UNITED STATES FILTER CORP, S-4/A, 1998-05-15

UNITED STATES FILTER CORP
S-4/A, 1998-05-15
REFRIGERATION & SERVICE INDUSTRY MACHINERY

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1998

REGISTRATION NO. 333-52717
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------

AMENDMENT NO. 1

TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
UNITED STATES FILTER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3589 33-266015
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
40-004 COOK STREET, PALM DESERT, CALIFORNIA 92211
(760) 340-0098
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
DAMIAN C. GEORGINO
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
UNITED STATES FILTER CORPORATION
40-004 COOK STREET, PALM DESERT, CALIFORNIA 92211
(760) 340-0098
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
COPIES TO:
<TABLE>
<S> <C> <C>
RODRIGO A. GUERRA, JR. EDWARD A. CHRISTENSEN DANIEL A. NEFF
BRIAN J. MCCARTHY CULLIGAN WATER TECHNOLOGIES, INC. DAVID A. KATZ
SKADDEN, ARPS, SLATE, ONE CULLIGAN PARKWAY WACHTELL, LIPTON, ROSEN & KATZ
MEAGHER & FLOM LLP NORTHBROOK, ILLINOIS 60062 51 WEST 52ND STREET
300 SOUTH GRAND AVENUE (847) 205-6000 NEW YORK, NEW YORK 10019
LOS ANGELES, CALIFORNIA 90071-3144O (212) 403-1000
(213) 687-5000

</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of the Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
--------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
AMOUNT OF
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(2) PER SHARE PRICE(3) FEE(4)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value 51,683,682
$.01 per share(1)..... shares Not Applicable $1,697,292,117 $500,702
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement relates to common stock of United States
Filter Corporation (the "Registrant") to be issued to holders of common
stock, par value $0.01 per share, of Culligan Water Technologies, Inc.
("Culligan") in connection with the merger (the "Merger") of Palm Water
Acquisition Corp. ("Subcorp"), a wholly owned subsidiary of the
Registrant, with and into Culligan, as described in the Agreement and Plan
of Merger among the Registrant, Subcorp and Culligan, dated as of February
9, 1998 (the "Merger Agreement"), attached as Annex A to the Joint Proxy
Statement/Prospectus forming a part of this Registration Statement.
(2) The number of shares to be registered is based upon 27,564,630 being the
number of shares of Culligan Common Stock expected to be acquired in the
transaction (such number being the number of shares outstanding as of
April 24, 1998 plus all shares issuable upon the exercise of all
outstanding options to acquire Culligan Common Stock) multiplied by the
highest possible exchange ratio under the terms of the Merger Agreement of
1.875 shares of the common stock, par value $0.01 per share ("U.S. Filter
Common Stock"), of the Registrant for each share of Culligan Common Stock.
(3) Pursuant to Rule 457(f)(1) of the Securities Act, this amount represents
the maximum aggregate offering price which would be computed by using the
average of the high and low prices of U.S. Filter Common Stock reported by
the New York Stock Exchange on May 12, 1998. This amount is estimated
solely for the purpose of calculating the Registration Fee.

(4) Previously paid.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

[LOGO OF U.S. FILTER]
40-004 COOK STREET
PALM DESERT, CALIFORNIA 92211

May 15, 1998

Dear Fellow Stockholders:

You are cordially invited to attend a Special Meeting of Stockholders of
United States Filter Corporation. ("U.S. Filter") to be held at the offices of
Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167 in the
fifth floor auditorium on Monday, June 15, 1998, at 9:30 a.m., local time (the
"Special Meeting").

At the Special Meeting you will be asked to vote on a proposal (the "Stock
Issuance Proposal") to approve the issuance of U.S. Filter common stock
pursuant to the Agreement and Plan of Merger, dated as of February 9, 1998
(the "Merger Agreement"), among U.S. Filter, Culligan Water Technologies, Inc.
("Culligan") and Palm Water Acquisition Corp., a wholly owned subsidiary of
U.S. Filter ("Subcorp"), providing for the merger (the "Merger") of Subcorp
with and into Culligan. Upon consummation of the Merger, Culligan, as the
surviving corporation of the Merger, will become a wholly owned subsidiary of
U.S. Filter, and Culligan stockholders will be entitled to receive in exchange
for shares of Culligan common stock held by them, that number of shares of
U.S. Filter common stock having a trading value at the time the exchange ratio
is set of $60 per share of Culligan common stock (assuming the average trading
value of U.S. Filter common stock as of a specified period is between $32 and
$35 per share), subject to certain adjustment provisions described in the
enclosed Joint Proxy Statement/Prospectus. Consummation of the Merger is
conditioned upon approval of the Stock Issuance Proposal.

U.S. Filter has received the opinions of each of Donaldson, Lufkin &
Jenrette Securities Corporation and Salomon Smith Barney, financial advisors
to U.S. Filter, to the effect that as of the date of such opinions, the
Exchange Ratio was fair, from a financial point of view, to the U.S. Filter
stockholders, as more fully described in the accompanying Joint Proxy
Statement/Prospectus.

ADDITIONAL INFORMATION REGARDING THE MERGER AND THE MERGER AGREEMENT IS SET
FORTH IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS AND THE ANNEXES
THERETO, WHICH YOU ARE URGED TO READ CAREFULLY IN THEIR ENTIRETY. FOR A
DISCUSSION OF CERTAIN RISK FACTORS, PLEASE SEE PAGE 12 OF THE JOINT PROXY
STATEMENT/PROSPECTUS.

YOUR BOARD OF DIRECTORS HAS CAREFULLY CONSIDERED THE TERMS AND CONDITIONS OF
THE PROPOSED MERGER AND HAS UNANIMOUSLY DETERMINED THAT THE STOCK ISSUANCE
PROPOSAL IS FAIR TO, AND IN THE BEST INTERESTS OF, U.S. FILTER AND ITS
STOCKHOLDERS. ACCORDINGLY, YOUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE APPROVAL AND ADOPTION OF THE STOCK ISSUANCE PROPOSAL.

Approval and adoption of the Stock Issuance Proposal requires approval by
the holders of a majority of the U.S. Filter Common Stock entitled to vote and
present in person or represented by proxy at the Special Meeting.

In view of the importance of the action to be taken at this Special Meeting
of U.S. Filter Stockholders, we urge you to review carefully the accompanying
Notice of Special Meeting of Stockholders and the Joint Proxy
Statement/Prospectus, including the annexes thereto, which also include
information about U.S. Filter and Culligan. Whether or not you expect to
attend the Special Meeting, please complete, sign and date the enclosed proxy
and return it as promptly as possible.

Very truly yours,

/s/ Richard J. Heckman

Richard J. Heckmann
Chairman of the Board, President and
Chief Executive Officer
<PAGE>

[LOGO OF U.S. FILTER]
40-004 COOK STREET
PALM DESERT, CALIFORNIA 92211

----------------

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MONDAY, JUNE 15, 1998

----------------

To the Stockholders of United States Filter Corporation:

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of United States Filter Corporation, a Delaware corporation ("U.S.
Filter"), will be held at the offices of Bear, Stearns & Co. Inc., 245 Park
Avenue, New York, New York 10167 in the fifth floor auditorium on Monday,
June 15, 1998, at 9:30 a.m., local time, for the following purposes:

1. To consider and vote on a proposal (the "Stock Issuance Proposal") to
approve the issuance of shares of U.S. Filter common stock, par value $.01
per share ("U.S. Filter Common Stock"), pursuant to the Agreement and Plan
of Merger, dated as of February 9, 1998 (the "Merger Agreement"), by and
among U.S. Filter, Palm Water Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of U.S. Filter ("Subcorp"), and Culligan Water
Technologies, Inc., a Delaware corporation ("Culligan"), pursuant to which,
among other things, (i) Subcorp will be merged with and into Culligan with
the result that Culligan will become a wholly owned subsidiary of U.S.
Filter, and (ii) U.S. Filter will issue in exchange for each issued and
outstanding share (other than treasury shares) of Culligan's common stock,
par value $.01 per share ("Culligan Common Stock"), 1.714 shares of U.S.
Filter common stock, par value $.01 per share, if the average of the
closing prices of the shares of U.S. Filter Common Stock as reported on the
New York Stock Exchange Composite Tape on each of the last ten trading days
ending on the sixth trading day prior to the date of the meeting of
Culligan's stockholders at which the approval of the merger (the "Merger")
by Culligan's stockholders is obtained (the "Average Share Price") is equal
to or greater than $35; provided, however, that (i) if the Average Share
Price is less than $35, but greater than or equal to $32, then the exchange
ratio shall be equal to the quotient obtained (rounded to the nearest ten-
thousandth of a share) by dividing $60 by the Average Share Price; and (ii)
if the Average Share Price is less than $32, the exchange ratio shall be
equal to 1.875. A copy of the Merger Agreement is attached as Annex A to
the accompanying Joint Proxy Statement/Prospectus.

2. To transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on April 23, 1998, as
the record date for the determination of the holders of U.S. Filter Common
Stock entitled to notice of, and to vote at, the Special Meeting and
adjournments or postponements thereof. A complete list of stockholders
entitled to vote in the meeting shall be available from the Proxy Solicitor,
MacKenzie, Partners, Inc., at its address and phone numbers listed on the back
cover of this Joint Proxy Statement/Prospectus at least 10 days prior to the
date of the Special Meeting. The Stock Issuance Proposal requires the
affirmative vote of the holders of a majority of the U.S. Filter Common Stock
entitled to vote and present in person or represented by proxy at the Special
Meeting.

Information regarding the Merger and related matters is contained in the
accompanying Joint Proxy Statement/Prospectus and the annexes thereto, which
are incorporated by reference herein and form a part of this Notice.

BEFORE THE TAKING OF THE VOTE AT THE SPECIAL MEETING A NOTICE OF REVOCATION
BEARING A LATER DATE THAN THE PROXY, (ii) DULY EXECUTING A LATER-DATED PROXY
RELATING TO THE SAME SHARES AND DELIVERING IT TO THE SECRETARY OF U.S. FILTER
BEFORE THE TAKING OF THE VOTE AT THE SPECIAL MEETING OR (iii) ATTENDING THE
SPECIAL MEETING AND VOTING IN PERSON.

THE BOARD OF DIRECTORS OF U.S. FILTER HAS UNANIMOUSLY DETERMINED THAT THE
TERMS OF THE STOCK ISSUANCE PROPOSAL ARE FAIR TO, AND IN THE BEST INTERESTS
OF, U.S. FILTER AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE APPROVAL AND ADOPTION OF THE STOCK ISSUANCE
PROPOSAL.

By Order of the Board of Directors

/s/ Damian C. Georgino

Damian C. Georgino
Corporate Secretary

Palm Desert, California May 15, 1998
<PAGE>

[LOGO OF CULLIGAN(R)]
ONE CULLIGAN PARKWAY
NORTHBROOK, ILLINOIS 60062-6209

May 15, 1998

Dear Fellow Stockholders:

You are cordially invited to attend a Special Meeting of Stockholders of
Culligan Water Technologies, Inc. ("Culligan") to be held at the offices of
Bear, Stearns, & Co. Inc., 245 Park Ave., New York, New York 10167 in the
fifth floor auditorium on Monday, June 15, 1998, at 11:00 a.m., local time
(the "Special Meeting").

At the Special Meeting you will be asked to vote on a proposal (the
"Culligan Merger Proposal") to approve and adopt an Agreement and Plan of
Merger, dated as of February 9, 1998 (the "Merger Agreement"), among Culligan,
United States Filter Corporation ("U.S. Filter") and Palm Water Acquisition
Corp., a wholly owned subsidiary of U.S. Filter ("Subcorp"), providing for the
merger (the "Merger") of Subcorp with and into Culligan. Upon consummation of
the Merger, Culligan, as the surviving corporation of the Merger, will become
a wholly owned subsidiary of U.S. Filter, and Culligan stockholders will be
entitled to receive in exchange for shares of Culligan common stock held by
them, that number of shares of U.S. Filter common stock having a trading value
at the time the exchange ratio is set of $60 per share of Culligan common
stock (assuming the average trading value of U.S. Filter common stock during a
specified period is between $32 and $35 per share), subject to certain
adjustment provisions described in the enclosed Joint Proxy
Statement/Prospectus. Consummation of the Merger is conditioned upon approval
and adoption of the Merger Agreement. You will also be asked to vote on a
proposal to adjourn the Special Meeting if required to solicit additional
votes (the "Adjournment Proposal").

Culligan has received the opinions of each of Bear, Stearns & Co. Inc. and
Goldman, Sachs & Co., financial advisors to Culligan, to the effect that as of
the date of such opinions, the Exchange Ratio was fair, from a financial point
of view, to the Culligan stockholders, as more fully described in the
accompanying Joint Proxy Statement/Prospectus.

YOUR BOARD OF DIRECTORS HAS CAREFULLY CONSIDERED THE TERMS AND CONDITIONS OF
THE PROPOSED MERGER AND HAS UNANIMOUSLY DETERMINED THAT THE TERMS OF THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN
THE BEST INTERESTS OF, CULLIGAN AND ITS STOCKHOLDERS. ACCORDINGLY, YOUR BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL AND ADOPTION OF THE
CULLIGAN MERGER PROPOSAL AND THE ADJOURNMENT PROPOSAL.

Approval and adoption of the Culligan Merger Proposal requires the
affirmative vote of the holders of a majority of Culligan's common stock
outstanding and entitled to vote thereon. The Adjournment Proposal requires
the affirmative vote of the holders of a majority of Culligan's common stock
entitled to vote and present in person or represented by proxy at the Special
Meeting.

In view of the importance of the action to be taken at this important
Special Meeting of Culligan stockholders, we urge you to review carefully the
accompanying Notice of Special Meeting of Stockholders and the Joint Proxy
Statement/Prospectus, including the annexes thereto, which also include
information about Culligan and U.S. Filter. Whether or not you expect to
attend the Special Meeting, please complete, sign and date the enclosed proxy
and return it as promptly as possible.

Very truly yours,

/s/ Douglas A. Pertz

Douglas A. Pertz
President and Chief Executive
Officer
<PAGE>

[LOGO OF CULLIGAN(R)]
ONE CULLIGAN PARKWAY
NORTHBROOK, ILLINOIS 60062-6209

----------------

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MONDAY, JUNE 15, 1998

----------------

To the Stockholders of Culligan Water Technologies, Inc.:

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of Culligan Water Technologies, Inc., a Delaware corporation
("Culligan"), will be held at the offices of Bear, Stearns & Co. Inc., 245
Park Avenue, New York, New York 10167 in the fifth floor auditorium on Monday,
June 15, 1998, at 11:00 a.m., local time, for the following purposes:

1. To consider and vote on a proposal (the "Culligan Merger Proposal") to
approve and adopt the Agreement and Plan of Merger, dated as of February 9,
1998 (the "Merger Agreement"), by and among United States Filter
Corporation, a Delaware corporation ("U.S. Filter"), Palm Water Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of U.S. Filter
("Subcorp"), and Culligan, pursuant to which, among other things, (i)
Subcorp will be merged with and into Culligan with the result that Culligan
will become a wholly owned subsidiary of U.S. Filter, and (ii) U.S. Filter
will issue in exchange for each issued and outstanding share (other than
treasury shares and shares owned by U.S. Filter) of Culligan's common
stock, par value $.01 per share ("Culligan Common Stock"), 1.714 shares of
U.S. Filter common stock, par value $.01 per share ("U.S. Filter Common
Stock"), if the average of the closing prices of the shares of U.S. Filter
Common Stock as reported on the New York Stock Exchange Composite Tape on
each of the last ten trading days ending on the sixth trading day prior to
the date of the meeting of Culligan's stockholders at which the approval of
the merger (the "Merger") by Culligan's stockholders is obtained (the
"Average Share Price") is equal to or greater than $35; provided, however,
that (i) if the Average Share Price is less than $35, but greater than or
equal to $32, then the exchange ratio shall be equal to the quotient
obtained (rounded to the nearest ten-thousandth of a share) by dividing $60
by the Average Share Price; and (ii) if the Average Share Price is less
than $32, the exchange ratio shall be equal to 1.875. A copy of the Merger
Agreement is attached as Annex A to the accompanying Joint Proxy
Statement/Prospectus.

2. To adjourn the Special Meeting, if necessary, to permit further
solicitation of proxies in the event that there are not sufficient votes at
the time of the Special Meeting to approve the Culligan Merger Proposal
(the "Adjournment Proposal").

3. To transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on April 23, 1998, as
the record date for the determination of the holders of Culligan Common Stock
entitled to notice of, and to vote at, the Special Meeting and adjournments or
postponements thereof. A complete list of stockholders entitled to vote in the
meeting shall be available from the Proxy Solicitor, MacKenzie, Partners,
Inc., at its address and phone numbers listed on the back cover of this Joint
Proxy Statement/Prospectus at least 10 days prior to the date of the Special
Meeting. The Culligan Merger Proposal requires the affirmative vote of the
holders of a majority of the Culligan Common Stock outstanding and entitled to
vote thereon. The Adjournment Proposal requires the affirmative vote of the
holders of a majority of the Culligan Common Stock entitled to vote and
present in person or represented by
<PAGE>

proxy at the Special Meeting. Under certain circumstances, the Merger
Agreement may be terminated prior to the time the Merger becomes effective,
whether before or after approval and adoption of the Merger Agreement by
Culligan stockholders. Culligan stockholders will not be entitled to
dissenters' appraisal rights in connection with the Merger.

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IT IS IMPORTANT THAT YOUR INTERESTS BE REPRESENTED AT THE SPECIAL MEETING. YOU
MAY REVOKE YOUR PROXY BY (i) FILING WITH THE SECRETARY OF CULLIGAN AT OR
BEFORE THE TAKING OF THE VOTE AT THE SPECIAL MEETING A NOTICE OF REVOCATION
BEARING A LATER DATE THAN THE PROXY, (ii) DULY EXECUTING A LATER-DATED PROXY
RELATING TO THE SAME SHARES AND DELIVERING IT TO THE SECRETARY OF CULLIGAN
BEFORE THE TAKING OF THE VOTE AT THE SPECIAL MEETING OR (iii) ATTENDING THE
SPECIAL MEETING AND VOTING IN PERSON.

THE BOARD OF DIRECTORS OF CULLIGAN HAS UNANIMOUSLY DETERMINED THAT THE TERMS
OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO,
AND IN THE BEST INTERESTS OF, CULLIGAN AND ITS STOCKHOLDERS. ACCORDINGLY, THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL AND ADOPTION OF
THE CULLIGAN MERGER PROPOSAL AND THE ADJOURNMENT PROPOSAL.

By Order of the Board of Directors

/s/ Edward A. Christensen

Edward A. Christensen
Secretary

Northbrook, Illinois

May 15, 1998

PLEASE DO NOT SEND ANY CERTIFICATES AT THIS TIME.
<PAGE>

UNITED STATES FILTER CORPORATION

AND

CULLIGAN WATER TECHNOLOGIES, INC.

JOINT PROXY STATEMENT

---------------

UNITED STATES FILTER CORPORATION

PROSPECTUS
SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE

---------------

This joint proxy statement/prospectus (the "Joint Proxy
Statement/Prospectus") is being furnished to the holders of shares of common
stock, par value $0.01 per share ("U.S. Filter Common Stock"), of United
States Filter Corporation, a Delaware corporation ("U.S. Filter"), in
connection with the solicitation of proxies by the Board of Directors of U.S.
Filter (the "U.S. Filter Board") for use at a Special Meeting of Stockholders
of U.S. Filter (the "U.S. Filter Stockholders") to be held at the offices of
Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167 in the
fifth floor auditorium on Monday, June 15, 1998, at 9:30 a.m. local time, and
at any and all adjournments or postponements thereof (the "U.S. Filter Special
Meeting").

This Joint Proxy Statement/Prospectus is also being furnished to the holders
of shares of common stock, par value $0.01 per share ("Culligan Common
Stock"), of Culligan Water Technologies, Inc., a Delaware corporation
("Culligan"), in connection with the solicitation of proxies by the Board of
Directors of Culligan (the "Culligan Board") for use at a Special Meeting of
Stockholders of Culligan (the "Culligan Stockholders") to be held at the
offices of Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167
in the fifth floor auditorium on Monday, June 15, 1998, 11:00 a.m. local time,
and at any and all adjournments or postponements thereof (the "Culligan
Special Meeting" and, together with the U.S. Filter Special Meeting, the
"Special Meetings").

This Joint Proxy Statement/Prospectus relates to the Agreement and Plan of
Merger, dated as of February 9, 1998 (the "Merger Agreement"), among U.S.
Filter, Palm Water Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of U.S. Filter ("Subcorp"), and Culligan, which provides for
the merger of Subcorp with and into Culligan (the "Merger"), with Culligan
surviving as a wholly owned subsidiary of U.S. Filter. Subject to the terms
and conditions of the Merger Agreement, each share of Culligan Common Stock
(other than treasury shares) outstanding immediately prior to the time at
which the Merger shall become effective (the "Effective Time") will be
converted into a number of shares of U.S. Filter Common Stock equal to the
Exchange Ratio. The "Exchange Ratio" shall be equal to 1.714 if the average of
the closing prices of U.S. Filter Common Stock as reported on the New York
Stock Exchange ("NYSE") Composite Tape (the "NYSE Composite Tape") on each of
the last ten trading days ending on the sixth trading day prior to the date of
the Culligan Special Meeting at which the approval of the Merger by the
Culligan Stockholders is obtained (the "Average Share Price") is equal to or
greater than $35; provided, however, that (i) if the Average Share Price is
less than $35, but greater than or equal to $32, then the Exchange Ratio shall
be equal to the quotient obtained (rounded to the nearest ten-thousandth of a
share) by dividing $60 by the Average Share Price; and (ii) if the Average
Share Price is less than $32, the Exchange Ratio shall be equal to 1.875. The
Exchange Ratio shall be adjusted to reflect any stock dividend, distribution,
stock split, reclassification, combination or certain other changes in the
U.S. Filter Common Stock prior to the Effective Time. Cash will be paid in
lieu of any fractional share of U.S. Filter Common Stock.

---------------

FOR A DESCRIPTION OF CERTAIN SIGNIFICANT CONSIDERATIONS IN CONNECTION WITH
THE MERGER AND RELATED MATTERS DESCRIBED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS, SEE "RISK FACTORS" BEGINNING ON PAGE 12.

---------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

---------------

The date of this Joint Proxy Statement/Prospectus is May 15, 1998.

(Continued on next page)
<PAGE>

(Continued from cover page)

The following table sets forth information concerning the consideration that
each holder of a share of Culligan Common Stock will be entitled to receive
pursuant to the Merger depending upon the Average Share Price (and assuming a
number of shares of Culligan Common Stock outstanding as of the Effective Time
equal to 25,875,754, the number of shares outstanding as of April 23, 1998).

<TABLE>
<CAPTION>
NUMBER OF SHARES OF
U.S. FILTER COMMON
STOCK ISSUED IN THE
MERGER PERCENT OF U.S. FILTER
ASSUMED ----------------------- VALUE PER SHARE COMMON STOCK OUTSTANDING
AVERAGE PER CULLIGAN OF CULLIGAN AFTER THE MERGER HELD BY
SHARE PRICE SHARE TOTAL COMMON STOCK* FORMER CULLIGAN STOCKHOLDERS
----------- ------------ ---------- --------------- ----------------------------
<S> <C> <C> <C> <C>
$37.00 1.7140 44,351,042 $63.42 29.01%
$35.00 1.7140 44,351,042 $60.00 29.01%
$34.00 1.7647 45,662,943 $60.00 29.62%
$33.00 1.8181 47,044,708 $60.00 30.24%
$32.00 1.8750 48,517,038 $60.00 30.90%
$30.00 1.8750 48,517,038 $56.25 30.90%
</TABLE>
- -------
* At the assumed Average Share Price.

Under the Merger Agreement, the Exchange Ratio will be equal to 1.875 if the
Average Share Price is equal to or less than $32.00 and the Exchange Ratio
will be equal to 1.714 if the Average Share Price is equal to or exceeds
$35.00.

U.S. Filter Common Stock is listed for trading on the NYSE under the symbol
"USF" and Culligan Common Stock is listed for trading on the NYSE under the
symbol "CUL." On February 6, 1998 the last trading day prior to the execution
of the Merger Agreement, the last reported sale prices of U.S. Filter Common
Stock and Culligan Common Stock, as reported on the NYSE Composite Tape, were
$34 11/16 per share and $37 3/4 per share, respectively. On May 14, 1998, the
last full trading day prior to the date of this Joint Proxy
Statement/Prospectus, the last reported sale prices of U.S. Filter Common
Stock and Culligan Common Stock, as reported on the NYSE Composite Tape, were
$33 3/16 per share and $55 1/2 per share, respectively, and the trading value
of the U.S. Filter Common Stock to be issued in the Merger in exchange for
each share of Culligan Common Stock (determined by applying the last reported
sale price of U.S. Filter Common Stock to the estimated Exchange Ratio of
1.8079) was $60.00 per share. Stockholders should obtain current quotes for
the U.S. Filter Common Stock and the Culligan Common Stock.

The consummation of the Merger is subject, among other things, to (i) the
approval of the proposal to issue (the "Stock Issuance") shares of U.S. Filter
Common Stock pursuant to the Merger in accordance with the terms of the Merger
Agreement (the "Stock Issuance Proposal") by the affirmative vote of the of
U.S. Filter Stockholders in the manner required by any applicable law and the
rules of the NYSE; (ii) the approval of the Merger by the Culligan
Stockholders in the manner required by any applicable law (the "Culligan
Merger Proposal"); and (iii) the receipt of certain regulatory approvals. A
copy of the Merger Agreement is attached to the Joint Proxy
Statement/Prospectus as Annex A.

This Joint Proxy Statement/Prospectus also constitutes the prospectus of
U.S. Filter filed as part of a registration statement on Form S-4 (together
with all amendments and exhibits, the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), relating to the shares of U.S.
Filter Common Stock to be issued in the Merger. Assuming an Average Share
Price of $33 3/16, (the closing price of U.S. Filter Common Stock on May 14,
1998) and based upon approximately 25,875,754 shares of Culligan Common Stock
outstanding (the number of shares of Culligan Common Stock outstanding as of
the Culligan Record Date) it is anticipated that approximately 46,780,776
shares of U.S. Filter Common Stock will be issued in the Stock Issuance,
representing approximately 30.1% of the shares of U.S. Filter Common Stock
expected to be outstanding after giving effect to the consummation of the
Merger.

At the Culligan Special Meeting, Culligan Stockholders will be asked to
consider and vote on a proposal for the adjournment of the Culligan Special
Meeting, if necessary, to permit further solicitation of proxies in the event
that there are not sufficient votes at the time of the Culligan Special
Meeting to approve the Culligan Merger Proposal (the "Culligan Adjournment
Proposal").

All information contained or incorporated by reference in this Joint Proxy
Statement/Prospectus with respect to Culligan has been supplied by Culligan.
All information contained or incorporated by reference in this Joint Proxy
Statement/Prospectus with respect to U.S. Filter has been supplied by U.S.
Filter.

This Joint Proxy Statement/Prospectus, and the accompanying forms of proxy,
letter to stockholders and notice of special meeting of stockholders are first
being mailed to stockholders of U.S. Filter and stockholders of Culligan on or
about May 15, 1998.
<PAGE>

TABLE OF CONTENTS

<TABLE>
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AVAILABLE INFORMATION..................................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 1
SUMMARY................................................................... 3
The Companies........................................................... 3
The Special Meetings.................................................... 3
Risk Factors............................................................ 5
The Merger and the Merger Agreement..................................... 5
Market Prices and Dividends............................................. 11
RISK FACTORS.............................................................. 12
Risk Factors Relating to the Merger..................................... 12
Risk of Nonconsummation of the Merger................................. 12
Exchange Ratio Subject to "Collar" Despite Potential Change in
Relative Stock Prices................................................ 12
Necessity of Receiving Governmental Approvals Prior to the Merger;
Possible Divestitures and Operating Restrictions..................... 13
Uncertainties in Integrating Business Operations and Achieving Cost
Savings.............................................................. 13
Dilution.............................................................. 13
Risk Factors Relating to a Combined U.S. Filter and Culligan After the
Merger................................................................. 13
Acquisition Strategy.................................................. 13
International Transactions............................................ 14
Reliance on Key Personnel............................................. 14
Profitability of Fixed Price Contracts................................ 14
Cyclicality, Seasonality and Possible Earnings Fluctuations........... 14
Potential Environmental Risks......................................... 15
Competition........................................................... 17
Potential Risks Related to Water Rights and Water Transfers........... 17
Technological and Regulatory Risks.................................... 18
Municipal Water and Wastewater Business............................... 18
Year 2000 Risks....................................................... 19
Shares Eligible for Future Sale....................................... 19
THE SPECIAL MEETINGS...................................................... 20
General................................................................. 20
Matters to be Considered at the Special Meetings........................ 20
U.S. Filter Special Meeting........................................... 20
Culligan Special Meeting.............................................. 20
Record Date; Vote Required; Voting at the Meetings...................... 21
Voting and Revocation of Proxies........................................ 22
Solicitation of Proxies................................................. 23
THE COMPANIES............................................................. 23
U.S. Filter............................................................. 23
Culligan................................................................ 27
COMPARATIVE PER SHARE DATA OF U.S. FILTER AND CULLIGAN.................... 28
MARKET PRICE AND DIVIDEND DATA............................................ 30
THE MERGER................................................................ 32
Background of the Merger................................................ 32
Unanimous Recommendation of the U.S. Filter Board of Directors; U.S.
Filter's Reasons
for the Merger......................................................... 33
Unanimous Recommendation of the Culligan Board of Directors; Culligan's
Reasons
for the Merger......................................................... 34
Opinions of U.S. Filter Financial Advisors.............................. 36
</TABLE>

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Opinions of Culligan Financial Advisors................................. 42
Management Projections.................................................. 50
Interests of Certain Persons in the Merger.............................. 51
Anticipated Accounting Treatment........................................ 53
No Appraisal Rights..................................................... 54
Governmental Approvals.................................................. 54
MANAGEMENT AND PRINCIPAL STOCKHOLDERS OF U.S. FILTER...................... 55
PRINCIPAL STOCKHOLDERS OF CULLIGAN........................................ 56
U.S. FILTER SELECTED CONSOLIDATED FINANCIAL DATA.......................... 59
CULLIGAN SELECTED CONSOLIDATED FINANCIAL DATA............................. 62
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION........................ 69
THE MERGER AGREEMENT...................................................... 84
Effective Time of the Merger............................................ 84
Conversion of Securities................................................ 84
Culligan Rights Agreement............................................... 86
Exchange of Certificates Representing Shares............................ 86
Dividends............................................................... 87
No Fractional Shares.................................................... 87
Unclaimed Amounts....................................................... 87
Representations and Warranties.......................................... 87
Other Matters........................................................... 87
Antitrust, Governmental and Other Approvals............................. 88
Operating Covenants..................................................... 88
The Special Meetings.................................................... 90
Resales of U.S. Filter Common Stock Received in the Merger; Restrictions
on Affiliates.......................................................... 90
No Solicitation......................................................... 90
Directors' and Officers' Indemnification and Insurance.................. 91
NYSE Listing............................................................ 91
Board of Directors of U.S. Filter....................................... 91
Employee Benefits....................................................... 92
Conditions to the Merger................................................ 92
Termination, Amendment and Waiver....................................... 93
Fees and Expenses....................................................... 93
Special Payment......................................................... 94
Cooling Off Period...................................................... 94
THE SUPPORT/VOTING AGREEMENTS............................................. 95
THE REGISTRATION RIGHTS AGREEMENT......................................... 96
THE CULLIGAN RIGHTS AGREEMENT AMENDMENT................................... 97
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.............................. 98
U.S. FEDERAL SECURITIES LAW CONSEQUENCES.................................. 99
COMPARISON OF STOCKHOLDER RIGHTS.......................................... 100
DESCRIPTION OF U.S. FILTER CAPITAL STOCK.................................. 105
OTHER ACTION TO BE TAKEN AT THE CULLIGAN SPECIAL MEETING.................. 107
STOCKHOLDER PROPOSALS..................................................... 108
LEGAL MATTERS............................................................. 108
EXPERTS................................................................... 108
</TABLE>

ii
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ANNEXES
A. The Merger Agreement.................................................. A-1
B. Opinion of Donaldson, Lufkin & Jenrette Securities Corporation........ B-1
C. Opinion of Salomon Brothers Inc....................................... C-1
D. Opinion of Bear, Stearns & Co. Inc.................................... D-1
E. Opinion of Goldman, Sachs & Co........................................ E-1
</TABLE>

iii
<PAGE>

AVAILABLE INFORMATION

U.S. Filter and Culligan (collectively, the "Companies") are subject to the
informational requirements of the United States Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith file
periodic reports, proxy solicitation materials and other information with the
Commission. Such reports, proxy solicitation materials and other information
can be inspected and copied at the public reference facilities maintained by
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the Commission's Regional Offices located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a World Wide Web site on the internet that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. Such reports, proxy
and information statements and other information may be found on the
Commission's World Wide Web site address, http://www.sec.gov. The U.S. Filter
Common Stock and Culligan Common Stock are both listed on the NYSE. Such
reports, proxy solicitation materials and other information can also be
inspected and copied at the NYSE at 20 Broad Street, New York, New York 10005.

U.S. Filter has filed with the Commission the Registration Statement under
the Securities Act with respect to the offering made hereby. This Joint Proxy
Statement/Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which are omitted in accordance
with the rules and regulations of the Commission. Such additional information
may be obtained from the Commission's principal office in Washington, D.C. or
their World Wide Web Site as set forth above. For further information,
reference is hereby made to the Registration Statement, including the exhibits
filed as a part thereof or otherwise incorporated herein. Statements made in
this Joint Proxy Statement/Prospectus as to the contents of any documents
referred to are necessarily summaries of such documents and are not complete,
and in each instance reference is made to such document for a more complete
description and each such statement is qualified in its entirety by such
reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed with the Commission pursuant
to the Exchange Act, are incorporated herein by reference:

(1) For U.S. Filter (File No. 1-10728), its:

(a) Annual Report on Form 10-K for the fiscal year ended March 31, 1997
(the "1997 U.S. Filter Form 10-K");

(b) Quarterly Reports on Form 10-Q for the quarterly periods ended June
30, 1997 (as amended on Form 10-Q/A dated August 22, 1997),
September 30, 1997 and December 31, 1997 (as amended on Form 10-Q/A
dated May 12, 1998 and May 14, 1998);

(c) Current Reports on Form 8-K dated October 28, 1996 (as amended on a
Form 8-K/A dated December 19, 1996), December 2, 1996, January 6,
1997, August 4, 1997, September 17, 1997, September 19, 1997,
December 9, 1997 (as amended on Forms 8-K/A dated February 6, 1998,
March 4, 1998, May 12, 1998 and May 14, 1998), December 31, 1997,
January 16, 1998 (as amended on Forms 8-K/A dated February 6, 1998,
March 4, 1998, May 12, 1998 and May 14, 1998), February 9, 1998,
May 12, 1998 and May 14, 1998;

(d) Definitive Proxy Statement on Schedule 14A dated July 8, 1997; and

(e) Description of U.S. Filter Common Stock contained in U.S. Filter's
Registration Statement on Form 8-A, as the same may be amended.

(2) For Culligan (File No. 1-14104), its:

(a) Annual Report on Form 10-K for the fiscal year ended January 31,
1998 (as amended on Form 10-K/A dated May 15, 1998);

1
<PAGE>

(b) Quarterly Reports on Form 10-Q for the quarterly periods ended
April 30, 1997, July 31, 1997 and October 31, 1997 (in the case of
the Quarterly Report for the quarter ended October 31, 1997, as
amended on Form 10-Q/A dated May 15, 1998);

(c) Current Reports on Form 8-K dated February 14, 1997, August 13,
1997, September 8, 1997, October, 22, 1997, November 21, 1997,
December 12, 1997 (as amended on Form 8-K/A dated February 17,
1998), and February 10, 1998 (as amended on May 15, 1998), as each
may have been amended;

(d) Definitive Proxy Statement on Schedule 14A dated May 14, 1997;

(e) Description of Culligan Common Stock contained in Culligan's
Registration Statement on Form S-1 filed with the Commission on
December 15, 1995 (File No. 33-99236), including any amendment or
report filed for the purpose of updating such information; and

(f) Description of Culligan Rights (as herein defined) contained in
Culligan's Registration Statement on Form 8-A filed with the
Commission on September 16, 1996 (File No. 1-14104), including any
amendment or report filed for the purpose of updating such
information.

All documents and reports subsequently filed by the companies pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Joint Proxy Statement/Prospectus and prior to the termination of the offering
made by this Joint Proxy Statement/Prospectus shall be deemed to be
incorporated by reference herein. In addition, all documents and reports filed
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of the initial registration statement and prior to effectiveness of the
registration statement shall be deemed to be incorporated by reference herein.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Joint Proxy Statement/Prospectus to the extent that a
statement contained herein or in any subsequently filed document which is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Joint Proxy
Statement/Prospectus.

THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH
DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON
TO WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR
ORAL REQUEST TO, THE PROXY SOLICITOR, MACKENZIE PARTNERS, INC., 156 FIFTH
AVENUE, NEW YORK, NEW YORK 10010 (TELEPHONE (212) 929-5500 (COLLECT) OR
(800) 322-2885 (TOLL FREE)). IN ORDER TO ENSURE TIMELY DELIVERY, ANY REQUEST
FOR DOCUMENTS SHOULD BE RECEIVED BY JUNE 8, 1998.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS JOINT PROXY STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF
PROXIES OR THE OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY U.S. FILTER OR CULLIGAN AND NEITHER THE DELIVERY OF THIS JOINT
PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED
HEREBY SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS NOT
BEEN ANY CHANGE IN THE AFFAIRS OF U.S. FILTER OR CULLIGAN SINCE THE DATE
HEREOF OR THAT THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS JOINT PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO PURCHASE, ANY SECURITIES, OR THE SOLICITATION OF A PROXY IN ANY
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION OF AN OFFER OR PROXY SOLICITATION.

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<PAGE>

SUMMARY

Following is a summary of certain information contained elsewhere in this
Joint Proxy Statement/Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained or
incorporated by reference in this Joint Proxy Statement/Prospectus including
the Annexes hereto. U.S. Filter Stockholders and Culligan Stockholders are
urged to read this Joint Proxy Statement/Prospectus including the Annexes
hereto in their entirety. Except as otherwise specified, all information in
this Joint Proxy Statement/Prospectus has been adjusted to reflect the 3 for 2
splits of the U.S. Filter Common Stock effected on each of December 5, 1994 and
July 15, 1996.

THE COMPANIES

U.S. Filter

U.S. Filter is a leading global provider of industrial and municipal water
and wastewater treatment systems, products and services, with an installed base
of systems that U.S. Filter believes is one of the largest worldwide. U.S.
Filter offers a single-source solution to its customers through what U.S.
Filter believes is the industry's broadest range of cost-effective systems,
products, services and proven technologies. U.S. Filter markets a broad line of
waterworks distribution products and services. In addition, U.S. Filter has one
of the industry's largest networks of sales and service and distribution
facilities through more than 600 locations including 88 manufacturing plants in
33 countries. U.S. Filter capitalizes on its large installed base, extensive
distribution network and manufacturing capabilities to provide customers with
ongoing local service and maintenance. U.S. Filter is a leading provider of
outsourced water services, including the operation of water and wastewater
treatment systems at customer sites. In addition, U.S. Filter is actively
involved in the development of privatization initiatives for municipal water
treatment facilities throughout the world and, specifically, in the United
States, Mexico and Canada. U.S. Filter also owns a significant amount of
properties with appurtenant water rights in the Western and Southwestern United
States, a substantial portion of which is leased to agricultural tenants. U.S.
Filter's principal executive offices are located at 40-004 Cook Street, Palm
Desert, California 92211, and its telephone number is (760) 340-0098.
References herein to U.S. Filter refer to United States Filter Corporation and
its subsidiaries, unless the context requires otherwise. See "THE COMPANIES--
U.S. Filter."

Culligan

Culligan is a leading manufacturer and distributor of water purification and
treatment products and services for household, consumer, and commercial
applications. Products and services offered by Culligan range from those
designed to solve residential water problems, such as filters for tap water and
household water softeners, to equipment and services, such as ultrafiltration
and microfiltration products. Culligan also offers desalination systems and
portable deionization services ("PDS"), designed for commercial and industrial
applications. In addition, Culligan sells and licenses its dealers to sell
under the Culligan trademark five-gallon bottled water. Culligan's principal
executive offices are located at One Culligan Parkway, Northbrook, Illinois
60062-6209, and its telephone number is (847) 205-6000. References herein to
Culligan refer to Culligan Water Technologies, Inc. and its subsidiaries,
unless the context requires otherwise. See "THE COMPANIES--Culligan."

THE SPECIAL MEETINGS

Time, Date and Place

U.S. Filter. The U.S. Filter Special Meeting will be held at the offices of
Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167 in the
fifth floor auditorium on Monday, June 15, 1998, commencing at 9:30 a.m., local
time. See "THE SPECIAL MEETINGS--General" and "--Matters to be Considered at
the Special Meetings."

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<PAGE>

Culligan. The Culligan Special Meeting will be held at the offices of Bear,
Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167 in the fifth
floor auditorium on Monday, June 15, 1998, commencing at 11:00 a.m., local
time. See "THE SPECIAL MEETINGS--General" and "--Matters to be Considered at
the Special Meetings."

Matters to be Considered

U.S. Filter. The purpose of the U.S. Filter Special Meeting is to consider
the Stock Issuance Proposal, as more fully described in "THE SPECIAL MEETINGS--
Matters to be Considered at the Special Meetings."

Culligan. The purpose of the Culligan Special Meeting is to consider the
Culligan Merger Proposal and the Culligan Adjournment Proposal, as more fully
described in "THE SPECIAL MEETINGS--Matters to be Considered at the Special
Meetings;" and "OTHER ACTION TO BE TAKEN AT THE CULLIGAN SPECIAL MEETING."

Record Date; Shares Entitled to Vote

U.S. Filter. The Board of Directors of U.S. Filter has fixed the close of
business on April 23, 1998 as the record date for determination of U.S. Filter
Stockholders entitled to notice of and to vote at the U.S. Filter Special
Meeting (the "U.S. Filter Record Date"). Accordingly, only U.S. Filter
Stockholders of record on the U.S. Filter Record Date, will be entitled to
notice of and to vote at the U.S. Filter Special Meeting. Each holder of record
of U.S. Filter Common Stock on the U.S. Filter Record Date is entitled to cast
one vote per share, exercisable in person or by a properly executed proxy, at
the U.S. Filter Special Meeting. As of the U.S. Filter Record Date, there were
108,515,187 shares of U.S. Filter Common Stock outstanding and entitled to vote
which were held by approximately 5,509 holders of record. See "THE SPECIAL
MEETINGS--Record Date; Vote Required; Voting at the Meetings."

Culligan. The Board of Directors of Culligan has fixed the close of business
on April 23, 1998 as the record date for determination of Culligan Stockholders
entitled to notice of and to vote at the Culligan Special Meeting (the
"Culligan Record Date"). Accordingly, only Culligan Stockholders of record on
the Culligan Record Date, will be entitled to notice of and to vote at the
Culligan Special Meeting. Each holder of record of Culligan Common Stock on the
Culligan Record Date is entitled to cast one vote per share, exercisable in
person or by a properly executed proxy, at the Culligan Special Meeting. As of
the Culligan Record Date, there were 25,875,754 shares of Culligan Common Stock
outstanding and entitled to vote which were held by approximately 2,654 holders
of record. See "THE SPECIAL MEETINGS--Record Date; Vote Required; Voting at the
Meetings."

Required Vote

U.S. Filter. Pursuant to the Restated Certificate of Incorporation of U.S.
Filter, as amended (the "U.S. Filter Certificate"), the NYSE rules and the
Delaware General Corporation Law (the "DGCL"), the affirmative vote of a
majority of votes entitled to vote and present in person or represented by
proxy at the U.S. Filter Special Meeting is required to approve and adopt the
Stock Issuance Proposal. See "THE SPECIAL MEETINGS--Record Date; Vote Required;
Voting at the Meetings."

Culligan. Pursuant to the Amended and Restated Certificate of Incorporation
of Culligan (the "Culligan Certificate") and the DGCL, (i) the affirmative vote
of the holders of a majority of the Culligan Common Stock outstanding and
entitled to vote thereon is required to approve and adopt the Culligan Merger
Proposal, and (ii) the affirmative vote of a majority of the Culligan Common
Stock entitled to vote and present in person or represented by proxy at the
Culligan Special Meeting is required to approve and adopt the Culligan
Adjournment Proposal. See "THE SPECIAL MEETINGS--Record Date; Vote Required;
Voting at the Meetings."

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Share Ownership of Management

U.S. Filter. As of the U.S. Filter Record Date, all directors and executive
officers of U.S. Filter, as a group, owned 3,355,673 shares of U.S. Filter
Common Stock, representing approximately 3.1% of the outstanding shares of U.S.
Filter Common Stock as of such date. In addition, such directors and executive
officers owned options to purchase an additional 1,523,596 shares of U.S.
Filter Common Stock as of such date. Such directors and executive officers have
indicated their intention to vote their shares of U.S. Filter Common Stock FOR
the Stock Issuance Proposal.

Culligan. As of the Culligan Record Date, all directors and executive
officers of Culligan, as a group, owned 8,544 shares of Culligan Common Stock,
representing approximately .03% of the outstanding shares of Culligan Common
Stock as of such date. In addition, such directors and executive officers owned
options to purchase an additional 1,104,926 shares of Culligan Common Stock as
of such date. Such directors and officers have indicated their intention to
vote their shares of Culligan Common Stock FOR each of the Culligan Merger
Proposal and the Culligan Adjournment Proposal. In addition, Apollo Investment
Fund, L.P. and Lion Advisors, L.P. (collectively "Apollo"), which as of the
Culligan Record Date beneficially owned an aggregate of 7,334,859 shares of
Culligan Common Stock (or approximately 28.43% of the aggregate voting power of
the issued and outstanding shares of Culligan Common Stock as of such date),
have agreed to vote their shares of Culligan Common Stock FOR each of the
Culligan Merger Proposal and the Culligan Adjournment Proposal. See "THE
SUPPORT/VOTING AGREEMENTS" and "PRINCIPAL STOCKHOLDERS OF CULLIGAN."

RISK FACTORS

In considering whether to approve the Stock Issuance Proposal or to approve
the Culligan Merger Proposal and the Culligan Adjournment Proposal, as
applicable, the U.S. Filter Stockholders and the Culligan Stockholders should
consider carefully certain risk factors relating to the Merger and to the
businesses of U.S. Filter and Culligan including, (i) that U.S. Filter or
Culligan may be obligated to pay to the other certain fees and expenses if the
Merger is not consummated because of the failure to obtain stockholder
approval; (ii) that the Exchange Ratio is subject to change based on
fluctuations in U.S. Filter's stock price; (iii) the necessity of receiving
governmental approvals and the related possibility of divestitures and
operating restrictions; (iv) uncertainties in integrating the business
operations of U.S. Filter and Culligan and achieving cost savings; (v) dilution
to the voting power of the U.S. Filter Stockholders and the Culligan
Stockholders; (vi) risks inherent in the combined company's acquisition
strategy; (vii) risks associated with international transactions;
(viii) reliance on key personnel of U.S. Filter; (ix) the profitability of
fixed price contracts; (x) cyclicality, seasonality and possible earnings
fluctuations; (xi) potential environmental risks; (xii) competition;
(xiii) potential risks related to water rights and water transfers;
(xiv) technological and regulatory risks; (xv) risks associated with the
municipal water business; (xvi) Year 2000 risks; and (xvii) risks associated
with shares eligible for future sale. See "RISK FACTORS."

THE MERGER AND THE MERGER AGREEMENT

General

Under the terms of the Merger Agreement, upon consummation of the Merger,
Subcorp will merge with and into Culligan, with Culligan surviving as a wholly-
owned subsidiary of U.S. Filter. Each share of Culligan Common Stock
outstanding immediately prior to the Effective Time of the Merger (other than
treasury shares) will be converted into a number of shares of U.S. Filter
Common Stock determined by the Exchange Ratio which shall be equal to 1.714 if
the Average Share Price is equal to or greater than $35; provided, however,
that (i) if the Average Share Price is less than $35, but greater than or equal
to $32, then the Exchange Ratio shall be equal to the quotient obtained
(rounded to the nearest ten-thousandth of a share) by dividing $60 by the
Average Share Price; and (ii) if the Average Share Price is less than $32, the
Exchange Ratio shall be equal to 1.875. The Exchange Ratio shall be adjusted to
reflect any stock dividend, distribution, stock split, reclassification,

5
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combination or other change in the U.S. Filter Common Stock prior to the
Effective Time. Cash will be paid in lieu of any fractional share of U.S.
Filter Common Stock that would otherwise be issued in the Stock Issuance. See
"CERTAIN TERMS OF THE MERGER AGREEMENT--Conversion of Securities."

<TABLE>
<CAPTION>
NUMBER OF SHARES OF
U.S. FILTER COMMON
STOCK ISSUED IN THE
ASSUMED MERGER PERCENT OF U.S. FILTER
AVERAGE ----------------------- VALUE PER SHARE COMMON STOCK OUTSTANDING
SHARE PER CULLIGAN OF CULLIGAN AFTER THE MERGER HELD BY
PRICE SHARE TOTAL COMMON STOCK* FORMER CULLIGAN STOCKHOLDERS
------- ------------ ---------- --------------- ----------------------------
<S> <C> <C> <C> <C>
$37.00 1.7140 44,351,042 $63.42 29.01%
$35.00 1.7140 44,351,042 $60.00 29.01%
$34.00 1.7647 45,662,943 $60.00 29.62%
$33.00 1.8181 47,044,708 $60.00 30.24%
$32.00 1.8750 48,517,038 $60.00 30.90%
$30.00 1.8750 48,517,038 $56.25 30.90%
</TABLE>
- --------
* At the assumed Average Share Price.

Under the Merger Agreement, the Exchange Ratio will be equal to 1.875 if the
Average Share Price is equal to or less than $32.00 and the Exchange Ratio will
be equal to 1.714 if the Average Share Price is equal to or exceeds $35.00.

U.S. Filter's Reasons for the Merger; Unanimous Recommendation of the U.S.
Filter Board of Directors

The U.S. Filter Board believes that the Merger represents a unique
opportunity to create a stronger company by adding the premium name brand in
the residential water business to complement U.S. Filter's existing business.
In addition, U.S. Filter believes that Culligan will complement its European
industrial operations. U.S. Filter believes that the combined company would be
one of the largest global providers of industrial, municipal, commercial and
consumer water and wastewater treatment systems, products and services. The
U.S. Filter Board believes that the Merger will bring opportunities for cost
savings, improved customer service, economies of scale and other synergies,
resulting in improved cash flow potential for the long-term growth of U.S.
Filter and enhancement of stockholder value. In addition, the Merger would
enable U.S. Filter to further its strategic goal of expanding its global market
presence by adding several new countries to its distribution network. The U.S.
Filter Board also considered a number of potential risks and disadvantages
relating to the Merger, including the difficulty in integrating the two
operations, the risk of nonachievement of the synergies and benefits sought in
the Merger, the risk that the Merger would not be consummated, the expenses
expected to be incurred by U.S. Filter in connection with the Merger, and the
potential dilutive effect of the issuance of shares of U.S. Filter Common
Stock. See "THE MERGER--Unanimous Recommendation of the U.S. Filter Board of
Directors; U.S. Filter's Reasons for the Merger."

The Board of Directors of U.S. Filter has determined that the Stock Issuance
Proposal is fair to, and in the best interests of U.S. Filter and the U.S.
Filter Stockholders. ACCORDINGLY, THE U.S. FILTER BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT U.S. FILTER STOCKHOLDERS VOTE FOR THE APPROVAL AND
ADOPTION OF THE STOCK ISSUANCE PROPOSAL. See "THE MERGER--Unanimous
Recommendation of the U.S. Filter Board of Directors; US. Filter's Reasons for
the Merger."

6
<PAGE>

Culligan's Reasons for the Merger; Unanimous Recommendation of the Culligan
Board of Directors

The Culligan Board of Directors, in the course of reaching its decision to
approve the Merger Agreement and the transactions contemplated thereby,
consulted with Culligan's special counsel and financial advisors as well as
with Culligan's management and considered a number of factors, including the
per share consideration to be received by Culligan Stockholders in the Merger;
potential enhancements in earnings that could be achieved by cost savings and
revenue synergies resulting from combining the operations of Culligan and U.S.
Filter; the opportunity to improve customer service; current industry, economic
and market conditions; the opportunity of Culligan Stockholders to continue as
stockholders of a combined organization with greater strength than Culligan on
a stand-alone basis; the opinions of Culligan's financial advisors; the
assessment of Culligan's strategic alternatives to the Merger; the terms and
conditions of the Merger Agreement and the fact that the Merger is expected to
be a tax-free transaction for U.S. federal income tax purposes to Culligan
Stockholders and that it is expected to qualify as a pooling-of-interests
transaction for accounting and financial reporting purposes. The Culligan Board
also considered a number of potential risks and disadvantages relating to the
Merger, including the difficulty in integrating the two operations, the risk of
nonachievement of the synergies and benefits sought in the Merger, the risk
that the Merger would not be consummated, the expenses expected to be incurred
by Culligan in connection with the Merger, and the substantial acquisition
history of U.S. Filter and the inherent uncertainty this creates with respect
to analyzing the historical and projecting the future performance of U.S.
Filter. See "THE MERGER--Unanimous Recommendation of the Culligan Board of
Directors; Culligan's Reasons for the Merger."

The Board of Directors of Culligan has determined that the terms of the
Culligan Merger Proposal and the transactions contemplated thereby are fair to,
and in the best interests of Culligan and the Culligan Stockholders.
ACCORDINGLY, THE CULLIGAN BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
CULLIGAN STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE CULLIGAN MERGER
PROPOSAL AND THE CULLIGAN ADJOURNMENT PROPOSAL. See "THE MERGER--Unanimous
Recommendation of the Culligan Board of Directors; Culligan's Reasons for the
Merger."

Opinions of U.S. Filter Financial Advisors

Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and Salomon Smith
Barney ("Salomon ") have acted as financial advisors to U.S. Filter in
connection with the Merger and have delivered written opinions, each dated
February 9, 1998, to the U.S. Filter Board to the effect that, based upon and
subject to the various considerations set forth therein, as of the date of such
opinions, the Exchange Ratio was fair to the U.S. Filter Stockholders from a
financial point of view. The full text of the written opinions are attached
hereto as Annexes B and C, respectively, and should be read carefully in their
entirety. See "THE MERGER--Opinions of U.S. Filter Financial Advisors."

Opinions of Culligan Financial Advisors

Bear, Stearns & Co. Inc. ("Bear Stearns") and Goldman, Sachs & Co. ("Goldman
Sachs", and together with Bear Stearns, the "Culligan Financial Advisors") have
acted as financial advisors to Culligan in connection with the Merger and each
has delivered a written opinion dated February 9, 1998, to the Culligan Board
to the effect that, based upon and subject to the various considerations set
forth therein, as of the date of such opinion, the Exchange Ratio was fair to
the Culligan Stockholders from a financial point of view. The full text of the
written opinions are attached hereto as Annexes D and E, respectively, and
should be read carefully in their entirety. See "THE MERGER--Opinions of
Culligan Financial Advisors."

Interests of Certain Persons in the Merger

7
<PAGE>

These interests include among others, Culligan Options held by all of the
executive officers of Culligan, employee benefits to Culligan employees to be
provided by U.S. Filter after the Merger and certain indemnification for
Culligan's executive officers and directors. The Culligan Board was aware of
these interests and took these interests into account in approving the Merger
Agreement and the transactions contemplated thereby. See "THE MERGER--Interests
of Certain Persons in the Merger."

Board of Directors of U.S. Filter

U.S. Filter has agreed in the Merger Agreement that the U.S. Filter Board
will take all action necessary immediately following the Effective Time to
elect one person selected by the Culligan Board as of prior to the Effective
Time (subject to the consent of the U.S. Filter Board which shall not be
unreasonably withheld) as a director of U.S. Filter. See "THE MERGER
AGREEMENT--Board of Directors of U.S. Filter."

No Solicitation

The Merger Agreement provides that Culligan will not, and will not authorize
or permit any of its subsidiaries or any of its or its subsidiaries' directors,
officers, employees, agents or representatives, directly or indirectly, to
solicit, initiate, encourage or facilitate, or furnish or disclose non-public
information in furtherance of, any Competing Transaction, provided that, at any
time prior to the approval of the Merger by the Culligan Stockholders, Culligan
may furnish information or negotiate a Competing Transaction if the Culligan
Board determines in good faith by a majority vote, after consultation of
outside legal counsel, that failure to do so would create a reasonable
possibility of a breach of the fiduciary duties of the Culligan Board under
applicable law. A "Competing Transaction" (as defined in the Merger Agreement)
includes a merger, acquisition, recapitalization or certain purchases of assets
or capital stock of Culligan. See "THE MERGER AGREEMENT--No Solicitation."

Conditions to the Merger; Termination

The obligations of each party to effect the Merger shall be subject to the
satisfaction or waiver of certain conditions, including the following: U.S.
Filter Stockholder approval of the Stock Issuance Proposal and Culligan
Stockholder approval of the Culligan Merger Proposal; compliance with the
United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder (the "HSR Act") and any
requirements of foreign jurisdictions; no judgment, injunction, order or decree
shall prohibit or enjoin the consummation of the Merger; there shall not be
pending any action by any federal governmental authority challenging or seeking
to restrain or prohibit the consummation of the Merger; the Registration
Statement shall have been declared effective and shall not be the subject of
any stop order or proceeding (current or threatened) seeking a stop order; the
shares of U.S. Filter Common Stock to be issued in the merger shall have been
approved for listing on the NYSE; and U.S. Filter shall have received letters
from KPMG Peat Marwick LLP stating that they agree that the Merger will qualify
for the pooling of interests method of accounting.

The obligations of U.S. Filter and Subcorp to consummate the Merger and the
other transactions contemplated thereby are subject to the satisfaction or
waiver of certain conditions, including the following: the representations and
warranties of Culligan set forth in the Merger Agreement shall be true and
correct in all material respects; and Culligan shall have performed and
complied with all obligations and covenants required to be performed or
complied with by it under the Merger Agreement.

The obligations of Culligan to consummate the Merger and the other
transactions contemplated thereby are subject to the satisfaction or waiver of
certain conditions, including the following: the representations and warranties
of U.S. Filter and Subcorp set forth in the Merger Agreement shall be true and
correct in all material respects; U.S. Filter and Subcorp shall have performed
all obligations and covenants required to be performed or complied with by it
under the Merger Agreement; and Culligan shall have received a written opinion
of Wachtell,

8
<PAGE>

Lipton, Rosen & Katz, special counsel to Culligan, to the effect that (i) the
Merger will be treated for U.S. Federal income tax purposes as a reorganization
under Section 368(a) of the United States Internal Revenue Code of 1986, as
amended (the "Code"), (ii) Culligan, U.S. Filter and Subcorp will each be a
party to that reorganization, and (iii) no gain or loss will be recognized by
the Culligan Stockholders upon the receipt of shares of U.S. Filter Common
Stock in exchange for shares of Culligan Common Stock pursuant to the Merger
(except with respect to cash received in lieu of fractional interests in shares
of U.S. Filter Common Stock).

The Merger Agreement provides that the Merger Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of the Merger Agreement by U.S. Filter
Stockholders and Culligan Stockholders) by mutual written consent of U.S.
Filter and Culligan or by either U.S. Filter or Culligan: (i) if the Merger
shall not have been consummated on or prior to November 15, 1998; (ii) if a
court or other governmental authority of competent jurisdiction shall have
issued a judgment, injunction, order or decree (which has become final and
nonappealable) enjoining U.S. Filter or Culligan from consummating the Merger;
(iii) if the requisite approvals of the stockholders of either of U.S. Filter
or Culligan shall not have been obtained; or (iv) if there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in the Merger Agreement, and such breach
shall not have been cured within 30 days after notice thereof shall have been
received by the party alleged to be in breach.

U.S. Filter may also terminate the Merger Agreement if the Culligan Board
withdraws, or modifies or changes the Culligan Board Unanimous Recommendation
in a manner adverse to U.S. Filter. See "THE MERGER AGREEMENT--Conditions to
the Merger" and "--Termination, Amendment and Waiver."

The Merger Agreement may also be terminated by Culligan: (i) in order to
proceed with a Competing Transaction (see "THE MERGER AGREEMENT--No
Solicitation"); or if the Average Share Price, or if the average of the closing
prices of shares of U.S. Filter Common Stock as reported on the NYSE Composite
Tape for any period of 10 consecutive trading days which ends after the last
trading day used in calculating the Average Share Price, is less than $26.25.

If the Merger Agreement is terminated and it is judicially determined that
such termination is caused by an intentional breach thereof, the breaching
party shall indemnify the other parties for their respective out-of-pocket
costs, fees and expenses. In addition, if Culligan terminates the Merger
Agreement in respect of a Competing Transaction, or if U.S. Filter terminates
the Merger Agreement because of certain actions or nonactions of the Culligan
Board or the Culligan Stockholders that are adverse to U.S. Filter, Culligan
will be required to pay to U.S. Filter (i) reimbursement of U.S. Filter's
expenses in an amount up to $5 million in the aggregate ("Expenses"); and (ii)
a termination fee (which will be the sole and exclusive remedy of U.S. Filter
in such event) in the amount of $42 million (the "Termination Fee"). In
addition, in the case of certain actions or nonactions of the U.S. Filter Board
or the U.S. Filter Stockholders that are adverse to Culligan, U.S. Filter will
be required to pay to Culligan up to $47 million. See "THE MERGER AGREEMENT--
Fees and Expenses" and "--Special Payment."

Governmental Approvals

U.S. Filter and Culligan have filed, or will file, applications with all
applicable regulatory agencies, and have taken, or will take, other appropriate
action with respect to any requisite approvals or other action of any court,
administrative agency or commission or other governmental authority or
instrumentality, U.S. or non-U.S., whose consent, approval, order or
authorization, or with whom registration, declaration or filing of the Merger
Agreement is required to consummate the Merger and related transactions,
subject to the provisions of the Merger Agreement.

9
<PAGE>

The Merger Agreement provides that the obligation of U.S. Filter and Culligan
to consummate the Merger is conditioned upon, among other things, the
termination of any applicable waiting period under the HSR Act and the absence
of any injunction restraining consummation of the Merger. See "THE MERGER--
Regulatory and Third Party Approvals."

The Support/Voting Rights Agreement

Apollo, who as of the Culligan Record Date beneficially owned in the
aggregate approximately 28.3% of the outstanding Culligan Common Stock, has
agreed to vote or direct the vote of all Culligan Common Stock over which
Apollo has voting power or control in favor of the Culligan Merger Proposal.
See "THE SUPPORT/VOTING AGREEMENTS."

The Registration Rights Agreement

U.S. Filter has entered into a Registration Rights Agreement (as hereinafter
defined) pursuant to which Apollo has certain registration rights under the
Securities Act with respect to the shares of U.S. Filter Common Stock Apollo
will receive in the Merger. See "THE REGISTRATION RIGHTS AGREEMENT."

The Culligan Rights Agreement Amendment

Immediately prior to entering into the Merger Agreement, Culligan entered
into an amendment dated February 9, 1998 (the "Rights Agreement Amendment") to
the Rights Agreement between Culligan and American Stock Transfer & Trust
Company (successor to The First National Bank of Boston), as Rights Agent (the
"Culligan Rights Agreement") to (i) exempt the Merger Agreement and the
transactions contemplated thereunder from causing the rights issued under the
Culligan Rights Agreement (the "Culligan Rights") to become exercisable, (ii)
reduce the threshold at which a person is deemed an "Acquiring Person" under
the Culligan Rights Agreement from 15% to 9.9%, and (iii) provide that none of
U.S. Filter, Subcorp or any other person will be deemed an Acquiring Person by
virtue of the Merger Agreement and the transactions contemplated thereby. See
"THE CULLIGAN RIGHTS AGREEMENT AMENDMENT."

Anticipated Accounting Treatment

The Merger is expected to be accounted for as a pooling of interests in
accordance with generally accepted accounting principles. It is a condition to
the consummation of the Merger that each of the Companies receive a letter from
KPMG Peat Marwick LLP that the Merger will qualify as a pooling of interests.
See "THE MERGER--Anticipated Accounting Treatment."

No Appraisal Rights

U.S. Filter Stockholders and Culligan Stockholders are not entitled to
appraisal rights in connection with the Merger. See "THE MERGER--No Appraisal
Rights."

Comparison of Stockholder Rights

In considering the Stock Issuance Proposal, the Culligan Merger Proposal and
the Culligan Adjournment Proposal, as applicable, the U.S. Filter Stockholders
and the Culligan Stockholders should be aware that the rights of U.S. Filter
Stockholders and Culligan Stockholders differ in certain respects. See
"COMPARISON OF STOCKHOLDER RIGHTS."

Certain U.S. Federal Income Tax Consequences

Culligan has received an opinion of Wachtell, Lipton, Rosen & Katz, special
counsel to Culligan, to the effect that, if the Merger occurs in accordance
with the Merger Agreement, the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code for U.S. federal income tax purposes.
As a

10
<PAGE>

reorganization under Section 368(a) of the U.S. Internal Revenue Code, no gain
or loss will be recognized by the Culligan Stockholders with respect to the
U.S. Filter Common Stock received in the Merger (except for the receipt of cash
in lieu of a fractional share). See "CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES."

MARKET PRICES AND DIVIDENDS

Set forth below are the last reported sale prices of U.S. Filter Common Stock
and Culligan Common Stock on February 6, 1998, the last full trading day prior
to execution of the Merger Agreement, and on May 14, 1998, the last trading day
prior to the date of the Joint Proxy Statement/Prospectus. Also presented are
the trading values of the U.S. Filter Common Stock to be issued in the Merger
in exchange for each share of Culligan Common Stock on such dates, as
determined by applying the last reported sale price of U.S. Filter Common Stock
to an estimated Exchange Ratio calculated by assuming an Average Share Price
equal to the last reported sale price as of such date.

<TABLE>
<CAPTION>
U.S. FILTER CULLIGAN CULLIGAN
COMMON STOCK COMMON STOCK EQUIVALENT
------------ ------------ ----------
<S> <C> <C> <C>
February 6, 1998........................ $34 11/16 $37 3/4 $60
May 14, 1998............................ $33 3/16 $55 1/2 $60
</TABLE>

See "MARKET PRICE AND DIVIDEND DATA."

11
<PAGE>

RISK FACTORS

In considering whether to approve the Stock Issuance Proposal or to approve
the Culligan Merger Proposal and the Culligan Adjournment Proposal, as the
case may be, the U.S. Filter Stockholders and the Culligan Stockholders should
consider carefully the following factors relating to the Merger and to the
businesses of U.S. Filter and Culligan, together with the other information
and financial data included or incorporated by reference in this Joint Proxy
Statement/Prospectus. Information contained or incorporated by reference in
this Prospectus includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 which can be identified
by the use of forward-looking terminology such as "believes," "contemplates,"
"expects," "may," "will," "could," "should," "would," "intends," "expects,"
"anticipates," "estimates," "projects" or "continue" or the negative thereof
or other variations thereon or comparable terminology. No assurance can be
given that the future results projected, estimated or implied by any forward-
looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to vary materially from the matters covered in such
forward-looking statements. Neither U.S. Filter nor Culligan undertake any
obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

RISK FACTORS RELATING TO THE MERGER

Risk of Nonconsummation of the Merger

If the Merger and the transactions contemplated thereby are not consummated
because of the failure of either the U.S. Filter Stockholders to approve the
Stock Issuance Proposal (a "U.S. Filter Stockholder Nonapproval") or the
Culligan Stockholders to approve the Culligan Merger Proposal (a "Culligan
Stockholder Nonapproval"), U.S. Filter or Culligan, respectively, may be
obligated to pay to the other certain fees and expenses. In the event of the
termination of the Merger Agreement because of a U.S. Filter Stockholder
Nonapproval, U.S. Filter may be required to pay to Culligan up to $47 million
in liquidated damages under the terms of the Merger Agreement. See "THE MERGER
AGREEMENT--Special Payment." In the event of the termination of the Merger
Agreement because of a Culligan Stockholder Nonapproval, Culligan may be
required to pay to U.S. Filter up to $47 million in fees and expenses if
Culligan enters into a competing transaction involving a business combination
within six months of the termination of the Merger Agreement or up to
$10 million in fees and expenses if Culligan does not enter into such a
competing transaction within six months of such termination. See "THE MERGER
AGREEMENT--Fees and Expenses."

Exchange Ratio Subject to "Collar" Despite Potential Change in Relative Stock
Prices

The Exchange Ratio is expressed in the Merger Agreement as a ratio subject
to limited adjustments or a "collar." Accordingly, the Exchange Ratio will not
be adjusted to reflect the amount by which the Average Share Price of the U.S.
Filter Common Stock is greater than $35.00 or less than $32.00. As a result,
if the Average Share Price is greater than $35 or less than $32, Culligan
Stockholders will receive a number of shares of U.S. Filter Common Stock
representing a value per share of Culligan Common Stock that is greater or
less than the value per share such Culligan Stockholders would receive in the
absence of such a restriction. The price of U.S. Filter Common Stock prior to
the Effective Time, and the Average Share Price, may vary from its price at
the date of this Joint Proxy Statement/Prospectus and at the date of the
Special Meetings. Such variations may be the result of the changes in the
business, operations or prospects of U.S. Filter or Culligan, market
assessments of the likelihood that the Merger will be consummated and the
timing thereof, regulatory considerations, general market and economic
conditions and other factors. Because the Effective Time will occur at a date
later than the Special Meetings and because the Exchange Ratio is set before
the Culligan Special Meeting, there can be no assurance that the price of U.S.
Filter Common Stock on the date of the Special Meetings will be the same as
the price of U.S. Filter Common Stock as of and after the Effective Time.
Assuming the Merger and the Stock Issuance Proposal are approved, the
Effective Time will occur as soon as practicable (but in any event within two
business days) following the Special Meeting and the satisfaction or waiver of
the other conditions set forth

12
<PAGE>

in the Merger Agreement. U.S. Filter Stockholders and Culligan Stockholders
are urged to obtain current market quotations for U.S. Filter Common Stock and
Culligan Common Stock. See "THE MERGER AGREEMENT--Conditions to the Merger."

Necessity of Receiving Governmental Approvals Prior to the Merger; Possible
Divestitures and Operating Restrictions

Certain filings with, notifications to and authorizations and approvals of,
various governmental agencies, both U.S. and non-U.S., with respect to the
transactions contemplated by the Merger Agreement, relating primarily to
antitrust and securities law issues, must be made and received prior to the
consummation of the Merger. The combined enterprise may be required to divest
one or more of its product lines, or agree to various operating restrictions,
before or after receipt of stockholder approval, in order to obtain the
necessary authorizations and approvals of the Merger or to assure that
governmental authorities do not seek to enjoin the Merger. There can be no
assurance that the consummation of any such divestitures could be effected at
a fair market price or that the reinvestment of the proceeds therefrom would
produce for the combined enterprise operating profit at the same level as the
divested product lines or a commensurate rate of return on the amount of its
investment. There also can be no assurance that any operating restrictions
imposed would not adversely affect the value of the combined enterprise. No
additional stockholder approval is expected to be required or sought for any
decision by U.S. Filter or Culligan after the Special Meetings to agree to any
terms and conditions necessary to resolve any regulatory objections to the
Merger. However, if U.S. Filter and Culligan decide to agree to any such terms
and conditions after the Special Meetings, U.S. Filter and/or Culligan will
make a new solicitation of proxies if stockholder approval is required for
such decision under applicable law. See "THE MERGER--Regulatory and Third
Party Approvals" and "THE MERGER AGREEMENT--Antitrust, Governmental and Other
Approvals."

Uncertainties in Integrating Business Operations and Achieving Cost Savings

In determining that the Merger is in the best interests of U.S. Filter
Stockholders or Culligan Stockholders, as the case may be, each of the U.S.
Filter Board and the Culligan Board considered the potential relative cost
savings, operating efficiencies and other synergies that may result from the
consummation of the Merger. The consolidation of functions, the integration of
departments, systems and procedures, and relocations of staff present
significant management challenges. There can be no assurance that such actions
will be successfully accomplished as rapidly as currently expected. Moreover,
although the primary purpose of such actions will be to realize direct cost
savings and other operating efficiencies, there can be no assurance of the
extent to which such cost savings and efficiencies will be achieved.

Dilution

The shares of U.S. Filter Common Stock to be issued to Culligan Stockholders
at the Effective Time are expected to represent approximately 30.1% of the
number of shares of U.S. Filter Common Stock outstanding immediately after the
Effective Time (assuming the Average Share Price is $33 3/16). Accordingly,
the Merger will have the effect of reducing the percentage voting interest in
U.S. Filter represented by a share of U.S. Filter Common Stock immediately
prior to the Effective Time, with respect to U.S. Filter Stockholders, and the
percentage voting interest in Culligan represented by a share of Culligan
Common Stock immediately prior to the Effective Time, with respect to Culligan
Stockholders. However, as a result of the Merger, stockholders of U.S. Filter
and stockholders of Culligan will each own a voting interest in a
significantly larger enterprise.

RISK FACTORS RELATING TO A COMBINED U.S. FILTER AND CULLIGAN AFTER THE MERGER

Acquisition Strategy

In pursuit of its strategic objective of becoming the leading global single-
source provider of water and wastewater treatment systems and services, U.S.
Filter has, since 1991, acquired more than 125 United States

13
<PAGE>

based and international businesses. U.S. Filter plans to continue to pursue
acquisitions that expand the segments of the water and wastewater treatment
and water-related industries in which it participates, complement its
technologies, products or services, broaden its customer base and geographic
areas served and/or expand its global distribution network, as well as
acquisitions which provide opportunities to further and implement U.S.
Filter's one-stop-shop approach in terms of technology, distribution or
service. U.S. Filter's acquisition strategy entails the potential risks
inherent in assessing the value, strengths, weaknesses, contingent or other
liabilities and potential profitability of acquisition candidates and in
integrating the operations of acquired companies. In addition, U.S. Filter's
acquisition of Memtec Limited, an Australian corporation ("Memtec"), was
accomplished through an unsolicited tender offer, and, before or after the
Effective Time, U.S. Filter could make other such acquisitions. The level of
risk associated with such acquisitions is generally greater because frequently
they are accomplished, as was the case with the acquisition of Memtec, without
the customary representations or due diligence typical of negotiated
transactions. Although U.S. Filter and Culligan generally have been successful
in pursuing acquisitions, there can be no assurance that acquisition
opportunities will continue to be available, that the combined company will
have access to the capital required to finance potential acquisitions, that
the combined company will continue to acquire businesses or that any business
acquired will be integrated successfully or prove profitable.

International Transactions

U.S. Filter has made, and expects that it will continue to make,
acquisitions and expects to obtain contracts in markets outside the United
States. In addition, a substantial portion of the business of Culligan
includes non-United States sales. While these activities may provide important
opportunities for the combined company to offer its products and services
internationally, they also entail the risks associated with conducting
business internationally, including the risk of currency fluctuations, slower
payment of invoices, the lack in some jurisdictions of well-developed legal
systems, nationalization and possible social, political and economic
instability. In particular, U.S. Filter has significant operations in Asia
which have been and may in the future be adversely affected by current
economic conditions in that region. While the full impact of this economic
instability cannot be predicted, it could have a material adverse effect on
the combined company's revenues and profitability.

Reliance on Key Personnel

The operations of U.S. Filter are, and operations of the combined company
are anticipated to be, dependent on the continued efforts of senior
management, in particular Richard J. Heckmann, U.S. Filter's Chairman of the
Board, President and Chief Executive Officer. U.S. Filter is considering an
employment agreement for Mr. Heckmann, who does not currently have one. U.S.
Filter is also considering employment agreements for other members of senior
management, most of whom do not currently have such agreements, although the
names of such members have yet to be determined. There can be no assurance
that U.S. Filter will enter into employment agreements with Mr. Heckmann or
members of senior management. Should any of the combined company's senior
managers be unable or choose not to continue in their present roles, the
combined company's prospects could be adversely affected.

Profitability of Fixed Price Contracts

A significant portion of U.S. Filter's revenues are, and the combined
company's revenues will be, generated under fixed price contracts. To the
extent that original cost estimates are inaccurate, scheduled deliveries are
delayed or progress under a contract is otherwise impeded, revenue recognition
and profitability from a particular contract may be adversely affected. U.S.
Filter routinely records upward or downward adjustments with respect to fixed
price contracts due to changes in estimates of costs to complete such
contracts. There can be no assurance that future downward adjustments will not
be material.

Cyclicality, Seasonality and Possible Earnings Fluctuations

The sale of capital equipment within the water treatment industry is
cyclical and influenced by various economic factors including interest rates
and general fluctuations of the business cycle. A significant portion of

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U.S. Filter's revenues, and the combined company's revenues will be, derived
from capital equipment sales. While U.S. Filter sells capital equipment to
customers in diverse industries and in global markets, cyclicality of capital
equipment sales and instability of general economic conditions, including
those currently unfolding in Asian markets, could have a material adverse
effect on the revenues and profitability of U.S. Filter and of the combined
company.

The sale of water and wastewater distribution equipment and supplies is also
cyclical and influenced by various economic factors including interest rates,
land development and housing construction industry cycles. Sales of such
equipment and supplies are also subject to seasonal fluctuation in temperate
climates. The sale of water and wastewater distribution equipment and supplies
is a significant component of U.S. Filter's business and will be a significant
component of the combined company's business. Cyclicality and seasonality of
water and wastewater distribution equipment and supplies sales could have a
material adverse effect on the revenues and profitability of U.S. Filter and
of the combined company.

U.S. Filter's high-purity process piping systems have been sold principally
to companies in the semiconductor and, to a lesser extent, pharmaceutical and
biotechnology industries, and sales of those systems are critically dependent
on these industries. The success of customers and potential customers for
high-purity process piping systems is linked to economic conditions in these
respective industries, which in turn are each subject to intense competitive
pressure and are affected by overall economic conditions. The semiconductor
industry in particular has historically been, and will likely continue to be,
cyclical in nature and vulnerable to general downturns in the economy. The
semiconductor and pharmaceutical industries also represent significant markets
for U.S. Filter's water and wastewater treatment systems. Downturns in these
industries could have a material adverse effect on the revenues and
profitability of U.S. Filter and of the combined company.

Operating results from the sale of high-purity process piping systems also
can be expected to fluctuate significantly as a result of the limited pool of
existing and potential customers for these systems, the timing of new
contracts, possible deferrals or cancellations of existing contracts and the
evolving and unpredictable nature of the markets for high-purity process
piping systems.

As a result of these and other factors, U.S. Filter's and the combined
company's operating results may be subject to quarterly or annual
fluctuations. There can be no assurance that at any given time the operating
results of U.S. Filter or the combined company will meet or exceed stock
market analysts' expectations, in which event the market price of the U.S.
Filter Common Stock could be adversely affected.

Potential Environmental Risks

U.S. Filter's business and products, and those of the combined company, may
be significantly influenced by the constantly changing body of environmental
laws and regulations, which require that certain environmental standards be
met and impose liability for the failure to comply with such standards. U.S.
Filter is also subject to inherent risks associated with environmental
conditions at facilities owned, and the state of compliance with environmental
laws, by businesses acquired by U.S. Filter, including those of Culligan
should the Merger be consummated. While U.S. Filter endeavors at each of its
facilities to assure compliance with environmental laws and regulations, there
can be no assurance that U.S. Filter's operations or activities, or historical
operations by others at U.S. Filter's locations, will not result in cleanup
obligations, civil or criminal enforcement actions or private actions that
could have a material adverse effect on U.S. Filter.

In that regard, at a Connecticut ion exchange resin regeneration facility
(the "South Windsor Facility") operated by a wholly owned subsidiary of U.S.
Filter (the "South Windsor Subsidiary") acquired by U.S. Filter in October
1995 from Anjou International Company ("Anjou"), United States federal and
state environmental regulatory authorities have issued certain notices of
violation alleging multiple violations of applicable wastewater pretreatment
standards. A grand jury investigation concerning these conditions also is
pending. The South Windsor Subsidiary has reached a tentative agreement with
the United States Attorney's Office and the United States Environmental
Protection Agency ("USEPA") to settle all agency claims and investigations

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<PAGE>

relating to this matter by pleading guilty to a single violation of the
Federal Water Pollution Control Act. The proposed settlement includes a
payment of $1.36 million, including a criminal penalty of approximately
$1.0 million, and annual environmental compliance audits at the South Windsor
Facility for five years. U.S. Filter believes that this settlement will
conclude this matter in its entirety; however, there can be no assurance that
the proposed settlement will become final, and it is not expected that it
would include a formal release of all liabilities in this regard. In
connection with this proposed settlement, representatives of U.S. Filter and
the USEPA's Office of Grants and Debarment have discussed the South Windsor
Facility's debarment from participation in government contracts. Based on its
discussions with the USEPA, U.S. Filter believes that the USEPA will lift any
such debarment immediately after U.S. Filter and the USEPA agree to the
proposed settlement. The loss of revenue from a debarment, regardless of its
duration, is not expected to be material to U.S. Filter. Based upon the
anticipated settlement, U.S. Filter does not believe that this matter will
have a material adverse effect on U.S. Filter. In addition, U.S. Filter has
certain rights of indemnification from Anjou which may be available with
respect to these matters pursuant to the laws of the state of New York or the
Stock Purchase Agreement dated as of August 30, 1995 among U.S. Filter, Anjou
and Polymetrics, Inc.

With respect to a former California ion exchange resin regeneration facility
(the "El Cajon Facility") operated by a wholly owned subsidiary of U.S. Filter
(the "El Cajon Subsidiary"), the San Diego county district attorney is
investigating a hydrochloric acid spill that occurred in early 1997. In
connection with this incident, U.S. Filter and the office of the district
attorney have reached a proposed settlement (subject to final approval of the
court) whereby U.S. Filter has agreed to a civil violation of the California
Health and Safety Code and has paid a $140,000 fine, including a civil penalty
of $25,000. Pursuant to the terms of the settlement, the office of the
district attorney has agreed that it will not subject U.S. Filter (or its
subsidiaries and affiliates) to further civil or criminal prosecution for this
matter.

In addition to the foregoing, U.S. Filter's activities as owner and operator
of certain hazardous waste treatment and recovery facilities are subject to
stringent laws and regulations and compliance reviews. Failure of these
facilities to comply with those regulations could result in substantial fines
and the suspension or revocation of the facility's hazardous waste permit.
U.S. Filter serves as contract operator of various municipal and industrial
wastewater collection and treatment facilities, which were developed and are
owned by governmental or private entities. U.S. Filter and Culligan also
operate other facilities, including service deionization centers and
manufacturing facilities, that discharge wastewater in connection with routine
operations. Under certain service contracts and applicable environmental laws,
U.S. Filter as operator of such facilities may incur liabilities in the event
those facilities experience malfunctions or discharge wastewater which does
not meet applicable permit limits and regulatory requirements. In some cases,
the potential for such liabilities depends upon design or operational
conditions over which U.S. Filter has limited, if any, control. In other
matters, U.S. Filter has been notified by the United States Environmental
Protection Agency that it is a potentially responsible party under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
("CERCLA") at certain sites to which U.S. Filter or its predecessors allegedly
sent waste in the past. It is possible that U.S. Filter could receive other
such notices under CERCLA or analogous state laws in the future. Based on
sites which are currently known to U.S. Filter that may require remediation,
U.S. Filter does not believe that its liability, if any, relating to such
sites will be material. However, there can be no assurance that such matters
will not be material. In addition, to some extent, the liabilities and risks
imposed by environmental laws on U.S. Filter's and the combined company's
customers may adversely impact demand for certain of U.S. Filter's and the
combined company's products or services or impose greater liabilities and
risks on U.S. Filter and the combined company, which could also have an
adverse effect on the competitive and financial position of U.S. Filter and
the combined company.

In 1995, Culligan purchased an equity interest in Anvil Holdings, Inc. As a
result of this transaction, Culligan assumed certain environmental liabilities
associated with soil and groundwater contamination at Anvil Knitwear's
Asheville Dyeing and Finishing Plant (the "Plant") in Swannanoa, North
Carolina. Since 1990, Culligan has delineated and monitored the contamination
pursuant to an Administrative Consent Order entered into with the North
Carolina Department of Environment, Health and Natural Resources related to
the closure of

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an underground storage tank at the site. Groundwater testing at the Plant and
at two adjoining properties has shown levels of a cleaning solvent believed to
be from the Plant above action levels under state guidelines. Culligan has
begun remediation of the contamination. Culligan anticipates that the
potential cost of further monitoring and corrective measures to address the
groundwater problem under applicable laws will not have a material adverse
effect on the financial position or the results of operations of Culligan,
however, because of the full extent of the required cleanup has not been
determined, there can be no assurance that this matter will not have a
material adverse effect on Culligan's financial position or the results of
operations of Culligan.

Certain of U.S. Filter's and Culligan's facilities contain or in the past
contained underground storage tanks which may have caused soil or groundwater
contamination. At one formerly owned site, Culligan is investigating, and has
taken certain actions to correct, contamination that may have resulted from a
former underground storage tank. Based on the amount of contamination believed
to have been present when the tank was removed, and the probability that some
of the contamination may have originated from nearby properties, U.S. Filter
believes, although there can be no assurance, that this matter will not have a
material adverse effect on U.S. Filter's financial position or results of
operations.

Competition

All of the markets in which U.S. Filter competes and the combined company
will compete are highly competitive, and most are fragmented, with numerous
regional and local participants. There are competitors of U.S. Filter in
certain markets that are divisions or subsidiaries of companies that have
significantly greater resources than U.S. Filter or the combined company. U.S.
Filter's process water treatment business competes in the United States and
internationally principally on the basis of product quality and
specifications, technology, reliability, price, customized design and
technical qualifications, reputation and prompt availability of local service.
U.S. Filter's wastewater treatment business competes in the United States and
internationally largely on the basis of the same factors, except that pricing
considerations can be predominant among competitors that have sufficient
technical qualifications, particularly in the municipal contract bid process.
U.S. Filter's filtration and separation business competes in the United States
and internationally principally on the basis of price, technical expertise,
product quality and responsiveness to customer needs, including service and
technical support. U.S. Filter's industrial products and services business
competes in the United States and internationally principally on the basis of
quality, service and price. In connection with the marketing of waterworks
distribution equipment and supplies, U.S. Filter competes not only with a
large number of independent wholesalers and with other distribution chains
similar to U.S. Filter, but also with manufacturers who sell directly to
customers. The principal methods of competition for U.S. Filter's waterworks
distribution business include prompt local service capability, product
knowledge by the sales force and service branch management, and price. U.S.
Filter's consumer products business competes with companies with national
distribution networks, businesses with regional scope, and local product
assemblers or service companies, as well as retail outlets. U.S. Filter
believes that there are thousands of participants in the residential water
business. The consumer products business, which upon consummation of the
Merger will include Culligan's current residential operations, competes
principally on the basis of price, product quality and "taste," service,
distribution capabilities, geographic presence and reputation. Competitive
pressures, including those described above, and other factors could cause U.S.
Filter or the combined company to lose market share or could result in
significant price erosion, either of which could have a material adverse
effect upon the financial position, results of operations and cash flows of
U.S. Filter or the combined company.

Potential Risks Related to Water Rights and Water Transfers

U.S. Filter recently acquired more than 47,000 acres of agricultural land
(the "Properties"), situated in the Southwestern United States, the
substantial majority of which are in Imperial County, California (the "IID
Properties") located within the Imperial Irrigation District (the "IID").
Substantially all of the Properties are currently leased to third party
agricultural tenants, including prior owners of the Properties. U.S. Filter
acquired the Properties with appurtenant water rights, and is actively seeking
to acquire additional properties with water rights, primarily in the
Southwestern and Western United States. U.S. Filter may seek in the future to
transfer

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<PAGE>

water attributable to water rights appurtenant to the Properties, particularly
the IID Properties (the "IID Water"). However, since the IID holds title to
all of the water rights within the IID in trust for the landowners, the IID
would control the timing and terms of any transfers of IID Water by U.S.
Filter. The circumstances under which transfers of water can be made and the
profitability of any transfers are subject to significant uncertainties,
including hydrologic risks of variable water supplies, risks presented by
allocations of water under existing and prospective priorities, and risks of
adverse changes to or interpretations of United States federal, state and
local laws, regulations and policies. Transfers of IID Water attributable to
water rights appurtenant to the IID Properties (the "IID Water Rights") are
subject to additional uncertainties. Allocations of Colorado River water,
which is the source of all water deliveries to the IID Properties, are subject
to limitations under complex international treaties, interstate compacts,
United States federal and state laws and regulations, and contractual
arrangements and, in times of drought, water deliveries could be curtailed by
the United States government. Further, any transfers of IID Water would
require the approval of the United States Secretary of the Interior. Even if a
transfer were approved, other California water districts and users could
assert claims adverse to the IID Water Rights, including but not limited to
claims that the IID has failed to satisfy United States federal law and
California constitutional requirements that IID Water must be put to
reasonable and beneficial use. A finding that the IID's water use is
unreasonable or nonbeneficial could adversely impact title to IID Water Rights
and the ability to transfer IID Water. Water transferred by the IID to
metropolitan areas of Southern California, such as San Diego, would be
transported through aqueducts owned or controlled by the Metropolitan Water
District, a quasi-governmental agency (the "MWD"). The transportation cost for
any transfer of IID Water and the volume of water which the MWD can be
required to transport at any time are subject to California laws of uncertain
application, some aspects of which are currently in litigation. The
uncertainties associated with water rights could have a material adverse
effect on the future profitability of U.S. Filter or the combined company.

Technological and Regulatory Risks

Portions of the water and wastewater treatment business are characterized by
changing technology, competitively imposed process standards and regulatory
requirements, each of which influences the demand for U.S. Filter's products
and services. Changes in regulatory or industrial requirements may render
certain of U.S. Filter's or the combined company's treatment products and
processes obsolete. Acceptance of new products may also be affected by the
adoption of new government regulations requiring stricter standards. U.S.
Filter's and the combined company's ability to anticipate changes in
technological and regulatory standards and to develop successfully and
introduce new and enhanced products on a timely basis will be a significant
factor in U.S. Filter's and the combined company's ability to grow and to
remain competitive. There can be no assurance that U.S. Filter or the combined
company will be able to achieve the technological advances that may be
necessary for it to remain competitive or that certain of its products will
not become obsolete. In addition, U.S. Filter is, and the combined company
will be, subject to the risks generally associated with new product
introductions and applications, including lack of market acceptance, delays in
development or failure of products to operate properly. The market growth
potential of acquired in-process research and development is subject to
certain risks, including costs to develop and commercialize such products, the
cost and feasibility of production of products utilizing the applicable
technologies, introduction of competing technologies, and market acceptance of
the products and technologies involved.

There can be no assurance that U.S. Filter's or the combined company's
existing or any future trademarks or patents, including any acquired in the
Merger, will be enforceable or will provide substantial protection from
competition or be of commercial benefit to U.S. Filter or the combined
company. In addition, the laws of certain non-United States countries may not
protect proprietary rights to the same extent as do the laws of the United
States. Successful challenges to certain of U.S. Filter's or the combined
company's patents or trademarks could materially adversely affect its
competitive and financial position.

Municipal Water and Wastewater Business

A significant percentage of U.S. Filter's revenues is, and the combined
company's will be, derived from municipal customers. While municipalities
represent an important part of the water and wastewater treatment

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<PAGE>

industry, contractor selection processes and funding for projects in the
municipal sector entail certain additional risks not typically encountered
with industrial customers. Competition for selection of a municipal contractor
typically occurs through a formal bidding process which can require the
commitment of resources and greater lead times than industrial projects. In
addition, this segment is dependent upon the availability of funding at the
local level, which may be the subject of increasing pressure as local
governments are expected to bear a greater share of the cost of public
services.

Year 2000 Risks

The Year 2000 issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from
the application of computer programs which have been written using two digits,
rather than four, to define the applicable year of business transactions. Most
of U.S. Filter's and Culligan's operating systems with Year 2000 issues have
been modified to address those issues; accordingly, management does not
anticipate any significant costs, problems or uncertainties associated with
becoming Year 2000 compliant. U.S. Filter and Culligan are each currently
developing plans intended to assure that their other internal operating
systems with Year 2000 issues are modified on a timely basis. Suppliers,
customers and creditors of U.S. Filter and Culligan also face similar Year
2000 issues. A failure to successfully address the Year 2000 issue could have
a material adverse effect on the business or results of operations of U.S.
Filter or the combined company.

Shares Eligible for Future Sale

The market price of the U.S. Filter Common Stock could be adversely affected
by the availability for public sale of shares held on March 31, 1998 by U.S.
Filter Stockholders, including: (i) up to 3,646,783 shares which may be
delivered by Laidlaw Inc. or its affiliates ("Laidlaw"), at Laidlaw's option
in lieu of cash, at maturity pursuant to the terms of 5 3/4% Exchangeable
Notes due 2000 of Laidlaw (the amount of shares or cash delivered or paid to
be dependent within certain limits upon the value of the U.S. Filter Common
Stock at maturity), or sold from time to time in accordance with Rule 144(k)
under the Securities Act; (ii) 7,636,364 shares issuable upon conversion of
U.S. Filter's 6% Convertible Subordinated Notes due 2005 at a conversion price
of $18.33 per share of U.S. Filter Common Stock; (iii) 10,481,013 shares
issuable upon conversion of U.S. Filter's 4 1/2% Convertible Subordinated
Notes due 2001 at a conversion price of $39.50 per share of U.S. Filter Common
Stock; (iv) 1,200,000 shares issuable upon exercise of warrants, 600,000 at an
exercise price of $50.00 per share and 600,000 at an exercise price of $60.00
per share, in each case expiring on September 17, 2007 and exercisable at any
time after the first sale of water from water rights appurtenant to the
Properties (the "Warrants"); (v) 8,482,926 outstanding shares which are
subject to agreements pursuant to which the holders have certain rights to
request U.S. Filter to register the sale of such holders' U.S. Filter Common
Stock under the Securities Act and/or, subject to certain conditions, to
include certain percentages of such shares in other registration statements
filed by U.S. Filter, of which such rights as to 8,000,000 shares are not
exercisable until February 17, 2000; and (vi) 5,815,450 outstanding shares
that are currently registered for sale under the Securities Act, pursuant to a
shelf registration statement. In addition, U.S. Filter has registered for sale
under the Securities Act 2,903,207 shares which may be issuable by U.S. Filter
from time to time in connection with acquisitions of businesses or assets from
third parties. Upon consummation of the Merger, approximately 13,260,692
additional shares received by Apollo will be subject to agreements pursuant to
which Apollo will have certain rights to request U.S. Filter to register the
sale of Apollo's shares of U.S. Filter Common Stock under the Securities Act
and/or, subject to certain conditions (assuming an Exchange Ratio of 1.8079
which is based on an assumed Average Share Price of $33 3/16, the closing
price of U.S. Filter Common Stock on May 14, 1998). See "THE REGISTRATION
RIGHTS AGREEMENT" and "THE SUPPORT/VOTING AGREEMENTS."

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THE SPECIAL MEETINGS

GENERAL

This Joint Proxy Statement/Prospectus is being furnished to U.S. Filter
Stockholders in connection with the solicitation of proxies by the Board of
Directors of U.S. Filter for use at the U.S. Filter Special Meeting to be held
on Monday, June 15, 1998, at the offices of Bear, Stearns & Co. Inc., 245 Park
Avenue, New York, New York 10167 in the fifth floor auditorium, commencing at
9:30 a.m., local time, and at any adjournment or postponement thereof.

This Joint Proxy Statement/Prospectus is also being furnished to Culligan
Stockholders in connection with the solicitation of proxies by the Board of
Directors of Culligan for use at the Culligan Special Meeting to be held on
Monday, June 15, 1998, at the offices of Bear, Stearns & Co. Inc., 245 Park
Avenue, New York, New York 10167 in the fifth floor auditorium, commencing at
11:00 a.m., local time, and at any adjournment or postponement thereof.

This Joint Proxy Statement/Prospectus, the Letter to U.S. Filter
Stockholders, the Notice of the U.S. Filter Special Meeting and the form of
proxy for use at the U.S. Filter Special Meeting are first being mailed to
U.S. Filter Stockholders on or about May 15, 1998. This Joint Proxy
Statement/Prospectus, the Letter to Culligan Stockholders, the Notice of the
Culligan Special Meeting and the form of proxy for use at the Culligan Special
Meeting are first being mailed to Culligan Stockholders on or about May 15,
1998.

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETINGS

U.S. Filter Special Meeting. At the U.S. Filter Special Meeting, U.S. Filter
Stockholders will consider and vote on:

1. The Stock Issuance Proposal, which is a proposal to approve, in
connection with the Merger, U.S. Filter's issuance in exchange for each
issued and outstanding share (other than treasury shares) of Culligan
Common Stock, 1.714 shares of U.S. Filter Common Stock if the Average Share
Price is equal to or greater than $35; provided, however, that (i) if the
Average Share Price is less than $35, but greater than or equal to $32,
then the exchange ratio shall be equal to the quotient obtained (rounded to
the nearest ten-thousandth of a share) by dividing $60 by the Average Share
Price; and (ii) if the Average Share Price is less than $32, the exchange
ratio shall be equal to 1.875. A copy of the Merger Agreement is attached
as Annex A to this Joint Proxy Statement/Prospectus.

2. Such other business as may properly come before the U.S. Filter
Special Meeting.

Culligan Special Meeting. At the Culligan Special Meeting, Culligan
Stockholders will consider and vote on:

1. The Culligan Merger Proposal, which is a proposal to approve and adopt
the Merger Agreement, pursuant to which, among other things, (i) Subcorp
will be merged with and into Culligan with the result that Culligan will
become a wholly owned subsidiary of U.S. Filter, and (ii) U.S. Filter will
issue in exchange for each issued and outstanding share (other than
treasury shares) of Culligan Common Stock, 1.714 shares of U.S. Filter
Common Stock if the Average Share Price is equal to or greater than $35;
provided, however, that (i) if the Average Share Price is less than $35,
but greater than or equal to $32, then the exchange ratio shall be equal to
the quotient obtained (rounded to the nearest ten-thousandth of a share) by
dividing $60 by the Average Share Price; and (ii) if the Average Share
Price is less than $32, the exchange ratio shall be equal to 1.875. A copy
of the Merger Agreement is attached as Annex A to this Joint Proxy
Statement/Prospectus.

2. The Culligan Adjournment Proposal, which is a proposal for the
adjournment of the Culligan Special Meeting, if necessary, to permit
further solicitation of proxies in the event that there are not sufficient
votes at the time of the Culligan Special Meeting to approve the foregoing
proposal.

3. Such other business as may properly come before the Culligan Special
Meeting.

KPMG Peat Marwick LLP has served as the principal accountants for each of
U.S. Filter and Culligan for the current year and the most recently completed
fiscal year. Representatives of KPMG Peat Marwick LLP are expected to be
present at each of the Special Meetings, will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond
to appropriate questions.

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<PAGE>

RECORD DATE; VOTE REQUIRED; VOTING AT THE MEETINGS

U.S. Filter. The Board of Directors of U.S. Filter has fixed the close of
business on April 23, 1998 as the U.S. Filter Record Date for determination of
U.S. Filter Stockholders entitled to notice of and to vote at the U.S. Filter
Special Meeting. Accordingly, only U.S. Filter Stockholders of record on the
U.S. Filter Record Date, will be entitled to notice of and to vote at the U.S.
Filter Special Meeting. Each holder of record of U.S. Filter Common Stock on
the U.S. Filter Record Date is entitled to cast one vote per share,
exercisable in person or by a properly executed proxy, at the U.S. Filter
Special Meeting. As of the U.S. Filter Record Date, there were 108,515,187
shares of U.S. Filter Common Stock outstanding and entitled to vote which were
held by approximately 5,657 holders of record.

Pursuant to the U.S. Filter Certificate, the NYSE rules and the DGCL, the
affirmative vote of the holders of a majority of the U.S. Filter Common Stock
entitled to vote and present in person or represented by proxy at the U.S.
Filter Special Meeting is required to approve and adopt the Stock Issuance
Proposal. As of the U.S. Filter Record Date, the directors and executive
officers of U.S. Filter and certain of their affiliates may be deemed to be
beneficial owners of 3,355,673 shares or approximately 3.1% of the outstanding
U.S. Filter Common Stock and each such person has advised U.S. Filter that
such person intends to vote in favor of the Stock Issuance Proposal.

In the event that U.S. Filter has the right to terminate the Merger
Agreement for any reason, the U.S. Filter Board may, in the exercise of its
fiduciary duty, make determinations (i) whether to terminate the Merger
Agreement or to waive the condition that gives rise to such right to terminate
the Merger Agreement and proceed to the consummation of the Merger, and (ii)
if it determines to waive the condition giving rise to such right to terminate
and proceed to the consummation of the Merger, whether or not to resolicit the
approval of the Stock Issuance Proposal. A resolicitation of the Stock
Issuance Proposal with an updated Joint Proxy Statement/Prospectus may be
required in the event U.S. Filter waives or amends any conditions material to
the U.S. Filter Stockholders, including the condition that each of U.S. Filter
and Culligan receive a letter from KPMG Peat Marwick LLP that the Merger will
qualify for the pooling of interests accounting treatment. However, U.S.
Filter does not presently intend to waive or amend any such material
condition. See "THE MERGER AGREEMENT--Termination, Amendment and Waiver" and
"THE MERGER--Anticipated Accounting Treatment."

Culligan. The Culligan Board has fixed the close of business on April 23,
1998 as the Culligan Record Date for determination of Culligan Stockholders
entitled to notice of and to vote at the Culligan Special Meeting.
Accordingly, only Culligan Stockholders of record on the Culligan Record Date,
will be entitled to notice of and to vote at the Culligan Special Meeting.
Each holder of record of Culligan Common Stock on the Culligan Record Date is
entitled to cast one vote per share, exercisable in person or by a properly
executed proxy, at the Culligan Special Meeting. As of the Culligan Record
Date, there were 25,875,754 shares of Culligan Common Stock outstanding and
entitled to vote which were held by approximately 2,654 holders of record.

Pursuant to the Culligan Certificate and the DGCL, (i) the affirmative vote
of the holders of a majority of the Culligan Common Stock outstanding and
entitled to vote thereon is required to approve and adopt the Culligan Merger
Proposal, and (ii) the affirmative vote of a majority of the Culligan Common
Stock entitled to vote and present in person or represented by proxy at the
Culligan Special Meeting is required to approve and adopt the Culligan
Adjournment Proposal. As of the Culligan Record Date, the directors and
executive officers of Culligan and certain of their affiliates may be deemed
to be beneficial owners of approximately .03% of the outstanding Culligan
Common Stock and each such person has advised Culligan that such person
intends to vote in favor of the Culligan Merger Proposal and the Culligan
Adjournment Proposal. In addition, Apollo, which as of the Culligan Record
Date beneficially owned in the aggregate approximately 28.3% of the
outstanding Culligan Common Stock, has agreed to vote or direct the vote of
all Culligan Common Stock over which Apollo has voting power or control in
favor of the Culligan Merger Proposal. See "THE SUPPORT/VOTING AGREEMENTS."

In the event that Culligan has the right to terminate the Merger Agreement
for any reason, the Culligan Board may, in the exercise of its fiduciary duty,
make determinations (i) whether to terminate the Merger Agreement or to waive
the condition that gives rise to such right to terminate the Merger Agreement
and proceed

21
<PAGE>

to the consummation of the Merger, and (ii) if it determines to waive the
condition giving rise to such right to terminate and proceed to the
consummation of the Merger, whether or not to resolicit the approval of the
Culligan Merger Proposal. A resolicitation of the Culligan Merger Proposal
with an updated Joint Proxy Statement/Prospectus may be required in the event
Culligan waives or amends any conditions material to the Culligan
Stockholders, including the condition that each of U.S. Filter and Culligan
receive a letter from KPMG Peat Marwick LLP that the Merger will qualify for
the pooling of interests accounting treatment. However, Culligan does not
presently intend to waive or amend any such material condition. See "THE
MERGER AGREEMENT--Termination, Amendment and Waiver" and "THE MERGER--
Anticipated Accounting Treatment."

VOTING AND REVOCATION OF PROXIES

All U.S. Filter Stockholders and Culligan Stockholders who are entitled to
vote and are represented at the U.S. Filter Special Meeting (in the case of
U.S. Filter Stockholders) or at the Culligan Special Meeting (in the case of
Culligan Stockholders) by properly executed proxies received prior to or at
such meeting and not revoked will be voted at such meeting in accordance with
the instructions indicated in such proxies. THE U.S. FILTER BOARD UNANIMOUSLY
RECOMMENDS THAT U.S. FILTER STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF
THE STOCK ISSUANCE PROPOSAL. THE CULLIGAN BOARD UNANIMOUSLY RECOMMENDS THAT
CULLIGAN STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF EACH OF THE
CULLIGAN MERGER PROPOSAL AND THE CULLIGAN ADJOURNMENT PROPOSAL. Accordingly,
if no instructions are indicated, such proxies will be voted, in the case of
U.S. Filter Stockholders, FOR approval and adoption of the Stock Issuance
Proposal or, in the case of Culligan Stockholders, FOR approval and adoption
of the Culligan Merger Proposal and the Culligan Adjournment Proposal.

If any other matters are properly presented at the U.S. Filter Special
Meeting (in the case of U.S. Filter Stockholders) or at the Culligan Special
Meeting (in the case of Culligan Stockholders) for consideration, the persons
named in the enclosed form of proxy, and acting thereunder, will have
discretion to vote on such matters in accordance with their best judgment
(unless authorization to use such discretion is withheld). Neither U.S. Filter
nor Culligan is aware of any matters expected to be presented at its
respective meetings other than as described in its respective Notices of
Special Meeting.

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of U.S. Filter or the Secretary of Culligan, as the case
may be, before the taking of the vote at the relevant meeting, a written
notice of revocation bearing a later date than the date of the proxy, (ii)
duly executing a later-dated proxy relating to the same shares and delivering
it to the Secretary of U.S. Filter or the Secretary of Culligan, as the case
may be, before the taking of the vote at the U.S. Filter Special Meeting or
the Culligan Special Meeting, as the case may be, or (iii) attending the
relevant meeting and voting in person. In order to vote in person at either
the U.S. Filter Special Meeting or the Culligan Special Meeting, U.S. Filter
Stockholders and Culligan Stockholders must attend the relevant meeting and
cast their votes in accordance with the voting procedures established for such
meeting. Attendance at a meeting will not in and of itself constitute a
revocation of a proxy. Any written notice of revocation or subsequent proxy
must be sent so as to be delivered at or before the taking of the vote at the
meeting as follows:

(i) in the case of U.S. Filter Stockholders, to United States Filter
Corporation, 40-004 Cook Street, Palm Desert, California 92211, Telecopy:
(760) 346-4024, Attention: Corporate Secretary; and

(ii) in the case of Culligan Stockholders, to Culligan Water
Technologies, Inc., One Culligan Parkway, Northbrook, Illinois 60062-6209,
Telecopy: (847) 205-6050, Attention: Secretary.

U.S. Filter Stockholders and Culligan Stockholders who require assistance in
changing or revoking a proxy should contact the Proxy Solicitor at its address
or phone numbers indicated on the back cover of this Joint Proxy
Statement/Prospectus.

Pursuant to the U.S. Filter Certificate and applicable law, broker non-votes
and abstaining votes will not be counted in favor of the Stock Issuance
Proposal and will not be treated as votes cast on such proposal. Since the
Stock Issuance Proposal requires a majority of the shares of the U.S. Filter
Common Stock entitled to vote and represented at the U.S. Filter Special
Meeting, abstentions will have the effect of a vote against the proposal,
while broker non-votes will not affect the outcome of the vote on the
proposal.

22
<PAGE>

Pursuant to the Culligan Certificate and applicable law, broker non-votes
and abstaining votes will not be counted in favor of the Culligan Merger
Proposal or the Culligan Adjournment Proposal and will not be treated as votes
cast on such proposals. Since the Culligan Merger Proposal requires the
affirmative vote of a majority of the outstanding Culligan Common Stock,
abstentions and broker non-votes will have the same effect as votes against
such proposal.

SOLICITATION OF PROXIES

The expenses of the respective solicitations for the Culligan and U.S.
Filter Special Meetings will be borne by Culligan and U.S. Filter, subject to
each party's obligation to reimburse the other for its expenses under certain
circumstances. See "THE MERGER AGREEMENT--Fees and Expenses." In addition to
solicitation by mail, proxies may be solicited by directors, officers and
employees of Culligan and U.S. Filter in person or by telephone, telegram or
other means of communication. These persons will receive no additional
compensation for solicitation of proxies, but may be reimbursed for reasonable
out-of-pocket expenses in connection with such solicitation. U.S. Filter and
Culligan have retained MacKenzie Partners, Inc. at an estimated cost of
$15,000, plus reimbursement of expenses, to assist in its solicitation of
proxies from brokers, nominees, institutions and individuals. Arrangements
will also be made by U.S. Filter and Culligan with custodians, nominees and
fiduciaries for forwarding of proxy solicitation materials to beneficial
owners of shares held of record by such custodians, nominees and fiduciaries,
and U.S. Filter and Culligan will reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith.

U.S. Filter Stockholders and Culligan Stockholders may contact MacKenzie
Partners, Inc., at its address and phone numbers indicated on the back cover
to this Joint Proxy Statement/Prospectus for information about voting on any
of the Stock Issuance Proposal, the Culligan Merger Proposal or the Culligan
Adjournment Proposal or for additional copies of this Joint Proxy
Statement/Prospectus, proxies or for documents incorporated herein by
reference.

THE COMPANIES

U.S. FILTER

U.S. Filter is a leading global provider of industrial and municipal water
and wastewater treatment systems, products and services, with an installed
base of systems that U.S. Filter believes is one of the largest worldwide.
U.S. Filter offers a single-source solution to its customers through what U.S.
Filter believes is the industry's broadest range of cost-effective systems,
products, services and proven technologies. U.S. Filter markets a broad line
of waterworks distribution products and services. In addition, U.S. Filter has
one of the industry's largest networks of sales and service and distribution
facilities through more than 600 locations including 88 manufacturing plants
in 33 countries. U.S. Filter capitalizes on its large installed base,
extensive distribution network and manufacturing capabilities to provide
customers with ongoing local service and maintenance. U.S. Filter is a leading
provider of outsourced water services, including the operation of water and
wastewater treatment systems at customer sites. In addition, U.S. Filter is
actively involved in the development of privatization initiatives for
municipal water treatment facilities throughout the world and, specifically,
in the United States, Mexico and Canada. U.S. Filter also owns a significant
amount of properties with appurtenant water rights in the Western and
Southwestern United States, a substantial portion of which is leased to
agricultural tenants.

Global population growth, economic expansion, scarcity of available water
resources, heightened public concern about water quality and growing
regulatory and legislative requirements have resulted in: (i) continued growth
of the multibillion dollar water and wastewater treatment industry; and (ii)
heightened demand for increasingly complex water and wastewater treatment
systems. The water treatment industry is highly fragmented, with numerous
regional participants who provide customers with a limited range of water and
wastewater treatment solutions. U.S. Filter differentiates itself from
competitors by serving as a single-source water and wastewater treatment
provider capable of designing, manufacturing, operating, financing and
maintaining water and wastewater systems on a local basis for its customers.
U.S. Filter's customer base includes a broad range of major industrial
customers, which require treated water as a necessary component of many
products and industrial processes and which must treat their wastewater, and
municipalities, which treat water and wastewater for their communities.

23
<PAGE>

Strategy

U.S. Filter's overall strategy is to enhance earnings growth by
strengthening its position as a leading global single-source provider of water
and wastewater treatment systems, products and services. U.S. Filter continues
to implement this strategy by pursuing the following objectives:

. Expand global market presence and single-source capabilities

. Pursue acquisitions that provide a strategic fit and contribute to
revenue and earnings growth

. Realize synergies, cost savings and economies of scale in operations

. Capitalize on distribution strength to enhance local sales and service
capabilities

. Pursue cross-selling opportunities among operating groups

. Capitalize on outsourcing and privatization opportunities

Systems, Products and Services

U.S. Filter conducts its operations primarily within six operating groups,
each of which is described briefly below:

North American Process Water Group

U.S. Filter's North American Process Water Group provides single-source
solutions for the treatment of industrial process water and municipal drinking
water through what U.S. Filter believes to be one of the industry's broadest
range of treatment systems, services and proven technologies. The North
American Process Water Group designs, engineers, manufactures and installs
pre-engineered and customized systems for the treatment of industrial process
water and municipal drinking water utilizing a broad range of treatment
technologies that can be combined and configured to meet wide-ranging customer
needs. Through the North American Process Water Group, U.S. Filter is also a
leading provider of service deionization ("SDI") and outsourced water services
for industrial and commercial customers.

In addition, U.S. Filter's North American Process Water Group sells,
installs and services in certain parts of the United States a wide range of
products which address household water issues, including water softening and
conditioning equipment and other products installed at the point of entry to a
residential water system, as well as point-of-use filtration units. U.S.
Filter also sells five-gallon bottled water, principally on a route basis.
U.S. Filter currently does not participate in any other segment of the bottled
water business.

North American Wastewater Group

U.S. Filter's North American Wastewater Group is a leading provider of
systems and services to treat and recycle municipal and industrial wastewater,
and of hazardous waste treatment and recovery services. The North American
Wastewater Group also provides services under municipal and industrial
wastewater treatment plant maintenance and operation contracts, and is
actively involved in the development of privatization initiatives for
municipal wastewater treatment facilities in the United States, Mexico and
Canada.

WaterWorks Distribution Group

U.S. Filter's WaterWorks Distribution Group markets a broad line of
waterworks distribution products and services. U.S. Filter believes that it is
one of the largest providers of such products and services in the United
States through a network of approximately 130 branch and service locations.
U.S. Filter further believes that the WaterWorks Distribution Group's strong
relationships with municipal customers will permit it to capitalize on
opportunities to retrofit, replace and repair aging water infrastructure in
the United States.

International Water and Wastewater Group

U.S. Filter's International Water and Wastewater Group has sales and
operations in 33 countries outside the United States, principally in Europe,
Asia, Latin America and the Middle East. The International Water and
Wastewater Group's approximately 170 international sales, manufacturing,
regeneration and distribution facilities provide equipment, systems and
services for the treatment of industrial process water, drinking water and
wastewater to industrial and municipal customers worldwide. Through the
International Water and Wastewater Group, U.S. Filter is also a leading
provider of SDI and outsourced water services for industrial and commercial
customers outside of North America.

24
<PAGE>

Filtration/Separation Group

The Filtration/Separation Group includes most of the businesses acquired
through the acquisition of Memtec and U.S. Filter's ceramic membrane and metal
screens businesses. Such businesses design, engineer, manufacture and market
large volume membrane-based fluid purification systems used primarily for the
purification of wastewater, drinking water and process water and for
recycling. The Filtration/Separation Group also designs, engineers,
manufactures and markets standard and proprietary filter housings and
disposable filters used for the fine filtration of liquid and gas streams,
which are sold primarily in the chemical processing, coatings, oil and gas,
food and beverage and electronics industries. The Filtration/Separation Group
also manufactures and markets filters and filter systems that use fine
metallic fibers as the filtration media for industrial applications used in
high temperature, high pressure and highly corrosive environments and which
are distributed primarily to engineering companies and indirect end-users. In
addition, the Filtration/Separation Group manufactures and markets a broad
range of filter sheets, discs and cartridges used primarily in the food and
beverage and pharmaceutical industries.

Industrial Products and Services Group

The Industrial Products and Services Group includes the businesses acquired
through the acquisition of The Kinetics Group, Inc. ("Kinetics"), and is a
leading United States manufacturer and supplier of sophisticated high-purity
process piping systems for the handling of water, gases and chemicals. Such
systems are provided primarily to the microelectronics, pharmaceutical and
biotechnology industries. The Industrial Products and Services Group offers
its customers turnkey and design/build operations, including comprehensive and
technically advanced engineering and design services, quality assurance and
control services, program management services and manufacturing of specialty
components. The Industrial Products and Services Group is also a global leader
in the manufacturing and distribution of surface finishing and preparation
systems, including profiling, peening, descaling, degreasing, deflashing,
deburring and washing for the foundry, automotive, aeronautical, concrete, oil
and gas, and metal finishing industries.

Recent Acquisitions

On December 9, 1997, U.S. Filter acquired approximately 96% of the
outstanding ordinary shares (the "Memtec Shares") of Memtec pursuant to a
tender offer. A compulsory acquisition by U.S. Filter of the remaining Memtec
Shares was consummated on February 5, 1998. The total purchase price for
Memtec was approximately $397.2 million in cash (including transaction costs
of approximately $10.6 million), and the acquisition was accounted for as a
purchase. Memtec designs, engineers, manufactures and markets an extensive
range of filtration products and systems worldwide, with operations in the
United States, Europe and the Pacific Rim. Additionally, on January 16, 1998
U.S. Filter acquired all of the outstanding shares of common stock of Kinetics
in exchange for 5,803,803 shares of U.S. Filter Common Stock. The acquisition
of Kinetics was effective as of December 31, 1997, and accounted for as a
pooling of interests. Kinetics is a leading United States manufacturer and
supplier of sophisticated high-purity process piping systems for the handling
of gases, water and chemicals. Such systems are provided principally to the
microelectronics, pharmaceutical and biotechnology industries, where they are
critical to operations.

Memtec

Memtec operates through four divisions, each of which targets specific
segments of filtration and separation, and complements U.S. Filter's existing
businesses.

The Memcor division designs, engineers, manufactures and markets large
volume membrane-based fluid purification systems used primarily for the
purification of wastewater, drinking water and process water and for
recycling. These systems feature Memtec's strategically important and
proprietary continuous microfiltration ("CMF") technology. CMF membranes are
frequently more effective than competing technologies in the removal of
chlorine-resistant, water-borne pathogens, while also providing greater
tolerance to feed stream variation and requiring minimal use of chemicals and
human resources. A distinguishing feature of the CMF-based systems is the
patented process which allows the system's membranes to be cleaned without
being removed from the filter system. This feature permits high-volume, long-
term throughput by enabling the user to

25
<PAGE>

avoid frequent shutdowns for filter changeover, and allows extended filter
use. As a result, CMF- based systems are generally cost-competitive when
compared to other, less effective methods of filtration.

The Filterite division designs, engineers, manufactures and markets standard
and proprietary filter housings and disposable filters used for the fine
filtration of liquid and gas streams. These products are sold primarily in the
chemical processing, coatings, oil and gas, food and beverage and electronics
industries.

The Fluid Dynamics division manufactures and markets filters and filter
systems that use fine metallic fibers as the filtration media for industrial
applications used in high temperature, high pressure and highly corrosive
environments. Fluid Dynamics' products are distributed primarily to
engineering companies and direct end-users.

The Seitz division manufactures and markets a broad range of filter sheets,
discs and cartridges used primarily in the food and beverage and
pharmaceutical industries.

U.S. Filter believes that the business of membrane filtration as a means of
treating water and wastewater will be driven by (i) global industrialization,
particularly in areas with poor-quality water supplies; (ii) diminishing water
resources and diminishing water quality; (iii) increasing use of membrane
filtration in applications that traditionally have used sand filtration; and
(iv) rising concern about chlorine-tolerant disease-causing pathogens found in
municipal water.

U.S. Filter believes that the acquisition of Memtec will further broaden
U.S. Filter's product offerings and technological capabilities through access
to Memtec's key proprietary filtration technologies. U.S. Filter also believes
that Memtec's technologies complement many of the products and services
currently offered by U.S. Filter, thereby providing opportunities to enhance
U.S. Filter's manufacturing capabilities, technology base and distribution
network. In addition, the acquisition of Memtec is expected to enhance U.S.
Filter's global presence and provide cost-saving opportunities through the
elimination of certain overhead expenses and geographic overlap and the
realization of operating efficiencies.

Kinetics

Kinetics is a leading United States manufacturer and supplier of
sophisticated high-purity process piping systems for the handling of water,
gases and chemicals. Such systems are provided primarily to the
microelectronics, pharmaceutical and biotechnology industries, where they are
critical to operations. Kinetics offers its customers turnkey and design/build
operations, including comprehensive and technically advanced engineering and
design services, quality assurance and control services, program management
services and manufacturing of specialty components. U.S. Filter believes that
Kinetics' turnkey and design/build operations allow Kinetics to provide its
customers with high quality systems that have shortened project cycle times
and cost efficiencies. U.S. Filter believes that Kinetics' high quality
product and service offerings combined with its emphasis on customer service
have enabled it to secure a high level of repeat business from its customers,
with more than 67% of its fiscal 1997 revenues generated from repeat
customers. Kinetics' customers include Intel, National Semiconductor,
Motorola, IBM, LSI Logic, Genentech and Merck.

The acquisition of Kinetics provides U.S. Filter with turnkey and
design/build capabilities for high-purity process piping systems as well as
ongoing project management services and maintenance capabilities. U.S. Filter
believes that the Kinetics acquisition will expand U.S. Filter's single-source
capabilities by broadening the scope of products and services that it
provides. U.S. Filter also believes that there will be significant cross-
selling opportunities with U.S. Filter's and Kinetics' existing customers. In
addition, the acquisition of Kinetics is expected to provide cost-savings
opportunities through the elimination of certain overhead expenses and
geographic overlap and the realization of operating efficiencies.

Management and Principal Stockholders of U.S. Filter

For information concerning directors, executive officers, certain
relationships and related transactions and voting securities and principal
holders thereof of U.S. Filter, reference is made to the Proxy Statement on
Schedule 14A of U.S. Filter dated July 8, 1997 and the Annual Report on Form
10-K of U.S. Filter for the fiscal year ended March 31, 1997. See "AVAILABLE
INFORMATION."

26
<PAGE>

Recent Developments

U.S. Filter has entered into an agreement to issue $900 million of unsecured
redeemable or remarketable debt securities to qualified institutional buyers
(as defined in Rule 144A of the U.S. Securities Act of 1933, as amended) to
refinance existing indebtedness under U.S. Filter's Senior Credit Facility and
for general corporate purposes. The proposed issuance of such securities is
not expected to have a material impact on U.S. Filter's financial position or
its future results of operations. The securities offered will not be, and have
not been, registered under the Securities Act and may not be offered or sold
in the United States absent registration or applicable exemption from the
registration requirements.

CULLIGAN

Culligan is a leading manufacturer and distributor of water purification and
treatment products and services for household consumer and commercial
applications. Products and services offered by Culligan range from those
designed to solve residential water problems, such as filters for tap water
and household water softeners, to equipment and services, such as
ultrafiltration and microfiltration products. Culligan also offers
desalination systems and PDS, designed for commercial and industrial
applications. In addition, Culligan sells and licenses its dealers to sell
under the Culligan trademark five-gallon bottled water. In fiscal 1997,
Culligan entered the consumer business selling filtration products directly to
retailers.

Culligan has been an active participant in the water purification and
treatment industry since 1936, and its Culligan(R), Everpure(R), Elga(R) and
Bruner(R) brands are among the most recognized in the industry. Culligan's
products are sold and serviced in over 90 countries through a worldwide
network of over 1,400 sales and service centers. To support this distribution
network, Culligan maintains manufacturing facilities in the United States,
United Kingdom, Italy, Spain and Canada. During the last 15 years, Culligan's
residential water treatment systems have been installed in over 3 million
households in the United States. In addition, Culligan has a significant
installed base in water treatment and filtration systems for commercial uses,
such as food service. Culligan also has a small presence in industrial and
municipal systems and desalination systems.

With net sales of $371 million for the fiscal year ended January 31, 1997
and $505.7 million for the fiscal year ended January 31, 1998, Culligan and
its dealers provide a wide range of services to support its products and offer
a full line of accessories and replacement parts. Approximately 43% of
Culligan's revenues in fiscal 1998 were derived from sources believed to be
recurring in nature, such as servicing installed equipment, sales of
replacement parts, filters and other consumables, equipment rental and
royalties. In fiscal 1998, approximately 38% of Culligan's revenues were from
export and international sales. Culligan conducts its activities in two
principal areas: household and consumer, and commercial and industrial.

In its fiscal year ended January 31, 1998, Culligan completed over 35
strategic, dealer and other acquisitions with annualized revenues of
approximately $350 million. The most significant of such acquisitions include
the acquisition of the water filtration business of Ametek, Inc. ("Ametek")
now known as Plymouth Products, Inc. in August 1997 and the acquisition of
Protean plc, a United Kingdom corporation ("Protean"), in December 1997. The
acquired Ametek business manufactures and markets point-of-use water
filtration and treatment products under the Ametek, Plymouth, American Plumber
and other brand names and had revenues for its year ended December 31, 1996 of
approximately $69 million. Protean manufactures, distributes and services
water purification equipment and analytical and thermal equipment. The
companies in the water purification division of Protean supply equipment which
is designed to purify tap water to the levels needed by scientific, medical
and industrial customers. The companies in the analytical and thermal
equipment division supply electric furnaces and ovens, specialized thermally
controlled equipment (including equipment for freeze-drying and thermal
conditioning), instruments and consumables for use in chromatography, glass
and plastic single-use containers and bench-top analytical equipment. Protean
had total revenues of (Pounds)81.1 million (US$129.0) in its fiscal year ended
March 31, 1997, of which (Pounds)38.8 million (US$63.5) related to its water
purification equipment operations and (Pounds)42.3 million (US$65.5) related
to its analytical and thermal equipment operations.

27
<PAGE>

COMPARATIVE PER SHARE DATA OF U.S. FILTER AND CULLIGAN

The following table sets forth certain income (loss) and book value per
basic share data for U.S. Filter and Culligan on historical and pro forma
bases. The pro forma combined amounts included below are based on the
historical combined statements of U.S. Filter (as restated for the acquisition
of Kinetics accounted for as a pooling of interests), Memtec, Culligan, Ametek
and Protean giving effect to the Memtec acquisition under the purchase method
of accounting, the Culligan acquisition under the pooling of interests method
of accounting, and Culligan's acquisitions of Protean and Ametek under the
purchase method of accounting. The pro forma per share data for equivalent pro
forma per share amounts is based on an exchange ratio of 1.714 as if the
number of outstanding shares of Culligan Common Stock had been adjusted at
such ratio. The information set forth below should be read in conjunction with
unaudited pro forma combined financial information including notes thereto
appearing elsewhere herein and the historical consolidated financial
statements and notes thereto of U.S. Filter, Memtec, Culligan, Ametek and
Protean, incorporated herein by reference.

The pro forma data do not reflect certain cost savings that U.S. Filter
believes may be realized following the Memtec, Kinetics and Culligan
acquisitions as well as Culligan's acquisitions of Protean and Ametek.

<TABLE>
<CAPTION>
FISCAL YEAR 1997 (NOTE A)
----------------------------------------
U.S. FILTER CULLIGAN
----------------- ---------------------
PRO EQUIVALENT
HISTORICAL FORMA HISTORICAL PRO FORMA
---------- ------ ---------- ----------
<S> <C> <C> <C> <C>
Net income per basic common
share............................ $ 0.51 $ 0.47 $ 0.75 $ 0.81
Dividends per basic common share.. -- -- -- --
Net income per diluted common
share............................ 0.49 0.45 0.74 0.77
Dividends per diluted common
share............................ -- -- -- --
<CAPTION>
FISCAL YEAR 1996 (NOTE A)
----------------------------------------
U.S. FILTER CULLIGAN
----------------- ---------------------
PRO EQUIVALENT
HISTORICAL FORMA HISTORICAL PRO FORMA
---------- ------ ---------- ----------
<S> <C> <C> <C> <C>
Net income (loss) per basic common
share............................ $ 0.62 $ 0.12 $(1.30) $ 0.21
Dividends per basic common share.. -- -- -- --
Net income per diluted common
share............................ 0.61 0.11 (1.30) 0.19
Dividends per diluted common
share............................ -- -- -- --
<CAPTION>
FISCAL YEAR 1995 (NOTE A)
----------------------------------------
U.S. FILTER CULLIGAN
----------------- ---------------------
PRO EQUIVALENT
HISTORICAL FORMA HISTORICAL PRO FORMA
---------- ------ ---------- ----------
<S> <C> <C> <C> <C>
Net income (loss) per basic common
share............................ $ 0.68 $(0.20) $(2.29) $(0.34)
Dividends per basic common share.. -- -- -- --
Net income per diluted common
share............................ 0.66 (0.20) (2.29) (0.34)
Dividends per diluted common
share............................ -- -- -- --
<CAPTION>
NINE MONTHS -- 1997 (NOTE B)
----------------------------------------
U.S. FILTER CULLIGAN
----------------- ---------------------
PRO EQUIVALENT
HISTORICAL FORMA HISTORICAL PRO FORMA
---------- ------ ---------- ----------
<S> <C> <C> <C> <C>
Income (loss) per basic common
share before extraordinary item.. $(3.65) $(2.36) $ 0.92 $(4.05)
Dividends per basic common share.. -- -- -- --
Net income per diluted common
share............................ (3.65) (2.36) 0.91 (4.05)
Dividends per diluted common
share............................ -- -- -- --
</TABLE>

28
<PAGE>

<TABLE>
<CAPTION>
NINE MONTHS -- 1996
---------------------------------------
U.S. FILTER CULLIGAN
----------------- ---------------------
PRO EQUIVALENT
HISTORICAL FORMA HISTORICAL PRO FORMA
---------- ------ ---------- ----------
<S> <C> <C> <C> <C>
Net income (loss) per basic common
share............................. $ 0.27 $ 0.24 $ 0.35 $ 0.41
Dividends per basic common share... -- -- -- --
Net income per diluted common
share............................. 0.26 0.23 0.35 0.39
Dividends per diluted common
share............................. -- -- -- --
<CAPTION>
BALANCE SHEET DATA (NOTE C)
---------------------------------------
U.S. FILTER CULLIGAN
----------------- ---------------------
PRO EQUIVALENT
HISTORICAL FORMA HISTORICAL PRO FORMA
---------- ------ ---------- ----------
<S> <C> <C> <C> <C>
Book value per basic common share
as of December 31, 1997........... $12.93 $11.10 $13.89 $19.03
Book value per diluted common share
as of December 31, 1997........... 12.93 11.10 13.73 19.03
Book value per basic common share
as of March 31, 1997.............. 16.32 13.21 8.23 22.64
Book value per diluted common share
as of March 31, 1997............. 15.72 12.77 8.12 21.89
</TABLE>
- --------
a. The fiscal years 1997, 1996 and 1995 present the historical results of U.S.
Filter for the fiscal years ended March 31, 1997, 1996 and 1995 and the
historical results of Culligan for the fiscal years ended January 31, 1997,
1996 and 1995, respectively. The pro forma data for the fiscal year 1997
gives effect to the results of U.S. Filter and Protean for the year ended
March 31, 1997, the results of Memtec for the year ended June 30, 1997, the
results of Culligan for the year ended January 31, 1997 and the results of
Ametek for the year ended December 31, 1996. The pro forma data for the
fiscal years 1996 and 1995 gives effect to the results of U.S. Filter for
the years ended March 31, 1996 and 1995 and the results of Culligan for the
years ended January 31, 1996 and 1995, respectively.

b. The nine months--1997 presents the historical results of U.S. Filter for
the nine months ended December 31, 1997 and the historical results of
Culligan for the nine months ended October 31, 1997. The pro forma data for
the nine months--1997 gives effect to the results of U.S. Filter for the
nine months ended December 31, 1997, the results of Memtec for the period
beginning April 1, 1997 and ending immediately prior to Memtec being
acquired by U.S. Filter on December 9, 1997, the results of Culligan for
the nine months ended October 31, 1997, the results of Protean for the nine
months ended September 30, 1997 and the results of Ametek for the period
beginning February 1, 1997 and ending immediately prior to Ametek being
acquired by Culligan on August 1, 1997. Results for Memtec for the period
from the date Memtec was acquired by U.S. Filter to December 31, 1997 are
included in U.S. Filter's historical results. Results for Ametek for the
period from the date Ametek was acquired by Culligan to October 31, 1997
are included in Culligan's historical results.

The nine months--1996 presents the historical results of U.S. Filter for
the nine months ended December 31, 1996 and the historical results of
Culligan for the nine months ended October 31, 1996. The pro forma data for
the nine months--1996 combines the results of U.S. Filter for the nine
months ended December 31, 1996 with the results of Culligan for the nine
months ended October 31, 1996.

c. The balance sheet data as of December 31, 1997 presents the historical book
value per basic and diluted common share of U.S. Filter as of December 31,
1997 and the historical book value per basic and diluted common share of
Culligan as of October 31, 1997. The pro forma book value as of December
31, 1997 per basic and diluted common share is derived from the Unaudited
Combined Pro Forma Balance Sheet, which is based on the balance sheet of
U.S. Filter as of December 31, 1997, the balance sheet of Culligan as of
October 31, 1997 and the balance sheet of Protean as of September 30, 1997.

The balance sheet data as of March 31, 1997 presents the historical book
value of U.S. Filter at such date and Culligan as of January 31, 1997. The
pro forma book value as of March 31, 1997 is based on the combined book
values of U.S. Filter and Protean as of such date, Memtec as of June 30,
1997, Culligan as of January 31, 1997, and Ametek as of December 31, 1996.

29
<PAGE>

MARKET PRICE AND DIVIDEND DATA

U.S. Filter

U.S. Filter Common Stock is listed on the NYSE under the symbol "USF." The
following table shows the high and low sales prices of U.S. Filter Common
Stock on the NYSE for the periods presented, based on published financial
sources.

<TABLE>
<CAPTION>
PRICE PER SHARE
OF U.S. FILTER
COMMON STOCK
---------------
HIGH LOW
---------------
<S> <C> <C>
Fiscal Year ended March 31, 1997
First Quarter............................................. $ 23.75 $ 18.42
Second Quarter............................................ 34.75 18.50
Third Quarter............................................. 36.25 30.38
Fourth Quarter............................................ 39.00 28.88
Fiscal Year ended March 31, 1998
First Quarter............................................. $ 33.38 $ 25.75
Second Quarter............................................ 43.19 26.94
Third Quarter............................................. 44.44 27.63
Fourth Quarter ........................................... 36.44 28.75
Fiscal Year ended March 31, 1999
First Quarter (through May 14, 1998)...................... $36.25 $31.06
</TABLE>

On February 6, 1998, the last full trading day prior to the execution of the
Merger Agreement, the last reported sale price of U.S. Filter Common Stock, as
reported on the NYSE Composite Tape, was $34 11/16 per share. On May 14, 1998,
the last full trading day prior to the date of this Joint Proxy
Statement/Prospectus, the last reported sale price of U.S. Filter Common
Stock, as reported on the NYSE Composite Tape, was $33 3/16 per share.
Stockholders should obtain current quotes for the U.S. Filter Common Stock and
the Culligan Common Stock.

U.S. Filter currently intends to retain earnings to provide funds for the
operation and expansion of its business and accordingly does not anticipate
paying cash dividends on the U.S. Filter Common Stock in the foreseeable
future. Any payment of cash dividends on the U.S. Filter Common Stock in the
future will depend upon U.S. Filter's financial condition, earnings, capital
requirements and such other factors as the U.S. Filter Board deems relevant.
U.S. Filter's Amended and Restated Multicurrency Credit Agreement, dated as of
October 20, 1997, imposes, and future debt or equity instruments or securities
of U.S. Filter may impose, restrictions on U.S. Filter's ability to pay
dividends.

Culligan

Culligan Common Stock is listed on the NYSE under the symbol "CUL." The
following table shows the high and low sales prices of Culligan common stock
on the NYSE for the periods presented, based on published financial sources.

<TABLE>
<CAPTION>
PRICE PER SHARE
OF CULLIGAN
COMMON STOCK
---------------
HIGH LOW
---------------
<S> <C> <C>
Fiscal Year ended January 31, 1997
First Quarter............................................. $ 33.75 $ 27.63
Second Quarter............................................ 40.75 32.75
Third Quarter............................................. 40.25 32.88
Fourth Quarter............................................ 41.13 33.00
Fiscal Year ended January 31, 1998
First Quarter............................................. $ 46.00 $ 33.63
Second Quarter............................................ 47.38 39.38
Third Quarter............................................. 50.81 39.88
Fourth Quarter............................................ 52.25 39.94
Fiscal Year ended January 31, 1999
First Quarter............................................. $61.69 $35.25
Second Quarter (through May 14, 1998)..................... $59.63 $54.25
</TABLE>

30
<PAGE>

On February 6, 1998, the last full trading day prior to the execution of the
Merger Agreement, the last reported sale price of Culligan Common Stock, as
reported on the NYSE Composite Tape, was $37 3/4 per share. On May 14, 1998,
the last full trading day prior to the date of this Joint Proxy
Statement/Prospectus, the last reported sale price of Culligan Common Stock,
as reported on the NYSE Composite Tape, was $55 1/2 per share, and the trading
value of the U.S. Filter Common Stock to be issued in the Merger in exchange
for each share of Culligan Common Stock (determined by applying the last
reported sale price of U.S. Filter Common Stock to the estimated Exchange
Ratio of 1.8079 was $60.00 per share.

U.S. Filter Stockholders or Culligan Stockholders should obtain current
quotes for the U.S. Filter Common Stock and the Culligan Common Stock.

Culligan currently anticipates that it will not pay cash dividends on shares
of the Culligan Common Stock in the foreseeable future. The payment of
dividends will be a business decision to be made by Culligan's Board of
Directors from time to time based on such considerations as the Board of
Directors deems relevant, will be payable only out of funds legally available
under Delaware law and will be subject to any restrictions which may be
contained in Culligan's debt instruments. The payment of dividends on
Culligan's Common Stock is currently limited by Culligan's credit facilities.

31
<PAGE>

THE MERGER

BACKGROUND OF THE MERGER

In the last week of January 1998, U.S. Filter Chairman, Richard J. Heckmann,
telephoned Douglas A. Pertz, Culligan's Chief Executive Officer and President,
regarding the possibility of a potential business combination between Culligan
and U.S. Filter. Shortly after this discussion, Messrs. Heckmann and Pertz and
several Culligan directors met in New York to discuss the possibility of a
potential business combination. These preliminary discussions included an
examination of the strategic implications of such a business combination and
respective business and management philosophies and goals and a preliminary
review of the opportunities such a business combination would afford the
combined companies and their respective customers, employees and distributors.
In addition, Culligan and U.S. Filter each separately began to identify the
potential efficiencies and cost savings that could be achieved through a
combination of Culligan's and U.S. Filter's businesses. The parties also
discussed certain potential challenges associated with such a combination,
including integration of the two management teams, retaining and motivating
key personnel and distributors, identifying and implementing the better
practices of the two companies, and effectively integrating and managing the
significantly larger organization and business operations that would result
from a combination of the two companies.

On February 4, 1998, U.S. Filter and Culligan executives met again in New
York. At this meeting, U.S. Filter and Culligan executed a mutual
confidentiality agreement. That evening and over the next several days,
financial, legal and operational due diligence was conducted by each of
Culligan and U.S. Filter and their representatives. On February 5, 1998, the
parties, together with their respective legal and financial advisors, began
negotiating the terms of a definitive merger agreement, as well as draft
support/voting agreements for certain stockholders of Culligan that U.S.
Filter indicated were requirements for any transaction between the parties.

On February 7, 1998, a special meeting of the Culligan Board was held at
which the potential for a business combination between Culligan and U.S.
Filter was discussed. At this meeting, Culligan's senior management and its
legal and financial advisors provided the Culligan Board with an overview of
U.S. Filter and its operations and outlined the preliminary structure of a
possible business combination then being discussed by the companies, as well
as certain legal issues that would be involved in any such transaction.

From February 7 through February 9, 1998, the parties and their legal and
financial advisors continued mutual due diligence investigations of the two
companies and completed the negotiation of the definitive terms of the Merger
Agreement, the Support/Voting Agreements and the Registration Rights
Agreement.

On February 9, 1997, special meetings of each of the Culligan Board and the
U.S. Filter Board were held to consider the terms of the proposed transaction.
At those meetings, which were held separately, the Culligan Board and the U.S.
Filter Board respectively discussed in detail the terms of the proposed
transaction. At the special meeting of the Culligan Board, Culligan's Board,
after receiving presentations from Culligan's financial and legal advisors,
received the oral opinions of Bear Stearns and of Goldman Sachs (later
confirmed in writing in the Bear Stearns Opinion (as hereinafter defined) and
the Goldman Sachs Opinion (as hereinafter defined)) to the effect that the
Exchange Ratio was fair, from a financial point of view, to the Culligan
Stockholders. After discussion, the Culligan Board approved the Rights
Agreement Amendment and the Merger Agreement and resolved to unanimously
recommend that the Culligan Stockholders vote for the approval and adoption of
the Merger Agreement at a special meeting of Culligan Stockholders to be held
for that purpose. See "--Unanimous Recommendation of the Culligan Board of
Directors; Culligan's Reasons for the Merger" and "--Opinions of Culligan
Financial Advisors."

At its meeting, the U.S. Filter Board, after receiving presentations from
U.S. Filter's financial and legal advisors, received the oral opinions of DLJ
and Salomon (later confirmed in writing in the DLJ Opinion (as hereinafter
defined) and the Salomon Opinion (as hereinafter defined)) to the effect that,
as of the date of the Merger Agreement, the Exchange Ratio was fair, from a
financial point of view, to the U.S. Filter Stockholders. After discussion,
the U.S. Filter Board unanimously approved the Merger Agreement, the
Registration Rights

32
<PAGE>

Agreement and the Support/Voting Agreements and resolved to recommend that
U.S. Filter Stockholders vote for the approval and adoption of the Stock
Issuance Proposal at a special meeting of U.S. Filter Stockholders to be held
for that purpose. See "--Unanimous Recommendation of the U.S. Filter Board of
Directors; Reasons for the Merger" and "--Opinions of U.S. Filter Financial
Advisors."

Later on February 9, 1998, the Rights Agreement Amendment, the Merger
Agreement, the Support/Voting Agreements and the Registration Rights Agreement
were executed. On February 9, 1998, U.S. Filter issued a press release
announcing the Merger.

UNANIMOUS RECOMMENDATION OF THE U.S. FILTER BOARD OF DIRECTORS; U.S. FILTER'S
REASONS FOR THE MERGER

For the foregoing reasons, the U.S. Filter Board believes that the terms and
conditions of the Stock Issuance Proposal are in the best interests of U.S.
Filter and its stockholders. The following are the material factors considered
by the U.S. Filter Board in reaching its conclusions, certain of which factors
contained both positive and negative elements:

(i) the judgment, advice and analyses of its management with respect to
the strategic, financial and operational benefits of the Merger, based in
part on the business, financial and accounting investigations performed
with respect to Culligan;

(ii) information concerning the financial condition, results of
operations, prospects, business and stock price performance of U.S. Filter
and Culligan;

(iii) current industry, economic and market conditions;

(iv) the synergies, cost reductions and operating efficiencies that may
become available to the combined enterprise as a result of the Merger, as
well as the management challenges associated with successfully integrating
the businesses, cultures and managements of two major corporations,
particularly in light of the competing demands for the attention of the
management of U.S. Filter, including the integration of Kinetics and
Memtec;

(v) the strategic benefits of the Merger and the current and anticipated
environment in the water industry and the strategic options available to
U.S. Filter;

(vi) the further diversification of U.S. Filter's business as a result of
the Merger and the reduction in the risk to U.S. Filter's stockholders
inherent in such diversification;

(vii) the express terms and conditions of the Merger Agreement, which are
viewed as providing an equitable basis for the Merger from the standpoint
of U.S. Filter;

(viii) the opinions and advice of, and financial analyses prepared by DLJ
and Salomon (see "--Opinions of U.S. Filter Financial Advisors");

(ix) historical market prices and trading information with respect to
U.S. Filter Common Stock and Culligan Common Stock;

(x) the advice of its independent auditors with respect to the ability to
account for the Merger as a pooling of interests;

33
<PAGE>

(xi) the corporate governance aspects of the Merger, including that U.S.
Filter directors would constitute all but one of the U.S. Filter Board
immediately following the consummation of the Merger, and that Mr. Heckmann
would serve as Chairman and Chief Executive Officer of the combined
company;

(xii) the number of shares of U.S. Filter Common Stock to be issued to
Culligan Stockholders in the Merger, and the percentage ownership of the
combined company represented thereby.

(xiii) the ability to obtain regulatory approvals for the Merger; and

(xiv) the opportunity to improve customer service and productivity by
implementing the best practices of each company in a variety of aspects of
the combined companies' business.

The U.S. Filter Board also considered a number of potential risks and
disadvantages relating to the Merger, including the following material risks
and disadvantages (the order does not necessarily reflect the relative
significance): (i) the difficulty and management distraction inherent in
integrating two large and geographically dispersed operations and the risk
that the synergies and benefits sought in the Merger might not be fully
achieved; (ii) the risk that the Merger would not be consummated and the
potential effects of the failure to consummate might have on the business,
employees and customers of U.S. Filter; (iii) the expenses expected to be
incurred by U.S. Filter in connection with the Merger; and (iv) the potential
dilutive effect of the issuance of shares of U.S. Filter Common Stock to be
issued to Culligan Stockholders at the Effective Time, including adjustments
to the Exchange Ratio based on the price of U.S. Filter Common Stock. The U.S.
Filter Board believed that these potential risks and disadvantages were
outweighed by the potential benefits anticipated to be realized from the
Merger.

The foregoing discussions of the information and factors considered and
given weight by the U.S. Filter Board is not intended to be exhaustive. In
view of the variety of factors considered in connection with its evaluation of
the Merger and the Stock Issuance Proposal, the U.S. Filter Board did not find
it practicable to and did not quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination. In addition,
individual members of the U.S. Filter Board may have given different weights
to different factors.

FOR THE REASONS DISCUSSED ABOVE, THE BOARD OF DIRECTORS OF U.S. FILTER HAS
UNANIMOUSLY DETERMINED THAT THE TERMS OF STOCK ISSUANCE PROPOSAL AND THE
TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST INTERESTS OF,
U.S. FILTER AND THE U.S. FILTER STOCKHOLDERS. ACCORDINGLY, THE U.S. FILTER
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT U.S. FILTER STOCKHOLDERS VOTE
FOR THE APPROVAL AND ADOPTION OF THE STOCK ISSUANCE PROPOSAL.

UNANIMOUS RECOMMENDATION OF THE CULLIGAN BOARD OF DIRECTORS; CULLIGAN'S
REASONS FOR THE MERGER

(i) the fact that the per share consideration to be received by Culligan
Stockholders in the Merger represented a premium of approximately 54% over
the closing price of the Culligan Common Stock on the last trading day
prior to the announcement of the signing of the Merger Agreement (based
upon the Culligan Common Stock price of $38.87 and the U.S. Filter Common
Share price of $34.56 on such date; Culligan Stockholders are urged to
obtain current market quotations; see "MARKET PRICE AND DIVIDEND DATA");

(ii) the potential enhancements in earnings that could be achieved by
cost savings and revenue synergies resulting from combining the operations
of Culligan and U.S. Filter;

(iii) the opportunity to improve customer service and productivity by
implementing the best practices of U.S. Filter and Culligan in a variety of
aspects of the combined companies' business;

34
<PAGE>

(iv) current industry, economic and market conditions which have
encouraged consolidation in the fragmented markets for water and water-
related products, together with U.S. Filter's growth strategy;

(v) the opportunity of Culligan Stockholders to continue as stockholders
of a combined organization with greater strength than Culligan on a stand-
alone basis;

(vi) the presentations of Bear Stearns and Goldman Sachs, and the Bear
Stearns Opinion and the Goldman Sachs Opinion, to the effect that, as of
the dates thereof and based upon and subject to the factors considered,
assumptions made and limitations on the review undertaken, as set forth
therein, the Exchange Ratio is fair to the Culligan Stockholders from a
financial point of view. See "--Opinions of Culligan Financial Advisors."
(The Bear Stearns Opinion and the Goldman Sachs Opinion are included as
Annex D and Annex E to this Joint Proxy Statement/Prospectus and should be
read in their entirety);

(vii) the assessment of Culligan's strategic alternatives to the Merger,
including remaining an independent public company, continuing its pursuit
of acquisitions or merging or consolidating with a party or parties other
than U.S. Filter (such acquisitions or mergers and consolidations with
parties other than U.S. Filter were considered on a hypothetical basis only
and the Culligan Board did not consider any specific transaction with any
party other than U.S. Filter during its consideration of the Merger);

(viii) the terms and conditions of the Merger Agreement, including the
"no-solicitation" and fiduciary responsibility provisions of the Merger
Agreement which permit Culligan to provide information and enter into
discussions with third parties under certain circumstances and to terminate
the Merger Agreement to enter into a transaction with a third party under
certain specified circumstances, the fees and expense reimbursement
payable, in certain circumstances, to Culligan, and in other circumstances,
by Culligan, the termination sections of the Merger Agreement, including
Culligan's right to terminate the Merger Agreement if the Average Share
Price or the average of the closing prices of shares of U.S. Filter Common
Stock as reported on the NYSE Composite Tape for any period of 10
consecutive trading days which ends after the last trading day used in
calculating the Average Share Price is less than $26.25, the provisions
relating to Culligan's ability to continue to operate its business during
the period between the execution of the Merger Agreement and Closing (see
"THE MERGER AGREEMENT--Termination, Amendment and Waiver;" "--Fees and
Expenses;" and "--Special Payment"), the conditions to closing and the
representations and warranties of each of the parties in the Merger
Agreement; and

(ix) the fact that the Merger is expected to be a tax-free transaction
for U.S. federal income tax purposes to Culligan Stockholders and that it
is expected to qualify as a pooling-of-interests transaction for accounting
and financial reporting purposes.

The Culligan Board also considered a number of potential risks and
disadvantages relating to the Merger, including the following material risks
and disadvantages (the order does not necessarily reflect the relative
significance): (i) the difficulty and management distraction inherent in
integrating two large and geographically dispersed operations and the risk
that the synergies and benefits sought in the Merger might not be fully
achieved; (ii) the risk that the Merger would not be consummated and the
potential effects of the failure to consummate might have on the business,
employees and customers of Culligan; (iii) the expenses expected to be
incurred by Culligan and U.S. Filter in connection with the Merger; and (iv)
the substantial acquisition history of U.S. Filter and the inherent
uncertainty this creates with respect to analyzing the historical and
projecting the future performance of U.S. Filter. The Culligan Board believed
that these potential risks and disadvantages were outweighed by the potential
benefits anticipated to be realized from the Merger.

The foregoing discussion of the material factors and potential material
risks and disadvantages considered by the Culligan Board is not intended to be
exhaustive. In view of the wide variety of factors, risks and disadvantages
considered in connection with its evaluation of the Merger, the Culligan Board
did not find it practicable to, and did not, quantify or assign any relative
or specific weights to the foregoing matters, and individual directors may
have deemed different matters more significant than others.

FOR THE REASONS DISCUSSED ABOVE, THE BOARD OF DIRECTORS OF CULLIGAN HAS
UNANIMOUSLY DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT AND THE

35
<PAGE>

TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST INTERESTS OF,
CULLIGAN AND THE CULLIGAN STOCKHOLDERS. ACCORDINGLY, THE CULLIGAN BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT CULLIGAN STOCKHOLDERS VOTE FOR THE
APPROVAL AND ADOPTION OF THE CULLIGAN MERGER PROPOSAL AND THE CULLIGAN
ADJOURNMENT PROPOSAL.

OPINIONS OF U.S. FILTER FINANCIAL ADVISORS

U.S. Filter engaged DLJ and Salomon to act as its financial advisors in
connection with the Merger based upon their qualifications, expertise and
reputation, as well as their prior investment banking relationship and
familiarity with U.S. Filter and Culligan.

Opinion of DLJ

On February 9, 1998, DLJ rendered an oral opinion to the U.S. Filter Board,
which was confirmed by delivery of its written opinion dated February 9, 1998
(the "DLJ Opinion"), to the effect that, as of such date, and based upon and
subject to the assumptions, limitations and qualifications set forth in such
opinion, the Exchange Ratio was fair to U.S. Filter and its stockholders from
a financial point of view.

THE FULL TEXT OF THE DLJ OPINION IS SET FORTH AS ANNEX B TO THIS JOINT PROXY
STATEMENT/PROSPECTUS AND SHOULD BE READ CAREFULLY IN ITS ENTIRETY AND IS
INCORPORATED HEREIN BY REFERENCE, INCLUDING WITHOUT LIMITATION THE
DESCRIPTIONS OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, OTHER MATTERS
CONSIDERED AND LIMITATIONS OF THE REVIEW UNDERTAKEN IN ARRIVING AT SUCH
OPINION. THE DLJ OPINION ADDRESSES THE FAIRNESS OF THE EXCHANGE RATIO TO U.S.
FILTER AND ITS STOCKHOLDERS FROM A FINANCIAL POINT OF VIEW AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF U.S. FILTER OR CULLIGAN AS
TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE RESPECTIVE SPECIAL MEETING.

The DLJ Opinion does not constitute an opinion as to the price at which U.S.
Filter Common Stock will actually trade at any time. The type and amount of
consideration was determined in arm's length negotiations between U.S. Filter
and Culligan in which negotiations DLJ advised U.S. Filter. No restrictions or
limitations were imposed upon DLJ with respect to the investigations made or
procedures followed by DLJ in rendering its opinion.

In arriving at its opinion, DLJ reviewed the February 6, 1998 draft of the
Merger Agreement, including exhibits thereto, as well as financial and other
information that was publicly available or furnished to it by U.S. Filter and
Culligan including information provided during discussions with their
respective managements. Included in the information provided during
discussions with the respective managements were certain internal financial
projections for U.S. Filter and Culligan prepared by their respective
managements. In addition, DLJ compared certain financial and securities data
of U.S. Filter and Culligan with various other companies whose securities are
traded in public markets, reviewed the historical stock prices and trading
volumes of U.S. Filter Common Stock and Culligan Common Stock, reviewed prices
and premiums paid in certain other business combinations, reviewed the
relative financial contributions which U.S. Filter and Culligan will represent
in the combined entity and conducted such other financial studies, analyses
and investigations as DLJ deemed appropriate for purposes of rendering its
opinion.

In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to it from public sources, that was provided to it by U.S. Filter and Culligan
or their respective representatives, or that was otherwise reviewed by it. DLJ
relied upon the estimates of the management of U.S. Filter of the operating
synergies achievable as a result of the Merger and upon discussion of such
synergies with the management of Culligan. DLJ also assumed that the financial
projections for U.S. Filter and Culligan used in its analysis were reasonably
prepared on the basis reflecting the best available estimates and judgments of
the management of U.S. Filter and Culligan as to the future operating and
financial performance of U.S. Filter and Culligan. DLJ assumed no
responsibility for making an independent evaluation of any assets or
liabilities or for making any independent verification of any of the
information reviewed by DLJ.

36
<PAGE>

The DLJ Opinion is necessarily based on economic, market, financial and
other conditions as they exist on, and on information made available to it as
of, the date of its opinion. DLJ does not have any obligation to update,
revise and reaffirm its opinion.

Opinion of Salomon

On February 9, 1998, Salomon rendered an oral opinion to the U.S. Filter
Board (subsequently confirmed in writing by an opinion dated February 9, 1998)
to the effect that, subject to the assumptions, procedures and limitations set
forth therein, as of such date, the Exchange Ratio was fair, from a financial
point of view, to the U.S. Filter Stockholders (the "Salomon Opinion").

THE FULL TEXT OF THE SALOMON OPINION WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
ANNEX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY
REFERENCE WITH THE CONSENT OF SALOMON. U.S. FILTER STOCKHOLDERS SHOULD READ
THE SALOMON OPINION CAREFULLY IN ITS ENTIRETY. THE SALOMON OPINION IS DIRECTED
TO THE BOARD OF DIRECTORS OF U.S. FILTER AND RELATES TO THE FAIRNESS OF THE
EXCHANGE RATIO FROM A FINANCIAL POINT OF VIEW TO THE U.S. FILTER STOCKHOLDERS,
AND IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER NOR DOES IT CONSTITUTE
A RECOMMENDATION TO ANY U.S. FILTER STOCKHOLDER AS TO HOW SUCH STOCKHOLDER
SHOULD VOTE WITH RESPECT TO THE MERGER.

In arriving at its opinion, Salomon reviewed: (i) a draft of the Merger
Agreement that U.S. Filter advised was substantially in the form executed by
the parties; (ii) certain publicly available business and financial
information relating to U.S. Filter and Culligan; (iii) certain internal
information, primarily financial in nature, including financial forecasts and
other financial and operating data relating to strategic implications and
operational benefits anticipated to result from the Merger; (iv) certain
publicly available and other information concerning the trading of, and the
trading market for, the publicly traded securities of U.S. Filter and
Culligan; (v) certain publicly available information with respect to other
companies that Salomon believed to be comparable in certain respects to U.S.
Filter or Culligan; and (vi) certain publicly available information with
respect to other merger and acquisition transactions that Salomon believed to
be comparable in certain respects to the Merger. Salomon also held discussions
with members of the senior management of U.S. Filter and Culligan regarding
U.S. Filter's and Culligan's views as to the financial and other information
described above and the strategic rationale for, and potential benefits of,
the Merger.

In rendering its opinion, Salomon assumed and relied upon the accuracy and
completeness of all information provided to or reviewed by them or publicly
available, and Salomon did not assume any responsibility for any independent
verification of any of such information. Salomon was advised by the
managements of U.S. Filter and Culligan that the financial forecasts and other
information provided to or reviewed by Salomon were reasonably prepared on
bases reflecting the best available estimates and judgments of U.S. Filter and
Culligan as to the expected future financial performance of U.S. Filter and
Culligan and the strategic implications and operational benefits anticipated
from the Merger and Salomon did not independently verify the accuracy or
completeness of such information. Salomon further relied on the assurances of
managements of U.S. Filter and Culligan that they were unaware of any facts
that would make the information or forecasts provided to Salomon incomplete or
misleading. In addition, Salomon relied upon an estimate of the synergies and
related cost savings that U.S. Filter expects to achieve as a result of the
Merger. With respect to pending legal and regulatory proceedings involving
U.S. Filter or Culligan, Salomon was not in a position to evaluate the impact
of such proceedings and Salomon assumed that these matters would be resolved
in a manner that would not adversely affect in any material respect the
financial forecasts on which Salomon has relied for purposes of its opinion.
Salomon did not make and was not provided with any independent evaluations or
appraisals of any of U.S. Filter's or Culligan's assets, properties,
liabilities or securities, nor did they make any physical inspection of the
properties or assets of U.S. Filter or Culligan. Salomon assumed that U.S.
Filter would account for the Merger as a pooling-of-interests in accordance
with generally accepted accounting principles ("GAAP"), and that the Merger
qualifies for such accounting treatment under GAAP. Salomon also assumed that
the Merger will constitute a "reorganization" within the meaning of Section
368(a) of the Code, and neither U.S. Filter, Culligan, Subcorp or U.S. Filter
Stockholders will recognize gain or loss for U.S. federal and state income tax
purposes as a result of the Merger.

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The Salomon Opinion relates to the relative values of U.S. Filter and
Culligan and does not imply any conclusion as to what the values of U.S.
Filter Common Stock actually will be when issued pursuant to the Merger or the
price at which such stock will trade following the consummation of the Merger.
The Salomon Opinion is based upon conditions and circumstances as they existed
on February 9, 1998 and could be evaluated as of such date and does not
address the underlying business decision of U.S. Filter to enter into the
Merger Agreement or complete the Merger. Specifically, Salomon was not asked
to nor did they express an opinion as to the relative merits of the Merger as
compared to any alternative business strategies that might exist for U.S.
Filter or the effect of any other transaction in which U.S. Filter might
engage. No limitations were imposed upon Salomon with respect to the
investigations made or procedures followed by Salomon in rendering its
opinion.

Summary of Analyses of U.S. Filter Financial Advisors.

The following is a brief summary of all material elements of the analysis
performed by DLJ and Salomon (collectively the "U.S. Filter Financial
Advisors") and reported to the U.S. Filter Board, in connection with rendering
their respective opinions. All analyses discussed below, unless otherwise
indicated, exclude the estimated operating synergies (the "Synergies")
provided by the management of U.S. Filter. For purposes of the following
analyses, the Exchange Ratio was calculated based upon the closing stock
prices of U.S. Filter and Culligan on February 5, 1998.

Common Stock Performance Analysis. The U.S. Filter Financial Advisors
analysis of U.S. Filter Common Stock performance consisted of a historical
analysis of closing prices and trading volumes for the twelve month period, 90
day period and 30 day period ended February 5, 1998. During such twelve month
period, U.S. Filter Common Stock reached a high closing price of $43.75 per
share and a low closing price of $26.00 per share. On October 3, 1997, the
closing price of U.S. Filter Common Stock of $43.75 per share represented the
high closing price of such range. In the twelve month period ended February 5,
1998, U.S. Filter Common Stock underperformed the S&P 400. The U.S. Filter
Financial Advisors analysis of Culligan's Common Stock performance consisted
of a historical analysis of closing prices and trading volumes for the twelve
month period, 90 day period and 30 day period ended February 5, 1998. During
such twelve month period, Culligan Common Stock reached a high closing price
of $51.63 per share and a low closing price of $33.94 per share. On January 7,
1998, the closing price of Culligan Common Stock of $51.63 per share was at
the high end of such range. During the twelve month period ended February 5,
1998, Culligan Common Stock underperformed the S&P 400 but outperformed the
U.S. Filter Common Stock and a comparable company index which included Air &
Water Technologies, Calgon Carbon Corporation, Cuno Incorporated, Ionics,
Inc., Millipore Corporation, Osmonics, Inc. and Pall Corporation.

Historical Exchange Ratio Analysis. The U.S. Filter Financial Advisors
analyzed the historical Exchange Ratio between U.S. Filter Common Stock and
Culligan Common Stock over several time periods. For each period selected, the
high, low and average Exchange Ratios were calculated. The time periods
(ending on February 5, 1998) selected for analysis were as follows: Last 120
trading days, last 60 trading days, last 30 trading days and last 10 trading
days. The average Exchange Ratio for each aforementioned time period was
1.289, 1.424, 1.404 and 1.095, respectively. In addition, the U.S. Filter
Financial Advisors also analyzed the Exchange Ratio between U.S. Filter Common
Stock and Culligan Common Stock for the twelve month period ended February 5,
1998. During this period, the Exchange Ratio reached a high of 1.792 (December
29, 1997) and a low of 0.987 (February 14, 1997).

Premium Analysis. The U.S. Filter Financial Advisors performed a comparison
of the premium represented by the Exchange Ratio to premiums offered in
acquisitions of $1.0 billion to $2.0 billion in size ("Comparable
Acquisitions") since January 1, 1993. For the Comparable Acquisitions
surveyed, the average premiums to the market price one day, one week and one
month prior to announcement were 32.2%, 31.3% and 30.2%, respectively, for
transactions accounted for as poolings-of-interests, and 29.5%, 29.0% and
28.2%, respectively, for transactions which were accounted for as either
purchases or poolings-of-interests. As compared to the above premiums, the
Exchange Ratio represented a 59.4% premium to the trading price one day prior
to

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announcement, a 55.8% premium to the trading price one week prior to the
announcement and a 19.6% premium to the trading price one month prior to the
announcement.

EPS Impact Analysis. The U.S. Filter Financial Advisors analyzed the pro
forma effects on U.S. Filter's projected earnings per share for fiscal 1999
and 2000 resulting from the Merger including, without independent
verification, the Synergies as estimated by the management of U.S. Filter
expected to result from the Merger. This analysis is based on a number of
assumptions provided by U.S. Filter's management, including, among other
things, the cost of integration, estimated amounts and timing of the
Synergies, the projected financial performance of U.S. Filter and Culligan and
prevailing interest rates. Based on the Exchange Ratio calculated using the
closing stock prices of U.S. Filter and Culligan as of February 5, 1998, the
analysis indicated that, the transaction, accounted for as a pooling-of-
interests and with the benefit of the Synergies, is anticipated to be
accretive to U.S. Filter's stand-alone earnings per share estimates for each
of the projected fiscal years ending March 1999 and 2000.

Relative Contribution Analysis. The U.S. Filter Financial Advisors analyzed
the relative contributions of U.S. Filter and Culligan to the revenues,
earnings before interest, taxes, depreciation and amortization ("EBITDA")
before and after allocation of the Synergies to Culligan, earnings before
interest and taxes ("EBIT") before and after allocation of the Synergies to
Culligan, and net income of the combined entity for the estimated pro forma
fiscal year ending March 1998 and projected fiscal years ending March 1999 and
2000, and compared these relative contributions to the pro forma ownership of
the combined entity and the relative enterprise value contributions of U.S.
Filter and Culligan. Based on the estimated pro forma fiscal year ending March
1998, Culligan's revenues, EBITDA and EBIT before allocation of the Synergies,
and net income represent 14.5%, 23.9%, 25.9%, and 25.6%, respectively, of the
combined entity. After allocation of the Synergies to Culligan, the relative
contribution of Culligan to the combined EBITDA and EBIT during the same time
period would be 29.0% and 32.8%, respectively. Based on the projected fiscal
year ending March 1999, Culligan's revenues, EBITDA and EBIT before allocation
of the Synergies, and net income represent 15.5%, 24.8%, 26.0%, and 23.1%,
respectively, of the combined entity. After allocation of the Synergies to
Culligan, the relative contribution of Culligan to the combined EBITDA and
EBIT during the same time period would be 28.3% and 30.6%, respectively. Based
on the projected fiscal year ending March 2000, Culligan's revenues, EBITDA
and EBIT before allocation of the Synergies, and net income represent 15.7%,
24.4%, 26.0%, and 23.0%, respectively, of the combined entity. After
allocation of the Synergies to Culligan, the relative contribution of Culligan
to the combined EBITDA and EBIT during the same time period would be 28.4% and
31.1%, respectively. The U.S. Filter shares (including shares underlying all
outstanding options without adjustment for any assumed cash exercise of the
options) to be issued to the Culligan stockholders will represent
approximately 30.7% of U.S. Filter's outstanding shares pro forma for the
Merger. The enterprise value of Culligan, calculated at the purchase price
represented by the Exchange Ratio based on the closing stock prices of U.S.
Filter and Culligan on February 5, 1998, represents 28.6% of the combined
enterprise value of Culligan and U.S. Filter.

Comparable Company Analysis. No company utilized in the Comparable Company
Analysis is identical to U.S. Filter or Culligan. Accordingly, an analysis of
the results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
U.S. Filter and Culligan and other factors that could affect the public
trading value of the Comparable Companies or company to which they are being
compared. Mathematical analysis (such as determining the mean or median) is
not in itself a meaningful method of using comparable company data.

The U.S. Filter Financial Advisors analyzed the operating performance of
U.S. Filter and Culligan relative to seven companies deemed by the U.S. Filter
Financial Advisors to be reasonably comparable to U.S. Filter and Culligan.
These companies are as follows: Air & Water Technologies, Calgon Carbon
Corporation, Cuno Incorporated, Ionics, Inc., Millipore Corporation, Osmonics,
Inc. and Pall Corporation (the "Comparable Companies"). Historical financial
information used in connection with the ratios provided below with respect to
the Comparable Companies is as of the most recent financial statements
publicly available for each company on February 5, 1998.

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The U.S. Filter Financial Advisors analyzed the relative performance and
value for U.S. Filter and Culligan by comparing certain market trading
statistics for U.S. Filter and Culligan with those of the Comparable
Companies. The U.S. Filter Financial Advisors examined certain publicly
available financial data of the Comparable Companies including enterprise
value (defined as market value of common equity plus book value of total debt
and preferred stock less cash) as multiples of the latest publicly available
twelve months revenues, EBITDA, EBIT and price to earnings ratios ("P/E")
based on estimated and projected calendar years ending 1997 and 1998 Earnings
Per Share ("EPS"). The U.S. Filter Financial Advisors analyzed the implied
multiples for Culligan at the Exchange Ratio with and without the Synergies.
As of February 5, 1998 this analysis resulted in (i) a range of 0.5x to 2.7x
(with a mean, excluding the high and low (the "Mean") of 1.8x) enterprise
value to latest twelve months revenues for the Comparable Companies compared
to 3.0x for Culligan at the Exchange Ratio (3.0x including the Synergies) and
1.7x for U.S. Filter; (ii) a range of 7.2x to 13.4x (with a Mean of 11.0x)
enterprise value to latest twelve months EBITDA for the Comparable Companies
compared to 16.5x for Culligan at the Exchange Ratio (13.1x including the
Synergies) and 18.1x for U.S. Filter, (iii) a range of 10.8x to 18.3x (with a
Mean of 15.6x) enterprise value to latest twelve months EBIT for the
Comparable Companies compared to 21.1x for Culligan at the Exchange Ratio
(15.8x including the Synergies) and 27.2x for U.S. Filter, (iv) a range of
16.7x to 23.8x (with a Mean of 21.0x) P/E based on estimated calendar year
1997 EPS estimates for the Comparable Companies compared to 39.2x for Culligan
at the Exchange Ratio and 32.1x for U.S. Filter, and (v) a range of 14.4x to
21.2x (with a Mean of 17.6x) estimated P/E based on projected calendar year
1998 EPS estimates for the Comparable Companies compared to 30.4x for Culligan
at the Exchange Ratio and 23.2x for U.S. Filter, in each case assuming the
Exchange Ratio is calculated using an Average U.S. Filter Trading Price of
$35.00. EPS estimates for U.S. Filter, Culligan and the Comparable Companies
were based on estimates provided by U.S. Filter, Culligan and the First Call
Research Network, respectively.

Comparable Transaction Analysis. No transaction utilized in the Comparable
Transaction Analysis is identical to the Merger. Accordingly, an analysis of
the results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
U.S. Filter and Culligan and other factors that could affect the acquisition
value of the companies to which they are being compared. Mathematical analysis
(such as determining the mean or median) is not itself a meaningful method of
using comparable transaction data.

The U.S. Filter Financial Advisors performed an analysis of selected merger
and acquisition transactions in the water and wastewater treatment industry.
Multiples of (i) aggregate transaction value (defined as the equity value of
the offer plus book value of total debt and preferred stock less cash) to
trailing twelve month revenues, EBITDA and EBIT and (ii) aggregate purchase
price (defined as the equity value of the offer) to trailing net income were
compared with multiples paid or implied in certain other comparable merger and
acquisition transactions involving, water and wastewater treatment companies
from 1996 through 1998. The comparison included a total of nine transactions.
These transactions included: U.S. Filter and Kinetics; Culligan and Protean;
U.S. Filter and Memtec; Culligan and Ametek; Pall Corporation and Gelman
Sciences; U.S. Filter and the Process Equipment Division ("PED") of United
Utilities plc; U.S. Filter and the Water Systems and Manufacturing Group
("WSMG") of Wheelabrator Technologies Inc.; U.S. Filter and WaterPro Supplies
Corporation; and U.S. Filter and Davis Water and Waste Industries, Inc.
("Davis") This analysis resulted in (i) a range of 0.4x to 2.5x (with a Mean
of 1.1x) trailing twelve month revenues compared to 3.0x for Culligan at the
Exchange Ratio (3.0x including the Synergies), (ii) a range of 8.5x to 23.0x
(with a Mean of 10.2x) trailing twelve month EBITDA compared to 16.5x for
Culligan at the Exchange Ratio (13.1x including the Synergies), (iii) a range
of 10.4x to 38.7x (with a Mean of 14.0x) trailing twelve month EBIT compared
to 21.1x for Culligan at the Exchange Ratio (15.8x including the Synergies),
(iv) a range of 23.9x to 49.6x (with a Mean of 44.6x) trailing twelve months
net income compared to 39.7x for Culligan at the Exchange Ratio.

Discounted Cash Flow Analysis. The U.S. Filter Financial Advisors performed
a discounted cash flow analysis for the five-year period ending with fiscal
year 2003 on the stand-alone unlevered free cash flows of U.S. Filter and
Culligan, based upon financial projections prepared by the respective
managements of each company (the financial projections for Culligan for fiscal
years 2000 through 2003 were an extrapolation of

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projected fiscal year 1999 using assumptions of Culligan Management).
Unlevered free cash flows were calculated as the after-tax operating earnings
of U.S. Filter and Culligan, respectively, plus depreciation and amortization
and other non-cash items, plus (or minus) net changes in working capital,
minus projected capital expenditures. The Synergies were allocated to the
Culligan projections. The U.S. Filter Financial Advisors calculated terminal
values by applying a range of estimated EBITDA multiples of 7.0x to 11.0x to
the projected EBITDA of U.S. Filter and Culligan, respectively, in fiscal year
2003. The unlevered free cash flows and terminal values were then discounted
to the present using a range of discount rates of 8.0% to 12.0% representing
an estimated range of the weighted average cost of capital of U.S. Filter and
Culligan. Based on this analysis, the U.S. Filter Financial Advisors
calculated per share equity values of U.S. Filter ranging from $27.78 to
$55.17 and of Culligan ranging from $51.44 to $95.08, resulting in Exchange
Ratios ranging from 1.723 to 1.852. The U.S. Filter Financial Advisors also
compared the per share equity value of U.S. Filter to the per share equity
value of Culligan before allocating the Synergies to Culligan. Based on this
analysis and using the same methodology as described above, the U.S. Filter
Financial Advisors calculated per share equity values of Culligan ranging from
$42.67 to $80.86.

The summary set forth above does not purport to be a complete description of
the analyses performed by the U.S. Filter Financial Advisors, but describes,
in summary form, the principal elements of the analyses performed by the U.S.
Filter Financial Advisors in arriving at their respective opinions. The
preparation of a fairness opinion involves various determinations as to the
most appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to summary description. Each of the
analyses conducted by the U.S. Filter Financial Advisors was carried out in
order to provide a different perspective on the transaction and add to the
total mix of information available. The U.S. Filter Financial Advisors did not
form a conclusion as to whether any individual analysis, considered in
isolation, supported or failed to support an opinion as to fairness from a
financial point of view. Rather, in reaching their conclusion, DLJ and Salomon
each considered the results of the analyses in light of each of the other
analyses and the other information available and ultimately reached their
respective opinions based on the results of the analyses and other information
taken as a whole. The U.S. Filter Financial Advisors did not place particular
reliance or weight on any individual factor, but instead concluded that, taken
as a whole, the analyses and other information supported their respective
determinations. Accordingly, notwithstanding the separate factors summarized
above, the analyses must be considered as a whole and selecting portions of
the analysis and the factors considered by the U.S. Filter Financial Advisors,
without considering all analyses and factors, could create an incomplete or
misleading view of the evaluation process underlying the U.S. Filter Financial
Advisors' opinions. In performing these analyses, the U.S. Filter Financial
Advisors made numerous assumptions with respect to industry performance,
business and economic conditions and other matters. The analyses performed by
the U.S. Filter Financial Advisors are not necessarily indicative of actual
values or future results, which may be materially more or less favorable than
suggested by such analyses. See "Risk Factors."

The U.S. Filter Financial Advisors were selected to render opinions in
connection with the Merger based upon their qualifications, expertise and
reputation, including the fact that each of the U.S. Filter Financial
Advisors, as part of their respective investment banking businesses are
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, underwritings, sales and distributions of
listed and unlisted securities, private placements and valuations for
corporate and other purposes.

Pursuant to a letter agreement between U.S. Filter, DLJ and Salomon dated
February 8, 1997 (the "Engagement Letter"), DLJ and Salomon have each received
a fee of $1.0 million at the time each notified the U.S. Filter Board that it
was prepared to deliver its opinion, before disclosing the conclusion reached
therein. Upon consummation of the Merger, DLJ is entitled to additional cash
compensation of $4.1 million and Salomon is entitled to additional cash
compensation of $2.4 million. U.S. Filter has agreed to reimburse the U.S.
Filter Financial Advisors for their out-of-pocket expenses, including
reasonable fees and expenses of counsel, and to indemnify the U.S. Filter
Financial Advisors for liabilities and expenses arising out of the Merger or
the transactions in connection therewith, including liabilities under federal
securities laws. The terms of the fee arrangement with the U.S. Filter
Financial Advisors, which the U.S. Filter Financial Advisors and U.S. Filter

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believe are customary in transactions of this nature, were negotiated at arm's
length between U.S. Filter and the U.S. Filter Financial Advisors and the U.S.
Filter Board was aware of such arrangement, including the fact that a
significant portion of the aggregate fee payable to the U.S. Filter Financial
Advisors is contingent upon consummation of the Merger.

Other Business Relationships

DLJ provides a full range of financial, advisory and brokerage services and
in the course of its normal trading activities may from time to time effect
transactions and hold positions in the securities or options on securities of
Culligan and/or U.S. Filter for its own account and for the account of
customers. Over the past two years, DLJ has served as lead-manager and
financial advisor to U.S. Filter on several occasions. In December 1996, DLJ
served as lead-manager of U.S. Filter's $400 million common stock offering and
$414 million convertible subordinated notes offering for which DLJ received
customary compensation. DLJ also served as financial advisor in U.S. Filter's
acquisition of Davis, for which DLJ received customary compensation. More
recently, in January 1998, DLJ served as exclusive financial advisor to U.S.
Filter in connection with its merger with Kinetics for which DLJ received
customary compensation. DLJ has also performed investment banking and other
services in the past for Apollo, an affiliate of Culligan and its largest
single stockholder, and its affiliates, for which DLJ has received customary
compensation. From time to time DLJ may perform such financial advisory and
other services for U.S. Filter and Apollo. During the last two years, the
amount of compensation received by DLJ in exchange for services provided to
U.S. Filter has been approximately $13.6 million.

Salomon and its predecessors, Salomon Brothers Inc and Smith Barney, Inc.,
have each previously rendered financial advisory and investment banking
services to U.S. Filter for which they have received customary compensation.
Salomon served as a manager and financial advisor to U.S. Filter's $400
million U.S. Filter Common Stock offering and $414 million convertible
subordinated notes offering. In December 1997 Salomon served as a financial
advisor to U.S. Filter in connection with its acquisition of all of the
outstanding ordinary shares of Memtec. In the ordinary course of its
securities business Salomon and its affiliates may hold or actively trade the
debt and equity securities of U.S. Filter or Culligan, for its own account and
for the accounts of customers and, accordingly, Salomon may at any time hold a
long or short position in such securities. In addition, Salomon and its
affiliates may maintain other business and financial relationships with U.S.
Filter and Culligan. Salomon and its affiliates have also performed investment
banking and other services in the past for Apollo, an affiliate of Culligan
and its largest single stockholder, and its affiliates, for which Salomon and
its affiliates have received customary compensation. From time to time Salomon
may perform such financial advisory and other services for U.S. Filter and
Apollo. During the last two years, the amount of compensation received by
Salomon Brothers Inc, Smith Barney, Inc. and Salomon in exchange for services
provided to U.S. Filter has been approximately $3.3 million, approximately
$2.1 million and approximately $1.0 million, respectively.

OPINIONS OF CULLIGAN FINANCIAL ADVISORS

On February 9, 1998, Bear Stearns and Goldman Sachs rendered their
respective oral opinions to the Culligan Board to the effect that, as of such
date and based upon and subject to various qualifications and assumptions
described in their subsequent written opinions, the Exchange Ratio provided in
the Merger Agreement was fair, from a financial point of view, to the holders
of Culligan Common Stock. Such oral opinions were subsequently confirmed by
delivery of their respective written opinions, dated February 9, 1998 (the
"Opinions").

THE FULL TEXT OF THE WRITTEN OPINION OF BEAR STEARNS (THE "BEAR STEARNS
OPINION") AND THE WRITTEN OPINION OF GOLDMAN SACHS (THE "GOLDMAN SACHS
OPINION"), BOTH DATED FEBRUARY 9, 1998, WHICH SET FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH
THE OPINIONS ARE ATTACHED HERETO AS ANNEXES D AND E, RESPECTIVELY, TO THIS
JOINT PROXY STATEMENT/PROSPECTUS AND ARE INCORPORATED HEREIN BY REFERENCE. THE
FOLLOWING SUMMARY DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF THE
ANALYSIS PERFORMED BY BEAR STEARNS OR GOLDMAN SACHS AND

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IS QUALIFIED BY REFERENCE TO THEIR RESPECTIVE WRITTEN OPINIONS. STOCKHOLDERS
OF CULLIGAN SHOULD READ SUCH OPINIONS IN THEIR ENTIRETY. THE OPINIONS ARE
INTENDED FOR THE BENEFIT AND USE OF THE CULLIGAN BOARD, AND DO NOT ADDRESS THE
MERITS OF THE UNDERLYING DECISION BY CULLIGAN TO ENGAGE IN THE MERGER AND DO
NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF CULLIGAN COMMON STOCK OR U.S.
FILTER COMMON STOCK AS TO HOW SUCH HOLDER SHOULD VOTE ON THE PROPOSED MERGER.

In arriving at their Opinions, neither Bear Stearns nor Goldman Sachs
performed any independent evaluations or appraisals of the assets or
liabilities of Culligan or U.S. Filter or their respective subsidiaries, nor
were they furnished with any such evaluations or appraisals. In addition,
neither Bear Stearns nor Goldman Sachs expressed any opinion as to the price
or range of prices at which U.S. Filter Common Stock may trade subsequent to
the consummation of the Merger. The Opinions are necessarily based on
economic, market and other conditions, and the information made available to
Bear Stearns and Goldman Sachs, as of the date of the Opinions and neither
Bear Stearns nor Goldman Sachs has been requested to update its Opinion based
on information since such date. Although Bear Stearns and Goldman Sachs
evaluated the fairness of the Exchange Ratio to holders of Culligan Common
Stock, the Exchange Ratio itself was determined by U.S. Filter and Culligan
through arm's-length negotiations in which the Culligan Financial Advisors
advised Culligan. Neither Bear Stearns nor Goldman Sachs was asked to or did
express an opinion as to the relative merits of the Merger as compared to any
alternative business strategies that might exist for Culligan or the effect of
any other transaction in which Culligan might engage. Culligan did not provide
specific instructions to, or place any limitations upon, Bear Stearns or
Goldman Sachs with respect to the procedures to be followed or factors to be
considered by them in performing their respective analyses or rendering their
respective Opinions.

In the course of their respective reviews, and in rendering their respective
opinions, Bear Stearns and Goldman Sachs relied upon and assumed, without any
obligation of independent verification, the accuracy and completeness of the
financial and other information provided to or discussed with them by U.S.
Filter and Culligan. In that regard and with respect to financial and
operating forecasts and projections, Bear Stearns and Goldman Sachs assumed
with the consent of the Culligan Board that they were reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
respective senior managements of U.S. Filter and Culligan as to the
anticipated future performance of their respective companies and as to the
anticipated synergies and related cost savings achievable within the
timeframes forecasted therein and that such financial and operating forecasts
and projections would be realized in the amounts and at the time periods
contemplated thereby. Neither Bear Stearns nor Goldman Sachs expressed a view
as to such financial information and forecasts, or the assumptions on which
they were based. Actual results may differ materially from those contemplated
in such forecasts, projections and estimates. See "RISK FACTORS".

Bear Stearns and Goldman Sachs also assumed, with the consent of the
Culligan Board, that the Merger would (i) qualify as a tax-free
"reorganization" under the provisions of Section 368(a) of the Code and (ii)
be accounted for as a pooling of interests under generally accepted accounting
principles. Bear Stearns and Goldman Sachs also expressly noted in their
Opinions that Culligan has the right to terminate the Merger if the Average
Share Price of U.S. Filter Common Stock, or the average of the closing prices
of shares of U.S. Filter Common Stock as reported on the NYSE Composite Tape
for any period of 10 consecutive trading days which ends after the last
trading day used in calculating the Average Share Price, is less than $26.25
(the "Walkaway Price").

For purposes of rendering their Opinions, Bear Stearns and Goldman Sachs
assumed, in all respects material to their respective analyses, that the
representations and warranties of each party in the Merger Agreement and all
related documents and instruments (collectively, the "Documents") contained
therein were true and correct, that each party to the Documents would perform
all of the covenants and agreements required to be performed by such party
under such Documents, and that all conditions to the consummation of the
Merger would be satisfied without waiver thereof. Bear Stearns and Goldman
Sachs assumed that in the course of obtaining the necessary regulatory or
other consents or approvals (contractual or otherwise) for the Merger, no
restrictions, including any divestiture requirements or amendments or
modifications, would be imposed that would have a material adverse effect on
the contemplated benefits of the Merger.

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The summaries set forth below do not purport to be complete descriptions of
the analyses performed by the Culligan Financial Advisors but describe, in
summary form, all material elements of the analyses performed by the Culligan
Financial Advisors in arriving at their respective opinions. The preparation
of a fairness opinion involves various determinations as to the most
appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to summary description. Each of the
analyses conducted by the Culligan Financial Advisors was carried out in order
to provide a different perspective on the transaction and add to the total mix
of information available. The Culligan Financial Advisors did not form a
conclusion as to whether any individual analysis, considered in isolation,
supported or failed to support an opinion as to fairness from a financial
point of view. Rather, in reaching their conclusions, Bear Stearns and Goldman
Sachs each considered the results of the analyses in light of each of the
other analyses and the other information available and ultimately reached
their respective opinions based on the results of the analyses and other
information taken as a whole. The Culligan Financial Advisors did not place
particular reliance or weight on any individual factor, but instead concluded
that, taken as a whole, the analyses and other information supported their
respective determinations. Accordingly, notwithstanding the separate factors
summarized below, the analyses must be considered as a whole and selecting
portions of the analyses and the factors considered by the Culligan Financial
Advisors, without considering all analyses and factors, could create an
incomplete or misleading view of the evaluation process underlying the
Culligan Financial Advisors' Opinions. In performing these analyses, the
Culligan Financial Advisors made numerous assumptions with respect to industry
performance, business and economic conditions and other matters. The analyses
performed by the Culligan Financial Advisors are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by such analyses.

The Bear Stearns Opinion

In arriving at the Bear Stearns Opinion, Bear Stearns (i) reviewed the
Merger Agreement; (ii) reviewed each of U.S. Filter's and Culligan's Annual
Reports to Stockholders and Annual Reports on Form 10-K for the years ended
March 31, 1997 and January 31, 1997, respectively, and their respective
Quarterly Reports on Form 10-Q for the quarterly periods since such Form 10-K
filings; (iii) reviewed certain operating and financial information, including
projections and projected cost savings and synergies, provided to them by U.S.
Filter's and Culligan's respective managements relating to their respective
businesses and prospects; (iv) met with certain members of U.S. Filter's and
Culligan's senior management to discuss the operations, historical financial
statements and future prospects of U.S. Filter and Culligan and their view of
the business, operational and strategic benefits, cost savings, potential
synergies and other implications of the Merger; (v) reviewed the historical
stock prices and trading activity of U.S. Filter Common Stock and Culligan
Common Stock; (vi) reviewed publicly available financial data and stock market
performance data of companies which it deemed generally comparable to U.S.
Filter and Culligan or otherwise relevant to its inquiry; (vii) reviewed the
terms, to the extent publicly available, of recent mergers and acquisitions
which it deemed generally comparable to the Merger or otherwise relevant to
their inquiry; and (viii) considered such other information and conducted such
other studies and analyses, inquiries and investigations Bear Stearns deemed
appropriate.

The following is a summary of the material valuation, financial and
comparative analyses Bear Stearns presented to the Culligan Board of Directors
on February 9, 1998 and which provided the basis for the Bear Stearns Opinion.
In arriving at its Opinion, Bear Stearns did not attribute any particular
weight to any analysis or factor considered by it, but rather made a single
judgment as to fairness based on its experience and professional judgment and
the analysis as a whole.

1. Comparable Public Company Analysis. Bear Stearns reviewed and compared
certain financial information relating to Culligan and U.S. Filter as of
February 6, 1998 to corresponding financial information, ratios and public
market multiples as of such date for the following publicly traded water
purification companies: Nalco, Betzdearborn, Ionics, Inc., Calgon Carbon
Corporation, Cuno Incorporated and Osmonics, Inc. (the "Comparable
Companies"). Bear Stearns also analyzed the implied multiples for Culligan at
$60.00 per share, which is the value per share the Culligan Stockholders would
receive if the U.S. Filter Common Stock trades

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within the $32.00 to $35.00 per share "collar" (the "Transaction Price"), and
at $49.22, which is the value per share the Culligan Stockholders would
receive if U.S. Filter Common Stock trades at $26.25 (the "Walkaway Price")
during the applicable period. Such analysis indicated that the ratio of stock
price to projected earnings per share ("P/E Multiple") resulted in (i) for
calendar year 1997, a range of 17.7x to 23.8x with a harmonic mean of 20.1x
for the Comparable Companies, compared to 39.0x for Culligan (estimated for
the fiscal year ended January 31, 1998) at the Transaction Price and 32.0x at
the Walkaway Price and (ii) for calendar year 1998, a range of 14.7x to 21.2x
with a harmonic mean of 17.8x for the Comparable Companies, compared to 29.9x
for Culligan (projected for the fiscal year ending January 31, 1999) at the
Transaction Price and 24.5x at the Walkaway Price. EPS estimates for the
Comparable Companies were based on the First Call Research Network or
Institutional Broker Estimate System ("IBES") and for Culligan were based on
Culligan management projections.

2. Historical Implied Exchange Ratios. Bear Stearns reviewed the historical
stock prices of Culligan and U.S. Filter Common Stock and the implied market
exchange ratios determined by dividing the price per share of Culligan Common
Stock by the price per share of U.S. Filter Common Stock (the "Market Exchange
Ratio") over various periods of time including, among others, the 180, 90, 60,
30, and 10 trading days ending February 6, 1998. Bear Stearns calculated that
the Market Exchange Ratio averaged 1.333, 1.320, 1.419, 1.385, and 1.087
during the 180, 90, 60, 30, and 10 trading days ended February 6, 1998
(collectively the "Average Market Exchange Ratios"). Bear Stearns then
calculated that (i) the Minimum Exchange Ratio of 1.714 (i.e., the Exchange
Ratio which would result if the U.S. Filter Common Stock price equaled or
exceeded $35.00 per share over the relevant measuring period) represented
premiums of 28.6%, 29.8%, 20.8%, 23.8%, and 57.7%, respectively, and that (ii)
the Maximum Exchange Ratio of 1.875 (i.e., the Exchange Ratio which would
result if the U.S. Filter Common Stock price were less than or equal to $32.00
per share over the relevant measuring period) represented premiums of 40.7%,
42.0%, 32.1%, 35.4%, and 72.4%, respectively, over the Average Market Exchange
Ratios. Bear Stearns also noted that the Market Exchange Ratio on February 6,
1998 was 1.088 and that the Minimum Exchange Ratio and Maximum Exchange Ratio
represented premiums of 57.5% and 72.3%, respectively, over the Market
Exchange Ratio which existed February 6, 1998.

In addition, Bear Stearns examined the daily Market Exchange Ratio for the
period February 6, 1997 through February 6, 1998 and calculated that the
Market Exchange Ratio ranged from a low of 0.987 to a high of 1.791 with a
mean of 1.313. Bear Stearns also observed that on only two days during this
period did the Market Exchange Ratio ever exceed the Minimum Exchange Ratio
and in no instances did the Market Exchange Ratio exceed the Maximum Exchange
Ratio.

3. Implied Premium over Culligan Stock Price. Bear Stearns observed that the
Transaction Price represented a premium of 58.9% over the closing stock price
of Culligan Common Stock on February 6, 1998 and 38.1% over the average of the
closing stock prices of Culligan Common Stock during the 30 trading days ended
February 6, 1998. Bear Stearns observed that the Walkaway Price represented a
premium of 30.4% over the closing stock price of Culligan Common Stock on
February 6, 1998 and 13.3% over the average of the closing stock prices of
Culligan Common Stock during the 30 trading days ended February 6, 1998.

4. Comparable Transaction Analysis. Bear Stearns analyzed certain
information relating to selected transactions in the filtration industry. Such
analysis indicated that for the selected transactions, "enterprise value"
(defined as market value of common equity plus book value of total debt and
preferred stock and minority interest less cash) as a multiple of (i) latest
twelve month ("LTM") revenues ranged from a low of 0.58x to a high of 4.21x
(with a mean of 1.91x), (ii) LTM EBIT ranged from a low of 9.2x to a high of
28.8x (with a mean of 15.3x) and (iii) LTM EBITDA ranged from a low of 8.0x to
a high of 14.6x (with a mean of 10.9x). Bear Stearns observed that for
Culligan the implied multiples of enterprise value to revenues, EBIT and
EBITDA at the Transaction Price were 3.75x, 20.9x, and 26.6x, respectively,
and at the Walkaway Price were 3.16x, 17.6x and 22.4x, respectively.

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5. Relative Contribution Analysis. Bear Stearns calculated the relative
contribution by each of Culligan and U.S. Filter to U.S. Filter following the
Merger on a pro forma combined basis with respect to, among other things,
equity market capitalization and enterprise value at February 6, 1998, and
revenues, EBITDA, EBIT, and net income for the projected fiscal year ended
March 31, 1999 (Culligan's financial projections were adjusted from Culligan's
fiscal year ended January 31, 1999 by Culligan management). In this relative
contribution analysis, Bear Stearns did not take into account any projected
synergies of the Merger. Bear Stearns calculated that Culligan would
contribute to U.S. Filter pro forma for the Merger approximately 15.7% of
revenues, 25.7% of EBITDA, 26.5% of EBIT, and 23.0% of net income for the
fiscal year ended March 31, 1999. Bear Stearns also calculated that, based on
the closing stock prices as of February 6, 1998, Culligan would contribute
20.2% of the fully diluted equity market capitalization (assuming conversion
of U.S. Filter's existing in-the-money convertible securities) and 20.9% of
the enterprise value. This analysis indicated that at the Minimum Exchange
Ratio and the Maximum Exchange Ratio Culligan's Stockholders would own 28.5%
and 30.4%, respectively, of the pro forma shares outstanding of the combined
entity (excluding options for both companies but assuming conversion of U.S.
Filter's existing in-the-money convertible securities).

6. Pro forma Merger Analysis. Bear Stearns analyzed certain pro forma
financial impacts of the Merger on the Culligan Stockholders based on (i) the
Minimum Exchange Ratio and the Maximum Exchange Ratio, (ii) projections for
the fiscal year ended March 31, 1999 (Culligan's financial projections were
adjusted by Culligan management as set forth in "Relative Contribution
Analysis" above), and (iii) an assumption for analytical purposes that the
Merger had occurred on March 31, 1998. Bear Stearns performed analyses that
(i) assumed the realization of certain synergies and (ii) did not assume the
realization of any synergies. In this analysis, Bear Stearns did not take into
account the potential income statement impact of potential restructuring
charges or other non-recurring items associated with the Merger.

The results of this analysis indicated, among other things, that (i) at the
Minimum Exchange Ratio, the Merger would result in the accretion of the
equivalent projected earnings per share ("EPS") of Culligan Common Stock of
21.8% assuming no synergies and 30.3% assuming the realization of certain
synergies, and (ii) at the Maximum Exchange Ratio, the Merger would result in
the accretion of the equivalent projected EPS of Culligan Common Stock of
30.0% assuming no synergies and 39.2% assuming the realization of certain
synergies, as compared to the projected EPS of Culligan Common Stock on a
stand-alone basis.

By way of comparison, the results of this analysis indicated, among other
things, that for the U.S. Filter Stockholders, (i) at the Minimum Exchange
Ratio, the Merger would result in dilution of 5.7% of the equivalent EPS of
the U.S. Filter Common Stock assuming no synergies and accretion of 0.9%
assuming the realization of certain synergies, and (ii) at the Maximum
Exchange Ratio, the Merger would result in dilution of 7.9% of the equivalent
projected EPS of the U.S. Filter Common Stock assuming no synergies and
dilution of 1.5% assuming the realization of certain synergies, as compared to
the projected EPS of U.S. Filter Common Stock on a stand-alone basis.

7. Illustrative Culligan Stockholder Value Analysis. Bear Stearns prepared
illustrative stockholder value matrices in order to demonstrate the
hypothetical pro forma impact of the Merger on the value of an equivalent
share of Culligan Common Stock, based on (i) the Minimum Exchange Ratio and
Maximum Exchange Ratio; (ii) a range of potential P/E Multiples for U.S.
Filter pro forma for the Merger from a low of 17.8x (representing the harmonic
mean of the P/E Multiple of the Comparable Companies for calendar 1998) to a
high of 24.0x with a midpoint of 21.7x (representing U.S. Filter's P/E
Multiple as of February 6, 1998 as a multiple of projected EPS for the fiscal
year ending March 31, 1999); and (iii) a range of synergies. Based on the
projections supplied by the respective managements of Culligan and U.S.
Filter, Bear Stearns calculated that the hypothetical pro forma value of an
equivalent share of Culligan Common Stock on February 6, 1998 assuming the
Merger had occurred (i) at the Maximum Exchange Ratio ranged from a low of
$49.07 (assuming a P/E Multiple for U.S. Filter of 17.8x and no synergies), to
a mid-range value of $63.96 (assuming a P/E Multiple for U.S. Filter of 21.7x
and certain synergies), to a high of $72.35 (assuming a P/E Multiple for U.S.
Filter of 24.0x and a higher level of synergies) and (ii) at the Minimum
Exchange Ratio ranged from a low of $45.95 (assuming a P/E Multiple for U.S.
Filter of 17.8x and no synergies), to a mid-range value of $59.89 (assuming a
P/E Multiple for

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U.S. Filter of 21.7x and certain synergies), to a high of $67.75 (assuming a
P/E Multiple for U.S. Filter of 24.0x and a higher level of synergies). Bear
Stearns noted that these imputed prices would respectively represent (i) for
the Maximum Exchange Ratio, premiums of 30.0%, 69.4%, and 91.6%, respectively
and (ii) for the Minimum Exchange Ratio, premiums of 21.7%, 58.6%, and 79.5%,
respectively, over the February 6, 1998 closing price of Culligan Common
Stock.

In performing its analysis, Bear Stearns was not expressing any opinion as
to the price or range of prices at which U.S. Filter Common Stock may trade
subsequent to the consummation of the Merger. The prices at which
U.S. Filter Common Stock ultimately trade in the stock market will be driven
by a variety of quantitative and qualitative factors (for example, the P/E
Multiple at which U.S. Filter is valued by potential investors, which may be
significantly more or less favorable than the illustrative range of P/E
Multiples used by Bear Stearns for its analytical purposes and the level of
synergies ultimately accepted by the stock market).

Culligan engaged Bear Stearns as its financial advisor because Bear Stearns
is an internationally recognized investment banking firm and is continually
engaged in valuations of business and their securities and in rendering
opinions in connection with mergers, acquisitions, corporate transactions and
other purposes. Culligan retained Bear Stearns based on its qualifications,
expertise and reputation in providing advice to companies in similar
transactions to the Merger.

Bear Stearns has acted as financial advisor to Culligan in connection with
the Merger and will receive a fee for such services, payment of a significant
portion of which is contingent upon the consummation of the Merger. Bear
Stearns has previously rendered certain investment banking and financial
advisory services to Culligan for which Bear Stearns received customary
compensation. In the ordinary course of Bear Stearns' business, Bear Stearns
may actively trade the securities of Culligan and U.S. Filter for its own
account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.

The Goldman Sachs Opinion

Goldman Sachs reviewed, among other things, the Merger Agreement; Annual
Reports to Stockholders and Annual Reports on Form 10-K of Culligan or its
predecessor for the five fiscal years ended January 31, 1997 and U.S. Filter
for the five fiscal years ended March 31, 1997; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of Culligan and U.S. Filter;
certain other communications from Culligan and U.S. Filter to their respective
stockholders; and certain internal financial analyses and forecasts for
Culligan and U.S. Filter prepared by their respective managements. Goldman
Sachs also held discussions with members of the senior management of Culligan
and U.S. Filter regarding the strategic rationale for, and the potential
benefits of, the Merger and the past and current business operations,
financial condition and future prospects of their respective companies. In
addition, Goldman Sachs reviewed the reported price and trading activity for
the Culligan Common Stock and the U.S. Filter Common Stock; compared certain
financial and stock market information for Culligan and U.S. Filter with
similar information for certain other companies the securities of which are
publicly traded; reviewed the financial terms of certain recent business
combinations in the water purification and filtration industry specifically
and in other industries generally and performed such other studies and
analyses as Goldman Sachs considered appropriate.

The following is a summary of the material valuation, financial and
comparative analyses Goldman Sachs presented to the Culligan Board of
Directors on February 9, 1998 and which provided the basis for the Goldman
Sachs Opinion. In arriving at its Opinion, Goldman Sachs did not attribute any
particular weight to any analysis or factor considered by it, but rather made
a single judgment as to fairness based on its experience and professional
judgment and the analysis as a whole.

1. Selected Companies Analysis. Goldman Sachs reviewed and compared certain
financial information relating to Culligan and U.S. Filter as of February 6,
1998 to corresponding financial information, ratios and public market
multiples as of such date for two publicly traded water purification
companies: Ionics, Inc. and Osmonics, Inc. (the "Selected Companies"). The
multiples of Culligan and U.S. Filter were calculated using a

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price of $37.75 per share of Culligan Common Stock and $34.69 per share of
U.S. Filter Common Stock, the closing price of such shares on February 6,
1998, and the multiples of the Selected Companies were calculated using the
closing market prices for such companies on February 6, 1998. Goldman Sachs
considered levered market capitalization (i.e., market value of common equity
plus the book value of debt less cash and cash equivalents) as a multiple of
latest twelve months ("LTM") revenues, as a multiple of LTM EBIT and as a
multiple of LTM EBITDA. Goldman Sachs' analyses of the Selected Companies and
U.S. Filter indicated multiples of levered market capitalization to LTM
revenues with a range from a low of 1.3x to a high of 2.0x (and a mean of 1.7x
and a median of 1.9x), to LTM EBIT with a range from a low of 13.5x to a high
of 32.2x (and a mean of 20.5x and a median of 15.8x), to LTM EBITDA with a
range from a low of 9.5x to a high of 21.5x (and a mean of 13.7x and a median
of 10.2), compared to Culligan's multiples of levered market capitalization to
LTM revenues of 2.8x, LTM EBIT of 19.9x and LTM EBITDA of 15.7x. Goldman Sachs
also considered the P/E ratios for 1997 and 1998 (based on IBES estimates
available as of February 6, 1998) for the Selected Companies and for Culligan
and U.S. Filter, adjusted to a comparable December year-end, which for the
Selected Companies and U.S. Filter ranged from a low of 21.6x to a high of
31.8x for calendar 1997 P/E ratios (with a mean of 25.8x and a median of
24.0x), and a low of 19.1x to a high of 22.8x for calendar 1998 P/E ratios
(with a mean of 21.1x and a median of 21.3x), compared to a calendar 1997 P/E
ratio of 24.0x and a calendar 1998 P/E ratio of 19.7x for Culligan. Five-year
EPS growth rates (based on the above referenced IBES estimates) for the
Selected Companies and U.S. Filter ranged from a low of 14.0% to a high of
27.5% (with a mean of 19.8% and a median of 18.0%) as compared to 20.0% for
Culligan.

2. Historical Trading Analysis. Goldman Sachs reviewed the historical stock
prices and trading volume history for Culligan Common Stock. This analysis
showed weekly closing prices ranging from $23.75 to $49.94 during the period
from December 15, 1995 (the date of first significant trading after Culligan's
1995 underwritten offering) to February 6, 1998. Goldman Sachs also reviewed
the historical stock prices and trading volume history of U.S. Filter Common
Stock. This analysis showed a range of daily closing stock prices for U.S.
Filter Common Stock of $7.61 to $43.75 during the period from February 5, 1993
to February 5, 1998, and a 52 week trading high of $44.44 on October 3, 1997,
a trading low of $25.75 on April 25, 1997, average daily volume of
approximately 793,516 shares and a six-month average stock price of $35.29.

3. Selected Transactions Analysis. Goldman Sachs analyzed certain
information relating to selected transactions in the filtration industry since
May 1998 (including two pending transactions). Such analysis indicated that
for the selected transactions for which transaction pricing and performance
data was available, enterprise consideration as a multiple of (i) LTM revenues
ranged from a low of 0.4x to a high of 3.9x (with a mean of 1.4x and a median
of 1.3x), (ii) LTM EBIT ranged from a low of 10.0x to a high of 43.4x (with a
mean of 19.8x and a median of 15.2x), (iii) LTM EBITDA ranged from a low of
4.9x to a high of 25.4x (with a mean of 12.9x and a median of 11.8x), and (iv)
equity consideration as a multiple of LTM net income ranged from a low of
15.2x to a high of 46.5x (with a mean of 29.4x and a median of 27.6x). Such
analysis also indicated that for the selected transactions, the percentage
premium paid (based on the stock price of the companies one day prior to the
announcement of the transaction) ranged from a discount of 7.1% to a premium
of 45.2%, with a mean of 20.7% and a median of 19.6% premiums.

4. Daily Exchange Ratio History. Goldman Sachs divided the daily Culligan
Common Stock price by the daily U.S. Filter Common Stock price (the "Daily
Exchange Ratio") for each day during the period from December 15, 1995 to
February 6, 1998, and reviewed the Daily Exchange Ratio for such period.
Goldman Sachs noted that, for the Daily Exchange Ratio, the average for the
period from December 15, 1995 to February 6, 1998 was 1.39, the previous six
month average was 1.29, the previous three month average was 1.42, and the
previous one month average was 1.30.

5. Relative Contribution Analysis. Goldman Sachs calculated the relative
contribution by each of Culligan and U.S. Filter to U.S. Filter following the
Merger on a pro forma combined basis with respect to, among other things,
equity market capitalization, levered market capitalization, revenues, EBITDA,
EBIT, and net income for the LTM, estimated fiscal year ended March 31, 1998
("1998EST") and estimated fiscal year

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ended March 31, 1999 ("1999EST"). This analysis was based on U.S. Filter
management projections for 1998EST and 1999EST and Culligan management
projections for estimated fiscal year ended January 31, 1998 adjusted to a
comparable March 31 year-end (together with 1998EST, "1998E") and estimated
fiscal year ended January 31, 1999 adjusted to a comparable March 31 year-end
(together with 1999EST, "1999E"). In this relative contribution analysis,
Goldman Sachs analyzed both before and after the realization of certain
estimated synergies. Goldman Sachs calculated that Culligan would contribute
to U.S. Filter pro forma for the Merger without synergies approximately 17.1%
of revenues, 28.3% of EBITDA, 31.5% of EBIT and 27.7% of net income for LTM,
14.0% of revenues, 22.5% of EBITDA, 25.6% of EBIT and 25.0% of net income for
1998E, and 15.7% of revenues, 25.8% of EBITDA, 26.5% of EBIT, and 23.1% of net
income for 1999E. Goldman Sachs also calculated that, based on the closing
stock prices as of February 6, 1998, Culligan would contribute 20.2% of the
equity market capitalization (assuming conversion of U.S. Filter's existing
in-the-money convertible securities) and 22.8% of the levered market
capitalization. This analysis also indicated that the implied exchange ratio
based on relative contributions for the LTM, 1998E, 1999E, and for revenues,
EBITDA, EBIT, and net income ranged from 0.7 to 1.97.

6. Pro forma Merger Analysis. Goldman Sachs prepared pro forma analyses of
the financial impact of the Merger assuming it would be accounted for as a
pooling of interests. The analyses were based on U.S. Filter management
projections of operating results for the fiscal year ended March 31, 1999 and
Culligan management projections for the fiscal year ended January 31, 1999.
The Culligan projections were then adjusted for a common fiscal year ending
March 31, 1999 in accordance with Culligan management assumptions.

The analysis examined the accretion or dilution to the EPS of U.S. Filter
for the fiscal year ending March 31, 1999 at a range which reflected the
"collar" and assuming the realization of a range of potential synergies. Using
Culligan management estimates for EPS adjusted to a fiscal year ending March
31, 1999 and assuming the realization of certain synergies, the analysis
showed that the Merger would be 1.4% dilutive to U.S. Filter Stockholders at
the highest Exchange Ratio and 1.0% accretive at the lowest Exchange Ratio.
This analysis was based on the fully diluted shares outstanding at the time of
the Opinion but did not take into account any restructuring charges or non-
recurring transaction costs related to the Merger.

7. U.S. Filter Discounted Cash Flow Analysis. Goldman Sachs performed a
discounted cash flow analysis of U.S. Filter utilizing stand-alone U.S. Filter
management projections for U.S. Filter for the years ended March 31, 1999 to
March 31, 2002. Goldman Sachs calculated a net present value of free cash
flows for the years ended March 31, 1999 through 2002 using discount rates
ranging from 9% to 13%. Goldman Sachs calculated U.S. Filter's terminal value
in the year 2002 based on multiples ranging from ten times EBITDA to fourteen
times EBITDA. These terminal values were then discounted using discount rates
ranging from 9% to 13%. Utilizing this analysis, the implied value per share
of U.S. Filter Common Stock (which is the present value of cash flows plus the
terminal value, less net debt, divided by the outstanding shares of U.S.
Filter Common Stock plus the shares issuable upon conversion of existing in-
the-money convertible securities) ranged from a low of $37.34 to a high of
$60.91. Additionally, Goldman Sachs analyzed the sensitivity of the implied
value per share to changes in revenue growth and EBIT margins, assuming a
discount rate of 11% and a terminal value multiple of 12x. Utilizing the
analysis, the implied value per share of U.S. Filter Common Stock ranged from
a low of $28.31 to a high of $62.59.

Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with Culligan having provided certain investment banking services to
Culligan from time to time, including having acted as lead managing
underwriter on two public offerings of Culligan Common Stock on December 14,
1995 and on October 7, 1997, respectively, for which Goldman Sachs received
customary and usual fees, and having acted as its financial advisor in
connection with, and having participated in certain of the negotiations
leading to, the Merger Agreement. Goldman Sachs will receive a fee for such
services, payment of a significant portion of which is contingent upon the
consummation of the Merger.

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Goldman Sachs has advised Culligan that, in the ordinary course of its
business as a full-service securities firm, Goldman Sachs may, subject to
certain restrictions, actively trade the equity and/or debt securities of
Culligan or U.S. Filter for its own account or for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities.

Pursuant to the terms of their respective engagement letters, Culligan has
paid each of Bear Stearns and Goldman Sachs an Opinion Fee of $1 million in
connection with the Opinions. Each Opinion Fee is credited against the
respective transaction fees payable to Bear Stearns and Goldman Sachs.
Culligan has further agreed to pay to each of Bear Stearns and Goldman Sachs a
transaction fee upon consummation of the Merger equal to the greater of (i)
$7.25 million or (ii) .381% of the aggregate Merger Consideration plus the
principal amount of indebtedness for borrowed money. If the Merger is not
consummated, but Culligan receives a payment as a result of the termination or
cancellation of the Merger, then Culligan has agreed to pay each of Bear
Stearns and Goldman Sachs a transaction fee equal to the lesser of $3 million
or 7.5% of any such payment. Culligan also has agreed to indemnify Bear
Stearns and Goldman Sachs against certain liabilities in connection with their
engagements, including certain liabilities under the Federal securities laws.
The terms of the fee arrangement with the Culligan Financial Advisors, which
the Culligan Financial Advisors and Culligan believe are customary in
transactions of this nature, were negotiated at arm's length between Culligan
and the Culligan Financial Advisors and the Culligan Board was aware of such
arrangement, including the fact that a significant portion of the aggregate
fee payable to the Culligan Financial Advisors is contingent upon consummation
of the Merger.

Bear Stearns and Goldman Sachs have previously rendered financial advisory
and investment banking services to Culligan for which they have received
customary compensation. During the last two years, the amount of compensation
received by Bear Stearns and Goldman Sachs in exchange for services provided
to Culligan has been approximately $2.7 million and approximately $3.7
million, respectively.

MANAGEMENT PROJECTIONS

Neither U.S. Filter nor Culligan as a matter of course make public forecasts
or projections as to future revenues or results of operations. However, during
discussions regarding the Merger, U.S. Filter made available to DLJ, Salomon,
Bear Stearns and Goldman Sachs financial projections not available to the
public. In addition, Culligan also provided to DLJ, Salomon, Bear Stearns and
Goldman Sachs financial projections for fiscal 1999 which were not available
to the public. The financial projections for Culligan for fiscal years after
1999 were an extrapolation of projected fiscal year 1999 using assumptions of
Culligan management. The projections were not prepared with a view toward
public disclosure or compliance with either the published guidelines of the
Commission regarding projections or forecasts or the American Institute of
Certified Public Accountants' Guide for Prospective Financial Statements. The
projections were not prepared in accordance with generally accepted accounting
principles and were not audited or reviewed by independent accountants.

The projections provided to Salomon and DLJ by U.S. Filter's management
project revenues for U.S. Filter for fiscal 1999 and fiscal 2000 of $4.3
billion and $4.9 billion, respectively, and project an 8.0% annual increase in
revenues in each of fiscal years 2001 through 2003. The projections project
that U.S. Filter would generate earnings before interest and taxes ("EBIT") of
$331.0 million (7.7% EBIT margin) in fiscal 1999 and $399.5 million (8.2% EBIT
margin) in fiscal 2000 and project that U.S. Filter's EBIT margin would
increase by 70 basis points in each of fiscal 2001 and 2002 and by 40 basis
points in fiscal 2003. The projections further project that U.S. Filter would
generate earnings before interest, taxes, depreciation and amortization
("EBITDA") of $460.0 million (10.7% EBITDA margin) in fiscal 1999 and $545.7
million (11.2% EBITDA margin) in fiscal 2000 and project that U.S. Filter's
EBITDA margin would increase by 70 basis points in each of fiscal 2001 and
2002 and by 40 basis points in fiscal 2003. The projections project that U.S.
Filter would generate net income of $186 million, $236.6 million, $291.3
million, $361.8 million and $419.6 million in fiscal years 1999, 2000, 2001,
2002 and 2003, respectively, and diluted earnings per share of $1.60, $1.97,
$2.36, $2.84 and $3.28 in each of the aforementioned years.

The projections provided to Bear Stearns and Goldman Sachs by U.S. Filter's
management through its financial advisors project for U.S. Filter for fiscal
1999, revenues of $4.3 billion, EBIT of $331.0 million and

50
<PAGE>

diluted earnings per share of $1.60. Financial projections provided to Bear
Stearns and Goldman Sachs by U.S. Filter's management through its financial
advisors for fiscal years after 1999 (as well as fiscal 1999 EBITDA) were an
extrapolation of projected fiscal year 1999 using assumptions contained in
rating agency presentation materials provided by U.S. Filter management.

The projections provided to Salomon, DLJ, Bear Stearns and Goldman Sachs by
Culligan's management project revenues for Culligan for fiscal 1999 of $771.0
million. The projections project that Culligan will generate EBIT of $114.8
million (14.9% EBIT margin) and, extrapolated from assumptions provided by
Culligan management, EBITDA of approximately $147.3 million in fiscal 1999.
Finally, the projections project that Culligan will generate net income for
fiscal 1999 of $53.6 million.

The assumptions and estimates underlying the projections are inherently
uncertain and, though considered reasonable by the managements of U.S. Filter
and Culligan, as the case may be, as of the date hereof, are subject to a wide
variety of significant business, economic and competitive risks and
uncertainties that could cause actual results to differ materially from those
projected, including, among others, risks and uncertainties including the
following: (A) seasonality and market factors may affect cash flow and there
can be no assurance that such conditions will not have an adverse effect on
U.S. Filter's or Culligan's financial projections, (B) both U.S. Filter and
Culligan are subject to the possibility of new or intensified competition as a
result of efforts by direct competitors to grow or gain market share which may
in turn affect either company's sales volume, pricing and/or margins, (C)
there is a risk that U.S. Filter's or Culligan's financial performance could
be impacted by a recession or depression, (D) U.S. Filter's or Culligan's
capital expenditure levels assumed in preparation of the projected financial
data contained herein may be inadequate to maintain either of their long-term
competitive positions and (E) the other risks set forth elsewhere herein under
the heading "Risk Factors" and other risk factors incorporated herein by
reference. The inherent uncertainties in results increase materially for years
closer to the end of the projection periods. Accordingly, there can be no
assurance that projected results are indicative of the future performance of
U.S. Filter or Culligan or that actual results will not be materially higher
or lower than those projections. Inclusion of these projections in this
prospectus should not be regarded as a representation by any person that the
projected results will be achieved. See the introductory paragraph to "RISK
FACTORS" for information regarding forward-looking information.

Neither U.S. Filter nor Culligan generally publishes its business plans and
strategies or makes external projections of its anticipated financial position
or results of operations. Accordingly, after the expected date of consummation
of the Merger, neither U.S. Filter nor Culligan intend to update or otherwise
revise the projections to reflect circumstances existing since their
preparation or to reflect the occurrence of unanticipated events, even in the
event that any or all of the underlying assumptions are shown to be in error.
Furthermore, neither U.S. Filter nor Culligan intend to update or revise the
projections to reflect changes in general economic or industry conditions.
However, U.S. Filter's and, to the extent it remains subject to the reporting
requirements of the U.S. Securities Exchange Act of 1934, as amended,
Culligan's regular quarterly and annual financial statements, and the
accompanying discussion and analysis, contained in their Quarterly Reports on
Form 10-Q and Annual Reports on Form 10-K, will contain disclosure concerning
actual financial condition and results of operations during the periods
covered by the projections. The independent auditors for Culligan and U.S.
Filter have neither examined nor compiled the prospective financial
information described above and, accordingly, do not express an opinion or any
form of assurance with respect thereto.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the unanimous recommendation of the Culligan Board with
respect to the Merger Agreement, Culligan Stockholders should be aware that
certain officers and directors of Culligan (or their affiliates) have
interests in the Merger that are different from and in addition to the
interests of Culligan Stockholders and the U.S. Filter Stockholders generally.
The Culligan Board and the U.S. Filter Board were aware of these interests and
took these interests into account in approving the Merger Agreement and the
transactions contemplated thereby.

Culligan Options. Prior to the Effective Time, Culligan will take all such
actions as may be necessary to cause each unexpired and unexercised Culligan
Option outstanding on the date of the Merger Agreement to be automatically
converted at the Effective Time into an option (a "U.S. Filter Exchange
Option") to purchase that

51
<PAGE>

number of shares of U.S. Filter Common Stock equal to the number of shares of
Culligan Common Stock issuable immediately prior to the Effective Time upon
exercise of the Culligan Option (without regard to actual restrictions on
exercisability) multiplied by the Exchange Ratio, with an exercise price per
share of U.S. Filter Common Stock equal to the exercise price per share of
Culligan Common Stock which existed under the corresponding Culligan Option
divided by the Exchange Ratio, and with other terms and conditions that are
the same as the terms and conditions of such Culligan Option immediately
before the Effective Time; provided that with respect to any Culligan Option
that is an "incentive stock option" within the meaning of Section 422(b) of
the Code, the foregoing conversion will be carried out in a manner satisfying
the requirements of Section 424(a) of the Code.

As of the Culligan Record Date, approximately 1,688,876 shares of Culligan
Common Stock were issuable upon the exercise of outstanding Culligan Options,
which options, assuming a final Exchange Ratio of 1.8391, will be converted to
become approximately 3,106,012 U.S. Filter Exchange Options at the Effective
Time. The weighted average exercise price per share of all Culligan Options
outstanding as of January 31, 1998 was approximately $23.12 per share.
Following the Merger and assuming a final Exchange Ratio of 1.8391, the
weighted average exercise price per share of U.S. Filter Exchange Options will
be approximately $12.57 per share. Assuming that such Culligan Options remain
outstanding until the Effective Time and that all U.S. Filter Exchange Options
are exercised immediately after the Effective Time and assuming a final
Exchange Ratio of 1.8391, the holders thereof would hold approximately 2.3% of
all U.S. Filter Common Stock issued and outstanding immediately after the
Effective Time (without including any U.S. Filter Common Stock otherwise held
by such holders). Substantially all of the executive officers and directors of
Culligan currently hold Culligan Options which will become U.S. Filter
Exchange Options.

U.S. Filter has agreed under the Merger Agreement to file with the
Commission, within 10 business days after the date of the Effective Time, a
registration statement on Form S-8 or other appropriate form under the
Securities Act to register the U.S. Filter Common Stock issuable upon exercise
of the U.S. Filter Exchange Options and to use its reasonable efforts to cause
such registration statement to remain effective until the exercise or
expiration of such options.

Employee Benefits. For at least one year from and after the Effective Time,
U.S. Filter has agreed in the Merger Agreement to provide Culligan employees
with (i) pension and savings benefits, (ii) health and medical benefits, (iii)
severance benefits, and (iv) other employee benefits that are, in the case of
each such category of benefits, no less favorable in the aggregate than the
comparable benefits provided to comparable employees of U.S. Filter and its
affiliates immediately before the Effective Time. U.S. Filter has agreed in
the Merger Agreement to honor, in accordance with their terms and except to
the extent amended in accordance with such terms, all Culligan employee
benefit plans and all contracts, plans, and programs providing for
compensation or benefits for Culligan employees.

From and after the Effective Time, U.S. Filter has agreed to treat all
service by Culligan employees with Culligan and its affiliates and their
respective predecessors prior to the Effective Time for all purposes as
service with U.S. Filter (except to the extent such treatment would result in
duplicative accrual on or after the Closing Date of benefits for the same
period of service), and, with respect to any medical or dental benefit plan in
which Culligan employees participate after the Effective Time, U.S. Filter has
agreed to waive or cause to be waived any pre-existing condition exclusions
and actively-at-work requirements (provided, however, that no such waiver will
apply to a pre-existing condition of any Culligan employee who was, as of the
Effective Time, excluded from participation in a Culligan benefit plan by
virtue of such pre-existing condition), and has agreed to provide that any
covered expenses incurred on or before the Effective Time by a Culligan
employee or a Culligan employee's covered dependent shall be taken into
account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions after the Effective Time to the same extent
as such expenses are taken into account for the benefit of similarly situated
employees of U.S. Filter and subsidiaries of U.S. Filter.

Stay Bonus Program. The Merger Agreement provides that Culligan may
implement a stay-bonus or similar program providing for payments in an
aggregate amount, not to exceed $5 million for employees of Culligan and will
consult with, but need not have the approval of, U.S. Filter prior to
implementing any such plans.

52
<PAGE>

Pertz Employment Agreement. As of February 1, 1997, Culligan entered into a
two-year employment agreement with Mr. Pertz (the "Pertz Employment
Agreement"), which became effective on February 1, 1998 upon the expiration of
a prior employment agreement. The term of employment under the Pertz
Employment Agreement expires on January 31, 2000.

Under the Pertz Employment Agreement, if Mr. Pertz's employment is
terminated by Culligan without "cause" or by Mr. Pertz for "good reason," Mr.
Pertz will become entitled to receive certain severance benefits including any
incentive bonus then payable under the Pertz Employment Agreement plus a
payment equal to the greater of (i) $600,000 and (ii) $50,000 multiplied by
the number of full calendar months remaining in the term of the Pertz
Employment Agreement. Additionally, if any payments or benefits received by
Mr. Pertz pursuant to the Pertz Employment Agreement or related stock option
agreement in connection with such a termination of employment become subject
to the tax imposed by Section 4999 of the Code, Mr. Pertz shall be paid an
amount (the "Additional Payment") equal to the amount of such tax.

Mr. Pertz may terminate his employment agreement for "good reason" upon the
occurrence of a "change in control" as defined in the Pertz Employment
Agreement. The Merger will constitute a "change in control" for purposes of
the Pertz Employment Agreement.

Indemnification; Insurance. In the Merger Agreement, U.S. Filter agreed that
U.S. Filter will cause Subcorp to amend its Certificate of Incorporation to
add provisions to such Certificate of Incorporation to limit the liability of
and to indemnify Culligan's directors and executive officers to the fullest
extent provided for by the DGCL, and not to amend such provisions for a period
of at least six years from the Effective Time, except to make such provisions
more favorable to current or former directors and officers.

The Merger Agreement also provides that from and after the Effective Time,
U.S. Filter will indemnify, defend and hold harmless the present and former
officers and directors of Culligan in respect of acts or omissions occurring
prior to the Effective Time to the fullest extent permitted by applicable law,
including with respect to taking all actions necessary to advance expenses to
the extent permitted by applicable law.

U.S. Filter has also agreed to use all reasonable efforts to cause the
Surviving Corporation or U.S. Filter to obtain and maintain in effect for a
period of six years after the Effective Time policies of directors' and
officers' liability insurance at no cost to the beneficiaries thereof with
respect to acts or omissions occurring prior to the Effective Time with
substantially the same coverage and containing substantially similar terms and
conditions as existing policies; provided, however, that neither the Surviving
Corporation nor U.S. Filter shall be required to pay an annual premium for
such insurance coverage in excess of 250% of Culligan's current annual
premium, but in such case shall purchase as much coverage as possible for such
amount

See "THE SUPPORT/VOTING AGREEMENTS," and "THE REGISTRATION RIGHTS
AGREEMENT."

ANTICIPATED ACCOUNTING TREATMENT

Consummation of the Merger is conditioned upon the receipt by U.S. Filter
and Culligan of letters, in form and substance reasonably satisfactory to U.S.
Filter and Culligan, from KPMG Peat Marwick LLP, dated the date of the
Effective Time, stating that they concur with the conclusion of U.S. Filter's
management that the Merger will qualify as a transaction to be accounted for
by U.S. Filter in accordance with the pooling-of-interests method of
accounting under the requirements of Opinion No. 16 "Business Combinations" of
the Accounting Principles Board of the American Institute of Certified Public
Accountants, as amended by applicable pronouncements by the Financial
Accounting Standards Board, and all related published rules, regulations and
policies of the Commission. If the Merger were not to qualify for the pooling-
of-interests treatment for accounting purposes, the Merger would be treated as
a purchase for accounting purposes. Pursuant to the Merger Agreement, U.S.
Filter, Subcorp and Culligan have agreed not to take any action that would, or
would be reasonably likely to, prevent U.S. Filter from accounting for the
Merger in accordance with the pooling-of-interests method. The pooling
condition may be waived if waived by each of Culligan, U.S. Filter and
Subcorp. However, none of Culligan, U.S. Filter nor Subcorp intends to waive
this condition. See "THE MERGER AGREEMENT--Termination, Amendment and Waiver."

53
<PAGE>

Under the pooling-of-interests method of accounting, the historical basis of
the assets and liabilities of U.S. Filter and Culligan will be combined at the
Effective Time and carried forward at their previously recorded amounts, the
stockholders' equity accounts of U.S. Filter and Culligan will be combined on
U.S. Filter's consolidated balance sheet and no goodwill or other intangible
assets will be created. Consolidated financial statements of U.S. Filter
issued after the Merger will be restated retroactively to reflect the
consolidated operations of U.S. Filter and Culligan as if the Merger had taken
place prior to the periods covered by such consolidated financial statements.

The unaudited pro forma combined financial information contained in this
Joint Proxy Statement/Prospectus has been prepared using the pooling-of-
interests accounting method to account for the Merger. Consistent with
pooling-of-interests accounting treatment, the direct costs related to the
Merger will be taken as a non-recurring charge to earnings in the quarter in
which the Merger is consummated. See "UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION," including the Notes contained therein.

NO APPRAISAL RIGHTS

Pursuant to Section 262 of the DGCL, holders of Culligan Common Stock and
U.S. Filter Common Stock are not entitled to appraisal rights in connection
with the Merger because the U.S. Filter Common Stock and the Culligan Common
Stock are traded on the NYSE and holders of Culligan Common Stock will receive
in the Merger only shares of U.S. Filter Common Stock and/or cash in lieu of
fractional shares thereof.

GOVERNMENTAL APPROVALS

Antitrust. Transactions such as the merger are reviewed by the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
or the United States Federal Trade Commission (the "FTC") to determine whether
they comply with applicable antitrust laws. Under the provisions of the HSR
Act and the rules promulgated thereunder by the FTC, the Merger may not be
consummated until such time as certain information has been furnished to the
Antitrust Division and the FTC and the specified waiting period requirements
of the HSR Act have been satisfied. Culligan and U.S. Filter each filed its
respective notification and report forms under the HSR Act on February 18,
1998. The waiting period under the HSR Act in connection with U.S. Filter's
acquisition of Culligan was terminated on April 1, 1998.

At any time before or after the Effective Time, the Department of Justice,
the FTC, state attorneys general, non-U.S. regulatory agencies or a private
person or entity could challenge the Merger under the antitrust laws and seek,
among other things, to enjoin the Merger or to cause the divestiture of
certain assets of Culligan or U.S. Filter. Private parties may also seek to
take legal action under the antitrust laws under certain circumstances. U.S.
Filter and Culligan believe that the consummation of the Merger will not
violate any antitrust laws. Nonetheless, there can be no assurance that a
challenge to the Merger on antitrust grounds will not be made or, if such a
challenge is made, with respect to the result thereof.

In addition, other filings with, notifications to and authorizations and
approvals of, various governmental agencies, both U.S. and non-U.S., with
respect to the transactions contemplated by the Merger Agreement, relating
primarily to antitrust and securities law issues, must be made and received
prior to the consummation of the Merger.

Status of Regulatory Approvals and Other Information. Culligan and U.S.
Filter have filed applications with all applicable regulatory agencies, and
have taken, or will take, other appropriate action with respect to any
requisite approvals or other action of any court, administrative agency or
commission or other governmental authority or instrumentality, U.S. or non-
U.S., whose consent, approval, order or authorization, or with whom
registration, declaration or filing of the Merger Agreement is required to
consummate the Merger and related transactions, subject to the provisions of
the Merger Agreement.

54
<PAGE>

and the absence of any injunction restraining consummation of the Merger. See
"THE MERGER AGREEMENT--Conditions to the Merger." There can be no assurance
that any governmental agency will approve or take any other required action
with respect to the Merger, and, if approvals are received or action is taken,
that such approvals or action will not be conditioned upon matters that would
cause the parties to abandon the Merger. In addition there can be no assurance
that an action will not be brought challenging such approvals or action,
including a challenge by the FTC or the Department of Justice, or, if such a
challenge is made, with respect to the result thereof.

As of the date hereof, Culligan and U.S. Filter are not aware of any
material governmental approvals that may be required for consummation of the
Merger other than as described above. Should any other approval or action be
required, it is presently contemplated that such approval or action would be
sought. There can be no assurance, however, that any such approval or action,
if needed, could be obtained and would not be conditioned in a manner that
would cause the parties to abandon the Merger.

MANAGEMENT AND PRINCIPAL STOCKHOLDERS OF U.S. FILTER

For information concerning directors, executive officers, certain
relationships and related transactions and voting securities and principal
holders thereof of U.S. Filter, please see the Proxy Statement on Schedule 14A
of U.S. Filter dated July 8, 1997 and the Annual Report on Form 10-K of U.S.
Filter for the fiscal year ended March 31, 1997, each of which is incorporated
herein by reference. See "AVAILABLE INFORMATION."

55
<PAGE>

PRINCIPAL STOCKHOLDERS OF CULLIGAN

Based on a review of statements filed with the Commission pursuant to
Section 13 of the Exchange Act, the following table sets forth certain
information about persons known to Culligan who are the beneficial owner of
more than 5% of the Culligan Common Stock, and as to the beneficial ownership
of the Culligan Common Stock by each of Culligan's directors and named
executive officers and all of Culligan's directors and executive officers as a
group, as of April 30, 1998. Except as otherwise indicated, to the knowledge
of Culligan, the persons identified below have sole voting power and sole
investment power with respect to the shares they beneficially own.

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS/OR TITLE OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT
--------------------------------------------- ------------------ -------
<S> <C> <C>
Apollo Investment Fund, LP(1).................... 7,334,859 28.5%
c/o Apollo Advisors, LP
2 Manahattanville Road
Purchase, New York 10577
American Express Company (2)..................... 2,262,950 9.0%
American Express Tower
299 Vesey Street
New York, NY 10285
Andrew D. Africk................................. 623 *
Apollo Management LP
1301 Avenue of the Americas 38th Floor
New York, NY 10019
R. Theodore Ammon................................ 957 *
Big Flower Press Holdings, Inc.
3 East 54th Street 19th Floor
New York, NY 10022
Bernard Attal.................................... 957 *
Apollo Management LP
1301 Avenue of the Americas 38th Floor
New York, NY 10019
Leon D. Black.................................... 957 *
Apollo Management LP
1301 Avenue of the Americas 38th Floor
New York, NY 10285
Robert H. Falk................................... 957 *
Apollo Management LP
1301 Avenue of the Americas 38th Floor
New York, NY 10019
Michael G. Fisch................................. 153 *
American Securities Capital Partners, LP
122 E. 42nd Street Suite 2400
New York, NY 10168
Mark H. Rachesky................................. 153 *
MHR Advisors
40 West 57th Street 33rd Floor
New York, NY 10019
</TABLE>

(continued on next page)

56
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS/OR TITLE OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT
--------------------------------------------- ------------------ -------
<S> <C> <C>
Robert L. Rosen.................................. 957 *
RLR Partners, LP
825 Third Avenue 40th Floor
New York, NY 10022
Marc Rowan....................................... 957 *
Apollo Management LP
1301 Avenue of the Americas 38th Floor
New York, NY 10019
Stephen J. Solarz................................ 100 *
APCO Associates, Inc.
1615 L Street NW
Washington, DC 20036
Carl Spielvogel.................................. 303 *
Carl Spielvogel Associates
375 Park Avenue Suite 1209
New York, NY 10052
Douglas A. Pertz................................. 551,726(3) 2.1%
President and Chief Executive Officer
Michael E. Salvati............................... 14,500(4) *
Vice President, Finance and
Chief Financial Officer
Edward A. Christensen............................ 24,300(5) *
Vice President, General Counsel
and Secretary
Calvin R. Hendrix................................ 12,000(6) *
Group President--North America
Kenneth I. Wellings.............................. 34,500(7) *
Vice President, International
All directors and executive officers as a group.. 637,026(8) 2.4%
</TABLE>
- --------
* Less than 1.0%

(1) Includes 3,666,696 shares beneficially held by Lion Advisors, LP for the
benefit of an investment account under management over which Lion
Advisors, LP holds investment, voting and dispositive power. Lion
Advisors, LP is an affiliate of Apollo Advisors, LP ("Apollo Advisors"),
the managing general partner of Apollo Investment Fund, LP. Each of
Messrs. Leon Black and John Hannan, directors of each of Apollo Capital
Management, Inc. and Lion Capital Management, Inc., the general partners
of each of Apollo Advisors and Lion Advisors, LP, respectively, and
Messrs. Africk, Falk and Rowan, disclaim beneficial ownership of all of
other indicated shares.

(2) Based on a Schedule 13G Amendment No. 1 filed with the Commission by
American Express Company and American Express Financial Corporation as of
December 31, 1997, an aggregate of 2,262,950 shares of Culligan Common
Stock (9.0% of its outstanding Common Stock at such date) were
beneficially owned by American Express Financial Corporation (of which
shared voting power was reported as to 1,124,750 shares and shared
dispositive power was reported as to 2,262,950 shares).

(3) Includes presently exercisable options to purchase 551,426 shares. Does
not include options for 240,000 shares not presently exercisable.

57
<PAGE>

(4) Includes options for 13,500 shares under Culligan's 1995 Amended and
Restated Stock Option and Incentive Compensation Plan that are presently
exercisable; does not include options for 46,500 shares under such plan
that are not currently exercisable.

(5) Includes options for 24,100 shares under Culligan's 1995 Amended and
Restated Stock Option Plan that are presently exercisable; does not
include options for 50,900 shares under such plan that are not presently
exercisable.

(6) Includes options for 12,000 shares under Culligan's 1995 Amended and
Restated Stock Option Plan that are presently exercisable; does not
include options for 68,000 shares under such plan that are not presently
exercisable.

(7) Consists of options for 34,500 shares presently exercisable under
Culligan's 1995 Stock Option and Incentive Compensation Plan; does not
include options for 64,000 shares under such plan that are not presently
exercisable.

(8) Does not include options that are not presently exercisable; percentage
amounts assumes the exercise by such persons of all options to acquire
shares of Culligan's Common Stock and no exercise by any other person.

Apollo Management LP has from time-to-time performed certain services for
Culligan in connection with acquisition transactions (other than the Merger
and transactions related thereto). In respect of such past services Culligan
presently expects to reimburse Apollo Management LP for expenses previously
incurred in an aggregate amount not in excess of $1.5 million.

58
<PAGE>

U.S. FILTER

SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED MARCH 31,(1) DECEMBER 31,(1)
---------------------------------------------------- ----------------------
1993(2) 1994(3) 1995(4) 1996(5) 1997(6) 1996(6) 1997(7)
-------- -------- -------- ---------- ---------- ---------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Revenues................ $511,623 $620,709 $830,765 $1,090,745 $1,764,406 $1,094,636 $2,346,553
Cost of Sales........... 408,859 500,731 658,834 836,973 1,376,615 859,754 1,798,595
-------- -------- -------- ---------- ---------- ---------- ----------
Gross Profit........... 102,764 119,978 171,931 253,772 387,791 234,882 547,958
Selling, general and
administrative
expenses............... 95,357 115,979 131,210 192,387 316,190 196,752 414,546
Purchased in-process
research and
development............ -- -- -- -- -- -- 299,505
Merger, restrtucturing
and other acquisition
related charges........ -- -- -- -- 5,581 5,581 141,109
-------- -------- -------- ---------- ---------- ---------- ----------
95,357 115,979 131,210 192,387 321,771 202,333 855,160
-------- -------- -------- ---------- ---------- ---------- ----------
Operating income
(loss)................ 7,407 3,999 40,721 61,385 66,020 32,549 (307,202)
Other income (expense):
Interest expense....... (4,627) (5,570) (8,807) (16,280) (26,509) (15,907) (34,374)
Other.................. 2,236 (6,953) 1,611 5,923 3,678 2,981 3,002
-------- -------- -------- ---------- ---------- ---------- ----------
(2,391) (12,523) (7,196) (10,357) (22,831) (12,926) (31,372)
-------- -------- -------- ---------- ---------- ---------- ----------
Income (loss) before
income tax expense
(benefit),
extraordinary item and
cumulative effect of a
change in accounting
principle............. 5,016 (8,524) 33,525 51,028 43,189 19,623 (338,574)
Income tax expense
(benefit).............. 1,237 (5,751) 8,904 20,329 10,681 3,845 (1,273)
-------- -------- -------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary item and
cumulative effect of a
change in accounting
principle............. 3,779 (2,773) 24,621 30,699 32,508 15,778 (337,301)
Extraordinary item...... 405 -- -- -- -- -- --
Cumulative effect of a
change in accounting
principle.............. 459 -- -- -- -- -- --
-------- -------- -------- ---------- ---------- ---------- ----------
Net income (loss)...... $ 4,643 $ (2,773) $ 24,621 $ 30,699 $ 32,508 $ 15,778 $ (337,301)
======== ======== ======== ========== ========== ========== ==========
PER COMMON SHARE
DATA:(8)
BASIC:
Income (loss) before
extraordinary item and
cumulative effect of a
change in accounting
principle............. $ 0.09 $ (0.11) $ 0.68 $ 0.62 $ 0.51 $ 0.27 $ (3.65)
Extraordinary item..... 0.01 -- -- -- -- -- --
Cumulative effect of a
change in accounting
principle............. 0.02 -- -- -- -- -- --
-------- -------- -------- ---------- ---------- ---------- ----------
Net Income (loss)...... $ 0.12 $ (0.11) $ 0.68 $ 0.62 $ 0.51 $ 0.27 $ (3.65)
======== ======== ======== ========== ========== ========== ==========
DILUTED:
Income (loss) before
extraordinary item and
cumulative effect of a
change in accounting
principle............. $ 0.09 $ (0.11) $ 0.66 $ 0.61 $ 0.49 $ 0.26 $ (3.65)
Extraordinary item..... 0.01 -- -- -- -- -- --
Cumulative effect of a
change in accounting
principle............. 0.02 -- -- -- -- -- --
-------- -------- -------- ---------- ---------- ---------- ----------
Net Income (loss)...... $ 0.12 $ (0.11) $ 0.66 $ 0.61 $ 0.49 $ 0.26 $ (3.65)
======== ======== ======== ========== ========== ========== ==========
Basic weighted average
number of common
shares outstanding.... 27,878 31,267 35,198 48,369 64,082 59,016 92,340
Diluted weighted
average number of
common shares
outstanding........... 28,171 31,267 35,568 49,668 66,531 61,071 92,340
======== ======== ======== ========== ========== ========== ==========
CONSOLIDATED BALANCE
SHEET DATA (END OF
PERIOD):
Working capital......... $ 79,094 $113,105 $135,079 $ 159,148 $ 515,152 $ 641,333 $ 545,628
Total assets............ $274,635 $430,206 $583,633 $1,003,316 $2,397,563 $2,129,806 $3,360,782
Notes payable and long-
term debt, including
current portion........ $ 42,899 $ 41,398 $ 65,192 $ 74,848 $ 86,066 $ 76,972 $ 629,633
Convertible subordinated
debt................... $ -- $ 60,000 $105,000 $ 200,000 $ 554,000 $ 554,000 $ 554,000
Stockholders' equity.... $128,189 $171,758 $200,548 $ 407,390 $1,045,830 $ 970,526 $1,193,524
</TABLE>
(notes on following page)

59
<PAGE>

- --------
(1) The historical consolidated financial data for U.S. Filter for the fiscal
years ended March 31, 1993, 1994, 1995, 1996 and 1997 and for the nine
months ended December 31, 1996 have been restated to include the accounts
and operations of Kinetics, which was merged with U.S. Filter effective
December 1997 and accounted for as a pooling of interests. Separate
results of operations for each of U.S. Filter and Kinetics for the years
ended March 31, 1993, 1994, 1995, 1996 and 1997 and the nine months ended
December 31, 1996 and 1997 are presented below:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED MARCH 31,(1) DECEMBER 31,(1)
------------------------------------------------- ----------------------
1993(2) 1994(3) 1995(4) 1996(5) 1997(6) 1996(6) 1997(7)
-------- -------- -------- ---------- ---------- ---------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
U.S. Filter (as
previously reported)... $416,725 $475,236 $600,832 $ 812,322 $1,376,601 $ 838,936 $2,346,553
Kinetics................ 94,898 145,473 229,933 278,423 387,805 255,700 --
-------- -------- -------- ---------- ---------- ---------- ----------
Combined............... $511,623 $620,709 $830,765 $1,090,745 $1,764,406 $1,094,636 $2,346,553
======== ======== ======== ========== ========== ========== ==========
OPERATING INCOME (LOSS):
U.S. Filter (as
previously reported)... $ 6,049 $ (2,358) $ 28,047 $ 45,382 $ 82,913 $ 51,296 $ (307,202)
Kinetics................ 1,358 6,357 12,674 16,003 (16,893) (18,747) --
-------- -------- -------- ---------- ---------- ---------- ----------
Combined............... $ 7,407 $ 3,999 $ 40,721 $ 61,385 $ 66,020 $ 32,549 $ (307,202)
======== ======== ======== ========== ========== ========== ==========
NET INCOME (LOSS):
U.S. Filter (as
previously reported)... $ 2,547 $ (7,892) $ 15,267 $ 21,967 $ 46,197 $ 29,014 $ (337,301)
Kinetics................ 2,096 5,119 9,354 8,732 (13,689) (13,236) --
-------- -------- -------- ---------- ---------- ---------- ----------
Combined............... $ 4,643 $ (2,773) $ 24,621 $ 30,699 $ 32,508 $ 15,778 $ (337,301)
======== ======== ======== ========== ========== ========== ==========
NET INCOME (LOSS) PER
COMMON SHARE(8):
BASIC:
As previously
reported.............. $ 0.02 $ (0.34) $ 0.50 $ 0.50 $ 0.79 $ 0.55 $ --
As restated............ 0.12 (0.11) 0.68 0.62 0.51 0.27 (3.65)
DILUTED:
As previously
reported.............. $ 0.02 $ (0.34) $ 0.49 $ 0.49 $ 0.77 $ 0.52 $ --
As restated............ 0.12 (0.11) 0.66 0.61 0.49 0.26 (3.65)
</TABLE>

(2) The fiscal year ended March 31, 1993 includes twelve months of results of
Societe des Ceramiques Techniques, S.A. ("SCT"), acquired April 1, 1992
and three months of The Permutit Company, Inc., a United States company
acquired January 5, 1993, accounted for as purchases. The fiscal year
ended March 31, 1993 also includes extraordinary gains of $0.4 million
resulting from the forgiveness of debt in connection with the buyout of a
capital lease obligation and $0.5 million resulting from U.S. Filter's
Davis subsidiary's adoption of SFAS No. 109, "Accounting for Income Taxes"
which is accounted for as a change in accounting principle.

(3) The fiscal year ended March 31, 1994 includes four months of results of
Ionpure Technologies Corporation and IP Holding Company ("Ionpure"),
acquired December 1, 1993 and accounted for as a purchase. Selling,
general and administrative expenses for the year ended March 31, 1994
reflect four months of integration of Ionpure, certain charges totaling
$2.4 million related to the rationalization of certain wastewater
operations and write-off of certain intangibles in the U.S. Filter's
Continental Penfield subsidiary totaling $3.7 million. In addition, the
year ended March 31, 1994 includes a charge of $8.9 million to reflect a
plan to shutdown and reorganize certain operations of Davis.

(4) The fiscal year ended March 31, 1995 includes the results of operations of
Smogless S.p.A., Crouzat S.A., Sation S.A., Seral Erich Alhauser GmbH and
the Ceraflo ceramic product line from the dates of their respective
acquisitions, accounted for as purchases.

(5) The fiscal year ended March 31, 1996 includes the results of operations of
The Permutit Company Limited and The Permutit Company Pty Ltd., Interlake
Water Systems, Arrowhead Industrial Water Inc. and

60
<PAGE>

Polymetrics Inc. from the dates of their respective acquisitions, accounted
for as purchases. General and administrative expenses for the year ended
March 31, 1996 includes charges totaling $3.2 million related to the write-
down of certain patents and equipment of Zimpro.

(6) The fiscal year ended March 31, 1997 includes the results of operations of
USG, WaterPro, WSMG, and PED from the dates of their respective
acquisitions, accounted for as purchases. The year ended March 31, 1997
and the nine months ended December 31, 1996 includes merger expenses of
$5.6 million, related to the acquisition of Davis, which was accounted for
as a pooling of interests. Cost of goods sold for the year ended March 31,
1997 includes charges recorded by Kinetics totaling $26.0 million related
certain unreimbursed project costs. Selling, general and administrative
expenses for the year ended March 31, 1997 includes charges totaling $6.8
million for increases in Kinetics' allowance doubtful accounts, the write-
off of certain receivables, the write-down of certain assets and the
establishment of certain accruals.

(7) The nine months ended December 31, 1997 includes the results of operations
for Memtec from the date of its acquisition on December 9, 1997, accounted
for as a purchase. The nine months ended December 31, 1997 also includes a
charge of $299.5 million related to the acquisition from Memtec of certain
in-process research and development projects that had not reached
technological feasibility and that had no alternative future uses.
Additionally, U.S. Filter recorded charges totaling $141.1 million related
to a restructuring plan that U.S. Filter implemented concurrent with the
acquisitions of Memtec and Kinetics. Cost of goods sold for the nine
months ended December 31, 1997 includes charges recorded by Kinetics
totaling $13.7 million related to certain unreimbursed project costs.
Selling, general and administrative expenses for the nine months ended
December 31, 1997 includes charges recorded by Kinetics totaling $3.6
million related to increases in Kinetics allowance for doubtful accounts,
the write-off of certain receivables, the write-down of certain assets and
the establishment of certain accruals.

(8) Income (loss) per common share amounts are computed in accordance with
SFAS 128 and are after (i) dividends on the Series A Preferred Stock of
$0.7 million for the fiscal year ended March 31, 1993, $0.7 million for
the fiscal year ended March 31, 1994, $0.7 million for the fiscal year
ended March 31, 1995 and $0.5 million for the fiscal year ended March 31,
1996 and (ii) accretion on the Series A Preferred Stock, a noncash
accounting adjustment required by Securities and Exchange Commission Staff
Accounting Bulletin No. 68 ("SAB 68"), in the amount of $0.6 million for
the fiscal year ended March 31, 1993. As of April 1, 1993 U.S. Filter and
the holder of the Series A Preferred Stock agreed to a fixed dividend of
$0.7 million per year on the Series A Preferred Stock eliminating the
increasing rate and, therefore, the accretion of dividends pursuant to SAB
68. The Series A Preferred Stock was converted into shares of U.S. Filter
Common Stock in March 1996.

61
<PAGE>

CULLIGAN

SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
SEVEN
MONTHS
FIVE MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
ENDED JUNE 30, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
1993 1994 1995 1996 1997 1998
--------------- ----------- ----------- ----------- ----------- -----------
PREDECESSOR (A)
---------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Net Sales............... $109,748 $154,325 $280,051 $304,502 $371,018 $505,744
Cost of Goods Sold (f).. 60,894 87,112 155,829 168,363 205,581 288,851
-------- -------- -------- -------- -------- --------
Gross Profit............ 48,854 67,213 124,222 136,139 165,437 216,893
Selling, General and
Administrative (f)..... 36,339 50,341 91,989 95,723 113,932 146,807
Administrative Expenses
Allocated from
Samsonite (b).......... -- -- 1,095 -- -- --
Write-off of Goodwill
and In-process Research
and
Development (c)........ -- -- -- -- -- 55,803
Merger and Restructuring
Expenses (d)........... -- 2,103 5,917 -- -- 5,236
Amortization of
Intangible Assets (e).. 731 22,554 38,691 38,802 17,522 5,440
-------- -------- -------- -------- -------- --------
Operating Income
(Loss)................. 11,784 (7,785) (13,470) 1,614 33,983 3,607
Other Income (Expense),
Net (g)................ (324) 1,919 398 2,867 5,023 32,888
-------- -------- -------- -------- -------- --------
Income (Loss) Before
Interest, Taxes,
Minority Interest and
Extraordinary Item..... 11,460 (5,866) (13,072) 4,481 39,006 36,495
Interest Income......... 1,436 886 1,439 1,576 2,633 1,765
Interest Expense (h).... (1,039) (11,576) (19,085) (12,426) (5,490) (9,903)
Income Taxes............ (4,387) (3,434) (5,678) (14,910) (20,264) (32,638)
Minority Interest....... -- -- -- -- -- (919)
-------- -------- -------- -------- -------- --------
Income (Loss) before
Extraordinary Item..... 7,470 (19,990) (36,396) (21,279) 15,885 (5,200)
Extraordinary Item...... -- -- -- -- -- (422)
-------- -------- -------- -------- -------- --------
Net Income (Loss)....... $ 7,470 $(19,990) $(36,396) $(21,279) $ 15,885 $ (5,622)
======== ======== ======== ======== ======== ========
PER COMMON SHARE DATA:
BASIC:
Income (Loss) before
Extraordinary Item.... $ (1.26) $ (2.29) $ (1.30) $ 0.75 $ (0.22)
Extraordinary Item..... -- -- -- -- $ (.02)
-------- -------- -------- -------- --------
Net Income (Loss)...... $ (1.26) $ (2.29) $ (1.30) $ 0.75 $ (0.24)
======== ======== ======== ======== ========
DILUTED:
Income (Loss) Before
Extraordinary Item.... (1.26) (2.29) (1.30) $ 0.74 (0.22)
Extraordinary Item..... -- -- -- -- (0.02)
-------- -------- -------- -------- --------
Net Income (Loss)...... (1.26) (2.29) (1.30) $ 0.74 (0.24)
-------- -------- -------- -------- --------
Basic Weighted Average
Number Of Common
Shares Outstanding
(000's)............... 15,889 15,889 16,311 21,091 23,444
Diluted Weighted
Average Number Of
Common Shares
Outstanding (000's)... 15,889 15,889 16,311 21,375 23,444
OTHER DATA:
Income (Loss) Before
Interest, Taxes,
Minority Interest and
Extraordinary Item..... $ 11,460 $ (5,866) $(13,072) $ 4,481 $ 39,006 $ 36,495
Amortization of
Reorganization Value in
Excess of Identifiable
Assets (e)............. -- 21,771 37,322 37,322 15,551 --
Administrative Expenses
Allocated from
Samsonite (b).......... -- -- 1,095 -- -- --
Write-off of Goodwill
and In-Process Research
and
Development (c)........ -- -- -- -- -- 55,803
Merger and Restructuring
Expenses (d)........... -- 2,103 5,917 -- -- 5,236
Gain on Disposition of
Investment In Affiliate
(g).................... -- -- -- -- -- (31,098)
Gain on Insurance
Settlement (g)......... -- -- -- -- (1,980) --
-------- -------- -------- -------- -------- --------
Adjusted Income Before
Interest, Taxes,
Minority Interest and
Extraordinary Item..... 11,460 18,008 31,262 41,803 52,577 66,436
All Other Amortization.. 731 783 1,369 1,480 1,971 5,440
Depreciation............ 3,175 5,696 9,279 9,409 10,091 15,161
-------- -------- -------- -------- -------- --------
EBITDA (i).............. $ 15,366 $ 24,487 $ 41,910 $ 52,692 $ 64,639 $ 87,037
======== ======== ======== ======== ======== ========
</TABLE>

(See footnotes beginning on page 63.)

62
<PAGE>

IMPACT OF NONRECURRING ITEMS

Included in Culligan's statements of operations subsequent to June 30, 1993,
are amortization and depreciation related to adjustments of assets and
liabilities to fair value in connection with the adoption of the American
Institute of Certified Public Accountants Statement of Position 90-7 entitled
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"). The most significant adjustment relates to reorganization value
in excess of identifiable assets which was amortized over a three-year period
which ended in June of 1996. In addition, the statements of operations for the
years ended January 31, 1997 and 1998, include certain nonrecurring items. Due
to the significance of these items, and considering that they are either of a
short duration or nonrecurring, management believes that it is useful to
isolate their impact on the statement of operations. The impact on income
before interest, taxes, minority interest and extraordinary item for the years
ending January 31, 1997 and 1998 are shown below. This information does not
represent and should not be considered an alternative to income before
interest, taxes, minority interest and extraordinary item, any other measure
of performance as determined by generally accepted accounting principles or as
an indicator of operating performance.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
1997 1998
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Income before interest, taxes, minority interest and
extraordinary item................................... $39,006 $36,495
Amortization of reorganization value in excess of
identifiable assets.................................. 15,551 --
Write-off of purchased in-process research and
development.......................................... -- 52,633
Write-off of goodwill................................. -- 3,170
Merger and restructuring expenses..................... -- 5,236
Gain on disposition of investment in affiliate........ -- (31,098)
Gain on insurance settlement.......................... (1,980) --
------- -------
Adjusted income before interest, taxes, minority
interest and extraordinary item...................... $52,577 $66,436
======= =======
</TABLE>
- --------
(a) In June 1993, Samsonite's predecessor, Astrum International Corp.
("Astrum"), completed a financial restructuring pursuant to a plan of
reorganization under Chapter 11 of the United States Bankruptcy Code (the
"Plan"). Effective June 30, 1993 and pursuant to SOP 90-7, Astrum and all
its subsidiaries, including Culligan, were required to adjust their assets
and liabilities to their fair ("Fresh Start") values. Due to the effect of
SOP 90-7, amortization of intangible assets and interest expense (see
notes (e) and (h) below) for the periods before and after June 30, 1993
are not comparable. The information for the predecessor company reflects
activity occurring through June 30, 1993, prior to the effective date of
the Plan.

(b) Administrative expenses allocated from Samsonite represent certain
accounting and management services performed for the benefit of Culligan
primarily related to Astrum's reorganization and the Spin-off. In prior
years, these services were not provided, and are not anticipated to recur
on an on-going basis.

(c) During fiscal 1998 Culligan wrote off $33.1 million of in-process R&D
purchased in connection with the acquisition of the Water Filtration
Business of Ametek. As of the purchase date, the Water Filtration Business
was engaged in ongoing research and development relating to carbon block
extrusion technology which was less labor intensive than competing
technologies and a new water filtration product line that is expected to
improve the purity of water and flow rates. Both of the projects are
proceeding according to schedule. It is estimated that technological and
commercial feasibility will be achieved in 6 to 12 months and that their
development will not require cash expenditures that are material to the
results of operations or financial position of Culligan. The principal
risks associated with successfully completing such in-process R&D is that
other competitors may bring a technologically superior product to market.
Culligan does not believe that the failure to complete such R&D projects
would have a material adverse effect on its results of operations or
financial position. The existing technology of the Water Filtration
Business acquired was included in goodwill and is being amortized over 40
years.

63
<PAGE>

During fiscal 1998, Culligan wrote-off $19.5 million of in-process R&D
purchased in connection with the acquisition of Protean as these projects
had not reached technological feasibility and have no alternative use. As
of the purchase date, Elga plc, a subsidiary of the continuing operations
of Protean, was engaged in the research and development of a series of new
water filtration systems that will employ new processes or techniques
related to the filtration of tap water for laboratory use. Such projects
were valued by an independent appraiser using a risk adjusted cash flow
model under which the expected cash flows were discounted, taking into
account the costs to complete the projects, risks related to existing and
future markets, and the life expectancy of such projects. Failure to
complete these projects successfully and on time would open the way for
competitors to introduce alternative technologies, with consequent
implications for Elga's revenues. The projects are proceeding according to
schedule and it is estimated that technological and commercial feasibility
will be met within the existing timeframes, which range from three months
to two years. These projects are not expected to require future cash
expenditures that are material to the results of operations or financial
position of Culligan. The existing technology of Protean's continuing
operations acquired was included in goodwill and is being amortized over 40
years.

Culligan also wrote off the remaining goodwill of $3.2 million arising from
the acquisition of UltraPure in January 1996, related to more costly carbon
block production technology used prior to the acquisition of the Water
Filtration Business. UltraPure was engaged in the business of development,
design, production, and sale of molded carbon block and molded filtration
devices for liquid filtration. The effect on future operations related to
this write down is not expected to be material.

(d) In fiscal 1994 Culligan implemented a plan to consolidate the production
facilities and administrative functions of certain operations in Europe.
The severance, other personnel related costs and facility shut-down
expenses related to the restructuring resulted in charges in fiscal 1994
and fiscal 1995 of $2.1 million and $5.9 million, respectively.

During fiscal 1998 Culligan recorded a merger and restructuring charge of
$5.2 million in connection with the acquisition of Ametek's Water
Filtration Business and as a result of a decision made by Culligan to exit
the market for the sale of consumer products in the department store and
mass merchant channels so as to focus principally on the "do-it-yourself"
(DIY) and hybrid retail markets. The merger and restructuring charge
reflects the costs of integrating and streamlining manufacturing, sales,
distribution, research and development, and administrative functions, in
order to take advantage of more cost effective technology acquired in the
acquisition of Ametek's Water Filtration Business. The merger and
restructuring charge also reflects costs resulting from the decision to
exit certain retail markets, such as charges against receivables to reflect
the fact that the value of these assets diminished as a result of the
decision to exit portions of the business. Included in the $5.2 million of
merger and restructuring costs are $0.7 million for severance costs related
to the elimination of redundant employees, $1.3 million related to the
write-off of receivables, $2.5 million related to the write-off of excess
property, equipment and other assets (consisting principally of fixed
assets used in the manufacture of molded carbon block), and $0.7 million
representing legal and other professional fees. During fiscal 1998, costs
amounting to $4.3 million were charged against the merger and restructuring
reserve. Total future cash requirements relating to the merger and
restructuring is expected to be immaterial.

64
<PAGE>

(e) Amortization of intangible assets consists of the following:

<TABLE>
<CAPTION>
SEVEN
EXPECTED MONTHS
USEFUL FIVE MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
LIFE ENDED JUNE JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
(YEARS) 30, 1993 1994 1995 1996 1997 1998
-------- ----------- ----------- ----------- ----------- ----------- -----------
PREDECESSOR
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Amortization of
reorganization value
in excess of
identifiable assets.. 3 -- $21,771 $37,322 $37,322 $15,551 $ --
Amortization of
trademarks and other
"Fresh Start"
intangibles.......... 40 -- 758 1,300 1,300 1,300 1,300
---- ------- ------- ------- ------- ------
"Fresh Start"
amortization......... 22,529 38,622 38,622 16,851 1,300
Amortization of
goodwill............. 10 to 40 699 18 158 504 3,784
Amortization of other
intangibles.......... 3 to 9 32 25 51 22 167 356
---- ------- ------- ------- ------- ------
Amortization of
intangible assets.... $731 $22,554 $38,691 $38,802 $17,522 $5,440
==== ======= ======= ======= ======= ======
</TABLE>

"Fresh Start" amortization represents the expense arising solely as a
result of "Fresh Start" accounting in accordance with SOP 90-7.

(f) Depreciation included in cost of goods sold and selling, general and
administrative related to adjustments of assets and liabilities to fair
value in connection with the adoption of SOP 90-7 consists of the
following:

<TABLE>
<CAPTION>
SEVEN
MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
"Fresh Start"
depreciation in cost
of goods sold........ $1,040 $1,414 $1,077 $603 $304
"Fresh Start"
depreciation in
selling, general and
administrative....... 520 707 539 301 152
------ ------ ------ ---- ----
Total "Fresh Start"
depreciation......... $1,560 $2,121 $1,616 $904 $456
====== ====== ====== ==== ====
</TABLE>

Property and equipment revalued in connection with the adoption of SOP 90-7
are being depreciated over their respective estimated useful lives,
primarily ranging from two to six years.

(g) Other income (expense), net for fiscal 1997 includes a gain of $1,980 on
an insurance settlement associated with a fire at Culligan's Belgian
facility in July 1993 and for fiscal 1998 includes a gain on Culligan's
disposition of its investment in Anvil Holdings, Inc. of $31,098.

(h) Interest expense for periods subsequent to June 30, 1993 includes interest
on the $150 million note payable to Samsonite issued in connection with
Astrum's reorganization. A principal payment of $20 million to Samsonite
and a $30 million contribution by Samsonite to equity capital of Culligan
on December 1, 1994 and January 31, 1995, respectively, reduced the
outstanding principal during fiscal 1995. During July 1995, borrowings
under a $150 million credit facility entered into by Culligan in July 1995
(the "Credit Facility") were used to repay in full the outstanding balance
of the note payable to Samsonite (the "Refinancing").

65
<PAGE>

(i) EBITDA is defined as income before interest, taxes, minority interest and
extraordinary item, excluding certain nonrecurring items plus depreciation
and amortization. Culligan believes that EBITDA provides useful
information regarding a company's financial performance. EBITDA should not
be considered in isolation or as an alternative to net income, an
indicator of Culligan's operating performance, or an alternative to
Culligan's cash flow from operating activities as a measure of liquidity.

<TABLE>
<CAPTION>
JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
1994 1995 1996 1997 1998 (D)
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property, Plant and
Equipment, Net......... $ 68,043 $ 68,974 $ 70,749 $ 78,740 $144,631
Total Assets............ 331,035 303,431 292,570 337,362 858,263
Long-Term Debt and
Capital Lease
Obligations (Including
Current Debt).......... 159,404 114,635(a) 48,324(b) 48,645 372,167
Total Liabilities....... 278,734 255,187 173,481(b) 163,722 560,235
Stockholders' Equity.... 52,301 48,244 119,089(b) 173,640(c) 298,028
</TABLE>
- --------
(a) During fiscal 1995, a principal payment of $20 million to Samsonite and a
$30 million contribution by Samsonite to equity capital of Culligan were
made on December 1, 1994 and January 31, 1995, respectively, related to
the note payable to Samsonite.

(b) During fiscal 1996, Culligan completed the sale of 4,025,000 shares of
common stock. Net proceeds included in equity capital at January 31, 1996
were approximately $85 million. Culligan used such proceeds to repay
borrowings under the Credit Facility. Also during fiscal 1996, prior to
the Spin-off, Samsonite contributed approximately $5 million to equity
capital of Culligan.

(c) During fiscal 1997, Culligan issued additional shares of common stock upon
the exercise of overallotment options granted to underwriters in
connection with a secondary public offering of shares of Culligan's common
stock. The net proceeds included in equity capital at January 31, 1997
were approximately $32 million which includes proceeds from the exercise
of stock options by one of the selling stockholders in the offering. In
addition, as a result of the exercise of stock options, Culligan
recognized an income tax benefit of approximately $7.5 million which it
recorded as additional paid-in-capital during fiscal 1997.

(d) During fiscal 1998, Culligan completed over 35 strategic dealer and
complimentary acquisitions with annual revenues of approximately $350
million. Payments for these acquisitions during the year approximated $324
million, financed principally through net borrowings on long-term debt of
$284 million and the issuance of common stock. Additionally, Culligan had
approximately $36 million in capital expenditures associated with a new
build, own and operate water treatment facility in the Caribbean,
improvements to Culligan's management information systems, and the
expansion and improvement of various manufacturing operations to support
new growth initiatives.

66
<PAGE>

SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

The following table sets forth selected unaudited pro forma combined
financial data for the combined company for each of the three years in the
period ended March 31, 1997, and for the nine-month periods ended December 31,
1996 and 1997 and are derived from the unaudited pro forma combined financial
information presented elsewhere herein. The statement of operations data
assumes that the Merger had been consummated as of the beginning of the
earliest period presented; whereas the balance sheet data assume that the
Merger had been consummated on December 31, 1997. The unaudited pro forma
combined financial data do not reflect certain cost savings that U.S. Filter
believes may be realized following consummation of the Merger. The pro forma
data is provided for illustrative purposes only and is not necessarily
indicative of the combined company's future results of operations or financial
position. The information set forth below should be read in conjunction with
unaudited pro forma combined financial information including notes thereto
appearing elsewhere herein and the historical consolidated financial
statements and notes thereto of U.S. Filter, Memtec, Culligan, Ametek,
Protean, WaterPro, WSMG and PED, incorporated herein by reference.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED MARCH 31, DECEMBER 31,
---------------------------------- -----------------------
UNAUDITED PRO FORMA
COMBINED STATEMENT OF
OPERATIONS DATA: 1995(1) 1996(2) 1997(3) 1996(3),(4) 1997(5)
--------------------- ---------- ---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues................ $1,110,816 $1,395,247 $3,196,355 $1,367,052 $3,011,820
Cost of Sales........... 814,663 1,005,336 2,335,388 1,011,450 2,187,035
---------- ---------- ---------- ---------- ----------
Gross Profit........... 296,153 389,911 860,967 355,602 824,785
Selling, general and
administrative
expenses............... 262,985 326,912 690,714 296,972 620,571
Purchased in-process
research and
development............ -- -- -- -- 319,675
Merger, restructuring
and other acquisition
related charges........ 5,917 -- 10,380 5,581 149,059
---------- ---------- ---------- ---------- ----------
268,902 326,912 701,094 302,553 1,089,305
---------- ---------- ---------- ---------- ----------
Operating income
(loss)................ 27,251 62,999 159,873 53,049 (264,520)
Other income (expense):
Interest expense....... (27,892) (28,706) (87,703) (19,983) (69,472)
Gain on disposition of
affiliate............. -- -- -- -- 31,098
Other.................. 3,448 10,366 13,988 8,664 6,442
---------- ---------- ---------- ---------- ----------
(24,444) (18,340) (73,715) (11,319) (31,932)
---------- ---------- ---------- ---------- ----------
Income (loss) before
income tax expense
(benefit) and
extraordinary items... 2,807 44,659 86,158 41,730 (296,452)
Income tax expense
(benefit).............. 14,582 35,239 34,333 18,588 24,481
Minority Interest....... -- -- -- -- 665
---------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary items... $ (11,775) $ 9,420 $ 51,825 $ 23,142 $ (321,598)
========== ========== ========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
UNAUDITED PRO FORMA COMBINED BALANCE SHEET DATA:(6) 1997
- --------------------------------------------------- ------------
(DOLLARS IN
THOUSANDS)
<S> <C>
Working Capital.................................................... $ 667,050
Total assets....................................................... $4,201,091
Notes payable and long-term debt, including current portion........ $ 957,031
Convertible subordinated debt...................................... $ 554,000
Shareholder's equity............................................... $1,514,485
</TABLE>
- --------
(1) The Unaudited Pro Forma Combined Statement of Operations for the year
ended March 31, 1995 combines the results of U.S. Filter for such period
with the results of Culligan for their fiscal year ended January 31, 1995.
Results for this period include expenses incurred by Culligan of $5.9
million related to a restructuring plan to consolidate the production
facilities and administrative functions of certain operations in Europe.

67
<PAGE>

(2) The Unaudited Pro Forma Combined Statement of Operations for the year
ended March 31, 1996 combines the results of U.S. Filter for such period
with the results of Culligan for their fiscal year ended January 31, 1996.

(3) The Unaudited Pro Forma Combined Statement of Operations for the year
ended March 31, 1997 combines (i) the results of U.S. Filter and Protean
for such fiscal year, (ii) the results of Memtec for its fiscal year ended
June 30, 1997, (iii) the results of Culligan for its fiscal year ended
January 31, 1997, (iv) the results of Ametek for its fiscal year ended
December 31, 1996, (v) the results of USG for the period beginning on
April 1, 1996 and ending immediately prior to U.S. Filter's acquisition of
USG on October 25, 1996, (vi) the results of WaterPro for the period
beginning on April 1, 1996 and ending immediately prior to U.S. Filter's
acquisition of WaterPro on October 28, 1996, (vii) the results of WSMG for
the period beginning on April 1, 1996 and ending immediately prior to U.S.
Filter's acquisition of WSMG on December 2, 1996, and (viii) the results
of PED for the period beginning on April 1, 1996 and ending immediately
prior to U.S. Filter's acquisition of PED on January 6, 1997. Results for
the year ended March 31, 1997 and the nine months ended December 31, 1996
include merger expenses of $5.6 million, related to the acquisition of
Davis. The year ended March 31, 1997 also includes restructuring charges
of $1.7 million, $1.1 million and $2.0 million incurred by Memtec, Protean
and PED, respectively.

(4) The Unaudited Pro Forma Combined Statement of Operations for the nine
months ended December 31, 1996 combines the results of U.S. Filter for
such period with the results of Culligan for the nine months ended October
31, 1996.

(5) The Unaudited Pro Forma Combined Statement of Operations for the nine
months ended December 31, 1997 combines (i) the results of U.S. Filter for
such period, (ii) the results of Memtec for the period beginning on April
1, 1997 and ending immediately prior to Memtec being acquired by U.S.
Filter on December 9, 1997, (iii) the results of Culligan for the nine
months ended October 31, 1997, (iv) the results of Protean for the nine
months ended September 30, 1997, and (v) the results of Ametek for the
period beginning February 1, 1997 and ending immediately prior to Ametek
being acquired by Culligan on August 1, 1997. On December 9, 1997, U.S.
Filter acquired (in connection with the acquisition of Memtec) certain in-
process research and development projects that had not reached
technological feasibility and that had no alternative future use. The
estimated market value of such in-process research and development was
$299.5 and was expensed at the acquisition date. Additionally, Culligan
acquired from Ametek certain in-process research and development projects
that had not reached technological feasibility and that had no alternative
future use. The estimated market value of such in-process research and
development projects was $17.0 million and was expensed on the date that
Culligan acquired Ametek. In addition, Culligan wrote-off the remaining
goodwill of $3.2 million arising from the acquisition of Ultra Pure in
January 1996 related to more costly technology used prior to the
acquisition of Ametek. The nine months ended December 31, 1997 also
includes restructuring charges of $141.1 million, $2.7 million and $9.5
million incurred by U.S. Filter, Memtec and Culligan, respectively.

(6) The Unaudited Pro Forma Combined Balance Sheet Data is based on the
balance sheet of U.S. Filter as of December 31, 1997, the balance sheet of
Culligan as of October 31, 1997 and the balance sheet of Protean as of
September 30, 1997. The assets and liabilities of Kinetics, Memtec, USG,
WaterPro, WSMG and PED are included in U.S. Filter's historical balance
sheet at December 31, 1997 as these acquisitions were consummated on or
before December 31, 1997. The assets and liabilities of Ametek are
included in Culligan's historical balance sheet as of October 31, 1997 as
Culligan's acquisition of Ametek was consummated on August 1, 1997.

68
<PAGE>

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

On February 9, 1998, U.S. Filter announced that it had signed the Merger
Agreement with Culligan providing, among other things, for the acquisition by
a wholly owned subsidiary of U.S. Filter of all outstanding shares of
Culligan. Effective December 2, 1997, Culligan acquired Protean for
approximately $174.5 million in cash and effective August 1, 1997, Culligan
acquired Ametek for approximately $155.0 million in Culligan common stock and
cash in lieu of fractional shares. On December 9, 1997, U.S. Filter acquired
approximately 96% of the outstanding shares (the "Memtec Shares") of Memtec
Limited ("Memtec") pursuant to a tender offer. The remaining Memtec Shares
were acquired on February 5, 1998. The total purchase price for all Memtec
Shares was approximately $397.2 million (including estimated transaction costs
of approximately $10.6 million) and was allocated to the assets and
liabilities of Memtec based upon their respective fair values. The value of
developed technology was approximately $64.4 million and is being amortized
over 25 years. The value of other intangible assets including patents,
trademarks, license and distribution fees was approximately $7.3 million, and
is being amortized over periods ranging from 5 to 12 years. U.S. Filter also
acquired from Memtec certain in-process research and development projects that
had not reached technological feasibility and that had no alternative future
use. Such projects were valued by an independent appraiser using a risk
adjusted cash flow model under which expected future cash flows were
discounted, taking into account risks related to existing and future markets
and assessments of the life expectancy of such projects. The estimated market
value of such in-process research and development projects was $299.5 million
and was expensed at the acquisition date. The allocation of the purchase price
of Memtec is final and is not expected to change materially subsequent to
December 31, 1997. During the fiscal year ended March 31, 1997, U.S. Filter
completed several significant acquisitions that were accounted for as
purchases including the acquisitions of The Utility Supply Group, Inc.
("USG"), WaterPro Supplies Corporation ("WaterPro"), the Systems and
Manufacturing Group ("WSMG") of Wheelabrator Technologies Inc. and the
businesses of the Process Equipment Division ("PED") of United Utilities Plc,
which were completed on October 25, 1996, October 28, 1996, December 2, 1996
and January 6, 1997, respectively.

U.S. Filter acquired all of the common stock of The Kinetics Group, Inc.
("Kinetics") as of December 31, 1997 in exchange for 5,803,803 shares of U.S.
Filter's Common Stock, par value $.01 per share. The acquisition of Kinetics
was accounted for as a pooling of interests and accordingly all U.S. Filter
historical consolidated financial information has been restated to include
Kinetics. In restating the historical consolidated financial data for this
transaction, the results of U.S. Filter for the fiscal year ended March 31,
1997 were combined with the results of Kinetics for the fiscal year ended
September 30, 1997 (Kinetics' most recent fiscal year end). Accordingly, the
accounts and results of U.S. Filter as of and for the nine months ended
December 31, 1997 include the accounts and results of Kinetics as of and for
the nine months ended December 31, 1997. Additionally, Kinetics' results for
the six months ended September 30, 1997 (including revenue of $227.4 million
and a net loss of $8.5 million) are included in both the restated historical
results for the fiscal year ended March 31, 1997 and the results for the nine
months ended December 31, 1997.

The following pro forma data is based on the historical combined statements
of U.S. Filter (as restated for the acquisition of Kinetics accounted for as a
pooling of interests), Memtec, Culligan, Protean, Ametek, USG, WaterPro, WSMG
and PED giving effect to (i) the Culligan acquisition under the pooling of
interests method of accounting, (ii) the Memtec, USG, WaterPro, WSMG and PED
acquisitions under the purchase method of accounting, (iii) Culligan's
acquisitions of Protean and Ametek under the purchase method of accounting and
(iv) the assumptions and adjustments (which U.S. Filter believes to be
reasonable and in accordance with US generally accepted accounting principles
("US GAAP")) described in the accompanying Notes to Unaudited Pro Forma
Combined Financial Information. Under the pooling of interests method of
accounting, the recorded assets and liabilities of the separate entities
become the recorded assets and liabilities of the combined entity. Under the
purchase method of accounting, assets acquired and liabilities assumed will be
recorded at their estimated fair value at the date of acquisition. The pro
forma adjustments set forth in the following unaudited pro forma combined
financial information are estimated and may differ from the final adjustments.

The following unaudited pro forma combined financial information presents
the Unaudited Pro Forma Combined Balance Sheet at December 31, 1997 giving
effect to the acquisitions of Culligan and Protean as if

69
<PAGE>

they had been consummated on that date. U.S. Filter's fiscal year ends March
31, Memtec's fiscal year ends on June 30, Culligan's fiscal year ends on
January 31, Protean's fiscal year ends on March 31 and Ametek's fiscal year
ends on December 31. The Unaudited Pro Forma Combined Balance Sheet combines
the balance sheet of U.S. Filter as of December 31, 1997, the balance sheet of
Culligan as of October 31, 1997 and the balance sheet of Protean as of
September 30, 1997. The assets and liabilities of Kinetics, Memtec, USG,
WaterPro, WSMG and PED are included in U.S. Filter's historical balance sheet
at December 31, 1997 as these acquisitions were consummated on or before
December 31, 1997. The assets and liabilities of Ametek are included in
Culligan's historical balance sheet as of October 31, 1997 as Culligan's
acquisition of Ametek was consummated on August 1, 1997.

The unaudited pro forma combined financial information also presents the
Unaudited Pro Forma Combined Statements of Operations for the fiscal year
ended March 31, 1997, giving effect to the acquisitions of Memtec, Culligan,
Protean, Ametek, USG, WaterPro, WSMG and PED as if each of the acquisitions
had been consummated as of the beginning of the earliest period presented. The
Unaudited Pro Forma Combined Statement of Operations for the fiscal year ended
March 31, 1997, combines (i) the results of the U.S. Filter (as restated for
the acquisition of Kinetics which was accounted for as a pooling of interests)
and Protean for such fiscal year, (ii) the results of Memtec for their fiscal
year ended June 30, 1997, (iii) the results of Culligan for their fiscal year
ended January 31, 1997 (iv) the results of Ametek for their fiscal year ended
December 31, 1996 (v) the results of USG for the period beginning on April 1,
1996 and ending immediately prior to U.S. Filter's acquisition of USG on
October 25, 1996, (vi) the results of WaterPro for the period beginning on
April 1, 1996 and ending immediately prior to U.S. Filter's acquisition of
WaterPro on October 28, 1996, (vii) the results of WSMG for the period
beginning on April 1, 1996 and ending immediately prior to U.S. Filter's
acquisition of WSMG on December 2, 1996, and (vii) the results of PED for the
period beginning on April 1, 1996 and ending immediately prior to U.S.
Filter's acquisition of PED on January 6, 1997. Results for USG, WaterPro,
WSMG and PED after they were acquired by U.S. Filter to March 31, 1997 are
included in U.S. Filter's historical results for the fiscal year ended March
31, 1997.

The Unaudited Pro Forma Combined Statement of Operations for the nine months
ended December 31, 1997 combines (i) the results of U.S. Filter for such
period, (ii) the results of Memtec for the period beginning on April 1, 1997
and ending immediately prior to Memtec being acquired by U.S. Filter on
December 9, 1997, (iii) the results of Culligan for the nine months ended
October 31, 1997, (iv) the results of Protean for the nine months ended
September 30, 1997 and (v) the results of Ametek for the period beginning
February 1, 1997 and ending immediately prior to Ametek being acquired by
Culligan on August 1, 1997. Results for Memtec for the period from the date
Memtec was acquired by U.S. Filter to December 31, 1997 are included in U.S.
Filter's historical results. Results of Kinetics, which was acquired on
December 31, 1997 and was accounted for as a pooling of interests, for the
nine months ended December 31, 1997 are included in U.S. Filter's historical
results. Results for USG, WaterPro, WSMG and PED for the nine months ended
December 31, 1997 are included in U.S. Filter's historical results as these
business were owned by U.S. Filter for the entire nine month period. Results
for Ametek for the period from the date Ametek was acquired by Culligan to
October 31, 1997 are included in Culligan's historical results.

Results of operations for Memtec for the three months ended June 30, 1997
including revenue of $67.8 million and net income of $0.7 million are included
in the Unaudited Pro Forma Combined Statements of Operations for the fiscal
year ended March 31, 1997 and for the nine months ended December 31, 1997.
Results of operations for Ametek including revenue of $6.4 million and net
income of $0.7 million for the month ended January 31, 1997 are not included
in either the Unaudited Pro Forma Combined Results of Operations for the
fiscal year ended March 31, 1997 or the nine months ended December 31, 1997.
Results of operations for Protean for the three months ended March 31, 1997
including revenue of $38.9 million and net income of $6.0 million are included
in the Unaudited Pro Forma Combined Statements of Operations for the fiscal
year ended March 31, 1997 and for the nine months ended December 31, 1997.

It is anticipated that the acquisition of Culligan will be accounted for as
a pooling of interests and the estimated costs to effect the transaction of
$35-$40 million will be expensed as incurred. Accordingly, Unaudited

70
<PAGE>

Pro Forma Combined Statements of Operations for the years ended March 31, 1996
and 1995 and the nine months ended December 31, 1996 are also presented. The
Unaudited Pro Forma Combined Statements of Operations for the years ended
March 31, 1996 and 1995 combines the results of U.S. Filter for such fiscal
years with the results of Culligan for their fiscal years ended January 31,
1996 and 1995, respectively. The Unaudited Pro Forma Combined Statement of
Operations for the nine months ended December 31, 1996 combines the results of
U.S. Filter (as restated for the acquisition of Kinetics accounted for as a
pooling of interests) for the nine months ended December 31, 1996 with the
results of Culligan for the nine months ended October 31, 1996. The Unaudited
Pro Forma Combined Statements of Operations for the years ended March 31, 1996
and 1995, respectively, and the nine months ended December 31, 1996 are in
effect a restatement of the historical operations of each of U.S. Filter and
Culligan and accordingly do not include the results of Memtec, Protean,
Ametek, USG, WaterPro, WSMG and PED, which were acquisitions accounted for as
purchases.

The historical financial statements of Protean and PED were prepared in
accordance with UK generally accepted accounting principles ("UK GAAP"), which
differs in certain respects from US GAAP. The historical PED Financial
Statements included in the unaudited combined financial information have been
restated to reflect PED's financial position and results of operations in
accordance with US GAAP. The pro forma adjustments contain certain adjustments
necessary to reflect Protean's historical financial statements in accordance
with US GAAP. Certain reclassifications have been made to the historical
financial statements of Protean to conform with U.S. Filter's presentation.

The following Unaudited Pro Forma Combined Financial Information does not
reflect certain cost savings that U.S. Filter believes may be realized
following the Kinetics, Memtec, Culligan, USG, WaterPro, WSMG and PED
acquisitions as well as Culligan's acquisitions of Protean and Ametek. Such
cost savings are expected to be realized primarily through the elimination of
certain overhead expenses and geographic overlap and the implementation of
strict cost controls and standardized operating procedures. Additionally, U.S.
Filter believes that such acquisitions will enable it to realize increased
operating efficiencies and economies of scale including enhanced purchasing
power and increased asset utilization.

The pro forma data is provided for illustrative purposes only. It does not
purport to be indicative of the results that actually would have occurred if
the acquisitions of Kinetics, Memtec, Culligan, USG, WaterPro, WSMG and PED,
as well as Culligan's acquisitions of Protean and Ametek, had been consummated
on the dates indicated or that may be obtained in the future. The unaudited
pro forma combined financial information should be read in conjunction with
the notes thereto, the audited consolidated financial statements and notes
thereto of Culligan, Protean and Ametek included elsewhere herein, the audited
consolidated financial statements and notes thereto of Kinetics, Memtec,
WaterPro, WSMG and PED, incorporated herein by reference and U.S. Filter's
Consolidated Financial Statements and related Notes thereto, incorporated
herein by reference.

71
<PAGE>

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997 (NOTE A)
------------------------------------------------------------------
HISTORICAL PRO FORMA
------------------------------ -----------------------------------
ADJUSTMENTS
INCREASE
U.S. FILTER CULLIGAN PROTEAN (DECREASE) NOTES COMBINED
----------- -------- ------- ----------- ------------ ----------
(IN THOUSANDS)
ASSETS
------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash................... $ 57,821 $ 8,992 $ 7,177 $ 73,990
Restricted cash........ -- 143,968 -- $(143,968) a(i) --
Short-term
investments........... 904 -- -- 904
Accounts receivable,
net................... 739,587 113,904 25,654 879,145
Cost and estimated
earnings in excess of
billings on
uncompleted
contracts............. 205,427 -- -- 205,427
Inventories............ 350,968 63,486 22,323 436,777
Prepaid expenses....... 19,893 6,499 6,377 (1,175) a(ii) 31,594
Deferred taxes......... 82,246 10,775 -- 93,021
Other current assets... 28,257 -- -- 28,257
----------- -------- ------- ----------
Total current
assets.............. 1,485,103 347,624 61,531 1,749,115
----------- -------- ------- ----------
Property, plant and
equipment, net........ 761,147 125,109 15,086 508 a(iii),a(iv) 901,850
Investment in leasehold
interests, net........ 22,424 -- -- 22,424
Cost in excess of net
assets of businesses
acquired, net......... 978,271 219,031 -- 143,994 a(v) 1,341,296
Other assets........... 113,837 101,005 -- (28,436) a(vi),a(vii) 186,406
----------- -------- ------- ----------
$ 3,360,782 $792,769 $76,617 $4,201,091
=========== ======== ======= ==========
<CAPTION>
LIABILITIES AND
SHAREHOLDERS' EQUITY
--------------------
<S> <C> <C> <C> <C> <C> <C>
Current liabilities:
Accounts payable....... $ 304,890 $ 36,658 $38,205 $ 379,753
Accrued liabilities.... 410,245 19,052 -- 429,297
Current portion of
long-term debt........ 25,464 11,126 -- 36,590
Billings in excess of
costs and estimated
earnings on
uncompleted
contracts............. 121,831 -- -- 121,831
Other current
liabilities........... 77,045 37,549 -- 114,594
----------- -------- ------- ----------
Total current
liabilities......... 939,475 104,385 38,205 1,082,065
----------- -------- ------- ----------
Notes payable........... 475,181 -- -- 475,181
Long-term debt,
excluding current
portion................ 128,988 307,567 8,401 304 a(viii) 445,260
Convertible subordinated
debentures............. 554,000 -- -- 554,000
Deferred taxes.......... 3,506 29,949 -- (1,175) a(ii) 32,280
Other liabilities....... 66,108 27,935 1,805 95,848
----------- -------- ------- ----------
Total liabilities.... 2,167,258 469,836 48,411 2,684,634
----------- -------- ------- ----------
Minority interest....... -- 1,972 -- 1,972
Shareholders' equity:...
Common stock........... 1,040 252 3,528 (3,339) a(ix),a(x) 1,481
Additional paid-in
capital............... 1,500,786 366,370 21,004 (21,193) a(ix),a(x) 1,866,967
Currency translation
adjustment............ (37,287) (5,749) -- (43,036)
Retained earnings
(accumulated
deficit).............. (271,015) (39,912) 3,674 (3,674) a(x) (310,927)
----------- -------- ------- ----------
Total shareholders'
equity.............. 1,193,524 320,961 28,206 $1,514,485
----------- -------- ------- ----------
$ 3,360,782 $792,769 $76,617 $4,201,091
=========== ======== ======= ==========
</TABLE>

The accompanying notes are an integral part of the unaudited pro forma combined
financial information.

72
<PAGE>

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31, 1997 (NOTE B)
---------------------------------------------------------------------------------------------------
HISTORICAL (NOTE C)
---------------------------------------------------------------------------------------
U.S. INCREASE
FILTER MEMTEC CULLIGAN AMETEK PROTEAN USG WATERPRO WSMG PED (DECREASE)
---------- -------- -------- ------- -------- ------- -------- -------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........... $1,764,406 $243,616 $371,018 $68,650 $129,014 $85,899 $185,199 $218,973 $130,407 $ (827)
Cost of sales...... 1,376,615 155,638 205,581 44,039 66,980 70,011 151,238 171,673 92,728 885
---------- -------- -------- ------- -------- ------- -------- -------- --------
Gross profit...... 387,791 87,978 165,437 24,611 62,034 15,888 33,961 47,300 37,679
Selling, general
and administrative
expenses.......... 316,190 72,702 131,454 12,251 45,385 13,595 24,689 32,854 32,270 9,324
Merger,
restructuring,
acquisition and
other related
charges............ 5,581 1,677 -- -- 2,105 -- -- -- 1,992 (975)
---------- -------- -------- ------- -------- ------- -------- -------- --------
321,771 74,379 131,454 12,251 47,490 13,595 24,689 32,854 34,262
---------- -------- -------- ------- -------- ------- -------- -------- --------
Operating
income............ 66,020 13,599 33,983 12,360 14,544 2,293 9,272 14,446 3,417
---------- -------- -------- ------- -------- ------- -------- -------- --------
Other income
(expense):
Interest
expense........... (26,509) (5,613) (5,490) -- (1,285) (932) (2,433) -- (9,469) (35,972)
Interest and
other income...... 3,678 816 7,656 (9) 639 411 358 439 --
---------- -------- -------- ------- -------- ------- -------- -------- --------
(22,831) (4,797) 2,166 (9) (646) (521) (2,075) 439 (9,469)
---------- -------- -------- ------- -------- ------- -------- -------- --------
Income before
income tax
expense........... 43,189 8,802 36,149 12,351 13,898 1,772 7,197 14,885 (6,052)
Income tax expense
(benefit)......... 10,681 1,306 20,264 4,188 4,822 711 2,829 5,954 (310) (16,112)
---------- -------- -------- ------- -------- ------- -------- -------- --------
Net income........ $ 32,508 $ 7,496 $ 15,885 $ 8,163 $ 9,076 $ 1,061 $ 4,368 $ 8,931 $ (5,742)
========== ======== ======== ======= ======== ======= ======== ======== ========
Net income per
common share:
Basic........... $ 0.51
==========
Diluted......... $ 0.49
==========
Weighted average
shares
outstanding:
Basic........... 64,082
==========
Diluted......... 66,531
==========
<CAPTION>
PRO FORMA
--------------------------------
NOTES COMBINED
-------------------- -----------
<S> <C> <C>
Revenues........... b(i) $3,196,355
Cost of sales...... b(i), b(ii), b(iii) 2,335,388
b(iv), b(v)
-----------
Gross profit...... 860,967
Selling, general
and administrative
expenses.......... b(i), b(ii), b(iii), 690,714
b(vi), b(vii),
b(viii), b(ix), b(x)
Merger,
restructuring,
acquisition and
other related
charges............ b(x) 10,380
-----------
701,094
-----------
Operating
income............ 159,873
-----------
Other income
(expense):
Interest
expense........... b(xi) (87,703)
Interest and
other income...... 13,988
-----------
(73,715)
-----------
Income before
income tax
expense........... 86,158
Income tax expense
(benefit)......... b(xii) 34,333
-----------
Net income........ $ 51,825
===========
Net income per
common share:
Basic........... $ 0.47
===========
Diluted......... $ 0.45
===========
Weighted average
shares
outstanding:
Basic........... 110,877
===========
Diluted......... 114,775
===========
</TABLE>

The accompanying notes are an integral part of these pro forma combined
financial data.

73
<PAGE>

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31, 1997 (NOTE B)
------------------------------------------------------------------------------------------------------------
HISTORICAL (NOTE C) PRO FORMA
------------------------------------------------ ----------------------------------------------------------
U.S. ADJUSTMENTS
FILTER MEMTEC CULLIGAN AMETEK PROTEAN INCREASE (DECREASE) NOTES COMBINED
---------- -------- -------- ------- -------- ------------------- --------------------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........... $2,346,553 $168,503 $354,254 $38,381 $104,129 $3,011,820
Cost of sales...... 1,798,595 106,412 202,441 24,623 54,926 $ 38 b (v) 2,187,035
---------- -------- -------- ------- -------- ----------
Gross profit...... 547,958 62,091 151,813 13,758 49,203 824,785
Selling, general
and administrative
expenses.......... 414,546 53,130 105,543 7,206 34,683 5,463 b(vi), b(viii), b(ix), b(x) 620,571
Purchased in-
process research
and development... 299,505 -- 20,170 -- -- 319,675
Merger,
restructuring,
acquisition and
other related
charges........... 141,109 2,714 5,236 -- -- 149,059
---------- -------- -------- ------- -------- ----------
855,160 55,844 130,949 7,206 34,683 1,089,305
---------- -------- -------- ------- -------- ----------
Operating income
(loss)........... (307,202) 6,247 20,864 6,552 14,520 (264,520)
---------- -------- -------- ------- -------- ----------
Other income
(expense):
Interest
expense.......... (34,374) (3,869) (5,277) -- (1,593) (24,359) b(xi) (69,472)
Gain on
disposition of
affiliate........ -- -- 31,098 -- -- 31,098
Interest and
other income..... 3,002 92 2,398 83 867 6,442
---------- -------- -------- ------- -------- ----------
(31,372) (3,777) 28,219 83 (726) (31,932)
---------- -------- -------- ------- -------- ----------
Income (loss)
before income
tax expense...... (338,574) 2,470 49,083 6,635 13,794 (296,452)
Income tax expense
(benefit)......... (1,273) 1,543 27,092 2,744 4,826 (10,451) b(xii) 24,481
Minority interest.. -- -- 665 -- -- 665
---------- -------- -------- ------- -------- ----------
Net income (loss)
before
extraordinary
item............. $ (337,301) $ 927 $ 21,326 $ 3,891 $ 8,968 $(321,598)
========== ======== ======== ======= ======== ==========
Net income (loss)
per common share
before
extraordinary
item:
Basic........... $ (3.65) $ (2.36)
========== ==========
Diluted......... $ (3.65) $ (2.36)
========== ==========
Weighted average
shares
outstanding:
Basic........... 92,340 136,499
========== ==========
Diluted......... 92,340 136,499
========== ==========
</TABLE>

The accompanying notes are an integral part of the unaudited pro forma combined
financial information.

74
<PAGE>

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31, 1996 (NOTE B)
-------------------------------------------------
HISTORICAL PRO FORMA
-------------------- ---------------------------
U.S. INCREASE
FILTER CULLIGAN (DECREASE) NOTES COMBINED
---------- -------- ---------- ----- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues................... $1,090,745 $304,502 $1,395,247
Cost of sales.............. 836,973 168,363 1,005,336
---------- -------- ----------
Gross profit............. 253,772 136,139 389,911
Selling, general and
administrative expenses... 192,387 134,525 326,912
---------- -------- ----------
Operating income......... 61,385 1,614 62,999
---------- -------- ----------
Other income (expense):
Interest expense......... (16,280) (12,426) (28,706)
Interest and other
income.................. 5,923 4,443 10,366
---------- -------- ----------
(10,357) (7,983) (18,340)
---------- -------- ----------
Income (loss) before
income tax expense...... 51,028 (6,369) 44,659
Income tax expense......... 20,329 14,910 35,239
---------- -------- ----------
Net income (loss)........ $ 30,699 $(21,279) $ 9,420
========== ======== ==========
Net income per common
share:
Basic.................. $ 0.62 $ 0.12
========== === ==========
Diluted................ $ 0.61 $ 0.11
========== === ==========
Weighted average shares
outstanding:
Basic.................. 48,369 76,326
========== === ==========
Diluted................ 49,668 78,147
========== ==========
</TABLE>

The accompanying notes are an integral part of the unaudited pro forma combined
financial information.

75
<PAGE>

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31, 1995 (NOTE B)
------------------------------------------------
HISTORICAL PRO FORMA
------------------ ----------------------------
U.S. INCREASE
FILTER CULLIGAN (DECREASE) NOTES COMBINED
-------- -------- --------- ------ ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues.................... $830,765 $280,051 $1,110,816
Cost of sales............... 658,834 155,829 814,663
-------- -------- ----------
Gross profit.............. 171,931 124,222 296,153
Selling, general and
administrative expenses.... 131,210 131,775 262,985
Restructuring expenses...... -- 5,917 5,917
-------- -------- ----------
131,210 137,692 268,902
-------- -------- ----------
Operating income (loss)... 40,721 (13,470) 27,251
-------- -------- ----------
Other income (expense):
Interest expense.......... (8,807) (19,085) (27,892)
Interest and other
income................... 1,611 1,837 3,448
-------- -------- ----------
(7,196) (17,248) (24,444)
-------- -------- ----------
Income (loss) before
income tax expense....... 33,525 (30,718) 2,807
Income tax expense.......... 8,904 5,678 14,582
-------- -------- ----------
Net income (loss)......... $ 24,621 $(36,396) $ (11,775)
======== ======== ==========
Net income (loss) per common
share:
Basic..................... $ 0.68 $ (0.20)
======== ==========
Diluted................... $ 0.66 $ (0.20)
======== ==========
Weighted average shares
outstanding:
Basic..................... 35,198 62,432
======== ==========
Diluted................... 43,707 62,432
======== ==========
</TABLE>

The accompanying notes are an integral part of the unaudited pro forma combined
financial information.

76
<PAGE>

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31, 1996 (NOTE B)
---------------------------------------------------
HISTORICAL PRO FORMA
--------------------- ----------------------------
INCREASE
U.S. FILTER CULLIGAN (DECREASE) NOTES COMBINED
----------- -------- --------- ------ ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues................. $ 1,094,636 $272,416 $1,367,052
Cost of sales............ 859,754 151,696 1,011,450
----------- -------- ----------
Gross profit........... 234,882 120,720 355,602
Selling, general and
administrative
expenses................ 196,752 100,220 296,972
Merger expenses.......... 5,581 0 5,581
----------- -------- ----------
202,333 100,220 302,553
----------- -------- ----------
Operating income ...... 32,549 20,500 53,049
----------- -------- ----------
Other income (expense):
Interest expense....... (15,907) (4,076) (19,983)
Interest and other
income................ 2,981 5,683 8,664
----------- -------- ----------
(12,926) 1,607 (11,319)
----------- -------- ----------
Income (loss) before
income tax expense.... 19,623 22,107 41,730
Income tax expense....... 3,845 14,743 18,588
----------- -------- ----------
Net income (loss)...... $ 15,778 $ 7,364 $ 23,142
=========== ======== ==========
Net income (loss) per
common share:
Basic.................. $ 0.27 $ 0.24
=========== ==========
Diluted................ $ 0.26 $ 0.23
=========== ==========
Weighted average shares
outstanding:
Basic.................. 58,016 95,290
=========== ==========
Diluted................ 61,464 98,737
=========== ==========
</TABLE>

The accompanying notes are an integral part of the unaudited pro forma combined
financial information.

77
<PAGE>

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

a. The Unaudited Pro Forma Combined Balance Sheet has been prepared to reflect
the pending acquisition by U.S. Filter of Culligan under the pooling of
interests method of accounting. U.S. Filter plans to acquire all of the
outstanding capital stock of Culligan in exchange for approximately 44.2
million shares of U.S. Filter's Common Stock (assuming an exchange ratio of
1.714 shares of U.S. Filter's Common Stock for each outstanding share of
Culligan Common Stock). Pursuant to the pooling of interests method of
accounting, the recorded assets and liabilities of each of U.S. Filter and
Culligan will be recorded as the assets and liabilities of the combined
entity.

The Unaudited Pro Forma Combined Balance Sheet has also been prepared to
reflect Culligan's acquisition of Protean under the purchase method of
accounting. Including transaction costs of approximately $8.7 million, the
equity purchase price of Protean was approximately $174.5 million. The
purchase price will be allocated to the assets of Protean based on their
respective estimated fair values. In addition to the equity purchase price,
Culligan assumed Protean's long-term indebtedness of approximately $8.4
million. The Protean balance sheet has been derived from the historical
financial statements, presented in accordance with UK GAAP and has been
translated into US dollars. The pro forma adjustments include certain
adjustments necessary to reflect Protean's historical financial statements
in accordance with US GAAP. Certain reclassifications have been made to the
historical financial statements of Protean to conform with U.S. Filter's
presentation. All amounts herein are presented in US dollars. In connection
with the acquisition of Protean, Culligan had decided to divest the
Analytical and Thermal Group of Protean by November 1998. These operations
were reflected as discontinued operations in the unaudited pro forma
financial information presented in Culligan's Form 8-K/A dated February 17,
1998 which has been incorporated by reference herein. Upon completion of
the merger, U.S. Filter will record a cumulative adjustment to reflect the
results of operations of the Analytical and Thermal Group of Protean as if
it had never been held for sale. The cumulative adjustment for the period
from the date of acquisition through January 31, 1998 will result in a
reduction in net income of $264,000.

The Unaudited Pro Forma Combined Balance Sheet as of December 31, 1997
combines the consolidated balance sheet of U.S. Filter as of December 31,
1997 with the consolidated balance sheets of Culligan as of October 31,
1997 and Protean as of September 30, 1997 and has been adjusted as follows.
The U.S. Filter consolidated balance sheet as of December 31, 1997 includes
the accounts of Kinetics, Memtec, USG, WaterPro, WSMG and PED as all of
these acquisitions were closed on or prior to December 31, 1997. The
Culligan consolidated balance sheet as of October 31, 1997 includes the
accounts of Ametek as Culligan acquired Ametek on August 1, 1997.

(i) To eliminate restricted cash that was held in escrow until Culligan's
offer to acquire Protean was declared unconditional on December 2,
1997. The restricted cash was used to acquire a portion of Protean's
outstanding shares.

(ii) To reclassify non-current deferred tax assets included in Protean's
prepaid assets.

(iii) To reverse the periodic revaluation of certain property, plant and
equipment allowed for UK GAAP purposes. Under US GAAP such
revaluations are not permitted and all property, plant and equipment,
other than land, is depreciated over their estimated economic lives.
The adjustment results in a reduction of the carrying value of net
property plant and equipment of $332,000.

(iv) To increase property, plant and equipment for the estimated step-up to
fair value in the amount of $840,000.

(v) To record the goodwill related to Culligan's acquisition of Protean.
Goodwill represents the excess of the purchase price paid over the sum
of the estimated fair value of identifiable assets acquired less
liabilities assumed and may change based on the final asset valuation.

(vi) To record a non-current asset of $1,757,000 to reflect Protean's
pension accounting on a US GAAP basis. Protean provides for the cost
of retirement benefits based upon consistent percentages of

78
<PAGE>

employees' pension payables as recommended by independent qualified
actuaries. US GAAP requires that the projected benefit obligation be
reduced to the extent of the plans' fair value of assets and be
adjusted to reflect unrecognized obligations or assets in determining
pension cost or credit for the year.

(vii)To eliminate Culligan's equity investment in Protean of $30,193,000
that was recorded on Culligan's consolidated balance sheet at October
31, 1997.

(viii) To record incremental indebtedness for Culligan's acquisition of
Protean. The total cash purchase price of Protean was approximately
$174.5 million including transactional costs of approximately
$8.7 million. Incremental indebtedness is calculated as follows:

<TABLE>
<S> <C>
Protean purchase price.................................... $ 174,465,000
Less:
Proceeds from restricted cash............................. (143,968,000)
Proceeds from initial equity investment................... (30,193,000)
-------------
Incremental indebtedness for acquisition of Protean....... $ 304,000
=============
</TABLE>

Proceeds from restricted cash and from initial equity investment were
obtained through borrowings by Culligan prior to October 31, 1997.
Accordingly debt associated with such borrowings are included on
Culligan's balance sheet as of October 31, 1997.

(ix)To reflect the equity adjustments necessary to reflect the acquisition
of Culligan on a pooling of interests basis. Such adjustments had the
effect of increasing common stock $189,000 and reducing additional
paid-in-capital by $189,000.

(x)To eliminate the equity of Protean.

b. The Unaudited Pro Forma Combined Statement of Operations for the fiscal
year ended March 31, 1997, combines (i) the results of U.S. Filter (as
restated for the acquisition of Kinetics which was accounted for as a
pooling of interests) and Protean for such fiscal year, (ii) the results of
Memtec for their fiscal year ended June 30, 1997, (iii) the results of
Culligan for their fiscal year ended January 31, 1997, (iv) the results of
Ametek for their fiscal year ended December 31, 1996, (v) the results of
USG for the period beginning on April 1, 1996 and ending immediately prior
to U.S. Filter's acquisition of USG on October 25, 1996, (vi) the results
of WaterPro for the period beginning on April 1, 1996 and ending
immediately prior to U.S. Filter's acquisition of WaterPro on October 28,
1996, (vii) the results of WSMG for the period beginning on April 1, 1996
and ending immediately prior to U.S. Filter's acquisition of WSMG on
December 2, 1996, and (vii) the results of PED for the period beginning on
April 1, 1996 and ending immediately prior to U.S. Filter's acquisition of
PED on January 6, 1997. Results of USG, WaterPro, WSMG and PED after they
were acquired by U.S. Filter to March 31, 1997 are included in U.S.
Filter's historical results for the fiscal year ended March 31, 1997.

The Unaudited Pro Forma Combined Statement of Operations for the nine
months ended December 31, 1997 combines (i) the results of U.S. Filter for
such nine month period (which includes the results of Kinetics as such
acquisition closed on December 31, 1997 and was accounted for as a pooling
of interests), (ii) the results of Memtec for the period beginning on April
1, 1997 and ended immediately prior to the acquisition by U.S. Filter on
December 9, 1997 (Memtec's results subsequent to its acquisition are
included in U.S. Filter's historical results), (iii) the results of
Culligan for their nine months ended October 31, 1997, (iv) the results of
Ametek for the period beginning on February 1, 1997 and ending immediately
prior to its acquisition by Culligan on August 1, 1997 (Ametek's results
subsequent to its acquisition by Culligan are included in Culligan's
historical results) and (v) the results of Protean for their nine months
ended September 30, 1997. The Protean statements of operations have been
derived from the historical financial accounts of Protean and are presented
in accordance with UK GAAP. These statements of operations have been
translated into US dollars using exchange rates of $1.59 and $1.63 per
British pound sterling for the

79
<PAGE>

year ended March 31, 1997 and the nine months ended September 30, 1997,
respectively. Additionally, certain pro forma adjustments were made to
conform Protean's historical financial information with US GAAP.

For the fiscal years ended March 31, 1996 and 1995, the historical results
of U.S. Filter for the fiscal years ended March 31, 1996 and 1995, are
combined with the results of Culligan for their fiscal years ended January
31, 1996 and 1995, respectively. For the nine month period ended December
31, 1996, the
historical results of U.S. Filter (as restated for the acquisition of
Kinetics which was accounted for as a pooling of interests) for such period
are combined with the results of Culligan for the nine months ended October
31, 1996. The Unaudited Pro Forma Combined Statements of Operations for
these periods are in effect a restatement of the historical operations of
each of U.S. Filter and Culligan and accordingly do not include the results
of Memtec, Protean, Ametek, USG, WaterPro, WSMG and PED which were
acquisitions accounted for as purchases.

The Unaudited Pro Forma Combined Statements of Operations gives effect to
the following adjustments:

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED NINE MONTHS ENDED
MARCH 31, 1997 DECEMBER 31, 1997
-------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
(i) To eliminate November and December 1995 sales (and
related expenses) of APIC International, S.A., a wholly
owned subsidiary of Ametek, to reduce the results to
the twelve months ended December 31, 1996. The
adjustment impacts the following accounts:
Sales................................................ $ 827 $--
======= ====
Cost of sales........................................ $ (359) $--
======= ====
Selling, general and administrative expenses......... $ (367) $--
======= ====
(ii) To reclassify research and development expenses
included in cost of sales in Ametek's historical
results for the year ended December 31, 1996 to
selling, general and administrative expenses in order
to combine Ametek's historical results on a basis
consistent with U.S. Filter. The adjustment impacts
the following accounts:
Cost of sales........................................ $ (618) $--
======= ====
Selling, general and administrative expenses......... $ 618 $--
======= ====
(iii) To reclassify depreciation expense of Ametek to cost
of sales from selling, general and administrative
expenses for the year ended December 31, 1996 in
order to combine Ametek's historical results on a
basis consistent with U.S. Filter. The adjustment
impacts the following accounts:
Cost of sales........................................ $ 1,856 $--
======= ====
Selling, general and administrative expenses......... $(1,856) $--
======= ====
(iv) To adjust cost of sales to capitalize tooling costs
expensed by Ametek, net of additional depreciation
expense related to such capitalized amounts, in
order to present Ametek's historical results on a
basis consistent with U.S. Filter and the accounting
policies that are being used subsequent to
Culligan's acquisition of Ametek ................... $ (45) $--
======= ====
</TABLE>

80
<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED NINE MONTHS ENDED
MARCH 31, 1997 DECEMBER 31, 1997
-------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
(v) To adjust cost of sales to record
depreciation expense on the net step-up
in fair value of the property, plant and
equipment acquired by Culligan in the
Protean acquisition. Such assets are
depreciated over a 10 year economic life
......................................... $ 51 $ 38
====== ======
(vi) To adjust selling, general and
administrative expenses to record
amortization expense of identifiable
trademarks acquired in connection with
Culligan's acquisition of Ametek ....... $ 160 $ 80
====== ======
(vii) To adjust selling, general and
administrative expenses to reflect
goodwill amortization from U.S.
Filter's acquisitions of USG, WaterPro,
WSMG and PED, with such goodwill of
approximately $262,326,000 amortized
over 40 years. The Pro Forma adjustment
reflects goodwill amortization from
April 1, 1996 until each of USG,
WaterPro, WSMG and PED were acquired.
Goodwill amortization related to these
acquirees after their respective
acquisition dates is included in U.S.
Filter's historical results............ $3,279 $ --
====== ======
(viii) To adjust selling, general and
administrative expenses to reflect the
goodwill amortization from Culligan's
acquisitions of Protean and Ametek,
with such goodwill of approximately
$262,634,000 amortized over 40 years.. $6,566 $4,924
====== ======
(ix) To reclassify restructuring expenses
recorded by Protean in accordance with
UK GAAP into selling, general and
administrative expenses for the year
ended March 31, 1997, as they do not
meet the definition of restructuring
costs under US GAAP. Additionally,
during the nine months ended December
31, 1997 certain costs that were accrued
by Protean as restructuring costs at
March 31, 1997 should have been expensed
as selling, general and administrative
costs as incurred in the subsequent nine
month period. The adjustments impact the
following accounts:
Selling, general and administrative
expenses................................ $ 975 $ 619
====== ======
Merger, restructuring, acquisition and
other related charges................... $ (975) $ --
====== ======
(x) To adjust selling, general and
administrative expenses to recognize the
effect of accounting for pension costs on
a US GAAP basis.......................... $ (51) $ (160)
====== ======
(xi) To adjust interest expense related to
the debt of approximately $562,829,000
incurred or to be incurred to finance
the acquisitions Memtec and Protean; and
to adjust interest expense related to
the debt of $25,000,000 assumed in
Culligan's acquisition of Ametek.
Interest on the total debt of
$587,829,000 is assumed to be either
financed by or refinanced by borrowings
under U.S. Filter's Senior Credit
Facility at an assumed effective rate of
5.92% per annum.
</TABLE>

81
<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED NINE MONTHS ENDED
MARCH 31, 1997 DECEMBER 31, 1997
-------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
For the fiscal year ended March 31,
1997, the total incremental debt of
$587,829,000 is assumed to be
outstanding for the entire fiscal year.
For the nine months ended December 31,
1997, incremental debt of $388,364,000
used to finance the acquisition of
Memtec is assumed to be outstanding for
period beginning on April 1, 1997 and
ending immediately prior to its
acquisition by U.S. Filter on December
9, 1997 (from that date until the end of
the nine month period on December 31,
1997 debt to acquire Memtec was actually
outstanding and interest expense on such
debt was included in U.S. Filter's
historical results). Additionally, for
the nine months ended December 31, 1997,
incremental debt of $174,465,000 used to
finance Culligan's acquisition of
Protean is assumed to be outstanding for
the entire nine month period; whereas
debt assumed in Culligan's acquisition
of Ametek of $25,000,000 is assumed to
be outstanding for the period beginning
on February 1, 1997 and ending
immediately prior to its acquisition by
Culligan on August 1, 1997 (from that
date until the end of the nine month
period on October 31, 1997 debt assumed
in Culligan's acquisition of Ametek was
actually outstanding and interest
expense on such debt was included in
Culligan's actual results).
For the fiscal year ended March 31,
1997, the interest expense adjustment
includes a provision for the debt of
approximately $541,025,000 incurred to
finance the acquisitions of WSMG and
PED, net of historical interest expense
recorded by WaterPro and PED on parent
company debt. WaterPro and PED incurred
interest on such parent company debt at
the prime rate and approximately 11%,
respectively, and incurred interest
expense of $2,433,000 and $9,469,000
respectively, for the period beginning
April 1, 1996 and ending when upon
acquisition of the individual
businesses. The assumed interest rate on
$414,000,000 of the debt incurred to
finance the WSMG and PED acquisitions is
4.5% as this debt was funded by
convertible subordinated debentures
issue December 12, 1996. The remaining
$137,025,000 of such debt is assumed to
be financed on borrowings under U.S.
Filter's Senior Credit Facility with an
effective interest rate of 5.92%.
The assumed effective interest of
5.92% on assumed borrowings under U.S.
Filter's Senior Credit Facility is
subject to variability. A 0.125%
increase-decrease in the assumed
effective interest rate incrementally
decreases-increases pro forma combined
net income (loss) $505,000 and
$325,000 for the year ended March 31,
1997 and the nine months ended
December 31, 1997..................... $ 35,972 $ 24,359
======== ========
(xii) To adjust the provision for income
taxes for each of the pro forma
adjustments assuming the statutory
tax rate of 35%..................... $(16,112) $(10,451)
======== ========
</TABLE>

82
<PAGE>

c. During the fiscal year ended March 31, 1997, U.S. Filter recorded merger
expenses of $5.6 million related to the acquisition of Davis. Such expenses
consisted primarily of investment banking, printing, stock transfer, legal,
accounting, governmental filing fees and certain other costs related to
existing Davis pension plans and change of control payments. On December 9,
1997, U.S. Filter acquired all of the outstanding shares of Memtec in
exchange for cash totaling $397.2 million (including estimated transaction
costs of $10.6 million). U.S. Filter acquired from Memtec certain in-
process research and development projects that had not reached
technological feasibility and that had no alternative future use. The
estimated market value of such in-process research and development
projects, as determined by an independent appraiser, was $299.5 million and
was expensed at the acquisition date. During the nine months ended December
31, 1997, U.S. Filter recorded a pre-tax charge for merger, restructuring,
acquisition and other related charges of $141.1 million. Such charges
related to a restructuring plan that U.S. Filter designed and implemented
concurrent with the acquisitions of Kinetics and Memtec. The plan was
designed to streamline U.S. Filter's manufacturing and production base,
improve efficiency and enhance its competitiveness. Included in the merger,
restructuring, acquisition and other related charges was merger expenses
incurred to consummated the Kinetics transaction of $4.3 million consisting
of investment banking, printing, stock transfer, legal, accounting,
governmental filing and certain other transaction costs.

During the fiscal year ended June 30, 1997 and the nine months ended
December 31, 1997, Memtec recorded restructuring expenses of $1.7 million
and $2.7 million, respectively. Such restructuring expenses related to
employee terminations and asset write-downs at Memtec's French operations.
The restructuring was performed to focus Memtec's French operations on
global brands and away from non-core businesses.

During the nine months ended October 31, 1997, Culligan recorded a merger
and restructuring charge of $9.5 million in connection with the acquisition
of Ametek to reflect the integration and restructuring of the Culligan's
Everpure(R), UltraPure(R) and US Water(R) Products operations with Ametek
and the restructuring of Culligan's consumer products division to focus
principally on the "do-it-yourself" and hybrid retail markets. During the
nine months ended October 31, 1997, Culligan acquired from Ametek certain
in-process research and development projects that had not reached
technological feasibility and that had no alternative future use. The
estimated market value of such in-process research and development projects
was $17.0 million and was expensed at the acquisition date. In addition
during such nine months, Culligan wrote-off the remaining goodwill of $3.2
million arising from the acquisition of UltraPure(R) in January 1996
related to more costly technology used prior to the acquisition of Ametek.
During the nine months ended October 31, 1997, Culligan disposed of its
investment in Anvil Holdings, Inc. for total cash proceeds of $50.9
million. The transaction, which included payment of outstanding accrued
interest receivable and dividends, resulted in a pre-tax gain of
approximately $31.1 million.

During the fiscal year ended March 31, 1997, Protean recorded a charge of
$2.1 million ($1.1 million for US GAAP purposes) for reorganization costs
incurred in respect of DWA GmBH & Co. AG consisting of redundancies and
professional and consultancy assistance in Germany, together with inventory
write downs and other provisions.

Prior to the acquisition of PED by U.S. Filter during the fiscal year ended
March 31, 1997, PED incurred restructuring charges relating to the plant
closure and relocation of the operations of Wallace & Tieman, Inc. a
subsidiary, from Belleville, N.J. to Vineland, N.J. These restructuring
charges totaled $2.0 million during the period beginning of April 1, 1996
and ending immediately prior to PED being acquired by U.S. Filter on
January 6, 1997.

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THE MERGER AGREEMENT

This section of the Joint Proxy Statement/Prospectus describes all of the
material terms of the Merger Agreement. The description does not purport to be
complete and is qualified by reference to the Merger Agreement, which is
attached as Annex A hereto and is incorporated by reference herein. All
Culligan Stockholders and U.S. Filter Stockholders are encouraged to read the
Merger Agreement in its entirety.

EFFECTIVE TIME OF THE MERGER

The Merger Agreement provides that, upon the terms and subject to the
conditions of the Merger Agreement, Subcorp shall be merged with and into
Culligan and the separate corporate existence of Subcorp shall thereupon
cease, and Culligan, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall continue its existence under the laws of the
State of Delaware.

The Effective Time shall occur when a certificate of merger (the
"Certificate of Merger") meeting the requirements of Section 251 of the DGCL,
which section sets forth requirements relating to the merger of two or more
Delaware corporations, is filed with Secretary of State of the State of
Delaware or at such later time as shall be agreed upon by U.S. Filter and
Culligan and specified in the Certificate of Merger. Prior to such filing, a
closing (the "Closing") shall be held as soon as practicable (but in any event
within two business days) following the date upon which all conditions set
forth in the Merger Agreement have been satisfied or waived or at such other
dates as U.S. Filter and Culligan may agree. See "--Conditions to the Merger."
From and after the Effective Time, the Merger shall have the effects set forth
in Section 259 of the DGCL, which section sets forth certain provisions
concerning the status, rights and liabilities of surviving corporations
following the consummation of a merger.

The Merger Agreement also provides that (i) the Certificate of Incorporation
of the Surviving Corporation as in effect immediately prior to the Effective
Time shall be amended as of the Effective Time so as to contain the
provisions, and only the provisions, contained immediately prior thereto in
the Amended and Restated Certificate of Incorporation of Subcorp, except that
the name of the Surviving Corporation shall continue to be "Culligan Water
Technologies, Inc."; and (ii) the Bylaws of Culligan as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation.
U.S. Filter has also agreed to cause Subcorp to amend its Certificate of
Incorporation to add certain provisions (the "Additional Provisions")
providing for indemnification and release of liability of directors and
officers (which action was taken on March 31, 1998) and not to amend the
Additional Provisions for at least six years from the Effective Time, except
to make such provisions more favorable to current or former directors and
officers.

In addition, the Merger Agreement provides that, from and after the
Effective Time, the directors of Subcorp shall be the directors of the
Surviving Corporation, and the officers of Culligan shall be the officers of
the Surviving Corporation in each case until their respective successors are
duly elected and qualified.

CONVERSION OF SECURITIES

The Merger Agreement provides that, as of the Effective Time, each share of
common stock, $0.01 par value, of Subcorp issued and outstanding immediately
prior to the Effective Time shall be converted into one share of common stock,
$0.01 par value, of the Surviving Corporation and that such shares shall
constitute all of the issued and outstanding capital stock of the Surviving
Corporation. Also as of the Effective Time (but subject to the other
provisions of the Merger Agreement), each share of Culligan Common Stock
issued and outstanding immediately prior to the Effective Time (the "Culligan
Shares") (other than Culligan Shares held in the treasury of Culligan, which
shall be canceled with no payment to be made in respect thereof) shall be
converted into and represent a number of shares of U.S. Filter Common Stock
equal to the Exchange Ratio (as defined below).

The "Exchange Ratio" shall be equal to 1.714 if the average of the closing
prices of the U.S. Filter Common Stock, as reported on the NYSE Composite Tape
on each of the last ten trading days ending on the

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sixth trading day prior to the date of the Culligan Special Meeting at which
the approval of the Merger by the Culligan Stockholders is obtained (the
"Average Share Price") is equal to or greater than $35; provided, however,
that (i) if the Average Share Price is less than $35, but greater than or
equal to $32, then the Exchange Ratio shall be equal to the quotient obtained
(rounded to the nearest ten-thousandth of a share) by dividing $60 by the
Average Share Price; and (ii) if the Average Share Price is less than $32, the
Exchange Ratio shall be equal to 1.875. No certificates for fractional shares
of U.S. Filter Common Stock shall be issued as a result of the conversion of
Culligan Common Stock into U.S. Filter Common Stock. The Exchange Ratio shall
be adjusted to reflect any stock dividend, distribution, stock split,
reclassification, combination or other change in the U.S. Filter Common Stock
prior to the Effective Time.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF
U.S. FILTER COMMON
STOCK ISSUED
IN THE MERGER PERCENT OF U.S. FILTER
ASSUMED ----------------------- VALUE PER SHARE COMMON STOCK OUTSTANDING
AVERAGE PER CULLIGAN OF CULLIGAN AFTER THE MERGER HELD BY
SHARE PRICE SHARE TOTAL COMMON STOCK* FORMER CULLIGAN STOCKHOLDERS
----------- ------------ ---------- --------------- ----------------------------
<S> <C> <C> <C> <C>
$37.00 1.7140 44,351,042 $63.42 29.01%
$35.00 1.7140 44,351,042 $60.00 29.01%
$34.00 1.7647 45,662,943 $60.00 29.62%
$33.00 1.8181 47,044,708 $60.00 30.24%
$32.00 1.8750 48,517,038 $60.00 30.90%
$30.00 1.8750 48,517,038 $56.25 30.90%
</TABLE>
- --------
* At the assumed Average Share Price.

Pursuant to the terms of the Merger Agreement, the specific number of shares
of U.S. Filter Common Stock into which each Culligan Share will be converted
will not be known until shortly prior to the Special Meetings and will vary
depending on the Average Share Price. For example, (1) if the Average Share
Price is $30, each Culligan Share will be converted into 1.875 shares of U.S.
Filter Common Stock, (2) if the Average Share Price is $35, each Culligan
Share will be converted into 1.714 shares of U.S. Filter Common Stock, and (3)
if the Average Share Price is $40, each Culligan Share will be converted into
1.714 shares of U.S. Filter Common Stock. There can be no assurance that the
number of shares of U.S. Filter Common Stock into which each Culligan Share is
converted will have a market value equal to $60 at the time of actual receipt
of shares of U.S. Filter Common Stock by a Culligan Stockholder.

Assuming an Average Share Price of $33 3/16 (the closing price of U.S.
Filter Common Stock on May 14, 1998) and based upon approximately 25,875,754
shares of Culligan Common Stock outstanding (the number of shares outstanding
as of the Culligan Record Date), it is anticipated that an aggregate of
approximately 46,780,776 shares of U.S. Filter Common Stock will be issued
pursuant to the Stock Issuance, representing approximately 30.1% of the shares
of U.S. Filter Common Stock expected to be outstanding after giving effect to
the consummation of the Merger.

The Merger Agreement also provides that, prior to the Effective Time, U.S.
Filter and Culligan shall take all such actions as may be necessary to cause
each unexpired and unexercised option under stock options plans of Culligan in
effect as of the date of the Merger Agreement which has been granted to
current or former directors, officers or employees of Culligan by Culligan (or
granted by Culligan prior to the Effective Time pursuant to agreements in
compliance with the terms of the Merger Agreement (each, a "Culligan
Option")), to

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be automatically converted at the Effective Time into an option (a "U.S.
Filter Exchange Option") to purchase that number of shares of U.S. Filter
Common Stock equal to the number of shares of Culligan Common Stock issuable
immediately prior to the Effective Time upon exercise of the Culligan Option
(without regard to actual restrictions on exercisability) multiplied by the
Exchange Ratio, with an exercise price equal to the exercise price which
existed under the corresponding Culligan Option divided by the Exchange Ratio,
and with other terms and conditions that are the same as the terms and
conditions of such Culligan Option immediately before the Effective Time;
(provided that with respect to Culligan Options that are "incentive stock
options" within the meaning of Section 422 of the Code, the conversion shall
be carried out in a manner satisfying the requirements of Section 424(a) of
the Code). U.S. Filter has agreed to reserve and make available for issuance
the number of shares of U.S. Filter Common Stock that will be subject to U.S.
Filter Exchange Options as well as to use reasonable efforts to file a
registration statement with respect to such shares within 10 business days
after the Closing Date. Culligan has agreed to issue treasury shares of
Culligan, to the extent available, upon the exercise of Culligan Options prior
the Effective Time. See "THE MERGER--Interests of Certain Persons in the
Merger."

CULLIGAN RIGHTS AGREEMENT

In the Merger Agreement, Culligan represented that the Culligan Rights
Agreement had been amended in a manner so that the rights issued thereunder
would not become exerciseable as a result of the execution of the Merger
Agreement or the consummation of the Merger, and to provide that the Culligan
Rights Agreement will expire immediately prior to the Effective Time. See "THE
CULLIGAN RIGHTS AGREEMENT AMENDMENT."

EXCHANGE OF CERTIFICATES REPRESENTING SHARES

The Merger Agreement provides that, promptly following the Effective Time,
U.S. Filter shall deposit with American Stock Transfer & Trust Company or such
other exchange agent as may be designated by U.S. Filter (the "Exchange
Agent"), for exchange in accordance with the Merger Agreement, certificates
representing shares of U.S. Filter Common Stock issuable in exchange for
outstanding shares of Culligan Common Stock and shall from time-to-time
deposit cash in an amount reasonably expected to be paid in lieu of fractional
shares of Culligan Shares (in accordance with the terms of the Merger
Agreement) (such shares and cash being hereinafter referred to as the
"Exchange Fund").

As soon as practicable after the Effective Time, U.S. Filter shall instruct
the Exchange Agent to mail to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of Culligan Common Stock whose shares were
converted into the right to receive shares of U.S. Filter Common Stock, (i) a
letter of transmittal (the form and substance of which shall have been
reasonably approved by Culligan prior to the Effective Time and which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other customary
provisions as U.S. Filter may reasonably specify), and (ii) instructions for
use in effecting the surrender of the Certificates. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal, the holder of such Certificate shall be
entitled to receive in exchange therefor that portion of the Exchange Fund
which such holder has the right to receive, after giving effect to any
required withholding tax, and the Certificate so surrendered shall forthwith
be cancelled. No interest will be paid or accrued on any cash to be paid in
lieu of fractional share interests in U.S. Filter Common Stock upon such
exchange. In the event of any transfer of ownership of Culligan Shares which
has not been registered in the transfer records of Culligan, certificates
representing the proper number of shares of U.S. Filter Common Stock, if any,
together with a check for the cash to be paid in lieu of fractional shares,
will be issued to the transferee of the Certificate presented to the Exchange
Agent, accompanied by all documents required to evidence and effect the prior
transfer thereof and to evidence that any applicable stock transfer taxes
associated with such transfer were paid. CERTIFICATES SHOULD NOT BE
SURRENDERED BY THE HOLDERS OF CULLIGAN COMMON STOCK UNTIL SUCH HOLDERS RECEIVE
THE LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.

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DIVIDENDS

The Merger Agreement provides that no dividends or other distributions with
respect to shares of U.S. Filter Common Stock constituting part of the
Exchange Fund shall be paid to the holder of any unsurrendered Certificates
until such Certificates are surrendered. Subject to applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
Certificates representing whole shares of U.S. Filter Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender the
amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of U.S.
Filter Common Stock and not paid, less the amount of any withholding taxes
which may be required thereon, and (ii) at the appropriate payment date
subsequent to surrender, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of U.S.
Filter Common Stock, less the amount of any withholding taxes which may be
required thereon.

NO FRACTIONAL SHARES

The Merger Agreement provides that no certificates representing fractional
shares of U.S. Filter Common Stock will be issued upon the surrender of
Certificates. In lieu of any such fractional interest, each holder of a
Certificate who would otherwise have been entitled to a fraction of a U.S.
Filter Share upon surrender of Certificates shall be paid cash upon such
surrender in an amount equal to the value of such fractional interest. Such
payment with respect to fractional shares is merely intended to provide a
mechanical rounding off of consideration to be paid out of the Exchange Fund
to holders of Culligan Shares in exchange for such Culligan Shares. If more
than one certificate representing shares of Culligan Common Stock shall be
surrendered for the account of the same holder, the number of shares of U.S.
Filter Common Stock for which certificates have been surrendered shall be
computed on the basis of the aggregate number of shares represented by the
certificates so surrendered.

UNCLAIMED AMOUNTS

The Merger Agreement provides that any portion of the Exchange Fund which
remains unclaimed by former Culligan Stockholders twelve months after the date
of mailing of letters of transmittal and instructions shall be delivered by
the Exchange Agent to U.S. Filter. Any former Culligan Stockholders who have
not theretofore complied with the exchange provisions of the Merger Agreement
shall thereafter look only to U.S. Filter for payment of any claim to shares
of U.S. Filter Common Stock, cash in lieu of fractional shares thereof, or
dividends and distributions, if any, in respect thereof. None of U.S. Filter,
the Surviving Corporation or the Exchange Agent will be liable to any former
holder of Culligan Shares for any shares of Culligan Common Stock (or
dividends or distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.

REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains customary representations and warranties of
U.S. Filter, Subcorp and Culligan relating to, among other things, certain
aspects of the respective businesses and financial statements of the parties
and certain other matters. The representations and warranties will expire as
of the Effective Time, although it is a condition to the Merger that each
party's representations and warranties set forth in the Merger Agreement shall
be true and correct in all material respects on the date of the Merger
Agreement and on and as of the date of the Effective Time as though made on
and as of such date (except for such representations and warranties made as of
a specified date, the accuracy of which will be determined as of the specified
date).

OTHER MATTERS

U.S. Filter and Culligan have agreed that until the earlier of the Effective
Time or the termination of the Merger Agreement, they will not, and will cause
their subsidiaries and affiliates not to, (i) actively pursue any pending or
threatened suit, claim, action, proceeding or investigation (an "Action")
against the other party

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relating to events that occurred prior to the date of the Merger Agreement, or
(ii) take any other action with respect to any such matter except as may be
necessary to maintain the status quo. In connection with the maintenance of
the status quo, each of U.S. Filter and Culligan will seek to postpone the
filing of any responsive pleadings in any Action, and will not file any new
Action unless such filing is necessary to preserve rights that may otherwise
be forfeited as a result of such delay.

ANTITRUST, GOVERNMENTAL AND OTHER APPROVALS

Each of U.S. Filter and Culligan have agreed to make all necessary filings
required under the HSR Act and other non-U.S. antitrust laws and to take
action to resolve such objections, if any, as may be asserted by any
governmental authority with respect to the transactions contemplated by the
Merger Agreement under U.S. federal, state or non-U.S. antitrust laws. The
Merger Agreement provides that each of U.S. Filter, Subcorp and Culligan will
use reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the
other transactions contemplated by the Merger Agreement. Such actions include,
among other things, the obtaining of necessary actions or nonactions, waivers,
consents, licenses, permits, authorizations, orders and approvals from
governmental authorities and the making of all other necessary registrations
and filings, the obtaining of all consents, approvals or waivers from third
parties related to or required in connection with the Merger that are
necessary to consummate the Merger and the transactions contemplated by the
Merger Agreement or required to prevent a Material Adverse Effect on U.S.
Filter or Culligan from occurring prior to or after the Effective Time, the
preparation of the Joint Proxy Statement/Prospectus and the Registration
Statement, the taking of all action necessary to ensure that the Merger is
accounted for as a pooling of interests for financial reporting purposes and
to ensure that the Merger constitutes a tax-free reorganization within the
meaning of Section 368(a), and the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, the Merger Agreement. In addition, the
parties have agreed that, if required to avoid a challenge to the Merger by
the Antitrust Division or the FTC, U.S. Filter shall and, at the direction of
U.S. Filter, Culligan shall take or agree to take any action required to avoid
such a challenge (unless such action would require U.S. Filter or the
Surviving Corporation to agree to the sale or divestiture of businesses,
properties, product lines or assets having aggregate gross annual sales in
excess of $150 million). However, the waiting period under the HSR Act in
connection with U.S. Filter's acquisition of Culligan was terminated on April
1, 1998 without any requirement for such action. Further, if any
administrative or judicial action or proceeding is instituted (or threatened
to be instituted) challenging any transaction contemplated by the Merger
Agreement as violative of any antitrust law, each of U.S. Filter and Culligan
have agreed to cooperate and use reasonable best efforts vigorously to contest
and resist any such action or proceeding, including any legislative,
administrative or judicial action, and to have overturned any order that is in
effect and that prohibits, prevents, or restricts consummation of the Merger,
including, without limitation, by vigorously pursuing all available avenues of
administrative and judicial appeal and all available legislative action,
unless, by mutual agreement, U.S. Filter and Culligan decide that litigation
is not in their respective best interests.

OPERATING COVENANTS

Each of U.S. Filter and Culligan have agreed that up until the Effective
Time, they shall each use reasonable efforts to maintain and preserve each of
their business organizations and to retain the services of each of their
officers and key employees and maintain relationships with customers,
suppliers and other third parties to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect. Pursuant thereto,
U.S. Filter and Culligan have agreed (subject to certain exceptions), among
other things,

(i) that neither U.S. Filter nor Culligan will change its accounting
policies in a way that is inconsistent with past practice;

(ii) that Culligan will not adjust, split, combine or reclassify its
capital stock or make, declare or pay any dividend or distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital Stock,

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(iii) that neither U.S. Filter nor Culligan will grant any person any
right or option to acquire shares of its capital stock (provided, however,
that either may grant options with a fair market value exercise price to
purchase up to, in the case of U.S. Filter, 750,000 shares of U.S. Filter
Common Stock, or 1,500,000 shares of U.S. Filter Common Stock if the
Effective Time is after July 1, 1998 or, in the case of Culligan, 250,000
shares of Culligan Common Stock, or 500,000 shares of Culligan Common Stock
if the Effective Time is after July 1, 1998, to employees in the ordinary
course consistent with past practice or in connection with acquisitions,
mergers, consolidations or similar transactions permitted pursuant by the
Merger Agreement);

(iv) that neither U.S. Filter nor Culligan will issue, deliver or sell or
agree to issue, deliver or sell any additional shares of its capital stock
or any securities or obligations convertible into or exchangeable for any
shares of its capital stock or securities (except pursuant to the exercise
of options for its common stock which are outstanding as of the date of the
Merger Agreement or which are granted prior to the Effective Time in
compliance with the terms of the Merger Agreement, or in connection with
acquisitions, mergers consolidations and similar transactions permitted by
the Merger Agreement provided that the fair market value of any capital
stock or securities issued does not exceed an aggregate of $350 million, in
the case of U.S. Filter, or $119 million, in the case of Culligan);

(v) that neither U.S. Filter nor Culligan will enter into any agreement,
understanding with respect to the sale, voting, registration or repurchase
of its capital Stock;

(vi) that Culligan will not, other than in connection with certain
permitted financings or refinancings of indebtedness, directly or
indirectly sell, transfer, lease, pledge, mortgage, encumber or otherwise
dispose of any of its property or assets other than in the ordinary course
of business (or as otherwise excepted under the Merger Agreement);

(vii) that neither U.S. Filter, Subcorp nor Culligan will make or propose
any changes in its Certificates of Incorporation or, in the case of
Culligan, Bylaws (except that U.S. Filter may do so to the extent that such
change or changes would not adversely affect the rights and preferences of
the holders of shares of U.S. Filter Common Stock);

(viii) that U.S. Filter will not merge or consolidate with any other
person or acquire any assets or businesses and Culligan will not make any
acquisition of any assets or businesses other than, with respect to both
U.S. Filter and Culligan, expenditures for current assets in the ordinary
course of business and expenditures for fixed or capital assets in the
ordinary course of business (except in connection with transactions
previously disclosed to Culligan or U.S. Filter, as the case may be,
acquisitions of assets or stock of entities in the business of servicing
residential commercial and consumer end users with water treatment and
related water products, or other acquisitions with an aggregate value of
consideration not exceeding, in the case of U.S. Filter, $500 million, and
in the case of Culligan, $170 million);

(ix) that Culligan will not, except pursuant to existing credit
arrangements or except as otherwise permitted by the Merger Agreement,
incur, create, assume or otherwise become liable for any indebtedness for
borrowed money;

(x) that Culligan will not enter into or modify any employment,
severance, termination or similar agreements or arrangements with, or grant
any bonuses, salary increases, severance or termination pay to, any
officer, director, consultant or employee other than in the ordinary course
of business consistent with past practice, except as may be required by
applicable law or as otherwise permitted by the Merger Agreement;

(xi) that Culligan will not enter into, adopt or amend any employee
benefit or similar plan except as may be required by applicable law;

(xii) that neither U.S. Filter nor Culligan will take any action that
could likely result in their respective representations and warranties as
set forth in the Merger Agreement becoming false or inaccurate in any
material respect;

(xiii) that Culligan will not enter into or carry out any other
transaction other than in the ordinary and usual course of business or as
otherwise permitted by the Merger Agreement; and

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(xiv) that neither U.S. Filter nor Culligan will permit or cause any
subsidiary to do any of the foregoing or agree or commit to do any of the
foregoing or agree in writing or otherwise to take any of the foregoing
actions.

THE SPECIAL MEETINGS

U.S. Filter and Culligan have each agreed pursuant to the Merger Agreement
to take all action in accordance with the U.S. federal securities laws, the
DGCL and the Certificate of Incorporation and Bylaws of U.S. Filter and
Culligan, as applicable, necessary to convene each of their respective Special
Meetings and to obtain the approval of their respective stockholders with
respect to the issuance of shares of U.S. Filter Common Stock in the Merger,
in the case of U.S. Filter, and the Merger, the Merger Agreement and the
transactions contemplated thereby, in the case of Culligan. However, if the
U.S. Filter Board determines in good faith by majority vote, after
consultation with and receipt of advice from outside legal counsel that
failure to do so would create a reasonable possibility of a breach of the
fiduciary duties of the U.S. Filter Board under applicable law, the U.S.
Filter Board may withdraw, change or modify such unanimous recommendation in a
manner adverse to Culligan. Culligan may change its unanimous recommendation
with respect to the Merger and may terminate the Merger Agreement under
certain circumstances, as described below under "--No Solicitation."

RESALES OF U.S. FILTER COMMON STOCK RECEIVED IN THE MERGER; RESTRICTIONS ON
AFFILIATES

U.S. Filter has agreed to use all reasonable efforts to cause each person
who may be at the Effective Time or was on the date of the Merger Agreement an
"affiliate" of U.S. Filter for purposes of applicable accounting releases of
the Commission with respect to pooling of interests accounting treatment (a
"U.S. Filter Affiliate"), to execute and deliver to Culligan no less than 30
days prior to the date of the U.S. Filter Special Meeting an affiliate letter
containing a covenant that such U.S. Filter Affiliate will not dispose of any
shares of U.S. Filter Common Stock held (or acquired) by such U.S. Filter
Affiliate from the date of such letter until after such time as results
covering at least 30 days of combined operations of U.S. Filter and Culligan
have been published by U.S. Filter in a public filing or announcement. See
"THE MERGER--Anticipated Accounting Treatment" and "U.S. FEDERAL SECURITIES
LAW CONSEQUENCES."

Culligan has agreed to use all reasonable efforts to cause each person who
may be at the Effective Time or was on the date of the Merger Agreement an
"affiliate" of Culligan for purposes of Rule 145 under the Securities Act or
applicable accounting releases of the Commission with respect to pooling of
interests accounting treatment (a "Culligan Affiliate") to execute and deliver
to U.S. Filter no less than 30 days prior to the date of the Culligan Special
Meeting a written agreement intended to ensure compliance with the Securities
Act (a "Culligan Affiliate Letter."). Each Culligan Affiliate Letter contains
a covenant that is similar to that in the U.S. Filter Affiliate Letter with
respect to Culligan Common Stock held (or acquired) by each Culligan
Affiliate.

Pursuant to the Merger Agreement, U.S. Filter will use its best efforts to
publish, as soon as possible after the Effective Time, financial results which
are sufficiently in accordance with Accounting Series Release No. 135 to
permit the disposition by all Culligan Stockholders of the shares of U.S.
Filter Common Stock received in the Merger consistent with the requirements
for treating the Merger as a pooling of interests for financial reporting
purposes; provided, however, that such financial results shall be published no
later than the fifteenth day after the end of the first calendar month that is
at least 30 days after the Effective Time.

NO SOLICITATION

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create a reasonable possibility of a breach of the fiduciary duties of the
Culligan Board under applicable law. Culligan has agreed, as of the date of
the Merger Agreement, to cease all existing activities, discussions and
negotiations with any parties conducted prior thereto with respect to any
proposal for a Competing Transaction. Culligan may change its unanimous
recommendation for the Merger in a manner adverse to U.S. Filter if the
Culligan Board in good faith by majority vote determines after consultation
with and receipt of advice from outside legal counsel, that failure to do so
would create a reasonable possibility of a breach of the fiduciary duties of
the Culligan Board under applicable law. Culligan may terminate the Merger
Agreement and enter into an acquisition agreement or other similar definitive
agreement (each, an "Acquisition Agreement") with respect to a Competing
Transaction if, prior to the approval of the Merger by the Culligan
Stockholders, the Culligan Board determines in good faith, after consultation
with its financial and legal advisors, with respect to any written proposal
from a third party for a Competing Transaction received after the date of the
Merger Agreement that failure to enter into such Competing Transaction would
create a reasonable possibility of a breach of the fiduciary duties of the
Culligan Board under applicable law and that such Competing Transaction is
more favorable to the Culligan Stockholders than the transactions contemplated
by the Merger Agreement. Prior to terminating the Merger Agreement, Culligan
has agreed to endeavor to provide U.S. Filter with a reasonable opportunity to
respond to any Competing Transaction which Culligan may wish to accept
including advising U.S. Filter of the material terms of any Competing
Transaction.

The Merger Agreement provides that Culligan shall immediately advise U.S.
Filter of any Competing Transactions with respect to which the Culligan Board
determines that it may furnish information, negotiate or otherwise engage in
discussions with a party in respect thereof.

DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE

The Merger Agreement provides that, from and after the Effective Time, U.S.
Filter shall indemnify, defend and hold harmless the present and former
officers and directors of Culligan in respect of acts or omissions occurring
prior to the Effective Time to the fullest extent permitted by applicable law
and to use all reasonable efforts to cause the corporation surviving the
Merger or U.S. Filter to obtain and maintain in effect for a period of six
years after the Effective Time policies of directors' and officers' liability
insurance at no cost to the beneficiaries with respect to acts or omissions
occurring prior to the Effective Time with substantially the same coverage and
containing substantially similar terms and conditions as existing policies
(but is not required to pay more than an annual premium in excess of 250% of
Culligan's current annual premium) and to provide to the directors of Culligan
who become directors of U.S. Filter directors' and officers' liability
insurance on the same basis and to the same extent as that provided to other
directors of U.S. Filter and to enter into indemnification agreements with
such directors of Culligan on terms entered into with other directors of U.S.
Filter. See "THE MERGER--Interests of Certain Persons in the Merger."

NYSE LISTING

U.S. Filter has agreed that it shall use its reasonable best efforts to
cause the shares of U.S. Filter Common Stock issuable pursuant to the Merger
to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Effective Time.

BOARD OF DIRECTORS OF U.S. FILTER

U.S. Filter has agreed in the Merger Agreement that the U.S. Filter Board
will take all action necessary immediately following the Effective Time to
elect one person selected by the Culligan Board prior to the Effective Time
(subject to the consent of the U.S. Filter Board which shall not be
unreasonably withheld) as a director of U.S. Filter effective as of the
Effective Time, for a term expiring at U.S. Filter's third annual meeting of
stockholders following the Effective Time.

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EMPLOYEE BENEFITS

The Merger Agreement provides that U.S. Filter will, for at least one year
from and after the Effective Time, provide employees of Culligan with pension,
health and other benefits that are no less favorable than those provided to
comparable employees of U.S. Filter immediately before the Effective Time and
to honor all contracts, plans, and programs providing for compensation or
benefits for employees of Culligan. U.S. Filter will not be obligated,
however, to continue the employment of any employee of Culligan following the
Effective Time. See "THE MERGER--Interests of Certain Persons in the Merger."

CONDITIONS TO THE MERGER

The obligations of each party to effect the Merger shall be subject to the
satisfaction or waiver of the following conditions:

(i) the Merger Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the Culligan
Stockholders in the manner required by any applicable law and the issuance
of the shares of U.S. Filter Common Stock to be issued in the Merger shall
have been approved by the U.S. Filter Stockholders in the manner required
by any applicable law and the applicable rules of the NYSE;

(ii) any applicable waiting periods under the HSR Act relating to the
Merger and the transactions contemplated by the Merger Agreement shall have
been expired or terminated, and any requirements of foreign jurisdictions
applicable to the consummation of the Merger shall have been satisfied
(unless the failure of such requirements of foreign jurisdictions to be
satisfied does not constitute a Material Adverse Effect in respect of
either Culligan or U.S. Filter);

(iii) no judgment, injunction, order or decree shall prohibit or enjoin
the consummation of the Merger;

(iv) there shall not be pending any action by any federal governmental
authority challenging or seeking to restrain or prohibit the consummation
of the Merger;

(v) the Registration Statement shall have been declared effective under
the Securities Act and shall not be the subject of any stop order or
proceedings (current or threatened) seeking a stop order;

(vi) the shares of U.S. Filter Common Stock to be issued in the Merger
shall have been approved for listing on the NYSE, subject to official
notice of issuance; and

(vii) U.S. Filter shall have received a letter in a form reasonable to
U.S. Filter and Culligan from KPMG Peat Marwick LLP dated as of the date of
the Effective Time stating that they agree that the Merger will qualify for
the pooling of interests method of accounting.

The obligations of Culligan to consummate the Merger and the other
transactions contemplated thereby are subject to the satisfaction or waiver of
the following conditions:

(i) the representations and warranties of U.S. Filter and Subcorp set
forth in the Merger Agreement shall be true and correct in all material
respects as of the date of the Merger Agreement and as of the Closing Date
except for such representations and warranties made as of a specified date,
the accuracy of which will be determined as of the specified date, as if
made as of such time;

(ii) each of U.S. Filter and Subcorp shall have performed and complied
with, in all material respects, all obligations and covenants required to
be performed or complied with by it under the Merger Agreement at or prior
to the Effective Time; and

(iii) Culligan shall have received a written opinion of Wachtell, Lipton,
Rosen & Katz, special counsel to Culligan, dated on or prior to the date of
the Registration Statement, to the effect that (i) the Merger will be
treated for U.S. federal income tax purposes as a reorganization under
Section 368(a) of the Code, (ii) Culligan, U.S. Filter and Subcorp will
each be a party to that reorganization, and (iii) no gain or loss will be
recognized by the Culligan Stockholders upon the receipt of shares of U.S.
Filter Common Stock in exchange for Culligan Shares pursuant to the Merger
(except with respect to cash received in lieu of fractional interests in
shares of U.S. Filter Common Stock).

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The obligations of U.S. Filter and Subcorp to consummate the Merger and the
other transactions contemplated thereby are subject to the satisfaction or
waiver of the following conditions:

(i) the representations and warranties of Culligan set forth in the
Merger Agreement shall be true and correct in all material respects as of
the date of the Merger Agreement and as of the Closing Date, except for
such representations and warranties made as of a specified date, the
accuracy of which will be determined as of the specified date, as if made
of such time; and

(ii) Culligan shall have performed and complied, in all material
respects, with all obligations and covenants required to be performed or
complied with by it under the Merger Agreement at or prior to the Effective
Time.

TERMINATION, AMENDMENT AND WAIVER

(A) by mutual written consent of U.S. Filter and Culligan; or

(B) by either U.S. Filter or Culligan:

(i) if the Merger shall not have been consummated on or prior to
November 15, 1998 (which date shall be December 31, 1998 if a "second
request" has been issued under the HSR Act);

(ii) if a court or other governmental authority of competent
jurisdiction shall have issued a judgment, injunction, order or decree
(which has become final and nonappealable) enjoining U.S. Filter or
Culligan from consummating the Merger;

(iii) if the requisite approvals of the stockholders of either of
U.S. Filter or Culligan shall not have been obtained at either of the
Special Meetings of Culligan or U.S. Filter; or

(iv) if there shall have been a material breach by the other of any
of its representations, warranties, covenants or agreements contained
in the Merger Agreement, which breach would result in the failure to
satisfy certain conditions set forth in the Merger Agreement or would
result in a material adverse effect on the ability of U.S. Filter
and/or Culligan to consummate the Merger, and such breach shall not
have been cured within 30 days after notice thereof shall have been
received by the party alleged to be in breach.

The Merger Agreement may also be terminated by Culligan: (i) in connection
with entering into a Competing Transaction (see "--No Solicitation," above);
or if the Average Share Price, or if the average of the closing prices of
shares of U.S. Filter Common Stock as reported on the NYSE Composite Tape for
any period of 10 consecutive trading days which ends after the last trading
day used in calculating the Average Share Price, is less than $26.25.

U.S. Filter may also terminate the Merger Agreement if the Culligan Board
shall withdraw, or shall modify or change, the Culligan Board Unanimous
Recommendation in a manner adverse to U.S. Filter.

The Merger Agreement may be amended in writing by the parties thereto,
whether before or after the adoption of the Merger Agreement by the Culligan
Stockholders by written agreement of the parties, by action taken or
authorized by their respective Boards of Directors; provided, however, that
after the approval of the Merger Agreement by the Culligan Stockholders, no
such amendment shall be made which by law requires further approval or
authorization by the Culligan Stockholders without such further approval or
authorization.

FEES AND EXPENSES

The Merger Agreement provides that all costs and expenses incurred in
connection with the Merger Agreement are to be borne by the party incurring
such expenses. Notwithstanding the above, if the Merger

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Agreement is terminated and it is judicially determined that such termination
is caused by an intentional breach thereof, the breaching party shall
indemnify and hold harmless the other parties for their respective out-of-
pocket costs fees and expenses of their counsel, accountants, financial
advisors and other experts and advisors as well as fees and expenses incident
to negotiation, preparation and execution of the Merger Agreement and related
documentation, preparation of filings, and stockholders' meetings and
consents, and any litigation by third parties resulting from the execution of
the Merger Agreement ("Costs"). In addition, if Culligan terminates the Merger
Agreement in respect of a Competing Transaction, or if U.S. Filter terminates
the Merger Agreement because of an adverse change in the Culligan Board's
unanimously recommendation to the Culligan Stockholders or because the
Culligan Stockholders fail to approve the Merger and the transactions
contemplated thereby, and within six months of such termination Culligan
consummates a Business Combination (as defined in the Merger Agreement) where
a Competing Transaction existed at the time of termination of the Merger
Agreement, Culligan shall pay to U.S. Filter (i) reimbursement of U.S.
Filter's expenses in an amount up to $5 million in the aggregate ("Expenses");
and (ii) a termination fee (which will be the sole and exclusive remedy of
U.S. Filter in such event) in the amount of $42 million (the "Termination
Fee"). However, in the event that U.S. Filter or Culligan terminates the
Merger Agreement because of the failure of the Culligan Stockholders to
approve the Merger Agreement and the transactions contemplated thereby at the
Culligan Special Meeting but in each case there was no Competing Proposal at
the time of termination and Culligan did not enter into a Business Combination
within six months after such termination, then Culligan will not owe the
Termination Fee and will instead pay to U.S. Filter, in addition to Expenses,
an amount equal to $5 million (which amount will be credited against the
Termination Fee if such fee becomes payable at a later date).

SPECIAL PAYMENT

In the event that (x) the U.S. Filter Board shall withdraw or shall modify
or change in a manner adverse to Culligan its unanimous recommendation to its
stockholders, and the Merger Agreement shall have terminated in accordance
with the terms thereof as a result thereof, or (y) the Merger Agreement is
terminated because of the failure of the U.S. Filter Stockholders to approve
the issuance of shares of U.S. Filter Common Stock pursuant to the Merger,
then U.S. Filter shall pay to Culligan as liquidated damages (i) in
reimbursement for Culligan's expenses, an amount of cash equal to the
aggregate amount of Culligan's Costs up to but not in excess of an amount
equal to $5 million in the aggregate and (ii) the amount of $42 million. In
the event that the Merger Agreement is terminated by Culligan because of an
order of a court of competent jurisdiction enjoining U.S. Filter or Culligan
from consummating the Merger, because the Merger shall not have been
consummated before November 15, 1998 (or December 31, 1998 if a "second
request" has been issued under the HSR Act) or because of a material breach by
U.S. Filter, in either case because of the failure of U.S. Filter to perform
its covenants and obligations under the Merger Agreement, then U.S. Filter
shall pay to Culligan as liquidated damages, an amount of cash equal to $47
million.

COOLING OFF PERIOD

In the event of a termination of the Merger Agreement due to a breach by
U.S. Filter, then U.S. Filter shall be prohibited from entering into or
negotiating a proposal or offer for a merger, consolidation, business
combination, sale of substantial assets, sale of shares of capital stock or
similar transaction involving current or former franchisees of Culligan (a
"Franchisee Acquisition Proposal") or engage in negotiations or discussions
concerning any Franchisee Acquisitions Proposal for a period of 180 days from
the date of termination. In the event of a termination of the Merger Agreement
other than due to a breach by Culligan or a breach by U.S. Filter, then U.S.
Filter shall be prohibited from entering into, commencing negotiations, or
soliciting negotiations, or having or continuing discussions that constitute,
or could reasonably be expected to lead to, a Franchisee Acquisitions
Proposal, or engage in negotiations or discussions concerning any Franchisee
Acquisition Proposal for a period of 90 days from the date of termination. In
the event of a termination of the Merger Agreement due to a breach by
Culligan, there shall be no prohibition on U.S. Filter concerning Franchisee
Acquisition Proposals from the date of termination. In addition, U.S. Filter
has agreed that it shall not make, solicit or pursue in any manner any pending
or future Franchisee Acquisition Proposal until the earlier occur of the
Effective Time or the termination of the Merger Agreement.

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THE SUPPORT/VOTING AGREEMENTS

In order to induce U.S. Filter to enter into the Merger Agreement, Apollo
has entered into Support/Voting Agreements, each dated as of February 9, 1998
with U.S. Filter (the "Support/Voting Agreements"). Apollo entered into the
Support/Voting Agreements as a condition to U.S. Filter entering into the
Merger Agreement and received no consideration for entering into the
Support/Voting Agreement other than consideration due to Culligan Stockholders
generally under the Merger Agreement upon consummation of the Merger and
certain registration rights. See "THE REGISTRATION RIGHTS AGREEMENT." Under
the Support/Voting Agreements, Apollo has agreed to not, and will not permit
any company, trust or other entity controlled by Apollo (other than Culligan)
to, contract to sell, sell or otherwise transfer or dispose of any Culligan
Common Stock held by Apollo or any interest therein or securities convertible
thereinto or any voting rights with respect thereto, other than (i) pursuant
to the Merger, (ii) with U.S. Filter's prior written consent or (iii) to the
extent contractually required.

The Support/Voting Agreements provide that Apollo will cause any company,
trust or other entity controlled by Apollo to, and will use its reasonable
best efforts to cause Apollo's affiliates to, cooperate fully with U.S. Filter
in connection with the Merger Agreement and the transactions contemplated
thereby. Apollo further agreed in the Support/Voting Agreements that, during
the term of the respective Support/Voting Agreements, Apollo will not directly
or indirectly solicit, initiate, encourage or facilitate, or furnish or
disclose non-public information in furtherance of, any inquiries or the making
of any proposal with respect to any Competing Transaction, or negotiate,
explore or otherwise engage in discussions with any person (other than U.S.
Filter, Subcorp or their respective directors, officers, employees, agents and
representatives) with respect to any Competing Transaction or enter into any
agreement, arrangement or understanding with respect to any Competing
Transaction or agree to or otherwise assist in the effectuation of any
Competing Transaction; provided, however, that nothing in the Support/Voting
Agreements will prevent Apollo (or any of Apollo's representatives) from
taking any action or omitting to take any action solely as a member of the
Culligan Board if failure to do so would create a reasonable possibility of a
breach of Apollo's fiduciary duties as a member (or members) of the Culligan
Board after consultation with outside counsel.

Under the Support/Voting Agreements, Apollo has agreed that all of the
Culligan Common Stock beneficially owned by Apollo (except shares subject to
unexercised stock options), or over which Apollo has voting power or control,
directly or indirectly (including any Common Stock of Culligan acquired after
the date of the Support/Voting Agreement), at the record date for any meeting
of stockholders of Culligan called to consider and vote to approve the Merger
and the Merger Agreement and/or the transactions contemplated thereby and/or
any Competing Transaction will be voted in favor the Merger and the Merger
Agreement and the transactions contemplated thereby and that Apollo will not
vote such shares in favor of any Competing Transaction during the term of the
Support/Voting Agreement.

The Support/Voting Agreements may be terminated at the option of any party
at any time upon the earlier of (i) the date on which the Merger Agreement is
terminated and (ii) the Effective Time; provided, however, if the Merger
Agreement is terminated (x) by U.S. Filter if the Culligan Board withdraws, or
modifies or changes the Culligan Board unanimous recommendation in a manner
adverse to U.S. Filter; (y) by U.S. Filter or Culligan if at the Culligan
Special Meeting the requisite vote of the Culligan Stockholders to approve the
Merger and the transactions contemplated hereby shall not have been obtained
and (z) by the Culligan Board in respect of a Competing Transaction, then the
limitations in the Support/Voting Agreements with respect to the voting and
transferability of the Culligan Common Stock held by Apollo will survive for
150 days from the date of termination.

As of the close of business on February 9, 1998, Apollo owned 7,334,859
shares of Culligan Common Stock, representing approximately 28.5% of the
aggregate voting power of the issued and outstanding shares of Culligan Common
Stock as of such date. Based on such stockholdings of Apollo as of such date
and the number of shares of Culligan Common Stock and U.S. Filter Common Stock
issued and outstanding on such date, if the Merger had occurred on such date,
Apollo would own approximately 13,260,692 shares of U.S. Filter Common

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Stock (assuming an Average Share Price equal to $33 3/16, the closing sale
price of U.S. Filter Common Stock as of such date), which would represent
approximately 8.5% of the aggregate shares of U.S. Filter Common Stock issued
and outstanding immediately following consummation of the Merger.

The foregoing is a summary of all of the material provisions of the
Support/Voting Agreements, a copy of each of which is filed as an exhibit to
the Registration Statement. See "AVAILABLE INFORMATION." This summary is
qualified in its entirety by reference to the Support/Voting Agreements, each
of which is incorporated herein by this reference.

THE REGISTRATION RIGHTS AGREEMENT

U.S. Filter has agreed to provide Apollo with certain registration rights
with respect to the shares of U.S. Filter Common Stock Apollo will receive in
the Merger (the "Registration Shares") under the Registration Rights
Agreement, dated as of February 9, 1998 (the "Registration Rights Agreement").
In accordance with the procedures set forth in the Registration Rights
Agreement, at the request of Apollo and subject to certain holdback periods
and other limitations, U.S. Filter will file up to three Registration
Statements with the Commission to register the resale of the Registration
Shares under the Securities Act and, after such a Registration Statement
becomes effective, use all reasonable efforts to maintain the effectiveness of
any such Registration Statement for specified time periods. The Registration
Rights Agreement also provides for incidental (or "piggy-back") registration
rights which allow Apollo to participate in and include in the registration
for public sale of U.S. Filter Common Stock initiated by U.S. Filter or other
stockholders of U.S. Filter.

The Registration Rights Agreement contains provisions under which U.S.
Filter will indemnify selling stockholders under the Registration Rights
Agreement with respect to untrue statements or alleged untrue statements of a
material fact contained in any prospectus relating to a registration covered
by the Registration Rights Agreement or the omissions, or alleged omissions
therefrom of a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Selling
stockholders under the Registration Rights Agreement will similarly indemnify
U.S. Filter with respect to such statements or omissions made in reliance upon
and in conformity with written information furnished to U.S. Filter by such
selling stockholders expressly for use in such registration statement or
prospectus.

Under the Registration Rights Agreement, U.S. Filter is required to pay all
registration expenses (other than underwriting discounts, selling commissions,
stock transfer taxes and certain legal fees) with respect to all registrations
made thereunder.

The Registration Rights Agreement will allow holders of Registrable Shares
to register their shares of U.S. Filter Common Stock, thereby making such
shares of U.S. Filter Common Stock more freely transferable by such holders.
In the event that one or more holders determine to sell a significant number
of their shares of U.S. Filter Common Stock in the public market, such sale
could adversely affect prevailing market prices for the U.S. Filter Common
Stock. See "RISK FACTORS--Shares Subject to Future Sale."

The foregoing is a summary of the material provisions of the Registration
Rights Agreement, a copy of which is filed as an exhibit to the Registration
Statement. See "AVAILABLE INFORMATION." This summary is qualified in its
entirety by reference to the Registration Rights Agreement which is
incorporated herein by this reference.

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THE CULLIGAN RIGHTS AGREEMENT AMENDMENT

Immediately prior to entering into the Merger Agreement, Culligan entered
into the Rights Agreement Amendment to the Culligan Rights Agreement. The
Rights Agreement Amendment (i) exempts the Merger Agreement and the
transactions contemplated thereunder from causing the Culligan Rights to
become exerciseable and (ii) reduces the threshold at which a person is deemed
an "Acquiring Person" under the Culligan Rights Agreement, as described
further below.

Pursuant to the Culligan Rights Agreement, on September 13, 1996, Culligan
declared a dividend distribution of one Culligan Right for each outstanding
share of Culligan Common Stock to stockholders of record at the close of
business on September 26, 1996. The Culligan Rights are attached to all
Culligan Common Stock certificates representing shares outstanding. Each
Culligan Right entitles the registered holder to purchase from Culligan one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share, at a purchase price of $78, subject to adjustment.

Under the Culligan Rights Agreement, the Culligan Rights will separate from
Culligan Common Stock upon the earlier of (i) ten (10) business days following
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of a certain
percentage (the "Acquiring Person Percentage") or more of the outstanding
shares of Culligan Common Stock, other than an Exempted Person, or (ii) ten
(10) business days (or such later date as the Culligan Board shall determine)
following commencement of a tender offer or exchange offer that would result
in a person or group becoming an Acquiring Person (the earlier to occur of (i)
and (ii), the "Distribution Date"). Culligan Rights are not exercisable until
the Distribution Date.

The Rights Agreement Amendment reduced the Acquiring Person Percentage from
15% to 9.9%. The Rights Agreement Amendment further provides that none of U.S.
Filter, Subcorp, or any other person, shall be deemed to be an Acquiring
Person by virtue of the Merger Agreement or as a result of the consummation of
the transactions contemplated thereby.

In the event that a person becomes an Acquiring Person (except pursuant to
an offer for all outstanding shares of Culligan Common Stock that the
disinterested directors of Culligan determine not to be inadequate and to
otherwise be in the best interest of Culligan and its stockholders), each
holder of a Culligan Right thereafter has the right to receive, upon exercise,
Culligan Common Stock (or, in certain circumstances, cash, property or other
securities of Culligan) having a value equal to two times the exercise price
of the Right. Notwithstanding any of the foregoing, following the occurrence
of the event set forth in this paragraph, all Culligan Rights that are, or
(under certain circumstances specified in the Culligan Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void. However,
Culligan Rights are not exercisable following the occurrence of the event set
forth above until such time as Culligan Rights are no longer redeemable by
Culligan as provided in the Culligan Rights Agreement.

In the event that, at any time following the first date of public
announcement by Culligan or an Acquiring Person that an Acquiring Person has
become such (other than pursuant to specified qualified offers), (i) Culligan
is acquired in a merger or other business combination transaction (other than
a merger following a specified offer), or (ii) fifty percent (50%) or more of
Culligan's assets, cash flow or earning power is sold or transferred, each
holder of a Culligan Right (except Culligan Rights which previously have been
voided) will thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the exercise price
of the Culligan Right.

The Rights Agreement Amendment provides that the Culligan Rights will expire
at the earlier of (i) the later of 5:00 P.M. (New York City time) on September
13, 1998 and the date the Merger Agreement is terminated, (ii) such other date
as may be established by the Culligan Board prior to the expiration of the
Rights, or (iii) the time immediately prior to the consummation of the Merger.

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The foregoing contains is a summary of the material provisions of the Rights
Agreement Amendment, a copy of which is filed as an exhibit to the
Registration Statement, and certain provisions of the Culligan Rights
Agreement, a copy of which is filed as an exhibit to Culligan's Registration
Statement on Form 8-A filed with the Commission on September 16, 1996. The
summary is qualified in its entirety by reference to the Culligan Rights
Agreement and the Rights Agreement Amendment each of which is incorporated
herein by this reference. See "AVAILABLE INFORMATION."

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

The following discussion is intended only as a summary of the material U.S.
federal income tax consequences of the Merger and does not purport to be a
complete analysis or listing of all potential tax effects relative to a
decision whether to vote for the approval of the Merger. The discussion does
not address all aspects of U.S. federal income taxation that may be applicable
to certain Culligan Stockholders subject to special U.S. federal income tax
treatment, including, without limitation, non-U.S. persons, insurance
companies, tax-exempt entities, retirement plans and persons who acquired
their Culligan Common Stock pursuant to the exercise of employee stock options
or otherwise as compensation. The discussion addresses neither the effect of
applicable state, local or non-U.S. tax laws, nor the effect of any U.S.
federal tax laws other than those pertaining to U.S. federal income tax.

Culligan has received an opinion from Wachtell, Lipton, Rosen & Katz,
special counsel to Culligan, to the effect that, if the Merger occurs in
accordance with the Merger Agreement, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code for U.S.
federal income tax purposes. Such opinion is based on the Code, the
regulations thereunder, administrative rulings of the Internal Revenue Service
and court decisions, all of which are subject to change. Any such change,
which may or may not be retroactive, could alter the tax consequences
discussed herein. The opinion is also based on certain assumptions regarding
the factual circumstances that will exist at the Effective Time, including,
without limitation, certain representations made by Culligan, Culligan and
certain stockholders of Culligan. If any of these factual assumptions is
inaccurate, the tax consequences of the Merger could differ from those
described herein. The discussion below applies to Culligan Stockholders who
hold their shares of Culligan Common Stock as a capital asset within the
meaning of Section 1221 of the Code.

As a reorganization under Section 368(a) of the Code, no gain or loss will
be recognized by the Culligan Stockholders with respect to the U.S. Filter
Common Stock received in the Merger. The tax basis of the U.S. Filter Common
Stock received by a Culligan Stockholder in the Merger will be equal to the
tax basis of the shares of Culligan Common Stock exchanged therefor, reduced
by any amount of basis allocable to fractional share interests for which cash
is received. For purposes of determining whether or not gain or loss on the
subsequent disposition of U.S. Filter Common Stock received in the Merger is
long-term, mid-term or short-term, the holding period of such U.S. Filter
Common Stock received by the Culligan Stockholders will include the holding
period of the shares of Culligan Common Stock exchanged therefor, provided
that the shares of Culligan Common Stock exchanged therefore were held as a
capital asset.

The receipt of cash in lieu of a fractional U.S. Filter Common Share by a
Culligan Stockholder pursuant to the Merger will result in taxable gain or
loss to such stockholder for U.S. federal income tax purposes based on the
difference between the amount of cash received by such stockholder and such
stockholder's basis in such fractional share as set forth above. Such gain or
loss will be a capital gain or loss.

The Merger Agreement provides that neither Culligan nor U.S. Filter is
obligated to consummate the Merger unless Culligan shall have received an
opinion from Wachtell, Lipton, Rosen & Katz, special counsel to Culligan,
substantially to the effect that under applicable law, for U.S. federal income
tax purposes, the Merger will constitute a reorganization under Section 368(a)
of the Code.

THE FOREGOING DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS
FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. THE OPINION OF
WACHTELL, LIPTON, ROSEN & KATZ IS NOT BINDING ON THE

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INTERNAL REVENUE SERVICE. BECAUSE OF THE COMPLEXITY OF THE TAX LAWS, AND
BECAUSE THE TAX CONSEQUENCES OF ANY PARTICULAR STOCKHOLDER MAY BE AFFECTED BY
MATTERS NOT DISCUSSED HEREIN, EACH CULLIGAN STOCKHOLDER IS URGED TO CONSULT
HIS TAX ADVISOR WITH RESPECT TO HIS OWN PARTICULAR CIRCUMSTANCES AND WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, ESTATE TAX
LAWS AND PROPOSED CHANGES IN APPLICABLE TAX LAWS.

U.S. FEDERAL SECURITIES LAW CONSEQUENCES

All shares of U.S. Filter Common Stock issued in connection with the Merger
will be freely transferable, except that any shares of U.S. Filter Common
Stock received by persons who are deemed to be "affiliates" (as such term is
defined under the Securities Act) of Culligan or U.S. Filter prior to the
Merger may be sold by them only in transactions permitted by the resale
provisions of Rule 145 under the Securities Act with respect to affiliates of
Culligan or U.S. Filter, or Rule 144 under the Securities Act with respect to
persons who are or become affiliates of U.S. Filter, or as otherwise permitted
under the Securities Act. Persons who may be deemed to be affiliates of
Culligan or U.S. Filter generally include individuals or entities that
control, are controlled by or are under common control with Culligan or U.S.
Filter and generally include the executive officers and directors as well as
principal stockholders of Culligan or U.S. Filter.

Affiliates may not sell their shares of U.S. Filter Common Stock acquired in
connection with the Merger, except pursuant to an effective registration under
the Securities Act covering such shares or in compliance with Rule 145 under
the Securities Act (or Rule 144 under the Securities Act in the case of
persons who become affiliates of U.S. Filter) or another applicable exemption
from the registration requirements of the Securities Act. In general, Rule 145
under the Securities Act provides that, for one year following the Effective
Time, an affiliate (together with certain related persons) would be entitled
to sell shares of U.S. Filter Common Stock acquired in connection with the
Merger only through unsolicited "broker transactions" or in transactions
directly with a "market maker," as such terms are defined in Rule 144 under
the Securities Act. Additionally, the number of shares to be sold by an
affiliate (together with certain related persons and certain persons acting in
concert) within any three-month period for purposes of Rule 145 under the
Securities Act may not exceed the greater of 1% of the outstanding shares of
U.S. Filter Common Stock or the average weekly trading volume of such shares
during the four calendar weeks preceding such sale. Rule 145 under the
Securities Act will remain available to affiliates if U.S. Filter remains
current with its informational filings with the Commission under the Exchange
Act. One year after the Effective Time, an affiliate will be able to sell such
shares of U.S. Filter Common Stock without being subject to such manner of
sale or volume limitations provided that U.S. Filter is current with its
Exchange Act informational filings and such affiliate is not then an affiliate
of U.S. Filter. Two years after the Effective Time, an affiliate will be able
to sell such shares of U.S. Filter Common Stock without any restrictions so
long as such affiliate had not been an affiliate of U.S. Filter for at least
three months prior to the date of such sale. See "--Anticipated Accounting
Treatment."

Pursuant to the Culligan Affiliate Letters, U.S. Filter has agreed that, for
so long as any affiliate that is party to an Affiliate Letter holds any shares
of U.S. Filter Common Stock as to which such affiliate is subject to the
limitations of Rule 145, U.S. Filter will use its reasonable efforts to file
all reports required to be filed by it pursuant to the Exchange Act and the
rules and regulations thereunder so as to satisfy the requirements of
paragraph (c) of Rule 144 under the Securities Act that there be available
current public information with respect to U.S. Filter, and to that extent to
make available to such affiliate the exemption afforded by Rule 145 with
respect to the sale, transfer or other disposition of the shares of U.S.
Filter Common Stock. See "THE MERGER AGREEMENT--Resales of U.S. Filter Common
Stock Received in the Merger; Restrictions on Affiliates" and "THE MERGER--
Anticipated Accounting Treatment."

U.S. Filter has agreed to provide Apollo with certain registration rights
has respect to the shares of U.S. Filter Common Stock Apollo will receive in
the Merger. See "THE REGISTRATION RIGHTS AGREEMENT."

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COMPARISON OF STOCKHOLDER RIGHTS

Both U.S. Filter and Culligan are incorporated in the state of Delaware.
Culligan Stockholders will continue to have their rights and obligations as
stockholders of U.S. Filter after the consummation of the Merger governed by
the DGCL. Set forth below is a summary comparison of all material differences
in the current rights of a U.S. Filter Stockholder under the Restated
Certificate of Incorporation of U.S. Filter, as amended (the "U.S. Filter
Certificate") and the Restated Bylaws of U.S. Filter (the "U.S. Filter
Bylaws"), on the one hand, and the rights of a Culligan Stockholder under the
Amended and Restated Certificate of Incorporation of Culligan (the "Culligan
Certificate") and the Amended and Restated By-Laws of Culligan (the "Culligan
Bylaws"), on the other hand.

In accordance with the terms of the Merger Agreement, at the Effective Time,
each issued and outstanding share of Culligan Common Stock (other than
treasury shares) will be converted into the right to receive the number of
shares of U.S. Filter Common Stock determined by the Exchange Ratio of U.S.
Filter Common Stock. (See "THE MERGER AGREEMENT--Conversion of Securities.")
Accordingly, upon consummation of the Merger, the rights of former Culligan
Stockholders who become holders of U.S. Filter Common Stock pursuant to the
Merger will be governed by the DGCL, the U.S. Filter Certificate and the U.S.
Filter Bylaws.

The following discussion is not intended to be complete and is qualified in
its entirety by reference to the U.S. Filter Certificate, the U.S. Filter
Bylaws, the Culligan Certificate and the Culligan Bylaws. Copies of these
documents are on file with the Commission and are incorporated herein by
reference and will be sent to U.S. Filter Stockholders and Culligan
Stockholders, respectively, upon request. See "INCORPORATION BY REFERENCE."

AUTHORIZED CAPITAL

U.S. Filter. The authorized capital stock of U.S. Filter consists of
300,000,000 shares of U.S. Filter Common Stock and 3,000,000 shares of
preferred stock, par value $0.10 per share (the "U.S. Filter Preferred
Stock"). As of the U.S. Filter Date, there were 108,462,296 shares of U.S.
Filter Common Stock outstanding. Of the unissued shares of U.S. Filter Common
Stock, 26,964,436 shares were reserved for issuance upon conversion of
convertible debt securities of U.S. Filter, exercise of warrants and stock
options. Assuming an Exchange Ratio of 1.8079, as of the U.S. Filter Record
Date, on a pro forma basis for the Merger, there would have been 155,243,072
shares of U.S. Filter Common Stock outstanding and 30,017,955 shares of
U.S. Filter Common Stock reserved for issuance upon conversion of convertible
debt securities of U.S. Filter and the exercise of warrants and stock options
of the combined company. The U.S. Filter Board has the authority to issue the
U.S. Filter Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions for each such series, without any
further vote or action by the U.S. Filter Stockholders. As of the U.S. Filter
Record Date, there were no shares of U.S. Filter Preferred Stock issued and
outstanding, and the U.S. Filter Board has no present intention of issuing
shares of U.S. Filter Preferred Stock. See "DESCRIPTION OF U.S. FILTER CAPITAL
STOCK."

Culligan. The authorized capital stock of Culligan consists of 60,000,000
shares of a Culligan Common Stock, of which there were 25,875,754 shares
outstanding as of the Culligan Record Date, and 2,000,000 authorized shares of
Culligan Preferred Stock ("Culligan Preferred Stock"), of which 300,000 shares
have been designated as Culligan Series A Junior Participating Preferred Stock
are reserved for issuance in connection with the Culligan Rights Agreement. In
addition, also as of the Culligan Record Date, 1,688,876 shares were reserved
for issuance upon the exercise of outstanding options, issuance of shares
pursuant to Culligan's Director's Stock Plan and for a working capital
adjustment in connection with an acquisition. The Culligan Board has the
authority to issue the Culligan Preferred Stock in one of more series and to
fix the rights, preferences, privileges and restrictions for such series,
without any further vote or action by the Culligan Stockholders. As of the
Culligan Record Date, there were no shares of Culligan Preferred Stock issued
and outstanding, and under the Merger Agreement Culligan cannot issue shares
of Culligan Preferred Stock.

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SIZE AND ELECTION OF BOARD OF DIRECTORS

U.S. Filter. Pursuant to the U.S. Filter Certificate, the number of
directors of U.S. Filter will not be less than three, with the precise number
to be fixed from time to time by an affirmative vote of a majority of the U.S.
Filter Board. The current number of U.S. Filter directors is eleven. The U.S.
Filter Certificate provides for the U.S. Filter Board to be divided into three
classes, each of which is to be composed as nearly as possible of one-third of
the directors. The U.S. Filter directors are elected for three-year terms by
receiving the greatest number of votes of the shares present or represented by
proxy at the annual stockholders meeting. A quorum at any meeting of the U.S.
Filter Board consists of a majority of the total number of U.S. Filter
directors, and a majority of the quorum present is required to approve any
action of the U.S. Filter Board.

Pursuant to the terms of the Merger Agreement, U.S. Filter has agreed to
elect one person selected by the Culligan Board prior to the Effective Time
(subject to the consent of the U.S. Filter Board which shall not be
unreasonably withheld) as a director of U.S. Filter effective as of the
Effective Time of the Merger, for a term expiring at U.S. Filter's third
annual meeting of stockholders following the Effective Time. See "THE MERGER
AGREEMENT--Board of Directors of U.S. Filter."

Culligan. Pursuant to the Culligan Certificate and Culligan Bylaws, the
number of directors of Culligan will not be less than three nor more than
fifteen, with the precise number to be determined from time to time by the
affirmative vote of a majority of the Culligan Board. The current number of
Culligan directors is eleven. The Culligan Certificate provides for the
Culligan Board to be divided into three classes, each of which is to be
composed as nearly as possible of one-third of the directors. The Culligan
directors are elected for three-year terms by a plurality of the votes of the
shares present or represented by proxy at the annual stockholders meeting. A
quorum at any meeting of the Culligan Board consists of a majority of the
total number of directors, and a majority of the quorum present is required to
approve any action of the Culligan Board.

NEWLY CREATED DIRECTORSHIPS AND VACANCIES

Under the Culligan Certificate, the Culligan By-Laws and the U.S. Filter
Bylaws, newly created directorships and vacancies on either of the Culligan
Board or the U.S. Filter Board may be filled by a majority of the directors
then in office, though less than a quorum provided, however, that pursuant to
the agreement whereby U.S. Filter acquired the Properties in exchange for
8,000,000 shares of U.S. Filter Common Stock and the Warrants in September
1997 (the "Properties Acquisition Agreement"), U.S. Filter has agreed that if
a vacancy occurs in the U.S. Filter Board while the parties from whom the
Properties were acquired (the "Parties") own at least 7 1/2% of the
outstanding shares of U.S. Filter Common Stock, and such vacancy is the result
of the cessation to serve of a non-employee director of U.S. Filter (other
than cessation of service of a person designated by the Parties for election
to the U.S. Filter Board (a "Designee"), which vacancy shall be filled with a
successor Designee), the Parties must also approve the person filling such
vacancy. See "RISK FACTORS--Risk Factors Relating to a Combined U.S. Filter
and Culligan After the Merger--Potential Risks Related to Water Rights and
Water Transfers" and "DESCRIPTION OF U.S. FILTER CAPITAL STOCK-- Certain
Voting Arrangements."

REMOVAL OF DIRECTORS

U.S. Filter. The U.S. Filter Certificate provides that a U.S. Filter
director may be removed by either a majority of the directors of U.S. Filter
then in office or by the U.S. Filter Stockholders and only for cause. The U.S.
Filter Bylaws provide that removal of a director by U.S. Filter Stockholders
requires the affirmative vote of the stockholders having a majority of the
voting power of U.S. Filter at a special meeting of stockholders called for
that purpose. Pursuant to the Properties Acquisition Agreement, if a Designee
is removed from the U.S. Filter Board and the Parties own at least 5% of the
outstanding shares of U.S. Filter Common Stock, the Parties have the right to
designate the person filling the vacancy caused by such removal.

Culligan. Neither the Culligan Certificate nor the Culligan By-Laws includes
a provision setting forth the procedure for the removal of directors. The DGCL
provides that, unless the Certificate of Incorporation otherwise

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provides, any director or the entire board of directors of a corporation whose
board is classified may be removed only for cause by the affirmative vote of
holders of a majority of shares then entitled to vote at an election of
directors.

SPECIAL MEETINGS OF STOCKHOLDERS

U.S. Filter. Pursuant to the U.S. Filter Certificate, a special meeting of
U.S. Filter Stockholders may be called by a majority of the U.S. Filter Board;
provided, however, that where a proposal requiring stockholder approval is
made by or on behalf of any individual or group owning 5% of the voting stock
of U.S. Filter (subject to certain exceptions) (a "Related Person"), then an
affirmative vote of the continuing directors unrelated to such individual or
group (as further described in the U.S. Filter Certificate, a "Continuing
Director") is required.

Culligan. Pursuant to the Culligan By-Laws, a special meeting of Culligan
Stockholders may be called by any officer at the written request of a majority
of the Culligan Board or by the Chairman of the Board, the President, the
Secretary or any Assistant Secretary.

QUORUM AT STOCKHOLDER MEETINGS

Culligan and U.S. Filter. Pursuant to the Culligan By-Laws and the U.S.
Filter Bylaws, the holders of a majority of the issued and outstanding capital
stock entitled to vote thereat, present in person or by proxy, shall
constitute a quorum at all stockholder meetings.

STOCKHOLDER ACTION BY WRITTEN CONSENT

U.S. Filter. Pursuant to the U.S. Filter Certificate and the U.S. Filter
Bylaws, no action may be taken by written consent of the stockholders without
a meeting.

Culligan. Pursuant to the Culligan By-Laws, stockholders may take any action
without a meeting, without prior notice and without a vote, upon the written
consent of stockholders having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.

As a consequence of and following the Merger, stockholders of Culligan who
currently have the right to call a special meeting of stockholders, will lose
this right once they become stockholders of U.S. Filter, as described in the
previous two paragraphs.

ADVANCE NOTICE OF STOCKHOLDER-PROPOSED BUSINESS OR DIRECTOR NOMINATIONS AT
ANNUAL MEETINGS

U.S. Filter. Pursuant to the U.S. Filter By-Laws, in order for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of U.S.
Filter. To be timely, a stockholder's notice must be delivered to U.S. Filter
from 30 to 60 days in advance of the meeting, or within 10 days after notice
of the meeting is first given to stockholders when such notice is given less
than 40 days prior to the meeting. A stockholder's notice to the Secretary
must set forth as to each matter the stockholder proposes to bring before the
annual meeting: (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and address, as they appear on U.S. Filter's
books, of the stockholder proposing such business, (iii) the class and number
of shares of U.S. Filter which are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business.

In addition, the U.S. Filter By-Laws provide that for a stockholder to
properly nominate a director at a meeting of stockholders, the stockholder
must be entitled to vote for the election of directors at such meeting and
must have given notice thereof to the Secretary of U.S. Filter. To be timely,
a stockholder's notice must be delivered to the Secretary consistent with the
deadlines set forth above with respect to other stockholder-sponsored
business. Such stockholder's notice shall set forth: (a) all information
relating to such person that is required to be disclosed in solicitations of
proxies for election, or is otherwise required, in each case pursuant to

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the Exchange Act including, without limitation, such person's written consent
to being named in the proxy statement as a nominee and to serving as a
director if elected, and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on U.S. Filter's books, of such stockholder
and (ii) the class and number of shares of U.S. Filter which are beneficially
owned by such stockholder.

Culligan. Pursuant to the Culligan By-Laws, in order for business to be
properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of Culligan.
To be timely, a stockholder's notice must be delivered to Culligan from 60 to
90 days in advance of the meeting, or within 10 days after notice of the
meeting is first given to stockholders when such notice is given less than 70
days prior to the meeting. A stockholder's notice to the Secretary must set
forth as to each matter the stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on Culligan's books, of the
stockholder proposing such business, (iii) the class and number of shares of
Culligan which are beneficially owned by the stockholder, (iv) any material
interest of the stockholder in such business and (v) a representation that the
stockholder intends to appear in person or by proxy at the annual meeting to
bring such business before the meeting.

In addition, the Culligan By-Laws provide that for a stockholder to properly
nominate a director at a meeting of stockholders, the stockholder must be
entitled to vote for the election of directors at such meeting and must have
given notice thereof to the Secretary of Culligan. To be timely, a
stockholder's notice must meet the deadlines set forth above with respect to
stockholder-sponsored business except in the case of a special meeting called
for the purpose of electing directors where notice must be within ten days
following mailing or public disclosure of the date of the special meeting. To
be in proper written form, such stockholder's notice must contain: (a) as to
each person whom the stockholder proposes to nominate for election or re-
election as a director, (i) the name, age, business address and, if known,
residence address of the nominee, (ii) the principal occupation or employment
of the nominee, (iii) the number of shares of stock of Culligan which are
beneficially owned by the nominee, and (iv) all information relating to such
person that is required to be disclosed in solicitations of proxies for
election, or is otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act, and the rules and regulations promulgated thereunder,
and (b) as to the stockholder giving the notice (i) the name and address, as
they appear on Culligan's books, of such stockholder, (ii) the class and
number of shares of Culligan which are beneficially owned by such stockholder,
(iii) a description of any arrangements between the stockholder and the
nominee and any other persons, (iv) a representation that the stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting and (v) all information relating to such person
that is required to be disclosed in solicitations of proxies for election, or
is otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act, as amended, and the rules and regulations promulgated. The
notice must also be accompanied by the nominee's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected.

AMENDMENT OF GOVERNING DOCUMENTS

U.S. Filter. Pursuant to the U.S. Filter Certificate, alteration, amendment,
repeal or rescission of the U.S. Filter Certificate requires compliance with
the DGCL. Under the DGCL, an amendment to a corporation's certificate of
incorporation requires the recommendation of a corporation's board of
directors, the approval of a majority of all shares entitled to vote thereon
unless a higher vote is required in the corporation's certificate of
incorporation and the approval of a majority of the outstanding stock of each
class entitled to vote thereon. In addition, amendment to the U.S. Filter
Certificate must be approved by a majority of the U.S. Filter Board and by the
affirmative vote of the holders of a majority of the outstanding voting stock
of U.S. Filter; provided however, that any amendment to the U.S. Filter
Certificate that deals with certain definitions contained in the U.S. Filter
Certificate, the number of directors, the limitations on director liability,
the bar on action of stockholders by written consent, the call of special
meetings and the amendment mechanism of the U.S. Filter Certificate and U.S.
Filter Bylaws must also be approved by either (i) a majority of the U.S.
Filter Board and, if one or more Related Persons exist, by a majority of
Continuing Directors with respect to all Related Persons, or (ii) by the
affirmative vote of the holders of not less than 80% of the outstanding voting
stock of U.S. Filter, and

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if the U.S. Filter Amendment is proposed by or on behalf of a Related Person
or a director affiliated with a Related Person, by the affirmative vote of the
holders of a majority of the shares held by stockholders other than the
Related Person (the "Disinterested Shares"). Amendments of the U.S. Filter
Bylaws must be approved either (i) by a majority of the authorized number of
directors and, if one or more Related Persons exist, by a majority of the U.S.
Filter Board who are Continuing Directors with respect to all Related Persons,
or (ii) by the affirmative vote of the holders of not less than 80% of the
outstanding voting stock of U.S. Filter and, if the amendment is proposed by
or on behalf of a Related Person or a U.S. Filter Board member affiliated with
a Related Person, by the affirmative vote of the holders of a majority of the
Disinterested Shares. Subject to the foregoing, the U.S. Filter Board is
expressly authorized to amend the U.S. Filter Bylaws, subject to any
limitations expressed in the U.S. Filter Bylaws.

Culligan. The Culligan Certificate reserves the right for Culligan to amend,
alter, change or repeal any provision of the Culligan Certificate as permitted
by the DGCL (as described in the previous paragraph). The Culligan By-Laws may
be amended or repealed by the Culligan Board or the stockholders at any
meeting of the stockholders or the Culligan Board in which there has been
proper notice of the proposed amendment. Such Amendment shall require the
affirmative vote of the holders of record of a majority of the shares of the
outstanding capital stock of Culligan, or of a majority of the Culligan Board,
as the case may be.

RIGHTS AGREEMENTS

U.S. Filter. U.S. Filter does not have a stockholder's rights agreement.

Culligan. Pursuant to the Culligan Rights Agreement, there is one Culligan
Right associated with each outstanding share of Culligan Common Stock. Each
Culligan Right entitles the registered holder to purchase one one-hundredth of
a share of Culligan Series A Junior Participating Preferred Stock, par value
$0.01 per share. The Culligan Rights have certain anti-takeover effects. The
Culligan Rights will cause substantial dilution to a person or group that
attempts to acquire control of Culligan in a manner which causes the Culligan
Rights to become exercisable unless the rights are redeemed by the Culligan
Board. See "THE MERGER AGREEMENT--Culligan Rights Agreement." As a consequence
of and following the Merger, Culligan Stockholders will lose all interests in
the Culligan Rights associated with their shares of Culligan Common Stock and
the anti-takeover protection that such rights provide. See "THE CULLIGAN
RIGHTS AGREEMENT AMENDMENT."

DELAWARE ANTI-TAKEOVER LAW

Section 203 of the DGCL ("Section 203") provides, in general, that a
stockholder acquiring more than 15% of the outstanding voting shares of a
corporation subject to the statute (an "Interested Stockholder"), but less
than 85% of such shares, may not engage in certain "Business Combinations"
with the corporation for a period of three years subsequent to the date on
which the stockholder became an Interested Stockholder unless (i) prior to
such date the corporation's board of directors has approved either the
Business Combination or the transaction in which the stockholder became an
Interested Stockholder or (ii) the Business Combination is approved by the
corporation's board of directors and authorized by a vote of at least two-
thirds of the outstanding voting stock of the corporation not owned by the
Interested Stockholder.

Section 203 defines the term "Business Combination" to encompass a wide
variety of transactions with or caused by an Interested Stockholder in which
the Interested Stockholder receives or could receive a benefit on other than a
pro rata basis with other stockholders, including mergers, certain asset
sales, certain issuances of additional shares to the Interested Stockholder,
transactions with the corporation that increase the proportionate interest of
the Interested Stockholder or transactions in which the Interested Stockholder
receives certain other benefits.

These provisions could have the effect of delaying, deferring or preventing
a change of control of U.S. Filter. U.S. Filter's stockholders, by adopting an
amendment to the U.S. Filter Certificate or the U.S. Filter By-laws, may elect
not to be governed by Section 203, effective twelve months after adoption.
Neither the

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U.S. Filter Certificate nor the U.S. Filter By-laws currently excludes U.S.
Filter from the restrictions imposed by Section 203.

U.S. Filter has not adopted an amendment to the U.S. Filter Certificate or
the U.S. Filter By-laws by which U.S. Filter elects not to be governed by
Section 203 of the DGCL. Culligan has adopted an amendment to the Culligan
Certificate by which Culligan has elected not to be governed by Section 203 of
the DGCL.

DESCRIPTION OF U.S. FILTER CAPITAL STOCK

GENERAL

As of March 31, 1998, U.S. Filter was authorized to issue 300,000,000 shares
of U.S. Filter Common Stock, par value $.01 per share, of which 108,462,296
shares were issued and outstanding, and 3,000,000 shares of U.S. Filter
Preferred Stock, par value $.10 per share, of which none were issued and
outstanding. Of the unissued shares of U.S. Filter Common Stock, 7,636,364
shares were reserved for issuance upon conversion of U.S. Filter's 6%
Convertible Subordinated Notes due 2005, 10,481,013 shares were reserved for
issuance upon conversion of U.S. Filter's 4 1/2% Convertible Subordinated
Notes due 2001, 1,200,000 shares were reserved for issuance upon exercise of
the Warrants expiring September 17, 2007 and an aggregate of 7,647,059 shares
were reserved for issuance upon exercise of options either outstanding or
available for grant.

U.S. FILTER COMMON STOCK

The holders of U.S. Filter Common Stock are entitled to one vote for each
share held of record by them on all matters to be voted on by stockholders.
There is no cumulative voting with respect to the election of directors; thus,
the holders of shares having more than 50% of U.S. Filter's voting power
(including both common and voting preferred shares, if any) voting for the
election of directors can elect all of the directors. The holders of U.S.
Filter Common Stock are entitled to receive dividends when, as and if declared
by U.S. Filter's Board of Directors out of funds legally available therefor,
subject to the prior rights of U.S. Filter preferred stockholders. In the
event of liquidation, dissolution or winding up of U.S. Filter's affairs, the
holders of U.S. Filter Common Stock are entitled to share ratably in all
assets remaining available for distribution to them after payment of
liabilities and after provision has been made for each class of stock,
including any preferred stock, that has preference over the U.S. Filter Common
Stock. Except as described below under "Stock Purchase Rights," holders of
shares of U.S. Filter Common Stock, as such, have no conversion, preemptive or
other subscription rights, and there are no redemption or sinking fund
provisions applicable to the U.S. Filter Common Stock.

U.S. FILTER PREFERRED STOCK

Shares of U.S. Filter Preferred Stock may be issued without stockholder
approval. U.S. Filter's Board of Directors is authorized to issue such shares
in one or more series and to fix the rights, preferences, privileges,
qualifications, limitations and restrictions thereof, including dividend
rights and rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares
constituting any series or the designation of such series, without any vote or
action by the stockholders. U.S. Filter has no current plans for the issuance
of any shares of U.S. Filter Preferred Stock. Any U.S. Filter Preferred Stock
to be issued could rank prior to the U.S. Filter Common Stock with respect to
dividend rights and rights of liquidation. U.S. Filter's Board of Directors,
without stockholder approval, may issue U.S. Filter Preferred Stock with
voting and conversion rights that could adversely affect the voting power of
holders of U.S. Filter Common Stock or create impediments to persons seeking
to gain control of U.S. Filter.

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STOCK PURCHASE RIGHTS

Laidlaw, which, as of February 1, 1998, held 3,646,783 shares of U.S. Filter
Common Stock, has certain rights to purchase voting securities of U.S. Filter
in order to maintain its percentage voting interest. Except in connection with
mergers or other acquisitions or in the ordinary course under an employee
stock option or stock bonus plan, in the event U.S. Filter proposes to sell or
issue shares of voting securities, Laidlaw has the right to purchase, on the
same terms as the proposed sale or issuance, that number of shares or rights
as will maintain its percentage interest in the voting securities of U.S.
Filter, assuming the conversion of all convertible securities and the exercise
of all options and warrants then outstanding. In addition, Laidlaw has other
purchase rights with respect to sales or issuances of securities by U.S.
Filter at prices below 85% of current market price at the time of sale or
issuance or the prevailing customary price for such securities or their
equivalent.

CERTAIN VOTING ARRANGEMENTS

Pursuant to the agreements whereby U.S. Filter acquired Smogless S.p.A. in
September 1994, Laidlaw has agreed to vote all shares owned by it for the
nominees of U.S. Filter's Board for election to U.S. Filter's Board, and on
all other matters in the same proportion as the votes cast by other holders of
voting securities, other than those that relate to any business combination or
similar transaction, such as the Merger, involving U.S. Filter or any
amendment to the U.S. Filter Certificate or the U.S. Filter By-laws.

In addition, pursuant to the Properties Acquisition Agreement, U.S. Filter
has agreed, so long as the Parties own at least 5% of the outstanding shares
of U.S. Filter Common Stock, to nominate a Designee to the U.S. Filter Board.
If a vacancy occurs in the U.S. Filter Board while the Parties own at least 7
1/2% of the outstanding U.S. Filter Common Stock and such vacancy is the
result of the cessation to serve of a non-employee director of U.S. Filter
(other than the cessation of service of a Designee, which vacancy shall be
filled with a successor Designee), the Parties must also approve the person
filling such vacancy. In addition, the Parties have agreed to vote all shares
owned by them as recommended by a majority of the members of U.S. Filter's
Board of Directors, except with respect to certain fundamental transactions,
transactions involving the issuance by U.S. Filter of U.S. Filter Common Stock
representing 20% or more of the outstanding U.S. Filter Common Stock (or
equivalents), such as the Merger, or amendment of the U.S. Filter Certificate
or the U.S. Filter By-laws.

In connection with the Merger, the U.S. Filter Board shall take all action
necessary to elect one person selected by the Culligan Board to the U.S.
Filter Board for a term expiring at U.S. Filter's third annual meeting of
stockholders following the Effective Time. See "THE MERGER AGREEMENT--Board of
Directors of U.S. Filter."

CERTAIN CHARTER AND BY-LAW PROVISIONS

The Certificate places certain restrictions on the voting rights of a
"Related Person," defined therein as any person who directly or indirectly
owns 5% or more of the outstanding voting stock of U.S. Filter. The founders
and the original directors of U.S. Filter are excluded from the definition of
"Related Persons," as are seven named individuals including Richard J.
Heckmann, the Chairman of the Board, President and Chief Executive Officer of
U.S. Filter. These voting restrictions apply in two situations. First, the
vote of a director who is also a Related Person is not counted in the vote of
U.S. Filter's Board of Directors to call a meeting of stockholders where that
meeting will consider a proposal made by the Related Person director. Second,
any amendments to the U.S. Filter Certificate that relate to specified
Articles therein (those dealing with corporate governance, limitation of
director liability or amendments to the U.S. Filter Certificate), in addition
to being approved by U.S. Filter's Board of Directors and a majority of U.S.
Filter's outstanding voting stock, must also be approved by either (i) a
majority of directors who are not Related Persons, or (ii) the holders of at
least 80% of U.S. Filter's outstanding voting stock, provided that if the
change was proposed by or on behalf of a Related Person, then approval by the
holders of a majority of the outstanding voting stock not held by Related
Persons is also required. In addition, any amendment to U.S. Filter's By-laws
must be approved by one of the methods specified in clauses (i) and (ii) in
the preceding sentence.

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The U.S. Filter Certificate and U.S. Filter's By-laws provide that U.S.
Filter's Board of Directors shall fix the number of directors and that U.S.
Filter's Board shall be divided into three classes, each consisting of one-
third of the total number of directors (or as nearly as may be possible).
Stockholders may not take action by written consent. Meetings of stockholders
may be called only by U.S. Filter's Board of Directors (or by a majority of
its members). Stockholder proposals, including director nominations, may be
considered at a meeting only if written notice of that proposal is delivered
to U.S. Filter from 30 to 60 days in advance of the meeting, or within ten
days after notice of the meeting is first given to stockholders.

DELAWARE ANTI-TAKEOVER LAW

Neither the U.S. Filter Certificate nor the U.S. Filter By-laws currently
excludes U.S. Filter from the restrictions imposed by Section 203. See
"COMPARISON OF STOCKHOLDER RIGHTS--Delaware Anti-Takeover Law."

OTHER ACTION TO BE TAKEN AT THE CULLIGAN SPECIAL MEETING

CULLIGAN ADJOURNMENT PROPOSAL

Culligan is submitting to its stockholders a proposal to authorize the named
attorneys-in-fact to vote in favor of the adjournment of the Culligan Special
Meeting, in the event that there are not sufficient votes to approve the
Culligan Merger Proposal at the time of the Culligan Special Meeting. Even
though a quorum may be present at the Culligan Special Meeting, it is possible
that Culligan may not have received sufficient votes to approve the Culligan
Merger Proposal at the time of the Culligan Special Meeting. In that event,
the Culligan Merger Proposal could not be approved unless the Culligan Special
Meeting were adjourned in order to permit further solicitation of proxies.

In order to allow the proxies that have been received by Culligan at the
time of the Culligan Special Meeting to be voted for such adjournment, if
necessary, Culligan has submitted the question of adjournment under such
circumstances, and only under such circumstances, to its stockholders for
their consideration. A majority of the shares of Culligan Common Stock
represented and voting at the Culligan Special Meeting is required in order to
approve any such adjournment.

The Culligan Board unanimously recommends that the Culligan Stockholders
vote their proxies in favor of the Culligan Adjournment Proposal so that their
proxies may be used for such purpose, should it become necessary. Properly
executed proxies will be voted in favor of such adjournment unless otherwise
noted thereon. If it is necessary to adjourn the Culligan Special Meeting, no
notice of the time and place of the adjourned meeting is required to be given
to stockholders other than an announcement of such time and place at the
Culligan Special Meeting. This adjournment proposal relates only to an
adjournment occurring for purposes of soliciting additional proxies for
approval of the Culligan Merger Proposal in the event that there are
insufficient votes to approve the Culligan Merger Proposal at the Culligan
Special Meeting. Any other adjournment (e.g., an adjournment required because
of the absence of a quorum) would be voted upon pursuant to the discretionary
authority granted by the proxy.

The Culligan Board retains full authority to postpone the Culligan Special
Meeting prior to such meeting being convened, without the consent of any
Culligan Stockholder.

CULLIGAN'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CULLIGAN
STOCKHOLDERS VOTE FOR THE CULLIGAN ADJOURNMENT PROPOSAL.

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STOCKHOLDER PROPOSALS

Due to the contemplated consummation of the Merger, Culligan does not
currently expect to hold a 1998 Annual Meeting of Stockholders because,
following the Merger, Culligan will not be a publicly traded company. In the
event that the Merger is not consummated and such a meeting is held, to be
eligible for inclusion in Culligan's proxy statement and form of proxy
relating to that meeting, proposals of stockholders intended to be presented
at such meeting must have been received by Culligan no later than January 14,
1998, except that if the date of such meeting is changed by more than 30 days
from the originally scheduled date of the meeting, proposals must be received
a reasonable time before solicitation of proxies for such meeting is made.

In order for a stockholder proposal to be considered for inclusion in U.S.
Filter's 1998 Annual Meeting of Stockholders, such proposal should be received
by U.S. Filter no later than March 10, 1998. Upon receipt of such proposal,
U.S. Filter will determine whether or not to include such proposal in the
proxy statement for that meeting, in accordance with applicable law.

LEGAL MATTERS

Certain legal matters with respect to the validity of the U.S. Filter Common
Stock to be issued pursuant to the Merger will be passed upon for U.S. Filter
by Skadden, Arps, Slate, Meagher & Flom LLP, U.S. Filter's outside legal
counsel. Certain legal matters with respect to the U.S. federal income tax
consequences of the Merger will be passed upon for Culligan by Wachtell,
Lipton, Rosen & Katz, Culligan's special outside legal counsel.

EXPERTS

The consolidated financial statements of U.S. Filter and its subsidiaries as
of March 31, 1996 and 1997 and for each of the three years in the period ended
March 31, 1997 have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants as stated in their report,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.

The combined financial statements of the Systems and Manufacturing Group of
Wheelabrator Technologies Inc. as of December 31, 1994 and 1995 and for each
of the three years in the three year period ended December 31, 1995 have been
incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.

The consolidated financial statements of Culligan as of January 31, 1996 and
1997 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the three years in the three
year period ended January 31, 1997 have been incorporated by reference herein
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, which report is incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.

The aggregated financial statements of the Process Equipment Division of
United Utilities Plc as of March 31, 1996 and 1995 and for each of the years
in the two year period ended March 31, 1996 have been incorporated by
reference herein in reliance upon the report of KPMG Audit Plc, independent
chartered accountants, which report is incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.

The aggregated financial statements of Protean plc as of March 31, 1997 and
for the year ended March 31, 1997 have been incorporated by reference herein
in reliance upon the report of KPMG Audit Plc, independent chartered
accountants, which report is incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.

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The consolidated financial statements of Kinetics at September 30, 1997 and
1996, and for each of the two years in the period ended September 30, 1997,
incorporated by reference herein have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon incorporated by
reference herein, and are incorporated by reference herein in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.

The combined financial statements of The Water Filtration Business (a wholly
owned business of Ametek) at December 31, 1996 and 1995, and for each of the
three years in the period ended December 31, 1996, incorporated by reference
herein have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon incorporated by reference herein, and are
incorporated by reference herein in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Memtec as of June 30, 1997 and 1996
and for each of the three years in the period ended June 30, 1997 incorporated
by reference herein have been so incorporated by reference in reliance on the
report of Price Waterhouse, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

The audited financial statements of WaterPro Supplies Corporation as of
December 31, 1995 and for the period from April 7, 1995 to December 31, 1995
incorporated by reference herein have been audited by Arthur Andersen LLP,
independent public accountants as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report.

The independent valuation report of The Mentor Group, Inc. is incorporated
by reference herein in reliance upon the authority of said firm in giving said
report.

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ANNEX A

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

UNITED STATES FILTER CORPORATION
("USF"),

PALM WATER ACQUISITION CORP.
A WHOLLY OWNED DIRECT SUBSIDIARY OF USF
("SUBCORP"),

AND

CULLIGAN WATER TECHNOLOGIES, INC.
("CULLIGAN")

FEBRUARY 9, 1998

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AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of the 9th day of February, 1998, by and among United States Filter
Corporation, a Delaware corporation ("USF"), Palm Water Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of USF ("Subcorp"), and
Culligan Water Technologies, Inc., a Delaware corporation ("Culligan").

PRELIMINARY STATEMENTS

A. USF desires to combine its water filtration business and other businesses
with the water filtration business and other businesses operated by Culligan
through the merger of Subcorp with and into Culligan, with Culligan as the
surviving corporation (the "Merger"), pursuant to which each share of Culligan
Common Stock (as defined in Section 4.4) outstanding at the Effective Time (as
defined in Section 1.2) will be converted into the right to receive shares of
USF Common Stock (as defined in Section 3.4) as more fully provided herein.

B. The Board of Directors of Culligan has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of
Culligan and Culligan desires to combine its water filtration business and
other businesses with the water filtration and other businesses operated by
USF and for the holders of shares of Culligan Common Stock ("Culligan
Stockholders") to have a continuing equity interest in the combined
USF/Culligan businesses through the ownership of shares of USF Common Stock.

C. The Board of Directors of USF has determined that the Merger is
consistent with the long-term business strategy of USF.

D. The parties intend that the Merger constitute a tax-free "reorganization"
within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the "Code"), by reason of Section 368(a)(2)(E) thereof.

E. The parties intend that the Merger be accounted for as a pooling-of-
interests for financial reporting purposes.

F. The respective Boards of Directors of USF, Subcorp and Culligan have
determined the Merger in the manner contemplated herein to be desirable and in
the best interests of their respective shareholders and, by resolutions duly
adopted, have approved and adopted this Agreement.

AGREEMENT

Now, therefore, in consideration of these premises and the mutual and
dependent promises hereinafter set forth, the parties hereto agree as follows:

ARTICLE I.

The Merger

1.1. The Merger. Upon the terms and subject to the conditions hereof, and in
accordance with the provisions of the Delaware General Corporation Act (the
"DGCL"), Subcorp shall be merged with and into Culligan at the Effective Time.
As a result of the Merger, the separate corporate existence of Subcorp shall
cease and Culligan shall continue its existence under the laws of the State of
Delaware. Culligan, in its capacity as the corporation surviving the Merger,
is hereinafter sometimes referred to as the "Surviving Corporation."

1.2. Effective Time. As promptly as possible on the Closing Date (as defined
below), the parties shall cause the Merger to be consummated by filing with
the Secretary of State of the State of Delaware (the

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"Delaware Secretary of State") a certificate of merger (the "Certificate of
Merger") in such form as is required by and executed in accordance with
Section 251 of the DGCL. The Merger shall become effective (the "Effective
Time") when the Certificate of Merger has been filed with the Delaware
Secretary of State or at such later time as shall be agreed upon by USF and
Culligan and specified in the Certificate of Merger. Prior to the filing
referred to in this Section 1.2, a closing (the "Closing") shall be held at
such place as the parties may agree as soon as practicable (but in any event
within two business days) following the date upon which all conditions set
forth in Article VI hereof have been satisfied or waived, or at such other
date as USF and Culligan may agree; provided, that the conditions set forth in
Article VI have been satisfied or waived at or prior to such date. The date on
which the Closing takes place is referred to herein as the "Closing Date." For
all tax purposes, the Closing shall be effective at the end of the day on the
Closing Date.

1.3. Effects of the Merger. From and after the Effective Time, the Merger
shall have the effects set forth in Section 259 of the DGCL.

1.4. Certificate of Incorporation and Bylaws. At the Effective Time (i) the
Certificate of Incorporation of the Surviving Corporation as in effect
immediately prior to the Effective Time shall be amended as of the Effective
Time so as to contain the provisions, and only the provisions, contained
immediately prior thereto in the Amended and Restated Certificate of
Incorporation of Subcorp, except for Article I thereof which shall continue to
read "The name of the corporation is "CULLIGAN WATER TECHNOLOGIES, INC.' ",
and (ii) the Bylaws of Culligan in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation; in each case until
amended in accordance with applicable law. As soon as practicable after the
date hereof, USF shall cause Subcorp to amend the Certificate of Incorporation
to add the provisions set forth in Exhibit B to this Agreement (the
"Additional Provisions"). USF agrees not to amend the Additional Provisions
included in the Amended and Restated Certificate of Incorporation of the
Surviving Corporation or Article VIII of the Bylaws of the Surviving
Corporation, in each case for a period of at least six years from the
Effective Time, except to make such provisions more favorable to current or
former directors and officers.

1.5. Directors and Officers of the Surviving Corporation. From and after the
Effective Time, the officers of Culligan shall be the officers of the
Surviving Corporation and the directors of Subcorp shall be the directors of
the Surviving Corporation, in each case until their respective successors are
duly elected and qualified.

1.6. Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable
to (a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Culligan, or (b) otherwise carry out the provisions of
this Agreement, Culligan and its officers and directors shall be deemed to
have granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, assignments or assurances in law and to
take all acts necessary, proper or desirable to vest, perfect or confirm title
to and possession of such rights, properties or assets in the Surviving
Corporation and otherwise to carry out the provisions of this Agreement, and
the officers and directors of the Surviving Corporation are authorized in the
name of Culligan or otherwise to take any and all such action.

ARTICLE II.

Conversion of Securities

2.1. Conversion of Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of USF, Subcorp or Culligan or their
respective shareholders:

(a) Each share of common stock, $0.01 par value, of Subcorp issued and
outstanding immediately prior to the Effective Time shall be converted into
one share of common stock, $0.01 par value, of the Surviving Corporation.
Such newly issued shares shall thereafter constitute all of the issued and
outstanding capital stock of the Surviving Corporation.

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(b) Subject to the other provisions of this Article II, each share of
Culligan Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into and represent a number of shares of
USF Common Stock equal to the Exchange Ratio (as defined in Section
2.2(a)).

(c) Each share of capital stock of Culligan held in the treasury of
Culligan shall be cancelled and retired and no payment shall be made in
respect thereof.

2.2. Exchange Ratio; Fractional Shares; Adjustments.

(a) The "Exchange Ratio" shall be equal to: 1.714 if the average of the
closing prices of the shares of USF Common Stock as reported on the New York
Stock Exchange ("NYSE") Composite Tape ("NYSE Composite Tape") on each of the
last ten trading days ending on the sixth trading day prior to the date of the
meeting of Culligan Stockholders at which the approval of the Merger by the
Culligan stockholders is obtained (the "Average Share Price") is equal to or
greater than $35; provided, however, that (i) if the Average Share Price is
less than $35, but greater than or equal to $32, then the Exchange Ratio shall
be equal to the quotient obtained (rounded to the nearest ten-thousandth of a
share) by dividing $60 by the Average Share Price; and (ii) if the Average
Share Price is less than $32, the Exchange Ratio shall be equal to 1.875. No
certificates for fractional Shares of USF Common Stock shall be issued as a
result of the conversion provided for in Section 2.1(b).

(b) In lieu of any such fractional shares, the holder of a certificate
previously evidencing Culligan Common Stock, upon presentation of such
fractional interest represented by an appropriate certificate for Culligan
Common Stock to the Exchange Agent pursuant to Section 2.3, shall be entitled
to receive a cash payment therefor in an amount equal to the value (determined
with reference to the closing price of shares of USF Common Stock as reported
on the NYSE Composite Tape on the last full trading day immediately prior to
the Closing Date) of such fractional interest. Such payment with respect to
fractional shares is merely intended to provide a mechanical rounding off of,
and is not a separately bargained for, consideration. If more than one
certificate representing shares of Culligan Common Stock shall be surrendered
for the account of the same holder, the number of shares of USF Common Stock
for which certificates have been surrendered shall be computed on the basis of
the aggregate number of shares represented by the certificates so surrendered.

(c) In the event that prior to the Effective Time USF shall declare a stock
dividend or other distribution payable in Shares of USF Common Stock or
securities convertible into shares of USF Common Stock, or effect a stock
split, reclassification, combination or other change with respect to shares of
USF Common Stock, the Exchange Ratio set forth in this Section 2.2 and the
price set forth in Section 7.1(h) shall each be adjusted to reflect such
dividend, distribution, stock split, reclassification, combination or other
change.

2.3. Exchange of Certificates.

(a) Exchange Agent. Promptly following the Effective Time, USF shall deposit
with American Stock Transfer & Trust Company or such other exchange agent as
may be designated by USF (the "Exchange Agent"), for the benefit of Culligan
Stockholders, for exchange in accordance with this Section 2.3, certificates
representing shares of USF Common Stock issuable pursuant to Section 2.1 in
exchange for outstanding shares of Culligan Common Stock and shall from time-
to-time deposit cash in an amount reasonably expected to be paid pursuant to
Section 2.2 (such shares of USF Common Stock and cash, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund").

(b) Exchange Procedures. As soon as practicable after the Effective Time,
USF shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to
the Effective Time represented outstanding shares of Culligan Common Stock
whose shares were converted into the right to receive shares of USF Common
Stock pursuant to Section 2.1(b), (i) a letter of transmittal (the form and
substance of which shall have been reasonably approved by Culligan prior to
the Effective Time and which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Exchange Agent and shall be in such form and have
such

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other customary provisions as USF may reasonably specify) and (ii)
instructions for effecting the surrender of the Certificates in exchange for
certificates representing Shares of USF Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate or certificates
representing that whole number of shares of USF Common Stock which such holder
has the right to receive pursuant to Section 2.1 in such denominations and
registered in such names as such holder may request and (y) a check
representing the amount of cash in lieu of fractional shares, if any, and
unpaid dividends and distributions, if any, which such holder has the right to
receive pursuant to the provisions of this Article II, after giving effect to
any required withholding tax. The shares represented by the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued
on the cash in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, payable to holders of shares of Culligan Common Stock.
In the event of a transfer of ownership of shares of Culligan Common Stock
which is not registered on the transfer records of Culligan, a certificate
representing the proper number of shares of USF Common Stock, together with a
check for the cash to be paid in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, may be issued to such transferee if the
Certificate representing such shares of Culligan Common Stock held by such
transferee is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.3, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon surrender
a certificate representing shares of USF Common Stock and cash in lieu of
fractional shares, if any, and unpaid dividends and distributions, if any, as
provided in this Article II.

(c) Distributions with Respect to Unexchanged Shares. Notwithstanding any
other provisions of this Agreement, no dividends or other distributions
declared or made after the Effective Time with respect to shares of USF Common
Stock having a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate, and no cash payment in lieu of
fractional shares shall be paid to any such holder, until the holder shall
surrender such Certificate as provided in this Section 2.3. Subject to the
effect of Applicable Laws (as defined in Section 3.10), following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole shares of USF Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends
or other distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of USF Common Stock and not paid,
less the amount of any withholding taxes which may be required thereon, and
(ii) at the appropriate payment date subsequent to surrender, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of USF Common Stock, less the amount of any
withholding taxes which may be required thereon.

(d) No Further Ownership Rights in Culligan Common Stock. All shares of USF
Common Stock issued upon surrender of Certificates in accordance with the
terms hereof (including any cash paid pursuant to this Article II) shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such shares of Culligan Common Stock represented thereby, and there shall be
no further registration of transfers on the stock transfer books of Culligan
of shares of Culligan Common Stock outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be cancelled and
exchanged as provided in this Section 2.3.

(e) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to Culligan Stockholders twelve months after the date of
the mailing required by Section 2.3(b) shall be delivered to USF, upon demand
therefor, and holders of Certificates previously representing shares of
Culligan Common Stock who have not theretofore complied with this Section 2.3
shall thereafter look only to USF for payment of any claim to shares of USF
Common Stock, cash in lieu of fractional shares thereof, or dividends or
distributions, if any, in respect thereof.

(f) No Liability. None of USF, the Surviving Corporation or the Exchange
Agent shall be liable to any person in respect of any shares of Culligan
Common Stock (or dividends or distributions with respect thereto) or

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cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.

(g) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by USF, on a daily basis. Any
interest and other income resulting from such investments shall be paid to USF
upon termination of the Exchange Fund pursuant to Section 2.3(e).

2.4. Treatment of Stock Options.

(a) Prior to the Effective Time, USF and Culligan shall take all such
actions as may be necessary to cause each unexpired and unexercised option
under stock option plans of Culligan in effect on the date hereof which has
been granted to current or former directors, officers or employees of Culligan
by Culligan (or which has been granted by Culligan prior to the Effective Time
pursuant to agreements in compliance with the terms of this Agreement) (each,
a "Culligan Option") to be automatically converted at the Effective Time into
an option (a "USF Exchange Option") to purchase that number of Shares of USF
Common Stock equal to the number of shares of Culligan Common Stock issuable
immediately prior to the Effective Time upon exercise of the Culligan Option
(without regard to actual restrictions on exercisability) multiplied by the
Exchange Ratio, with an exercise price equal to the exercise price which
existed under the corresponding Culligan Option divided by the Exchange Ratio,
and with other terms and conditions that are the same as the terms and
conditions of such Culligan Option immediately before the Effective Time;
provided that with respect to any Culligan Option that is an "incentive stock
option" within the meaning of Section 422 of the Code, the foregoing
conversion shall be carried out in a manner satisfying the requirements of
Section 424(a) of the Code. In connection with the issuance of USF Exchange
Options, USF shall (i) reserve for issuance the number of Shares of USF Common
Stock that will become subject to USF Exchange Options pursuant to this
Section 2.4 and (ii) from and after the Effective Time, upon exercise of USF
Exchange Options, make available for issuance all Shares of USF Common Stock
covered thereby, subject to the terms and conditions applicable thereto.

(b) Culligan agrees to issue treasury shares of Culligan, to the extent
available, upon the exercise of Culligan Options prior to the Effective Time.

(c) USF agrees to use its reasonable efforts to file with the Securities and
Exchange Commission (the "Commission") within 10 business days after the
Closing Date a registration statement on Form S-8 or other appropriate form
under the Securities Act to register shares of USF Common Stock issuable upon
exercise of the USF Exchange Options and use its reasonable efforts to cause
such registration statement to remain effective until the exercise or
expiration of such options.

ARTICLE III.

Representations and Warranties of USF and Subcorp

In order to induce Culligan to enter into this Agreement, USF and Subcorp
hereby represent and warrant to Culligan as follows:

3.1. Organization and Standing. Each of USF and Subcorp is a corporation
duly organized, validly existing and in good standing under the DGCL with full
corporate power and authority to own, lease, use and operate its properties
and to conduct its business as and where now owned, leased, used, operated and
conducted. Each of USF and Subcorp is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business
conducted by it or the property it owns, leases or operates, makes such
qualification necessary, except where the failure to be so qualified or in
good standing in such jurisdiction would not reasonably be expected to have a
Material Adverse Effect (as defined in Section 8.3) on USF. USF is not in
default in the performance, observance or fulfillment of any provision of its
Restated Certificate of Incorporation, as amended (the "USF Certificate"), or
its Restated Bylaws (the "USF Bylaws"), and Subcorp is not in default in the
performance, observance or fulfillment of any provisions of its Amended and
Restated Certificate of

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Incorporation or Bylaws. USF has heretofore furnished to Culligan a complete
and correct copy of the USF Certificate and USF Bylaws.

3.2. Subsidiaries. Except as set forth in Section 3.2 to the disclosure
schedule delivered by USF to Culligan and dated the date hereof (the "USF
Disclosure Schedule"), USF owns directly or indirectly each of the outstanding
shares of capital stock (or other ownership interests having by their terms
ordinary voting power to elect a majority of directors or others performing
similar functions with respect to such subsidiary) of each of USF's
subsidiaries.

3.3. Corporate Power and Authority. Each of USF and Subcorp has all
requisite corporate power and authority to enter into and deliver this
Agreement, subject to approval of the issuance of shares of USF Common Stock
issuable in the Merger and the transactions contemplated hereby by the USF
Stockholders, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
each of USF and Subcorp, subject to approval by the USF Stockholders of the
issuance of shares of USF Common Stock in the Merger. This Agreement has been
duly executed and delivered by each of USF and Subcorp, and constitutes the
legal, valid and binding obligation of each of Subcorp and USF enforceable
against each of them in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally and (ii) the availability of injunctive relief and other equitable
remedies.

3.4. Capitalization of USF and Subcorp.

(a) As of February 1, 1998, USF's authorized capital stock consisted solely
of (a) 300,000,000 shares of common stock, par value $.01 per share ("USF
Common Stock"), of which (i) 105,979,930 shares were issued and outstanding,
(ii) no shares were issued and held in treasury (except as set forth in
Section 3.4 to the USF Disclosure Schedule) and (iii) except as set forth in
Section 3.4 to the USF Disclosure Schedule, no shares were reserved for
issuance upon the exercise or conversion of options, warrants or convertible
securities granted or issuable by USF, and (b) 3,000,000 shares of Preferred
Stock, par value $.10 per share, none of which was issued and outstanding or
reserved for issuance. Each outstanding share of USF capital stock is, and all
shares of USF Common Stock to be issued in connection with the Merger will be,
duly authorized and validly issued, fully paid and nonassessable, and, except
as set forth in Section 3.4 to the USF Disclosure Schedule, each outstanding
share of USF capital stock has not been, and all Shares of USF Common Stock to
be issued in connection with the Merger will not be, issued in violation of
any preemptive or similar rights and holders of shares of USF Common Stock, as
such, have no conversion, preemptive or other subscription rights, and there
are no redemption or sinking fund provisions applicable to the USF Common
Stock. As of the date hereof, other than as set forth in the first sentence
hereof or in Section 3.4 to the USF Disclosure Schedule, there are no
outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type relating to
the issuance, sale, repurchase, transfer or registration by USF of any equity
securities of USF, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital stock of USF and
neither USF nor any USF subsidiary has any obligation of any kind to issue any
additional securities or to pay for or repurchase any securities of USF, its
subsidiaries or its or their predecessors. The shares of USF Common Stock
(including those shares to be issued in the Merger) are registered under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "Exchange Act"). Except as set forth in Section
3.4 to the USF Disclosure Schedule, USF has no agreement, arrangement or
understanding to register any securities of USF or any of its subsidiaries
under the Securities Act or under any state securities law and has not granted
registration rights to any person or entity (other than agreements,
arrangements or understandings with respect to registration rights that are no
longer in effect as of the date of this Agreement); copies of all such
agreements have previously been provided to Culligan.

(b) Subcorp's authorized capital stock consists solely of 1,000 shares of
Common Stock, par value $.01 per share ("Subcorp Common Stock"), of which, as
of the date hereof, 1,000 were issued and outstanding and none

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were reserved for issuance. As of the date hereof, all of the outstanding
shares of Subcorp Common Stock are owned, beneficially and of record, by USF
free and clear of any liens, claims or encumbrances.

3.5. Conflicts; Consents and Approval. Neither the execution and delivery of
this Agreement by USF or Subcorp nor the consummation of the transactions
contemplated hereby will:

(a) conflict with, or result in a breach of any provision of the USF
Certificate or USF Bylaws or the Amended and Restated Certificate of
Incorporation or Bylaws of Subcorp, subject to approval by the USF
Stockholders of the issuance of shares of USF Common Stock in the Merger;

(b) except as set forth in Section 3.5 to the USF Disclosure Schedule,
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with the giving of notice, the
passage of time or otherwise, would constitute a default) under, or entitle
any party (with the giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of USF or any of its subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, contract, undertaking, agreement, lease or other
instrument or obligation to which USF or any of its subsidiaries is a
party;

(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to USF or any of its subsidiaries or any of their
respective properties or assets; or

(d) require any action or consent or approval of, or review by, or
registration or filing by USF or any of its affiliates with, any third
party or any local, domestic, foreign or multi-national court, arbitral
tribunal, administrative agency or commission or other governmental or
regulatory body, agency, instrumentality or authority (a "Governmental
Authority"), other than (i) approval by the USF Stockholders of the
issuance of the shares of USF Common Stock to be issued in the Merger, (ii)
authorization for inclusion of the Shares of USF Common Stock to be issued
in the Merger and the transactions contemplated hereby on the NYSE, subject
to official notice of issuance, (iii) actions required by the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act") or any applicable
foreign Antitrust Law (as defined in Section 5.1(a)), (iv) registrations or
other actions required under federal and state securities laws as are
contemplated by this Agreement, or (v) consents or approvals of any
Governmental Authority set forth in Section 3.5 to the USF Disclosure
Schedule;

except in the case of (b), (c) and (d) for any of the foregoing that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on USF or a material adverse effect on the ability of
the parties to consummate the Merger.

3.6. Brokerage and Finder's Fees. Except for USF's obligations to Donaldson,
Lufkin & Jenrette Securities Corporation and Salomon Smith Barney, neither USF
nor any shareholder, director, officer or employee thereof has incurred or
will incur on behalf of USF any brokerage, finder's or similar fee in
connection with the transactions contemplated by this Agreement.

3.7. Accounting Matters; Reorganization. Neither USF nor any of its
affiliates has taken or agreed to take any action that (without giving effect
to any actions taken or agreed to be taken by Culligan or any of its
affiliates) would (a) prevent USF from accounting for the business combination
to be effected by the Merger as a pooling-of-interests for financial reporting
purposes or (b) prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.

3.8. USF SEC Documents. USF has timely filed with the Commission all forms,
reports, schedules, statements and other documents required to be filed by it
since January 1, 1996 under the Exchange Act or the Securities Act of 1933, as
amended (the "Securities Act") (such documents, as supplemented and amended
since the time of filing, collectively, the "USF SEC Documents"). The USF SEC
Documents, including, without limitation, any financial statements or
schedules included therein, at the time filed (and, in the case of
registration statements and proxy statements, on the dates of effectiveness
and the dates of mailing, respectively) (a) did not

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contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be.
The financial statements of USF included in the USF SEC Documents at the time
filed (and, in the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of mailing, respectively) complied as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the Commission with respect
thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the Commission), and fairly present
(subject in the case of unaudited statements to normal, recurring audit
adjustments) the consolidated financial position of USF and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.

3.9. Registration Statement. None of the information provided by USF in
writing for inclusion in the registration statement on Form S-4 (such
registration statement as amended, supplemented or modified, the "Registration
Statement") to be filed with the Commission by USF under the Securities Act,
including the prospectus relating to Shares of USF Common Stock to be issued
in the Merger (as amended, supplemented or modified, the "Prospectus") and the
joint proxy statement and form of proxies relating to the vote of Culligan
Stockholders with respect to the Merger and the vote of USF Stockholders with
respect to the issuance of shares of USF Common Stock in the Merger (as
amended, supplemented or modified, the "Joint Proxy Statement"), at the time
the Registration Statement becomes effective or, in the case of the Joint
Proxy Statement, at the date of mailing and at the date of the Culligan
Stockholders Meeting or the USF Stockholders Meeting (each, as hereinafter
defined) to consider the Merger and the transactions contemplated thereby,
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. Each of the Registration Statement and Joint Proxy Statement,
except for such portions thereof that relate only to Culligan, will comply as
to form in all material respects with the provisions of the Securities Act and
Exchange Act.

3.10. Compliance with Law. USF and its subsidiaries are in compliance with,
and at all times since January 1, 1996 have been in compliance with, all
applicable laws, statutes, orders, rules, regulations or policies promulgated,
or judgments, decisions or orders entered by any Governmental Authority (all
such laws, statutes, orders, rules, regulations, policies, judgments,
decisions and orders, collectively, "Applicable Laws"), relating to USF, its
subsidiaries or their respective business or properties, except where the
failure to be in compliance therewith (individually or in the aggregate) would
not reasonably be expected to have a Material Adverse Effect on USF or where
such non-compliance has been cured. Except as set forth in the USF SEC
Documents, no investigation or review by any Governmental Authority with
respect to USF or its subsidiaries is pending, or, to the knowledge of USF,
threatened, nor has any Governmental Authority indicated in writing an
intention to conduct the same, other than those the outcome of which would not
reasonably be expected to have a Material Adverse Effect on USF.

3.11. Litigation. Except as set forth in the USF SEC Documents, there is no
suit, claim, action, proceeding or investigation (an "Action") pending or, to
the knowledge of USF, threatened against USF or any of its subsidiaries which,
individually or in the aggregate, would have a Material Adverse Effect on USF
or a material adverse effect on the ability of USF to consummate the
transactions contemplated hereby. Neither USF nor any of its subsidiaries is
subject to any outstanding order, writ, injunction or decree which,
individually or in the aggregate, insofar as can be reasonably foreseen, could
have a Material Adverse Effect on USF or a material adverse effect on the
ability of USF to consummate the Merger.

3.12. Board Recommendation. The Board of Directors of USF, at a meeting duly
called and held, has by unanimous vote of those directors present (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, taken together, are fair to and in the best interests of
USF and the USF

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Stockholders, and (ii) resolved to recommend that the USF Stockholders approve
and authorize the issuance of shares of USF Common Stock in the Merger.

3.13. No Material Adverse Change. Except as disclosed in the USF SEC
Documents filed prior to the date of this Agreement, since March 31, 1997,
there has been no change in the business or financial condition of USF which
would constitute a Material Adverse Effect on USF or any event, occurrence or
development which would have a material adverse effect on the ability of USF
to consummate the Merger.

3.14. Title to Properties. USF and its subsidiaries own or hold under valid
leases all real property, plants, machinery and equipment necessary for the
conduct of the business of USF and its subsidiaries as presently conducted,
except where the failure to own or so hold such property, plants, machinery
and equipment would not reasonably be expected to have a Material Adverse
Effect on USF.

3.15. Undisclosed Liabilities. Except (i) as and to the extent disclosed or
reserved against on the restated consolidated balance sheet of USF as of March
31, 1997 included in the USF SEC Documents, (ii) as incurred after the date
thereof in the ordinary course of business consistent with prior practice and
not prohibited by this Agreement or (iii) as set forth in Section 3.15 to the
USF Disclosure Schedule, USF, together with its subsidiaries, does not have
any liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
required by generally accepted accounting principles to be recognized or
disclosed on a consolidated balance sheet of USF and its consolidated
subsidiaries or in the notes thereto and which, individually or in the
aggregate, have or would have a Material Adverse Effect on USF.

3.16. Environmental Matters. Except for matters disclosed in the USF SEC
Documents and except for matters that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on USF,
(a) the properties, operations and activities of USF and its subsidiaries are
in compliance with all applicable Environmental Laws (as defined below) and
all past noncompliance of USF or any USF subsidiary with any Environmental
Laws or Environmental Permits (as defined below) that has been resolved with
any Governmental Authority has been resolved without any pending, ongoing or
future obligation, cost or liability; (b) USF and its subsidiaries and the
properties and operations of USF and its subsidiaries are not subject to any
existing, pending or, to the knowledge of USF, threatened action, suit,
investigation, inquiry or proceeding by or before any court or governmental
authority under any Environmental Law; (c) there has been no release of any
hazardous substance, pollutant or contaminant into the environment by USF or
its subsidiaries or in connection with their properties or operations; and (d)
to the best of USF's knowledge, there has been no exposure of any person or
property to any hazardous substance, pollutant or contaminant in connection
with the properties, operations and activities of USF and its subsidiaries.
The term "Environmental Laws" means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or industrial, toxic or hazardous substances or
wastes (collectively, "Hazardous Materials") into the environment, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, as
well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder, as
in effect on the date hereof. "Environmental Permit" means any permit,
approval, identification number, license or other authorization required under
or issued pursuant to any applicable Environmental Law.

3.17. Opinions of Financial Advisors. USF has received the written opinions
of Donaldson, Lufkin & Jenrette Securities Corporation and Salomon Smith
Barney, its financial advisors, to the effect that, as of the date of this
Agreement, the Exchange Ratio is fair to the USF Stockholders from a financial
point of view, USF has heretofore provided copies of such opinion to Culligan
and such opinion has not been withdrawn or restated or modified in any
material respect.

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ARTICLE IV.

Representations and Warranties of Culligan

In order to induce Subcorp and USF to enter into this Agreement, Culligan
hereby represents and warrants to USF and Subcorp as follows:

4.1. Organization and Standing. Culligan is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to own, lease, use and operate its
properties and to conduct its business as and where now owned, leased, used,
operated and conducted. Each of Culligan and each subsidiary of Culligan is
duly qualified to do business and in good standing in each jurisdiction in
which the nature of the business conducted by it or the property it owns,
leases or operates requires it to so qualify, except where the failure to be
so qualified or in good standing in such jurisdiction would not reasonably be
expected to have a Material Adverse Effect on Culligan. Culligan is not in
default in the performance, observance or fulfillment of any provision of its
Amended and Restated Certificate of Incorporation, as amended and restated
(the "Culligan Certificate"), or its Bylaws, as in effect on the date hereof
(the "Culligan Bylaws"). Culligan has heretofore furnished to USF a complete
and correct copy of the Culligan Certificate and the Culligan Bylaws.

4.2. Subsidiaries. Culligan does not own, directly or indirectly, any equity
or other ownership interest in any corporation, partnership, joint venture or
other entity or enterprise, except for the subsidiaries and other entities set
forth in Section 4.2 to the disclosure schedule delivered by Culligan to USF
and dated the date hereof (the "Culligan Disclosure Schedule"). Except as set
forth in Section 4.2 to the Culligan Disclosure Schedule, Culligan owns
directly or indirectly each of the outstanding shares of capital stock (or
other ownership interests having by their terms ordinary voting power to elect
a majority of directors or others performing similar functions with respect to
such subsidiary) of each of Culligan's subsidiaries. Each of the outstanding
shares of capital stock of each of Culligan's subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by Culligan free and clear of all liens, pledges, security
interests, claims or other encumbrances. Other than as set forth in Section
4.2 to the Culligan Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance,
sale or transfer of any securities of any subsidiary of Culligan, nor are
there outstanding any securities which are convertible into or exchangeable
for any shares of capital stock of any subsidiary of Culligan, and neither
Culligan nor any subsidiary of Culligan has any obligation of any kind to
issue any additional securities of any subsidiary of Culligan or to pay for or
repurchase any securities of any subsidiary of Culligan or any predecessor
thereof.

4.3. Corporate Power and Authority. Culligan has all requisite corporate
power and authority to enter into and deliver this Agreement, to perform its
obligations hereunder and, subject to approval of the Merger by the Culligan
Stockholders, to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Culligan have been duly
authorized by all necessary corporate action on the part of Culligan, subject
to approval of the Merger and the transactions contemplated hereby by Culligan
Stockholders. This Agreement has been duly executed and delivered by Culligan
and constitutes the legal, valid and binding obligation of Culligan
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally and (ii) the availability of injunctive relief and other equitable
remedies.

4.4. Capitalization of Culligan. As of February 5, 1998, Culligan's
authorized capital stock consisted solely of (a) 60,000,000 shares of common
stock, par value $.01 per share ("Culligan Common Stock"), of which (i)
25,710,809 shares were issued and outstanding, (ii) no shares were issued and
held in treasury (which does not include the shares reserved for issuance set
forth in clause (iii) below) and no shares were held by subsidiaries of
Culligan, and (iii) 2,815,995 shares were reserved for issuance upon the
exercise of outstanding options, issuance of shares pursuant to Culligan's
Directors' Stock Plan and for a working capital adjustment in

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connection with an acquisition, and no shares were reserved for issuance upon
the conversion or exchange of convertible or exchangeable securities granted
or issued by Culligan; and (b) 2,000,000 shares of preferred stock, par value
("Culligan Preferred Stock"), none of which was issued and outstanding or
reserved for issuance, except for a series of 300,000 shares of Culligan
Preferred Stock designated as Series A Junior Participating Preferred Stock
reserved for issuance pursuant to the Culligan Rights Agreement (as defined in
Section 4.21), none of which was issued and outstanding. Each outstanding
share of Culligan capital stock is duly authorized and validly issued, fully
paid and nonassessable, and has not been issued in violation of any preemptive
or similar rights. Other than as set forth in the first sentence hereof or in
Section 4.4 to the Culligan Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to the issuance,
sale, repurchase or transfer by Culligan of any securities of Culligan, nor
are there outstanding any securities which are convertible into or
exchangeable for any shares of capital stock of Culligan, and neither Culligan
nor any subsidiary of Culligan has any obligation of any kind to issue any
additional securities or to pay for or repurchase any securities of Culligan
or any predecessor. Except as set forth in Section 4.4 to the Culligan
Disclosure Schedule, Culligan has no agreement, arrangement or understandings
to register any securities of Culligan or any of its subsidiaries under the
Securities Act or under any state securities law and has not granted
registration rights to any person or entity (other than agreements,
arrangements or understandings with respect to registration rights that are no
longer in effect as of the date of this Agreement); copies of all such
agreements have previously been provided to USF.

4.5. Conflicts; Consents and Approvals. Neither the execution and delivery
of this Agreement by Culligan, nor the consummation of the transactions
contemplated hereby or thereby will:

(a) conflict with, or result in a breach of any provision of, the
Culligan Certificate or the Culligan Bylaws;

(b) except as set forth in Section 4.5 to the Culligan Disclosure
Schedule, violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice,
the passage of time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate, modify or call a default under, or
result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Culligan under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, contract, undertaking, agreement, lease or other
instrument or obligation to which Culligan or any of its subsidiaries is a
party;

(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Culligan or any of its subsidiaries or any of
their respective properties or assets; or

(d) require any action or consent or approval of, or review by, or
registration or filing by Culligan or any of its affiliates with, any third
party or any Governmental Authority, other than (i) approval of the Merger
and the transactions contemplated hereby by Culligan Stockholders, (ii)
actions required by the HSR Act or any applicable foreign Antitrust Laws,
(iii) registrations or other actions required under federal and state
securities laws as are contemplated by this Agreement and (iv) consents or
approvals of any Governmental Authority set forth in Section 4.5 to the
Culligan Disclosure Schedule;

except in the case of (b), (c) and (d) for any of the foregoing that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Culligan or a material adverse effect on the
ability of the parties to consummate the Merger.

4.6. No Material Adverse Change. Except as disclosed in the Culligan SEC
Documents (as defined in Section 4.7 hereof) filed prior to the date of this
Agreement or in Section 4.6 to the Culligan Disclosure Schedule, since January
31, 1997, there has been no change in the business or financial condition of
Culligan which would constitute a Material Adverse Effect on Culligan or any
event, occurrence or development which would have a material adverse effect on
the ability of Culligan to consummate the Merger.

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4.7. Culligan SEC Documents. Culligan has timely filed with the Commission
all forms, reports, schedules, statements and other documents required to be
filed by it since January 1, 1996 under the Exchange Act or the Securities Act
(such documents, as supplemented and amended since the time of filing,
collectively, the "Culligan SEC Documents"). The Culligan SEC Documents,
including, without limitation, any financial statements or schedules included
therein, at the time filed (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates of mailing,
respectively) (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (b) except as set forth in Section
4.7 to the Culligan Disclosure Schedule, complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act,
as the case may be. The financial statements of Culligan included in the
Culligan SEC Documents at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness and the dates
of mailing, respectively) complied as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the Commission with respect thereto, were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q of the Commission), and fairly present (subject in the case of
unaudited statements to normal, recurring audit adjustments) the consolidated
financial position of Culligan and its consolidated subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended.

4.8. Taxes. Except as set forth in Section 4.8 to the Culligan Disclosure
Schedule and except for such matters that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Culligan:

(a) Culligan and its subsidiaries (i) have duly filed all federal, state,
local and foreign income, franchise, excise, real and personal property and
other Tax Returns and reports (including, but not limited to, those filed
on a consolidated, combined or unitary basis) required to have been filed
by Culligan or its subsidiaries prior to the date hereof; (ii) have within
the time and manner prescribed by Applicable Law paid or, prior to the
Effective Time, will pay all Taxes, interest and penalties required to be
paid pursuant to such returns or reports; and (iii) have adequate reserves
on their financial statements for any Taxes in excess of the amounts so
paid. Neither Culligan nor any of its subsidiaries is the subject of any
currently ongoing Tax audit. As of the date of this Agreement, there are no
pending requests for waivers of the time to assess any Tax, other than
those made in the ordinary course and for which payment has been made or
there are adequate reserves. With respect to any taxable period ended prior
to January 1, 1994, all federal income Tax Returns including Culligan or
any of its subsidiaries have been audited by the Internal Revenue Service
or are closed by the applicable statute of limitations. Neither Culligan
nor any of its subsidiaries has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. There are no liens with respect to Taxes upon any
of the properties or assets, real or personal, tangible or intangible of
Culligan or any of its subsidiaries (other than liens for Taxes not yet
due). Culligan has not filed an election under Section 341(f) of the Code
to be treated as a consenting corporation.

(b) Neither Culligan nor any of its subsidiaries is obligated by any
contract, agreement or other arrangement to indemnify any other person with
respect to Taxes. Neither Culligan nor any of its subsidiaries are now or
have ever been a party to or bound by any agreement or arrangement (whether
or not written and including, without limitation, any arrangement required
or permitted by law) binding Culligan or any of its subsidiaries which (i)
requires Culligan or any of its subsidiaries to make any Tax payment to
(other than payments made prior to October 31, 1997 or payments which are
adequately reserved on Culligan's balance sheet as of January 31, 1997
included in the Culligan SEC Documents) or for the account of any other
person, or (ii) affords any other person the benefit of any net operating
loss, net capital loss, investment Tax credit, foreign Tax credit,
charitable deduction or any other credit or Tax attribute which could
reduce Taxes (including, without limitation, deductions and credits related
to alternative minimum Taxes) of Culligan or any of its subsidiaries.

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(c) Culligan and its subsidiaries have withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, shareholder or
other third party.

(d) "Tax Returns" means returns, reports and forms required to be filed
with any Governmental Authority of the United States or any other
jurisdiction responsible for the imposition or collection of Taxes.

(e) "Taxes" means (i) all Taxes (whether federal, state, local or
foreign) based upon or measured by income and any other Tax whatsoever,
including, without limitation, gross receipts, profits, sales, use,
occupation, value added, ad valorem, transfer, franchise, withholding,
payroll, employment, excise, or property Taxes, together with any interest
or penalties imposed with respect thereto and (ii) any obligations under
any agreements or arrangements with respect to any Taxes described in
clause (i) above.

4.9. Compliance with Law. Culligan is in compliance, and at all times since
January 1, 1996 has been in compliance, with all Applicable Laws relating to
Culligan or its business or properties, except where the failure to be in
compliance with such Applicable Laws (individually or in the aggregate) would
not reasonably be expected to have a Material Adverse Effect on Culligan or
where such non-compliance has been cured. Except as disclosed in Section 4.9
to the Culligan Disclosure Schedule, no investigation or review by any
Governmental Authority with respect to Culligan is pending, or, to the
knowledge of Culligan, threatened, nor has any Governmental Authority
indicated in writing an intention to conduct the same, other than those the
outcome of which would not reasonably be expected to have a Material Adverse
Effect on Culligan.

4.10. Intellectual Property. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Culligan, Culligan owns or possesses adequate licenses or other valid rights
to use all patents, patent rights, trademarks, trademark rights, trade names,
trade dress, trade name rights, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and other
proprietary rights and information used or held for use in connection with the
businesses of Culligan ("Intellectual Property") as currently conducted, and
there has not been any written assertion or claim against Culligan challenging
the validity or the use by Culligan of any of the foregoing. The conduct of
the businesses of Culligan as currently conducted does not conflict with or
infringe upon any patent, patent right, license, trademark, trademark right,
trade dress, trade name, trade name right, service mark or copyright of any
third party except for any conflict or infringement that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Culligan. Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Culligan, there
are no infringements of any of the Intellectual Property owned by or licensed
by or to Culligan and the Intellectual Property is not the subject to any
pending Action.

4.11. Title to Properties. Culligan owns or holds under valid leases all
real property, plants, machinery and equipment necessary for the conduct of
the business of Culligan as presently conducted, except where the failure to
own or so hold such property, plants, machinery and equipment would not
reasonably be expected to have a Material Adverse Effect on Culligan.

4.12. Registration Statement; Joint Proxy Statement. None of the information
provided in writing by Culligan for inclusion in the Registration Statement at
the time it becomes effective or, in the case of the Joint Proxy Statement, at
the date of mailing and at the date of the Culligan Stockholders Meeting or
the USF Stockholders Meeting, will contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Registration
Statement and Joint Proxy Statement, except for such portions thereof that
relate only to USF and its subsidiaries, will each comply as to form in all
material respects with the provisions of the Securities Act and the Exchange
Act.

4.13. Litigation. Except as set forth in Section 4.13 to the Culligan
Disclosure Schedule or in the Culligan SEC Documents, there is no Action
pending or, to the knowledge of Culligan, threatened against Culligan which,
individually or in the aggregate, would have a Material Adverse Effect on
Culligan or a material

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<PAGE>

adverse effect on the ability of Culligan to consummate the Merger. Culligan
is not subject to any outstanding order, writ, injunction or decree which,
individually or in the aggregate, insofar as can be reasonably foreseen, could
have a Material Adverse Effect on Culligan or a material adverse effect on the
ability of Culligan to consummate the Merger.

4.14. Brokerage and Finder's Fees; Expenses. Except for Culligan's
obligations to Bear, Stearns & Co. Inc. and Goldman, Sachs & Co., neither
Culligan nor any stockholder, director, officer or employee thereof, has
incurred or will incur on behalf of Culligan, any brokerage, finder's or
similar fee in connection with the transactions contemplated by this
Agreement.

4.15. Accounting Matters; Reorganization. Neither Culligan nor any of its
affiliates has taken or agreed to take any action that (without giving effect
to any actions taken or agreed to be taken by USF or any of its affiliates)
would (a) prevent USF from accounting for the business combination to be
effected by the Merger as a pooling-of-interests for financial reporting
purposes or (b) prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.

4.16. Employee Benefit Plans.

(a) For purposes of this Section 4.16, the following terms have the
definitions given below:

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.

"ERISA Affiliate" means, with respect to any entity, trade or business,
any other entity, trade or business that is a member of a group described
in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of
ERISA that includes the first entity, trade or business, or that is a
member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.

"Plans" means all employee welfare benefit plans within the meaning of
Section 3(1) of ERISA and all employee pension benefit plans within the
meaning of Section 3(2) of ERISA sponsored or maintained by Culligan or any
of its subsidiaries or to which Culligan or any of its subsidiaries
contributes or is obligated to contribute.

"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.

(b) Except as set forth in Section 4.16(b) to the Culligan Disclosure
Schedule or as would not have a Material Adverse Effect, the Internal Revenue
Service has issued a favorable determination letter with respect to each Plan
that is intended to be a "qualified plan" within the meaning of Section 401(a)
of the Code (a "Qualified Plan") and there are no existing circumstances nor
any events that have occurred that would adversely affect the qualified status
of any Qualified Plan or the related trust.

(c) Culligan and its subsidiaries have complied, and are now in compliance,
in all respects, with all provisions of ERISA, the Code and all laws and
regulations applicable to the Plans and each Plan has been operated in
material compliance with its terms except, in each case, to the extent
noncompliance would not have a Material Adverse Effect.

(d) Except as set forth in Section 4.16(d) to the Culligan Disclosure
Schedule, no Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor
has Culligan or any of its subsidiaries or any of their respective ERISA
Affiliates, at any time within six years before the date hereof, contributed
to or been obligated to contribute to any Multiemployer Plan or Multiple
Employer Plan. With respect to each Multiemployer Plan: (i) neither Culligan
nor any of its ERISA Affiliates has incurred any Withdrawal Liability that has
not been satisfied in full; and (ii) neither Culligan nor any ERISA Affiliate
has received any notification, nor has any

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reason to believe, that any such plan is in reorganization, is insolvent, has
been terminated, or would be in reorganization, to be insolvent, or to be
terminated unless such event would not have a Material Adverse Effect. Except
for Multiemployer Plans and except as set forth in Schedule 4.16(a) to the
Culligan Disclosure Schedule, no Plan is subject to Title IV or Section 302 of
ERISA or Section 412 or 4971 of the Code.

(e) Except as disclosed in Section 4.16(e) to the Culligan Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in, cause the
accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee, officer, director or consultant of
Culligan or any of its subsidiaries.

(f) Except as disclosed in Section 4.16(f) to the Culligan Disclosure
Schedule, there are no pending or to the knowledge of Culligan threatened
claims (other than claims for benefits in the ordinary course), lawsuits or
arbitrations which have been asserted or instituted against the Plans, any
fiduciaries thereof with respect to their duties to the Plans or the assets of
any of the trusts under any of the Plans which would result in any material
liability of Culligan or any of its subsidiaries to the Pension Benefit
Guaranty Corporation, the Department of Treasury, the Department of Labor or
any Multiemployer Plan.

4.17. Undisclosed Liabilities. Except (i) as and to the extent disclosed or
reserved against on the consolidated balance sheet of Culligan as of January
31, 1997 included in the Culligan SEC Documents, (ii) as incurred after the
date thereof in the ordinary course of business consistent with prior practice
and not prohibited by this Agreement or (iii) as set forth in Section 4.17 to
the Culligan Disclosure Schedule, Culligan, together with its subsidiaries,
does not have any liabilities or obligations of any nature, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to
become due, required by generally accepted accounting principles to be
recognized or disclosed on a consolidated balance sheet of Culligan and its
consolidated subsidiaries or in the notes thereto and which, individually or
in the aggregate, have or would have a Material Adverse Effect on Culligan.

4.18. Environmental Matters. Except for matters disclosed in Schedule 4.18
of the Culligan Disclosure Schedule and except for matters that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Culligan, (a) the properties, operations and activities of
Culligan and its subsidiaries are in compliance with all applicable
Environmental Laws (as defined below) and all past noncompliance of Culligan
or any Culligan subsidiary with any Environmental Laws or Environmental
Permits (as defined below) that has been resolved with any Governmental
Authority has been resolved without any pending, ongoing or future obligation,
cost or liability; (b) Culligan and its subsidiaries and the properties and
operations of Culligan and its subsidiaries are not subject to any existing,
pending or, to the knowledge of Culligan, threatened action, suit,
investigation, inquiry or proceeding by or before any court or governmental
authority under any Environmental Law; (c) there has been no release of any
hazardous substance, pollutant or contaminant into the environment by Culligan
or its subsidiaries or in connection with their properties or operations; and
(d) to the best of Culligan's knowledge, there has been no exposure of any
person or property to any hazardous substance, pollutant or contaminant in
connection with the properties, operations and activities of Culligan and its
subsidiaries.

4.19. Opinions of Financial Advisors. Culligan has received the written
opinions of Bear, Stearns & Co. Inc. and Goldman, Sachs & Co., its financial
advisors, to the effect that, as of the date of this Agreement, the Exchange
Ratio is fair to the Culligan Stockholders from a financial point of view,
Culligan has heretofore provided copies of such opinions to USF and such
opinion has not been withdrawn or revoked or modified in any material respect.

4.20. Board Recommendation. The Board of Directors of Culligan, at a meeting
duly called and held, has by unanimous vote of those directors present (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, taken together, are fair to and in the best interests of
the Culligan Stockholders, and (ii) resolved to recommend that the holders of
the shares of Culligan Common Stock approve

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<PAGE>

this Agreement and the transactions contemplated herein, including the Merger
(the "Culligan Board Recommendation").

4.21. Rights Agreement. The Rights Agreement, dated as of September 13, 1996
(the "Culligan Rights Agreement"), between Culligan and the First National
Bank of Boston, has been amended so that USF is exempt from the definition of
"Acquiring Person" contained in the Culligan Rights Agreement, no "Stock
Acquisition Date," "Triggering Event" or "Distribution Date" (as such terms
are defined in the Culligan Rights Agreement) will occur as a result of the
execution of this Agreement or the consummation of the Merger pursuant to this
Agreement and the Culligan Rights Agreement will expire immediately prior to
the Effective Time, and the Culligan Rights Agreement, as so amended, has not
been further amended or modified. Copies of all such amendments to the
Culligan Rights Agreement have been previously provided to USF.

ARTICLE V.

Covenants of the Parties

The parties hereto agree that:

5.1. Mutual Covenants.

(a) HSR Act Filings; Reasonable Best Efforts; Notification.

(i) Each of USF and Culligan shall (A) make or cause to be made the
filings required of such party or any of its subsidiaries or affiliates
under the HSR Act with respect to the transactions contemplated hereby as
promptly as practicable and in any event within ten business days after the
date of this Agreement, (B) comply at the earliest practicable date with
any request under the HSR Act for additional information, documents, or
other materials received by such party or any of its subsidiaries from the
Federal Trade Commission or the Department of Justice (each an "HSR
Authority") or any other Governmental Authority in respect of such filings
or such transactions, and (C) cooperate with the other party in connection
with any such filing (including, with respect to the party making a filing,
providing copies of all such documents to the non-filing party and its
advisors prior to filing and, if requested, to accept all reasonable
additions, deletions or changes suggested in connection therewith) and in
connection with resolving any investigation or other inquiry of any such
agency or other Governmental Authority under any Antitrust Laws (as
hereinafter defined) with respect to any such filing or any such
transaction. Each party shall furnish to each other all information
required for any application or other filing to be made pursuant to any
Applicable Law in connection with the Merger and the other transactions
contemplated by this Agreement. Each party shall promptly inform the other
party of any communication with, and any proposed understanding,
undertaking, or agreement with, any Governmental Authority regarding any
such filings or any such transaction. Neither party shall independently
participate in any meeting or discussion with any Governmental Authority in
respect of any such filings, investigation, or other inquiry without giving
the other party prior notice of the meeting or discussion and, to the
extent permitted by such Governmental Authority, the opportunity to attend
and/or participate. The parties hereto will consult and cooperate with one
another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by
or on behalf of any party hereto in connection with proceedings under or
relating to the HSR Act or other Antitrust Laws.

(ii) Subject to the limitation set forth in Section 5.1(a)(iv), each of
USF and Culligan shall use reasonable best efforts to resolve such
objections, if any, as may be asserted by any Governmental Authority with
respect to the transactions contemplated by this Agreement under the HSR
Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal
Trade Commission Act, as amended, and any other federal, state or foreign
statutes, rules, regulations, orders, decrees, administrative or judicial
doctrines or other laws that are designed to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). In connection therewith, if any
administrative or judicial action or proceeding is instituted (or
threatened to be instituted) challenging any

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transaction contemplated by this Agreement as violative of any Antitrust
Law, each of USF and Culligan shall cooperate and use reasonable best
efforts vigorously to contest and resist any such action or proceeding,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order whether temporary, preliminary or permanent (each an
"Order"), that is in effect and that prohibits, prevents, or restricts
consummation of the Merger or any other transactions contemplated by this
Agreement, including, without limitation, by vigorously pursuing all
available avenues of administrative and judicial appeal and all available
legislative action, unless by mutual agreement USF and Culligan decide that
litigation is not in their respective best interests. Notwithstanding the
foregoing or any other provision of this Agreement, nothing in this Section
5.1(a) shall limit a party's right to terminate this Agreement pursuant to
Section 7.1, so long as such party has up to then complied with its
obligations under this Section 5.1(a). Each of USF and Culligan shall use
reasonable best efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or other Antitrust Laws
with respect to such transactions as promptly as possible after the
execution of this Agreement and shall refrain from taking any action that
would have the effect of making the expiration of such notice periods less
likely or delay in the Merger in any material respect.

(iii) Subject to the limitation set forth in Section 5.1(a)(iv), each of
the parties agrees to use reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (A) the obtaining of all other necessary actions or
nonactions, waivers, consents, licenses, permits, authorizations, orders
and approvals from Governmental Authorities and the making of all other
necessary registrations and filings, (B) the obtaining of all consents,
approvals or waivers from third parties related to or required in
connection with the Merger that are necessary to consummate the Merger and
the transactions contemplated by this Agreement or required to prevent a
Material Adverse Effect on USF or Culligan from occurring prior to or after
the Effective Time, (C) the preparation of the Joint Proxy Statement, the
Prospectus and the Registration Statement, (D) the taking of all action
necessary to ensure that it is a "poolable entity" eligible to participate
in a transaction to be accounted for as a pooling of interests for
financial reporting purposes and to ensure that the Merger constitutes a
tax-free reorganization within the meaning of Section 368(a)(1)(A), and (E)
the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.

(iv) Unless USF and Culligan otherwise agree in writing, if required to
avoid an HSR Authority instituting an Action challenging the transactions
under this Agreement under the Antitrust Laws and seeking to enjoin or
prohibit the consummation of any of the transactions contemplated by this
Agreement, USF shall and, at the direction of USF, Culligan shall, hold
separate (including by trust or otherwise) or divest any of their
respective businesses or assets, or take or agree to take any action or
agree to any limitation required to avoid an HSR Authority instituting an
Action challenging the transactions under this Agreement under the
Antitrust Laws and seeking to enjoin or prohibit the consummation of any of
the transactions contemplated hereby unless such action would require USF
or the Surviving Corporation to agree to the sale or divestiture of
businesses, properties, product lines or assets having aggregate gross
annual sales in excess of $150 million.

(b) Pooling-of-Interests. Each of the parties agrees that it shall not, and
shall not permit any of its subsidiaries to, take any actions which would, or
would be reasonably likely to, prevent USF from accounting, and shall use its
best efforts (including, without limitation, providing appropriate
representation letters to USF's accountants) to allow USF to account, for the
Merger in accordance with the pooling-of-interests method of accounting under
the requirements of Opinion No. 16 "Business Combinations" of the Accounting
Principles Board of the American Institute of Certified Public Accountants, as
amended by applicable pronouncements by the Financial Accounting Standards
Board, and all related published rules, regulations and policies of the
Commission ("APB No. 16"), and to obtain a letter, in form and substance
reasonably satisfactory to USF and Culligan, from KPMG Peat Marwick LLP dated
the date of the Effective Time stating that they concur with

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management's conclusion that the Merger will qualify as a transaction to be
accounted for by USF in accordance with the pooling of interests method of
accounting under the requirements of APB No. 16.

(c) Tax-Free Treatment. Each of the parties shall use its best efforts to
cause the Merger to constitute a tax-free "reorganization" under Section
368(a) of the Code and to cooperate with one another in obtaining an opinion
from Wachtell, Lipton, Rosen & Katz ("Wachtell, Lipton"), counsel to Culligan,
as provided for in Section 6.2(d). In connection therewith, each of USF and
Culligan shall deliver to Wachtell, Lipton representation letters and Culligan
shall use all reasonable efforts to obtain representation letters from
appropriate shareholders of Culligan and shall deliver any such letters
obtained to Wachtell, Lipton, in each case in form and substance reasonably
satisfactory to Wachtell, Lipton.

(d) Public Announcements. The initial press release concerning the Merger
and the transactions contemplated hereby shall be a joint press release.
Unless otherwise required by Applicable Laws or requirements of the NYSE (and
in that event only if time does not permit), at all times prior to the earlier
of the Effective Time or termination of this Agreement pursuant to Section
7.1, USF and Culligan shall consult with each other before issuing any press
release with respect to the Merger and shall not issue any such press release
prior to such consultation.

(e) Other Matters. Each of USF and Culligan agree that from the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, it will not, and it will cause its subsidiaries and affiliates not
to, (i) actively pursue any pending or threatened Action against the other
party relating to events that occurred prior to the date of this Agreement, or
(ii) take any other action with respect to any such matter except as may be
necessary to maintain the status quo. In connection with the maintenance of
the status quo, each of USF and Culligan will seek to postpone the filing of
any responsive pleadings in any Action, and will not file any new Action
unless such filing is necessary to preserve rights that may otherwise be
forfeited as a result of such delay.

5.2. Covenants of USF.

(a) USF Stockholders Meeting. USF shall take all action in accordance with
the federal securities laws, the DGCL and the USF Certificate and USF Bylaws,
as amended and restated, necessary to convene a special meeting of USF
Stockholders (the "USF Stockholders Meeting") to be held on the date
determined by USF, and to obtain the approval of USF Stockholders with respect
to the issuance of shares of USF Common Stock in the Merger, including
recommending approval of the issuance of shares of USF Common Stock in the
Merger to the USF Stockholders as set forth in Section 3.12 of this Agreement;
provided, however, that if the Board of Directors of USF determines in good
faith by majority vote, after consultation with and receipt of advice from
outside legal counsel, that failure to do so would create a reasonable
possibility of a breach of the fiduciary duties of the USF Board of Directors
under Applicable Law, the Board of Directors of USF may withdraw, change or
modify such recommendation in a manner adverse to Culligan.

(b) Preparation of Registration Statement. USF shall, as soon as is
reasonably practicable, prepare the Joint Proxy Statement for filing with the
Commission on a confidential basis. Consistent with the timing for the USF
Stockholders Meeting and the Culligan Stockholders Meeting, USF shall prepare
and file the Registration Statement with the Commission as soon as is
reasonably practicable following clearance of the Joint Proxy Statement by the
Commission and reasonable approval of the Joint Proxy Statement by Culligan
and shall use all reasonable efforts to have the Registration Statement
declared effective by the Commission as promptly as practicable and to
maintain the effectiveness of the Registration Statement through the Effective
Time. If, at any time prior to the Effective Time, USF shall obtain knowledge
of any information pertaining to USF contained in or omitted from the
Registration Statement that would require an amendment or supplement to the
Registration Statement or the Joint Proxy Statement, USF will so advise
Culligan in writing and will promptly take such action as shall be required to
amend or supplement the Registration Statement and/or the Joint Proxy
Statement. USF shall promptly furnish to Culligan all information concerning
it as may be required for the Joint Proxy Statement and any supplements or
amendments thereto. USF shall cooperate with Culligan in the preparation of

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the Joint Proxy Statement in a timely fashion and shall use all reasonable
efforts to assist Culligan in clearing the Joint Proxy Statement with the
Staff of the Commission, such Joint Proxy Statement to include the
recommendation of the USF Board of Directors referred to in Section 3.12 above
(to the extent not previously withdrawn in compliance with Section 5.2(a)) and
the written opinions of Donaldson, Lufkin & Jenrette Securities Corporation
and Salomon Smith Barney. USF also shall take such other reasonable actions
(other than qualifying to do business in any jurisdiction in which it is not
so qualified) required to be taken under any applicable state securities laws
in connection with the issuance of Shares of USF Common Stock in the Merger.

(c) Conduct of USF's Operations. During the period from the date of this
Agreement to the Effective Time, USF shall use its reasonable efforts to
maintain and preserve its business organization and to retain the services of
its officers and key employees and maintain relationships with customers,
suppliers and other third parties to the end that their goodwill and ongoing
business shall not be impaired in any material respect. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time, USF shall not, except as otherwise expressly
contemplated by this Agreement and the transactions contemplated hereby or as
set forth in Section 5.2(c) to the USF Disclosure Schedule, without the prior
written consent of Culligan:

(i) change any method or principle of accounting in a manner that is
inconsistent with past practice except to the extent required by generally
accepted accounting principles as advised by USF's regular independent
accountants;

(ii) (A) grant any person any right or option to acquire any shares of
its capital stock, provided, however, that USF may grant options with a
fair market value exercise price to purchase up to 750,000 shares of USF
Common Stock (which number shall be 1,500,000 shares of USF Common Stock if
the Effective Time is after July 1, 1998) to employees of USF in the
ordinary course consistent with past practice or in connection with
acquisitions, mergers, consolidations or similar transactions permitted
pursuant to clause (iii) below; (B) issue, deliver or sell or agree to
issue, deliver or sell any additional shares of its capital stock or any
securities or obligations convertible into or exchangeable or exercisable
for any shares of its capital stock or securities (except (I) pursuant to
the exercise of options for USF Common Stock which are outstanding as of
the date hereof or which are granted by USF prior to the Effective Time in
compliance with the terms of this Agreement, or (II) in connection with
acquisitions, mergers, consolidations and similar transactions permitted
pursuant to clause (iii) below provided that the fair market value of any
capital stock or securities issued (based on the closing price on the NYSE
Composite Tape on the date the agreement for any such transaction is
entered into) does not exceed $350 million in the aggregate) or (C) enter
into any agreement, understanding or arrangement with respect to the sale,
voting, registration or repurchase of its capital stock;

(iii) merge or consolidate with any other person or acquire any assets or
businesses other than expenditures for current assets in the ordinary
course of business and expenditures for fixed or capital assets in the
ordinary course of business; provided, however, USF shall not be prohibited
from acquiring any assets or businesses or effecting any merger,
consolidation or similar transaction or incurring or assuming indebtedness
in connection with acquisitions of assets or businesses or mergers,
consolidations or similar transactions so long as such transactions are (A)
disclosed in Section 5.2(c) to the USF Disclosure Schedule, or (B)
Distribution Acquisitions (except to the extent prohibited by Section
7.7(c) hereof) or other acquisitions provided that the aggregate value of
consideration paid in connection with all of such acquisitions (including
Distribution Acquisitions) does not exceed $500 million;

(iv) take any action that could likely result in the representations and
warranties set forth in Article III becoming false or inaccurate in any
material respect;

(v) make any changes in the USF Certificate that would adversely affect
the rights and preferences of the holders of Shares of USF Common Stock or
make any changes in the Amended and Restated Certificate of Incorporation
of Subcorp;

(vi) permit or cause any subsidiary to do any of the foregoing or agree
or commit to do any of the foregoing; or

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(vii) agree in writing or otherwise to take any of the foregoing actions.

The term "Distribution Acquisition" means the acquisition (by purchase,
merger, consolidation or otherwise) of assets or stock of an entity whose
primary business is the sale and/or service to residential, commercial and
consumer end users of water treatment, water purification, bottled water or
related water products.

(d) Indemnification; Directors' and Officers' Insurance.

(i) From and after the Effective Time, USF shall indemnify, defend and
hold harmless the present and former officers and directors of Culligan in
respect of acts or omissions occurring prior to the Effective Time to the
fullest extent permitted by Applicable Law, including with respect to
taking all actions necessary to advance expenses to the extent permitted by
Applicable Law.

(ii) USF shall use all reasonable efforts to cause the Surviving
Corporation or USF to obtain and maintain in effect for a period of six
years after the Effective Time policies of directors' and officers'
liability insurance at no cost to the beneficiaries thereof with respect to
acts or omissions occurring prior to the Effective Time with substantially
the same coverage and containing substantially similar terms and conditions
as existing policies; provided, however, that neither the Surviving
Corporation nor USF shall be required to pay an annual premium for such
insurance coverage in excess of 250% of Culligan's current annual premium,
but in such case shall purchase as much coverage as possible for such
amount.

(iii) USF covenants and agrees from and after the Effective Time to (A)
provide to the directors of Culligan who become directors of USF directors'
and officers' liability insurance on the same basis and to the same extent
as that, if any, provided to other directors of USF, and (B) enter into
indemnification agreements with any directors of Culligan who become
directors of USF on terms entered into with other directors of USF
generally.

(e) Merger Sub. Prior to the Effective Time, Subcorp shall not conduct any
business or make any investments other than as specifically contemplated by
this Agreement and will not have any assets (other than a de minimis amount of
cash paid to Subcorp for the issuance of its stock to USF) or any material
liabilities.

(f) NYSE Listing. USF shall use its reasonable best efforts to cause the
Shares of USF Common Stock issuable pursuant to the Merger (including, without
limitation, the Shares of USF Common Stock issuable upon the exercise of the
USF Exchange Options) to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Effective Time.

(g) Access. From the date hereof until the earlier to occur of the Effective
Time or the termination of this Agreement, USF shall permit representatives of
Culligan to have appropriate access at all reasonable times to USF's premises,
properties, books, records, contracts and documents. Information obtained by
Culligan pursuant to this Section 5.2(g) shall be subject to the provisions of
the confidentiality agreement between USF and Culligan dated February 4, 1998
(the "Confidentiality Agreement"), which agreement remains in full force and
effect. No investigation conducted pursuant to this Section 5.2(g) shall
affect or be deemed to modify any representation or warranty made in this
Agreement.

(h) Board of Directors of USF. The Board of Directors of USF shall take all
action necessary immediately following the Effective Time to elect one person
selected by the Culligan Board of Directors prior to the Effective Time
(subject to the consent of the USF Board of Directors which shall not be
unreasonably withheld) as a director of USF effective as of the Effective
Time, for a term expiring at USF's third annual meeting of stockholders
following the Effective Time.

(i) Affiliates of USF. USF shall use all reasonable efforts to cause each
such person who may be at the Effective Time or was on the date hereof an
"affiliate" of USF for purposes of applicable accounting releases of the
Commission with respect to pooling of interests accounting treatment, to
execute and deliver to Culligan no less than 30 days prior to the date of the
USF Stockholders Meeting, the written undertakings in the form attached hereto
as Exhibit A-2 (the "USF Affiliate Letter").

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(j) Notification of Certain Matters. USF shall give prompt notice to
Culligan of (i) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would cause any USF representation or warranty
contained in this Agreement to be untrue or inaccurate at or prior to the
Effective Time in any material respect and (ii) any material failure of USF to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.2(j) shall not limit or otherwise affect the
remedies available hereunder to Culligan.

(k) Employees and Employee Benefits. (i) For at least one year from and
after the Effective Time, USF and its affiliates shall provide Culligan
Employees (as defined below) with (i) pension and savings benefits, (ii)
health and medical benefits, (iii) severance benefits, and (iv) other employee
benefits that are, in the case of each such category of benefits, no less
favorable in the aggregate than the comparable benefits provided to comparable
employees of USF and its affiliates immediately before the Effective Time.
From and after the Effective Time, USF and its affiliates shall honor, in
accordance with their terms and except to the extent amended in accordance
with such terms, all Plans and all contracts, plans, and programs providing
for compensation or benefits for Culligan Employees.

(ii) From and after the Effective Time, USF shall treat all service by
Culligan Employees (as defined below) with Culligan and its affiliates and
their respective predecessors prior to the Effective Time for all purposes as
service with USF (except to the extent such treatment would result in
duplicative accrual on or after the Closing Date of benefits for the same
period of service), and, with respect to any medical or dental benefit plan in
which Culligan Employees participate after the Effective Time, USF shall waive
or cause to be waived any pre-existing condition exclusions and actively-at-
work requirements (provided, however, that no such waiver shall apply to a
pre-existing condition of any Culligan Employee who was, as of the Effective
Time, excluded from participation in a Culligan Benefit Plan by virtue of such
pre-existing condition), and shall provide that any covered expenses incurred
on or before the Effective Time by a Culligan Employee or a Culligan
Employee's covered dependent shall be taken into account for purposes of
satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions after the Effective Time to the same extent as such expenses are
taken into account for the benefit of similarly situated employees of USF and
subsidiaries of USF.

(iii) Nothing in this Section 5.2(k) shall be construed to impose upon USF
and its affiliates any obligation to continue the employment of any Culligan
Employee following the effective time. For purposes of this Section 5.2(k),
"Culligan Employees" shall mean persons who are, as of the Effective Time,
employees of Culligan or any of its subsidiaries.

(l) Press Release. USF shall use its best efforts to publish, as soon as
possible after the Effective Time, financial results which are sufficient in
accordance with Accounting Series Release No. 135 to permit the disposition by
all Culligan Stockholders of the shares of USF Common Stock received in the
Merger consistent with the requirements for treating the Merger as a pooling
of interests for financial reporting purposes; provided, however, that such
financial results shall be published no later than the fifteenth day after the
end of the first calendar month that is at least 30 days after the Effective
Time.

5.3. Covenants of Culligan.

(a) Culligan Stockholders Meeting. Culligan shall take all action in
accordance with the federal securities laws, the DGCL and the Culligan
Certificate and the Culligan Bylaws necessary to convene a special meeting of
Culligan Stockholders (the "Culligan Stockholders Meeting") to be held on the
date determined by Culligan, to consider and vote upon approval of the Merger,
this Agreement and the transactions contemplated hereby, including the
Culligan Board Recommendation to the extent not previously withdrawn in
compliance with Section 5.3(d).

(b) Information for the Registration Statement and Preparation of Joint
Proxy Statement. Culligan shall promptly furnish USF with all information
concerning it as may be required for inclusion in the Registration Statement.
Culligan shall cooperate with USF in the preparation of the Registration
Statement in a timely fashion

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and shall use all reasonable efforts to assist USF in having the Registration
Statement declared effective by the Commission as promptly as practicable
consistent with the timing for the Culligan Stockholders Meeting as determined
by Culligan and the USF Stockholders Meeting. If, at any time prior to the
Effective Time, Culligan obtains knowledge of any information pertaining to
Culligan that would require any amendment or supplement to the Registration
Statement or the Joint Proxy Statement, Culligan shall so advise USF and shall
promptly furnish USF with all information as shall be required for such
amendment or supplement and shall promptly amend or supplement the
Registration Statement and/or Joint Proxy Statement. Culligan shall use all
reasonable efforts to cooperate with USF in the preparation and filing of the
Joint Proxy Statement with the Commission on a confidential basis. Consistent
with the timing for the USF Stockholders Meeting and the Culligan Stockholders
Meeting as determined by Culligan, Culligan shall use all reasonable efforts
to mail at the earliest practicable date to Culligan Stockholders the Joint
Proxy Statement, which shall include all information required under Applicable
Law to be furnished to Culligan Stockholders in connection with the Merger and
the transactions contemplated thereby and shall include the Culligan Board
Recommendation to the extent not previously withdrawn in compliance with
Section 5.3(d) and the written opinions of Goldman, Sachs & Co. and Bear,
Stearns & Co. Inc. described in Section 4.20.

(c) Conduct of Culligan's Operations. Culligan shall conduct its operations
in the ordinary course except as expressly contemplated by this Agreement and
the transactions contemplated hereby and shall use all reasonable efforts to
maintain and preserve its business organization and its material rights and
franchises and to retain the services of its officers and key employees and
maintain relationships with customers, suppliers, lessees, licensees and other
third parties, and to maintain all of its operating assets in their current
condition (normal wear and tear excepted), to the end that its goodwill and
ongoing business shall not be impaired in any material respect. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, Culligan shall not, except as otherwise
expressly contemplated by this Agreement and the transactions contemplated
hereby or as set forth in Section 5.3(c) to the Culligan Disclosure Schedule,
without the prior written consent of USF:

(i) do or effect any of the following actions with respect to its
securities: (A) adjust, split, combine or reclassify its capital stock, (B)
make, declare or pay any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for
any shares of its capital stock, (C) grant any person any right or option
to acquire any shares of its capital stock, provided, however, that
Culligan may grant options with a fair market value exercise price to
purchase up to 250,000 shares of Culligan Common Stock (which number shall
be 500,000 shares of Culligan Common Stock if the Effective Time is after
July 1, 1998) to employees of Culligan in the ordinary course consistent
with prior practice or in connection with acquisitions, mergers,
consolidations and similar transactions permitted pursuant to clause (v)
below, (D) issue, deliver or sell or agree to issue, deliver or sell any
additional shares of its capital stock or any securities or obligations
convertible into or exchangeable or exercisable for any shares of its
capital stock or such securities (except (I) pursuant to the exercise of
Culligan Options which are outstanding as of the date hereof or which are
granted by Culligan prior to the Effective Time in compliance with the
terms of this Agreement, or (II) in connection with acquisitions, mergers,
consolidations and similar transactions permitted pursuant to clause (v)
below provided that the fair market value of any capital stock or
securities issued (based on the closing price on the NYSE Composite Tape on
the date the agreement for any such transaction is entered into) does not
exceed $119 million in the aggregate), or (E) enter into any agreement,
understanding or arrangement with respect to the sale, voting, registration
or repurchase of its capital stock;

(ii) other than in connection with financing or refinancing of
indebtedness permitted pursuant to clause (vi) below, directly or
indirectly sell, transfer, lease, pledge, mortgage, encumber or otherwise
dispose of any of its property or assets other than in the ordinary course
of business and other than the sale of some or all of the Protean plc
businesses and up to an additional $25 million of other assets;

(iii) make or propose any changes in the Culligan Certificate or the
Culligan Bylaws;

(iv) merge or consolidate with any other person (other than as permitted,
in each case, by Section 5.3(d) or in connection with a transaction
permitted pursuant to clause (v) below);

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<PAGE>

(v) make any acquisition of any assets or businesses other than
expenditures for current assets in the ordinary course of business and
expenditures for fixed or capital assets in the ordinary course of
business; provided, however, Culligan shall not be prohibited from
acquiring any assets or businesses or effecting any merger, consolidation
or similar transaction or incurring or assuming indebtedness in connection
with acquisitions of assets or businesses or mergers, consolidations or
similar transactions so long as such transactions are (A) disclosed in
Section 5.3(c) to the Culligan Disclosure Schedule, or (B) Distribution
Acquisitions (it being understood that such Distribution Acquisitions shall
not be deemed to violate Culligan's obligations pursuant to Section
5.1(a)), or other acquisitions provided that the aggregate value of
consideration paid in connection with all of such acquisitions (including
Distribution Acquisitions) does not exceed $170 million;

(vi) except pursuant to existing credit arrangements or as permitted
pursuant to clause (v), incur, create, assume or otherwise become liable
for any indebtedness for borrowed money or assume, guarantee, endorse or
otherwise as an accommodation become responsible or liable for the
obligations of any other individual, corporation or other entity, other
than in the ordinary course of business, consistent with past practice or
in connection with a refinancing of existing indebtedness (which
refinancing shall not increase the aggregate amount of indebtedness
permitted to be outstanding thereunder by more than $200 million);

(vii) enter into or modify any employment, severance, termination or
similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any officer, director,
consultant or employee other than in the ordinary course of business
consistent with past practice, or otherwise increase the compensation or
benefits provided to any officer, director, consultant or employee except
as may be required by Applicable Law or in the ordinary course of business
consistent with past practice; provided, however, that Culligan may
implement a stay-bonus or similar program providing for payments in an
aggregate amount, not to exceed $5 million for employees of Culligan and
will consult with, but need not have the approval of, USF prior to
implementing any such plans;

(viii) enter into, adopt or amend any employee benefit or similar plan
except as may be required by Applicable Law;

(ix) change any method or principle of accounting in a manner that is
inconsistent with past practice except to the extent required by generally
accepted accounting principles as advised by Culligan's regular independent
accountants;

(x) take any action that will likely result in the representations and
warranties set forth in Article IV becoming false or inaccurate in any
material respect;

(xi) enter into or carry out any other transaction other than in the
ordinary and usual course of business or other than as permitted pursuant
to the other clauses in this Section 5.3(c);

(xii) permit or cause any subsidiary to do any of the foregoing or agree
or commit to do any of the foregoing; or

(xiii) agree in writing or otherwise to take any of the foregoing
actions.

(d) No Solicitation. Culligan agrees that, during the term of this
Agreement, it shall not, and shall not authorize or permit any of its
subsidiaries or any of its or its subsidiaries' directors, officers,
employees, agents or representatives, directly or indirectly, to solicit,
initiate, encourage or facilitate, or furnish or disclose non-public
information in furtherance of, any inquiries or the making of any proposal
with respect to any recapitalization, merger, consolidation or other business
combination involving Culligan, or acquisition of any capital stock from
Culligan (other than upon exercise of Culligan Options which are outstanding
as of the date hereof and other than to the extent specifically permitted by
Section 5.3(c)) or 15% or more of the assets of Culligan and its subsidiaries,
taken as a whole, in a single transaction or a series of related transactions,
or any acquisition by Culligan of any material assets or capital stock of any
other person (other than to the extent specifically permitted by Section
5.3(c)), or any combination of the foregoing (a "Competing Transaction"), or
negotiate, explore or otherwise engage in discussions with any person (other
than USF, Subcorp or their respective directors, officers, employees, agents
and representatives) with respect to any Competing Transaction

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or enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement; provided that, at any time prior to the
approval of the Merger by the Culligan Stockholders, Culligan may furnish
information to, and negotiate or otherwise engage in discussions with, any
party who delivers a proposal for a Competing Transaction if and so long as
the Board of Directors of Culligan determines in good faith by a majority
vote, after consultation with its outside legal counsel, that failing to take
such action would create a reasonable possibility of a breach of the fiduciary
duties of the Board of Directors of Culligan under Applicable Law. Culligan
will immediately cease all existing activities, discussions and negotiations
with any parties conducted heretofore with respect to any proposal for a
Competing Transaction. Notwithstanding any other provision of this Section
5.3(d), in the event that prior to the approval of the Merger by the Culligan
Stockholders the Board of Directors of Culligan determines in good faith by a
majority vote, after consultation with and receipt of advice from outside
legal counsel, that failure to do so would create a reasonable possibility of
a breach of the fiduciary duties of the Culligan Board of Directors under
Applicable Law, the Board of Directors of Culligan may withdraw, modify or
change, in a manner adverse to USF, the Culligan Board Recommendation and, to
the extent applicable, comply with Rule 14e-2 promulgated under the Exchange
Act with respect to a Competing Transaction by disclosing such withdrawn,
modified or changed Culligan Board Recommendation in connection with a tender
or exchange offer for Culligan securities. Culligan shall immediately advise
USF, in writing, if the Board of Directors of Culligan shall make any
determination as to any Competing Transaction as contemplated by the proviso
to the first sentence of this Section 5.3(d).

(e) Termination Right. If prior to the approval of the Merger by the
Culligan Stockholders the Board of Directors of Culligan shall determine in
good faith, after consultation with its financial and legal advisors, with
respect to any written proposal from a third party for a Competing Transaction
received after the date hereof that failure to enter into such Competing
Transaction would create a reasonable possibility of a breach of the fiduciary
duties of the Board of Directors of Culligan under Applicable Law and that
such Competing Transaction is more favorable to the Culligan Stockholders than
the transactions contemplated by this Agreement (including any adjustment to
the terms and conditions of such transaction proposed in writing by USF in
response to such Competing Transaction), Culligan may terminate this Agreement
and enter into an acquisition agreement or other similar definitive agreement
(each, an "Acquisition Agreement") with respect to such Competing Transaction.
Prior to terminating this Agreement pursuant to this Section 5.3(e), Culligan
shall endeavor to provide USF with a reasonable opportunity to respond to any
Competing Transaction which Culligan may wish to accept, including in any case
advising USF of the material terms of any Competing Transaction.

(f) Affiliates of Culligan. Culligan shall use all reasonable efforts to
cause each such person who may be at the Effective Time or was on the date
hereof an "affiliate" of Culligan for purposes of Rule 145 under the
Securities Act or applicable accounting releases of the Commission with
respect to pooling of interests accounting treatment, to execute and deliver
to USF no less than 30 days prior to the date of the Culligan Stockholders
Meeting, the written undertakings in the form attached hereto as Exhibit A-1
(the "Culligan Affiliate Letter"). No later than 45 days prior to the date of
the Culligan Stockholders Meeting, Culligan, after consultation with its
outside counsel, shall provide USF with a letter (reasonably satisfactory to
outside counsel to USF) specifying all of the persons or entities who, in
Culligan's opinion, may be deemed to be "affiliates" of Culligan under the
preceding sentence.

(g) Access. From the date hereof until the earlier to occur of the Effective
Time or the termination of this Agreement, Culligan shall permit
representatives of USF to have appropriate access at all reasonable times to
Culligan's premises, properties, books, records, contracts and documents.
Information obtained by USF pursuant to this Section 5.3(g) shall be subject
to the provisions of the Confidentiality Agreement, which agreement remains in
full force and effect. No investigation conducted pursuant to this Section
5.3(g) shall affect or be deemed to modify any representation or warranty made
in this Agreement.

(h) Notification of Certain Matters. Culligan shall give prompt notice to
USF of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any Culligan representation or warranty
contained in this Agreement to be untrue or inaccurate at or prior to the
Effective Time in any material

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<PAGE>

respect and (ii) any material failure of Culligan to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.3(h) shall not limit or otherwise affect the remedies available
hereunder to USF.

ARTICLE VI.

Conditions

6.1. Conditions to the Obligations of Each Party. The obligations of
Culligan, USF and Subcorp to consummate the Merger shall be subject to the
satisfaction of the following conditions:

(a) (i) This Agreement and the Merger shall have been approved and
adopted by the Culligan Stockholders in the manner required by any
Applicable Law, and (ii) the issuance of the Shares of USF Common Stock to
be issued in the Merger shall have been approved by the USF Stockholders in
the manner required by any Applicable Law and the applicable rules of the
NYSE.

(b) Any applicable waiting periods under the HSR Act relating to the
Merger and the transactions contemplated by this Agreement shall have
expired or been terminated, and any requirements of foreign jurisdictions
applicable to the consummation of the Merger shall have been satisfied
unless the failure of such requirements of foreign jurisdictions to be
satisfied does not constitute a Material Adverse Effect in respect of
either Culligan or USF.

(d) There shall not be pending any Action by any federal Governmental
Authority challenging or seeking to restrain or prohibit the consummation
of the Merger.

(e) The Commission shall have declared the USF Registration Statement
effective under the Securities Act, and no stop order or similar
restraining order suspending the effectiveness of the USF Registration
Statement shall be in effect and no proceedings for such purpose shall be
pending before or threatened by the Commission.

(f) The Shares of USF Common Stock to be issued in the Merger (including,
without limitation, the shares of USF Common Stock issuable upon the
exercise of the USF Exchange Options) shall have been approved for listing
on the NYSE, subject to official notice of issuance.

(g) USF shall have received a letter, in form and substance reasonably
satisfactory to USF and Culligan, from KPMG Peat Marwick LLP dated the date
of the Effective Time stating that they concur with the conclusion of USF's
management that the Merger will qualify as a transaction to be accounted
for by USF in accordance with the pooling of interests method of accounting
under the requirements of APB No. 16.

6.2. Conditions to Obligations of Culligan. The obligations of Culligan to
consummate the Merger and the transactions contemplated hereby shall be
subject to the fulfillment of the following conditions unless waived by
Culligan:

(a) The representations and warranties of USF and Subcorp set forth in
Article III shall be true and correct in all material respects on the date
hereof and on and as of the Closing Date as though made on and as of the
Closing Date (except for such representations and warranties made as of a
specified date, the accuracy of which will be determined as of the
specified date).

(b) Each of USF and Subcorp shall have performed in all material respects
each obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by it
hereunder at or prior to the Effective Time.

(c) Each of USF and Subcorp shall have furnished Culligan with a
certificate dated the Closing Date signed on behalf of it by the Chairman,
President or any Vice President to the effect that the conditions set forth
in Sections 6.2(a) and (b) have been satisfied.

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<PAGE>

(d) Culligan shall have received the opinion of Wachtell, Lipton, dated
on or prior to the effective date of the Registration Statement, to the
effect that (i) the Merger will constitute a reorganization under section
368(a) of the Code, (ii) Culligan, USF and Subcorp will each be a party to
that reorganization, and (iii) no gain or loss will be recognized by the
shareholders of Culligan upon the receipt of Shares of USF Common Stock in
exchange for shares of Culligan Common Stock pursuant to the Merger except
with respect to cash received in lieu of fractional share interests in
Shares of USF Common Stock.

6.3. Conditions to Obligations of USF and Subcorp. The obligations of USF
and Subcorp to consummate the Merger and the other transactions contemplated
hereby shall be subject to the fulfillment of the following conditions unless
waived by USF:

(a) The representations and warranties of Culligan set forth in Article
IV shall be true and correct in all material respects on the date hereof
and on and as of the Closing Date as though made on and as of the Closing
Date (except for such representations and warranties made as of a specified
date, the accuracy of which will be determined as of the specified date).

(b) Culligan shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects
with each covenant to be performed and complied with by it hereunder at or
prior to the Effective Time.

(c) Culligan shall have furnished USF with a certificate dated the
Closing Date signed on its behalf by its Chairman, President or any Vice
President to the effect that the conditions set forth in Sections 6.3(a)
and (b) have been satisfied.

ARTICLE VII.

Termination and Amendment

7.1. Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by Culligan Stockholders and USF Stockholders):

(a) by mutual written consent of USF and Culligan;

(b) by either USF or Culligan if any judgment, injunction, order or
decree of a court or other Governmental Authority of competent jurisdiction
enjoining USF or Culligan from consummating the Merger shall have been
entered and such judgment, injunction, order or decree shall have become
final and nonappealable;

(c) by either USF or Culligan if the Merger shall not have been
consummated before November 15, 1998 (which date shall be December 31, 1998
if the HSR Authorities have issued a "second request" under the HSR Act),
provided, however, that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party whose failure or whose
affiliate's failure to perform any material covenant or obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date;

(d) by USF if the Board of Directors of Culligan shall withdraw, or shall
modify or change the Culligan Board Recommendation in a manner adverse to
USF;

(e) by USF or Culligan if at the Culligan Stockholders Meeting (including
any adjournment or postponement thereof) the requisite vote of the Culligan
Stockholders to approve the Merger and the transactions contemplated hereby
shall not have been obtained;

(f) by USF or Culligan if at the USF Stockholders Meeting (including any
adjournment or postponement thereof) the requisite vote of the USF
Stockholders to approve the issuance of shares of USF Common Stock in the
Merger shall not have been obtained;

(g) by Culligan, pursuant to Section 5.3(e);

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(h) by Culligan if the Average Share Price, or if the average of the
closing prices of the shares of USF Common Stock as reported on the NYSE
Composite Tape for any period of 10 consecutive trading days which ends
after the last trading day used in calculating the Average Share Price, is
less than $26.25;

(i) by USF or Culligan if there shall have been a material breach by the
other of any of its representations, warranties, covenants or agreements
contained in this Agreement, which breach would result in the failure to
satisfy one or more of the conditions set forth in Section 6.2(a) or 6.2(b)
(in the case of a breach by USF) or Section 6.3(a) or 6.3(b) (in the case
of a breach by Culligan) or would result in a material adverse effect on
the ability of USF and/or Culligan to consummate the Merger, and such
breach shall not have been cured within 30 days after notice thereof shall
have been received by the party alleged to be in breach.

7.2. Effect of Termination.

(a) In the event of the termination of this Agreement pursuant to Section
7.1, this Agreement, except for the provisions of the second sentence of each
of Section 5.2(g) and Section 5.3(g) and the provisions of Sections 7.2, 7.7
and 8.11, shall become void and have no effect, without any liability on the
part of any party or its directors, officers or stockholders. Notwithstanding
the foregoing, nothing in this Section 7.2 shall relieve any party to this
Agreement of liability for a material breach of any provision of this
Agreement and provided, further, however, that if it shall be judicially
determined that termination of this Agreement was caused by an intentional
breach of this Agreement, then, in addition to other remedies at law or equity
for breach of this Agreement, the party so found to have intentionally
breached this Agreement shall indemnify and hold harmless the other parties
for their respective out-of-pocket costs, fees and expenses of their counsel,
accountants, financial advisors and other experts and advisors as well as fees
and expenses incident to negotiation, preparation and execution of this
Agreement and related documentation, preparation of filings, and shareholders'
meetings and consents, and any litigation by third parties resulting from the
execution of this Agreement ("Costs").

(b) Culligan agrees that, if:

(i) Culligan terminates this Agreement pursuant to Section 7.1(g); or

(ii) (A) USF or Culligan terminates this Agreement pursuant to Section
7.1(e) or USF terminates this Agreement pursuant to Section 7.1(d), (B) at
the time of such termination there is a publicly announced or disclosed
Competing Transaction with respect to Culligan involving a third party or,
in the case of a termination pursuant to Section 7.1(d), at the time of
such termination there is a Competing Transaction with respect to Culligan
involving a third party and USF is aware of such Competing Transaction even
if not publicly announced or disclosed, and (C) within six months after
such termination, Culligan shall enter into an Acquisition Agreement for a
Business Combination (as defined below) or consummates a Business
Combination;

then, (X) in the case of a termination by Culligan as described in clause (i)
above, concurrently with such termination, or (Y) in the case of a termination
by Culligan or USF as described in clause (ii) above upon the earlier of the
consummation of a Business Combination or execution of a definitive agreement
with respect thereto, Culligan will pay to USF in cash by wire transfer in
immediately available funds to an account designated by USF (i) in
reimbursement for USF's expenses an amount in cash equal to the aggregate
amount of USF's Costs incurred in connection with pursuing the transactions
contemplated by this Agreement, including, without limitation, legal,
accounting and investment banking fees, up to but not in excess of an amount
equal to $5 million in the aggregate and (ii) a termination fee in an amount
equal to $42 million (such amounts collectively, the "Termination Fee"). In
the event that USF or Culligan terminates this Agreement pursuant to Section
7.1(e) or USF terminates this Agreement pursuant to Section 7.1(d) but in each
case clauses (B) and (C) of Section 7.2(b)(ii) are not satisfied, Culligan
will pay to USF in cash by wire transfer in immediately available funds to an
account designated by USF (i) in reimbursement for USF's expenses an amount in
cash equal to the aggregate amount of USF's Costs incurred in connection with
the Agreement, up to but not in excess of an amount equal to $5 million in the
aggregate, and (ii) an additional amount equal to $5 million; provided,
however, to the extent the Termination Fee becomes payable at a subsequent
date, the amount of any payments

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<PAGE>

made pursuant to this sentence shall be credited against the Termination Fee.
For the purposes of this Section 7.2, "Business Combination" means (i) a
merger, consolidation, share exchange, business combination or similar
transaction involving Culligan as a result of which the Culligan Stockholders
prior to such transaction in the aggregate cease to own at least 50% of the
voting securities of the entity surviving or resulting from such transaction
(or the ultimate parent entity thereof), (ii) a sale, lease, exchange,
transfer or other disposition of more than 35% of the assets of Culligan and
its subsidiaries, taken as a whole, in a single transaction or a series of
related transactions, or (iii) the acquisition, by a person (other than USF or
any affiliate thereof) or group (as such term is defined under Section 13(d)
of the Exchange Act and the rules and regulations thereunder) of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of more than 15%
of the Culligan Common Stock whether by tender or exchange offer or otherwise.

7.3. Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any
time before or after adoption of this Agreement by Culligan Stockholders, but
after any such approval, no amendment shall be made which by law requires
further approval or authorization by the Culligan Stockholders without such
further approval or authorization. Notwithstanding the foregoing, this
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

7.4. Special Payment.

(a) In the event that (x) the Board of Directors of USF shall withdraw or
shall modify or change in a manner adverse to Culligan its recommendation as
set forth in Section 3.12 of this Agreement, and this Agreement shall have
terminated in accordance with the terms hereof as a result thereof, or (y)
this Agreement is terminated pursuant to Section 7.1(f), then concurrently
with any such termination by USF or within 3 days after delivery by Culligan
of notice of such termination, USF shall pay to Culligan in cash by wire
transfer of immediately available funds to an account designated by Culligan,
as liquidated damages (i) in reimbursement for Culligan's expenses, an amount
of cash equal to the aggregate amount of Culligan's Costs up to but not in
excess of an amount equal to $5 million in the aggregate and (ii) the amount
of $42 million.

(b) In the event that this Agreement is terminated by Culligan pursuant to
Section 7.1(b), 7.1(c) or Section 7.1(i) hereof, in each case as a result of
the failure of USF or its affiliates to perform its covenants and obligations
under Section 5.1(a) hereof, then within 3 days after such termination, USF
shall pay to Culligan in cash by wire transfer of immediately available funds
to an account designated by Culligan, as liquidated damages, an amount of cash
equal to $47 million.

7.5. Exclusive Remedy. In the event that any Termination Fee is paid
pursuant to Section 7.2 or any liquidated damages are paid pursuant to Section
7.4, notwithstanding any other provision of this Agreement, it is understood
and agreed that such Termination Fee or liquidated damages, as the case may
be, shall be the exclusive remedy for any act or omission resulting in the
termination of this Agreement or other claim arising out of this Agreement or
the transactions contemplated hereby.

7.6. Extension; Waiver. At any time prior to the Effective Time, USF (with
respect to Culligan) and Culligan (with respect to USF and Subcorp) by action
taken or authorized by their respective Boards of Directors, may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of such party, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.

7.7. Cooling Off Period.

(a) In the event of a termination of this Agreement due to a breach by USF,
then USF shall be prohibited from entering into, commencing negotiations or
soliciting negotiations, or having or continuing discussions that

A-28
<PAGE>

constitute, or could reasonably be expected to lead to, a proposal or offer
for a merger, consolidation, business combination, sale of substantial assets,
sale of shares of capital stock or similar transaction involving current or
former franchisees of Culligan (a "Franchisee Acquisition Proposal") or engage
in negotiations or discussions concerning any Franchisee Acquisition Proposal
for a period of 180 days from the date of termination. In the event of a
termination of this Agreement other than due to a breach by Culligan or a
breach by USF, then USF shall be prohibited from entering into, commencing
negotiations, or soliciting negotiations, or having or continuing discussions
that constitute, or could reasonably be expected to lead to, a Franchisee
Acquisition Proposal, or engage in negotiations or discussions concerning any
Franchisee Acquisition Proposal for a period of 90 days from the date of
termination.

(b) In the event of a termination of this Agreement due to a breach by
Culligan, there shall be no prohibition on USF concerning Franchisee
Acquisition Proposals from the date of termination.

(c) Notwithstanding any other provision of this Agreement, except with
respect to the transactions contemplated by the definitive agreements
previously disclosed to counsel for Culligan by counsel for USF, USF hereby
agrees that from the date of this Agreement until the earlier to occur of the
Effective Time or the termination of this Agreement, that it shall not make,
solicit or pursue in any manner any pending or future Franchisee Acquisition
Proposal.

ARTICLE VIII.

Miscellaneous

8.1. Survival of Representations and Warranties. The representations and
warranties made herein by the parties hereto shall not survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the
parties hereto, which by its terms contemplates performance after the
Effective Time or after the termination of this Agreement.

8.2. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or dispatched by a nationally recognized overnight courier
service to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

(a) if to USF or Subcorp:

United States Filter Corporation
40-004 Cook Street
Palm Desert, California 92211
Attention: Damian C. Georgino
Telecopy No.: (760) 346-4024

with a copy to

Brian J. McCarthy
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, CA 90071-3144
Telecopy No.: (213) 687-5600

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<PAGE>

(b) if to Culligan:

Culligan Water Technologies, Inc.
One Culligan Parkway
Northbrook, Illinois 60062
Attention: General Counsel
Telecopy No.: (847) 205-6050

with a copy to

Daniel A. Neff
David A. Katz
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000

8.3. Interpretation.

(a) When a reference is made in this Agreement to an Article or Section,
such reference shall be to an Article or Section of this Agreement unless
otherwise indicated. The headings and the table of contents contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When a reference is made in this
Agreement to Culligan, such reference shall be deemed to include any and all
subsidiaries of Culligan, individually and in the aggregate, except for
Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.7, 4.8, 4.12, 4.16, 4.17, 4.19, 4.20,
4.21, 5.2(k) and 8.3.

(b) For the purposes of any provision of this Agreement, a "Material Adverse
Effect" with respect to any party shall be deemed to occur if any event,
change or effect, individually or in the aggregate with such other events,
changes or effects, has occurred which has a material adverse effect on the
business or financial condition of such party and its subsidiaries taken as a
whole; provided, however, that a Material Adverse Effect with respect to any
party shall not include any change in or effect upon the business or financial
condition of such party or any of its subsidiaries directly or indirectly
arising out of or attributable to or a consequence of (i) conditions, events,
or circumstances generally affecting the industries in which USF (and its
subsidiaries) and Culligan (and its subsidiaries) operate or the economy in
general, (ii) the loss by such party (and its subsidiaries) of any of its
customers, suppliers or employees as a result of the transactions contemplated
hereby or the public announcement of this Agreement, or (iii) any action or
change specifically contemplated by the provisions of this Agreement or, with
respect to Culligan, any other transactions or actions by or involving USF or
its affiliates.

(c) For purposes of this Agreement, a "subsidiary" of any person means
another person, an amount of the voting securities or other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are
no such voting securities or interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person.

(d) For purposes of this Agreement, "knowledge" of a party shall mean the
actual knowledge of all officers of such party with a title of vice president
or higher.

8.4. Counterparts. This Agreement may be executed in counterparts, which
together shall constitute one and the same Agreement. The parties may execute
more than one copy of the Agreement, each of which shall constitute an
original.

8.5. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein), the Support/Voting Agreement, dated as of
February 9, 1998 between USF and Apollo Investment Fund, L.P., the Support
Voting Agreement, dated as of February 9, 1998, between USF and Lion Advisors,
L.P., the Registration Rights Agreement, dated as of February 9, 1998, between
USF and the parties listed therein, and the Confidentiality Agreement
constitute the entire agreement among the parties and supersede all prior

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<PAGE>

agreements and understandings, agreements or representations by or among the
parties, written and oral, with respect to the subject matter hereof and
thereof.

8.6. Third Party Beneficiaries. Except for the agreement set forth in
Section 5.2(d), 5.2(k) and 5.2(l), nothing in this Agreement, express or
implied, is intended or shall be construed to create any third party
beneficiaries.

8.7. Governing Law. Except to the extent that the laws of the jurisdiction
of organization of any party hereto, or any other jurisdiction, are
mandatorily applicable to the Merger or to matters arising under or in
connection with this Agreement, this Agreement shall be governed by the laws
of the State of Delaware. All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any state or
federal court sitting in Delaware.

8.8. Consent to Jurisdiction; Venue.

(a) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state courts of Delaware and to the jurisdiction of the
United States District Court for Delaware, for the purpose of any action or
proceeding arising out of or relating to this Agreement and each of the
parties hereto irrevocably agrees that all claims in respect to such action or
proceeding may be heard and determined exclusively in any Delaware state or
federal court sitting in Delaware. Each of the parties hereto agrees that a
final judgment in any action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

(b) Each of the parties hereto irrevocably consents to the service of any
summons and complaint and any other process in any other action or proceeding
relating to the Merger, on behalf of itself or its property, by the personal
delivery of copies of such process to such party. Nothing in this Section 8.8
shall affect the right of any party hereto to serve legal process in any other
manner permitted by law.

8.9. Specific Performance. The transactions contemplated by this Agreement
are unique. Accordingly, each of the parties acknowledges and agrees that, in
addition to all other remedies to which it may be entitled, each of the
parties hereto is entitled to a decree of specific performance, provided such
party is not in material default hereunder.

8.10. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other parties. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.

8.11. Expenses. Subject to the provisions of Section 7.2, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses.

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<PAGE>

IN WITNESS WHEREOF, USF, Subcorp and Culligan have signed this Agreement as
of the date first written above.

United States Filter Corporation

/s/ Richard J. Heckmann
By: _________________________________
Name: Richard J. Heckmann
Title: Chief Executive Officer

Palm Water Acquisition Corp.

/s/ Richard J. Heckmann
By: _________________________________
Name: Richard J. Heckmann
Title: Chief Executive Officer

Culligan Water Technologies, Inc.

/s/ Douglas A. Pertz
By: _________________________________
Name: Douglas A. Pertz
Title: President and Chief
Executive Officer

A-32
<PAGE>

ANNEX B

LOGO

February 9, 1998

Board of Directors
United States Filter Corporation
40-004 Cook Street
Palm Desert, CA 92211

Dear Sirs:

You have requested our opinion as to the fairness from a financial point of
view to United States Filter Corporation (the "Company") and its stockholders
of the exchange ratio to be offered by the Company pursuant to the terms of
the Agreement and Plan of Merger, to be dated as of February 9, 1998 (the
"Agreement"), by and among the Company, Palm Water Acquisition Corp. ("Merger
Sub"), a wholly owned subsidiary of the Company, and Culligan Water
Technologies, Inc. ("Culligan") pursuant to which Merger Sub will be merged
(the "Merger") with and into Culligan.

Pursuant to the Agreement, each share of common stock, par value $.01 per
share, of Culligan will be converted into and shall represent the right to
receive the number of shares of common stock, par value $.01 per share, of the
Company determined as follows: (i) if the average of the closing prices, per
share, of the Company's common stock, as reported on the New York Stock
Exchange Composite Tape on each of the last ten trading days ending on the
sixth trading day prior to the date of the meeting of Culligan stockholders at
which approval of the Merger is obtained (the "Average Share Price") equals or
exceeds $35.00, 1.714; (ii) if the Average Share Price equals or exceeds
$32.00 but is less than $35.00, the quotient obtained by dividing $60.00 by
the Average Share Price; and (iii) if the Average Share Price is less than
$32.00, 1.875 (such number determined pursuant to clauses (i) through (iii),
the "Exchange Ratio").

In arriving at our opinion, we have reviewed the draft of the Agreement
dated February 6, 1998. We also have reviewed financial and other information
that was publicly available or furnished to us by the Company and Culligan
including information provided during discussions with their respective
managements. Included in the information provided during discussions with the
respective managements were certain financial projections of Culligan for the
period beginning November 1, 1997 and ending January 31, 1999 prepared by the
management of Culligan and certain financial projections of the Company for
the period beginning January 1, 1998 and ending March 31, 2003 prepared by the
management of the Company. In addition, we have compared certain financial and
securities data of the Company and Culligan with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the common stock of Culligan and the Company, reviewed
prices and premiums paid in certain other business combinations, reviewed the
relative financial contribution which the Company and Culligan will represent
in the combined entity and conducted such other financial studies, analyses
and investigations as we deemed appropriate for purposes of this opinion.

In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and Culligan
or their respective representatives, or that was otherwise reviewed by us. In
particular, we have relied upon the estimates of the management of the Company
of the operating synergies achievable as a result of the Merger and upon our
discussion of such synergies with the management of Culligan. With respect to
the financial projections used in our analysis, we have assumed that they have
been reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of the Company and

B-1
<PAGE>

Culligan as to the future operating and financial performance of the Company
and Culligan. We have not assumed any responsibility for making any
independent evaluation of any assets or liabilities or for making any
independent verification of any of the information reviewed by us. We have
relied as to certain legal matters on advice of counsel to the Company.

Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as
of, the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which the Company's common stock will actually trade at any time.
Our opinion does not address the relative merits of the Merger and the other
business strategies being considered by the Company's Board of Directors, nor
does it address the Board's decision to proceed with the Merger. Our opinion
does not constitute a recommendation to any stockholder as to how such
stockholder should vote on the proposed transaction.

Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. DLJ has
performed investment banking and other services for the Company in the past
and has been compensated for such services. In January 1998, DLJ served as
exclusive financial advisor to the Company in connection with the Company's
merger with The Kinetics Group for which DLJ will receive customary
compensation. Additionally, in December 1996, DLJ served as lead-manager of
the Company's $400 million common stock offering and $414 million convertible
subordinated notes offering for which DLJ received customary compensation. DLJ
has also performed investment banking and other services in the past for
Apollo Investment Fund, L.P., an affiliate of Culligan, and its affiliates for
which DLJ has received customary compensation.

Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Exchange Ratio is fair to the Company and its
stockholders from a financial point of view.

Very truly yours,

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

/s/ James T. Sington
By: _________________________________
James T. Sington
Managing Director

B-2
<PAGE>

ANNEX C

213-253-2000 . 800-421-8458
LOGO

February 9, 1998

Board of Directors
United States Filter Corporation
40-004 Cook Street
Palm Desert, CA 92211

Members of the Board:

You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common stock of United States Filter Corporation (the
"Company") of the Exchange Ratio (as defined below) to be used in the
Company's proposed merger (the "Merger") with Culligan Water Technologies,
Inc. ("Culligan") pursuant to the Agreement and Plan of Merger by and among
United States Filter Corporation, USF Merger Corp. and Culligan Water
Technologies, Inc. to be dated February 9, 1998 (the "Merger Agreement"). We
understand that, in the Merger, a subsidiary of the Company ("Merger Sub")
will be merged with and into Culligan, as a result of which Culligan will be
the surviving entity in the Merger. We further understand that, upon
effectiveness of the Merger, each issued and outstanding share of Merger Sub
will be converted into one share of common stock, par value $0.01 per share,
of Culligan (the "Culligan Common Stock"), and that each issued and
outstanding share of Culligan Common Stock will be converted into and
represent the right to receive a number of fully paid and non-assessable
shares of the Company's common stock, par value $0.01 per share (the "Company
Common Stock"), equal to the greater of: (i) 1.714 shares and (ii) the lesser
of: (a) 1.875 shares and (b) the number of shares with a market value
(determined in accordance with the terms of the Merger Agreement) equal to
$60.00 (the "Exchange Ratio").

In connection with rendering our opinion, we have reviewed: (i) a draft of
the Merger Agreement that you have advised us is substantially in the form to
be executed by the parties; (ii) certain publicly available business and
financial information relating to the Company and Culligan; (iii) certain
internal information, primarily financial in nature, including financial
forecasts and other financial and operating data relating to strategic
implications and operational benefits anticipated to result from the Merger;
(iv) certain publicly available and other information concerning the trading
of, and the trading market for, the publicly traded securities of the Company
and Culligan; (v) certain publicly available information with respect to other
companies that we believe to be comparable in certain respects to the Company
or Culligan; and (vi) certain publicly available information with respect to
other merger and acquisition transactions that we believe to be comparable in
certain respects to the Merger. We have also held discussions with certain
members of the senior management of the Company and Culligan regarding the
Company's and Culligan's views as to the financial and other information
described above and the strategic rationale for, and potential benefits of,
the Merger. In addition to the foregoing, we have conducted such other
analyses and examinations and considered such other financial, economic and
market criteria as we deem appropriate to arrive at our opinion.

In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of all information provided to or reviewed by us or publicly
available, and we have not assumed any responsibility for any independent
verification of any of such information. With respect to financial forecasts,
and other

SALOMON BROTHERS INC 333 S. Hope Street, 32nd Floor, Los Angeles, CA 90071
FAX 213-253-
1808

C-1
<PAGE>

information provided to or reviewed by us, we have been advised by the
managements of the Company and Culligan that such forecasts and other
information were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the Company and Culligan as to the
expected future financial performance of the Company and Culligan and the
strategic implications and operational benefits anticipated from the Merger.

We further relied on the assurances of managements of the Company and Culligan
that they were unaware of any facts that would make the information or
forecasts provided to us incomplete or misleading. In particular, we were
provided with and relied upon a schedule from the Company of estimated
synergies and related cost savings that the Company expects to achieve as a
result of the Merger. With respect to pending legal and regulatory proceedings
involving the Company or Culligan, we were not in a position to evaluate the
impact of such proceedings and we have assumed that these matters will be
resolved in a manner that will not adversely affect in any material respect
the financial forecasts on which we have relied for purposes of our opinion.
We have not made or been provided with any independent evaluations or
appraisals of any of the Company's or Culligan's assets, properties,
liabilities or securities, nor have we made any physical inspection of the
properties or assets of the Company or Culligan. We have assumed that you will
account for the Merger as a pooling-of-interests in accordance with generally
accepted accounting principles ("GAAP"), and that the Merger qualifies for
such accounting treatment under GAAP. We have also assumed that the Merger
will constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and neither the Company, Culligan,
Merger Sub or holders of Company Common Stock will recognize gain or loss for
U.S. federal and state income tax purposes as a result of the Merger.

As you are aware, Salomon Brothers Inc and Smith Barney Inc. (collectively,
"Salomon Smith Barney") are acting as financial advisor to the Company in
connection with the Merger for which we have received certain fees including
with regard to the rendering of this opinion, a significant portion of which
are contingent upon the consummation of the Merger. Additionally, Salomon
Smith Barney has previously rendered financial advisory and investment banking
services to the Company for which we have received customary compensation. In
the ordinary course of our securities business we and our affiliates may hold
or actively trade the debt and equity securities of the Company or Culligan,
for our own account and for the accounts of customers and, accordingly, we may
at any time hold a long or short position in such securities. In addition, we
and our affiliates may maintain other business and financial relationships
with the Company and Culligan.

Our opinion as expressed below relates to the relative values of the Company
and Culligan and does not imply any conclusion as to what the values of the
Company Common Stock actually will be when issued pursuant to the Merger or
the price at which such stock will trade following the consummation of the
Merger. Our opinion necessarily is based upon conditions and circumstances as
they exist and can be evaluated as of the date hereof and does not address the
underlying business decision of the Company to enter into the Merger Agreement
or complete the Merger. Specifically, we have not been asked to nor do we
express an opinion as to the relative merits of the Merger as compared to any
alternative business strategies that might exist for the Company or the effect
of any other transaction in which the Company might engage.

This opinion is for the benefit and use by members of the Board of Directors
of the Company in connection with their evaluation of the Merger and does not
constitute a recommendation to any holder of shares of the Company Common
Stock as to how such stockholder should vote with respect to the Merger. This
opinion may not be published or otherwise used without our prior written
consent, other than as provided for in the engagement agreement, dated
February 8, 1998, among the Company, Donaldson, Lufkin & Jenrette Securities
Corporation and Salomon Smith Barney.

Based upon, and subject to, the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to
the holders of Company Common Stock.

Very truly yours,

/s/ Salomon Smith Barney
- -------------------------------
SALOMON SMITH BARNEY

C-2
<PAGE>

ANNEX D

BEAR, STEARNS & CO. INC.
LOGO
245 PARK AVENUE

NEW YORK, NEW YORK 10167

(212) 272-2000

ATLANTA . BOSTON

CHICAGO . DALLAS . LOS ANGELES

NEW YORK . SAN FRANCISCO

FRANKFURT . GENEVA . HONG KONG

LONDON . PARIS . TOKYO

February 9, 1998

Board of Directors
Culligan Water Technologies, Inc.
One Culligan Parkway
Northbrook, Illinois 60062

Gentlemen:

We understand that pursuant to an Agreement and Plan of Merger dated as of
February 9, 1998 (the "Merger Agreement") by and among Culligan Water
Technologies, Inc. ("Culligan"), United States Filter Corporation ("USF") and
Palm Water Acquisition Corp. ("Subcorp"). Subcorp will be merged with and into
Culligan (the "Merger") and each outstanding share of common stock of Culligan
(the "Culligan Shares"), other than Culligan Shares to be cancelled pursuant
to the terms of the Merger Agreement, will be converted into the right to
receive 1.714 shares of the common stock of USF ("USF Common Stock") if the
Average Share Price (as defined in the Merger Agreement) of USF Common Stock
is equal to or greater than $35; $60 of USF Common Stock (based upon the
Average Share Price) if the Average Share Price of USF Common Stock is less
than $35 but greater than or equal to $32; and 1.875 shares of USF Common
Stock if the Average Share Price of USF Common Stock is less than $32
(collectively, the "Exchange Ratio"), all in accordance with the terms and
conditions of the Merger Agreement. If the Average Share Price or the average
closing price over a defined period of USF Common Stock is less than $26.25,
then Culligan may terminate the Merger Agreement (the "Walkaway"). The Merger
is anticipated to be tax-free to the Culligan shareholders.

You have asked us to render our opinion as to whether the Exchange Ratio (as
defined in the Merger Agreement) is fair, from a financial point of view, to
the shareholders of Culligan.

In the course of our analyses for rendering this opinion, we have:

1. reviewed the Merger Agreement;

2. reviewed each of USF's and Culligan's Annual Reports to Shareholders
and Annual Reports on Form 10-K for the years ended March 31, 1997 and
January 31, 1997, respectively, and their respective Quarterly Reports on
Form 10-Q for the quarterly periods since such Form 10-K filings;

3. reviewed certain operating and financial information, including
projections and projected cost savings and synergies, provided to us by
USF's and Culligan's respective managements relating to their respective
business and prospects;

4. met with certain members of USF's and Culligan's senior management to
discuss the operations, historical financial statements and future
prospects of USF and Culligan and their view of the business, operational
and strategic benefits, cost savings, potential synergies and other
implications of the Merger;

5. reviewed the historical stock prices and trading activity of USF
Common Stock and Culligan Common Stock;

D-1
<PAGE>

6. reviewed publicly available financial data and stock market
performance data of companies which we deemed generally comparable to USF
and Culligan or otherwise relevant to our inquiry;

7. reviewed the terms, to the extent publicly available, of recent
mergers and acquisitions which we deemed generally comparable to the Merger
or otherwise relevant to our inquiry; and

8. considered such other information and conducted such other studies,
analyses, inquiries and investigations as we deemed appropriate.

In the course of our review, we have relied upon and assumed, without any
obligation of independent verification, the accuracy and completeness of the
financial and other information provided to us by USF and Culligan. With
respect to USF's and Culligan's budgeted financial results for fiscal 1999
(including cost savings and synergies resulting from, and contemplated tax and
accounting effects of the Merger and related transactions), we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the respective managements of USF and
Culligan as to the expected future performance of USF and Culligan,
respectively. We have not assumed any responsibility for the information
provided to us and we have further relied upon the assurances of the
managements of USF and Culligan that they are unaware of any facts that would
make the information provided to us incomplete or misleading. We have also
assumed with your consent that the Merger will be consummated in accordance
with the terms described in the Merger Agreement. In arriving at our opinion,
we have not performed any independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of USF or Culligan and we have not been
furnished with any such evaluation or appraisal.

Our opinion is necessarily based on economic, market and other conditions,
and the information made available to us, as they exist and can be evaluated
as of the date hereof. Our opinion as expressed below does not imply any
conclusion as to the likely trading range of USF Common Stock either prior to
or subsequent to the consummation of the Merger, which may vary depending
upon, among other factors, changes in interest rates, dividend rates, market
conditions, general economic conditions and other factors that generally
influence the price of securities. Our opinion as expressed below does not
address Culligan's underlying business decision to effect the Merger, and is
not a recommendation to Culligan directors or shareholders as to whether to
approve or vote for the Merger.

We have acted as financial advisor to Culligan in connection with the Merger
and will receive a fee for such services, payment of a significant portion of
which is contingent upon the consummation of the Merger. We have previously
rendered certain investment banking and financial advisory services to
Culligan for which we received customary compensation. In the ordinary course
of our business, we may actively trade the securities of Culligan for our own
account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.

It is understood that this letter is intended for the benefit and use of the
Board of Culligan and is not to be used for any other purpose, or reproduced,
disseminated, quoted or referred to at any time, in whole or in part, without
our prior written consent; provided, however, that this letter may be included
in its entirety in any joint proxy statement/prospectus to be distributed to
the holders of Culligan and USF Common Stock in connection with the Merger.

Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to
the shareholders of Culligan.

Very truly yours,

BEAR, STEARNS & CO. INC.

/s/ Anthony J. Magro
By: _________________________________
Anthony J. Magro
Senior Managing Director

D-2
<PAGE>

ANNEX E

Goldman, Sachs & Co. l Broad Street l New York, New York, 10004
Tel: 212-902-1000

February 9, 1998

Board of Directors
Culligan Water Technologies, Inc.
One Culligan Parkway
Northbrook, IL 60062-6209

Gentlemen:

You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value $0.01
per share (the "Shares"), of Culligan Water Technologies, Inc. ("Culligan" or
the "Company") of the Exchange Ratio of 1.714 Shares (subject to adjustment as
described below) of Common Stock, par value $0.01 per share ("USF Common
Stock"), of United States Filter Corporation ("USF") to be received for each
Share (the "Exchange Ratio") pursuant to the Agreement and Plan of Merger,
dated as of February 9, 1998, among USF, Palm Water Acquisition Corp., a
wholly owned subsidiary of USF, and the Company (the "Agreement"). Pursuant to
the Agreement, the Exchange Ratio shall be equal to 1.714 if the Average Share
Price (as defined in the Agreement) of USF Common Stock is greater than or
equal to $35.00; provided, however, that (i) if the Average Share Price of USF
Common Stock is less than $35.00, but greater than or equal to $32.00, then
the Exchange Ratio shall be equal to the quotient obtained (rounded to the
nearest ten-thousandth of a share) by dividing $60.00 by the Average Share
Price; and (ii) if the Average Share Price is less than $32.00, the Exchange
Ratio shall be equal to 1.875. In addition, the Company has the right to
terminate the transaction contemplated by the Agreement if the Average Share
Price is less than $26.25. You have informed us that it is anticipated that
the transaction contemplated by the Agreement will be tax-free to the holders
of Shares.

Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. We are familiar with the Company having provided certain investment
banking services to the Company from time to time, including having acted as
lead managing underwriter on two public offerings of Common Stock on December
14, 1995 and on October 7, 1997, for which we received customary and usual
fees, and having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement. We will
receive a fee for such services, payment of a significant portion of which is
contingent upon the consummation of the transaction contemplated by the
Agreement.

[LOGO OF GOLDMAN SACHS]

E-1
<PAGE>

In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of
the Company or its predecessor for the five fiscal years ended January 31,
1997 and USF for the five fiscal years ended March 31, 1997; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of the Company and
USF; certain other communications from the Company and USF to their respective
stockholders; and certain internal financial analyses and forecasts for the
Company and USF prepared by their respective managements. We also have held
discussions with members of the senior management of the Company and USF
regarding the strategic rationale for, and the potential benefits of, the
transaction contemplated by the Agreement and the past and current business
operations, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading
activity for the Shares and the USF Common Stock; compared certain financial
and stock market information for the Company and USF with similar information
for certain other companies the securities of which are publicly traded;
reviewed the financial terms of certain recent business combinations in the
water purification and filtration industry specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.

We have relied upon and assumed, without obligation of independent
verification, the accuracy and completeness of the financial and other
information provided to us by USF and the Company. With respect to USF's and
the Company's forecasted financial results for fiscal 1999 (including cost
savings and synergies resulting from, and contemplated accounting effects of
the transaction contemplated by the Agreement), we have assumed that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the respective managements of USF and the Company
as to the expected future performance of USF and the Company, respectively. We
have not assumed any responsibility for the information provided to us and we
have further relied upon the assurances of the managements of USF and the
Company that they are unaware of any facts that would make the information
provided to us incomplete or misleading. We have also assumed with your
consent that the transaction contemplated by the Agreement will be consummated
in accordance with the terms described in the Agreement. In arriving at our
opinion, we have not performed any independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of USF or the Company or any
of their subsidiaries and we have not been furnished with any such evaluation
or appraisal. Our advisory services and the opinion expressed herein are
provided for the information and assistance of the Board of Directors of the
Company in connection with its consideration of the transaction contemplated
by the Agreement and such opinion does not constitute a recommendation as to
whether the Culligan directors should engage in the transaction contemplated
by the Agreement or how any holder of Shares should vote with respect to the
transaction contemplated by the Agreement.

Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the
Exchange Ratio pursuant to the Agreement is fair from a financial point of
view to the holders of Shares.

Very truly yours,

/s/ Goldman, Sachs & Co.
(GOLDMAN, SACHS & CO.)

E-2
<PAGE>

ANNEX F

-------------------------------------------------------------------------------

PROXY

UNITED STATES FILTER CORPORATION
40-004 COOK STREET
PALM DESERT, CALIFORNIA 92211

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Damian C. Georgino, Kevin L. Spence and
Richard J. Heckmann, and each of them, the attorneys and proxies of the
undersigned with full power of substitution to vote as indicated herein, all
the common stock, par value $.01 per share, of United States Filter
Corporation ("U.S. Filter") held of record by the undersigned at the close of
business on April 23, 1998, at the Special Meeting of stockholders of U.S.
Filter to be held on Monday, June 15, 1998, or any postponements or
adjournments thereof, with all the powers the undersigned would possess if
then and there personally present.

SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

- -------------------------------------------------------------------------------

<PAGE>

- -------------------------------------------------------------------------------

[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE STOCKHOLD-
ER. IF NO SPECIFICATIONS ARE MADE, THE PROXY WILL BE VOTED FOR EACH OF THE FOL-
LOWING PROPOSALS, AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY POSTPONEMENTS OR ADJOURN-
MENTS THEREOF.

1. Proposal to approve the issuance of U.S. Filter FOR AGAINST ABSTAIN
common stock upon the consummation of the merger [_] [_] [_]
described in the Agreement and Plan of Merger,
dated as of February 9, 1998, among United States
Filter Corporation ("U.S. Filter"), Culligan Water
Technologies, Inc. ("Culligan") and Palm Water
Acquisition Corp., a wholly owned subsidiary of U.S.
Filter, in which U.S. Filter will issue in exchange
for each issued and outstanding share (other than
treasury shares) of Culligan Common Stock, 1.714 shares
of U.S. Filter Common Stock if the Average Share Price
(as defined in the related Joint Proxy Statement/Prospectus)
is equal to or greater than $35; provided, however, that
(i) if the Average Share Price is less than $35, but greater
than or equal to $32, then the exchange ratio shall be
equal to the quotient obtained (rounded to the nearest
ten-thousandth of a share) by dividing $60 by the Average
Share Price; and (ii) if the Average Share Price is less than
$32, the exchange ratio shall be equal to 1.875.

2. In their discretion, to vote upon such other business
as may properly come before the meeting.

Votes must be indicated in black or blue ink.

Receipt of Notice of Special Meeting of Stockholders and the related Joint
Proxy Statement/Prospectus is hereby acknowledged.

SIGNATURE(S) __________________________ DATE ____________________________
Please sign as your name appears herein. if shares are held jointly, all hold-
ers must sign. when signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person, indicating where proper,
official position or representative capacity.
- -------------------------------------------------------------------------------

<PAGE>

ANNEX G

- -------------------------------------------------------------------------------

PROXY

CULLIGAN WATER TECHNOLOGIES, INC.
ONE CULLIGAN PARKWAY
NORTHBROOK, ILLINOIS 60062-6209

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Douglas A. Pertz, Michael E. Salvati and
Edward A. Christensen, and each of them, the attorneys and proxies of the
undersigned with full power of substitution to vote as indicated herein, all
the common stock ("Culligan Common Stock"), par value $.01 per share, of
Culligan Water Technologies, Inc. ("Culligan") held of record by the
undersigned at the close of business on April 23, 1998, at the Special Meeting
of Culligan Stockholders to be held on Monday, June 15, 1998, or any
postponements or adjournments thereof, with all the powers the undersigned
would possess if then and there personally present.

SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

- -------------------------------------------------------------------------------

<PAGE>

- -------------------------------------------------------------------------------

[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE
STOCKHOLDER. IF NO SPECIFICATIONS ARE MADE, THE PROXY WILL BE VOTED FOR EACH OF
THE FOLLOWING PROPOSALS, AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY POSTPONEMENTS OR
ADJOURNMENTS THEREOF.

1. Proposal to approve, authorize and adopt the FOR AGAINST ABSTAIN
Agreement and Plan of Merger, dated as of [_] [_] [_]
February 9, 1998, by and among Culligan Water
Technologies, Inc., United States Filter
Corporation and Palm Water Acquisition Corp.

2. Proposal to adjourn the Special Meeting, if FOR AGAINST ABSTAIN
necessary, to permit further solicitation [_] [_] [_]
of proxies in the event that there are not
sufficient votes at the time of the Special
Meeting to approve Proposals 1.

3. In their discretion, to vote upon such other business as may properly come
before the meeting.

Votes must be indicated in black or blue ink.

Receipt of Notice of Special Meeting of Stockholders and the related Joint
Proxy Statement/Prospectus is hereby acknowledged.

SIGNATURE(S) ___________________________ DATE __________________
Please sign as your name appears herein. if shares are held jointly, all hold-
ers must sign. when signing as attorney, executor, administrator, trustee or
guardian, please give your full title. if a corporation, please sign in full
corporate name by president or other authorized officer. if a partnership,
please sign in partnership name by authorized person, indicating where proper,
official position or representative capacity.
- -------------------------------------------------------------------------------

<PAGE>

UNITED STATES FILTER CORPORATION

CULLIGAN WATER TECHNOLOGIES, INC.

IMPORTANT

No person has been authorized to give any information or to make any
representations, other than those contained in this Joint Proxy
Statement/Prospectus. If given or made, such information or representation may
not be relied upon as having been authorized by either of U.S. Filter or
Culligan. Neither the delivery of this Joint Proxy Statement/Prospectus nor
any distribution of securities pursuant hereto shall under any circumstances
create any implications that the information contained herein is correct as of
any time subsequent to the date hereof or that there has been no change in the
information set forth herein or in the affairs of either of U.S. Filter or
Culligan since the date hereof.

FOR INFORMATION REGARDING THE PROCEDURES TO BE FOLLOWED IS CONNECTION WITH
VOTING ON ANY OF THE STOCK ISSUANCE PROPOSAL, THE CULLIGAN MERGER PROPOSAL OR
THE CULLIGAN ADJOURNMENT PROPOSAL, SEE "THE SPECIAL MEETINGS."

The Proxy Solicitor:

[LOGO OF MACKENZIE PARTNERS, INC]

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885

ADDITIONAL COPIES

Requests for additional copies of this Joint Proxy Statement/Prospectus or
proxies should be directed to the Proxy Solicitor. You may also contact your
broker, dealer, or trust company for assistance concerning the Merger.
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Certificate of Incorporation and the By-laws of U.S. Filter provide for
the indemnification of directors and officers to the fullest extent permitted
by the General Corporation Law of the State of Delaware, the state of
incorporation of U.S. Filter.

Section 145 of the General Corporation Law of the State of Delaware
authorizes indemnification when a person is made a party or is threatened to
be made a party to any proceeding by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation or is or was
serving as a director, officer, employee or agent of another enterprise, at
the request of the corporation, and if such person acted in good faith and in
a manner reasonably believed by him or her to be in, or not opposed to, the
best interests of the corporation. With respect to any criminal proceeding,
such person must have had no reasonable cause to believe that his or her
conduct was unlawful. If it is determined that the conduct of such person
meets these standards, he or she may be indemnified for expenses incurred
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such
proceeding.

If such a proceeding is brought by or in the right of the corporation (i.e.,
a derivative suit), such person may be indemnified against expenses actually
and reasonably incurred if he or she acted in good faith and in a manner
reasonably believed by him or her to be in, or not opposed to, the best
interests of the corporation. There can be no indemnification with respect to
any matter as to which such person is adjudged to be liable to the
corporation; however, a court may, even in such case, allow such
indemnification to such person for such expenses as the court deems proper.

Where such person is successful in any such proceeding, he or she is
entitled to be indemnified against expenses actually and reasonably incurred
by him or her. In all other cases, indemnification is made by the corporation
upon determination by it that indemnification of such person is proper because
such person has met the applicable standard of conduct.

U.S. Filter maintains an errors and omissions liability policy for the
benefit of its officers and directors, which may cover certain liabilities of
such individuals to U.S. Filter.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits. The following exhibits are filed as part of this registration
statement:

II-1
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
23.05 Consent of Arthur Andersen LLP (filed herewith)
23.06 Consent of The Mentor Group, Inc. (filed herewith)
23.07 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.01 filed herewith)
23.08 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.01
filed herewith)
23.09 Consent of Donaldson, Lufkin & Jenrette Securities Corporation (filed
herewith)
23.10 Consent of Salomon Smith Barney (filed herewith)
23.11 Consent of Bear, Stearns & Co. Inc. (filed herewith)
23.12 Consent of Goldman, Sachs & Co. (filed herewith)
24.01 Powers of Attorney (included on signature page of this registration
statement)
99.1 Form of U.S. Filter Proxy (included as Annex F to the Joint Proxy
Statement Prospectus)
99.2 Form of Culligan Proxy (included as Annex G to the Joint Proxy
Statement Prospectus)
</TABLE>

ITEM 22. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

(4) That, for purposes of determining any liability under the Securities
Act, each filing of the U.S. Filter Annual Report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.

II-2
<PAGE>

(6) That every prospectus (i) that is filed pursuant to paragraph (5)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(7) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.

(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the corporation being acquired involved therein,
that was not the subject of and included in the registration statement when it
became effective.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Palm Desert, State of California, on
May 15, 1998.

UNITED STATES FILTER CORPORATION

*
By: _________________________________
Richard J. Heckmann
Chairman of the Board,
President and Chief Executive
Officer

Know all persons by these presents, that each person whose signature appears
below constitutes and appoints Kevin L. Spence and Damian C. Georgino, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, including post-effective amendments, and to file the
same, with all exhibits thereto, and other documentation in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done in or about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this amendment
has been signed by the following persons in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
* Chairman of the Board, May 15, 1998
____________________________________ President and Chief
Richard J. Heckmann Executive Officer
(Principal Executive
Officer) and a Director
* Executive Vice President and May 15, 1998
____________________________________ Chief Financial Officer
Kevin L. Spence (Principal Financial and
Accounting Officer)
* Executive Vice President and May 15, 1998
____________________________________ Chief Administrative
Michael J. Reardon Officer
and a Director
* President and Chief May 15, 1998
____________________________________ Operating Officer--North
Nicholas C. Memmo American Process Water
Group
and a Director
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
* Director May 15, 1998
____________________________________
James E. Clark

* Director May 15, 1998
____________________________________
John L. Diederich

* Director May 15, 1998
____________________________________
Robert S. Hillas

* Director May 15, 1998
____________________________________
Arthur B. Laffer

* Director May 15, 1998
____________________________________
Arden E. Moore

* Director May 15, 1998
____________________________________
Alfred E. Osborne, Jr.

* Director May 15, 1998
____________________________________
J. Danforth Quayle

* Director May 15, 1998
____________________________________
C. Howard Wilkins, Jr.

*/s/ Damian C. Georgino May 15, 1998
- ------------------------------------
Damian C. Georgino
Attorney-in-Fact
</TABLE>

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.01 Agreement and Plan of Merger, dated as of February 9, 1998, by and
among United States Filter Corporation, Palm Water Acquisition Corp.
and Culligan Water Technologies, Inc. (Included as Annex A to the
Joint Proxy Statement/Prospectus included in this Registration
Statement (the "Joint Proxy Statement/Prospectus"))
5.01 Opinion of Skadden, Arps, Slate, Meagher and Flom LLP as to the
legality of the securities being registered (filed herewith)
8.01 Opinion of Wachtell, Lipton, Rosen & Katz as to certain tax matters
(filed herewith)
23.01 Consents of KPMG Peat Marwick LLP (filed herewith)
23.02 Consents of KPMG Audit Plc (filed herewith)
23.03 Consents of Ernst & Young LLP (filed herewith)
23.04 Consent of Price Waterhouse (filed herewith)
23.05 Consent of Arthur Andersen LLP (filed herewith)
23.06 Consent of The Mentor Group, Inc. (filed herewith)
23.07 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.01 filed herewith)
23.08 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.01
filed herewith)
23.09 Consent of Donaldson, Lufkin & Jenrette Securities Corporation (filed
herewith)
23.10 Consent of Salomon Smith Barney (filed herewith)
23.11 Consent of Bear, Stearns & Co. Inc. (filed herewith)
23.12 Consent of Goldman, Sachs & Co. (filed herewith)
24.01 Powers of Attorney (included on signature page of this registration
statement)
</TABLE>

<PAGE>

EXHIBIT 5.01

[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]

May 14, 1998

United States Filter Corporation
40-004 Cook Street
Palm Desert, CA 92211

Re: United States Filter Corporation
Registration on Form S-4
-----------------------------------

Gentlemen:

We have acted as special counsel to United States Filter Corporation,
a Delaware corporation (the "Company"), in connection with the proposed merger
(the "Merger") of Palm Water Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Company ("Subcorp"), with and into Culligan Water
Technologies, Inc., a Delaware corporation ("Culligan"), pursuant to the
Agreement and Plan of Merger, dated as of February 9, 1998 (the "Merger
Agreement"), among the Company, Subcorp and Culligan. Pursuant to the Merger,
up to 48,306,711 shares (the "Shares") of the common stock, par value $.01 per
share ("U.S. Filter Common Stock"), of the Company will be issued to former
holders of the common stock, par value $.01 per share ("Culligan Common Stock"),
of Culligan in exchange for all of such holders shares of Culligan Common Stock.

This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Act").

In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
<PAGE>

Statement on Form S-4 (File No. 333-52717) as filed with the Securities and
Exchange Commission on May , 1998 under the Act (such Registration Statement
being hereinafter referred to as the "Registration Statement"); (ii) the Merger
Agreement, filed as Annex A to the Joint Proxy Statement/Prospectus, which is
included in the Registration Statement; (iii) a specimen certificate
representing the shares of U.S. Filter Common Stock; (iv) the Restated
Certificate of Incorporation of the Company, as amended, as presently in effect;
(v) the Restated Bylaws of the Company, as presently in effect; and (vi) certain
resolutions of the Board of Directors of the Company relating to the issuance
and sale of the Shares and other matters related to the Merger. We have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such records of the Company and such agreements, certificates
of public officials, certificates of officers or other representatives of the
Company and others, and such other documents, certificates and records as we
have deemed necessary or appropriate as a basis for the opinions set forth
herein.

In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than the
Company, we have assumed that such parties had or will have the power, corporate
or other, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and
execution and delivery by such parties of such documents and the validity and
binding effect thereof. As to any facts material to the opinions expressed
herein which we have not independently established or verified, we have relied
upon statements and representations of officers and other representatives of the
Company and others.

Members of our firm are admitted to the bar in the State of Delaware,
and we do not express any opinion as to the laws of any other jurisdiction.

Based upon and subject to the foregoing, we are of the opinion that
the issuance and sale of the Shares has been duly authorized by all requisite
corporate action on the part of the Company and, when (i) the Merger becomes
effective in
<PAGE>

accordance with the terms of the Merger Agreement and under applicable law, and
(ii) certificates representing the Shares in the form of the specimen
certificates examined by us have been properly signed by an authorized officer
of the transfer agent and registrar for U.S. Filter Common Stock and registered
by such transfer agent and registrar, and delivered to the Exchange Agent (as
defined in the Merger Agreement) in accordance with the terms of the Merger
Agreement, the Shares will be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.

Very truly yours,

/s/ Skadden, Arps, Slate, Meagher &
Flom LLP

<PAGE>

EXHIBIT 8.01

[Letterhead of Wachtell, Lipton, Rosen & Katz]

May 14, 1998

Culligan Water Technologies, Inc.

One Culligan Parkway

Northbrook, Illinois 60062-6209

Ladies/Gentlemen:

We have acted as special counsel to Culligan Water Technologies, Inc.,
a Delaware corporation ("Culligan"), in connection with the proposed merger
among United States Filter Corporation, a Delaware corporation ("U.S. Filter"),
Palm Water Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of U.S. Filter ("Subcorp"), and Culligan, in which Subcorp will merge
with and into Culligan (the "Merger") with Culligan surviving as a wholly owned
subsidiary of U.S. Filter, pursuant to the Agreement and Plan of Merger dated as
of February 9, 1998 (the "Agreement"). At your request, and pursuant to Section
6.2(d) of the Agreement, we are rendering our opinion concerning certain federal
income tax consequences of the Merger.

For purposes of the opinion set forth below, we have relied, with the
consent of U.S. Filter and the consent of Culligan, upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of U.S. Filter and Culligan
dated the date hereof, and have assumed that such statements and representations
will be complete and accurate as of the Effective Time. We have also relied
upon the accuracy of the Registration Statement on Form S-4 (the "Registration
Statement") and the joint proxy statement/prospectus of U.S. Filter and Culligan
(the "Joint Proxy Statement/Prospectus") filed with the Securities and Exchange
Commission in connection with the Merger. Any
<PAGE>

capitalized term used and not defined herein has the meaning given to it in the
Joint Proxy Statement/Prospectus or the appendices thereto (including the
Agreement).

We have also assumed that (i) the transactions contemplated by the
Agreement will be consummated in accordance therewith and as described in the
Joint Proxy Statement/Prospectus and (ii) the Merger will qualify as a statutory
merger under the applicable laws of the State of Delaware. We are unable to
render an opinion as to the qualification of the Merger as a statutory merger
under the laws of the State of Delaware at this time because such qualification
is contingent on future factors on which we cannot presently render an opinion.

Based upon and subject to the foregoing, it is our opinion, under
currently applicable United States federal income tax law, that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, that Culligan, U.S. Filter and Subcorp will
each be a party to the reorganization, and that no gain or loss will be
recognized by the shareholders of Culligan upon the receipt of shares of U.S.
Filter Common Stock in exchange for shares of Culligan Common Stock pursuant to
the Merger except with respect to cash received in lieu of fractional interests
in shares of U.S. Filter Common Stock.

We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement, and to the
references to us in the Joint Proxy Statement/Prospectus. In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended.

Very truly yours,

/s/ Wachtell, Lipton, Rosen & Katz

<PAGE>

EXHIBIT 23.01

INDEPENDENT AUDITORS' CONSENT
-----------------------------

Board of Directors and Shareholders
United States Filter Corporation:

We consent to the use of our report incorporated by reference herein and the
reference to our firm under the heading "Experts" in the Prospectus.

/s/ KPMG Peat Marwick LLP

Orange County, California
May 15, 1998
<PAGE>

INDEPENDENT AUDITORS' CONSENT
-----------------------------

Board of Directors and Shareholders
United States Filter Corporation:

We consent to the use of our report incorporated by reference herein and the
reference to our firm under the heading "Experts" in the Prospectus.

/s/ KPMG Peat Marwick LLP

Chicago, Illinois
May 15, 1998

<PAGE>

CONSENT OF KPMG PEAT MARWICK LLP

The Board of Directors
Culligan Water Technologies, Inc.:

We consent to the use of our report dated March 17, 1997 incorporated by
reference herein, with respect to the consolidated balance sheets of Culligan
Water Technologies, Inc. as of January 31, 1997 and 1996 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended January 31, 1997, which report
appears in the Form 8-K of United States Filter Corporations dated May 12, 1998.
We also consent to the use of our report dated April 7, 1998 incorporated by
reference herein, with respect to the consolidated balance sheets of Culligan
Water Technologies, Inc. as of January 31, 1998 and 1997 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended January 31, 1998, which report
appears in the Form 10K/A of Culligan Water Technologies, Inc. dated May 15,
1998. We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4, No. 333-52717) of United States Filter
Corporation for the registration of shares of its common stock.

KPMG Peat Marwick LLP

Chicago, Illinois
May 15, 1998

<PAGE>

EXHIBIT 23.02

CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS

To the Board of Directors and Shareholders

United Utilities PLC:

We consent to the incorporation by reference in the Prospectus constituting
part of the Registration Statement on Form S-4 of United States Filter
Corporation of our report dated 16 October 1996 relating to the aggregated
financial statements of the United Utilities PLC Process Division as of 31 March
1996 and 1995 and for each of the years in the two year period ended 31 March
1996.

KPMG Audit Plc
Manchester, England
14 May 1998
<PAGE>

CONSENT OF KPMG AUDIT Plc

The Board of Directors
Protean plc:

We consent to the inclusion of our report dated June 12, 1997, with respect
to the consolidated balance sheet of Protean plc as of March 31, 1997, and the
related consolidated profit and loss account, cash flow statement,
reconciliation of net cash flow to movement in net debt, statement of total
recognised gains and losses, reconciliation of movements in shareholders' funds,
and note of consolidated historical cost profits and losses for the year ended
March 31, 1997, which report appears in the Form 8-K of United States Filter
Corporation dated May 12, 1998.

KPMG Audit Plc
Chartered Accountants and Registered Auditors

London
May 14, 1998

<PAGE>

EXHIBIT 23.03

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4 - No. 333-52717) and related Prospectus of
United States Filter Corporation for the registration of 51,683,682 shares of
its common stock and to the incorporation by reference therein of our report
dated January 16, 1998, with respect to the financial statements of The Kinetics
Group, Inc. included in the Current Report on Form 8-K/A dated February 6, 1998
of United States Filter Corporation, filed with the Securities and Exchange
Commission.

ERNST & YOUNG LLP

Walnut Creek, California
May 11, 1998.

<PAGE>

Consent of Ernst & Young LLP

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) of United States Filter Corporation and
related Joint Proxy Statement of United States Filter Corporation and Culligan
Water Technologies, Inc. for the registration of shares of United States Filter
Corporation common stock and to the incorporation by reference therein of our
report dated March 14, 1997, with respect to the combined financial statements
of The Water Filtration Business (a wholly owned business of AMETEK, Inc.)
incorporated by reference in the Current Report on Form 8-K of Culligan Water
Technologies, Inc. dated August 13, 1997, filed with the Securities and Exchange
Commission.

Ernst & Young LLP

Philadelphia, Pennsylvania
May 14, 1998

<PAGE>

EXHIBIT 23.04

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of United States Filter Corporation of our report dated
September 26, 1997 relating to the consolidated balance sheets of Memtec Limited
at June 30, 1997 and 1998 and the related consolidated statements of income,
cash flows and of shareholder's equity for each of the three years in the period
ended June 30, 1997, which appears on page F-2 of the Form 8-K/A of United
States Filter Corporation dated February 6, 1998.

/s/ Price Waterhouse
- --------------------
Price Waterhouse
Sydney
May 14, 1998

<PAGE>

EXHIBIT 23.05

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 8, 1996
included in United States Filter Corporation's Report on Form 8-K dated November
6, 1996 and to all references to our Firm included in this registration
statement.

ARTHUR ANDERSEN, LLP

Minneapolis, Minnesota,
May 12, 1998

<PAGE>

EXHIBIT 23.06

THE MENTOR GROUP, INC.
777 EAST TAHQUITZ CANYON WAY #200
PALM SPRINGS, CALIFORNIA 92262

May 7, 1998

Mr. Kevin L. Spence
Chief Financial Officer
United States Filter Corporation
40-004 Cook Street
Palm Desert, CA 92211

Re: Consent of Independent Appraisers Letter

Dear Kevin:

We hereby consent to the incorporation by reference of our January 31, 1998
independent valuation report of the In-Process Research and Development acquired
by United States Filter Corporation ("U.S. Filter") from Memtec Limited in the
U.S. Filter Registration Statement on Form S-4 (No. 333-52717), as amended.

We also consent to the reference to The Mentor Group, Inc. under the heading
"Experts" in such Form S-4.

If you require anything further pursuant to this matter, please do not hesitate
to call.

Sincerely,

THE MENTOR GROUP, INC.

/s/ JOHN D. GLENN

John D. Glenn
President and Managing Director

<PAGE>

Exhibit 23.09

CONSENT OF
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
MAY 11, 1998.

We hereby consent to the inclusion of our letter to the Board of Directors
of U.S. Filter Corporation dated February 9, 1998 as an exhibit to the joint
Proxy Statement/Prospectus of U.S. Filter Corporation and Culligan Water
Technologies, Inc. included in the Registration Statement of U.S. Filter
Corporation on Form S-4 filed with the Securities and Exchange Commission
concurrently with this consent (the "Proxy/Prospectus") and to the references to
our Firm under the captions "SUMMARY - The Merger and the Merger Agreement -
Opinions of U.S. Filter Financial Advisors" and "THE MERGER - Background of the
Merger," "-- Recommendation of the U.S. Filter Board of Directors: U.S. Filter's
Reasons for the Merger" and "Opinions of U.S. Filter's Financial Advisors" in
the Proxy/Prospectus. In giving such consent, we do not hereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.

Donaldson, Lufkin & Jenrette Securities Corporation

By: /s/ Pauline Boghosian
---------------------------------------------------

Title: Vice President
---------------------------------------------------

<PAGE>

EXHIBIT 23.10

[LETTERHEAD OF SALOMON SMITH BARNEY]

Board of Directors
United States Filter Corporation
40-004 Cook Street
Palm Desert, CA 92211

Member of the Board:

In reference to our written opinion, dated February 9, 1998 (our "Opinion")
addressed to you as to the fairness, from a financial point of view, to the
holders of common stock of United States Filter Corporation (the "Company") of
the Exchange Ratio (as defined in our Opinion) to be used in the Company's
proposed merger (the "Merger") with Culligan Water Technologies, Inc.
("Culligan"), we hereby consent to the inclusion of our Opinion in its entirety
in the joint proxy statement/prospectus of Culligan and the Company to be
distributed to the stockholders of Culligan and the Company in connection with
the Merger.

Very truly yours,

/s/ Salomon Smith Barney
SALOMON SMITH BARNEY

<PAGE>

EXHIBIT 23.11

CONSENT OF BEAR, STEARNS & CO. INC.
-----------------------------------

We hereby consent to the inclusion of our opinion, dated February 9, 1998,
as Annex D to the Joint Proxy Statement/Prospectus constituting a part of the
Registration Statement on Form S-4 filed by United States Filter Corporation,
and to the references to us and our opinion under the captions "SUMMARY - The
Merger and the Merger Agreement - Opinions of Culligan Financial Advisors", "THE
MERGER - Background of the Merger," " - Recommendation of the Culligan Board of
Directors; Culligan's Reasons for the Merger," and " - Opinions of Culligan
Financial Advisors". By giving such consent we do not thereby admit that we are
experts with respect to any part of such Registration Statement within the
meaning of the term "expert" as used in, or that we come within the category of
persons whose consent is required under, the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.

BEAR, STEARNS & CO. INC.

By: /s/ Michael Grad
----------------------------
Senior Managing Director

New York, New York
May 14, 1998

<PAGE>

EXHIBIT 23.12

May 14, 1998

Board of Directors

Culligan Water Technologies, Inc.

One Culligan Parkway

Northbrook, IL 60062-6209

Re: Registration Statement of United States Filter Corporation Relating to
Common Stock, par value $0.01 per share, of United States Filter
Corporation being registered in connection with the Agreement and Plan of
Merger dated as of February 9, 1998 by and among United States Filter
Corporation, Palm Water Acquisition Corp., a wholly owned subsidiary of
United States Filter Corporation and Culligan Water Technologies, Inc.

Gentlemen:

Reference is made to our opinion letter dated February 9, 1998 with respect to
the fairness from a financial point of view to the holders of the outstanding
shares of Common Stock, par value $0.01 per share, of Culligan Water
Technologies, Inc. (the "Company") of the Exchange Ratio (as defined in such
opinion letter) pursuant to the Agreement and Plan of Merger dated as of
February 9, 1998 by and among United States Filter Corporation ("USF"), Palm
Water Acquisition Corp., a wholly owned subsidiary of USF, and the Company.

The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of the Company in connection with its consideration of
the transaction contemplated therein and is not to be used, circulated, quoted
or otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to include our
opinion in the above-referenced Registration Statement.

In that regard, we hereby consent to the references to our Firm and the opinion
of our Firm under the captions "SUMMARY -- The Merger and the Merger Agreement--
Culligan's Reasons for the Merger; Unanimous Recommendation of the Culligan
Board of Directors," "-- The Merger and the Merger Agreement -- Opinions of
Culligan Financial Advisors," "THE MERGER -- Background of the Merger," "--
Unanimous Recommendation of the Culligan Board of Directors; Culligan's Reasons
for the Merger" and " -- Opinions of Culligan Financial Advisors" and to the
inclusion of the foregoing opinion in the Joint Proxy Statement/Prospectus
included in the above-mentioned Registration Statement. In giving such consent,
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933 or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,

- -----------------------
(GOLDMAN, SACHS & CO.)