UNITED STATES FILTER CORP, S-4, 1998-12-17

UNITED STATES FILTER CORP
S-4, 1998-12-17
REFRIGERATION & SERVICE INDUSTRY MACHINERY

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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UNITED STATES FILTER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<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
(NAME, 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>
THOMAS J. LEARY NICK E. YOCCA
O'MELVENY & MYERS LLP JEFFREY B. COYNE
610 NEWPORT CENTER DRIVE, 17TH FLOOR STRADLING YOCCA CARLSON & RAUTH
NEWPORT BEACH, CALIFORNIA 92660-6429 660 NEWPORT CENTER DRIVE, SUITE 1600
(949) 760-9600 NEWPORT BEACH, CALIFORNIA 92660
(949) 725-4000
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and the Merger
has become effective under the Merger Agreement as described herein.

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. [_]

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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
PROPOSED PROPOSED AMOUNT OF
MAXIMUM MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(2) PER SHARE PRICE(3) FEE(4)
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share (including
Rights)(5).................... 3,196,094 shares Not applicable $31,401,627 $8,730
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</TABLE>
(Footnotes continued on following page)
<PAGE>

(Footnotes continued from previous page)

(1) This Registration Statement relates to Common Stock, par value $.01 per
share (including the associated Rights, "U.S. Filter Common Stock"), of
United States Filter Corporation (the "Registrant") to be issued to
holders of Common Stock, par value $0.15 per share ("Unit Common Stock"),
of Unit Instruments, Inc. ("Unit") in connection with the merger (the
"Merger") of Kinetics Acquisition Corp. ("Subcorp"), a wholly owned
subsidiary of the Registrant, with and into Unit, as described in the
Agreement and Plan of Merger among the Registrant, Subcorp and Unit, dated
as of July 2, 1998, and amended by the First Amendment thereto dated
August 5, 1998 and the Second Amendment thereto dated November 10, 1998,
attached as Appendix A to the Proxy Statement/Prospectus forming a part of
this Registration Statement (such Agreement and Plan of Merger, as amended
by such First Amendment and Second Amendment to Agreement and Plan of
Merger, is referred to herein as the "Merger Agreement").

(2) The number of shares of U.S. Filter Common Stock to be registered is based
upon the expected number of shares of Unit Common Stock to be converted
into shares of U.S. Filter Common Stock pursuant to the Merger Agreement
(3,995,118, which was the number of shares of Unit Common Stock
outstanding as of December 4, 1998), multiplied by the exchange ratio that
would result pursuant to the Merger Agreement if the average of the
closing price per share for shares of U.S. Filter Common Stock as reported
on the New York Stock Exchange Composite Tape on each of the 20 days
ending on the fifth trading day preceding the closing date of the Merger
was $10.00 (.8000).

(3) Pursuant to Rule 457(f)(1) of the Securities Act, this amount was
calculated upon the basis of the average of the high and low prices of
Unit Common Stock reported on the Nasdaq National Market as of
December 15, 1998 ($7.86 per share), multiplied by the number of shares of
Unit Common Stock expected to be exchanged for U.S. Filter Common Stock
pursuant to the Merger Agreement as calculated in note (2) above
(3,995,118 shares). This amount is estimated solely for the purpose of
calculating the Registration Fee.

(4) A fee of $5,911.00 was paid on September 24, 1998 pursuant to Section
14(g)(1)(A) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14a-6(i)(1) and Rule 0-11 promulgated under the
Exchange Act in respect of the Merger upon the filing by Unit of
preliminary proxy statement materials relating to the Merger. Pursuant to
Rule 457(b) under the Securities Act and Section 14(g)(1)(B) of the
Exchange Act and Rule 0-11(2) promulgated thereunder, the amount of such
previously paid fee may be credited against the registration fee payable
in connection with this filing. Accordingly, only $2,819 of the total
registration fee of $8,730, calculated pursuant to Section 6(b) of the
Securities Act which requires a fee of $278 per $1,000,000 of the maximum
aggregate price at which the U.S. Filter Common Stock is proposed to be
offered, is required to be paid with this Registration Statement.

(5) A Preferred Stock Purchase Right (a "Right" or, collectively, "Rights") is
a right to purchase one one-thousandth of a share of Series A Junior
Participating Preferred Stock of the Registrant. One Right is initially
attached to each share of U.S. Filter Common Stock being registered
hereby. Until the occurrence of certain prescribed events, the Rights are
not exercisable, are evidenced by the certificates representing the U.S.
Filter Common Stock, and will be transferred only with such shares of U.S.
Filter Common Stock.

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

Pursuant to Rule 416(a), the number of shares registered herein shall be
adjusted to include any additional shares which may become issuable as a
result of stock splits, stock dividends, or similar transactions.

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

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 AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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<PAGE>

[LOGO OF UNIT INSTRUMENTS APPEARS HERE]

December 17, 1998

Dear Shareholder:

You are cordially invited to attend a Special Meeting of the Shareholders
(the "Unit Special Meeting") of Unit Instruments, Inc., a California
corporation ("Unit") to be held on January 22, 1999 at 8:00 a.m., local time,
at Unit's principal executive offices located at 22600 Savi Ranch Parkway,
Yorba Linda, California 92887.

As described in the enclosed Proxy Statement/Prospectus, at the Unit Special
Meeting, shareholders will be asked to vote upon a proposal to approve the
Agreement and Plan of Merger, dated as of July 2, 1998, as amended by that
certain First Amendment to Agreement and Plan of Merger dated as of August 5,
1998, and by that certain Second Amendment to Agreement and Plan of Merger
dated as of November 10, 1998 (such Agreement and Plan of Merger, as amended
by such First Amendment and Second Amendment thereto, is referred to herein as
the "Merger Agreement"), among Unit, United States Filter Corporation, a
Delaware corporation ("U.S. Filter"), and Kinetics Acquisition Corp., a
California corporation and a wholly-owned subsidiary of U.S. Filter
("Subcorp"), and the merger of Subcorp with and into Unit in accordance with
the Merger Agreement (the "Merger"). As a result of the Merger, Unit will
become a wholly-owned subsidiary of U.S. Filter and each outstanding share of
Unit's common stock (the "Unit Common Stock") will be converted into the right
to receive a number of shares of U.S. Filter's common stock (including the
associated Preferred Stock purchase rights, "U.S. Filter Common Stock") equal
to the exchange ratio calculated pursuant to the Merger Agreement by dividing
the Merger Consideration (as defined below) by the average of the closing
price per share for shares of U.S. Filter Common Stock as reported on the New
York Stock Exchange Composite Tape on each of the 20 consecutive trading days
ending on the fifth trading day preceding the closing date of the Merger (the
"U.S. Filter Share Value"). The "Merger Consideration" will be determined as
follows: (i) if the U.S. Filter Share Value is greater than or equal to
$22.00, then the Merger Consideration will equal $10.00; (ii) if the U.S.
Filter Share Value is less than $22.00 and greater than $12.00, then the
Merger Consideration will equal $8.00 plus the dollar amount equal to a
fraction, the numerator of which will be the U.S. Filter Share Value minus
$12.00 and the denominator of which will be five; and (iii) if the U.S. Filter
Share Value is less than or equal to $12.00, then the Merger Consideration
will equal $8.00. If the U.S. Filter Share Value is less than $11.00, then
U.S. Filter may terminate the Merger Agreement. You are urged to read the
enclosed Proxy Statement/Prospectus, which provides you with a description of
certain of the terms of the proposed Merger. A copy of the Merger Agreement is
included as Appendix A to the enclosed Proxy Statement/Prospectus.

THE BOARD HAS CAREFULLY CONSIDERED THE TERMS AND CONDITIONS OF THE PROPOSED
MERGER AND HAS DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF, AND IS
ON TERMS THAT ARE FAIR TO, UNIT'S SHAREHOLDERS. THE BOARD HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE MERGER, AND RECOMMENDS THAT THE SHAREHOLDERS OF UNIT APPROVE THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
MERGER.

Consummation of the Merger is subject to certain conditions, including
approval of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of the holders of a majority of the outstanding shares of
the Unit Common Stock entitled to vote thereon.

Only holders of Unit Common Stock of record at the close of business on
December 4, 1998 are entitled to notice of and to vote at the Unit Special
Meeting or any adjournments or postponements thereof.
<PAGE>

In the material accompanying this letter, you will find a Notice of Special
Meeting of Unit Shareholders, a Proxy Statement/Prospectus relating to the
actions to be taken by Unit's shareholders at the Unit Special Meeting and a
proxy. The Proxy Statement/Prospectus more fully describes the proposed Merger
and includes information about Unit and U.S. Filter.

It is important that your shares are represented and voted at the Unit
Special Meeting. All shareholders of Unit are invited to attend the Unit
Special Meeting in person. However, whether or not you plan to attend the Unit
Special Meeting, please complete, sign, date and return your proxy in the
enclosed envelope. If you attend the Unit Special Meeting, you may vote in
person if you wish, even though you have previously returned your proxy.
Executed proxies with no instructions indicated thereon will be voted "FOR"
approval of the Merger Agreement and the transactions contemplated thereby,
including the Merger.

Please do not send in your stock certificate at this time. In the event that
the Merger is approved by the requisite vote of Unit's shareholders, you will
be sent a letter of transmittal for that purpose after the Merger is
consummated.

Sincerely,

/s/ Michael J. Doyle, President

Michael J. Doyle, President
<PAGE>

UNIT INSTRUMENTS, INC.
22600 SAVI RANCH PARKWAY
YORBA LINDA, CALIFORNIA 92887

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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 22, 1999

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To the Shareholders of Unit Instruments, Inc.:

A Special Meeting of Shareholders of UNIT INSTRUMENTS, INC., a California
corporation ("Unit"), will be held on Friday, January 22, 1999, at 8:00 a.m.,
local time, at the principal executive offices of Unit, located at 22600 Savi
Ranch Parkway, Yorba Linda, California 92887 for the following purposes:

1. To consider and vote upon a proposal to approve (i) the Agreement and
Plan of Merger, dated as of July 2, 1998, as amended by a First Amendment
to Agreement and Plan of Merger dated as of August 5, 1998, and by a Second
Amendment to Agreement and Plan of Merger dated as of November 10, 1998
(such Agreement and Plan of Merger, as amended by such First Amendment and
Second Amendment thereto, is referred to herein as the "Merger Agreement"),
among Unit, United States Filter Corporation, a Delaware corporation ("U.S.
Filter"), and Kinetics Acquisition Corp., a California corporation and a
wholly-owned subsidiary of U.S. Filter ("Subcorp"); and (ii) the merger of
Subcorp with and into Unit in accordance with the Merger Agreement (the
"Merger"). As a result of the Merger, Unit will become a wholly-owned
subsidiary of U.S. Filter and each outstanding share of Unit's common stock
will be converted into the right to receive a number of shares of U.S.
Filter's common stock (including the associated Preferred Stock purchase
rights, "U.S. Filter Common Stock") equal to the exchange ratio calculated
pursuant to the Merger Agreement by dividing the Merger Consideration (as
defined below) by the average of the closing price per share for shares of
U.S. Filter Common Stock as reported on the New York Stock Exchange
Composite Tape on each of the 20 consecutive trading days ending on the
fifth trading day preceding the closing date of the Merger (the "U.S.
Filter Share Value"). The "Merger Consideration" will be determined as
follows: (i) if the U.S. Filter Share Value is greater than or equal to
$22.00, then the Merger Consideration will equal $10.00; (ii) if the U.S.
Filter Share Value is less than $22.00 and greater than $12.00, then the
Merger Consideration will equal $8.00 plus the dollar amount equal to a
fraction, the numerator of which will be the U.S. Filter Share Value minus
$12.00 and the denominator of which will be five; and (iii) if the U.S.
Filter Share Value is less than or equal to $12.00, then the Merger
Consideration will equal $8.00. If the U.S. Filter Share Value is less than
$11.00, then U.S. Filter may terminate the Merger Agreement.

2. To act upon procedural matters, including (without limitation)
potential adjournments of the Special Meeting.

Only shareholders of record of Unit's common stock at the close of business
on December 4, 1998 are entitled to notice of, and will be entitled to vote
at, the Special Meeting or any adjournment or postponement thereof. Approval
of the Merger Agreement and the Merger will require the affirmative vote of
the holders of a majority of the outstanding shares of Unit's common stock
entitled to vote thereon. Executed proxies with no instructions indicated
thereon will be voted "FOR" approval of the Merger Agreement and the Merger.
If votes sufficient for approval of the Merger Agreement and the Merger are
not received, it is expected that the Special Meeting will be postponed or
adjourned to a later time in order to permit further solicitation of proxies
or votes by Unit. Executed proxies indicating votes "AGAINST" approval of the
Merger Agreement and the Merger will not be voted in favor of any such
postponement or adjournment.

By Order of the Board of Directors

/s/ Gary N. Patten

Gary N. Patten
Secretary

Yorba Linda, California
December 17, 1998

TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING, YOU
ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE POSTAGE PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO
ATTEND THE SPECIAL MEETING IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY YOU
AT ANY TIME BEFORE IT IS VOTED BY ONE OF THE METHODS SPECIFIED IN THE
PROXY STATEMENT/PROSPECTUS. DO NOT SEND STOCK CERTIFICATES AT THIS TIME.

<PAGE>

PROXY STATEMENT OF UNIT INSTRUMENTS, INC./
PROSPECTUS OF UNITED STATES FILTER CORPORATION

This Proxy Statement/Prospectus is furnished to shareholders ("Unit
Shareholders") of Unit Instruments, Inc., a California corporation ("Unit"), in
connection with the solicitation of proxies by Unit's Board of Directors (the
"Unit Board") for a Special Meeting of Unit Shareholders scheduled to be held
on Friday, January 22, 1999, at 8:00 a.m. local time, at Unit's principal
executive offices, located at 22600 Savi Ranch Parkway, Yorba Linda, California
92887 (the "Unit Special Meeting") to consider and vote upon a proposal to
approve (i) the Agreement and Plan of Merger, dated as of July 2, 1998, as
amended by a First Amendment to Agreement and Plan of Merger dated August 5,
1998, and by a Second Amendment to Agreement and Plan of Merger dated November
10, 1998 (such Agreement and Plan of Merger, as amended by such First Amendment
and Second Amendment thereto, is referred to herein as the "Merger Agreement"),
among Unit, United States Filter Corporation, a Delaware corporation ("U.S.
Filter"), and Kinetics Acquisition Corp., a California corporation and wholly-
owned subsidiary of U.S. Filter ("Subcorp"), and (ii) the merger of Subcorp
with and into Unit in accordance with the Merger Agreement (the "Merger").

This Proxy Statement/Prospectus also relates to up to 3,196,094 shares of
Common Stock of U.S. Filter, par value $0.01 per share (including the
associated Rights, as hereinafter defined, "U.S. Filter Common Stock"), offered
hereby to Unit Shareholders upon consummation of the Merger. Upon the
effectiveness of the Merger, each outstanding share of Unit's common stock, par
value $0.15 per share ("Unit Common Stock"), will be converted into the right
to receive a number of shares of U.S. Filter Common Stock equal to the exchange
ratio calculated pursuant to the Merger Agreement (the "Exchange Ratio") by
dividing the Merger Consideration (as defined below) by the average of the
closing price per share for shares of U.S. Filter Common Stock as reported on
the New York Stock Exchange Composite Tape on each of the 20 consecutive
trading days ending on the fifth trading day preceding the closing date (the
"Closing Date") of the Merger (the "U.S. Filter Share Value"). The "Merger
Consideration" will be determined as follows: (i) if the U.S. Filter Share
Value is greater than or equal to $22.00, then the Merger Consideration will
equal $10.00; (ii) if the U.S. Filter Share Value is less than $22.00 and
greater than $12.00, then the Merger Consideration will equal $8.00 plus the
dollar amount equal to a fraction, the numerator of which will be the U.S.
Filter Share Value minus $12.00 and the denominator of which will be five; and
(iii) if the U.S. Filter Share Value is less than or equal to $12.00, then the
Merger Consideration will equal $8.00. If the U.S. Filter Share Value is less
than $11.00, then U.S. Filter may terminate the Merger Agreement. Needham &
Company, Inc. ("Needham"), has delivered an opinion to the Unit Board dated
November 10, 1998 that, as of such date, the Exchange Ratio is fair to the Unit
Shareholders from a financial point of view.

On December 16, 1998, the last full trading day prior to the date of this
Proxy Statement/Prospectus, the closing sale price of U.S. Filter Common Stock
on the NYSE Composite Tape was $20.81 per share, and the closing sale price of
Unit's Common Stock on the Nasdaq National Market was $7.94 per share. Because
the market price of U.S. Filter Common Stock is subject to fluctuation, the
value of the shares of U.S. Filter Common Stock that holders of Unit Common
Stock will receive in the Merger may increase or decrease prior to and after
the Merger. See "SUMMARY--The Merger--Effects of Merger" for a table setting
forth the number of shares of U.S. Filter Common Stock which would be issuable
per share of Unit Common Stock based on various assumed U.S. Filter Share Value
determinations. Unit Shareholders should obtain current quotes for the U.S.
Filter Common Stock and Unit Common Stock. See "COMPARATIVE PER SHARE MARKET
PRICE AND DIVIDEND INFORMATION."

This Proxy Statement/Prospectus and the accompanying form of proxy are first
being mailed to Unit Shareholders on or about December 17, 1998.

UNIT SHAREHOLDERS ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS
PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY, PARTICULARLY THE MATTERS REFERRED
TO BEGINNING ON PAGE 12 UNDER "RISK FACTORS."

THE SECURITIES OFFERED HEREBY 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 PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Proxy Statement/Prospectus is December 17, 1998.
<PAGE>

NO PERSON HAS BEEN AUTHORIZED BY U.S. FILTER OR UNIT TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN
THIS 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 UNIT. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS OR A SOLICITATION OF A
PROXY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT WOULD BE
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.

NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION
OF THE SECURITIES TO WHICH THIS PROXY STATEMENT/PROSPECTUS RELATES SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF U.S. FILTER OR UNIT SINCE THE DATE HEREOF OR THAT THE
INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.

AVAILABLE INFORMATION

U.S. Filter and Unit are subject to the informational requirements of the
U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information
with the U.S. Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of these materials can also be obtained from the Commission at
prescribed rates by writing to the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains an
Internet web site that contains certain reports, proxy statements and other
information regarding issuers, like U.S. Filter and Unit, who file
electronically with the Commission. The address of that site is
http://www.sec.gov. The reports, proxy statements and other information filed
by U.S. Filter with the Commission may also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005. The reports, proxy statements
and other information filed by Unit with the Commission may also be inspected
at the offices of the National Association of Securities Dealers, Inc., NASDAQ
Reports Section, 1735 K Street, Washington, D.C. 20006.

U.S. Filter has filed with the Commission a Registration Statement on Form
S-4 under the U.S. Securities Act of 1933, as amended (the "Securities Act"),
with respect to the U.S. Filter Common Stock to be issued in connection with
the Merger (the "Registration Statement"). This Proxy Statement/Prospectus
constitutes the prospectus of U.S. Filter that is filed as part of the
Registration Statement. Other parts of the Registration Statement are omitted
from this Proxy Statement/Prospectus in accordance with the rules and
regulations of the Commission. Copies of the Registration Statement, including
the exhibits to the Registration Statement and other material that is not
included herein, may be inspected, without charge, at the offices of the
Commission referred to above, or obtained as set forth above.

Statements made in this Proxy Statement/Prospectus concerning the contents
of any contract or other document are not necessarily complete. With respect
to each contract or other document filed as an exhibit to the Registration
Statement, reference is hereby made to that exhibit for a more complete
description of the matter involved, and each such statement is hereby
qualified in its entirety by such reference.

ALL INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS RELATING TO
U.S. FILTER HAS BEEN FURNISHED BY U.S. FILTER, AND ALL INFORMATION HEREIN
RELATING TO UNIT HAS BEEN FURNISHED BY UNIT.

ii
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by U.S. Filter (File No. 1-10728) with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
U.S. Filter's Annual Report on Form 10-K for the fiscal year ended March 31,
1998; U.S. Filter's Quarterly Reports on Form 10-Q for the quarter ended June
30, 1998 as amended by a Form 10-Q/A dated November 9, 1998) and for the
quarter ended September 30, 1998; U.S. Filter's Current Reports on Form 8-K
dated December 9, 1997, January 16, 1998, May 12, 1998, May 19, 1998, June 15,
1998, August 14, 1998, November 9, 1998, November 10, 1998, November 27, 1998
and December 3, 1998; U.S. Filter's Current Reports on Form 8-K/A dated
February 6, 1998 and March 4, 1998 (amending the Current Report on Form 8-K
dated December 9, 1997), February 6, 1998, March 4, 1998, May 12, 1998 and May
14, 1998 (amending the Current Report on Form 8-K dated January 16, 1998), May
14, 1998 (amending the Current Report on Form 8-K dated May 12, 1998), August
17, 1998 (amending the Current Report on Form 8-K dated August 14, 1998) and
September 18, 1998 (amending the Current Report on Form 8-K dated June 15,
1998); U.S. Filter's Definitive Proxy Statement on Schedule 14A dated July 7,
1998; and the descriptions of U.S. Filter Common Stock, and the associated
rights to purchase Series A Junior Participating Preferred Stock of U.S.
Filter (the "Rights"), set forth in U.S. Filter's Registration Statements
filed pursuant to Section 12 of the Exchange Act, and any report or amendment
filed for the purpose of updating any such descriptions.

The following documents previously filed by Unit with the Commission are
hereby incorporated by reference in this Proxy Statement/Prospectus: (i)
Unit's Annual Report on Form 10-K for the year ended May 31, 1998; (ii) Unit's
Quarterly Report on Form 10-Q for the quarter ended August 28, 1998; and (iii)
Unit's Current Reports on Form 8-K dated July 2, 1998, and November 10, 1998.

In addition, all documents filed by U.S. Filter and Unit with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of the initial filing of the Registration Statement and prior to
effectiveness of the Registration Statement and subsequent to the date of this
Proxy Statement/Prospectus and prior to the date of the Unit Special Meeting
shall be deemed incorporated by reference into this Proxy Statement/Prospectus
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated herein shall be deemed to
be modified or superseded for purposes of this Proxy Statement/Prospectus to
the extent that a statement contained herein or in any other subsequently
filed document which also 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 Proxy Statement/Prospectus.

This Proxy Statement/Prospectus includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Exchange Act. Although U.S. Filter and Unit believe that the expectations
reflected in such forward-looking statements are reasonable at this time, they
can give no assurance that such expectations will prove to be correct.
Important factors that could cause actual results to differ materially from
such expectations are set forth in "Risk Factors" as well as elsewhere in this
Proxy Statement/Prospectus.

THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE HEREIN) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL
REQUEST. REQUESTS FOR DOCUMENTS RELATING TO U.S. FILTER SHOULD BE DIRECTED TO
UNITED STATES FILTER CORPORATION, ATTN: DAMIAN GEORGINO, ESQ., EXECUTIVE VICE
PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY, 40-004 COOK STREET, PALM
DESERT, CALIFORNIA 92211 (TELEPHONE (760) 340-0098). REQUESTS FOR DOCUMENTS
RELATING TO UNIT SHOULD BE DIRECTED TO UNIT INSTRUMENTS, INC., ATTN: GARY N.
PATTEN, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY, 22600 SAVI
RANCH PARKWAY, YORBA LINDA, CALIFORNIA 92887 (TELEPHONE (714) 921-2640). IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE SPECIAL
MEETING, ANY SUCH REQUEST SHOULD BE MADE BY JANUARY 16, 1999.

iii
<PAGE>

SUMMARY

The following is a summary of all material information contained elsewhere in
this Proxy Statement/Prospectus. This summary does not contain a complete
description of the Merger Agreement, a copy of which is attached as Appendix A,
or the other matters contained in this Proxy Statement/Prospectus. This summary
is qualified in its entirety by reference to the full text of this Proxy
Statement/Prospectus and the attached Appendices. Shareholders are urged to
read carefully this Proxy Statement/Prospectus and the attached Appendices in
their entirety before voting.

THE PARTIES

Unit

Unit was incorporated in 1984 and is the successor-in-interest to Autoclave
Engineers, Inc. ("Autoclave"), a Pennsylvania corporation founded in 1946. Unit
commenced operations in 1980 and was acquired by Autoclave in 1984. From 1986
to 1995, the predecessor company consisted of three operating segments: Burton
Corblin, Autoclave Engineers Group and Unit Instruments. Burton Corblin
designed and manufactured high pressure diaphragm and piston compressors.
Autoclave Engineers Group designed, manufactured and marketed autoclaves,
compressors, valves, fittings and related systems, components and accessories,
principally for elevated temperatures and/or pressure applications. During
fiscal 1995, Burton Corblin was sold and a formal plan for the disposition of
Autoclave Engineers Group was adopted by the Board of Directors of the
predecessor company. In the second quarter of fiscal 1996, Autoclave Engineers
Group was sold. At the Annual Meeting of Shareholders held in November, 1995,
the shareholders approved the change of the predecessor company's state of
incorporation from Pennsylvania to California, pursuant to a Plan of Merger
which provided for Autoclave to be merged into its wholly-owned subsidiary,
Unit Instruments, Inc. In conjunction with this action, the corporate office in
Erie, Pennsylvania was relocated to Unit's facilities in Yorba Linda,
California. As used herein, the term "Unit" shall mean and refer to Unit, its
predecessor company and its subsidiary, as appropriate.

Since the restructuring, Unit has consisted of a single operating segment
which designs, manufactures and markets mass flow controllers that are used to
control the flow of process gases into semiconductor wafer fabrication chambers
and other related semiconductor fabrication equipment. Also included in this
segment is the design, manufacturing and marketing of ultra high purity gas
isolation boxes, gas panels and valve manifold boxes for use in semiconductor
wafer manufacturing processes. Wafer fabrication involves deposition, etching
and stripping processes that each require the introduction of process gases
that must be precisely controlled to ensure system throughput and process
yields. Unit's products are marketed and sold worldwide through a direct sales
force and sales representatives. Principal marketing and service centers are
maintained in the United States, Ireland, Japan and Korea. See "BUSINESS OF
UNIT."

Unit's principal executive offices are located at 22600 Savi Ranch Parkway,
Yorba Linda, California 92887 and its telephone number is (714) 921-2640.

U.S. Filter

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,
substantially all of which are leased to agricultural tenants. See "BUSINESS OF
U.S. FILTER."

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.

Subcorp

Subcorp is a newly-formed, wholly-owned subsidiary of U.S. Filter formed
solely for the purposes of the Merger. Subcorp's principal executive offices
are located at 40-004 Cook Street, Palm Desert, California 92211 and its
telephone number is (760) 340-0098.

SPECIAL MEETING OF SHAREHOLDERS

Date, Time and Place

The Unit Special Meeting is scheduled to be held on January 22, 1999 at 8:00
a.m., local time, at Unit's principal executive offices located at 22600 Savi
Ranch Parkway, Yorba Linda, California 92887.

Purpose of the Special Meeting

At the Unit Special Meeting, Unit Shareholders of record as of the close of
business on the Record Date (as defined below) will be asked to consider and
vote upon a proposal to approve the Merger Agreement and the Merger, and such
other matters as may properly be brought before the Unit Special Meeting.

Record Date; Shares Outstanding and Entitled to Vote; Quorum

Only Unit Shareholders of record at the close of business on December 4, 1998
(the "Record Date") will be entitled to notice of and to vote at the Unit
Special Meeting. At the close of business on the Record Date, there were
3,995,118 shares of Unit Common Stock outstanding, each of which will be
entitled to one vote on each matter to be acted upon. The required quorum for
the transaction of business at the Unit Special Meeting is a majority of the
shares of Unit Common Stock issued and outstanding on the Record Date.
Abstentions and broker non-votes each will be included in determining the
number of shares present for purposes of determining the presence of a quorum.

Vote Required; Revocability of Proxies

Approval of the Merger Agreement and the Merger requires the affirmative vote
of the holders of a majority of the outstanding shares of Unit Common Stock
issued and outstanding and entitled to vote thereon as of the close of business
on the Record Date. Abstentions and broker non-votes will have the same effect
as votes against the Merger Agreement and the Merger. As of December 4 , 1998,
the directors and officers of Unit and their affiliates had the right to vote
an aggregate of 3.3% of the Unit Common Stock outstanding as of such date. Any
Unit Shareholder who has given a proxy may revoke it at any time before it is
exercised at the Unit Special Meeting, by (i) delivering to the Secretary of
Unit (by any means, including facsimile) a written notice, bearing a date later
than the proxy, stating that the proxy is revoked, (ii) signing and so
delivering a proxy relating to the same shares and bearing a later date than
the earlier proxy prior to the vote at the Unit Special Meeting or
(iii) attending the Unit Special Meeting and voting in person (although
attendance at the Unit Special Meeting will not, by itself, revoke a proxy).
See "THE UNIT SPECIAL MEETING--Voting of Proxies."

2
<PAGE>

THE MERGER

General. Pursuant to the Merger, Subcorp will be merged with and into Unit
and Unit will be the surviving corporation of the Merger and become a wholly-
owned subsidiary of U.S. Filter. If the requisite approval of the Unit
Shareholders is received, the Merger is expected to be consummated as soon as
practicable after the satisfaction or waiver of each of the conditions to the
consummation of the Merger, which is expected to occur as soon as practicable
following receipt of shareholder approval at the Unit Special Meeting.

Effects of Merger. Upon consummation of the Merger, each then-outstanding
share of Unit Common Stock, other than shares owned by Unit, U.S. Filter,
Subcorp or any subsidiary of Unit, U.S. Filter or Subcorp, if any and other
than Dissenting Shares (as defined below), will be converted automatically into
the right to receive a number of shares of U.S. Filter Common Stock equal to
the Exchange Ratio calculated pursuant to the Merger Agreement as the Merger
Consideration divided by the U.S. Filter Share Value (calculated as the average
of the closing price per share for shares of U.S. Filter Common Stock as
reported on the New York Stock Exchange Composite Tape on each of the 20
consecutive trading days ending on the fifth trading day preceding the Closing
Date). The Merger Consideration will be determined as follows: (i) if the U.S.
Filter Share Value is greater than or equal to $22.00, then the Merger
Consideration will equal $10.00; (ii) if the U.S. Filter Share Value is less
than $22.00 and greater than $12.00, then the Merger Consideration will equal
$8.00 plus the dollar amount equal to a fraction, the numerator of which will
be the U.S. Filter Share Value minus $12.00 and the denominator of which will
be five; and (iii) if the U.S. Filter Share Value is less than or equal to
$12.00, then the Merger Consideration will equal $8.00.

The following table sets forth the number of shares of U.S. Filter Common
Stock which would be issuable per share of Unit Common Stock based upon certain
assumed U.S. Filter Share Value determinations:

<TABLE>
<CAPTION>
NUMBER OF SHARES OF AGGREGATE VALUE OF
U.S. FILTER SHARE VALUE U.S. FILTER COMMON STOCK MERGER CONSIDERATION(1)
----------------------- ------------------------ -----------------------
<S> <C> <C>
$10.00................... 0.80000 $ 8.00
12.00................... 0.66667 8.00
14.00................... 0.60000 8.40
16.00................... 0.55000 8.80
18.00................... 0.51111 9.20
20.00................... 0.48000 9.60
22.00................... 0.45455 10.00
24.00................... 0.41667 10.00
26.00................... 0.38462 10.00
30.00................... 0.33333 10.00
</TABLE>
- --------
(1) The Aggregate Value of Merger Consideration data presented above is based
upon the assumed U.S. Filter Share Value and therefore does not necessarily
reflect the value of such consideration as of the date of the Unit Special
Meeting, the effective time of the Merger, or any other time.

In the event that the U.S. Filter Share Value is less than $11.00, U.S.
Filter may terminate the Merger Agreement.

3
<PAGE>

$8.00, a decrease in the trading price of U.S. Filter Common Stock would not be
expected to be a factor that, by itself, would cause the trading price of Unit
Common Stock to fall below $8.00. However, in the event that the U.S. Filter
Share Value decreases to and below $11.00, the trading price of Unit Common
Stock may potentially decrease below $8.00 due to the risk that U.S. Filter may
exercise its right to terminate the Merger Agreement.

The foregoing statements regarding the possible effects that changes in the
trading price of U.S. Filter Common Stock could have on Unit Common Stock are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. No assurance can be given that the possible
effects described in or implied by such forward-looking statements will
actually occur, or that the effect of changes in the trading price of U.S.
Filter Common Stock on the trading price of Unit Common Stock would be limited
to the possible effects described. Actual trading prices of Unit Common Stock
depend on many factors that are unrelated to the trading price of U.S. Filter
Common Stock. For example, the trading price of Unit Common Stock could
increase or decrease, including increases above $10.00 or decreases below
$8.00, as a result of factors unrelated to the trading price of U.S. Filter
Common Stock. See Unit's Annual Report on Form 10-K for the fiscal year ended
May 31, 1998 for 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 those
described in or implied by such forward-looking statements.

The actual value of the shares of U.S. Filter Common Stock as of the Closing
Date could vary significantly from the U.S. Filter Share Value. The actual
value of the shares of U.S. Filter Common Stock to be issued in the Merger
cannot be determined until the effective date of the Merger and such value
could be significantly more or less than the U.S. Filter Share Value as of the
Closing Date or the value of the shares of U.S. Filter Common Stock as of the
date of this Proxy Statement/Prospectus or the date of the Special Meeting.

No fractional shares of U.S. Filter Common Stock will be issued in the
Merger. In lieu of the issuance of any fractional shares of U.S. Filter Common
Stock, cash equal to the value (determined with reference to the closing price
of shares of U.S. Filter Common Stock as reported on the NYSE Composite Tape on
the last full trading day immediately prior to the Closing Date) of such
fractional share will be paid to holders in respect of such fractional share
that would otherwise be issuable.

Exchange of Certificates. If the Merger is consummated, Unit Shareholders
will be notified as soon as practicable of the consummation of the Merger and
will be advised of the procedure for surrender of their stock certificates in
exchange for the Merger Consideration, which will be delivered within five
business days after such surrender. SHAREHOLDERS SHOULD NOT SEND IN STOCK
CERTIFICATES AT THIS TIME. See "THE MERGER AND RELATED TRANSACTIONS--Exchange
of Certificates."

Effective Time of the Merger. The Merger will become effective upon the
filing of an agreement of merger with the Secretary of State of California, in
accordance with the Merger Agreement and the California General Corporation Law
(the "Agreement of Merger"), or such later time as may be specified in the
Agreement of Merger (the "Effective Time"). The Agreement of Merger is expected
to be filed as soon as practicable after the satisfaction or waiver of each of
the conditions to consummation of the Merger, which is expected to occur as
soon as practicable following receipt of shareholder approval at the Unit
Special Meeting.

RECOMMENDATION OF THE UNIT BOARD OF DIRECTORS; UNIT'S REASONS FOR THE MERGER

The Unit Board has unanimously approved the Merger Agreement and the Merger
and believes that the Merger is fair to and in the best interests of Unit
Shareholders and unanimously recommends that Unit Shareholders vote for the
approval of the Merger Agreement and the Merger. In reaching its unanimous
determination, the Unit Board considered a number of factors, set forth in more
detail in "THE MERGER AND RELATED TRANSACTIONS--Reasons for the Merger,"
including its knowledge of the business of Unit, management's assessments, the
historical and current value of the Unit Common Stock, the terms of the Merger
Agreement, and the fairness opinion of Needham. The Unit Board believes that
Unit's recent operating results

4
<PAGE>

have been adversely affected by a trend of reduced market demand and by the
current and prospective environment in which Unit operates. Though Unit has
taken steps to address the reduced demand by reducing its workforce and
instituting other cost-reduction measures, the Unit Board believes that there
is substantial risk that in the long-term, Unit will not produce shareholder
value in excess of the Merger Consideration by continuing to operate as an
independent entity.

U.S. FILTER'S REASONS FOR THE MERGER

U.S. Filter believes that its acquisition of Unit through the Merger will
further its strategy for its Industrial Products and Services Group (the "IP&S
Group") by bringing to the IP&S Group complementary technology, an increased
international presence, and opportunities for reduced costs and increased
efficiencies.

INTERESTS OF CERTAIN PERSONS

In considering the recommendation of the Unit Board with respect to the
Merger, Unit Shareholders should be aware that the Unit Board and certain
officers of Unit have interests that may present them with potential conflicts
of interests. See "THE MERGER AND RELATED TRANSACTIONS--Interests of Certain
Persons."

OPINION OF FINANCIAL ADVISOR

Needham has delivered its written opinion to the Unit Board dated November
10, 1998, to the effect that, as of such date, and based upon and subject to
certain matters stated in such opinion, the Exchange Ratio is fair to the Unit
Shareholders from a financial point of view. The full text of the November 10,
1998 written opinion of Needham, which sets forth the assumptions made, matters
considered and limitations on the review undertaken by Needham in connection
with such opinion, is attached as Appendix B to this Proxy
Statement/Prospectus. Unit Shareholders are urged to read the opinion in its
entirety. See "THE MERGER AND RELATED TRANSACTIONS--Opinion of Financial
Advisor."

THE MERGER AGREEMENT

Representations and Warranties; Covenants

Under the Merger Agreement, Unit made a number of representations regarding
its capital structure, operations, financial condition and other matters,
including its authority to enter into the Merger Agreement and, subject to the
approval of the Merger Agreement and the Merger by the Unit Shareholders, to
consummate the Merger. See "THE MERGER AGREEMENT--Representations and
Warranties; Covenants."

Unit has agreed that, until the consummation of the Merger or the termination
of the Merger Agreement, it will maintain its business, it will not take
certain actions outside the ordinary course of its business without
U.S. Filter's consent and it will use reasonable efforts to consummate the
Merger. Unit has agreed not to directly or indirectly solicit, initiate,
encourage or facilitate, or furnish or disclose nonpublic information in
furtherance of, any inquiries or the making of any proposal or offer with
respect to any recapitalization, merger, consolidation or other business
combination involving, or any purchase of any material assets or any equity
securities of, Unit and its subsidiaries, taken as a whole, or any acquisition
by Unit of any material assets or capital stock of any other person, or any
combination of the foregoing (a "Competing Transaction"), except that the Unit
Board may provide information to and engage in negotiations with a third party
regarding a Competing Transaction if failure to do so would constitute a breach
of the Unit Board's fiduciary duties, as determined by the Unit Board in good
faith after receipt of advice from Unit's outside counsel. See "THE MERGER
AGREEMENT--Representations and Warranties; Covenants."

5
<PAGE>

situated employees for a period of twelve months following the effectiveness of
the Merger. U.S. Filter has also agreed, if the Merger is consummated, to
indemnify the officers and directors of Unit, subject to any limitations
imposed by applicable law, with respect to acts or omissions occurring prior to
the Merger. See "THE MERGER AGREEMENT--Representations and Warranties;
Covenants."

Conditions Precedent to the Merger

In addition to the approval of the Unit Shareholders sought hereby, the
obligations of Unit, U.S. Filter and Subcorp to consummate the Merger are also
conditioned upon (i) the accuracy in all material respects of the
representations and warranties made by the other party and the performance in
all material respects of the covenants of the other party; (ii) the absence of
any judgement, injunction, order or decree prohibiting or enjoining the
consummation of the Merger; (iii) the absence of any action by any governmental
entity challenging or seeking to restrain the consummation of the Merger; (iv)
the declaration by the Securities and Exchange Commission of the effectiveness
of the Registration Statement under the Securities Act; and (v) the approval by
NYSE, subject to official notice of issuance, of the listing of U.S. Filter
Common Stock to be issued in the Merger. Unit's obligations under the Merger
Agreement are also conditioned upon the receipt by Unit of the opinion of its
counsel to the effect that the Merger will constitute a reorganization under
section 368(a) of the Internal Revenue Code (the "Code") and that the Unit
Shareholders will not recognize any gain or loss as a result thereof, except
with respect to cash received in lieu of fractional share interests in U.S.
Filter Common Stock. U.S. Filter's obligations under the Merger Agreement are
also conditioned upon the following: (i) the consent and approval of each
person is required in connection with the Merger under all agreements to which
Unit or any of its subsidiaries is a party, and (ii) the absence of any
material adverse change in the value, condition, prospects, business or results
of operations of Unit (provided, however, that any deterioration in Unit's
prospects or operating results, to the extent attributable to a decline in the
market demand for semiconductor manufacturing equipment, shall not be deemed a
material adverse change for purposes of this condition). See "THE MERGER
AGREEMENT--Conditions to the Merger."

Stock Options and Warrants

At the Effective Time, those outstanding options and warrants to purchase
shares of Unit Common Stock that (a) were granted prior to the date of the
Merger Agreement and (b) are unexpired and unexercised as of the Effective
Time, shall be automatically converted into an option or a warrant, as the case
may be, to purchase a number of shares of U.S. Filter Common Stock equal to (x)
the number of shares of Unit Common Stock issuable immediately as of the date
of the Merger Agreement upon exercise of such option or warrant multiplied by
(y) the Exchange Ratio, with an exercise price equal to (i) the exercise price
which existed under the corresponding Unit option or warrant divided by (ii)
the Exchange Ratio, and with such other terms and conditions, subject to U.S.
Filter's approval, as were in effect under such option and warrant as of the
date of the Merger Agreement. See "THE MERGER AGREEMENT--Stock Options and
Warrants."

U.S. Filter has reached an agreement with certain current employees of Unit
who are also holders of options to purchase Unit Common Stock ("Unit Options")
and entitled pursuant to the Merger Agreement to have their Unit Options
converted into options to purchase shares of U.S. Filter Common Stock
("Exchange Options") at the Effective Time (the "Employee-Optionees"), whereby
(i) the number of shares of U.S. Filter Common Stock underlying each such
Employee Optionee's Exchange Options would be adjusted to equal the number of
shares of Unit Common Stock underlying his or her corresponding Unit Options
multiplied by a fraction, the numerator of which will be $10.00 and the
denominator of which will be the U.S. Filter Share Value and (ii) the exercise
price under his or her Exchange Options would be adjusted to equal (x) the
lesser of (A) the exercise price per share of Unit Common Stock under his or
her corresponding Unit Options or (B) $10.00, divided by (y) a fraction, the
numerator of which will be $10.00 and the denominator of which will be the U.S.
Filter Share Value, provided he or she continues as an employee of U.S. Filter
or Unit after the Effective Time. See "THE MERGER AND RELATED TRANSACTIONS--
Interests of Certain Persons in the Merger."

6
<PAGE>

Amendment of Merger Agreement

The Merger Agreement may be amended by Unit, U.S. Filter and Subcorp prior to
the Effective Time, at any time before or after approval of the Merger by the
Unit Shareholders; provided, however, that after such shareholder approval, no
amendment may be made without the further approval of such shareholders which
would by law require further approval or authorization by Unit Shareholders.
See "THE MERGER AGREEMENT--Amendment or Termination of the Merger Agreement."

Termination of Merger Agreement

The Merger Agreement may be terminated by mutual agreement of U.S. Filter and
Unit or by either such party if (i) there shall have been a material breach by
the other party of any of its representatives warranties, covenants or
agreements in the Merger Agreement to be complied with or performed by such
party at or prior to such date of termination, (ii) if the required approval of
the shareholders of Unit is not obtained by reason of the failure to obtain the
required vote, (iii) if the Merger has not been consummated by January 29,
1999, other than as a result of a material breach of the Merger Agreement by
the terminating party, or (iv) if there shall be any judgment, injunction,
order or decree enjoining U.S. Filter or Unit from consummating the Merger is
entered and such judgment, injunction, order or decree has become final and
nonappealable. See "THE MERGER AGREEMENT--Amendment or Termination of the
Merger Agreement."

The Merger Agreement may be terminated by U.S. Filter if (i) the Unit Board
withdraws or modifies its approval or recommendation of the Merger Agreement or
the Merger in a manner adverse to U.S. Filter or Subcorp, or (ii) the U.S.
Filter Share Value is less than $11.00. The Merger Agreement may be terminated
by Unit if Unit receives a proposal with respect to a Competing Transaction on
terms Unit Board (after consultation with its financial advisors) determines to
be more favorable to Unit Shareholders than the terms of the Merger, and Unit
Board determines, after consultation with Unit's outside counsel, that to
continue to recommend that Unit Shareholders vote in favor of the Merger,
notwithstanding the receipt of such offer with respect to a Competing
Transaction, would violate the fiduciary duties of the Unit Board to the Unit
Shareholders; provided, however, that Unit has provided U.S. Filter the
material terms and conditions of such Competing Transaction and a reasonable
opportunity of at least 48 hours to respond to such Competing Transaction; and
provided, further, that Unit shall promptly pay the termination fees described
below (a "Company Fiduciary Termination").

Reimbursement of Expenses; Breakup Fee

The Merger Agreement provides for the reimbursement of U.S. Filter's fees and
expenses in connection with this transaction and the payment of an additional
breakup fee of $1.5 million by Unit if (a) Unit terminates the Agreement
pursuant to a Company Fiduciary Termination, or (b) Unit terminates the Merger
Agreement because the required approval of the Unit Shareholders is not
obtained by reason of the failure to obtain the required vote or U.S. Filter
terminates the Merger Agreement as a result of Unit Board's withdrawal or
modification of (or resolution to withdraw or modify) its approval or
recommendation of the Merger Agreement or the Merger in a manner adverse to
U.S. Filter or Subcorp, and at the time of such termination there is a publicly
announced or disclosed Competing Transaction with respect to Unit involving a
third party or, in the case of a termination as a result of Unit Board's
withdrawal or modification of its approval or recommendation, at the time of
such termination there is a Competing Transaction with respect to Unit
involving a third party of which Unit is aware, and within nine months after
such termination Unit has consummated, or has entered into an agreement for, a
"Business Combination." For the purposes of the Merger Agreement, "Business
Combination" is defined to mean (i) a merger or similar transaction, (ii) a
sale or other disposition of any material asset of Unit or its subsidiaries, or
(iii) the acquisition of beneficial ownership of more than 20% of the Unit
Common Stock. See "THE MERGER AGREEMENT--Reimbursement of Expenses; Breakup
Fee".

7
<PAGE>

RIGHTS OF DISSENTING SHAREHOLDERS

If the Merger is approved by the shareholders and is consummated,
shareholders of Unit who disapprove of the Merger may, if they satisfy certain
conditions, pursue rights as dissenting shareholders to have their shares
purchased at fair market value as determined in a judicial appraisal action.
Under the provisions of Sections 1300 through 1312 of the California General
Corporation Law (the "CGCL"), Unit's shares are not eligible to be treated as
dissenting shares unless demands under the CGCL for appraisal are filed with
respect to 5% or more of the outstanding shares. Accordingly, shareholders of
Unit will not have dissenters' rights unless holders of at least 5% of the Unit
Common Stock file timely demands. In order to perfect dissenters' rights, Unit
Shareholders must (i) deliver written demand for the purchase of their shares
before the Unit Special Meeting, (ii) vote against the Merger and (iii)
surrender their stock certificates to Unit or its transfer agent within 30 days
after the mailing to Unit Shareholders of notice of approval of the Merger.

THE REQUIRED PROCEDURES MUST BE FOLLOWED EXACTLY OR DISSENTERS' RIGHTS, IF
AVAILABLE, MAY BE LOST. For a summary of these rights, see "THE MERGER AND
RELATED TRANSACTIONS--Rights of Dissenting Shareholders." The full text of
Sections 1300 through 1312 of the CGCL is attached to the Proxy
Statement/Prospectus as Appendix C and incorporated herein by this reference.

COMPARISON OF RIGHTS OF SHAREHOLDERS

Upon consummation of the Merger, holders of Unit Common Stock will become
holders of U.S. Filter Common Stock. As a result, their rights as shareholders,
which are now governed by the CGCL and Unit's Articles of Incorporation and
Bylaws will be governed by the Delaware General Corporation Law (the "DGCL")
and U.S. Filter's Certificate of Incorporation and Bylaws. Because of certain
differences between California and Delaware corporate law and between
provisions of Unit's Articles of Incorporation and Bylaws and those of U.S.
Filter, the rights of Unit Shareholders before the Merger will be different
than their rights as U.S. Filter stockholders after the Merger. For a
discussion of various differences between the rights of shareholders of Unit
and the rights of stockholders of U.S. Filter, see "Comparison of Rights of
Shareholders of U.S. Filter and Unit."

8
<PAGE>

MARKET PRICE DATA

U.S. Filter Common Stock is listed on the NYSE and traded under the symbol
"USF." Unit Common Stock is traded on the over-the-counter market under the
Nasdaq National Market symbol "UNII." The following table sets forth for the
periods indicated the high and low per share sales prices for shares of U.S.
Filter Common Stock and Unit Common Stock as reported on the NYSE Composite
Transactions Tape and the Nasdaq National Market, respectively.

U.S. Filter Common Stock

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ending March 31, 1999
Third Quarter (through December 16, 1998)................... $25.50 $11.44
Second Quarter.............................................. 31.25 14.06
First Quarter............................................... 36.25 26.38
Fiscal Year Ended March 31, 1998
Fourth Quarter.............................................. $36.44 $28.75
Third Quarter............................................... 44.44 27.63
Second Quarter.............................................. 43.19 26.94
First Quarter............................................... 33.38 25.75
Fiscal Year Ended March 31, 1997
Fourth Quarter.............................................. $39.00 $28.88
Third Quarter............................................... 36.25 30.38
Second Quarter.............................................. 34.75 18.50
First Quarter............................................... 23.75 18.42

Unit Common Stock

<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ending May 31, 1999
Third Quarter (through December 16, 1998)................... $ 8.88 $ 7.69
Second Quarter.............................................. 9.00 3.13
First Quarter............................................... 10.75 6.00
Fiscal Year Ended May 31, 1998
Fourth Quarter.............................................. $ 9.75 $ 6.38
Third Quarter............................................... 10.50 8.50
Second Quarter.............................................. 14.25 9.75
First Quarter............................................... 14.50 8.94
Fiscal Year Ended May 31, 1997
Fourth Quarter.............................................. $ 9.63 $ 7.25
Third Quarter............................................... 10.63 8.13
Second Quarter.............................................. 10.63 8.25
First Quarter............................................... 14.50 8.63
</TABLE>

9
<PAGE>

The following table sets forth the last reported trading price per share of
Unit Common Stock and U.S. Filter Common Stock as of June 26, 1998, the last
full trading day preceding Unit's announcement that it was in merger
discussions with an undisclosed party, on July 1, 1998, the last full trading
day prior to Unit's announcement that the Merger Agreement had been executed,
on August 4, 1998, the last full trading day prior to Unit's announcement that
the First Amendment to Agreement and Plan of Merger dated as of August 5, 1998,
had been executed, and on November 10, 1998, the last full trading day prior to
Unit's announcement that the Second Amendment to Agreement and Plan of Merger
dated as of November 10, 1998 had been executed:

<TABLE>
<CAPTION>
UNIT U.S. FILTER
COMMON STOCK COMMON STOCK
------------ ------------
<S> <C> <C>
June 26, 1998...................................... $6.56 $26.75
July 1, 1998....................................... 8.88 29.50
August 4, 1998..................................... 9.38 27.50
November 10, 1998.................................. 7.88 20.50
</TABLE>

On December 16, 1998, the last full trading day for which stock prices were
available at the time of printing of this Proxy Statement/Prospectus, the high
and low sales price for Unit Common Stock were $8.00 and $7.94, respectively,
and the high and low sales price for U.S. Filter Common Stock were $21.19 and
$20.31, respectively. SHAREHOLDERS ARE URGED TO OBTAIN THE CURRENT STOCK PRICE
FOR U.S. FILTER COMMON STOCK AND UNIT COMMON STOCK. Current stock prices for
Unit Common Stock and U.S. Filter Common Stock can be obtained from Unit by
telephone at (800) 229-8648.

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 U.S. Filter Common Stock in the foreseeable future.
Any payment of cash dividends on 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 of Directors 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.

Unit has not declared any cash dividends on the shares of Unit Common Stock
since the first quarter of fiscal 1996. Unit 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 Unit Common Stock in
the foreseeable future. Any payment of cash dividends on Unit Common Stock in
the future will depend upon Unit's financial condition, earnings, capital
requirements and such other factors as the Unit Board of Directors deems
relevant. Certain of Unit's future debt or equity instruments or securities may
impose restrictions on Unit's ability to pay dividends.

U.S. FEDERAL INCOME TAX CONSEQUENCES

The Merger is intended to qualify as a tax-free reorganization for U.S.
federal income tax purposes, so that no gain or loss will generally be
recognized by the Unit Shareholders on the exchange of their shares of Unit
Common Stock for shares of U.S. Filter Common Stock. Income will be recognized
to the extent that Unit Shareholders receive cash in the exchange (i.e., cash
in lieu of fractional shares or cash for dissenting shares). The obligations of
Unit to consummate the Merger are conditioned upon the receipt by Unit of an
opinion that the Merger qualifies as a tax-free reorganization. Shareholders
are urged to consult their own tax advisors as to the tax consequences of the
Merger. See "THE MERGER--Federal Income Tax Consequences" and "--Conditions to
the Merger."

ACCOUNTING TREATMENT

U.S. Filter has advised Unit that it intends to treat the Merger as a
"purchase" for accounting purposes. See "THE MERGER--Accounting Treatment."

10
<PAGE>

REGULATORY MATTERS

Consummation of the Merger is subject to the expiration or termination of the
applicable waiting period (and any extension thereof) under the HSR Act. Unit
and U.S. Filter filed notification and report forms under the HSR Act on August
12, 1998, and received notice of early termination of the pre-merger waiting
period on August 25, 1998.

COMPARATIVE PER SHARE DATA

The following table sets forth for the U.S. Filter Common Stock certain
historical and pro forma combined per share financial information for the
fiscal year ended March 31, 1998 and the six-month period ended September 30,
1998, and for the Unit Common Stock certain historical and pro forma equivalent
per share financial information for the fiscal year ended May 31, 1998 and the
six-month period ended August 29, 1998. The following information should be
read in conjunction with and is qualified in its entirety by the consolidated
financial statements and accompanying notes of U.S. Filter and the consolidated
financial statements and accompanying notes of Unit included elsewhere in this
Proxy Statement/Prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
ENDED ENDED
MARCH 31, 1998 SEPTEMBER 30, 1998
-------------- ------------------
<S> <C> <C>
U.S. FILTER COMMON STOCK
Income (loss) per common share (Diluted):
Historical............................. $(2.18) $(0.59)
Pro forma combined..................... $(2.19) $(0.60)
Dividends per common share:
Historical............................. -- --
Pro forma combined..................... -- --
Book value per common share at end of pe-
riod:
Historical............................. $10.21 $ 9.22
Pro forma combined..................... $10.31 $ 9.34
<CAPTION>
FISCAL YEAR SIX MONTHS
ENDED ENDED
MAY 31, 1998 AUGUST 29, 1998
-------------- ------------------
<S> <C> <C>
UNIT'S COMMON STOCK
Income (loss) per common share:
Historical............................. $(1.08) $(0.52)
Pro forma equivalent(1)................ $(0.98) $(0.27)
Dividends per common share:
Historical............................. -- --
Pro forma equivalent(1)................ -- --
Book value per share at end of period:
Historical............................. $ 8.26 $ 7.88
Pro forma equivalent(1)................ $ 4.61 $ 4.17
</TABLE>
- --------
(1) Pro forma equivalent amounts are calculated by multiplying U.S. Filter pro
forma combined amounts by an assumed Exchange Ratio of .4470 (based upon an
assumed U.S. Filter Share Value of $22.37, which would be the U.S. Filter
Share Value if calculated based on the average of the closing price per
share for shares of U.S. Filter Common Stock as reported on the NYSE
Composite Tape on each of the 20 days ending on December 16, 1998, the last
full trading day prior to the date of this Proxy Statement/Prospectus).

11
<PAGE>

RISK FACTORS

Prospective investors should consider carefully the following factors
relating to the business of U.S. Filter, together with the other information
and financial data included or incorporated by reference in this Prospectus,
before acquiring the securities offered hereby. Information contained or
incorporated by reference in this Prospectus includes "forward-looking
statements" which can be identified by the use of forward-looking terminology
such as "believes," "contemplates," "expects," "may," "will," "could,"
"should," "would," "anticipates" or "continue" or the negative thereof or
other variations thereon or comparable terminology. No assurance can be given
that the future results covered by the 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 future results covered in such forward-looking statements.

EARNINGS VARIATION DUE TO BUSINESS CYCLES AND SEASONAL FACTORS

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 U.S.
Filter's revenues are 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 and certain
other markets, could have a material adverse effect on U.S. Filter's revenues
and profitability.

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. Cyclicality and
seasonality of water and wastewater distribution equipment and supplies sales
could have a material adverse effect on U.S. Filter's revenues and
profitability.

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 U.S. Filter's revenues and
profitability.

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 operating results may
be subject to quarterly or annual fluctuations. There can be no assurance that
at any given time U.S. Filter's operating results will meet or exceed stock
market analysts' expectations.

PROFIT UNCERTAINTY IN FIXED-PRICE CONTRACTS

A significant portion of U.S. Filter's revenues are 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

12
<PAGE>

estimates of costs to complete such contracts. There can be no assurance that
future downward adjustments will not be material.

COMPETITION

All of the markets in which U.S. Filter competes 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. 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 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 to lose market
share or could result in significant price erosion, either of which could have
a material adverse effect upon U.S. Filter's financial position, results of
operations and cash flows.

RISKS RELATED TO ACQUISITIONS

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 150 United States 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
("Memtec") was accomplished through an unsolicited tender offer, and 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 generally has been successful in pursuing acquisitions,
there can be no assurance that acquisition opportunities will continue to be
available, that U.S. Filter will have access to the capital required to
finance potential acquisitions, that U.S. Filter will continue to acquire
businesses or that any business acquired will be integrated successfully or
prove profitable.

RISKS OF DOING BUSINESS IN OTHER COUNTRIES

U.S. Filter has made and expects it will continue to make acquisitions and
expects to obtain contracts in markets outside the United States. While these
activities may provide important opportunities for U.S. Filter to

13
<PAGE>

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 and Latin America which have been and may in
the future be adversely affected by current economic conditions in those
regions. While the full impact of this economic instability cannot be
predicted, it could have a material adverse effect on U.S. Filter's revenues
and profitability.

IMPORTANCE OF SENIOR OFFICERS

The operations of U.S. Filter are 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 has entered
into various agreements and compensation arrangements with its senior
management, including Mr. Heckmann, designed to encourage their retention.
There can be no assurance, however, that members of U.S. Filter's senior
management will continue in their present roles, and should any of U.S.
Filter's senior managers be unable or choose not to do so, U.S. Filter's
prospects could be adversely affected.

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 six digits
(e.g., 12/31/99), rather than eight (e.g., 12/31/1999), to define the
applicable year of business transactions. Many products and systems could
experience malfunctions when attempting to process certain dates, such as
January 1, 2000 or September 9, 1999 (a date programmers sometimes used as a
default date). U.S. Filter is currently identifying which of its information
technology ("IT") and non-IT systems will be affected by Year 2000 issues.

U.S. Filter's Year 2000 compliance program consists of three phases:
identification and assessment; remediation; and testing. For any given system,
the phases occur in sequential order, from identification and assessment of
Year 2000 problems, to remediation, and, finally, to testing U.S. Filter's
solutions. Most of U.S. Filter's IT systems with Year 2000 issues have been
modified to address those issues. U.S. Filter has also commenced
identification and assessment of its non-IT systems, which include, among
other things, components found in water and wastewater treatment plants and
process water treatment systems operated and/or owned under contract by U.S.
Filter and in U.S. Filter's hazardous waste treatment facilities, as well as
components of equipment in U.S. Filter's manufacturing facilities. U.S. Filter
is in the identification and assessment phase with respect to all non-IT
systems, which is projected to continue until September 1999 for currently-
owned businesses.

With the possible exception of the remediation and testing phases for
certain of U.S. Filter's non-IT systems, all phases of U.S. Filter's Year 2000
compliance program are expected to be completed by September 1999, although
there can be no assurance that all phases for all businesses will be completed
by that date. As U.S. Filter acquires additional businesses, each IT and non-
IT system of the acquired business must be independently identified and
assessed. As a result, all three phases of U.S. Filter's Year 2000 compliance
program may be occurring simultaneously insofar as they relate to systems
acquired at different times, with varying timetables to completion, depending
upon the system and the date when a particular business was acquired by U.S.
Filter. There can be no assurance that acquired businesses will be Year 2000
compliant, although U.S. Filter currently has a policy that requires an
acquisition candidate to represent that such business is Year 2000 compliant
and U.S. Filter reviews the Year 2000 status of acquisition candidates to the
extent feasible prior to completing an acquisition. In addition to its
internal systems, U.S. Filter has begun to assess the level of Year 2000
problems associated with various suppliers, customers and creditors of U.S.
Filter. To test the Year 2000 compliance status of its suppliers, U.S. Filter
plans to submit hypothetical orders to its suppliers dated after December 31,
1999 requesting confirmation that the orders have been correctly processed.
U.S. Filter's costs to date for its Year 2000 compliance program, excluding
the salaries of its employees, has not been material. Although U.S. Filter has
not

14
<PAGE>

completed its assessment, it does not currently believe that the future costs
associated with its Year 2000 compliance program will be material.

U.S. Filter is currently unable to determine its most reasonably likely
worst case Year 2000 scenario, as it has not identified and assessed all of
its systems, particularly its non-IT systems. As U.S. Filter completes its
identification and assessment of internal and third-party systems, it expects
to develop contingency plans for various worst case scenarios. U.S. Filter
expects to have such contingency plans in place by September 1999. A failure
to address Year 2000 issues successfully could have a material adverse effect
on U.S. Filter's business, financial condition or results of operations.

POTENTIAL ENVIRONMENTAL RISKS

U.S. Filter's business and products 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. 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.

U.S. Filter has been notified by the U.S. Environmental Protection Agency
("USEPA") 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. In particular, in 1995,
Culligan Water Technologies, Inc., a wholly owned subsidiary of U.S. Filter
("Culligan"), purchased an equity interest in Anvil Holdings, Inc. ("Anvil").
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 and Anvil have 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 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 that are above
action levels under state guidelines. U.S. Filter has begun remediation of the
contamination. U.S. Filter currently estimates that the costs of future site
remediation will range from $1.0 million to $1.8 million and that it has
sufficient reserves for the site cleanup. U.S. Filter anticipates that the
potential costs 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 U.S. Filter.
However, because 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 U.S. Filter's financial position or results of
operations. Based on sites which are currently known to U.S. Filter that may
require remediation, including the Anvil site, 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.

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 also operates 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 certain 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.

15
<PAGE>

Certain of U.S. Filter's facilities contain or in the past contained
underground storage tanks which may have caused soil or groundwater
contamination. At one site formerly owned by Culligan, U.S. Filter 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.

To some extent, the liabilities and risks imposed by environmental laws on
U.S. Filter's customers may adversely impact demand for certain of U.S.
Filter's products or services or impose greater liabilities and risks on U.S.
Filter, which could also have an adverse effect on U.S. Filter's competitive
and financial position.

RISKS RELATED TO MUNICIPAL WATER AND WASTEWATER BUSINESS

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

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 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 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 ability to grow and to remain competitive.
There can be no assurance that U.S. Filter 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 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 existing or any future
trademarks or patents will be enforceable or will provide substantial
protection from competition or be of commercial benefit to U.S. Filter. 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 patents or trademarks could
materially adversely affect its competitive and financial position.

RISKS RELATED TO WATER RIGHTS AND TRANSFERS OF WATER

U.S. Filter owns 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

16
<PAGE>

rights, primarily in the Southwestern and Western United States. U.S. Filter
may seek in the future to transfer water attributable to water rights
appurtenant to the Properties, particularly the IID Properties (the "IID
Water"). 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, conveyance risks from
unavailable or inadequate transportation facilities, risks presented by
allocations of water under existing and prospective priorities, and risks of
adverse changes to or interpretations of U.S. federal, state and local laws,
regulations and policies. The IID holds title to all of the water rights
within the IID in trust for the landowners, and would control the timing and
terms of any transfers of IID Water by U.S. Filter. 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, U.S. federal and state laws and regulations, and
contractual arrangements and, in times of drought, water deliveries could be
curtailed by the U.S. government. Further, any transfers of IID Water would
require the approval of the U.S. Secretary of the Interior. Additionally, the
Metropolitan Water District of Southern California, a quasi-governmental
agency, owns the Colorado River Aqueduct and could restrict its use. Any
transfers must also comply with all U.S. federal and state environmental laws
and regulations. 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 U.S.
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 the IID Water
Rights and the ability to transfer IID Water. The uncertainties associated
with water rights could have a material adverse effect on U.S. Filter's future
profitability.

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 November 2, 1998 by
security holders of U.S. Filter, including: (i) up to 2,806,263 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) 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; (iii)
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"); (iv) 5,815,450 outstanding shares that are currently
registered for sale under the Securities Act pursuant to a shelf registration
statement; and (v) 22,235,786 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. In addition, as of November 20, 1998, U.S. Filter has
registered for sale under the Securities Act 10,019,045 shares which may be
issuable by U.S. Filter from time to time in connection with acquisitions of
businesses or assets from third parties.

17
<PAGE>

THE UNIT SPECIAL MEETING

DATE, TIME AND PLACE OF SPECIAL MEETING

The Unit Special Meeting will be held on January 22, 1999 at 8:00 a.m.,
local time, at Unit's principal executive offices located at 22600 Savi Ranch
Parkway, Yorba Linda, California 92887.

PURPOSE OF THE UNIT SPECIAL MEETING

At the Unit Special Meeting, shareholders of record of Unit as of the close
of business on the Record Date will be asked to consider and vote upon a
proposal to approve and adopt the Merger Agreements and the Merger, and such
other matters as may properly be brought before the Special Meeting.

RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE; QUORUM

Only holders of record of Unit Common Stock at the close of business on the
Record Date are entitled to notice of and to vote at the Unit Special Meeting.
As of the close of business on the Record Date, there were 3,995,118 shares of
Unit Common Stock outstanding and entitled to vote, held of record by
approximately 1,571 shareholders. A majority, or 1,997,560 of these shares,
present in person or represented by proxy, will constitute a quorum for the
transaction of business. Each Unit Shareholder is entitled to one vote for
each share of Unit Common Stock held as of the Record Date. Abstentions and
broker non-votes will be counted for the purposes of establishing a quorum at
the Unit Special Meeting.

VOTE REQUIRED

Pursuant to the California Corporations Code and Unit's Articles of
Incorporation, approval and adoption of the Merger Agreement and the Merger
requires the affirmative vote of the holders of a majority of the outstanding
shares of Unit Common Stock entitled to vote. On December 4, 1998, the record
date for the Unit Special Meeting (the "Record Date"), 3,995,118 shares of
Unit Common Stock were outstanding, all of which are entitled to vote on the
Merger Agreement and the Merger. As of December 4, 1998, shareholders who are
not affiliates of Unit or U.S. Filter owned approximately 3,683,814, or 96.7%,
of the outstanding shares of Unit Common Stock. U.S. Filter owns no shares of
Unit Common Stock. The directors and officers of Unit together own
approximately 3.3% of the Unit Common Stock. Abstentions and broker non-votes
will have the same effect as votes against the Merger Agreement and the
Merger.

VOTING OF PROXIES; REVOCABILITY OF PROXIES

The proxy accompanying this Proxy Statement/Prospectus is solicited on
behalf of the Unit Board for use at the Unit Special Meeting. Unit
Shareholders are requested to complete, date and sign the accompanying proxy
and promptly return it in the accompanying envelope or otherwise mail it to
Unit. All proxies that are properly executed and received by Unit in time to
be voted at the Unit Special Meeting, and that are not revoked, will cause the
shares of Unit Common Stock represented thereby to be voted at the Unit
Special Meeting in accordance with the instructions indicated on the proxies
or, if no direction is indicated, to approve the Merger Agreement and the
Merger. In accordance with California law, no other business may be brought
before the Unit Special Meeting. Any shareholder who has given a proxy may
revoke it at any time before it is exercised at the Unit Special Meeting, by
(i) delivering to the Secretary of Unit (by any means, including facsimile) a
written notice, bearing a date later than the proxy, stating that the proxy is
revoked, addressed to the Secretary of Unit at 22600 Savi Ranch Parkway, Yorba
Linda, California 92887, facsimile number (714) 921-0636, (ii) signing and so
delivering a proxy relating to the same shares and bearing a later date than
the earlier proxy prior to the vote at the Unit Special Meeting or (iii)
attending the Unit Special Meeting and voting in person (although attendance
at the Unit Special Meeting will not, by itself, revoke a proxy).

If a quorum is not obtained or if fewer shares of Unit Common Stock than the
number required therefor are voted in favor of approval of the Merger
Agreement and the Merger, it is expected that the Unit Special Meeting

18
<PAGE>

will be postponed or adjourned in order to permit additional time for
soliciting and obtaining additional proxies or votes, and at any subsequent
reconvening of the Unit Special Meeting, all proxies will be voted in the same
manner as such proxies would have been voted at the original Unit Special
Meeting, except for any proxies which have theretofore effectively been
revoked or withdrawn.

SOLICITATION OF PROXIES AND EXPENSES

Unit will bear the cost of the solicitation of proxies in the enclosed form
from its shareholders. In addition to solicitation by mail, the directors,
officers and employees of Unit may solicit proxies from shareholders by
telephone, telegram, letter, facsimile or in person. Following the original
mailing of the proxies and other soliciting materials, Unit will request
brokers, custodians, nominees and other record holders to forward copies of
the proxy and other soliciting materials to persons for whom they hold shares
of Unit Common Stock and to request authority for the exercise of proxies. In
such cases, Unit, upon the request of the record holders, will reimburse such
holders for their reasonable expenses.

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<PAGE>

THE MERGER AND RELATED TRANSACTIONS

GENERAL

The Merger Agreement provides for the merger of Subcorp with and into Unit,
with Unit to be the surviving corporation of the Merger, becoming a wholly-
owned subsidiary of U.S. Filter. If the requisite approval of the Unit
Shareholders is received, the Merger is expected to be consummated as soon as
practicable after the satisfaction or waiver of each of the conditions to
consummation of the Merger, which is expected to occur as soon as practicable
following receipt of shareholder approval at the Unit Special Meeting. The
Effective Time of the Merger will occur upon the acceptance of filing of the
Agreement of Merger by the Secretary of State of the State of California or at
such later time as is specified on such Agreement of Merger. The Effective
Time of the Merger is currently expected to be on or about January 22, 1999.
The filing of the Agreement of Merger will occur as soon as practicable after
the satisfaction of the conditions set forth in the Merger Agreement. The
Merger Agreement may be terminated by U.S. Filter or Unit if the Merger has
not been consummated on or before January 29, 1999, and may also be terminated
by either party under certain other conditions. See "The Merger Agreement--
Conditions to the Merger," "--Termination" and "--Fees and Expenses." The
following discussion in this Proxy Statement/Prospectus of the Merger and the
Merger Agreement is a description of material terms of the Merger and the
Merger Agreement; provided, however, that such discussion is subject to and
qualified in its entirety by reference to the Merger Agreement, a copy of
which is attached to this Proxy Statement/Prospectus as Appendix A and
incorporated herein by this reference.

CONVERSION OF SHARES

At the Effective Time of the Merger, each then outstanding share of Unit
Common Stock (other than shares with respect to which the holders exercise
appraisal rights), will be converted into and represent the right to receive a
number of shares of U.S. Filter Common Stock equal to the Exchange Ratio
calculated pursuant to the Merger Agreement by dividing the Merger
Consideration by the U.S. Filter Share Value (calculated as the average of the
closing price per share for shares of U.S. Filter Common Stock as reported on
the New York Stock Exchange Composite Tape on each of the 20 consecutive
trading days ending on the fifth trading day preceding the Closing Date). The
Merger Consideration will be determined as follows: (i) if the U.S. Filter
Share Value is greater than or equal to $22.00, then the Merger Consideration
will equal $10.00; (ii) if the U.S. Filter Share Value is less than $22.00 and
greater than $12.00, then the Merger Consideration will equal $8.00 plus the
dollar amount equal to a fraction, the numerator of which will be the U.S.
Filter Share Value minus $12.00 and the denominator of which will be five; and
(iii) if the U.S. Filter Share Value is less than or equal to $12.00, then the
Merger Consideration will equal $8.00.

The following table sets forth the number of shares of U.S. Filter Common
Stock which would be issuable per share of Unit Common Stock based upon
certain assumed U.S. Filter Share Value determinations:

<TABLE>
<CAPTION>
NUMBER OF SHARES OF AGGREGATE VALUE OF
U.S. FILTER SHARE VALUE U.S. FILTER COMMON STOCK MERGER CONSIDERATION(1)
----------------------- ------------------------ -----------------------
<S> <C> <C>
$10.00................... 0.80000 $ 8.00
12.00................... 0.66667 8.00
14.00................... 0.60000 8.40
16.00................... 0.55000 8.80
18.00................... 0.51111 9.20
20.00................... 0.48000 9.60
22.00................... 0.45455 10.00
24.00................... 0.41667 10.00
26.00................... 0.38462 10.00
30.00................... 0.33333 10.00
</TABLE>
- --------
(1) The Aggregate Value of Merger Consideration data presented above is based
upon the assumed U.S. Filter Share Value and therefore does not
necessarily reflect the value of such consideration as of the date of the
Unit Special Meeting, the effective time of the Merger, or any other time.

20
<PAGE>

In the event that the U.S. Filter Share Value is less than $11.00, U.S.
Filter may terminate the Merger Agreement.

As a result of the method used to calculate the Merger Consideration,
changes in the trading price of U.S. Filter Common Stock may have certain
effects on the trading price of Unit Common Stock. For example, as the trading
price of U.S. Filter Common Stock increases, the trading price of Unit Common
Stock may increase, provided that because the maximum Merger Consideration is
$10.00, an increase in the trading price of U.S. Filter Common Stock would not
be expected to be a factor that, by itself, would cause the trading price of
Unit Common Stock to exceed $10.00. Conversely, as the trading price of U.S.
Filter Common Stock decreases, the trading price of Unit Common Stock may
decrease, provided that because the minimum Merger Consideration is $8.00, a
decrease in the trading price of U.S. Filter Common Stock would not be
expected to be a factor that, by itself, would cause the trading price of Unit
Common Stock to fall below $8.00. However, in the event that the U.S. Filter
Share Value decreases to and below $11.00, the trading price of Unit Common
Stock may potentially decrease below $8.00 due to the risk that U.S. Filter
may exercise its right to terminate the Merger Agreement.

FRACTIONAL SHARES

No fractional shares of U.S. Filter Common Stock will be issued pursuant to
the Merger. In lieu of any fractional shares of U.S. Filter Common Stock that
a Unit Shareholder would otherwise be entitled to receive as a result of the
Merger, such holder shall be entitled to receive cash in an amount equal to
the value (determined with reference to the closing price of shares of U.S.
Filter Common Stock as reported on the NYSE Composite Tape on the last full
trading day immediately prior to the Closing Date) of such fractional share.

BACKGROUND OF THE MERGER

On August 11, 1997, the Unit Board decided to retain Needham to assist Unit
in exploring and evaluating strategic alternatives for maximizing shareholder
value. The Unit Board decided to take this action after considering various
factors, including the stock market valuations for technology based companies,
the mergers and acquisition environment, and the cyclical nature of the
semiconductor equipment business.

Subsequent to their appointment, Needham contacted approximately 25 parties
regarding a possible transaction with Unit and circulated preliminary
information packages describing Unit and its business to interested parties
from among this contact group. U.S. Filter was one of those companies
approached by Needham, and one of the companies that requested an information
package. Another company, The Kinetics Group, Inc. ("Kinetics"), as an
independent company and prior to being acquired by U.S. Filter, was not
approached by Needham, but expressed interest in a possible acquisition of
Unit, and was furnished with an information package. As part of this process,
Needham requested interested parties to submit written indications of interest
to acquire Unit in late October, 1997. Four companies expressed interest in
pursuing a transaction and, after review by the Unit Board and Needham, two
companies were invited to commence due diligence. Kinetics and U.S. Filter did
not express interest in pursuing a transaction and were excluded from further
consideration.

21
<PAGE>

During November and early December 1997, Unit conducted a number of meetings
with these two prospective buyers. On November 26, 1997, Kinetics informed
Needham that they would like to participate in due diligence activities with
Unit, and were subsequently invited to perform a due diligence review of Unit.
On December 15, 1997 and December 17, 1997, one interested party and Kinetics,
respectively, submitted written non-binding offers for the acquisition of
Unit. After careful review by the Unit Board, Needham was instructed to
solicit enhanced offers from both companies and present these revised offers
to the Unit Board. On December 22, 1997, Needham presented a revised offer
from one of the prospective purchasers, while Kinetics declined to enhance
their offer. The Unit Board was not able to reach a consensus on accepting or
rejecting these offers and adjourned the meeting until December 24, 1997, so
that each Board Member could independently review and consider the most
appropriate direction for Unit. At the December 24, 1997 Unit Board meeting,
the Board was not able to reach a consensus concerning the non-binding offers
of interest and explored alternatives for Unit. On December 26, 1997, the Unit
Board decided to defer a decision on pursuing either offer until the January
20, 1998 Board Meeting.

Effective December 31, 1997, U.S. Filter acquired Kinetics.

At the January 20, 1998 Unit Board meeting, after extensive discussion, the
Board determined that long-term shareholder value could be maximized by
focusing on expanding Unit's existing business opportunities.

On February 20, 1998, a representative of U.S. Filter contacted Nick E.
Yocca, Unit's outside counsel, to request a meeting with Unit. On February 26,
1998, after consultation with the Unit Board, management was authorized to
arrange a meeting, which was subsequently held on March 3, 1998. At that
meeting, Mr. Damian C. Georgino, Executive Vice President and General Counsel
of U.S. Filter, initiated discussions with Mr. Gary N. Patten, Vice President
and Chief Financial Officer of Unit, and Ms. Janice E. Robertson, Managing
Director of Needham, regarding U.S. Filter's recent acquisition of Kinetics
and their interest in pursuing a friendly business combination with Unit.
Following this meeting, Mr. Michael J. Doyle, Chairman of the Board and
Chief Executive Officer of Unit, and Mr. Patten held a series of meetings with
Mr. David J. Shimmon, President and Chief Executive Officer of Kinetics, and
other representatives of Kinetics.

From June 8, 1998 through June 12, 1998, representatives of U.S. Filter and
Unit, along with legal advisors to Unit, held a series of meetings to
negotiate the principal terms of a merger. On June 15, 1998, the Unit Board
met to consider the terms of the proposed merger and authorized management to
negotiate a definitive merger agreement on the terms presented to the Board.
From June 16, 1998 through June 24, 1998, representatives of U.S. Filter and
Unit, along with legal and financial advisors, met to negotiate the terms of
the Merger Agreement. On June 25, 1998, the Unit Board approved the Agreement
and Plan of Merger, subject to the resolution of certain items, and on August
13, 1998, the U.S. Filter Board approved the Agreement and Plan of Merger,
subject to the resolution of certain items. On July 2, 1998, U.S. Filter and
Unit entered into the Agreement and Plan of Merger.

From July 2, 1998 to July 31, 1998, U.S. Filter undertook a due diligence
review with respect to Unit. During this review, Unit announced that, in
response to the continuing unforeseen downturn in the semiconductor
manufacturing equipment market it would reduce its workforce and institute
partial facility shutdowns worldwide. During the week of July 20, 1998,
representatives of U.S. Filter met with representatives of Unit to discuss
various due diligence issues that U.S. Filter had learned of during its
review, including the significant decline in Unit's prospects and operating
results as a result of the severe continuing downturn in the semiconductor
manufacturing equipment market, the level of benefits payable under certain
severance agreements to certain executive officers and employees of Unit, the
level of compensation due to Needham in the event the Merger is consummated,
the exercise of certain registration rights held by Needham with respect to
certain shares issuable upon exercise of a warrant held by Needham, and
potential liability arising out of certain tax audits pending with respect to
Unit. On July 28, 1998, representatives of U.S. Filter and Unit met to discuss
possible remedial actions with respect to such issues, including a reduction
in the Exchange Ratio.

On July 31, 1998, U.S. Filter formally notified Unit (the "Investigation
Notice") that it was dissatisfied with certain matters that it had learned of
during its due diligence review, as referenced above, and indicated

22
<PAGE>

that it intended to exercise its right to terminate the Merger Agreement
pursuant to the Merger Agreement if such matters were not resolved to its
satisfaction in accordance with the terms previously discussed by the parties.

Following receipt of the Investigation Notice, Unit management conferred
with outside legal counsel, Needham and each of the directors of Unit to
discuss the matters set forth in the Investigation Notice, the terms of the
Merger Agreement and potential actions to resolve the concerns raised in the
Investigation Notice. Following a series of discussions between
representatives of Unit and U.S. Filter, the parties agreed to amend the
Merger Agreement to reduce the exchange ratio used to calculate the Merger
Consideration by reducing the dollar amount by which the U.S. Filter Share
Value was divided to $11.03 from $12.62 (the amount originally set forth in
the Merger Agreement) and to reduce the minimum U.S. Filter Share Value to
$26.00 from $27.00 (the amount originally set forth in the Merger Agreement),
and Unit and U.S. Filter entered into the First Amendment to Agreement and
Plan of Merger dated August 5, 1998 (the "First Amendment"), implementing such
changes.

Following the execution of the First Amendment, the trading price of the
U.S. Filter Common Stock varied significantly, and between August 5, 1998 (the
date of the First Amendment) and the execution of a second amendment of the
Merger Agreement dated as of November 10, 1998 (the "Second Amendment"), U.S.
Filter Common Stock traded as high as $27.25 per share and as low as $11.44
per share. Under the Merger Agreement as amended by the First Amendment, due
to the minimum U.S. Filter Share Value of $26.00, if the 20-day average per
share closing price of U.S. Filter Common Stock had been below $26.00, the
value of the shares of U.S. Filter Common Stock issuable with respect to each
share of Unit Common Stock would have been less than $11.03. In addition,
prior to the execution of the Second Amendment, Unit had the right to
terminate the Merger Agreement if the U.S. Filter Share Value was less than
$24.00. Concurrently, the semiconductor equipment industry downturn continued
to affect Unit. On August 7, 1998, Unit announced a net loss of $1.08 per
share for its 1998 fiscal year, compared to a loss of $0.99 per share for its
prior fiscal year. On October 1, 1998, Unit announced a net loss for its first
fiscal quarter ended August 29, 1998 of $0.39 per diluted share, compared to
net income of $0.08 per diluted share for the prior year's first quarter.

In light of these developments, the parties entered into discussions which
led to the revised merger terms contained in the Second Amendment.
Specifically, the Second Amendment changed the method of calculating the
Exchange Ratio from (i) $11.03 divided by the greater of the U.S. Filter Share
Value or $26.00 to (ii) the Merger Consideration (calculated pursuant to the
Merger Agreement as described under "Conversion of Shares," above) divided by
the U.S. Filter Share Value. The Second Amendment also extended the date as of
which either U.S. Filter or Unit may terminate the Merger Agreement if the
Merger shall not have been consummated from December 31, 1998 to January 29,
1999, and gave U.S. Filter the right to terminate the Merger Agreement if the
U.S. Filter Share Price is less than $11.00. As a result of the Second
Amendment, Unit no longer has a right to terminate the Merger Agreement if the
U.S. Filter Share Value is less than $24.00.

Needham advised the Unit Board as of November 10, 1998, that the Exchange
Ratio, as revised by the Second Amendment, is fair to the Unit Shareholders
from a financial point of view, and the Unit Board unanimously resolved that
the Exchange Ratio, as revised by the Second Amendment, is fair to Unit
Shareholders and that it is in the best interests of Unit and its shareholders
that Unit enter into the Second Amendment and to consummate the Merger in
accordance with the Merger Agreement, as amended.

REASONS FOR THE MERGER

U.S. Filter's Reasons for the Merger

U.S. Filter believes that its acquisition of Unit through the Merger will
further its strategy for its Industrial Products and Services Group (the "IP&S
Group"). This strategy includes the goals of (i) becoming a leading provider
of integrated products for the high-purity gas delivery market and of gas
delivery systems to the semiconductor wafer fabrication equipment market, (ii)
developing international operations, (iii) reducing costs, and (iv) increasing
efficiencies.

23
<PAGE>

For example, three processes are fundamental to the semiconductor wafer
fabrication process: ultra pure water, chemicals and gas. The IP&S Group
currently offers turnkey ultra-pure water solutions and is developing turnkey
chemical solutions. U.S. Filter believes the Merger would help further its
IP&S Group strategy by complementing these existing and developing
capabilities with Unit's turnkey gas delivery solutions.

U.S. Filter also believes that both companies would benefit from strong
cross-selling opportunities to wafer fabrication equipment manufacturers and
end users. Unit stands to benefit from the IP&S Group's existing customer
relationships with end users and gas companies, and U.S. Filter could gain
from Unit's relationships and market penetration in the wafer fabrication
equipment market.

Unit and U.S. Filter's IP&S Group have a presence worldwide. U.S. Filter
believes that the combination of its strategic offices and cleanroom space
worldwide with Unit's existing foreign service centers offers potential for
overhead reduction through consolidation of facilities, thereby giving the
IP&S Group an opportunity to pursue its goals of reducing operating costs and
increasing operating efficiencies, and expanding its international operations.

Unit's Reasons for the Merger

Prior to entering into the Merger Agreement, the Unit Board carefully
considered the terms and conditions of the proposed Merger, and determined
that the Merger was in the best interests of, and was on terms fair to, Unit
Shareholders and unanimously approved the Merger Agreement, and the
transactions contemplated thereby, including the Merger.

In reaching its unanimous determination that the Merger Agreement and the
transactions contemplated thereby, including the Merger, were in the best
interests of, and on terms fair to, Unit Shareholders, the Unit Board
considered a number of factors, which taken together supported such
determination, including without limitation the following:

(i) The Unit Board's knowledge of the semiconductor equipment market, its
cyclical nature, the severity of the current industry downturn, the
uncertainty of when the current downturn will end, the consolidation trend
within the industry, both at the OEM and supplier level, and the expanding
market dominance of a limited number of semiconductor equipment
manufacturers and the adverse impact these factors could have on Unit's
results of operations and financial condition (see "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS");

(ii) The Unit Board's knowledge of the business, operations, properties,
assets, financial condition and operating results of Unit, which provided
the background and context for its deliberations and determinations;

(iii) The Unit Board's determination that there is substantial risk that
in the long term Unit will not produce shareholder value in excess of the
Merger Consideration by continuing to operate as an independent entity,
based upon advice of management and the uncertainty of business conditions
within the semiconductor equipment market;

(iv) The Unit Board's view that the ability to offer an integrated gas
delivery system will be vital to competing in Unit's market, and the
likelihood that some form of business combination and/or additional capital
would most probably be required for Unit to be able to offer an integrated
gas delivery solution to the semiconductor industry (see "THE BUSINESS OF
UNIT");

(v) The presentation by Needham and its opinion that the Exchange Ratio
was fair, from a financial point of view, to such shareholders (see "THE
MERGER AND RELATED TRANSACTIONS--Opinion of Financial Advisor");

(vi) The Merger would provide Unit Shareholders with the opportunity to
participate in the long-term growth of the semiconductor industry through
ownership of shares of U.S. Filter Common Stock;

24
<PAGE>

(vii) The Merger would provide Unit Shareholders with the opportunity to
receive a considerable premium for their shares of Unit compared to the
market price preceding the June 29, 1998 announcement (see "TERMS OF
MERGER; MERGER CONSIDERATION");

(viii) The fact that the Merger Consideration is not subject to financing
contingencies and that the U.S. Filter Common Stock is actively traded and
hence offers good liquidity to Unit Shareholders.

(ix) The relationship of the Merger Consideration to the historical and
current market prices for Unit Common Stock preceding the announcement of
the Merger and the Unit Board's belief that the public market's valuation
of Unit and the semiconductor and manufacturing equipment industry in
general, may limit the value realized by Unit in the public market; and

(x) The terms of the Merger Agreement, as reviewed by the Board with its
legal advisors.

The Unit Board was continuing to pursue Unit's established business
strategies discussed above until U.S. Filter made an offer to acquire Unit at
a price which the Board did not believe would be offered by any other party.
After detailed consideration, the Board determined that the price was
substantially higher than Unit's stock price had been in recent months and
that the price was so advantageous to Unit Shareholders that it would be
imprudent not to enter into the Merger Agreement. In light of the significant
experience of the Unit Board in analyzing the pricing for the potential sale
of Unit, the Unit Board believed that the Merger Consideration was above the
amount other potential acquirors would be willing to pay or that Unit could
expect to otherwise achieve.

Following U.S. Filter's due diligence review and its objection to certain
matters as discussed above, the Unit Board carefully considered the terms and
conditions of the Merger Agreement and the proposed Merger, as amended by the
First Amendment, and determined that the Merger was in the best interests of,
and was on terms fair to, the Unit Shareholders and unanimously approved the
Merger Agreement, as so amended, and the transactions contemplated thereby,
including the Merger.

In reaching its unanimous determination that the Merger Agreement, as
amended by the First Amendment, and the transactions contemplated thereby,
were in the best interests of, and on terms fair to, the Unit Shareholders,
the Unit Board considered a number of factors, which taken together supported
such determination, including without limitation the factors listed above,
which the Unit Board determined were also applicable to the terms of the
Merger Agreement and the Merger as amended by the First Amendment, as well as
the following additional factors:

(i) information concerning Unit's and U.S. Filter's respective
businesses, prospects, financial performance, financial condition and
operations, which did not include forecasted financial information
regarding U.S. Filter;

(ii) the history of the trading prices and trading volume of Unit Common
Stock and U.S. Filter Common Stock;

(iii) premiums to market and multiples paid in other acquisition and
merger transactions in the semiconductor equipment and other industries;

(iv) the severity and uncertain duration of the current downturn in the
semiconductor equipment market;

(v) a financial presentation by Needham, including the opinion of Needham
that, as of the date thereof, the Exchange Ratio, as amended by the First
Amendment, was fair to the Unit shareholders from a financial point of view
(while certain forecasted financial information derived from one of the
publicly available analyst reports provided to Needham by U.S. Filter was
included in the materials provided to the Unit Board by Needham, such
information was not considered by the Unit Board); and

(vi) the terms and conditions of the First Amendment.

Following the events giving rise to the Second Amendment and the discussions
between the parties, the Unit Board has carefully considered the terms and
conditions of the Merger Agreement and the proposed Merger, as amended by the
First Amendment and the Second Amendment, and has determined that the Merger

25
<PAGE>

is in the best interests of, and is on terms fair to, the Unit Shareholders,
and has unanimously approved the Merger Agreement, as so amended, and the
transactions contemplated thereby, including the Merger.

In reaching its unanimous determination that the Merger Agreement, as
amended by the First Amendment and Second Amendment, and the transactions
contemplated thereby, are in the best interests of, and or terms fair to, the
Unit Shareholders, the Unit Board considered a number of factors, which taken
together supported such determination, including without limitation the
factors listed above, which the Unit Board determined were also applicable to
the terms of the Merger Agreement and the Merger as amended by the First
Amendment and the Second Amendment, as well as the following additional
factors:

(i) updated information concerning Unit's business, prospects, financial
performance, financial condition and operations and U.S. Filter's business,
stock price, financial performance, financial condition and operations;

(ii) recent and historical trading prices and trading volume of Unit
Common Stock and U.S. Filter Common Stock;

(iii) premiums to market and multiples paid in recent and pending
acquisition and merger transactions in the semiconductor equipment and
other industries;

(iv) the continued severity and uncertain duration of the current
downturn in the semiconductor equipment market;

(v) a financial presentation by Needham, including the opinion of Needham
that, as of the date thereof, the Exchange Ratio, as amended by the First
Amendment and Second Amendment, was fair to the Unit Shareholders from a
financial point of view; and

(vi) the terms and conditions of the Second Amendment.

The foregoing discussion of the information and factors considered by the
Unit Board addresses all of the material factors considered by the Unit Board
in its consideration of the Merger. The Board did not quantify or attach any
particular weight to the various factors that it considered in reaching its
determination that the Merger Agreement and the transactions contemplated
thereby, including the Merger, are advisable and in the best interests of Unit
Shareholders. In reaching its determination, the Unit Board took the various
factors into account collectively, did not perform factor-by-factor analysis,
but rather its determination was made in consideration of all of the factors
as a whole.

UNIT BOARD RECOMMENDATION

THE UNIT BOARD HAS CAREFULLY CONSIDERED THE TERMS AND CONDITIONS OF THE
PROPOSED MERGER AND HAS DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS
OF, AND IS ON TERMS THAT ARE FAIR TO, UNIT SHAREHOLDERS. THE UNIT BOARD HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE MERGER, AND RECOMMENDS THAT THE UNIT SHAREHOLDERS
APPROVE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE MERGER.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Two executive officers and five additional senior management employees of
Unit are covered by individual severance agreements which provide for payments
upon termination following a change in control. Michael J. Doyle and Gary N.
Patten, each an executive officer of Unit, have each entered into a severance
agreement with Unit dated May 17, 1996 that provides for three years of salary
upon termination following a change in control (the "Severance Agreement").
Each Severance Agreement had an initial term expiring on December 31, 1996
with automatic one-year renewals thereafter; however, if a Change in Control
(as defined below) occurs, the term will be at least three years beyond such
Change in Control. "Change in Control" is defined in the Severance

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Agreement as (i) when any person becomes the beneficial owner of securities of
Unit representing more than 20% of the combined voting power of Unit's then
outstanding securities; (ii) if, during any period of two consecutive years,
individuals who constitute the Board of Directors cease to constitute a
majority of the Board of Directors; (iii) if all, or substantially all, of
Unit's assets are sold or transferred to a third party; (iv) if Unit
consolidates or merges with another company and Unit is not the survivor; or
(v) if Unit no longer has a class of securities registered pursuant to Section
12 of the Exchange Act. The Merger will constitute a Change in Control under
the Severance Agreements.

During the term of the Severance Agreement, if an employee is terminated
within three (3) years following a Change in Control or prior to a Change in
Control if due thereto, for any reason other than death, cause, disability or
retirement, or if the employee voluntarily terminates employment following a
Change in Control for "Good Reason" (generally, certain defined substantial
adverse changes in the employee's status or position as an executive or
resulting from the Change in Control), the employee will receive the following
benefits: (i) within five business days of termination, cash payment equal to
the product of (A) the employee's annual base salary plus any cash bonuses
paid to the employee in the 12 months preceding the Change in Control and (B)
three (3); (ii) continuation for three (3) years of insurance coverage
providing benefits to the employee and dependents, provided the employee makes
employee contribution payments as before the termination; (iii) continuation
for three years of the employee's current auto allowance; (iv) acceleration of
all non-vested stock options; and (v) payment of outplacement services, if
requested by the employee within six months of termination. However, if any
payments under the Severance Agreement or other benefits received by the
employee from Unit constitute an "excess parachute payment" under Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), such payments
shall be reduced to the extent necessary to prevent imposition of excise tax.

Pursuant to separate letter agreements, three additional employees of Unit
who are not executive officers of Unit are each entitled to six months of
severance pay if such employee is terminated in the first year after a change
in control (defined in these agreements as an event of the type specified in
clauses (i), (ii), (iii), (iv) or (v) of the definition of Change in Control
in the Severance Agreement, including the Merger) or prior to such change of
control if due thereto, for any reason other than death, cause, disability or
retirement. In addition, each such employee would receive a continuation for
six months of insurance coverage providing benefits to the employee and
dependents, provided the employee makes employee contribution payments as
before the termination.

U.S. Filter has reached an agreement with certain current employees of Unit
who are also holders of Unit Options and entitled pursuant to the Merger
Agreement to have their Unit Options converted into Exchange Options at the
Effective Time (the "Employee-Optionees"), whereby (i) the number of shares of
U.S. Filter Common Stock underlying each such Employee Optionee's Exchange
Options would be adjusted to equal the number of shares of Unit Common Stock
underlying his or her corresponding Unit Options multiplied by a fraction, the
numerator of which will be $10.00 and the denominator of which will be the
U.S. Filter Share Value and (ii) the exercise price under his or her Exchange
Options would be adjusted to equal (x) the lesser of (A) the exercise price
per share of Unit Common Stock under his or her corresponding Unit Options or
(B) $10.00, divided by (y) a fraction, the numerator of which will be $10.00
and the denominator of which will be the U.S. Filter Share Value, provided he
or she continues as an employee of U.S. Filter or Unit after the Effective
Time.

In addition, U.S. Filter has reached an arrangement with certain current
employees of Unit, including Messrs. Doyle and Patten, whereby U.S. Filter
will pay each such employee a monetary bonus provided that he or she continues
as an employee of Unit or U.S. Filter after the Effective Time. The maximum
aggregate amount of these bonus payments is $240,479, of which Mr. Doyle would
receive $32,178 and Mr. Patten would receive $67,643.

OPINION OF FINANCIAL ADVISOR

Needham was engaged to act as Unit's financial advisor in connection with
the Merger pursuant to an engagement letter dated June 6, 1997, as amended by
letter agreements dated September 4, 1998 and October 30,

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1998 (the "Needham Engagement Letter"). Pursuant to the Needham Engagement
Letter, Unit retained Needham to provide financial advisory and investment
banking services in connection with a possible sale of or business combination
involving Unit, and to render an opinion as to the fairness of the exchange
ratio in such a business combination, from a financial point of view, to the
holders of Unit Common Stock. The exchange ratio to be provided for in the
Merger was determined through arm's length negotiations between Unit and U.S.
Filter and not by Needham.

At a meeting of the Unit Board on June 26, 1998, Needham delivered its oral
opinion that, as of such date and based upon and subject to certain
assumptions and other matters described in its written opinion, the exchange
ratio initially proposed was fair to the holders of Unit Common Stock from a
financial point of view. Needham subsequently delivered its written opinion to
the Unit Board dated August 5, 1998 that, as of such date and based upon and
subject to certain assumptions and other matters described therein, the
exchange ratio set forth in the Merger Agreement, as amended as of such date,
was fair to the holders of Unit Common Stock from a financial point of view.
On November 10, 1998, Needham delivered its written opinion that, as of such
date and based upon and subject to certain assumptions and other matters
described therein, the Exchange Ratio was fair to the holders of Unit Common
Stock from a financial point of view. NEEDHAM'S OPINIONS ARE ADDRESSED TO THE
UNIT BOARD, ARE DIRECTED ONLY TO THE FINANCIAL TERMS OF THE MERGER AGREEMENT,
AND DO NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER OF UNIT AS TO HOW
SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING.

The complete text of the November 10, 1998 opinion (the "Needham Opinion"),
which sets forth the assumptions made, matters considered, limitations on and
scope of the review undertaken by Needham, is attached to this Proxy
Statement/Prospectus as Appendix B, and the summary of the Needham Opinion set
forth in this Proxy Statement/Prospectus is qualified in its entirety by
reference to the Needham Opinion. UNIT SHAREHOLDERS ARE URGED TO READ THE
NEEDHAM OPINION CAREFULLY AND IN ITS ENTIRETY FOR A DESCRIPTION OF THE
PROCEDURES FOLLOWED, THE FACTORS CONSIDERED, AND THE ASSUMPTIONS MADE BY
NEEDHAM.

In arriving at the Needham Opinion, Needham, among other things, (a)
reviewed the Merger Agreement; (b) reviewed certain publicly available
information concerning Unit and U.S. Filter, including certain publicly
available "consensus" forecasted financial information obtained by Needham
from I/B/E/S Corporation (the "I/B/E/S Projections") and several publicly
available analyst reports containing forecasted financial information
regarding U.S. Filter that were provided to Needham by U.S. Filter (which were
not all of the publicly available analyst reports regarding U.S. Filter), and
certain other relevant financial and operating data of Unit made available
from the internal records of Unit; (c) reviewed the historical stock prices
and trading volumes of the Unit Common Stock and the U.S. Filter Common Stock;
(d) held discussions with members of senior management of Unit and U.S. Filter
concerning the current and future business prospects of each company; (e)
reviewed certain financial forecasts and projections prepared by the
management of Unit; (f) compared certain publicly available financial data of
companies whose securities are traded in the public markets and that Needham
deemed relevant to similar data for Unit; (g) reviewed the financial terms of
certain other business combinations that Needham deemed generally relevant;
and (h) performed and/or considered such other studies, analyses, inquiries
and investigations as Needham deemed appropriate. The foregoing list
summarizes all material factors considered by Needham in arriving at the
Needham Opinion. The forecasted financial information contained in the analyst
reports provided to Needham by U.S. Filter differed from the I/B/E/S
Projections due to the fact that the I/B/E/S Projections are "consensus"
estimates, based on the estimates of several different analysts. The
forecasted financial information contained in the analyst reports provided to
Needham by U.S. Filter, as well as the I/B/E/S Projections obtained
independently by Needham, differed from the forecasted financial information
contained in this Proxy Statement/Prospectus under the heading "FIRST CALL
CONSENSUS EARNINGS ESTIMATES" (the "First Call Projections") due to the fact
that the First Call Projections were prepared as of November 6, 1998, whereas
such analyst reports were prepared on various dates during and prior to August
1998. The forecasted financial information contained in the analyst reports
provided to Needham by U.S. Filter also differed from the First Call
Projections due to the fact that the First Call Projections are "consensus"
estimates, based on the estimates of several different analysts.

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Needham assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by or discussed with it
for purposes of rendering its opinion. With respect to Unit's financial
forecasts provided to Needham by Unit's management, Needham assumed that such
forecasts have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of such management, at the time of
preparation, of the future operating and financial performance of Unit.
Needham did not assume any responsibility for or make or obtain any
independent evaluation, appraisal or physical inspection of the assets or
liabilities of Unit or U.S. Filter. The Needham Opinion states that it was
based on economic, monetary and market conditions existing as of the date of
such opinion. Needham expressed no opinion as to what the value of U.S. Filter
Common Stock will be when issued to the shareholders of Unit pursuant to the
Merger or the prices at which the U.S. Filter Common Stock will actually trade
at any time. In addition, Needham was not asked to consider, and the Needham
Opinion does not address, Unit's underlying business decision to engage in the
Merger, the relative merits of the Merger as compared to any alternative
business strategies that might exist for Unit, or the effect of any other
transaction in which Unit might engage. No other limitations were imposed by
Unit on Needham with respect to the investigations made or procedures followed
by Needham in rendering the Needham Opinion.

Based on this information, Needham performed a variety of financial analyses
of the Merger and the Exchange Ratio. The following paragraphs summarize all
material financial analyses performed by Needham in arriving at the Needham
Opinion.

Selected Company Analysis. Using publicly available information, Needham
compared selected historical and projected financial and market data ratios
for Unit to the corresponding data and ratios of certain other publicly traded
semiconductor capital equipment companies: Advanced Energy Industries, Inc.,
Applied Science and Technology, Inc., Brooks Automation, Inc. and Helix
Technology Corporation (the "Selected Companies"). Such data and ratios
included total market capitalization to historical and projected revenue,
price per share to historical and projected earnings per share, and market
value to historical book value.

Needham calculated multiples for the Selected Companies based on the closing
stock prices on November 10, 1998 and for Unit based on the U.S. Filter Share
Value of $18.58 as of November 10, 1998, which would result in Merger
Consideration of $9.32 per share. For the Selected Companies, the multiples of
total market capitalization to last twelve months ("LTM") revenues ranged from
0.7 to 2.6 with a mean of 1.5 and a median of 1.3, as compared with a multiple
of 0.6 for Unit; the multiples of market capitalization to projected calendar
1998 revenues ranged from 0.9 to 2.7 with a mean of 1.7 and a median of 1.6,
as compared with a multiple of 1.1 for Unit; and the multiples of market
capitalization to projected calendar 1999 revenues ranged from 0.7 to 2.3 with
a mean of 1.4 and a median of 1.4, as compared with a multiple of 0.9 for
Unit. For the Selected Companies, the projected calendar 1999 price-earnings
multiples ranged from 10.6 to 76.3 with a mean of 42.3 and a median of 41.1,
as compared with a multiple of 34.5 for Unit; a comparison of LTM and
projected calendar 1998 price-earnings multiples was not meaningful due to
Unit's net losses or projected net losses for those periods. For the Selected
Companies, the multiples of market value to historical book value ranged from
1.1 to 4.3 with a mean of 2.7 and a median of 2.6, as compared with a multiple
of 1.4 for Unit.

Selected Transaction Analysis. Needham also analyzed publicly available
financial information for 19 selected mergers and acquisitions of companies in
the semiconductor capital equipment industry since January 1, 1993 with
transaction values less than $300 million (the "Selected Transactions"). In
examining the Selected Transactions, Needham analyzed certain market price,
income statement and balance sheet parameters of the acquired companies
relative to the Merger Consideration, such as premiums of the consideration
offered to the target's stock price one day and four weeks prior to the
announcement date of the transaction; aggregate transaction value as multiples
of LTM sales, earnings before interest and taxes ("EBIT"), and earnings before
interest, taxes, depreciation and amortization ("EBITDA"); and multiples of
market value to LTM net income and historical book value. In certain cases,
complete financial data was not publicly available for the Selected
Transactions and only partial information was used in such instances.

Stock price premium information was available for only three Selected
Transactions. For these transactions, the one-day stock price premium ranged
from 11.4% to 52.6% with a mean of 34.4% and a median of 39.1%;

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and the four-week stock price premium ranged from 26.3% to 97.3% with a mean
of 50.1% and a median of 26.7%. These compared with one-day and four-week
premiums for Unit implied by the proposed Merger of 5.0% and 49.1%, calculated
based on the U.S. Filter Share Value of $18.58 as of November 10, 1998, which
would result in Merger Consideration of $9.32 per share.

For the Selected Transactions, the multiples of transaction value to LTM
sales ranged from 0.5 to 3.5 with a mean of 1.8 and a median of 1.9; the LTM
EBIT multiples ranged from 6.8 to 36.2 with a mean of 17.6 and a median of
15.6; and the LTM EBITDA multiples ranged from 5.6 to 24.7 with a mean of 12.6
and a median of 11.5. The multiples of market value to LTM net income ranged
from 7.4 to 62.8 with a mean of 26.3 and a median of 23.3; and the multiples
of market value to book value ranged from 1.0 to 7.5 with a mean of 4.0 and a
median of 3.2.

These ratios compared with the following for Unit, calculated based on the
Merger Consideration of $9.32 per share of Unit Common Stock: LTM sales
multiple of 0.6 and market to book value multiple of 1.4; a comparison of the
LTM EBIT, EBITDA and net income multiples was not meaningful due to Unit's
negative EBIT, EBITDA and net loss over such period.

No company, transaction or business used in the "Selected Company Analysis"
or "Selected Transaction Analysis" as a comparison is identical to Unit, U.S.
Filter or the Merger. Accordingly, these analyses are not simply mathematical;
rather, they involve complex considerations and judgments concerning
differences in the financial and operating characteristics and other factors
that could affect the acquisition, public trading or other values of the
Selected Companies, Selected Transactions, or the business segment, company or
transaction to which they are being compared.

Other Analyses. In rendering its opinion, Needham considered certain other
analyses, including, among other things, a history of trading prices and
volumes for Unit and U.S. Filter, and a comparison of Unit's and U.S. Filter's
stock price performance relative to the Standard & Poor's 500 Index.

The summary set forth above does not purport to be a complete description of
the analyses performed by Needham in connection with the rendering of the
Needham Opinion. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant quantitative and
qualitative methods of financial analyses and the application of those methods
to the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Accordingly, Needham believes that its
analyses must be considered as a whole and that considering any portions of
such analyses and of the factors considered, without considering all analyses
and factors, could create a misleading or incomplete view of the process
underlying its opinion. In its analyses, Needham made numerous assumptions
with respect to industry performance, general business and economic and other
matters, many of which are beyond the control of Unit or U.S. Filter. Any
estimates contained in these analyses are not necessarily indicative of actual
values or predictive of future results or values, which may be significantly
more or less favorable as set forth therein. Additionally, analyses relating
to the values of business or assets do not purport to be appraisals or
necessarily reflect the prices at which businesses or assets may actually be
sold. Accordingly, such analyses and estimates are inherently subject to
substantial uncertainty. Needham's opinions and related analyses were only one
of many factors considered by the Unit Board in its evaluation of the proposed
Merger and should not be viewed as determinative of the views of the Unit
Board or management with respect to the Exchange Ratio or the proposed Merger.

Pursuant to the terms of the Needham Engagement Letter, which were
negotiated at arms-length between Unit and Needham, Unit has paid or agreed to
pay Needham fees aggregating $275,000 for financial advisory services and for
rendering its opinions. Needham will also receive an additional transaction
fee, upon consummation of the Merger, of 1.25% of the aggregate consideration
paid and indebtedness assumed in the Merger, against which $75,000 of the
$275,000 previously paid or agreed to be paid would be credited. Based on the
closing price of the U.S. Filter Common Stock on December 15, 1998, the total
compensation payable to Needham in connection with the Merger would be
approximately $714,000. Unit has also agreed to reimburse Needham for certain
of its reasonable out-of-pocket expenses and to indemnify it against certain
liabilities relating to or arising out of services performed by Needham as
financial advisor to Unit.

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Needham is a nationally recognized investment banking firm. As part of its
investment banking services, Needham is frequently engaged in the evaluation
of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of securities,
private placements and other purposes. Needham was retained by the Unit Board
to act as Unit's financial advisor in connection with the Merger based on
Needham's experience as a financial advisor in mergers and acquisitions, as
well as Needham's familiarity with the semiconductor capital equipment
industry and with Unit. In the normal course of its business, Needham may
actively trade the equity securities of Unit or U.S. Filter for its own
account or for the account of its customers and, therefore, may at any time
hold a long or short position in such securities. In connection with
investment banking services rendered to Unit in 1994, Needham was issued a
warrant to purchase 100,000 shares of Unit Common Stock at an exercise price
of $8.925 per share. Such warrant expired unexercised on October 17, 1998.

THE MERGER AGREEMENT

REPRESENTATIONS AND WARRANTIES; COVENANTS

Under the Merger Agreement, Unit, U.S. Filter and Subcorp made a number of
representations regarding such matters as their valid existence and good
standing and their authority to enter into the Merger Agreement and, subject
to the approval of the Merger Agreement and the Merger by Unit shareholders,
to consummate the Merger.

Unit agreed that, until the consummation of the Merger or the termination of
the Merger Agreement, it will maintain its business and it will not take
certain actions outside the ordinary course of business without U.S. Filter's
consent. Unit agreed to take certain actions necessary to effect the Merger,
such as filing its proxy materials with the Commission, complying with all
legal requirements of a Special Meeting, and, subject to the fiduciary duties
of the officers and directors, using its best efforts to obtain shareholder
approval of the Merger Agreement and the Merger. Unit has agreed not to
directly or indirectly solicit, initiate, encourage, or facilitate, or furnish
or disclose nonpublic information in furtherance of, any inquiries or the
making of any proposal or offer with respect to any recapitalization, merger,
consolidation or other business combination involving, or any purchase of any
material assets or any equity securities of, Unit and its subsidiaries, taken
as a whole (a "Competing Transaction"), except that the Unit Board may provide
information to and engage in negotiations with a third party regarding a
Competing Transaction if failure to do so would constitute a breach of the
Unit Board's fiduciary duties, as determined by the Unit Board in good faith
after receipt of advice from Unit's outside counsel.

U.S. Filter has agreed, if the Merger is consummated, to provide employees
of Unit retained by U.S. Filter with employee benefits in the aggregate no
less favorable than those benefits provided to U.S. Filter's similarly
situated employees for a period of twelve months following the effectiveness
of the Merger. U.S. Filter has also agreed, if the Merger is consummated, to
indemnify the officers and directors of Unit, subject to any limitations
imposed by applicable law, with respect to acts or omissions occurring prior
to the Merger.

CONDITIONS TO THE MERGER

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conditioned upon the receipt by Unit of the opinion of its counsel to the
effect that the Merger will constitute a reorganization under section 368(a)
of the Internal Revenue Code (the "Code") and that the Unit Shareholders will
not recognize any gain or loss as a result thereof, except with respect to
cash received in lieu of fractional share interests in U.S. Filter Common
Stock or in exchange for shares for which dissenters' rights are exercised.
U.S. Filter's obligations under the Merger Agreement are also conditioned upon
the following: (i) receipt of the consent and approval of each person whose
consent is required in connection with the Merger under all agreements to
which Unit is a party, and (ii) the absence of material adverse changes in the
value, condition, prospects, business or results of operations of Unit
(provided, however, that any deterioration in Unit's prospects or operating
results, to the extent attributable to a decline in the market demand for
semiconductor manufacturing equipment, shall not be deemed a material adverse
change for purposes of this condition).

STOCK OPTIONS AND WARRANTS

At the Effective Time, those outstanding options and warrants to purchase
shares of Unit Common Stock that (a) were granted prior to the date of the
Merger Agreement and (b) are unexpired and unexercised as of the Effective
Time shall be automatically converted into an option or a warrant, as the case
may be, to purchase a number of shares of U.S. Filter Common Stock equal to
(x) the number of shares of Unit Common Stock issuable immediately as of the
date of the Merger Agreement upon exercise of such option or warrant
multiplied by (y) the Exchange Ratio, with an exercise price equal to (i) the
exercise price which existed under the corresponding Unit option or warrant
divided by (ii) the Exchange Ratio, and with such other terms and conditions,
subject to U.S. Filter's approval, as were in effect under such option and
warrant as of the date of the Merger Agreement.

AMENDMENT OR TERMINATION OF THE MERGER AGREEMENT;
REIMBURSEMENT OF EXPENSES AND BREAKUP FEE

Amendment of Merger Agreement

The Merger Agreement may be amended by Unit, U.S. Filter and Subcorp prior
to the Effective Time, at any time before or after approval of the Merger by
the Unit Shareholders; provided, however, that after such shareholder
approval, no amendment may be made without the further approval of such
shareholders which would by law require further approval or authorization by
Unit Shareholders.

Termination of Merger Agreement

The Merger Agreement may be terminated by mutual agreement of U.S. Filter
and Unit or by either such party if (i) there shall have been a material
breach by the other party of any of its representations, warranties, covenants
or agreements in the Merger Agreement to be complied with or performed by such
party at or prior to such date of termination, (ii) if the required approval
of the Unit Shareholders is not obtained by reason of the failure to obtain
the required vote, (iii) if the Merger has not been consummated by January 29,
1999, other than as a result of a material breach of the Merger Agreement by
the terminating party, or (iv) if any judgment, injunction, order or decree
enjoining U.S. Filter or Unit from consummating the Merger is entered and such
judgment, injunction, order or decree has become final and nonappealable.

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The Merger Agreement may be terminated by U.S. Filter if the Unit Board
withdraws or modifies its approval or recommendation of the Merger Agreement
or the Merger in a manner adverse to U.S. Filter or Subcorp, or if the U.S.
Filter Share Value is less than $11.00. The Merger Agreement may be terminated
by the Unit Board if Unit receives a proposal with respect to a Competing
Transaction on terms the Unit Board (after consultation with its financial
advisors) determines to be more favorable to Unit Shareholders than the terms
of the Merger, and the Unit Board determines, after consultation with Unit's
outside counsel, that to continue to recommend that Unit Shareholders vote in
favor of the Merger, notwithstanding the receipt of such offer with respect to
a Competing Transaction, would violate the fiduciary duties of the Unit Board
to the Unit Shareholders and; provided, however, that Unit has provided U.S.
Filter with the material terms and conditions of such Competing Transaction
and a reasonable opportunity of not less than 48 hours to respond thereto; and
provided, further, that Unit shall promptly pay to U.S. Filter the termination
fees described below (a "Company Fiduciary Termination").

Reimbursement of Expenses; Breakup Fee

The Merger Agreement provides for the reimbursement of U.S. Filter's fees
and expenses in connection with this transaction and the payment of an
additional breakup fee of $1.5 million by Unit if (a) Unit terminates the
Agreement pursuant to a Company Fiduciary Termination, or (b) Unit terminates
the Merger Agreement because the required approval of the Unit Shareholders is
not obtained by reason of the failure to obtain the required vote or U.S.
Filter terminates the Merger Agreement as a result of the Unit Board's
withdrawal or modification of (or resolution to withdraw or modify) its
approval or recommendation of the Merger Agreement or the Merger in a manner
adverse to U.S. Filter or Subcorp, and at the time of such termination there
is a publicly announced or disclosed Competing Transaction with respect to
Unit involving a third party or, in the case of a termination as a result of
Unit Board's withdrawal or modification of its approval or recommendation, at
the time of such termination there is a Competing Transaction with respect to
Unit involving a third party of which Unit is aware, and within nine months
after such termination, Unit has consummated, or has entered into an agreement
for, a "Business Combination." For the purposes of the Merger Agreement,
"Business Combination" is defined to mean (i) a merger or similar transaction,
(ii) a sale or other disposition of any material asset of Unit or its
subsidiaries, or (iii) the acquisition of beneficial ownership of more than
20% of the Unit Common Stock.

HSR ACT

Transactions such as the Merger are reviewed by the Department of Justice
and the Federal Trade Commission (the "FTC") under applicable antitrust laws.
Under the provisions of the HSR Act, the Merger may not be consummated until
such time as certain information has been furnished to the Department of
Justice and the FTC and the specified waiting period requirements of the HSR
Act have been satisfied. Notification forms were filed by Unit and U.S. Filter
with the Department of Justice and the FTC under the HSR Act on August 12,
1998, and early termination of the waiting period under the HSR Act was
granted on August 25, 1998.

AFFILIATES' RESTRICTIONS ON SALES OF U.S. FILTER COMMON STOCK

All shares of U.S. Filter Common Stock received by Unit Shareholders in the
Merger in exchange for issued and outstanding shares of Unit Common Stock will
have been registered under the Securities Act by a Registration Statement on
Form S-4, thereby allowing those shares to be traded without restriction by
former holders of issued and outstanding shares of Unit Common Stock who (i)
are not deemed to be "affiliates" (as that term is defined for purposes of
Rule 145 under the Securities Act) of Unit at the time of the Unit Special
Meeting and (ii) do not become affiliates of U.S. Filter after the Merger.
Unit Shareholders who are identified by Unit as its affiliates will be so
advised by Unit prior to the Merger.

Unit has agreed to use its best efforts to cause each person who may be
deemed to be an affiliate to agree not to make any public sale of any U.S.
Filter Common Stock received upon consummation of the Merger in violation of
the Securities Act or the rules and regulations promulgated thereunder.
Generally, this will require

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that sales be made in accordance with Rule 145(d) under the Securities Act,
which in turn requires that for specified periods such sales be made in
compliance with volume limitations, manner of sale provisions and current
information requirements of Rule 144 under the Securities Act. The volume
limitations should not impose any material limitation on any shareholder of
Unit who owns less than 1% of U.S. Filter's outstanding Common Stock after the
Merger unless, pursuant to Rule 144, such shareholder's shares are required to
be aggregated with those of other shareholders.

ACCOUNTING TREATMENT

U.S. Filter has advised Unit that it intends to treat the Merger as a
purchase for accounting purposes. Under the purchase method of accounting, the
purchase price of Unit, including direct costs of the Merger, will be
allocated to the assets acquired and liabilities assumed based upon their
estimated relative fair values, with the excess of fair value of net assets
received over the purchase consideration allocated as a reduction to the value
of the related long-lived assets. The results of U.S. Filter's operations will
include the results of operations of Unit commencing at the Effective Time.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes the material anticipated U.S. federal
income tax considerations relevant to the exchange of shares of Unit Common
Stock for U.S. Filter Common Stock pursuant to the Merger. This summary is
based upon the opinion delivered by Stradling Yocca Carlson & Rauth, counsel
for Unit, delivered in connection with the filing of the Registration
Statement, and a substantially similar opinion of Stradling Yocca Carlson &
Rauth to be delivered to Unit at the Effective Time of the Merger (the "Tax
Opinion"), that the Merger will constitute a tax-free "reorganization" within
the meaning of Section 368 of the Code (a "Reorganization").

Holders of Unit Common Stock should be aware that this discussion does not
deal with all federal income tax considerations that may be relevant to
particular Unit Shareholders in light of their particular circumstances.
Shareholders with unique circumstances, such as dealers in securities, banks,
insurance companies, tax exempt organizations, foreign persons, persons who
acquired their shares in connection with stock options or stock purchase plans
or in other compensatory transactions, and persons who do not hold their Unit
Common Stock as capital assets, are specifically not addressed herein. In
addition, the following discussion is based on current legal authorities as of
the date hereof, and no assurance can be given that further legislation,
regulations, administrative pronouncements or court decisions will not
significantly change the law and materially affect the discussion contained
herein. Further, the following discussion does not address the tax
consequences of the Merger under foreign, state or local tax laws. Finally,
the following discussion also does not address the tax consequences of
transactions (other than the Merger) effectuated prior or subsequent to or
concurrently with the Merger, including without limitation, transactions in
which Unit Common Stock is acquired or sold, U.S. Filter shares are disposed
of, or transactions in which Unit Common Stock is sold after the date of the
Merger Agreement and prior to the Effective Time of the Merger.

ACCORDINGLY, UNIT SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABLE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE MERGER IN
THEIR PARTICULAR CIRCUMSTANCES.

Subject to the limitations and qualifications referred to herein,
qualification of the Merger as a Reorganization will result in the following
federal income tax consequences:

(a) No gain or loss will be recognized by Unit Shareholders solely upon
their receipt of U.S. Filter Common Stock solely in exchange for Unit
Common Stock pursuant to the Merger (gain or loss will be recognized as a
result of cash received in lieu of a fractional share of U.S. Filter Common
Stock and for cash received in exchange for Unit Common Stock for which
dissenters' rights are exercised).

34
<PAGE>

(b) The aggregate tax basis of the U.S. Filter Common Stock received by
each Unit Shareholder in the Merger will be the same as the aggregate tax
basis of Unit Common Stock surrendered in exchange therefor (without regard
to the tax basis, if any, allocated to fractional share interests).

(c) The holding period of the U.S. Filter Common Stock received in the
Merger will include the period for which the Unit Common Stock surrendered
in exchange therefor was held, provided that the Unit Common Stock is held
as a capital asset at the time of the Merger.

(d) If a Unit Shareholder receives cash in lieu of a fractional share of
U.S. Filter Common Stock, such shareholder will be treated as if such
fractional share of U.S. Filter Common Stock had been issued in the Merger
and then redeemed by U.S. Filter. A shareholder receiving such cash will
generally recognize gain or loss upon such payment, equal to the difference
(if any) between the amount of cash received and such shareholder's basis
in the fractional share.

(e) Unit Shareholders who receive cash in exchange for shares for which
dissenters' rights are exercised ("Dissenting Shareholders") will recognize
income equal to the lesser of the cash received or the gain realized in the
Merger (the difference between (i) the amount of cash plus the fair market
value of the U.S. Filter Common Stock, if any, received and (ii) the
Dissenting Shareholder's basis in the Unit Common Stock exchanged). The
character of such income will generally be capital gain or dividend
depending on the Dissenting Shareholder's particular situation. Dissenting
Shareholders should consult with their own tax advisors as to the character
of such income to them.

(f) Neither U.S. Filter, Subcorp nor Unit will recognize material amounts
of gain solely as a result of the Merger.

No ruling has been or will be obtained from the Internal Revenue Service
(the "IRS") in connection with the Merger. The Tax Opinions do not and will
not bind the IRS and the IRS is, therefore, not precluded from successfully
asserting a contrary opinion. The Tax Opinions are and will also be subject to
certain assumptions and certain representations made by U.S. Filter and Unit
regarding, among other things, the conduct of the business of Unit following
the Merger.

The obligations of Unit to consummate the Merger are conditioned upon the
receipt of the Tax Opinion. If Unit fails to receive the Tax Opinion and
determines to waive the related condition to its obligation to consummate the
Merger, and the material federal income tax consequences to the Unit
Shareholders are different from those described above, Unit will resolicit the
shareholders' vote prior to proceeding with consummation of the Merger.

A successful IRS challenge to the reorganization status of the Merger would
result in the Unit Shareholders recognizing taxable gain or loss, as of the
Effective Time, with respect to each share of Unit Common Stock surrendered
equal to the difference between the shareholder's basis in such share and the
fair market value, as of the Effective Time, of the U.S. Filter Common Stock
received in exchange therefor. In such event, a shareholder's aggregate basis
in the U.S. Filter Common Stock so received would equal its fair market value
and the holding period for such stock would begin the day after the Effective
Time.

RIGHTS OF DISSENTING SHAREHOLDERS

Generally

The rights of Unit Shareholders to dissent from approval of the Merger are
governed by Chapter 13 of the CGCL, the full text of which is reprinted as
Appendix C to this Proxy Statement/Prospectus. While the following summarizes
all material rights of dissenting shareholders in the Merger, it is not
intended to be complete and is qualified in its entirety by reference to
Appendix C.

Under the CGCL, Unit Shareholders will not have any dissenters' rights with
respect to the Merger Agreement or the Merger unless demands for payment are
duly filed with respect to five percent or more of the outstanding shares of
Unit Common Stock. If the holders of five percent or more of the outstanding
shares of Unit Common Stock duly file demands for payment and fully comply
with Chapter 13 of the CGCL, they will have dissenters' rights to be paid in
cash the fair market value of their shares.

35
<PAGE>

Dissenters' rights cannot be validly exercised by persons other than
shareholders of record regardless of the beneficial ownership of the shares.
Persons who are beneficial owners of shares held of record by another person,
such as a broker, a bank or a nominee, should instruct the record holder to
follow the procedures outlined below and set forth in Chapter 13 of the CGCL
if such beneficial owners wish to assert their dissenters' rights.

As described more fully below, in order for Unit Shareholders to perfect
their dissenters' rights, they must (i) make written demand for the purchase
of their dissenting shares to Unit or its transfer agent on or before the date
of the Unit Special Meeting, (ii) vote their dissenting shares against
approval of the Merger Agreement and the Merger, and (iii) within 30 days
after the mailing to Unit Shareholders of notice of approval of the Merger
Agreement and the Merger, submit the certificates representing their
dissenting shares to Unit or its transfer agent. FAILURE TO FOLLOW ANY OF THE
PROCEDURES SET FORTH IN CHAPTER 13 OF THE CGCL MAY RESULT IN THE LOSS OF
DISSENTERS' RIGHTS.

Under the CGCL, "fair market value" is determined as of the day before the
first announcement of the terms of the Merger Agreement, excluding any
appreciation or depreciation as a consequence of the Merger (the "Fair Market
Value"). If the parties are unable to agree on the Fair Market Value, the
dissenting shareholder may request the Superior Court for the County of Orange
to determine the Fair Market Value of the dissenting shareholders' shares. The
terms of the Merger were publicly announced on July 2, 1998. On July 1, 1998,
the last trading day prior to the public announcement of the terms of the
Merger, the high and low sales prices for Unit Common Stock were $9.125 and
$8.625, respectively.

Demand for Purchase

Dissenting shareholders must submit to Unit at its principal office at 22600
Savi Ranch Parkway, Yorba Linda, California 92887, or to its transfer agent,
Continental Stock Transfer & Trust Company, at 2 Broadway, New York, New York
10004, a written demand that Unit purchase for cash those shares with respect
to which they wish to act as dissenting shareholders. The written demand must
(i) state the number and class of the shares held of record by the dissenting
shareholder which the shareholder demands that Unit purchase and (ii) contain
a statement of what such dissenting shareholder claims to be the Fair Market
Value of those shares (which statement constitutes an offer by the shareholder
to sell the shares at such price). THE WRITTEN DEMAND WILL NOT BE EFFECTIVE
FOR ANY PURPOSE UNLESS IT IS RECEIVED BY UNIT OR ITS TRANSFER AGENT NOT LATER
THAN THE DATE OF THE UNIT SPECIAL MEETING. A shareholder may not withdraw a
demand for payment without the consent of Unit.

No shareholder who has a right to demand payment of cash for such
shareholder's shares and who in fact makes such a demand will have any right
to attack the validity of the Merger or have the Merger set aside or
rescinded, except in an action to test whether Unit has received the number of
shares required to approve the Merger. Any shareholder who does not demand
payment of cash for such shareholder's shares and who institutes an action to
attack the validity of the Merger or to have the Merger set aside or rescinded
would not thereafter have any right to demand payment of cash pursuant to the
exercise of dissenters' rights.

Vote Against Approval of the Merger

Dissenting shareholders must vote their dissenting shares against approval
of the Merger. Record shareholders may vote part of the shares that they are
entitled to vote in favor of the Merger or abstain from voting a part of such
shares without jeopardizing their dissenters' rights as to other shares;
however, if record shareholders vote part of the shares they are entitled to
vote in favor of the Merger and fail to specify the number of shares they are
so voting, it is conclusively presumed under California law that their
approving vote is with respect to all shares that they are entitled to vote.
Voting against the Merger will not of itself, absent compliance with the
provisions of Chapter 13 of the CGCL summarized herein, satisfy the
requirements of the CGCL for exercise and perfection of dissenters' rights.
However, any shareholder desiring to execute dissenters' rights must vote
against approval of the Merger.

36
<PAGE>

Notice of Approval

If the Merger is approved by the Unit Shareholders, then within 10 days of
such approval Unit will mail notice of such approval (the "Notice of
Approval") to shareholders having a right to require Unit to purchase their
shares for cash under the dissenters' rights provisions of the CGCL. The
Notice of Approval will contain a statement of the price determined by Unit to
represent the Fair Market Value of the dissenting shares (which statement will
constitute an offer by Unit to purchase any dissenting shares at that price).

Submission of Stock Certificates

Within 30 days after the date of mailing of the Notice of Approval,
dissenting shareholders must submit to Unit or its transfer agent (at their
respective addresses set forth above) the certificates representing the shares
which the shareholder demands that Unit purchase. Certificates so submitted
will be stamped or endorsed with a statement that the shares are dissenting
shares or to be exchanged for certificates of appropriate denomination so
stamped and endorsed. A SUBMISSION WILL NOT BE EFFECTIVE FOR ANY PURPOSE IF
NOT MADE WITHIN 30 DAYS AFTER THE DATE OF MAILING OF THE NOTICE OF APPROVAL,
WHICH DATE WILL BE STATED IN THE NOTICE OF APPROVAL.

Purchase of Dissenting Shares

If Unit and a shareholder agree that such shareholder's shares qualify as
dissenting shares and agree on the Fair Market Value of the shares, payment
for the dissenting shares will be made by Unit within 30 days of such
agreement upon surrender of the certificates representing the dissenting
shares. The purchase price will bear interest from the date of such agreement
until paid at the legal rate on judgments. Any agreement between dissenting
shareholders and Unit fixing the Fair Market Value of any dissenting shares
must be filed with the Secretary of Unit.

If Unit denies that the shares qualify as dissenting shares, or if Unit and
a dissenting shareholder fail to agree on the Fair Market Value of the shares,
the dissenting shareholder may, within six months after the date of mailing of
the Notice of Approval (but not thereafter), file a complaint in the Superior
Court for the County of Orange, State of California, requesting that the
Superior Court determine whether the shares are dissenting shares and to
determine the Fair Market Value of such dissenting shares. Two or more
shareholders may join together in any such action, or a shareholder may
intervene in any pending action.

The Superior Court will determine whether the shares which are the subject
of that complaint qualify as dissenting shares, if disputed by Unit, and may
determine or appoint appraisers to determine the Fair Market Value of the
shares. The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
Unit, Unit shall pay the costs (including, in the court's discretion,
attorneys' fees, fees of expert witnesses and interest at the legal rate on
judgments if the Fair Market Value is determined by the court to exceed 125%
of the price offered by Unit).

Termination of Dissenting Share and Dissenting Shareholder Status

Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to
require the corporation to purchase their shares upon the happening of any of
the following: (i) Unit abandons the Merger (whereupon Unit shall pay on
demand to any dissenting shareholder who has initiated proceedings in good
faith under Chapter 13 of the CGCL all necessary expenses incurred in such
proceedings and reasonable attorneys' fees); (ii) the shares are transferred
prior to their submission for endorsement or are surrendered for conversion
into shares of another class; (iii) the dissenting shareholder and Unit do not
agree upon the status of the shares as dissenting shares or upon the purchase
price of the shares, and neither files a complaint or intervenes in a pending
action as provided in Chapter 13 of the CGCL within six months after the date
of mailing of the Notice of Approval; or (iv) the dissenting shareholder, with
the consent of Unit, withdraws the shareholder's demand for purchase of the
dissenting shares.

37
<PAGE>

EXCHANGE OF CERTIFICATES

Prior to the Effective Time, U.S. Filter will appoint a bank or trust
company (the "Exchange Agent") for the purpose of exchanging stock
certificates representing the Unit Common Stock for the Merger Consideration.
U.S. Filter or Subcorp will make available to the Exchange Agent the Merger
Consideration to be paid to Unit Shareholders on surrender of their stock
certificates (the "Exchange Fund").

As soon as practicable after the Effective Time, U.S. Filter will instruct
the Exchange Agent to mail to each record holder of a certificate previously
evidencing shares of Unit Common Stock a transmittal letter and instructions
advising the holder of the procedure for surrendering such holder's
certificates. The transmittal form will state that the delivery of the Merger
Consideration will be made, and the risk of loss and title will pass, only
upon proper delivery of the certificates to the Exchange Agent. Each holder of
a certificate previously evidencing shares of Unit Common Stock will be
entitled to receive, upon surrender of the certificate to the Exchange Agent,
along with other documentation completed in accordance with the transmittal
form, a certificate representing the number of whole shares of U.S. Filter
Common Stock to which such holder is entitled to receive as the stock
component of the Merger Consideration and cash in lieu of fractional shares
due to such holder (if any) pursuant to the provisions of the Merger
Agreement.

In the event of a transfer of ownership of shares of Unit Common Stock which
is not registered on the transfer records of Unit, a certificate representing
the proper number of shares of U.S. Filter Common Stock, together with a check
for the cash to be paid in lieu of fractional shares (if any) shall be issued
to such transferee if the certificate representing such shares of Unit 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.

Any portion of the Exchange Fund which remains undistributed to Unit
Shareholders twelve months after the date of the mailing of the transmittal
letter and instructions will be delivered to U.S. Filter upon demand, and
holders of certificates previously representing shares of Unit Common Stock
who have not theretofore complied with the procedures set forth in the
transmittal letter and instructions will thereafter only be able to look to
U.S. Filter for payment of any claim to shares of U.S. Filter Common Stock or
cash in lieu of fractional shares thereof, or dividends or distributions, if
any, in respect thereof. None of U.S. Filter, Subcorp or Unit will be liable
to any person in respect of any shares of Unit Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund properly
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.

38
<PAGE>

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

U.S. Filter's Common Stock is listed on the NYSE under the symbol "USF." The
Unit Common Stock is traded on the NASDAQ National Market under the symbol
"UNII." The following table sets forth, for the periods indicated, the high
and low sales prices of U.S. Filter Common Stock, as reported on the NYSE
Composite Tape, and the high and low sales prices of the Unit Common Stock, as
reported by the NASDAQ National Market. Each fiscal year of U.S. Filter is
ended March 31, and each fiscal year of Unit is ended May 31.

<TABLE>
<CAPTION>
U.S. FILTER
COMMON STOCK UNIT COMMON STOCK
------------- -----------------------
HIGH LOW HIGH LOW DIVIDENDS
------ ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C>
FISCAL 1996
First Quarter.......................... $13.08 $ 9.92 $17.63 $11.50 $0.06
Second Quarter......................... 16.08 12.50 19.25 10.63 --
Third Quarter.......................... 18.00 13.42 15.25 11.63 --
Fourth Quarter......................... 19.33 16.42 15.50 11.88 --
FISCAL 1997
First Quarter.......................... $23.75 $18.42 $14.50 8.63 --
Second Quarter......................... 34.75 18.50 10.63 8.25 --
Third Quarter.......................... 36.25 30.38 10.63 8.13 --
Fourth Quarter......................... 39.00 28.88 9.63 7.25 --
FISCAL 1998
First Quarter.......................... $33.38 $25.75 $14.50 $ 8.94 --
Second Quarter......................... 43.19 26.94 14.25 9.75 --
Third Quarter.......................... 44.44 27.63 10.50 8.50 --
Fourth Quarter......................... 36.44 28.75 9.75 6.38 --
FISCAL 1999
First Quarter.......................... $36.25 $26.38 $10.75 $ 6.00 --
Second Quarter......................... 31.25 14.06 9.00 3.13 --
Third Quarter (through December 16,
1998)................................. 25.50 11.44 8.88 7.69 --
</TABLE>

The following table sets forth the last reported trading price per share of
Unit Common Stock and U.S. Filter Common Stock as of June 26, 1998, the last
full trading day preceding Unit's announcement that it was in merger
discussions with an undisclosed party, on July 1, 1998, the last full trading
day prior to Unit's announcement that the Merger Agreement had been executed,
on August 4, 1998, the last full trading day prior to Unit's announcement that
the First Amendment to Agreement and Plan of Merger dated as of August 5,
1998, had been executed, and on November 10, 1998, the last full trading day
prior to Unit's announcement that the Second Amendment to Agreement and Plan
of Merger dated as of November 10, 1998 had been executed:

<TABLE>
<CAPTION>
UNIT U.S. FILTER
COMMON COMMON
STOCK STOCK
------ -----------
<S> <C> <C>
June 26, 1998............................................. $6.56 $26.75
July 1, 1998.............................................. 8.88 29.50
August 4, 1998............................................ 9.38 27.50
November 10, 1998......................................... 7.88 20.50
</TABLE>

The closing sales price of U.S. Filter Common Stock as of December 16, 1998,
as reported on the NYSE Composite Tape, was $20.81. The closing sales price of
Unit Common Stock as of December 16, 1998, as reported by the NASDAQ National
Market, was $7.94. As of May 31, 1998, there were 263 holders of record of
Unit Common Stock. As of June 26, 1998, there were 4,258 holders of record of
U.S. Filter Common Stock.

39
<PAGE>

Shareholders are advised to obtain current market quotations for U.S. Filter
Common Stock and Unit Common Stock prior to making any decision with respect
to the Merger. Such quotations are available from Unit by telephone at (800)
229-8648. No assurance can be given as to the market price of U.S. Filter
Common Stock or Unit Common Stock at, or in the case of the U.S. Filter Common
Stock after, the Effective Time of the Merger.

Unit has not declared any cash dividends on the shares of Unit Common Stock
since the first quarter of fiscal 1996. Unit 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 Unit Common Stock in
the foreseeable future. Any payment of cash dividends on Unit Common Stock in
the future will depend upon Unit's financial condition, earnings, capital
requirements and such other factors as the Unit Board of Directors deems
relevant. Certain of Unit's future debt or equity instruments or securities
may impose restrictions on Unit's ability to pay dividends.

40
<PAGE>

BUSINESS OF U.S. FILTER

U.S. Filter is a leading global provider of industrial, municipal,
commercial and consumer 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 one of the industry's broadest
range of cost-effective systems, products, services and proven technologies.
In addition, U.S. Filter markets a broad line of waterworks distribution
products and services. U.S. Filter has one of the industry's largest networks
of sales and service and distribution facilities through approximately 1,500
locations, including over 600 franchised dealerships, and approximately
850 company-owned or leased facilities, including manufacturing plants. 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,
substantially all of which are leased to agricultural tenants.

Since 1991, U.S. Filter has acquired more than 150 United States based and
international businesses. These acquisitions have enabled U.S. Filter to
expand significantly the segments of the water and wastewater treatment
industry and water-related industries in which it participates, to complement
its technologies, products or services, to enter into additional geographic
areas and serve additional industries, municipalities, governmental and other
customers and to expand its installed base, service network, range of products
and technologies and global distribution network. U.S. Filter intends to
actively seek additional acquisitions that enhance its geographic network,
customer base, and range of product offerings, technologies, markets and
industries served, or that provide opportunities to implement U.S. Filter's
one-stop-shop approach in terms of technology, distribution or service.

Kinetics. Effective December 31, 1997, U.S. Filter acquired The Kinetics
Group, Inc. ("Kinetics") in exchange for 5,803,803 shares of Common Stock.
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 primarily to the microelectronics,
pharmaceutical and biotechnology industries, and are critical to these
operations. For its fiscal year ended September 30, 1997, Kinetics' revenues
were $387.8 million.

Memtec. U.S. Filter completed the acquisition of Memtec in December 1997 for
a total cash purchase price of $397.2 million. Memtec designs and manufactures
large volume membrane-based systems featuring Memtec's proprietary
microfiltration technology. It also designs and manufactures an extensive
range of products and systems worldwide that are used in the filtration of
liquid and gas streams in a wide variety of industrial, municipal and
commercial applications. For its fiscal year ended June 30, 1997, Memtec's
revenues were $243.6 million.

Culligan. On June 15, 1998, U.S. Filter acquired Culligan, a leading
manufacturer and distributor of water purification and treatment products and
services for consumer, commercial and industrial 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 for commercial and industrial customers, such as
ultrafiltration and microfiltration products. Culligan also offers
desalination systems and portable deionization services designed for
commercial and industrial applications. In addition, Culligan sells and
licenses dealers to sell five-gallon bottled water under the Culligan
trademark. Culligan has been an active participant in the water purification
and treatment industry since 1936, and its Culligan, Everpure, Ametek and
Bruner brands are among the most recognized in the industry. For its fiscal
year ended January 31, 1998, Culligan's revenues were $505.7 million.

Bass Properties. In September 1997, U.S. Filter acquired the Properties
(including appurtenant water rights) in the Western and Southwestern United
States from interests principally owned by affiliates of certain

41
<PAGE>

members of the Bass family of Fort Worth, Texas. The Properties were acquired
in exchange for 8,000,000 shares of U.S. Filter Common Stock and non-
transferable warrants to purchase 1,200,000 shares of U.S. Filter Common
Stock. The substantial majority of the Properties are located in Imperial
County, California within the Imperial Irrigation District, and substantially
all of the Properties are currently leased to agricultural tenants.

BUSINESS OF UNIT

GENERAL

Unit was incorporated in California in 1984 and is the successor-in-interest
to Autoclave Engineers, Inc. ("Autoclave"), a Pennsylvania corporation founded
in 1946. Unit commenced operations in 1980 and was acquired by Autoclave in
1984. From 1986 to 1995, the predecessor company consisted of three operating
segments: Burton Corblin, Autoclave Engineers Group and Unit Instruments.
Burton Corblin designed and manufactured high pressure diaphragm and piston
compressors. Autoclave Engineers Group designed, manufactured and marketed
autoclaves, compressors, valves, fittings and related systems, components and
accessories, principally for elevated temperatures and/or pressure
applications. During fiscal 1995, Burton Corblin was sold and a formal plan
for the disposition of Autoclave Engineers Group was adopted by the Board of
Directors of the predecessor company. In the second quarter of fiscal 1996,
Autoclave Engineers Group was sold. At the Annual Meeting of Shareholders held
in November, 1995, the shareholders approved the change of the predecessor
company's state of incorporation from Pennsylvania to California, pursuant to
a Plan of Merger which provided for Autoclave to be merged into its wholly-
owned subsidiary, Unit Instruments, Inc. In conjunction with this action, the
corporate office in Erie, Pennsylvania was relocated to Unit's facilities in
Yorba Linda, California. As used herein, the term "Unit" shall mean and refer
to Unit, its predecessor company and its subsidiary, as appropriate.

Following the restructuring, Unit consists of one operating segment which
designs, manufactures and markets mass flow controllers that are used to
control the flow of process gases into semiconductor wafer fabrication
chambers and other related semiconductor fabrication equipment. Also included
in this segment is the design, manufacturing and marketing of ultra high
purity gas isolation boxes, gas panels and valve manifold boxes for use in
semiconductor wafer manufacturing processes. Wafer fabrication involves
deposition, etching and stripping processes that each require the introduction
of process gases that must be precisely controlled to ensure system throughput
and process yields. Unit's products are marketed and sold worldwide through a
direct sales force and sales representatives. Principal marketing and service
centers are maintained in the United States, Ireland, Japan and Korea.

PROPERTIES

Unit maintains its headquarters and principal manufacturing facility in a
leased 82,000 square foot building in Yorba Linda, California. The lease on
this facility expires in 2006 and provides for a 5-year renewal option. Unit
owns a 7,000 square foot manufacturing facility in Dublin, Ireland; leases a
2,700 square foot manufacturing facility in Tokyo, Japan; has five leased
service centers in San Jose, California, Chandler, Arizona, Dallas, Austin,
Texas and Richmond, Virginia. Internationally, Unit has leased service centers
in Kyusha Island and Osaka, Japan and Sungnam, Korea.

LEGAL PROCEEDINGS

Unit has filed suit against six suppliers of zinc-plated fasteners in July
1997 in Superior Court of the State of California for the County of Orange.
Unit is seeking actual and consequential damages to be determined. The suit
alleges that Unit was shipped a defective batch of fasteners that failed in
MFC products. Unit is not involved in any other legal proceedings as of
December 15, 1998.

42
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA OF U.S. FILTER

The selected consolidated financial data of U.S. Filter set forth below are
derived from U.S. Filter's audited consolidated financial statements and
related notes thereto except as noted. Each fiscal year of U.S. Filter is
ended March 31. The financial data as of and for the three months ended
September 30, 1997 and 1998 are derived from unaudited consolidated financial
statements of U.S. Filter which, in the opinion of U.S. Filter, reflect all
adjustments (consisting principally of normal, recurring amounts) necessary
for the fair statement of the financial position and results of operations for
the periods presented and are not necessarily indicative of the results for
any other interim period or for the full fiscal year. The selected
consolidated financial data should be read in conjunction with and is
qualified in its entirety by U.S. Filter's consolidated financial statements
and related notes thereto and other financial information incorporated herein
by reference.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED MARCH 31,(1) SEPTEMBER 30,(1)
-------------------------------------------------------- ----------------------
1994(2) 1995(3) 1996(4) 1997(5) 1998(6) 1997(7) 1998(8)
-------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $884,782 $1,110,816 $1,395,247 $2,135,424 $3,740,324 $1,731,294 $2,345,213
Cost of sales........... 648,737 814,663 1,005,336 1,582,196 2,740,787 1,296,064 1,649,614
-------- ---------- ---------- ---------- ---------- ---------- ----------
Gross Profit........... 236,045 296,153 389,911 553,228 999,537 435,230 695,599
Selling, general and
administrative
expenses............... 228,047 262,985 326,912 447,644 725,249 330,666 467,579
Purchased in-process
research and
development............ -- -- -- -- 355,308 -- 3,558
Merger, restructuring,
acquisition and other
related charges........ -- 5,917 -- 5,581 150,582 -- 257,920
-------- ---------- ---------- ---------- ---------- ---------- ----------
228,047 268,902 326,912 453,225 1,231,139 330,666 729,057
-------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income
(loss)................ 7,998 27,251 62,999 100,003 (231,602) 104,564 (33,458)
Other income (expenses):
Interest expense....... (18,185) (27,892) (28,706) (31,999) (63,790) (23,878) (55,181)
Interest and other in-
come.................. (3,036) 3,448 10,366 11,334 38,212 33,880 7,730
-------- ---------- ---------- ---------- ---------- ---------- ----------
(21,221) (24,444) (18,340) (20,665) (25,578) 10,002 (47,451)
-------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before
income tax expense.... (13,223) 2,807 44,659 79,338 (257,180) 114,566 (80,909)
Income tax expense ..... 2,070 14,582 35,239 30,945 48,221 41,708 14,277
-------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)...... $(15,293) $ (11,775) $ 9,420 $ 48,393 $ (305,401) $ 72,858 $ (95,186)
======== ========== ========== ========== ========== ========== ==========
PER COMMON SHARE
DATA:(9)
Basic:
Net income (loss)...... $ (0.26) $ (0.19) $ 0.11 $ 0.47 $ (2.18) $ 0.57 $ (0.59)
======== ========== ========== ========== ========== ========== ==========
Weighted average number
of common shares
outstanding........... 61,060 64,991 78,953 102,250 139,867 128,274 161,271
======== ========== ========== ========== ========== ========== ==========
Diluted:
Net income (loss)...... $ (0.26) $ (0.19) $ 0.11 $ 0.45 $ (2.18) $ 0.56 $ (0.59)
======== ========== ========== ========== ========== ========== ==========
Weighted average number
of common shares
outstanding........... 61,060 64,991 80,252 106,609 139,867 130,769 161,271
======== ========== ========== ========== ========== ========== ==========
CONSOLIDATED BALANCE
SHEET DATA (END OF
PERIOD):
Working capital......... $158,957 $ 155,683 $ 214,205 $ 594,575 $ 704,423 $ 652,514 $ 901,065
Total assets............ $761,241 $ 887,064 $1,295,886 $2,734,925 $4,465,445 $3,403,995 $4,834,583
Notes payable and long-
term debt, including
current portion........ $200,802 $ 200,685 $ 123,172 $ 134,711 $1,098,071 $ 227,587 $ 540,476
Convertible subordinated
debt................... $ 60,000 $ 105,000 $ 200,000 $ 554,000 $ 554,000 $ 554,000 $ 414,000
ROARS................... $ -- $ -- $ -- $ -- $ -- $ -- $ 900,000
Shareholders' equity.... $224,059 $ 248,792 $ 526,479 $1,219,470 $1,591,438 $1,686,621 $1,569,686
OTHER DATA:
EBITDA(10).............. $ 53,005 $ 102,177 $ 143,679 $ 183,840 $ 387,893 $ 160,652 $ 306,017
Ratio of earnings to
fixed charges(11)...... N/A 1.1x 2.4x 3.1x N/A 5.2x N/A
</TABLE>
- --------
(1) The historical consolidated financial data for the fiscal years ended
March 31, 1994, 1995, 1996, 1997 and 1998 and for the six months ended
September 30, 1997 have been restated to include the accounts and

43
<PAGE>

operations of Culligan which was merged with U.S. Filter in June 1998 and
accounted for as a pooling of interests. Separate results of operations of
U.S. Filter and Culligan for the years ended March 31, 1994 through March
31, 1998 and for the six months ended September 30, 1997 are presented
below:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED MARCH 31, SEPTEMBER 30,
-------------------------------------------------------- ---------------------
1994(2) 1995(3) 1996(4) 1997(5) 1998(6) 1997(7) 1998(8)
--------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
U.S. Filter (as previ-
ously reported)........ $ 620,709 $ 830,765 $1,090,745 $1,764,406 $3,234,580 $1,517,126 $2,345,213
Culligan................ 264,073 280,051 304,502 371,018 505,744 214,168 --
--------- ---------- ---------- ---------- ---------- ---------- ----------
$ 884,782 $1,110,816 $1,395,247 $2,135,424 $3,740,324 $1,731,294 $2,345,213
========= ========== ========== ========== ========== ========== ==========
OPERATING INCOME (LOSS)
U.S. Filter (as previ-
ously reported)........ $ 3,999 $ 40,721 $ 61,385 $ 66,020 $ (235,209) $ 74,356 $ (33,458)
Culligan................ 3,999 (13,470) 1,614 33,983 3,607 30,208 --
--------- ---------- ---------- ---------- ---------- ---------- ----------
$ 7,998 $ 27,251 $ 62,999 $ 100,003 $ (231,602) $ 104,564 $ (33,458)
========= ========== ========== ========== ========== ========== ==========
NET INCOME (LOSS)
U.S. Filter (as previ-
ously reported)........ $ (2,773) $ 24,621 $ 30,699 $ 32,508 $ (299,779) $ 36,794 $ (95,186)
Culligan................ (12,520) (36,396) (21,279) 15,885 (5,622) 36,064 --
--------- ---------- ---------- ---------- ---------- ---------- ----------
$ (15,293) $ (11,775) $ 9,420 $ 48,393 $ (305,401) $ 72,858 $ (95,186)
========= ========== ========== ========== ========== ========== ==========
NET INCOME (LOSS) PER
COMMON SHARE(7):
Basic:
As previously
reported............ $ (0.11) $ 0.68 $ 0.62 $ 0.51 $ (3.13) $ 0.42 $ --
As restated.......... $ (0.26) $ (0.19) $ 0.11 $ 0.47 $ (2.18) $ 0.57 $ (0.59)
Diluted:
As previously
reported............ $ (0.11) $ 0.66 $ 0.61 $ 0.49 $ (3.13) $ 0.41 $ --
As restated.......... $ (0.26) $ (0.19) $ 0.11 $ 0.45 $ (2.18) $ 0.56 $ (0.59)
</TABLE>

(2) 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 the write-off of certain intangibles in 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 Water & Waste
Industries, Inc. ("Davis"). Fiscal 1994 includes seven months of
operations of Culligan and five months of operations of its predecessor.

(3) 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 Cereflo ceramic product line from the dates of their respective
acquisitions, accounted for as purchases. Results for this period include
expenses incurred of $5.9 million related to a restructuring plan to
consolidate the production facilities and administrative functions of
certain Culligan operations in Europe.

(4) 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 Polymetrics
Inc. from the dates of their respective acquisitions, accounted for as
purchases. Selling, 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 Environmental,
Inc.

(5) The fiscal year ended March 31, 1997 includes the results of operations
of The Utility Supply Group, Inc., WaterPro Supplies Corporation, the
Systems and Manufacturing Group of Wheelabrator Technologies Inc. and the
businesses of the Process Equipment Division of United Utilities Plc from
the dates of their

44
<PAGE>

respective acquisitions, accounted for as purchases. The year ended March
31, 1997 also includes merger expenses of $5.6 million, related to the
acquisition of Davis, which was accounted for as a pooling of interests.
Costs of goods sold for the year ended March 31, 1997 includes charges
recorded by Kinetics totaling $26.0 million related to 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 for doubtful accounts, the write-off
of certain receivables, the write-down of certain assets and the
establishment of certain accruals.

(6) The fiscal year ended March 31, 1998 includes the results of operations
for Memtec from the date of its acquisition on December 9, 1997,
accounted for as a purchase. The year ended March 31, 1998 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
year ended March 31, 1998 includes charges recorded by Kinetics totaling
$13.7 million related to certain unreimbursed project costs. Selling,
general and administrative expenses for the year ended March 31, 1998
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. This period also includes the results
of the Water Filtration Business of Ametek, Inc. (the "Water Filtration
Business" or "Ametek") and Protean plc ("Protean") from the date of their
acquisitions on August 1, 1997 and December 2, 1997, respectively, by
Culligan accounted for as purchases. Culligan acquired from Ametek and
Protean certain in-process research and development projects that had not
reached technological feasibility and that had no alternative future
uses. The estimated market value of such in-process research and
development projects was approximately $55.8 million and was expensed
during fiscal 1998. The year ended March 31, 1998 also includes a $31.1
million pre-tax gain recorded by Culligan on the sale of its investment
in Anvil Holdings, Inc. for total cash proceeds of $50.9 million. The
gain is included in other income in the fiscal year ended March 31, 1998.
In addition, Culligan recorded charges totaling $9.5 million related to a
restructuring plan that Culligan implemented concurrent with its
acquisition of Ametek.

(7) The six months ended September 30, 1997 includes a $31.1 million pre-tax
gain recorded by Culligan on the sale of its investment in Anvil
Holdings, Inc. for total cash proceeds of $50.9 million. The gain is
included in other income in the six months ended September 30, 1997.

(8) During the six months ended September 30, 1998, U.S. Filter recorded
charges totaling $257.9 million related to a restructuring plan that U.S.
Filter implemented concurrent with the acquisition of Culligan. Included
in the restructuring charges is approximately $49.2 million of merger
expenses incurred to consummate the Culligan transaction. In addition,
the six months ended September 30, 1998 includes a charge of $3.6 million
for purchased in-process research and development projects at the
Analytical and Thermal Division of Protean. These projects had not
reached technological feasibility and had no alternative future uses.

(9) Net income (loss) per common share amounts are computed in accordance
with SFAS 128 after dividends on the Series A Preferred Stock of $0.7
million for the fiscal year ended March 31, 1994, $0.7 million for the
fiscal year ended March 1995 and $0.5 million for the fiscal year ended
March 31, 1997. The Series A Preferred Stock was converted into shares of
Common Stock in March 1996.

(10) EBITDA is defined as income before interest and taxes, excluding certain
nonrecurring items, plus depreciation and amortization. EBITDA data is
presented because such data is used by certain investors to determine
U.S. Filter's ability to meet debt service requirements. However, such
information should not be considered as an alternative to net income,
operating profit, cash flows from operations, or any other operating or
liquidity performance measure prescribed by generally accepted accounting
principles. The EBITDA measure presented by U.S. Filter may not be
comparable to similarly titled measures by other companies.

(11) In the ratio of earnings to fixed charges, earnings are computed by
adding "income (loss) before income tax expense (benefit)" to fixed
charges. Fixed charges are computed by adding interest expense to one-
third of rent expense, which is the portion of rent expense that U.S.
Filter has determined to be fixed in nature. For the fiscal years ended
March 31, 1994 and 1998 as well as for the six months ended September 30,
1998, earnings were inadequate to cover fixed charges.

45
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA OF UNIT

The following selected financial data as of May 31, 1998 and 1997 and for
the years ended May 31, 1996, 1997 and 1998 have been derived from Unit's
financial statements, which have been audited by PricewaterhouseCoopers LLP,
independent accountants, as indicated in their report. The selected financial
data as of May 31, 1994, 1995 and 1996 and for the years ended May 31, 1994
and 1995 are derived from financial statements, which were also audited by
PricewaterhouseCoopers LLP. The financial data as of and for the three months
ended August 29, 1998 and 1997 are derived from unaudited consolidated
financial statements of Unit which, in the opinion of Unit, reflect all
adjustments (consisting principally of normal, recurring amounts) necessary
for the fair statement of the financial position and results of operations for
the periods presented and are not necessarily indicative of the results for
any other interim period or for the full fiscal year. The data should be read
in conjunction with the Consolidated Financial Statements, including the Notes
thereto, and with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" incorporated herein by reference.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31, THREE MONTHS
------------------------------------------- ENDED AUGUST 29,
(IN THOUSANDS, EXCEPT PER SHARE DATA) ------------------
1994 1995 1996 1997 1998 1997 1998
------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:(1)
Net sales............... $33,141 $48,256 $65,568 $43,271 $52,234 $ 14,596 $ 6,164
Cost of sales........... 20,840 30,014 39,501 33,582 36,141 9,961 5,211
------- ------- ------- ------- ------- -------- --------
Gross profit............ 12,301 18,242 26,067 9,689 16,093 4,635 953
Selling, general and ad-
ministrative........... 9,983 13,317 14,587 12,337 12,091 3,108 2,461
Research, development
and engineering........ 1,792 2,871 3,757 4,035 4,533 1,105 939
Restructuring........... -- 1,230 373 558 4,931 -- 213
------- ------- ------- ------- ------- -------- --------
Operating profit
(loss)................. 526 824 7,350 (7,241) (5,462) 422 (2,660)
Interest income......... 66 230 690 822 735 199 165
Interest (expense)...... (448) (339) (112) (148) (115) (15) (7)
Other income (expense).. 70 222 (132) 39 (441) (8) 16
------- ------- ------- ------- ------- -------- --------
Income (loss) from
continuing operations
before provision for
income taxes, and
cumulative effect of
accounting change...... 214 937 7,796 (6,528) (5,283) 598 (2,486)
Provision (benefit) for
income taxes........... 426 232 3,018 (2,220) (634) 239 (920)
------- ------- ------- ------- ------- -------- --------
Income (loss) from
continuing operations
before cumulative
effect of accounting
change................. (212) 705 4,778 (4,308) (4,649) 359 (1,566)
Cumulative effect of ac-
counting change........ 224 -- -- -- -- -- --
------- ------- ------- ------- ------- -------- --------
Income (loss) from con-
tinuing operations..... $ 12 $ 705 $ 4,778 $(4,308) $(4,649) $ 359 $ (1,566)
======= ======= ======= ======= ======= ======== ========
BASIC EARNINGS PER
SHARE:
Income (loss) from
continuing operations
before cumulative
effect of accounting
change................. $ (0.05) $ 0.17 $ 1.16 $ (0.99) $ (1.08) $ 0.08 $ (0.39)
Cumulative effect of ac-
counting change........ $ 0.05 $ -- $ -- $ -- $ -- $ -- $ --
------- ------- ------- ------- ------- -------- --------
Income (loss) per share
from continuing opera-
tions.................. $ -- $ 0.17 $ 1.16 $ (0.99) $ (1.08) $ 0.08 $ (0.39)
======= ======= ======= ======= ======= ======== ========
DILUTED EARNINGS PER
SHARE:
Income (loss) from
continuing operations
before cumulative
effect of accounting
change................. $ (0.05) $ 0.16 $ 1.09 $ (0.99) $ (1.08) $ 0.08 $ (0.39)
Cumulative effect of ac-
counting change........ $ 0.05 -- -- -- -- -- --
------- ------- ------- ------- ------- -------- --------
Income (loss) from con-
tinuing operations..... $ -- $ 0.16 $ 1.09 $ (0.99) $ (1.08) $ 0.08 $ (0.39)
======= ======= ======= ======= ======= ======== ========
Cash dividend per
share.................. $ 0.24 $ 0.24 $ 0.06 $ -- $ -- $ -- $ --
AVERAGE SHARES USED IN
COMPUTING EARNINGS PER
SHARE:
Basic................... 4,214 4,218 4,125 4,375 4,295 4,443 3,995
Diluted................. 4,268 4,340 4,393 4,375 4,295 4,540 3,995
</TABLE>

<TABLE>
<CAPTION>
AT MAY 31,
--------------------------------------- AUGUST 29,
1994 1995 1996 1997 1998 1998
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $25,128 $27,573 $26,724 $23,696 $19,722 $ 9,038
Total assets................. $58,250 $51,902 $52,780 $50,964 $40,103 $36,104
Long Term debt............... $ 952 $ 453 $ -- $ 58 $ -- $ --
Stockholders' equity......... $37,721 $38,478 $43,224 $42,661 $33,010 $31,493
Book value per share......... $ 8.95 $ 9.07 $ 10.57 $ 9.72 $ 8.26 $ 7.88
</TABLE>
- --------
(1) Excludes discontinued operations of Burton Corblin and Autoclave Engineers
Group.

46
<PAGE>

UNIT MANAGEMENT'S DISCUSSION AND ANALYSIS OF
UNIT'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THREE MONTHS ENDED AUGUST 29, 1998 COMPARED TO THREE MONTHS ENDED AUGUST 30,
1997

Sales for the first fiscal quarter ended August 29, 1998 decreased 58% to
$6,164,000 from $14,596,000 for the first fiscal quarter of the prior year.
The substantial reduction in sales was primarily the result of a severe
worldwide slump in the semiconductor equipment industry that began to affect
Unit in January 1998. Management believes this industry downturn is one of the
most severe the industry has experienced and is broad based in its impact. The
major causes of this condition are a unique convergence of Asian economic
difficulties, industry overcapacity, and a movement toward sub $1,000 personal
computers.

Unit suffered a 71% drop in its shipments in both semiconductor mass flow
controllers ("MFCs") and fabricated gas systems in the current period, as
compared to the first quarter of fiscal 1998. In response to this downturn,
Unit has increased its efforts to penetrate the industrial and medical markets
with its MFCs and fabricated gas systems. Shipments to these non-semiconductor
customers increased to 7% of total sales in the current quarter from less than
1% of total sales in the comparable prior year period. Unit's market share in
the industrial sector is still very small and management believes there is
substantial opportunity to improve sales in the industrial and medical markets
for MFCs and gas delivery technology.

The semiconductor equipment industry is the major market for Unit's products
and will likely remain a larger share of Unit's business than the industrial
and medical markets. The semiconductor equipment industry is a cyclical
industry and remains depressed. Unit has not noticed any improvement in order
rates but the downward trend in orders appears to have stabilized, at least
currently. Industry analysts have broadly different views on when the
semiconductor equipment industry will recover and what the magnitude of the
evidential recovery will be.

Gross profit margin declined to 16% for the current quarter from 32% for the
first quarter of the last fiscal year. The decrease resulted mainly from
substantially reduced production, which increased overhead costs on a per unit
basis. Labor costs per unit also increased due to reduced efficiency resulting
from lower production levels. In addition, $382,000 was charged to cost of
sales to supplement inventory reserves because of lower activity levels.

Selling, general and administrative ("SG&A") expenses decreased to
$2,461,000 in the first quarter of fiscal 1999 from $3,108,000 for the first
fiscal quarter of the prior year. The reduction resulted mainly from cost
savings effected by the restructuring incurred in the third quarter of fiscal
1998. As a percent of sales, SG&A expenses increased to 40% in the current
quarter from 21% in the first quarter of the prior fiscal year due to lower
sales volume. In addition, Unit incurred legal fees of approximately $120,000
for merger related matters and litigation expenses pertaining to defective
fasteners.

Restructuring expense of $213,000 was recorded in the current fiscal
quarter. In response to the downturn in the semiconductor industry that
intensified during the current quarter and the fourth quarter of fiscal 1998,
Unit reduced its workforce by 46 positions, which represented approximately
15% of the worldwide workforce of Unit at the beginning of this fiscal year.
The majority of the restructuring charge was for employee severance. Of the
$213,000 restructuring expense recorded, $161,000 has been paid out and
$52,000 is recorded as a current liability. A restructuring expense of
$4,931,000 was recorded in the third quarter of fiscal 1998. Of the
restructuring charge booked in the third quarter of fiscal 1998, $98,000 is
classified as a current liability. The expected future benefit from the
$213,000 restructuring expense recorded in the current fiscal quarter is a
reduction in expense of approximately $1.9 million annually.

Research, development and engineering ("RD&E") expenses decreased 15% to
$939,000, or 15% of sales, for the current quarter from $1,105,000, or 8% of
sales, in the first quarter of the prior fiscal year. RD&E activity is
primarily directed towards new product development, including Unit's
proprietary Z-BlocTM modular gas system. Unit believes that the continued
timely development of new products and enhancements to its existing products
is essential to maintaining its competitive position within the industry.

47
<PAGE>

Interest income declined to $165,000 in the current quarter from $199,000 in
the prior year period due to lower average cash balances.

A loss before income taxes of $2,486,000 was recorded in the current
quarter. A pretax profit of $598,000 was recorded in the first quarter of the
prior year. The current quarter loss was mainly due to a 58% reduction in
sales in the current quarter, as compared to the prior year period. For the
current quarter an income tax benefit of $920,000 was recorded, which
represents a 37% tax rate. The tax benefit was favorably impacted by foreign
earnings subject to a lower tax rate than the statutory U. S. rate of 34%,
offset with a reduction in state income tax benefits due to potential
expiration of some state tax loss benefits and certain foreign losses for
which no tax benefit is available.

A net loss of $1,566,000, which represents a loss of $0.39 per share, was
recorded for the current quarter. Net income of $359,000 was reported for the
first quarter of the prior fiscal year, which resulted in earnings per share
of $0.08.

YEARS ENDED MAY 31, 1998, MAY 31, 1997 AND MAY 31, 1996

1998 Compared to 1997

Sales for fiscal 1998 increased 20.7% to $52.2 million from $43.3 million in
fiscal 1997. Management believes the increase in sales was primarily due to
the recovery in the semiconductor market that began approximately at the
beginning of calendar 1997. This recovery continued until approximately the
beginning of calendar 1998 when another, more severe, downward trend became
apparent in the semiconductor equipment market. Unit was able to increase
sales on a fiscal year basis because the most recent downturn did not affect
the first and second quarters, and only negatively impacted the latter part of
the third fiscal quarter.

This gross profit margin for fiscal 1998 increased to 30.8%, from 22.4% in
fiscal 1997. The increase was mainly the result of increased efficiency due to
higher manufacturing volume, lower overhead rates due to higher volume, and
cost cutting programs affecting material acquisition costs and labor
efficiency.

SG&A expenses decreased as a percentage of sales in fiscal 1998 to 23.1 %,
from 28.5% in fiscal 1997. This was due to the increased sales base and a 2%
reduction in actual SG&A expenses from fiscal 1997 to fiscal 1998. The
reductions in expenses were attributable to cost cutting and the third quarter
fiscal 1998 restructuring that began to result in cost savings in the fourth
quarter of fiscal 1998.

In January 1998, Unit approved a restructuring plan that included the
closure of the Rio Rancho, New Mexico manufacturing and administrative
facility of Unit's Control Systems, Inc. ("CSI") subsidiary. On February 3,
1998, operations and administrative functions for the Rio Rancho facility were
transferred to Unit's Chandler, Arizona facility and the Yorba Linda,
California corporate office, respectively. The restructuring was effected to
lower the cost of operations of high-purity gas systems production and to
improve efficiency by centralizing certain administrative and marketing
functions.

The categories of costs included in the restructuring charge are as follows:

<TABLE>
<S> <C>
Severance and other employee related costs.................... $ 288,000
Facility closure costs........................................ 136,000
Impairment of CSI goodwill.................................... 4,125,000
Fixed asset disposition and write-off......................... 382,000
----------
Total restructuring costs..................................... $4,931,000
==========
</TABLE>

The CSI Rio Rancho facility was closed on February 3, 1998 and the lease was
terminated in August 1998. Costs to maintain the facility and remove the
leasehold improvements were accrued in the third quarter in the amount of
$136,000. As of May 31, 1998, $95,000 of this accrual remains as a current
liability.

48
<PAGE>

Control Systems, Inc. ("CSI") was acquired June 3, 1996. CSI manufactured
high purity gas distribution systems that were sold exclusively to
semiconductor manufacturers. Since the acquisition of CSI, the semiconductor
industry and the manufacturers of semiconductor equipment have experienced two
sharp business downturns that caused sales at CSI to decline significantly. In
addition, a major customer of CSI significantly reduced domestic facility
expansions and this also had a negative impact on CSI's revenue. Unit
implemented several cost reduction steps at CSI since its acquisition to lower
expenses and improve operating performance, but activity levels declined more
precipitously than costs. In January 1998, it become clear that the
semiconductor industry and the semiconductor equipment segment was in another
sharp business contraction; management decided it was imperative to
restructure the operations of CSI. Accordingly, management determined, in
accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed of" ("SFAS 121") that an asset impairment existed. Management
determined that future undiscounted cash flows from the high-purity gas system
business are not sufficient to recover the carrying value of the related
goodwill over its remaining life of approximately 10 years. Therefore, Unit
determined that the high-purity gas system related goodwill, with a remaining
unamortized carrying value of $4,125,000, is fully impaired and has written-
off the entire carrying amount of such goodwill. No tax deduction is allowed
for this goodwill write-off. The fixed assets of the CSI Rio Rancho facility
that are useable were relocated to the Yorba Linda, California and Chandler,
Arizona facilities. The fixed assets that were not useable or removable were
written-off in the amount of $382,000.

During fiscal 1997, a restructuring charge of $558,000 was incurred for
severance related costs associated with the consolidation of the Tempe,
Arizona service center into the Chandler, Arizona facility. Unit expects to
save approximately $2.0 million on an annual basis from these restructuring
actions. Such savings will be predominately derived from personnel reductions
and the elimination of goodwill charges associated with the acquisition of
CSI.

RD&E expense for fiscal 1998 increased by 12.3% over fiscal 1997 RD&E
expenses. As a percentage of sales, RD&E expenses were slightly reduced to
8.7% in fiscal 1998, as compared to 9.3% in fiscal 1997. Unit is continually
applying resources to the enhancement of existing products and the development
of new products and new versions of existing products. Unit believes that
these efforts are essential to maintaining and increasing its competitive
position.

Interest income declined 10.6% in fiscal 1998, as compared to fiscal 1997,
due to lower average cash balances.

Other expense was $441,000 in fiscal 1998, as compared to $39,000 of income
for fiscal 1997. Of the $441,000 expense, $265,000 was due to currency
transaction losses incurred by Unit's Japanese subsidiary. The value of the
Japanese yen, as measured in U.S. dollars, declined during fiscal 1998.

A loss before income taxes of $5,283,000 was recorded in fiscal 1998, as
compared to a loss before income taxes of $6,528,000 recorded in 1997. Without
the restructuring charge of $4,931,000, the fiscal 1998 pre-tax loss was
$352,000, compared to fiscal 1997 pre-tax loss of $5,970,000, excluding the
fiscal 1997 restructuring charge of $558,000.

The tax benefit for fiscal 1998 is $634,000, which is 12% of pre-tax loss,
as compared to a tax benefit of $2,220,000 in fiscal 1997, which was 34% of
fiscal 1997 pre-tax loss. The fiscal 1998 tax benefit was only 12% of pre-tax
loss, mainly because the goodwill write-off of $4,125,000, described in the
restructuring paragraphs above, is not deductible for income tax purposes.

A net loss of $4,649,000, or $1.08 per share, was recorded in fiscal 1998,
as compared to a net loss of $4,308,000 in fiscal 1997, or $0.99 per share.
The net loss of fiscal 1998 was largely due to restructuring charges of
$4,931,000, of which $4,125,000 was a non-tax deductible charge.

49
<PAGE>

1997 Compared to 1996

Sales from continuing operations for fiscal 1997 decreased 34% to $43.3
million from $65.6 million in fiscal 1996. Management believes that this sales
decline was mainly attributable to the industry slowdown that started
approximately in the middle of 1996, and that the downturn appeared to bottom
out near the end of calendar year 1996. Since that time, Unit has experienced
a slow recovery in sales activity from the depressed business levels of late
1996 until January of 1998 when another industry downturn began to have a
negative impact on Unit's sales orders.

Unit primarily sells to original equipment manufacturers ("OEMs") that
supply equipment used for the production of semiconductors. Therefore, the
downturn in the semiconductor equipment industry had a strong negative impact
on Unit's sales. As the market weakened, Unit's OEM customers immediately and
substantially reduced their purchases of MFCs. Some OEMs began to liquidate
their inventories of MFCs which exacerbated the effect the industry downturn
had on Unit's sales volume. In addition, Unit generally has a limited backlog
due to a short production cycle which accentuates fluctuations in order rates.
The reduction in sales was partially offset by sales generated from CSI, which
was acquired on June 3, 1996 (fiscal 1997) of approximately $5.1 million.
Sales of CSI's gas distribution systems were also lower than expected due
mainly to a reduction in capital spending by CSI's largest customer. The
downturn in the semiconductor equipment market has been worldwide and has had
a negative impact on both domestic and international sales of Unit.

The gross profit margin for fiscal 1997 was 22.4%, as compared to 39.8% in
the prior year. This reduction can be attributed to the large decrease in
production due to substantially lower sales volume. The reduction in
production reduced overhead absorption rates and labor efficiency, thereby
negatively impacting the gross profit margin. Substantial layoffs in the
production departments were made as a result of the reduced volumes and
organization and cost cutting measures were implemented in response to the
downturn. Selling, general and administrative expenses for fiscal 1997
decreased by 15.4% from fiscal 1996. However, as a result of the reduced sales
volume, these expenses as a percent of sales for fiscal 1997 increased to
28.5% of sales as compared to 22.2% in the prior year. The expenses were
reduced by restructuring some functions, reducing the workforce and reducing
costs.

A restructuring charge of $558,000 was incurred in fiscal 1997 for severance
related expenses and costs associated with the consolidation of facilities. In
fiscal 1996, a restructuring charge of $373,000 was recorded for employee
severance expense, legal fees and other expenses associated with the closure
of the Erie, Pennsylvania corporate office.

Research, development and engineering expenses for fiscal 1997 increased by
7.4% over fiscal 1996. As a percent of sales, such expenses increased to 9.3%
from 5.7% in fiscal 1996. Unit is committed to a strong research and
engineering function, hence these expenses were not reduced in response to the
change in sales activity. Unit believes that the continued timely development
of new products and enhancement of existing products is essential to
maintaining and increasing its competitive position.

Interest income increased to $822,000 in fiscal 1997, from $690,000 in
fiscal 1996, because the cash balances from the sale of AEG were available for
the entire fiscal year.

A loss from continuing operations before income taxes of $6.5 million was
incurred in fiscal 1997 compared to income from continuing operations before
income taxes of $7.8 million in fiscal 1996. This $14.3 million reduction in
operating earnings, before income taxes, is almost entirely due to the
reduction of $22.3 million of sales from fiscal 1996 to fiscal 1997.

An income tax benefit on continuing operations was provided for at a rate of
34.0% for fiscal 1997. Income tax expense was provided for at a rate of 38.7%
for fiscal 1996 on continuing operations. Both rates are negatively effected
by the non-deductibility of goodwill amortization.

A net loss of $4.3 million, or $.99 a share, was incurred for fiscal 1997.
In fiscal 1996, Unit recorded income from continuing operations of $4.8
million, or $1.09 a share. In fiscal 1996, income from discontinued operations

50
<PAGE>

resulted from Autoclave Engineers Group operations through the date of sale in
September, 1995. A net gain of $1.5 million was recorded on the sale of
Autoclave Engineers Group. Net income for fiscal 1996 was $7.0 million, or
$1.59 per share.

LIQUIDITY AND CAPITAL RESOURCES

During the first quarter of fiscal 1999, Unit generated $833,000 in cash
from its operating activities. Contributing to the operating cash flow were
the conversion of receivables into cash, which generated $2,456,000,
reductions of inventories of $785,000, and depreciation and amortization
expenses of $628,000. The positive cash flows were offset by the $1,566,000
net loss and a usage of $1,045,000 due to reductions in accounts payable and
accrued liabilities. During the quarter, Unit used $634,000 in investing
activities, of which $528,000 was used to purchase two Nakamura lathes used
for fabricating components previously purchased from vendors, and used
$688,000 in financing activities, including $1,438,000 used to repay a note
payable to a Japanese bank and $750,000 received from Snap-tite, Inc. in
payment of a note receivable. The net cash used by Unit during the quarter was
$440,000.

In fiscal 1998, Unit generated $4,150,000 in cash from its operating
activities. Contributing to the operating cash flow were depreciation and
amortization expenses of $2,772,000, reductions in inventories of $1,062,000,
and net tax refunds of $1,482,000. In addition to generating cash from
operations, Unit obtained cash from the exercise of employee stock options and
related tax benefit of $1,123,000. The reductions in inventories were due to
an effort to reduce the amount of inventory on-hand and maintain the same
level of response time of filling orders, generally within two weeks of
receipt. Contributing to the net tax refund were refunds of federal income
taxes received due to the carryback of the fiscal 1997 loss. The unusually
large amount of cash received from the exercise of employee stock options was
generally the result of a favorable stock market value in conjunction with a
large number of option contracts expiring during fiscal year 1998. During
fiscal 1998, Unit used $1,192,000 for the acquisition of fixed assets, of
which $472,000 was used to establish a service center in Virginia. Unit used
$6,042,000 to buy 519,000 shares of Unit stock. 412,000 of these shares were
purchased from a former director and his family members. The net cash used by
Unit in fiscal 1998 was $2,261,000.

Cash balances as of August 29, 1998 were $9,502,000, as compared to cash of
$9,942,000 as of May 31, 1998. Inventory balances as of August 29, 1998 were
$6,853,000, as compared to $7,638,000 as of May 31, 1998.

Unit's financial position remains strong. As of August 29, 1998, Unit had
$9,502,000 in cash and no long-term debt. Unit expects that current cash
balances and anticipated cash flow from operations will be adequate to meet
its near-term financing needs for at least the next 12 months. Beyond that
time, if Unit's cash generated from operations is insufficient to meet Unit's
financing needs, Unit will be required to obtain additional financing. There
can be no assurance that such financing will be available on satisfactory
terms or at all.

YEAR 2000 COMPLIANCE

Virtually all business and government organizations use computers and other
electronic systems in their operations. Computer software routinely uses dates
in order to process information or perform calculations correctly. Software is
the set of instructions used to direct the functions of computers and other
electronic devices. A considerable amount of software that is currently in use
today stores dates using only two digits to specify the year instead of four
digits. On January 1, 2000, the computer systems that are using software that
incorporates two digit date fields may not recognize the year 2000 and operate
on the assumption that the year is 1900, or perhaps some other date depending
on what other instructions are in the software. Such an event could cause a
great deal of havoc in an organization's operations. To avoid such problems,
an enterprise must update its software and possibly its equipment so that
information is processed correctly. An enterprise that has corrected its Year
2000 issues is considered to be Year 2000 compliant ("compliant").

Unit uses information technology (IT) for its internal infrastructure, which
consists of the main enterprise resource planning (ERP) system, individual
workstations and the network system that links the individual

51
<PAGE>

workstations for communications purposes. It is important to Unit's operations
that these computer systems be compliant. Unit also has several non-IT systems
that use dates electronically that must be reviewed for compliance. These
include employee time clocks, security systems, clean room environmental
controls, fire detection systems, gas detection systems, elevator controls,
voice mail and phone systems, lawn sprinkler systems, electrical systems,
numerically controlled production machinery and computer based production
equipment.

The readiness of Unit to meet Year 2000 Compliance varies among the
different systems. A new ERP system was placed in service in November, 1996
for purposes of improving Unit's managerial, financial and operating
efficiency. The software and data base of this ERP system are compliant.
However, the operating system is not in compliance with respect to some
features that are not currently used by Unit. This will be remedied by
installing a vendor supplied upgrade to the operating system. The other IT
systems not included in the ERP that are usually considered part of an ERP
system are the payroll, human resources and fixed asset systems. The human
resources system and the fixed asset system are compliant. The payroll system
requires a currently available upgrade to be compliant.

Unit has numerous personal computers ("PCs") that are used as employee
workstations. Some of these PCs are compliant. Unit has a plan to either
upgrade or replace all PCs that are not compliant. The network that links the
PCs for communications purposes is composed of file servers, switches, routers
and hubs. The file servers use an operating system that is not compliant. An
upgrade to the operating system is available to effect compliance, which Unit
plans to purchase. The switches, routers and hubs are either compliant or do
not have a compliance issue.

Compliance issues can also apply to a company's products. Unit manufactures
analog and digital MFCs. The analog versions have no date information in their
electronics so compliance is not an issue. The digital MFCs do have date
information capability in their software and these products are compliant. The
Z-Bloc(TM) product and gas fabrication products do not incorporate electronics
that could cause a compliance problem.

Of the non-IT systems, the computer based production equipment has been
upgraded to be compliant and the numerically controlled machines do not have
date information. The other non-IT systems are in the process of being
reviewed for compliance.

Unit has requested compliance information from its bank, benefits
administrator and forty major suppliers, representing all vendors with whom
Unit has a material relationship. All have responded and the responses
received have indicated that the respondents are in compliance.

Unit's new ERP system, installed in November, 1996, is compliant,
notwithstanding the fact that the primary reasons for acquiring the system
were not related to this compliance issue. The cost of the system was
$493,000. Additional economic costs were incurred due to temporarily lower
productivity because of learning curves and other intangibles. The costs Unit
expects to incur to become fully compliant in all areas are as follows:

<TABLE>
<S> <C>
Upgrade PCs................................................... $150,000
Upgrade UNIX system........................................... 4,000
Upgrade payroll system........................................ 1,000
Upgrade network servers....................................... 39,000
Various non IT and other...................................... 10,000
--------
Total estimate................................................ $204,000
========
</TABLE>

The source of funds for the estimated Year 2000 remediation will be provided
from Unit's cash balances or cash generated from operations. Unit intends to
charge such costs against earnings or a depreciating capital account,
whichever is appropriate, as the costs are incurred.

52
<PAGE>

Unit solved most of the potential disruption that could be caused by non-
compliance by its purchase of the new ERP system. However, if Unit were not to
take any further action to insure compliance where compliance does not exist
such as the PCs, the network server operating system and various non-IT
systems, various disruptions could occur. Non-compliance at the PC level could
reduce employee productivity by causing incorrect or misleading information.
Non-compliance at the network server level could interrupt e-mail
communication. Non-compliance of some of the non-IT systems could affect
employee communications, safety and comfort. The risk from potential supplier
non-compliance has been reduced because Unit has added the capability of
manufacturing most of its finished metal parts in house. Electronic parts are
supplied by compliant vendors and other vendors are available.

Unit plans to perform the required modifications described in the previous
paragraphs in order to become compliant. Unit's contingency plan for
compliance is to implement the actions indicated in the previous paragraphs.
Management deems the implementation of these actions to be sufficient for Year
2000 remediation. Contingency plans for the failure to implement compliance
procedures have not been completed because it is Unit's intent to complete all
required modifications and to test such modifications thoroughly prior to
December 31, 1999. Management reviews the status of such modifications on a
periodic basis, and will develop such a contingency plan if, by June 30, 1999,
it believes that there is a reasonable possibility that such modifications
will not be completed and tested prior to December 31, 1999.

53
<PAGE>

SECURITY OWNERSHIP OF UNIT

The following table set forth certain information regarding the beneficial
ownership of Common Stock of Unit as of December 1, 1998 as to (i) each person
known by management to be the beneficial owner of more than 5% of Unit Common
Stock, (ii) each director of Unit, (iii) each of the executive officers paid
in excess of $100,000 in fiscal 1997 and (iv) all directors and executive
officers of Unit as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF UNIT'S
NAME BENEFICIALLY OWNED(1) COMMON STOCK
---- --------------------- -----------------
<S> <C> <C>
The Killen Group, Inc.............. 534,300(2) 13.4%
1199 Lancaster Avenue
Berwyn, PA 19312-1298
Dimensional Fund Advisors, Inc..... 338,626(3) 8.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
U.S. Bancorp....................... 263,548(4) 6.6%
601 2nd Avenue South
Minneapolis, MN 55402-4302
George Boyadjieff.................. 5,761(5) *
Michael J. Doyle................... 225,415(6) 5.5%
Gary N. Patten..................... 80,572(7) 2.0%
Edward Rogas, Jr. ................. 5,761(8) *
Donald M. Spero.................... 13,383(9) *
All Directors and Executive Offi-
cers as a group (5 persons)....... 330,892(10) 7.9%
</TABLE>
- --------
*Less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Unit Common Stock
subject to options or warrants currently exercisable or exercisable
within 60 days of October 30, 1998 are deemed to be beneficially owned by
the person holding such option or warrant for computing the percentage
ownership of such person, but are not treated as outstanding for
computing the percentage of any other person. Applicable percentages of
beneficial ownership are based on 3,995,118 shares of common stock
outstanding on December 1, 1998.

(2) Based on Schedule 13G filed February 17, 1998, The Killen Group reports
sole voting power for 267,993 shares and sole dispositive power for
534,300 shares.

(3) Based on Schedule 13G filed on February 9, 1998, Dimensional Fund
Advisors, Inc. reports sole voting power for 232,746 shares and sole
dispositive power for 338,626 shares.

(4) Based on Schedule 13G filed February 9, 1998, U.S. Bancorp reports sole
voting power for 263,548 shares and sole dispositive power for 262,548
shares.

(5) Includes 5,761 shares which Mr. Boyadjieff has the right to acquire by
the exercise of stock options that are currently exercisable or will
become exercisable within sixty (60) days of December 1, 1998.

(6) Includes 117,111 shares which Mr. Doyle has the right to acquire by the
exercise of stock options that are currently exercisable or will become
exercisable within sixty (60) days of December 1, 1998.

(7) Includes 57,572 shares which Mr. Patten has the right to acquire by the
exercise of the stock options that are currently exercisable or will
become exercisable within sixty (60) days of December 1, 1998.

(8) Includes 5,761 shares which Mr. Rogas has the right to acquire by the
exercise of the stock options that are currently exercisable or will
become exercisable within sixty (60) days of December 1, 1998.

(9) Includes 13,383 shares which Mr. Spero has the right to acquire by the
exercise of the stock options that are currently exercisable or will
become exercisable within sixty (60) days of December 1, 1998.

(10) Includes 199,588 shares which executive officers and directors have the
right to acquire by exercise of stock options that are currently
exercisable or will become exercisable within sixty (60) days of
December 1, 1998.

54
<PAGE>

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 7, 1998 and the Annual Report on Form 10-K of U.S.
Filter for the fiscal year ended March 31, 1998, each of which is incorporated
herein by reference. See "AVAILABLE INFORMATION."

FIRST CALL CONSENSUS EARNINGS ESTIMATES

The following consensus earnings estimates and the footnotes thereto (the
"First Call Estimates") were calculated by First Call Corporation ("First
Call") as of November 6, 1998, based on the earnings projections made by
analysts who cover U.S. Filter. The First Call Estimates are provided for
informational purposes only. Any opinions, estimates or forecasts regarding
U.S. Filter's performance made by these analysts (and therefore the First Call
Estimates) are theirs alone and do not represent opinions, forecasts or
predictions of U.S. Filter or its management. U.S. Filter does not by its
inclusion of the First Call Estimates imply that it is endorsing or concurring
with the First Call Estimates. The First Call Estimates are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. No assurance can be given that the earnings projected, estimated or
implied by such forward-looking statements will be achieved. See the section
entitled "Risk Factors" for 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. U.S. Filter does
not 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. The First Call
Estimates were not reviewed by the Unit Board in deciding whether to approve
the Merger.

FIRST CALL CORPORATION
CONSENSUS EARNINGS PER SHARE ESTIMATE SUMMARY(1)
NOVEMBER 6, 1998

<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED QUARTER ENDED QUARTER ENDED FISCAL YEAR ENDED
FISCAL YEAR JUNE 30 SEPTEMBER 30 DECEMBER 31 MARCH 31 MARCH 31
----------- ------------- ------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
2000.................... $0.37(2) $0.40(2) $0.41(2) $0.41(2) $1.61(2)
1999(3)................. -- -- 0.36(4) 0.37(4) 1.44(4)
</TABLE>
- --------
(1) The First Call consensus 5-year growth rate for U.S. Filter is 15%.

(2) Includes estimates from 14 brokers.

(3) For the calendar year ended December 31, 1999, the consensus annual
earnings per share estimate is $1.55. This includes estimates from 3
brokers.

(4) Includes estimates from 15 brokers.

55
<PAGE>

COMPARISON OF RIGHTS OF STOCKHOLDERS OF U.S. FILTER AND SHAREHOLDERS OF UNIT

The rights of U.S. Filter's stockholders are governed by its Certificate of
Incorporation (the "U.S. Filter Certificate"), its Amended and Restated Bylaws
(the "U.S. Filter Bylaws") and the laws of the State of Delaware. The rights
of Unit's shareholders are governed by its Articles of Incorporation ("Unit's
Articles"), its Bylaws ("Unit's Bylaws") and the laws of the State of
California. Upon consummation of the Merger, Unit Shareholders will become
holders of U.S. Filter Common Stock. As a result, the rights of Unit
Shareholders will be governed by the DGCL, the U.S. Filter Certificate and the
U.S. Filter Bylaws instead of the CGCL, Unit's Articles and Unit's Bylaws. The
following is a summary of the material differences between Delaware and
California corporate law and between the rights of U.S. Filter stockholders
and the rights of Unit Shareholders under their respective governing
documents. The summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the U.S. Filter Articles, the U.S.
Filter Bylaws, Unit's Articles, Unit's Bylaws, the DGCL and the CGCL.

AMENDMENT OF ARTICLES OR CERTIFICATE OF INCORPORATION AND BYLAWS

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 U.S. Filter's board of directors
(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 (as defined below) exist, by a majority of Continuing Directors (as
defined below) 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 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. See "COMPARISON
OF RIGHTS OF STOCKHOLDERS OF U.S. FILTER AND SHAREHOLDERS OF UNIT--Shareholder
Voting." 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.

Unit. The CGCL also requires approval of a majority of the outstanding
shares for an amendment of articles of incorporation. It further provides that
approval of a majority of a class of shares is required, whether or not such
class is entitled to vote thereon by the provisions of the articles of
incorporation, if the amendment would (i) increase or decrease the aggregate
number of authorized shares of such class; (ii) effect an exchange,
reclassification or cancellation of all or part of such class; (iii) effect an
exchange, or create a right of exchange, of all or part of the shares of
another class into shares of such class; (iv) change the rights, preferences,
privileges or restrictions of the shares of such class; (v) create a new class
of shares having rights, preferences or privileges prior to the shares of such
class, or increase the rights, preferences or privileges or the number of
authorized shares of a class having rights, preferences or privileges prior to
the shares of such class; (vi) in the case of

56
<PAGE>

preferred shares, divide the shares of any class into series having different
rights, preferences and privileges; and (vii) cancel or otherwise affect
dividends on the shares of such class which have accrued but have not been
paid. Amendments to Unit's Bylaws must be approved either by the Unit Board or
the Unit Shareholders.

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 December 15, 1998, there were 176,358,939 shares of U.S. Filter
Common Stock issued and outstanding and, as of November 2, 1998, of the
unissued shares of U.S. Filter Common Stock, 27,631,223 shares were reserved
for issuance upon conversion of convertible debt securities of U.S. Filter and
exercise of warrants and stock options. 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.

Unit. Unit's Articles authorize 12,000,000 shares of Unit Common Stock, per
value $0.15 per share, of which 3,995,118 shares were issued and outstanding
on December 4, 1998.

DIVIDENDS AND REPURCHASES OF SHARES

U.S. Filter. The U.S. Filter Certificate provides that (i) the U.S. Filter
Board is authorized to fix any dividend rights of U.S. Filter preferred stock,
including whether dividends are cumulative, and (ii) in the event of voluntary
or involuntary dissolution, liquidation, or winding up of the affairs of U.S.
Filter, and subject to the rights of the holders of outstanding shares of
preferred stock, if any, the holders of shares of U.S. Filter Common Stock
shall be entitled to receive pro rata all of the remaining assets of U.S.
Filter available for distribution to its stockholders after payment or
provisions for payment of the debts and other liabilities of U.S. Filter.
Delaware law permits a corporation to declare and pay dividends out of surplus
or, if no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or for the preceding fiscal year, as long as the
amount of capital of the corporation following the declaration and payment of
the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon
the distribution of assets. In addition, Delaware law generally provides that
a corporation may redeem or repurchase its shares only if such redemption or
repurchase will not impair the capital of the corporation.

Unit. Under California law, a California corporation may not make any
distribution (including dividends, whether in cash or other property, and
repurchases of its shares) unless either the corporation's retained earnings
immediately before the proposed distribution equal or exceed the amount of the
proposed distribution or, immediately after giving effect to such
distribution, the corporation's assets (exclusive of goodwill, capitalized
research and development expenses and deferred charges) will be at least equal
to 1 1/4 times its liabilities (not including deferred taxes, deferred income
and other deferred credits), and the corporation's current assets will be at
least equal to its current liabilities (or 1 1/4 times its current liabilities
if the average pre-tax and pre-interest expense earnings for the preceding two
fiscal years were less than the average interest expense for such years).

QUORUM AT STOCKHOLDER MEETINGS

U.S. Filter. Pursuant to 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.

Unit. Pursuant to Unit's 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 shareholder meetings.

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POWER TO CALL SPECIAL SHAREHOLDERS' MEETINGS

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.

Unit. Under California law, a special meeting of the shareholders may be
called by the board of directors, the chairman, the president, the holders of
shares entitled to cast not less than ten percent of the votes at such meeting
and such additional persons as are authorized by the corporation's articles of
incorporation or bylaws. Neither Unit's Articles or Unit's Bylaws authorize
additional persons to call a special meeting of Unit's shareholders.

LIMITATION ON SHAREHOLDERS' ABILITY TO ACT 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.

Unit. Pursuant to Unit's Bylaws, any action may be taken by Unit's
Shareholders by written consent without a meeting so long as the consent is
signed by all shareholders entitled to vote on such action.

PROCEDURES FOR STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS

U.S. Filter. Pursuant to the U.S. Filter Bylaws, 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 Bylaws 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 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.

Unit. Unit's Articles and Unit's Bylaws do not impose comparable conditions
on the submission of shareholder proposals or director nominations.

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

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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.

Unit. Unit currently has a board consisting of four directors. In general,
under California law, the number of directors must be approved by a majority
of the corporation's outstanding shares; however, a California corporation's
board of directors may fix the exact number of directors within a stated range
set forth in the articles of incorporation or bylaws, if that stated range has
been approved by the corporation's shareholders. Unit's Bylaws provide that
the number of directors shall be between four and seven until amended by
Unit's Shareholders, with the exact number fixed within such range by the
Board of Directors. Unit's Articles and Unit's Bylaws do not provide for a
classified board of directors.

FILLING VACANCIES ON THE BOARD OF DIRECTORS

U.S. Filter. Under the U.S. Filter Bylaws, newly created directorships and
vacancies on the U.S. Filter Board may be filled by a majority of the
directors then in office, even 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--Potential Risks Related to Water
Rights and Transfers of Water."

Unit. Unit's Bylaws provide that any vacancy occurring in the Unit Board
(except for a vacancy created by the removal of a director) may be filled, for
the unexpired term of office, by the affirmative vote of a majority of the
remaining directors, even though less than a quorum.

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.

Unit. Under California Law and Unit's Bylaws, any director or the entire
board of directors of Unit may be removed, with or without cause, with the
approval of a majority of Unit's outstanding shares entitled to vote for such
director or directors. However, neither California law nor Unit's Bylaws
permit the removal of any individual director (unless the entire board is
removed) if the number of votes cast against such removal would be sufficient
to elect the director under cumulative voting.

INSPECTION OF SHAREHOLDERS LIST

U.S. Filter. Delaware law allows a stockholder to inspect the stockholders'
list for purposes reasonably related to that person's interest as a
stockholder. However, Delaware law does not give stockholders an absolute
right of inspection of the stockholders' list, and no such right is granted
under the U.S. Filter Certificate or the U.S. Filter Bylaws.

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Unit. California law allows any shareholder to inspect the shareholders'
list for a purpose reasonably related to such person's interest as a
shareholder. California law also gives an absolute right to inspect and copy a
California corporation's shareholder list to persons holding an aggregate of
five percent (5%) or more of the corporation's voting shares, or shareholders
holding an aggregate of one percent (1%) or more of such shares who have filed
a Schedule 14A with the Securities and Exchange Commission relating to the
election of directors.

SHAREHOLDER VOTING

Both California and Delaware law generally require that a majority of the
shareholders of both acquiring and target corporations approve statutory
mergers. Delaware law does not require a stockholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
certificate of incorporation) if (a) the merger agreement does not amend the
surviving corporation's existing certificate of incorporation, (b) each share
of the surviving corporation outstanding before the merger is an identical
outstanding or treasury share after the merger, and (c) the number of shares
to be issued by the surviving corporation in the merger does not exceed twenty
percent (20%) of the shares outstanding immediately before the merger.
California law contains a similar exception to its voting requirements for
reorganizations in which the shareholders or the corporation itself, or both,
immediately before the reorganization will own equity securities constituting
more than five-sixths ( 5/6) of the voting power of the surviving or acquiring
corporation or its parent entity, immediately after the reorganization.

Both California and Delaware law also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the voting shares of the corporation transferring such assets.

With certain exceptions, California law also requires that mergers,
reorganizations, certain sales of assets and similar transactions be approved
by a majority vote of each class of shares outstanding. In contrast, Delaware
law generally does not require class voting, except in certain transactions
involving an amendment to the certificate of incorporation that adversely
affects a specific class of shares.

California law (but not Delaware law) also requires that holders of
nonredeemable common stock receive nonredeemable common stock in a merger of
the corporation with the holder of more than fifty percent (50%) but less than
ninety percent (90%) of such common stock or its affiliate unless all of the
holders of such common stock consent to the transaction.

California law also provides that, except in certain circumstances, when a
tender offer or a proposal for a reorganization or for a sale of assets is
made by an interested party (generally a controlling or managing party of the
target corporation), an affirmative opinion in writing as to the fairness of
the consideration to be paid to the shareholders must be delivered to
shareholders. This fairness opinion requirement applies only to a California
corporation that has at least 100 record shareholders, or to a transaction
that has been qualified under California state securities laws. California law
also provides that if a tender of shares or vote is sought pursuant to an
interested party's proposal and a later proposal is made by another party at
least ten days before the date of acceptance of the interested party proposal,
the shareholders must be informed of the later offer and be afforded a
reasonable opportunity to withdraw any vote, consent or proxy, or to withdraw
tendered shares. Delaware law has no comparable provision.

VOTING BY BALLOT

U.S. Filter. Under Delaware law, the right to vote by written ballot may be
restricted if so provided in a Delaware corporation's certificate of
incorporation. The U.S. Filter Certificate provides that election need not be
by ballot unless the U.S. Filter Bylaws otherwise provide. The U.S. Filter
Bylaws provide that if the chairman of the meeting specifically demands
election of directors by ballot, then elections shall be held by ballot.

Unit. California law provides that the election of directors may proceed in
the manner described in a California corporation's bylaws. Unit's Bylaws
provide that the election of directors at a shareholders' meeting

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may be by voice vote or ballot, unless before such vote a shareholder demands
a vote by ballot, in which case such vote must be by ballot.

CUMULATIVE VOTING

U.S. Filter. Under Delaware law, cumulative voting in the election of
directors is not available unless provided for in a corporation's certificate
of incorporation. The U.S. Filter Certificate does not provide for cumulative
voting.

Unit. Under California law, if any shareholder of a California corporation
has given notice of his or her intention to cumulate votes for the election of
directors, all shareholders are entitled to cumulate votes at such election.
However, California corporations that are listed on the New York or American
Stock Exchange, or that have 800 or more shareholders of record and have their
stock designated as qualified for trading on the NASDAQ National Market (such
as Unit), may eliminate cumulative voting rights by adopting amendments to
their articles and bylaws effecting such elimination, and by having such
amendments approved by their shareholders. Unit's Articles eliminate
cumulative voting.

ANTI-TAKEOVER LAW

U.S. Filter. 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.
However, no such amendment has been adopted to date and neither the U.S.
Filter Certificate nor the U.S. Filter Bylaws currently excludes U.S. Filter
from the restrictions imposed by Section 203.

Unit. The CGCL does not have, and Unit is not subject to, the equivalent of
Section 203.

RIGHTS PLAN

U.S. Filter. U.S. Filter has adopted a stockholder rights plan (the "Rights
Plan"), which is designed to protect the interests of U.S. Filter stockholders
in the event U.S. Filter and the U.S. Filter Board are confronted with
coercive or unfair takeover tactics. Under certain circumstances, in
accordance with the Rights Plan, holders of U.S. Filter Common Stock may have
rights to acquire shares of U.S. Filter Common Stock, U.S. Filter Series A
Junior Participating Preferred Stock, or common stock of a company acquiring
U.S. Filter. See "DESCRIPTION OF U.S. FILTER COMMON STOCK--Rights Plan."

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LIMITATIONS ON LIABILITY AND INDEMNIFICATION

U.S. Filter. The DGCL permits a Delaware corporation to adopt a provision in
its certificate of incorporation that limits or eliminates, with certain
exceptions, directors' personal liability to the corporation or its
stockholders for monetary damages resulting from a breach of the directors'
fiduciary duty to the corporation. The U.S. Filter Certificate contains such a
provision eliminating directors' liability to the fullest extent allowed under
Delaware law. The DGCL does not, however, permit a Delaware corporation to
eliminate or limit a director's liability for (i) breaches of the director's
duty of loyalty to the corporation or its stockholders (as opposed to the
director's duty of care), (ii) acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, (iii) the
payment of unlawful dividends or unlawful stock repurchases or redemptions or
(iv) a transaction in which the director receives an improper personal
benefit.

Delaware law generally permits indemnification of expenses incurred in the
defense or settlement of a derivative or third-party action, provided that a
determination has been made by a majority vote of the disinterested directors,
even if less than a quorum, by independent legal counsel or by a majority vote
of a quorum of shareholders that the person seeking indemnification acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation. Without court approval, however, no
indemnification may be made by a Delaware corporation in respect of any
derivative action in which a person is adjudged liable for negligence or
misconduct in the performance of his or her duty to the corporation. The
U.S. Filter Bylaws provide that U.S. Filter shall indemnify and hold harmless,
to the fullest extent not prohibited by the DGCL, public policy, or other
applicable law, each person made (or threatened to be made) a party to a
proceeding by reason of the fact that such person is or was a director or
officer of U.S. Filter, or is or was serving at the request of U.S. Filter as
a director, officer, partner, trustee, employee or agent of another entity.

Unit. Unit's Articles contain a provision that eliminates the liabilities of
directors to the fullest extent permitted by California law. The CGCL does not
permit the elimination of monetary liability where such liability is based on:
(i) acts or omissions that involve intentional misconduct or knowing and
culpable violation of law; (ii) acts or omissions that a director believes to
be contrary to the best interests of the corporation or its shareholders, or
that involve the absence of good faith on the part of the director; (iii)
receipt of an improper personal benefit; (iv) acts or omissions that show a
reckless disregard for the director's duty to the corporation or its
shareholders, where the director in the ordinary course of performing a
director's duties should be aware of a risk of serious injury to the
corporation or its shareholders; (v) acts or omissions that constitute an
unexecuted pattern of inattention that amounts to an abdication of the
director's duty to the corporation and its shareholders; (vi) interested
transactions between the corporation and a director in which a director has a
material financial interest; and (vii) liability for improper distributions,
loans or guarantees.

California law permits indemnification of expenses incurred in derivative
and third-party actions, except that in derivative actions (a) no
indemnification may be made when a person is adjudged liable to a corporation
in the performance of that person's duty to the corporation and its
shareholders, unless a court determines that such person is entitled to
indemnity for expenses, in which case indemnification for such expenses may be
made only to the extent that such court determines, and (b) no indemnification
may be made without court approval in respect of amounts paid or expenses
incurred in settling or otherwise disposing of a threatened or pending action
or amounts incurred in defending a pending action which is settled or
otherwise disposed of without court approval.

Indemnification is permitted by California law only for acts taken in good
faith and believed to be in the best interests of a California corporation and
its shareholders, as determined by a majority vote of a disinterested quorum
of the corporation's directors, independent legal counsel (if a quorum of
independent directors is not obtainable), a majority vote of a quorum of the
corporation's shareholders (excluding shares owned by the indemnified party)
or the court handling the action. Unit's Articles and Unit's Bylaws provide
that Unit shall indemnify and hold harmless, to the maximum extent not
prohibited by California law, each person made (or threatened to be made) a
party to a proceeding by reason of the fact that such person is or was a
director or officer of Unit, or is or was serving at the request of Unit as a
director, officer, partner, trustee, employee or agent of another entity,

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The indemnification and liability provision of California law, and not
Delaware law, will apply to actions of the directors and officers of Unit made
before the Merger. After the Merger, the indemnification and liability
provisions of Delaware law will apply.

INTERESTED DIRECTOR TRANSACTIONS

Under both California and Delaware law, certain contracts or transactions in
which one or more of a corporation's directors has an interest are not void or
voidable because of such interest provided that certain conditions are met.
With some exceptions, the conditions are similar under California and Delaware
law. Under California and Delaware law, (a) either the shareholders or the
board of directors must approve any such contract or transaction after full
disclosure of the material facts, and in the case of board approval the
contract or transaction must also be "just and reasonable" (in California) or
"fair" (in Delaware) to the corporation, or (b) the contract or transaction
must have been just and reasonable or fair as to the corporation at the time
it was approved. In the latter case, California law explicitly places the
burden of proof on the interested director. Under California law, if
shareholder approval is sought, the interested director is not entitled to
vote his shares at a shareholder meeting with respect to any action regarding
such contract or transaction. If board approval is sought, the contract or
transaction must be approved by a majority vote of a quorum of the
disinterested directors, without counting the vote of interested directors
(except that interested directors may be counted for purposes of establishing
a quorum). Under Delaware law, if board approval is sought, the contract or
transaction must be approved by a majority of the disinterested directors
(even though less than a majority of a quorum).

LOANS TO OFFICERS AND EMPLOYEES

Under California law, any loan or guaranty to or for the benefit of a
director or officer of a California corporation or its parent requires
approval of a majority of the corporation's shareholders unless such loan or
guaranty is provided under an employee benefit plan approved by shareholders
owning a majority of the outstanding shares of the corporation. In addition,
under California law, shareholders of any California corporation with 100 or
more shareholders of record may approve a bylaw authorizing the corporation's
board of directors alone to approve loans or guarantees to or on behalf of
officers (whether or not such officers are directors) if the board determines
that any such loan or guaranty may reasonably be expected to benefit the
corporation. Under Delaware law, a Delaware corporation may make loans to,
guarantee the obligations of or otherwise assist its officers or other
employees and those of its subsidiaries (including directors who are also
officers or employees) when such action, in the judgment of the directors, may
reasonably be expected to benefit the corporation.

SHAREHOLDER DERIVATIVE SUITS

California law provides that a shareholder bringing a derivative action on
behalf of a California corporation need not have been a shareholder at the
time of the transaction in question, provided that certain tests are met.
Under Delaware law, a stockholder of a Delaware corporation may only bring a
derivative action on behalf of the corporation if the stockholder was a
stockholder of the corporation at the time of the transaction in question or
his or her stock thereafter devolved upon him or her by operation of law.
California law also provides that a California corporation or the defendant in
a derivative suit may make a motion to the court for an order requiring the
plaintiff shareholder to furnish a security bond. Delaware does not have a
similar bonding requirement.

DISSENTERS' OR APPRAISAL RIGHTS

Under both California and Delaware law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to dissenters' or appraisal rights pursuant to
which such shareholder may receive cash in the amount of the fair market value
of his or her shares in lieu of the consideration he or she would otherwise
receive in the transaction. Under Delaware law, such appraisal rights are not
available (a) with respect to the sale, lease or exchange of all or
substantially all of the assets of a

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corporation (unless otherwise provided in the certificate of incorporation),
(b) with respect to a merger or consolidation by a corporation the shares of
which either are listed on a national securities exchange or held of record by
more than 2,000 holders if such stockholders receive only shares of the
surviving corporation or shares of any other corporation that are either
listed on a national securities exchange or held of record by more than 2,000
holders, plus cash in lieu of fractional shares, or (c) to stockholders of a
corporation surviving a merger if no vote of the shareholders of the surviving
corporation is required to approve the merger because the merger agreement
does not amend the existing certificate of incorporation, each share of the
surviving corporation outstanding before the merger is an identical
outstanding or treasury share after the merger, the number of shares to be
issued in the merger does not exceed twenty percent (20%) of the shares of the
surviving corporation outstanding immediately before the merger and if certain
other conditions are met.

The limitations on the availability of appraisal rights under California law
are different from those under Delaware law. The shareholders of a California
corporation whose shares are listed on a national securities exchange or on a
list of over-the-counter margin stocks issued by the Board of Governors of the
Federal Reserve System generally do not have such appraisal rights unless the
holders of at least five percent (5%) of the class of outstanding shares claim
the right or the corporation or any law restricts the transfer of such shares.
Appraisal rights are unavailable if the shareholders of a corporation or the
corporation itself, or both, immediately before the reorganization will own
immediately after the reorganization equity securities constituting more than
five-sixths ( 5/6) of the voting power of the surviving or acquiring
corporation or its parent entity. In general, California law affords appraisal
rights in connection with sale-of-asset reorganizations.

DISSOLUTION

Under California law, the shareholders of a California corporation who hold
fifty percent (50%) or more of the corporation's total voting power may
authorize the corporation's dissolution, with or without the approval of the
corporation's board of directors, and this right may not be modified by the
articles of incorporation. Under Delaware law, unless the board of directors
approves a proposal to dissolve such corporation, the dissolution must be
approved by shareholders holding one hundred percent (100%) of the total
voting power of the corporation. Only if the dissolution is initiated by the
board of directors may it be approved by a simple majority of the
corporation's shareholders. In the event of a board-initiated dissolution,
Delaware law allows a Delaware corporation to include in its certificate of
incorporation a supermajority voting requirement in connection with
dissolutions. The U.S. Filter Certificate contains no such supermajority
voting requirement.

DESCRIPTION OF U.S. FILTER COMMON STOCK

GENERAL

As of December 15, 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
176,358,939 shares were issued and outstanding, and 3,000,000 shares of
preferred stock, par value $.10 per share, of which none were issued and
outstanding. As of November 2, 1998, of the unissued shares of U.S. Filter
Common Stock, 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 15,950,210 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 the U.S. Filter Board out

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of funds legally available therefor, subject to the prior rights of 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 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 investments or securities
of U.S. Filter may impose, restrictions on U.S. Filter's ability to pay
dividends.

Under certain circumstances, in accordance with the Rights Plan adopted by
U.S. Filter, holders of U.S. Filter Common Stock may have rights to acquire
shares of U.S. Filter Common Stock, U.S. Filter Series A Junior Participating
Preferred Stock, or common stock of a company acquiring U.S. Filter. See
"DESCRIPTION OF U.S. FILTER COMMON STOCK--Rights Plan."

PREFERRED STOCK

Shares of preferred stock may be issued without stockholder approval. The
U.S. Filter Board 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 preferred stock. Any preferred
stock to be issued could rank prior to the U.S. Filter Common Stock with
respect to dividend rights and rights of liquidation. The U.S. Filter Board,
without stockholder approval, may issue 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. Under certain circumstances, shares of U.S. Filter
Series A Junior Participating Preferred Stock may be issued in accordance with
the Rights Plan adopted by U.S. Filter. See "DESCRIPTION OF U.S. FILTER COMMON
STOCK--Rights Plan."

STOCK PURCHASE RIGHTS

Laidlaw, which, as of November 1, 1998, held 2,806,263 shares of U.S. Filter
Common Stock, or 1.6% of the outstanding 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.

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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 the 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 involving U.S. Filter or any amendment to the U.S. Filter
Certificate or the U.S. Filter Bylaws.

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, U.S. Filter has agreed, so long as the parties from whom the
Properties were acquired (the "Parties") own at least 5% of the outstanding
U.S. Filter Common Stock, to nominate a person designated by the Parties for
election to U.S. Filter Board (the "Designee"). The Designee, Ardon E. Moore,
has been appointed by U.S. Filter's U.S. Filter Board to serve as a Class I
director until U.S. Filter's Annual Meeting in 2000. If a vacancy occurs in
U.S. Filter's 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 agreed to vote all of their shares as
recommended by a majority of the members of U.S. Filter's Board, except with
respect to transactions involving the sale of all or substantially all of U.S.
Filter's assets, merger or acquisition transactions in which U.S. Filter is
not the survivor or the parent of the survivor (unless the holders of U.S.
Filter's stock prior to such a transaction continue to own 80% or more of the
outstanding voting stock of the survivor), 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), or amendment of the
U.S. Filter Certificate or the U.S. Filter By-Laws.

CERTAIN CHARTER AND BY-LAW PROVISIONS

The U.S. Filter 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 form 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 the Board of Directors to call a meeting of stockholder 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 the U.S. Filter 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.

The U.S. Filter Certificate and U.S. Filter's By-Laws provide that the Board
of Directors shall fix the number of directors and that the 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 the
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.

The U.S. Filter Certificate and U.S. Filter By-Laws also contain other
provisions affecting the rights of stockholders. See "COMPARISON OF RIGHTS OF
STOCKHOLDERS OF U.S. FILTER AND SHAREHOLDERS OF UNIT."

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RIGHTS PLAN

On December 11, 1998, the U.S. Filter Board paid a dividend distribution of
one Right for each outstanding share of U.S. Filter Common Stock to U.S.
Filter stockholders of record on that date. Each Right entitles the registered
holder to purchase from U.S. Filter one one-thousandth of a share of Series A
Junior Participating Preferred Stock (the "Series A Preferred Stock"), at a
purchase price of $80, subject to adjustment. In addition, so long as the
Rights are attached to the U.S. Filter Common Stock, one additional Right (as
such number may be adjusted pursuant to the provisions of the Rights
Agreement) shall be deemed to be delivered for each share of U.S. Filter
Common Stock issued or transferred by U.S. Filter in the future. 300,000
shares of Series A Preferred Stock were initially reserved for issuance upon
exercise of the Rights.

The description and terms of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between U.S. Filter and The Bank of New York, as
Rights Agent. The following summary of the Rights does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Rights Plan and the exhibits attached to the Rights Plan.

The Rights are not exercisable until the distribution date (the
"Distribution Date"), which will occur upon the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of fifteen percent (15%) or more of the
outstanding shares of U.S. Filter Common Stock (the "Stock Acquisition Date"),
other than as a result of repurchases of stock by U.S. Filter, or (ii) 10
business days (or such later date as the U.S. Filter Board shall determine)
following the commencement of a tender offer or exchange offer that would
result in a person or group becoming an Acquiring Person. Until a Right is
exercised, the holder thereof, as such, will have no rights as a U.S. Filter
stockholder, including, without limitation, the right to vote or to receive
dividends. The Rights will expire at the close of business on November 27,
2008, unless earlier redeemed or exchanged by U.S. Filter.

In the event that a person becomes an Acquiring Person (except pursuant to
an offer for all outstanding shares of U.S. Filter Common Stock that the
independent directors of U.S. Filter determine to be fair to U.S. Filter
stockholders and not inadequate and otherwise in the best interests of U.S.
Filter and its stockholders), each holder of a Right will thereafter have the
right to receive, upon exercise, at the option of the U.S. Filter Board of
Directors, (i) U.S. Filter Common Stock, (ii) one one-thousandth of a share of
Series A Preferred Stock and/or (iii) cash, property or other securities of
U.S. Filter, each of (i), (ii) and (iii) 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 Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void. However,
Rights are not exercisable following the occurrence of the event set forth
above until such time as the Rights are no longer redeemable by U.S. Filter as
set forth below.

For example, at an exercise price of $80 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following an event set
forth in the preceding paragraph would entitle its holder to purchase $160
worth of U.S. Filter Common Stock (or other consideration, as noted above) for
$80. Assuming that the U.S. Filter Common Stock had a per share value of $20
at such time, the holder of each valid Right would be entitled to purchase 8
shares of U.S. Filter Common Stock for $80.

In the event that, at any time following the Stock Acquisition Date, (i)
U.S. Filter is acquired in a merger or other business combination transaction
in which U.S. Filter is not the surviving corporation (other than a merger
which follows an offer described in the second preceding paragraph), or (ii)
fifty percent (50%) or more of U.S. Filter's assets, cash flow or earning
power is sold or transferred, each holder of a Right (except Rights which

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previously have been voided as set forth above) shall 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 Right.

At any time after a person becomes an Acquiring Person and prior to the
acquisition by such person or group of fifty percent (50%) or more of the
outstanding U.S. Filter Common Stock, the U.S. Filter Board may exchange the
Rights (other than Rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio of one share of U.S. Filter
Common Stock, or one one-thousandth of a share of Series A Preferred Stock (or
of a share of a class or series of U.S. Filter's preferred stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).

At any time until 10 days following the Stock Acquisition Date, U.S. Filter
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(payable in cash, U.S. Filter Common Stock or other consideration deemed
appropriate by the U.S. Filter Board). Redemption of the Rights may also occur
after November 27, 2000 through a stockholder referendum if U.S. Filter
receives a qualifying offer from a person owning less than 5% of the U.S.
Filter Common Stock. Immediately upon the action of the U.S. Filter Board
ordering redemption of the Rights or the effectiveness of the redemption of
Rights pursuant to the stockholder referendum, the Rights will terminate and
the only right of the holders of Rights will be to receive the $.01 redemption
price.

Any of the provisions of the Rights Agreement may be amended by the U.S.
Filter Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the U.S. Filter Board in
order to cure any ambiguity, to make changes which do not adversely affect the
interests of holders of Rights, or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment may be made
at such time as the Rights are not redeemable.

The Rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire U.S. Filter
in a manner which causes the Rights to become exercisable unless the offer is
conditioned on a substantial number of Rights being acquired. The Rights,
however, should not affect any prospective offeror willing to make an offer at
a fair price and otherwise in the best interests of U.S. Filter and its
stockholders as determined by a majority of the U.S. Filter directors who are
not affiliated with the person making the offer, or willing to negotiate with
the U.S. Filter Board. The Rights should not interfere with any merger or
other business combination approved by the U.S. Filter Board since the U.S.
Filter Board may, at its option, (i) at any time prior to the Distribution
Date, amend the Rights Agreement, or (ii) at any time until ten days following
the Stock Acquisition Date, redeem all but not less than all the then
outstanding rights at the redemption price.

EXPENSES OF SOLICITATION

The total costs of this solicitation, which total costs are currently
estimated to be $50,000, will be borne by Unit. It is anticipated that banks,
brokerage houses, and other custodians, nominees and fiduciaries will forward
soliciting material to beneficial owners of the Unit Common Stock entitled to
vote at the Special Meeting, and such persons will be reimbursed for their
out-of-pocket expenses incurred in this connection. In addition to
solicitation by mail, proxies may be solicited by directors, officers and
employees of Unit by personal interviews, telephone, telegraph and facsimile.

ANNUAL REPORT ON FORM 10-K

UNIT WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K,
INCLUDING FINANCIAL STATEMENTS AND RELATED SCHEDULES, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UPON REQUEST IN WRITING FROM ANY PERSON WHO
WAS A HOLDER OF RECORD, OR WHO REPRESENTS IN GOOD FAITH THAT HE OR SHE WAS A

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BENEFICIAL OWNER, OF UNIT COMMON STOCK AS OF THE CLOSE OF BUSINESS ON
DECEMBER 1, 1998. ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE SECRETARY OF
UNIT AT 22600 SAVI RANCH PARKWAY, YORBA LINDA, CALIFORNIA 92887.

SUBMISSION OF SHAREHOLDER PROPOSALS

Assuming that the Merger is approved and completed, no proxies will be
solicited for Unit's 1999 Annual Meeting. If the Merger is not approved and
completed, a proposal by a shareholder intended to be presented at the 1999
Annual Meeting must be received by Unit at its principal executive offices by
April 25, 1999, to be included in the Proxy Statement for that Meeting, and
all other legal requirements for such inclusion must be satisfied.

LEGAL MATTERS

The federal income tax consequences in connection with the Merger will be
passed upon by Stradling Yocca Carlson & Rauth, Newport Beach, California. The
validity of the shares of U.S. Filter Common Stock to be issued in connection
with the Merger will be passed upon for U.S. Filter by Kirkpatrick & Lockhart
LLP, counsel to U.S. Filter.

EXPERTS

The consolidated balance sheets of Unit as of May 31, 1998, May 31, 1997,
and May 31, 1996, and the consolidated statements of income, retained
earnings, and cash flows of Unit for each of the three years in the period
ended May 31, 1998, have been incorporated by reference herein and in the
Registration Statement in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts
in accounting and auditing. No representative of PricewaterhouseCoopers LLP is
expected to be present at the Unit Special Meeting.

The consolidated financial statements of United States Filter Corporation
and its subsidiaries as of March 31, 1997 and 1998 and for each of the three
years in the period ended March 31, 1998, have been incorporated by reference
herein and in the Registration Statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, which as to years
ended March 31, 1997 and 1996 are based in part on the reports of Ernst &
Young LLP, independent auditors, incorporated herein and in the Registration
Statement by reference, given upon the authority of said firms as experts in
accounting and auditing. No representative of KPMG Peat Marwick LLP is
expected to be present at the Unit Special Meeting.

The consolidated financial statements of The Kinetics Group, Inc. at
September 30, 1997 and for each of the two years in the period ended September
30, 1997 incorporated by reference herein and in the Registration Statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon incorporated by reference herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing. No
representative of Ernst & Young LLP is expected to be present at the Unit
Special Meeting.

The consolidated financial statements of Memtec Limited 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, issued in the name Price Waterhouse, of
PricewaterhouseCoopers, independent accountants, given on the authority of
said firm as experts in auditing and accounting. No representative of
PricewaterhouseCoopers is expected to be present at the Unit Special Meeting.

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APPENDIX A

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

UNITED STATES FILTER CORPORATION,

KINETICS ACQUISITION CORP.,

AND

UNIT INSTRUMENTS, INC.

DATED AS OF JULY 2, 1998

<PAGE>

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this "AGREEMENT") is made and entered
into as of July 2, 1998, by and among United States Filter Corporation, a
Delaware corporation ("PARENT"), Kinetics Acquisition Corp., a California
corporation and a wholly owned subsidiary of Parent ("SUBCORP"), and Unit
Instruments, Inc., a California corporation ("UNIT").

PRELIMINARY STATEMENTS

A. The parties desire to effect the merger of Subcorp with and into Unit,
with Unit as the surviving corporation (the "MERGER"), pursuant to which each
share of Unit 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 Parent Common Stock (as defined in Section 3.3), as more
fully provided herein.

B. The Board of Directors of Unit has determined that the Merger is in the
best interests of the holders of shares of Unit Common Stock ("UNIT
SHAREHOLDERS").

C. The respective Boards of Directors of Parent and Subcorp have determined
that the Merger is in the best interests of their respective stockholders.

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 accounting and financial reporting purposes.

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 California Corporations Code (the
"CCC"), Subcorp shall be merged with and into Unit at the Effective Time. As a
result of the Merger, the separate corporate existence of Subcorp shall cease
and Unit shall continue its existence under the laws of the State of
California. Unit, 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 California (the "CALIFORNIA SECRETARY
OF STATE") a duly executed agreement of merger (the "MERGER AGREEMENT") in
accordance with Section 1103 of the CCC. The Merger shall become effective
(the "EFFECTIVE TIME") when the Merger Agreement has been filed with the
California Secretary of State or at such later time as shall be agreed upon by
Parent and Unit and specified in the Merger Agreement. Prior to the filing
referred to in this Section 1.2, a closing (the "CLOSING") shall be held at
the offices of O'Melveny & Myers LLP, 610 Newport Center Drive, Suite 1700,
Newport Beach, California, as soon as practicable following the date upon
which all conditions set forth in Article VI hereof have been satisfied or
waived, or at such other date as Parent and Unit may agree (provided

A-1
<PAGE>

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 1107 of the CCC.

1.4 Articles of Incorporation and Bylaws. At the Effective Time (i) the
Articles 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 only the provisions contained immediately prior thereto
in the Articles of Incorporation of Subcorp, except for Article I thereof
which shall continue to read "The name of the corporation is "Unit
Instruments, Inc."', and (ii) the Bylaws of Subcorp 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.

1.5 Directors and Officers of the Surviving Corporation. From and after the
Effective Time, the directors and officers of the Surviving Corporation shall
be as follows, until their respective successors are duly elected and
qualified:

<TABLE>
<S> <C>
Directors: Damian C. Georgino
Kevin L. Spence
David J. Shimmon
Officers: David J. Shimmon--Chairman
Michael Doyle--President
Kevin L. Spence--Vice President
Gary N. Patten--Vice President
Damian C. Georgino--Vice President
Dan Rubin--Vice President
Kurt Gilson--Vice President
</TABLE>

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 or any other acts or things 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 Unit, or (b) otherwise carry out the
provisions of this Agreement, Unit 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 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 Unit or otherwise to take any and all such actions.

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 Parent, Subcorp or Unit 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.

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

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2.2 Exchange Ratio; Fractional Shares; Adjustments.

(a) The "EXCHANGE RATIO" shall equal $12.62 divided by the Parent Share
Value. The "PARENT SHARE VALUE" shall be either (i) the average of the
closing price per share for shares of Parent Common Stock as reported on
the New York Stock Exchange ("NYSE") Composite Tape ("NYSE COMPOSITE TAPE")
on each of the twenty (20) consecutive trading days ending on the fifth
(5th) trading day preceding the Closing Date (the "AVERAGE SHARE PRICE") if
the Average Share Price is above $27.00, or (ii) $27.00 if the Average
Share Price is equal to or less than $27.00. No certificates for fractional
Shares of Parent 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 Unit Common Stock, upon presentation of such
fractional interest represented by an appropriate certificate for Unit
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 Parent 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 Unit
Common Stock shall be surrendered for the account of the same holder, the
number of shares of Parent 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 Parent shall declare a
stock dividend or other distribution payable in shares of Parent Common
Stock or securities convertible into shares of Parent Common Stock, or
effect a stock split, reclassification, combination or other change with
respect to shares of Parent Common Stock, the Exchange Ratio set forth in
this Section 2.2 shall 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, Parent shall
deposit with American Stock Transfer & Trust Company or such other exchange
agent as may be designated by Parent (the "EXCHANGE AGENT") for exchange in
accordance with this Section 2.3 (i) certificates representing shares of
Parent Common Stock issuable pursuant to Section 2.1 in exchange for
outstanding shares of Unit Common Stock, and (ii) cash in an amount
reasonably expected to be paid pursuant to Section 2.2(b) (such shares of
Parent 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,
Parent 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 Unit Common
Stock whose shares were converted into the right to receive shares of
Parent 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
Unit 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 Parent
may reasonably specify) and (ii) instructions for effecting the surrender
of the Certificates in exchange for certificates representing shares of
Parent 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, and the Exchange Agent shall deliver to the holder within five
(5) business days thereafter, (x) a certificate or certificates
representing that whole number of shares of Parent 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

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<PAGE>

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 Unit Common Stock.
In the event of a transfer of ownership of shares of Unit Common Stock
which is not registered on the transfer records of Unit, a certificate
representing the proper number of shares of Parent 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, shall be issued to such
transferee if the Certificate representing such shares of Unit 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 Parent 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 Parent
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 4.9), following surrender
of any such Certificate, there shall be paid to the holder of the
certificates representing whole shares of Parent 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
Parent 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 Parent Common Stock, less the amount of any withholding taxes
which may be required thereon.

(d) No Further Ownership Rights in Unit Common Stock. All shares of
Parent 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 Unit Common Stock represented thereby, and
there shall be no further registration of transfers on the stock transfer
books of Unit of shares of Unit 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 Unit Shareholders twelve months after the date of
the mailing required by Section 2.3(b) shall be delivered to Parent, upon
demand therefor, and holders of Certificates previously representing shares
of Unit Common Stock who have not theretofore complied with this Section
2.3 shall thereafter look only to Parent for payment of any claim to shares
of Parent Common Stock or cash in lieu of fractional shares thereof, or
dividends or distributions, if any, in respect thereof.

(f) No Liability. None of Parent, Sub, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any shares of
Unit Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund properly 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 Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent upon termination of the Exchange Fund pursuant to Section 2.3(e).

2.4 Treatment of Stock Options and Warrants. At the Effective Time, such
outstanding options and warrants to purchase shares of Unit Common Stock that
(a) were granted prior to the date of this Agreement

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(which options and warrants are described on Schedule 2.4 hereto and referred
to herein as the "UNIT OPTIONS" and the "UNIT WARRANTS," respectively), and
(b) are unexpired and unexercised as of the Effective Time shall be
automatically converted into an option (a "PARENT EXCHANGE OPTION") or a
warrant (a "PARENT EXCHANGE WARRANT"), as the case may be, to purchase (x) the
number of shares of Unit Common Stock issuable immediately as of the date of
this Agreement upon exercise of such Unit Option or Unit Warrant multiplied by
(y) the Exchange Ratio, with an exercise price equal to the exercise price
which existed under the corresponding Unit Option or Unit Warrant divided by
the Exchange Ratio, and with such other terms and conditions, subject to
Parent's approval, as were in effect under such Unit Option or Unit Warrant as
of the date of this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBCORP

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

3.1 Organization and Standing. Parent and Subcorp are corporations duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of organization and each has the corporate power and
authority to own or lease its properties, and carry on its business. Parent is
not in violation of its Restated Certificate of Incorporation, as amended (the
"PARENT CERTIFICATE"), or its Restated Bylaws (the "PARENT BYLAWS"), and
Subcorp is not in violation of its Amended and Restated Certificate of
Incorporation or Bylaws. Parent has heretofore furnished to Unit a complete
and correct copy of the Parent Certificate and Parent Bylaws.

3.2 Corporate Power and Authority. Each of Parent and Subcorp has all
requisite corporate power and authority to enter into and deliver this
Agreement, 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 Parent and Subcorp. This Agreement has been duly executed and
delivered by each of Parent and Subcorp, and constitutes the legal, valid and
binding obligation of each of Parent and Subcorp enforceable against each of
them in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally and (b) the
availability of injunctive relief and other equitable remedies.

3.3 Capitalization of Parent and Subcorp. As of June 26, 1998, Parent's
authorized capital stock consisted solely of (i) 300,000,000 shares of common
stock, par value $.01 per share ("PARENT COMMON STOCK"), of which 161,565,388
shares were issued and outstanding, and (ii) 3,000,000 shares of Preferred
Stock, par value $.10 per share, none of which was issued and outstanding or
reserved for issuance. The Parent Common Stock to be issued to the Unit
Shareholders pursuant to this Agreement will be duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights or
rights of first refusal. 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 shares were issued and
outstanding. As of the date hereof, all of the outstanding shares of Subcorp
Common Stock are owned, beneficially and of record, by Parent free and clear
of any liens, claims or encumbrances.

3.4 Brokerage and Finder's Fees. Except for Parent's obligations to Societe
Generale Investment Banking, neither Parent nor any shareholder, director,
officer or employee thereof has incurred or will incur on behalf of Parent any
brokerage, finder's or similar fee in connection with the transactions
contemplated by this Agreement.

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

(a) conflict with, or result in a breach of any provision of the Parent
Certificate or Parent Bylaws or the Amended and Restated Certificate of
Incorporation or Bylaws of Subcorp;

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(b) 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 of 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 Parent 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 Parent or any of its subsidiaries is a
party;

(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent 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 Parent 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) authorization for inclusion of the shares of
Parent 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, or (iv)
registrations or other actions required under federal and state securities
laws as are contemplated by this Agreement.

3.6 Reorganization. Neither Parent 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 Unit or any of its affiliates) would prevent the Merger
from constituting a reorganization qualifying under the provisions of Section
368(a) of the Code.

3.7 Parent SEC Documents. Parent 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 "PARENT SEC DOCUMENTS").
The Parent 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)
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 Parent included in the Parent 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 Parent and its consolidated subsidiaries as
at the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended.

3.8 Disclosure. None of the representations or warranties of Parent
contained herein is false or misleading in any material respect or omits to
state a fact herein necessary to make the statements herein or therein not
misleading in any material respect.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF UNIT

In order to induce Subcorp and Parent to enter into this Agreement, and
except as disclosed in the Unit SEC Documents (as defined in Section 4.6
below) or in the disclosure schedules delivered by Unit to Parent and

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dated the date hereof (the "UNIT DISCLOSURE SCHEDULES"), all of which are
incorporated in each of the following statements as exceptions thereto, Unit
hereby represents and warrants to Parent and Subcorp as follows:

4.1 Organization and Standing. Unit is a corporation duly organized, validly
existing and in good standing under the laws of the State of California 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 Unit and each subsidiary of Unit 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. Unit is not in violation of any provision
of its Articles of Incorporation, as amended and restated (the "UNIT
ARTICLES"), or its Bylaws, as in effect on the date hereof (the "UNIT
BYLAWS"). Unit has heretofore furnished to Parent a complete and correct copy
of the Unit Articles and the Unit Bylaws.

4.2 Subsidiaries. Unit 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 Unit Disclosure Schedule. Except as set forth in
Section 4.2 to the Unit Disclosure Schedule, Unit 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 Unit's subsidiaries. Each of the outstanding shares of capital stock
of each of Unit's subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and is owned, directly or indirectly, by Unit free and
clear of all liens, pledges, security interests, claims or other encumbrances.
Other than as set forth in Section 4.2 to the Unit 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 Unit,
nor are there outstanding any securities which are convertible into or
exchangeable for any shares of capital stock of any subsidiary of Unit, and
neither Unit nor any subsidiary of Unit has any obligation of any kind to
issue any additional securities of any subsidiary of Unit or to pay for or
repurchase any securities of any subsidiary of Unit or any predecessor
thereof.

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

4.4 Capitalization of Unit. Unit's authorized capital stock consists solely
of (a) 12,000,000 shares of common stock, par value $.15 per share ("UNIT
COMMON STOCK"), of which as of June 25, 1998, 3,995,118 shares were issued and
outstanding. Except for 975,214 shares of Unit Common Stock reserved for
issuance upon the exercise of outstanding options, no shares of Unit capital
stock are reserved for issuance upon the exercise of outstanding options or
warrants, or for the conversion or exchange of convertible or exchangeable
securities. No shares of Unit capital stock are held in treasury or by
subsidiaries of Unit. Each outstanding share of Unit 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 Section 4.4 to the Unit 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 Unit of any securities of Unit, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of capital stock of Unit, and neither Unit nor any subsidiary of Unit
has any obligation of any kind to issue any additional securities or to pay
for or repurchase any securities of Unit or any predecessor. Unit has no
agreement, arrangement or understandings to register any securities of Unit or
any of its subsidiaries under the Securities

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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).

4.5 Conflicts; Consents and Approvals. Neither the execution and delivery of
this Agreement by Unit, nor the consummation by Unit of the transactions
contemplated hereby or thereby, nor Unit's performance of and compliance with
the terms hereof, will:

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

(b) 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 capital stock, properties or assets of Unit 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 Unit or any of its subsidiaries is a party, or
result in the creation, maturation or acceleration of any liability or
obligation of Unit (or give to any other person the right to cause such a
creation, maturation or acceleration);

(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Unit 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 Unit or any of its affiliates with, any third
party or any court, arbitral tribunal, administrative agency or commission,
or any other governmental or regulatory body, agency, instrumentality or
authority (a "GOVERNMENTAL AUTHORITY"), other than (i) approval of the
Merger and the transactions contemplated hereby by Unit Shareholders and
filing of the Merger Agreement with the California Secretary of State, (ii)
actions required by the HSR Act, and (iii) registrations or other actions
required under federal and state securities laws as are contemplated by
this Agreement.

4.6 Unit SEC Documents. Since October 1, 1995, Unit has timely filed with
the Commission all forms, reports, schedules, statements and other documents
required to be filed by it under the Exchange Act or the Securities Act (such
documents, as supplemented and amended since the time of filing, collectively,
the "UNIT SEC DOCUMENTS"). The Unit 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) 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 Unit included in the Unit 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, taken as a
whole, fairly present the consolidated financial position of Unit and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.

4.7 No Material Adverse Change. Except as disclosed in Section 4.7 to the
Unit Disclosure Schedule or as may be disclosed by Unit pursuant to and in
accordance with Section 6.3(d) of this Agreement, since February 28, 1998,
there has been no change in the business, assets, condition (financial or
other), results of operations or prospects of Unit which would constitute a
Material Adverse Effect on Unit or any event,

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occurrence or development which would have a material adverse effect on the
ability of Unit to consummate the Merger. Notwithstanding the foregoing
sentence, since February 28, 1998, except as disclosed in Section 4.7 of the
Unit Disclosure Schedule or as may be disclosed by Unit pursuant to and in
accordance with Section 6.3(d) of this Agreement, there has not been any: (i)
material adverse change in the financial condition, assets, liabilities, net
worth, earning power, business or prospects of Unit; (ii) damage or
destruction to any material asset of Unit, whether or not covered by
insurance; (iii) strike or other labor trouble at Unit; (iv) creation of any
encumbrance on any asset of Unit; (v) declaration or payment of any dividend
or other distribution on or with respect to or redemption or purchase by Unit
of any shares of capital stock of Unit, including any Unit Common Stock;
(vi) increase in the salary, wage or bonus of any managerial employee of Unit
except those done in the normal course of business for periodic raises in
accordance with past business practices, or any increase in the number of such
employees; (vii) asset acquisition or expenditure in excess of $100,000
individually or $500,000 in the aggregate, other than the purchase of
inventory in the ordinary course of business; (viii) change in any Plan (as
defined in Section 4.16); (ix) change in any method of accounting; (x)
disposition of any asset (other than inventory in the ordinary course of
business) for less than fair market value; (xi) payment, prepayment or
discharge of any liability other than in the ordinary course of business or
any failure to pay any liability when due; (xii) write-offs or write-downs of
any assets of Unit; (xiii) creation, termination or amendment of, or waiver of
any right under, any material agreement of Unit; or (xv) agreement or
commitment to do any of the foregoing.

4.8 Taxes. Except as set forth in Section 4.8 to the Unit Disclosure
Schedule or disclosed in the Unit SEC Documents:

(a) Unit 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 Unit or its subsidiaries prior to the date hereof; (ii) have within the
time and manner prescribed by Applicable Law (as defined in Section 4.9)
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 Unit 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 May 31, 1994, all income Tax Returns (whether
federal, state, local, foreign or otherwise) including Unit or any of its
subsidiaries have been audited by the applicable taxing authority or are
closed by the applicable statute of limitations. Neither Unit 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 Unit or
any of its subsidiaries. Unit has not filed an election under Section
341(f) of the Code to be treated as a consenting corporation. No claim has
been made by any taxing authority of a jurisdiction where Unit or any of
its subsidiaries does not file Tax Returns that Unit or such subsidiary, as
the case may be, is or may be subject to taxation in that jurisdiction.

(b) Neither Unit nor any of its subsidiaries is obligated by any
contract, agreement or other arrangement to indemnify any other person with
respect to Taxes. Neither Unit 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 Unit or any of its subsidiaries which (i)
requires Unit or any of its subsidiaries to make any Tax payment to 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 Unit or any
of its subsidiaries.

(c) Unit and its subsidiaries have withheld and paid substantially 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.

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(d) "Tax Returns" means returns, reports and forces 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. Unit is in compliance, and at all times since June
1, 1995 (and, to the best of Unit's knowledge, at all times prior to such
date) has been in compliance, with all applicable laws, statutes, orders,
rules, regulations or policies promulgated, or judgments, decisions or orders
entered by any Governmental Authority (collectively, "APPLICABLE LAWS")
relating to Unit 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 Unit or
where such non-compliance has been cured. Except as disclosed in Section 4.9
to the Unit Disclosure Schedule, no investigation or review by any
Governmental Authority with respect to Unit is pending, or, to the knowledge
of Unit, threatened, nor has any Governmental Authority indicated in writing
an intention to conduct the same.

4.10 Intellectual Property Rights. Section 4.10 to the Unit Disclosure
Schedule discloses all of the trademark and service mark rights, applications
and registrations, trade names, fictitious names, service marks, logos and
brand names, registered copyrights, copyright applications, letters patent,
patent applications and licenses of any of the foregoing owned or used by Unit
in or applicable to Unit's business. Unit has the entire right, title and
interest in and to, or has the royalty-free right to use, the intellectual
property rights disclosed on Section 4.10 to the Unit Disclosure Schedule and
all other processes, know-how, show-how, formulae, trade secrets, inventions,
discoveries, improvements, blueprints, specifications, drawings, designs, and
other proprietary rights used in or necessary to Unit's business
("INTELLECTUAL PROPERTY"), free and clear of all security interests, liens,
and other encumbrances. Section 4.10 to the Unit Disclosure Schedule
separately discloses all Intellectual Property under license. The Intellectual
Property is valid and not the subject of any interference, opposition,
reexamination or cancellation. There has not been any written assertion or
claim against Unit challenging the validity or the use by Unit of any of the
foregoing. To the best knowledge of Unit, after due inquiry, the conduct of
the businesses of Unit 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. To the best knowledge of Unit, after due inquiry, there are no
infringements of any of the Intellectual Property owned by or licensed by or
to Unit and the Intellectual Property is not the subject to any pending
Action.

4.11 Title to and Condition of Properties. Unit owns or holds under valid
leases all real property, plants, machinery and equipment necessary for the
conduct of the business of Unit as presently conducted. The buildings,
fixtures, improvements, machinery, equipment, tools, furniture, improvements
and tangible personal property of Unit are in good operating condition and
repair (ordinary wear and tear excepted) and are suitable for the purposes for
which they are used in Unit's business.

4.12 Registration Statement; Proxy Statement. None of the information
provided in writing by Unit for inclusion in the Registration Statement at the
time it becomes effective or, in the case of the Proxy Statement, at the date
of mailing and at the date of the Unit Shareholders 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
Proxy Statement and, except for such portions thereof that relate only to
Parent and its subsidiaries, the Registration Statement, 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 Unit Disclosure
Schedule or in the Unit SEC Documents, there is no suit, claim, action,
proceeding or investigation (an "ACTION") pending or, to the knowledge of
Unit, threatened against Unit and Unit is not subject to any outstanding
order, writ, injunction or decree.

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

4.15 Reorganization. Neither Unit 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 Parent any of its affiliates) would prevent the Merger
from constituting a reorganization qualifying under the provisions of Section
368(a) of the Code.

4.16 Employee Benefits.

(a) Benefit Plans; Company Plans. Section 4.16 of the Unit Disclosure
Schedule discloses all written and unwritten "employee benefit plans"
within the meaning of Section 3(3) of ERISA, and any other written and
unwritten profit sharing, pension, savings, deferred compensation, fringe
benefit, insurance, medical, medical reimbursement, life, disability,
accident, post-retirement health or welfare benefit, stock option, stock
purchase, sick pay, vacation, employment, severance, termination or other
plan, agreement, contract, policy, trust fund or arrangement (each, a
"BENEFIT PLAN"), whether or not funded and whether or not terminated, (i)
maintained or sponsored by Unit, or (ii) with respect to which Unit has or
may have liability or is obligated to contribute, or (iii) that otherwise
covers any of the current or former employees of Unit or their
beneficiaries, or (iv) as to which any such current or former employees or
their beneficiaries participated or were entitled to participate or accrue
or have accrued any rights thereunder (each, a "UNIT PLAN").

(b) Unit Group Matters; Funding. Neither Unit nor any corporation that
may be aggregated with Unit under Sections 414(b), (c), (m) or (o) of the
Code (the "UNIT GROUP") has any obligation to contribute to or any direct
or indirect liability under or with respect to any Benefit Plan of the type
described in Sections 4063 and 4064 of ERISA or Section 413(c) of the Code.
Unit does not have any liability, and after the Closing Unit will not have
any liability, with respect to any Benefit Plan of any other member of the
Unit Group, whether as a result of delinquent contributions, distress
terminations, fraudulent transfers, failure to pay premiums to United
States Pension Benefit Guaranty Corporation (the "PBGC"), withdrawal
liability or otherwise. No accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) exists nor has any
funding waiver from the IRS been received or requested with respect to any
Unit Plan or any Benefit Plan of any member of the Unit Group and no excise
or other Tax is due or owing because of any failure to comply with the
minimum funding standards of the Code or ERISA with respect to any of such
plans.

(c) Compliance. Each of the Unit Plans and all related trusts, insurance
contracts and funds have been created, maintained, funded and administered
in all material respects in compliance with all applicable law and in
compliance with the plan document, trust agreement, insurance policy or
other writing creating the same or applicable thereto. No Unit Plan is or
is proposed to be under audit or investigation, and no completed audit of
any Unit Plan has resulted in the imposition of any Tax, fine or penalty.

(d) Qualified Plans. Section 4.16 of the Unit Disclosure Schedule
discloses each Unit Plan that purports to be a qualified plan under Section
401(a) of the Code and exempt from United States federal income tax under
Section 501(a) of the Code (a "QUALIFIED PLAN"). With respect to each
Qualified Plan, a determination letter (or opinion or notification letter,
if applicable) has been received from the IRS that such plan is qualified
under Section 401(a) of the Code and exempt from federal income tax under
Section 501(a) of the Code. No Qualified Plan has been amended since the
date of the most recent such letter. No member of the Unit Group, nor any
fiduciary of any Qualified Plan, nor any agent of any of the foregoing, has
done anything that would adversely affect the qualified status of a
Qualified Plan or the qualified status of any related trust.

(e) No Defined Benefit Plans. No Unit Plan is a defined benefit plan
within the meaning of Section 3(35) of ERISA (a "DEFINED BENEFIT PLAN"). No
Defined Benefit Plan sponsored or maintained by any member of the Unit
Group has been terminated or partially terminated after September 1, 1974,
except as set forth on Schedule 4.16 of the Unit Disclosure Schedule. Each
Defined Benefit Plan identified as

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terminated on Schedule 4.16 of the Unit Disclosure Schedule has met the
requirement for standard termination of single-employer plans contained in
Section 4041(b) of ERISA. During the five (5) year period ending on the
Closing Date, no member of the Unit Group has transferred a Defined Benefit
Plan to a corporation that was not, at the time of transfer, related to the
transferor in any manner described in Sections 414(b), (c), (m) or (o) of
the Code.

(f) Multiemployer Plans. No Unit Plan is a multiemployer plan within the
meaning of Section 3(37) or Section 4001(a)(3) of ERISA (a "MULTIEMPLOYER
PLAN"). No member of the Unit Group has withdrawn from any Multiemployer
Plan or incurred any withdrawal liability to or under any Multiemployer
Plan. No Unit Plan covers any employees of any member of the Unit Group in
any foreign country or territory.

(g) Prohibited Transactions; Fiduciary Duties; Post-Retirement
Benefits. No prohibited transaction (within the meaning of Section 406 of
ERISA and Section 4975 of the Code) with respect to any Unit Plan exists or
has occurred that could subject Unit to any liability or Tax under Part 5
of Title I of ERISA or Section 4975 of the Code. No member of the Unit
Group, nor any administrator or fiduciary of any Unit Plan, nor any agent
of any of the foregoing, has engaged in any transaction or acted or failed
to act in a manner that will subject Unit to any liability for a breach of
fiduciary or other duty under ERISA or any other applicable Law. With the
exception of the requirements of Section 4980B of the Code, no post-
retirement benefits are provided under any Unit Plan that is a welfare
benefit plan as described in ERISA Section 3(1).

4.17 Undisclosed Liabilities. Except as set forth in Section 4.17 of the
Unit Disclosure Schedule, neither Unit nor any of its subsidiaries has any
debt, obligation or liability, absolute, fixed, contingent or otherwise, of
any nature whatsoever, whether due or to become due, including any unasserted
claim, whether incurred directly or by any predecessor thereto, and whether
arising out of any act, omission, transaction, circumstance, sale of goods or
services, state of facts or other condition, except: (i) those reflected or
reserved against on the consolidated balance sheets of Unit as of February 28,
1998 included in the Unit SEC Documents in the amounts shown therein; (ii)
those not required under generally accepted accounting principles to be
reflected or reserved against therein and that have arisen in the ordinary
course of business of Unit and have been consistent in amount and character
with past practice and experience of Unit and which, individually or in the
aggregate, has not had and will not have a Material Adverse Effect with
respect to Unit.

4.18 Environmental Matters. Except as disclosed in Section 4.18 of the Unit
Disclosure Schedule or in the Unit SEC Documents:

(a) Compliance; No Liability. Unit has operated its business and each
parcel of Real Property, and any real property previously owned, used or
leased by Unit, in compliance with all applicable Environmental Laws. Unit
is not subject to any liability, penalty or expense (including legal fees)
and will not hereafter suffer or incur any loss, liability, penalty or
expense (including legal fees) by virtue of any violation of any
Environmental Law by Unit occurring prior to the Closing. "Environmental
Law" means any applicable law or regulation relating to public health and
safety or protection of the environment, including common law nuisance,
property damage, and similar common law theories.

(b) Treatment; CERCLIS. Unit has not treated, stored, recycled or
disposed of any hazardous substance as defined by any Environmental Law and
any other material regulated by any applicable Environmental Law, including
petroleum-related material, crude oil or any fraction thereof, PCB's, and
friable asbestos ("Regulated Material") on any real property, and to the
best of Unit's knowledge, no other Person has treated, stored, recycled or
disposed of any Regulated Material on any part of the Real Property. Unit
has not transported any Regulated Material or arranged for the
transportation of any Regulated Material to any location that is listed or
proposed for listing on the National Priorities List pursuant to Superfund,
on CERCLIS or any other location that is the subject of federal, state or
local enforcement action or other investigation that may lead to claims
against Unit for cleanup costs, remedial action, damages to natural
resources, to other property or for personal injury including claims under
Superfund. None of the Real

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Property is listed or proposed for listing on the National Priorities List
pursuant to Superfund, CERCLIS or any state or local list of sites
requiring investigation or cleanup.

(c) Notices; Existing Claims; Certain Regulated Materials; Storage
Tanks. Unit has not received any request for information, notice of claim,
demand or other notification that it is or may be potentially responsible
with respect to any investigation, abatement or cleanup of any threatened
or actual release of any Regulated Material. Unit is not required to place
any notice or restriction relating to the presence of any Regulated
Material at any Real Property or in any deed to any Real Property. There
has been no past, and there is no pending or contemplated, claim by or
against Unit under any Environmental Law or laws based on actions of others
that may have impacted on the Real Property, and Unit has not entered into
any agreement with any person regarding any Environmental Law, remedial
action or other environmental liability or expense. All aboveground storage
tanks and, to the best knowledge of Unit, all underground storage tanks
located on the Real Property are disclosed on Section 4.18 of the Unit
Disclosure Schedule, and all such tanks and associated piping are in sound
condition and are not leaking and have not leaked.

4.19 Opinion of Financial Advisors. Unit has received the oral advice of
Needham & Company, its financial advisors, to the effect that, as of the date
of this Agreement, the Exchange Ratio is fair to the Unit Shareholders from a
financial point of view. Such oral advice has not been withdrawn or revoked or
modified in any material respect and is to be confirmed in a written fairness
opinion of Needham & Company, which opinion will be dated as of the date of
this Agreement. Unit will promptly provide copies of such opinion to Parent.

4.20 Board Recommendation. The Board of Directors of Unit, at a meeting duly
called and held, has by unanimous vote of those directors present (a)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, taken together, are fair to and in the best interests of
the Unit Shareholders, and (b) resolved to recommend that the Unit
Shareholders approve this Agreement and the transactions contemplated herein,
including the Merger (the "UNIT BOARD RECOMMENDATION").

4.21 [Intentionally Omitted.]

4.22 Inventory. All of the inventory owned by Unit is valued on the books
and records of Unit and in the financial statements contained in the Unit SEC
Documents at lower of cost or market, the cost thereof being determined on a
FIFO basis in accordance with generally accepted accounting principles. All of
the finished goods inventory of Unit is in good, merchantable and usable
condition and is salable in the ordinary course of business within a
reasonable time and at normal profit margins, and all of the raw materials and
work-in-process inventory of Unit can reasonably be expected to be consumed in
the ordinary course of business within a reasonable period of time. No
material portion of Unit's inventory is obsolete, slow-moving, has been
consigned to others or is on consignment from others.

4.23 Receivables. All trade and other accounts receivable of Unit
("RECEIVABLES"), whether reflected on the financial statements contained in
the Unit SEC documents or created after the date of such financial statements,
arose from bona fide sales transactions of Unit, and no portion of any
Receivable is subject to counterclaim, defense or set-off or is otherwise in
dispute. Except to the extent of the recorded reserve for doubtful accounts,
all of the Receivables are collectible in the ordinary course of business and
will be fully collected within one hundred twenty (120) days after having been
created using commercially reasonable efforts, except for contract reserves
and retainages.

4.24 Permits. Unit holds all permits, certificates, licenses, franchises,
privileges, approvals, registrations and authorizations required under any
applicable law or otherwise advisable in connection with the operation of its
assets and business (each, a "PERMIT" and collectively, "PERMITS"). Each
Permit is valid, subsisting and in full force and effect. Unit is in
compliance with and has fulfilled and performed its obligations under each
Permit, and, no event or condition or state of facts exists (or would exist
upon the giving of notice or lapse of time or any of them) that could
constitute a breach or default under any Permit. Unit has not received any
notice of non-renewal of any Permit.

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4.25 Real Property. Section 4.25 of the Unit Disclosure Schedule identifies
all real properties currently owned, used or leased by Unit or in which Unit
has an interest (collectively, the "REAL PROPERTY") and identifies the record
title holder of all of the Real Property. Unit has good and marketable fee
simple title to (or a leasehold interest in, as the case may be) all Real
Property shown as owned by it on Section 4.25 of the Unit Disclosure Schedule,
free and clear of all liens and other encumbrances, other than (i) easements,
covenants, rights-of-way and other encumbrances or restrictions of record,
(ii) zoning restrictions, and (iii) liens for current taxes not yet due,
provided that any such encumbrance in clauses (i), (ii) and (iii) does not
either adversely affect the value of the Real Estate or prohibit or interfere
with the operations of Unit's business. Unit has the right to quiet enjoyment
of all Real Property in which it holds a leasehold interest for the full term,
including all renewal rights, of the lease or similar agreement relating
thereto. Copies of all title insurance policies written in favor of Unit and
all surveys in Unit's possession relating to the Real Property owned or leased
by Unit have been delivered to Parent. All structures and other improvements
on all Real Property owned by Unit are within the lot lines and do not
encroach on the properties of any other person, and the use and operation of
all Real Property conform to all applicable building, zoning, safety and
subdivision laws, environmental laws and other laws, and all restrictive
covenants and restrictions and conditions affecting title. Unit has not
received any written or oral notice of assessments for public improvements or
condemnation against any Real Property.

4.26 Labor Relations. No employee of Unit is represented by any union or
other labor organization. No representation election, arbitration proceeding,
grievance, labor strike, dispute, slowdown, stoppage or other labor trouble is
pending or threatened against Unit. No complaint against Unit is pending or
threatened before the National Labor Relations Board, the Equal Employment
Opportunity Commission or any similar state or local agency, by or on behalf
of any employee of Unit. Unit has no contingent liability for sick leave,
vacation time, severance pay or any similar item other than that which has
been adequately reserved against on the February 28, 1998 balance sheet of
Unit. Unit has no contingent liability for any occupational disease of any of
its employees, former employees or others, other than that which has been
adequately reserved against on the February 28, 1998 balance sheet of Unit.

4.27 Products Liability; Warranties.

(a) Section 4.27 of the Unit Disclosure Schedule (i) sets forth Unit's
warranty expense for each of Unit's last three (3) fiscal years ended May
30, 1998, and (ii) describes Unit's product return policy and the form of
all warranties given or made by Unit with respect to products sold by Unit
since October 1, 1995.

(b) Unit has not been required to file any notification or other report
with, nor has Unit been required to provide information to, any product
safety commission, agency, board or other governmental authority or any
jurisdiction concerning actual or potential hazards with respect to any
product manufactured or sold by Unit.

(c) Unit has not failed to obtain approval of any product or component
which is used, manufactured or licensed by Unit in the conduct of its
business and which is required to be approved by any independent or
government-sponsored testing laboratory, industry trade association or
similar body, agency or association.

(d) Except as disclosed on Section 4.27 of the Unit Disclosure Schedule,
there is no fact or event which has occurred at any time since June 1, 1995
(or, to the best of Unit's knowledge, prior to such date) which has formed
or could reasonably be expected to form the basis of any claim against
Unit, whether or not covered by insurance, for products liability or for
breach of any express or implied product warranty, other than warranty
claims asserted by customers in the ordinary course of business and
consistent with Unit's past experience as set forth on Section 4.27 of the
Unit Disclosure Schedule. The reserves taken by Unit for warranty expenses,
as reflected on Unit's financial statements contained in the Unit SEC
Documents, are adequate to cover warranty claims asserted by customers in
the ordinary course of business.

4.28 Insurance. Section 4.28 of the Unit Disclosure Schedule discloses all
insurance policies with respect to which Unit is the owner, insured or
beneficiary. Such policies are reasonable, in both scope and amount, in light
of the risks attendant to Unit's business. Unit will not have any liability
after the Closing for retrospective

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or retroactive premium adjustments, except as disclosed in Section 4.28 of the
Unit Disclosure Schedule. For the past five (5) years, all insurance policies
covering products liability and general liability maintained by or for the
benefit of Unit have been "claims made" policies. Section 4.28 of the Unit
Disclosure Schedule discloses the manner in which Unit provides coverage for
workers' compensation claims.

4.29 Customer Relations.

(a) Section 4.29 to the Unit Disclosure Schedule identifies (i) Unit's
ten (10) largest customers during fiscal 1998 in terms of the proportion of
Unit's revenue represented by such customers (each a "MAJOR CUSTOMER") and
(ii) each supplier or vendor which is the sole supplier or vendor to Unit
of any supply or material used by Unit in its business (a "SOLE SOURCE
PROVIDER").

(b) To Unit's knowledge, no facts exist relating to any Major Customer or
Sole Source Provider that could reasonably be expected to have a material
adverse effect on Unit's relationship with such Major Customer or Sole
Source Provider or otherwise have a Material Adverse Effect on Unit or its
business.

4.30 Contracts; Compliance. Section 4.30 to the Unit Disclosure Schedule
identifies each contract, lease, indenture, mortgage, instrument, commitment
or other agreement, arrangement or understanding, oral or written, formal or
informal, to which Unit is a party or by which it or its assets may be
affected, except for service agreements whose annual contract price is less
than $100,000 and that (i) is material to Unit's business or Unit's assets or
operations, individually or in the aggregate, (ii) involves the purchase, sale
or lease of any asset, materials, supplies, inventory or services in excess of
$100,000 per year, (iii) has an unexpired term of more than one (1) year from
the date hereof, taking into account the effect of any renewal options, (iv)
relates to the borrowing or lending of any money or guarantee of any
obligation, (v) limits the right of Unit to compete in any line of business or
otherwise restricts any right Unit may have, (vi) is an employment or
consulting contract involving payment of compensation and benefits, (vii) is a
confidentiality or non-disclosure agreement or other agreement relating to
Unit's trade secrets, confidential information, or the protection of Unit's
intellectual property, or (viii) was not entered into in the ordinary course
(each, a "CONTRACT" and collectively, the "CONTRACTS"). Each Contract is a
legal, valid and binding obligation of Unit and is in full force and effect.
Unit and each other party to each Contract has performed all obligations
required to be performed by it thereunder and is not in breach or default, and
is not alleged to be in breach or default, in any respect thereunder, and no
event has occurred and no condition or state of facts exists (or would exist
upon the giving of notice or the lapse of time or any of them) that would
become or cause a breach, default or event of default thereunder, would give
to any person the right to cause such a termination or would cause an
acceleration of any obligation thereunder. Unit is not currently renegotiating
any Contract in excess of $100,000, except as those Contracts identified as
such on Section 4.30 of the Unit Disclosure Schedule, nor has Unit received
any notice of non-renewal or price increase or sales or production allocation
with respect to any Contract. year, (iii) has an unexpired term of more than
one (1) year from the date hereof, taking into account the effect of any
renewal options, (iv) relates to the borrowing or lending of any money or
guarantee of any obligation, (v) limits the right of Unit to compete in any
line of business or otherwise restricts any right Unit may have, (vi) is an
employment or consulting contract involving payment of compensation and
benefits, (vii) is a confidentiality or non-disclosure agreement or other
agreement relating to Unit's trade secrets, confidential information, or the
protection of Unit's intellectual property, or (viii) was not entered into in
the ordinary course (each, a "CONTRACT" and collectively, the "CONTRACTS").
Each Contract is a legal, valid and binding obligation of Unit and is in full
force and effect. Unit and each other party to each Contract has performed all
obligations required to be performed by it thereunder and is not in breach or
default, and is not alleged to be in breach or default, in any respect
thereunder, and no event has occurred and no condition or state of facts
exists (or would exist upon the giving of notice or the lapse of time or any
of them) that would become or cause a breach, default or event of default
thereunder, would give to any person the right to cause such a termination or
would cause an acceleration of any obligation thereunder. Unit is not
currently renegotiating any Contract in excess of $100,000, except as those
Contracts identified as such on Section 4.30 of the Unit Disclosure Schedule,
nor has Unit received any notice of non-renewal or price increase or sales or
production allocation with respect to any Contract.

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4.31 Year 2000. To Unit's knowledge, (i) no material modifications are
required to any of Unit's computer systems or computer software to assure that
such systems and software contain no deficiencies relating to formatting for
entering dates (commonly referred to and referred herein as the "YEAR 2000
PROBLEM"); (ii) Unit's computer systems and software in all material respects
are susceptible to all necessary modification and Unit has adequate personnel
or consultants under contract or other available means to timely modify (or,
as applicable, replace and/or upgrade) its own computer systems and software.
Unit is not aware of any inability on the part of any of its customers,
insurance providers or vendors to timely address the Year 2000 Problem that
will in any manner materially adversely affect Unit's business operations.

4.32 Disclosure. None of the representations or warranties of Unit contained
herein and none of the information contained in the Unit Disclosure Schedule
is false or misleading in any material respect or omits to state a fact herein
or therein necessary to make the statements herein or therein not misleading
in any material respect.

ARTICLE V

COVENANTS OF THE PARTIES

The parties hereto agree that:

5.1 Mutual Covenants.

(a) Hart-Scott-Rodino; Reasonable Efforts.

(i) The parties agree to use their reasonable efforts to take all
actions necessary to comply with the HSR Act and to make all necessary
filings with applicable authorities thereunder.

(ii) The parties further agree to use reasonable 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 Parent or Unit from occurring prior to or
after the Effective Time, (C) the preparation of the 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), (E) the satisfaction of all conditions precedent
to the parties' obligations hereunder, and (F) 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. 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).

(b) 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 to Unit from Stradling Yocca Carlson & Rauth ("STRADLING, YOCCA"),
counsel to Unit, as provided for in Section 6.2(d). In connection
therewith, each of Parent and Unit shall deliver to Stradling, Yocca
representation letters and Unit shall use all reasonable efforts to obtain
representation letters from appropriate shareholders of Unit and shall
deliver any such letters obtained to Stradling, Yocca in each case in form
and substance reasonably satisfactory to Stradling, Yocca.

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(c) 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, Parent and Unit 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.

(d) 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 Parent from accounting,
and shall use reasonable efforts (including, without limitation, providing
appropriate representation letters to Parent's accountants) to allow Parent
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").

5.2 Covenants of Parent.

(a) Preparation of Registration Statement. Consistent with the timing for
the Unit Shareholders Meeting, Parent shall prepare and file the
Registration Statement with the Commission as soon as is reasonably
practicable following pre-filing of the Proxy Statement by Unit, approval
by Parent thereof, and clearance thereof by the Commission and shall use
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, Parent shall obtain knowledge of any
information pertaining to Parent contained in or omitted from the
Registration Statement that would require an amendment or supplement to the
Registration Statement or the Proxy Statement, Parent will so advise Unit
in writing and will promptly take such action as shall be required to amend
or supplement the Registration Statement and/or the Proxy Statement. Parent
shall promptly furnish to Unit all information concerning it as may be
required for the Proxy Statement and any supplements or amendments thereto.
Parent shall cooperate with Unit in the preparation of the Proxy Statement
in a timely fashion and shall use all reasonable efforts to assist Unit in
clearing the Proxy Statement with the Staff of the Commission. Parent 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 Parent Common Stock in the Merger.

(b) 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
Parent) or any material liabilities.

(c) NYSE Listing. Parent shall use its reasonable efforts to cause the
Shares of Parent Common Stock issuable pursuant to the Merger (including,
without limitation, the Shares of Parent Common Stock issuable upon the
exercise of the Parent Exchange Options) to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the Effective Time.

(d) Notification of Certain Matters. Parent shall give prompt notice to
Unit of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any Parent 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
Parent 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 Unit.

(e) Indemnification. From and after the Effective Time, Parent shall
indemnify, defend and hold harmless the present and former officers and
directors of Unit in respect of acts or omissions occurring prior

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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. Parent agrees that (a) the
provisions of the Articles of Incorporation and Bylaws of the Surviving
Corporation or any successor entity relating to the indemnification of
officers and directors shall not be amended so as to make such provisions
less favorable to the officers and directors of the Surviving Corporation
than the provisions contained in the Articles of Incorporation and Bylaws
of Subcorp in effect as of the date hereof, and (b) the Surviving
Corporation shall not be merged with any other entity unless the provisions
of the Articles of Incorporation and Bylaws (or equivalent documents) of
the surviving entity in such merger relating to the indemnification of
officers and directors are at least as favorable to the officers and
directors of the Surviving Corporation as the provisions contained in the
Articles of Incorporation and Bylaws of Subcorp in effect as of the date
hereof. The present and former officers and directors of Unit are intended
third-party beneficiaries of the provisions of this Section as of and
following the Effective Time.

(f) Employees and Employee Benefits.

(i) For at least one year from and after the Effective Time, Parent
and its affiliates shall provide Unit Employees (as defined below) with
(a) retirement and savings benefits, (b) health and medical benefits,
(c) severance benefits, and (d) 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 Parent and its affiliates immediately before the Effective Time.

(ii) From and after the Effective Time, Parent shall treat all
service by Unit Employees (as defined below) with Unit and its
affiliates and their respective predecessors prior to the Effective
Time for all purposes as service with Unit (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 Unit Employees participate
after the Effective Time, Parent 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 pre-existing
condition of any Unit Employee who was, as of the Effective Time,
excluded from participation in a Unit 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 Unit Employee or a Unit
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 Parent and subsidiaries of Parent.

(iii) Nothing in Section 5.2(f) shall be construed to impose upon
Parent and its affiliates any obligation to continue the employment of
any Unit Employee following the Effective Time. For purposes of this
Section 5.2(f), "Unit Employees" shall mean persons who are, as of the
Effective Time, employees of Unit or any of its subsidiaries.

5.3 Covenants of Unit.

(a) Unit Shareholders Meeting. Unit shall take all action in accordance
with the federal securities laws, the CCC, the Unit Articles and the Unit
Bylaws necessary to convene a special meeting of Unit Shareholders (the
"UNIT SHAREHOLDERS MEETING") to be held on the date determined by Unit and
acceptable to Parent, to consider and vote upon approval of the Merger,
this Agreement and the transactions contemplated hereby, including the Unit
Board Recommendation to the extent not previously withdrawn in compliance
with Section 5.3(d).

(b) Information for the Registration Statement and Preparation of Proxy
Statement. Unit shall promptly furnish Parent with all information
concerning it as may be required for inclusion in the Registration
Statement. Unit shall cooperate with Parent in the preparation of the
Registration Statement in a timely fashion and shall use all reasonable
efforts to assist Parent in having the Registration Statement declared
effective by the Commission as promptly as practicable consistent with the
timing for the Unit Shareholders Meeting. If, at any time prior to the
Effective Time, Unit obtains knowledge of any

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information pertaining to Unit that would require any amendment or
supplement to the Registration Statement or the Proxy Statement, Unit shall
so advise Parent and shall promptly furnish Parent with all information as
shall be required for such amendment or supplement and shall promptly amend
or supplement the Proxy Statement and cooperate with Parent to promptly
amend or supplement the Registration Statement, as the case may be. Unit
shall use all reasonable efforts to cooperate with Parent in the
preparation and filing of the Proxy Statement with the Commission on a
confidential basis. Consistent with the timing for the Unit Shareholders
Meeting as determined by Unit, Unit shall use all reasonable efforts to
mail at the earliest practicable date to Unit Shareholders the Proxy
Statement, which shall include all information required under Applicable
Law to be furnished to Unit Shareholders in connection with the Merger and
the transactions contemplated thereby and shall include the Unit Board
Recommendation to the extent not previously withdrawn in compliance with
Section 5.3(d) and the written opinions of Needham & Company, Inc.
described in Section 4.19.

(c) Conduct of Unit's Operations. Unit shall conduct its operations in
the ordinary course except as expressly contemplated by this Agreement and
the transactions contemplated hereby and shall use its best 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, Unit shall
not, except as otherwise expressly contemplated by this Agreement and the
transactions contemplated hereby, without the prior written consent of
Parent:

(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, (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 pursuant to the exercise of
Unit Options which are outstanding as of the date hereof or which are
granted by Unit prior to the Effective Time in compliance with the
terms of this Agreement), or (E) enter into any agreement,
understanding or arrangement with respect to the sale, voting,
registration or repurchase of its capital stock;

(ii) 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;

(iii) make or propose any changes in the Unit Articles or the Unit
Bylaws;

(iv) merge or consolidate with any other person;

(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;

(vi) 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;

(vii) enter into, adopt or amend any employee benefit or similar plan
except as may be required by Applicable Law;

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(viii) 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 Unit's regular
independent accountants;

(ix) take any action that will likely result in any of the
representations and warranties set forth in Article IV becoming false
or inaccurate in any material respect;

(x) enter into or carry out any other transaction other than in the
ordinary and usual course of business;

(xi) permit or cause any subsidiary to do any of the foregoing or
agree or commit to do any of the foregoing; or

(xii) agree in writing or otherwise to take any of the foregoing
actions.

(d) No Solicitation. Unit 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 nonpublic information in furtherance of,
any inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination
involving Unit, or acquisition of any capital stock from Unit (other than
upon exercise of Unit Options which are outstanding as of the date hereof)
or acquisition of any material assets of Unit and its subsidiaries, taken
as a whole, in a single transaction or a series of related transactions, or
any acquisition by Unit of any material assets or capital stock of any
other person, or any combination of the foregoing (a "COMPETING
TRANSACTION"), or negotiate, explore or otherwise engage in discussions
with any person (other than Parent, Subcorp or their respective directors,
officers, employees, agents and representatives) with respect to any
Competing Transaction 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 Unit
Shareholders, Unit 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 Unit
determines in good faith by a majority vote (after consultation with and
receipt of advice from outside legal counsel leading the Board of Directors
to conclude) that failing to take such action would constitute a breach of
the fiduciary duties of the Board of Directors of Unit under Applicable
Law. Unit shall 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 Unit Shareholders the Board of Directors of Unit determines
in good faith by a majority vote (after consultation with and receipt of
advice from outside legal counsel leading the Board of Directors to
conclude) that failure to do so would constitute a breach of the fiduciary
duties of the Unit Board of Directors under Applicable Law, the Board of
Directors of Unit may withdraw, modify or change the Unit 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 Unit Board Recommendation
in connection with a tender or exchange offer for Unit securities. Unit
shall immediately advise Parent, in writing, of any inquiry, offer or
proposal regarding a Competing Transaction or any determination of the Unit
Board of Directors with respect thereto or with respect to the Unit Board
Recommendation, and shall keep Parent informed at all times of the status
thereof.

(e) Termination Right. If prior to the approval of the Merger by the Unit
Shareholders the Board of Directors of Unit 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 to continue to recommend the Merger
notwithstanding the receipt of the offer pertaining to such Competing
Transaction would constitute a breach of the fiduciary duties of the Board
of Directors of Unit under Applicable Law and that such Competing
Transaction is more favorable to the Unit Shareholders than

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the transactions contemplated by this Agreement (including any adjustment
to the terms and conditions of such transaction proposed in writing by
Parent in response to such Competing Transaction), Unit 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), Unit shall endeavor to provide Parent with a
reasonable opportunity of not less than 48 hours to respond to any
Competing Transaction which Unit may wish to accept, including in any case
advising Parent of the material terms of any Competing Transaction. In the
event Unit terminates that Agreement pursuant to this Section 5.3(e), Unit
shall promptly pay the Termination Fee as provided in Section 7.2.

(f) Affiliates of Unit. Unit shall use all reasonable efforts to cause
such officers and directors of Unit as may be requested by Parent and, in
any event, each person who may be at the Effective Time or was on the date
hereof an "affiliate" of Unit 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 Parent
no less than 30 days prior to the date of the Unit Shareholders Meeting,
the written undertakings in the form attached hereto as EXHIBIT A (the
"UNIT AFFILIATE LETTER"). No later than 45 days prior to the date of the
Unit Shareholders Meeting, Unit, after consultation with its outside
counsel, shall provide Parent with a letter (reasonably satisfactory to
outside counsel to Parent) specifying all of the persons or entities who,
in Unit's opinion, may be deemed to be "affiliates" of Unit under the
preceding sentence.

(g) Access. Unit shall, and Unit shall cause each of its subsidiaries to,
afford to Parent, and to the officers, employees, accountants, counsel,
financial advisors and other representatives of Parent, access during
normal business hours during the period prior to the Effective Time to all
of Unit's and each of its subsidiaries' respective properties, books,
contracts, commitments, personnel and records and, during such period, Unit
shall, and Unit shall cause each of its respective subsidiaries to, furnish
promptly to Parent, (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other
information concerning its business, properties and personnel as Parent or
its representatives may request. Except to the extent otherwise required by
law, Parent will hold any confidential information obtained pursuant to
this Section 5.3(g) in accordance with the Confidentiality Agreement dated
August 20, 1997, between Parent and Unit (the "CONFIDENTIALITY AGREEMENT").

(h) Notification of Certain Matters. Unit shall give prompt notice to
Parent of (i) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would cause any Unit representation or warranty
contained in this Agreement to be untrue or inaccurate at or prior to the
Effective Time and (ii) any failure of Unit 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 Parent.

ARTICLE VI

CONDITIONS

6.1 Conditions to the Obligations of Each Party. The obligations of Unit,
Parent 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 Unit Shareholders in the manner required by any Applicable
Law, and (ii) the issuance of the Shares of Parent Common Stock to be
issued in the Merger shall have been approved by the Parent's stockholders
if 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

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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 Unit or Parent.

(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 Registration Statement
effective under the Securities Act, and no stop order or similar
restraining order suspending the effectiveness of the 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 Parent Common Stock to be issued in the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.

6.2 Conditions to Obligations of Unit. The obligations of Unit to consummate
the Merger and the transactions contemplated hereby shall be subject to the
fulfillment of the following conditions unless waived by Unit:

(a) The representations and warranties of Parent 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 Parent 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 Parent and Subcorp shall have furnished Unit 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.

(d) Unit shall have received the opinion of Stradling, Yocca 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) Unit, Parent and Subcorp will each be a party to that
reorganization, and (iii) no gain or loss will be recognized by the
shareholders of Unit upon the receipt of Shares of Parent Common Stock in
exchange for shares of Unit Common Stock pursuant to the Merger, except
with respect to cash received in lieu of fractional share interests in
Shares of Parent Common Stock.

6.3 Conditions to Obligations of Parent and Subcorp. The obligations of
Parent 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 Parent:

(a) The representations and warranties of Unit 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) Unit 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) Unit shall have obtained the consent and approval of each person
whose consent is required in connection with the Merger under all
agreements to which Unit or any of its subsidiaries is a party.

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(d) From and including the date hereof, there shall not have occurred any
Material Adverse Change with respect to Unit (other than as may be
disclosed in writing by Unit to Parent not less than five (5) business days
prior to the Investigation Date).

(e) Unit shall have furnished Parent and Subcorp 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), (b), (c) and (d) have been satisfied.

(f) Parent shall have concluded an investigation of the business,
condition (financial and other), properties, assets, liabilities,
prospects, operations and affairs of Unit, and Parent shall be satisfied,
in its reasonable discretion, with the results of such investigation;
provided, however, that this condition shall be deemed satisfied unless
Parent delivers written notice (an "INVESTIGATION NOTICE") to Unit by
5:00 p.m. PDT on July 31, 1998 (the "INVESTIGATION DATE"), which Notice
shall state in reasonable detail the basis for Parent's dissatisfaction
and, if applicable, Parent's intention to terminate this Agreement pursuant
to Section 7.1(h). Unit's representations and warranties set forth in this
Agreement shall remain in full force and effect notwithstanding any
investigation conducted by Parent under this Section 6.3(g), and Parent's
failure to give notice under this Section 6.3(g) shall not be deemed to
constitute a waiver by Parent of any of Parent's rights or remedies in the
event of a breach by Unit of any of such representations or warranties.
Notwithstanding the foregoing, this condition shall not apply to any matter
which is expressly disclosed in the Unit Disclosure Schedules or in the
Unit SEC Documents filed with the Commission prior to the date of this
Agreement, except to the extent that the disclosure contained therein (a)
does not disclose with reasonable accuracy the nature or magnitude of the
impact on Unit's business, assets, condition (financial or other), results
of operations or prospects or Unit's exposure with respect to any actual or
potential liability, or (b) references documents which have not yet been
provided to Parent, or (c) otherwise does not contain detail reasonably
sufficient for Parent to evaluate the matters disclosed.

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 Unit Shareholders):

(a) by mutual written consent of Parent and Unit;

(b) by either Parent or Unit if any judgment, injunction, order or decree
of a court or other Governmental Authority of competent jurisdiction
enjoining Parent or Unit from consummating the Merger shall have been
entered and such judgment, injunction, order or decree shall have become
final and nonappealable;

(c) by either Parent or Unit if the Merger shall not have been
consummated before December 31, 1998, 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 Parent if the Board of Directors of Unit shall withdraw, or shall
modify or change the Unit Board Recommendation in a manner adverse to
Parent;

(e) by Parent or Unit if at the Unit Shareholders Meeting (including any
adjournment or postponement thereof) the requisite vote of the Unit
Shareholders to approve the Merger and the transactions contemplated hereby
shall not have been obtained;

(f) by Unit, pursuant to Section 5.3(e);

(g) by Parent or Unit 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

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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 Parent) or Section
6.3(a), 6.3(b), 6.3(c) or 6.3(d) (in the case of a breach by Unit) or would
result in a material adverse effect on the ability of Parent and/or Unit 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;

(h) by Parent, upon failure of the condition set forth in Section 6.3(g),
unless Unit cures all conditions referenced in the Investigation Notice (if
susceptible to cure) within 30 days after the receipt of such Investigation
Notice; or

(i) by Unit, if the Average Share Price is less than $24.00.

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
Section 5.3(g) and the provisions of Sections 7.2 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. No termination of this Agreement
shall affect the obligations contained in the Confidentiality Agreement,
which will survive in accordance with its terms. 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 by either party, then, in addition to other
remedies at law or equity for breach of this Agreement, the breaching party
shall indemnify and hold harmless the non-breaching 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) Unit agrees that, if:

(i) Unit terminates this Agreement pursuant to Section 7.1(f); or

(ii) (A) Unit terminates this Agreement pursuant to Section 7.1(e) or
Parent 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 Unit 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 Unit
involving a third party of which Unit is aware, and (C) within nine
months after such termination, Unit 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 Unit as described in clause
(i) above, concurrently with such termination, or (Y) in the case of a
termination by Unit or Parent 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, Unit will pay to Parent
in cash by wire transfer in immediately available funds to an account
designated by Parent (i) in reimbursement for Parent's expenses an
amount in cash equal to the aggregate amount of Parent's costs incurred
in connection with pursuing the transactions contemplated by this
Agreement, including, without limitation, legal, accounting and
investment banking fees and (ii) a termination fee in an amount equal
to $1.5 million (such amounts collectively, 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 Unit as a result of which the Unit Shareholders
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 any material assets
of Unit or its subsidiaries, or (iii) the acquisition, by a person
(other than Parent or any affiliate thereof)

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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 20% of
the Unit Common Stock whether by tender or exchange offer or otherwise.

(c) In the event that Unit shall fail to pay the Termination Fee or any
other amount payable under Section 7.2(b) when due, such amount shall be
increased to include the costs and expenses actually incurred or accrued by
Parent (including, without limitation, fees and expenses of counsel) in
connection with the collection under and enforcement of this Section 7.2,
together with interest on such unpaid Termination Fee or expenses,
commencing on the date that such Termination Fee or expenses became due, at
a rate equal to the rate of interest publicly announced by Bank of America,
from time to time, in the City of Los Angeles as such bank's base rate plus
3.00%; provided, however, that such interest shall not exceed the maximum
permitted under any applicable usury or similar law or regulation.

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 Unit Shareholders, but
after any such approval, no amendment shall be made which by law requires
further approval or authorization by the Unit Shareholders 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 Extension; Waiver. At any time prior to the Effective Time, Parent (with
respect to Unit) and Unit (with respect to Parent 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.

7.5 Exclusive Remedy. In the event that any Termination Fee is paid pursuant
to Section 7.2, notwithstanding any other provision of this Agreement, it is
understood and agreed that such Termination Fee 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.

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 Parent or Subcorp:

United States Filter Corporation
40-004 Cook Street
Palm Desert, California 92211
Attention: Damian C. Georgino
Telecopy No.: (760) 346-4024

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with a copy to

Gary J. Singer, Esq.
O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
Telecopy No.: (949) 823-6994

(b)if to Unit:

Unit Instruments, Inc.
22600 Savi Ranch Parkway
Yorba Linda, California 92687
Attention: Mr. Gary Patten
Telecopy No.: (714) 921-0636

with a copy to

Nick E. Yocca, Esq.
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Telecopy No.: (949) 725-4100

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 Unit, such reference shall be deemed to include
any and all subsidiaries of Unit, 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 and 8.3.

(b) For the purposes of any provision of this Agreement, a "MATERIAL
ADVERSE EFFECT" or a "MATERIAL ADVERSE CHANGE" 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, financial condition,
results of operations or prospects 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,
financial condition, results of operations or prospects 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 Parent (and its
subsidiaries) and Unit (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 specifically disclosed in the Unit Disclosure Schedule or the
Parent Disclosure Schedule.

(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.

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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 this Agreement, each of which shall constitute an
original.

8.5 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) and the Confidentiality Agreement constitute
the entire agreement among the parties and supersede all prior 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 as expressly set forth in Section
5.2(e) hereof, 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
California. 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 California.

8.8 Consent to Jurisdiction; Venue.

(a) Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state courts of California and to the jurisdiction of
any United States District Court located in California, 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
California state or federal court sitting in California. 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.

A-27
<PAGE>

IN WITNESS WHEREOF, Parent, Subcorp and Unit have signed this Agreement as
of the date first written above.

"PARENT"

UNITED STATES FILTER CORPORATION, a
Delaware corporation

By: /s/ Damian C. Georgino
------------------------------
Name: DAMIAN C. GEORGINO
Title: Executive Vice President

"SUBCORP"

KINETICS ACQUISITION CORP.,
a California corporation

By: /s/ Damian C. Georgino
------------------------------
Name: DAMIAN C. GEORGINO
Title: Vice President

"UNIT"

UNIT INSTRUMENTS, INC., a California
corporation

By: /s/ Gary N. Patten
------------------------------
Name: GARY N. PATTEN
Title: Vice President and Chief
Financial Officer

S-1
<PAGE>

FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER

This First Amendment to Agreement and Plan of Merger (this "AMENDMENT") is
made and entered into as of August 5, 1998, by and among United States Filter
Corporation, a Delaware corporation ("PARENT"), Kinetics Acquisition Corp., a
California corporation and a wholly owned subsidiary of Parent ("SUBCORP"),
and Unit Instruments, Inc., a California corporation ("UNIT").

PRELIMINARY STATEMENTS

A. The parties entered into an Agreement and Plan of Merger dated as of July
2, 1998 (the "MERGER AGREEMENT").

B. The parties have decided to amend the Merger Agreement by amending,
restating and supplementing certain provisions of the Merger Agreement as set
forth in this Amendment.

AGREEMENT

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

Section 1. Section 2.2(a) of the Merger Agreement is amended and restated in
its entirety as follows:

"(a) The "EXCHANGE RATIO" shall equal $11.03 divided by the Parent Share
Value. The "PARENT SHARE VALUE" shall be either (i) the average of the
closing price per share for shares of Parent Common Stock as reported on
the New York Stock Exchange ("NYSE") Composite Tape ("NYSE COMPOSITE TAPE")
on each of the twenty (20) consecutive trading days ending on the fifth
(5th) trading day preceding the Closing Date (the "AVERAGE SHARE PRICE") if
the Average Share Price is above $26.00, or (ii) $26.00 if the Average
Share Price is equal to or less than $26.00. No certificates for fractional
Shares of Parent Common Stock shall be issued as a result of the conversion
provided for in Section 2.1(b)."

Section 2. In order to induce Subcorp and Parent to enter into this
Amendment, Unit hereby represents and warrants to Parent and Subcorp as
follows:

(a) Unit has received the oral advice of Needham & Company, its financial
advisors, to the effect that, as of the date of this Amendment, the
Exchange Ratio is fair to the Unit Shareholders from a financial point of
view. Such oral advice has not been withdrawn or revoked or modified in any
material respect and is to be confirmed in a written fairness opinion of
Needham & Company, which opinion will be dated as of the date of this
Amendment. Unit will promptly provide copies of such opinion to Parent.

(b) The Board of Directors of Unit has authorized this Amendment and, by
unanimous written consent, (i) determined that the Merger Agreement, as
amended by this Amendment, and the transactions contemplated thereby and
hereby, including the Merger, taken together, are fair to and in the best
interests of the Unit Shareholders, and (ii) resolved to recommend that the
Unit Shareholders approve the Merger Agreement, as amended by the
Amendment, and the transactions contemplated therein and herein, including
the Merger (which recommendation shall be deemed part of the Unit Board
Recommendation).

Section 3. In addition to the conditions set forth in Section 6.3 of the
Merger Agreement, the obligations of Parent and Subcorp to consummate the
Merger and the other transactions contemplated by the Merger Agreement, as
amended by this Amendment, shall be subject to the fulfillment of the
following conditions unless waived by Parent:
<PAGE>

(a) The representations and warranties of Unit set forth in this
Amendment shall be true and correct in all material respects on and as of
the Closing Date.

(b) Needham & Company shall have waived, in form and substance reasonably
acceptable to Parent and Subcorp, all of its registration rights under that
certain Warrant to Purchase 100,000 Shares of Common Stock of Autoclave
Engineers, Inc. dated as of October 17, 1994.

Section 4. In order to induce Unit to enter into this Amendment, Parent and
Subcorp agree with Unit that, except as set forth in or contemplated by
Section 3 above, and notwithstanding the delivery to Unit of the letter from
Parent's counsel dated July 31, 1998 pursuant to Section 6.3(f) of the Merger
Agreement (the "INVESTIGATION NOTICE"):

(a) The condition to Parent's and Subcorp's obligations set forth in
Section 6.3(f) of the Merger Agreement shall be deemed to be satisfied;

(b) The matters set forth in the Investigation Notice, to the extent of
information pertaining thereto that has been specifically disclosed by Unit
to Parent in the draft of Unit's annual report on Form 10-K delivered by
Unit to Parent on July 22, 1998, in Unit's press release dated July 17,
1998 announcing certain workforce reductions (the "PRESS RELEASE"), or in
other written material delivered by Unit to Parent and Subcorp prior to
Parent's execution of this Amendment (collectively, the "PREVIOUSLY
DISCLOSED INFORMATION"), shall be deemed to amend and supplement the Unit
Disclosure Schedules for all purposes under Article IV of the Merger
Agreement;

(c) Parent and Subcorp hereby waive any breach of Unit's covenants under
Section 5.1(c) or 5.3(c) of the Merger Agreement with respect to the
issuance by Unit of the Press Release and the taking by Unit of actions
specified in and consistent with the Press Release;

(d) Unit shall be deemed to have complied with its notice obligations
under Section 5.3(h) of the Merger Agreement with respect to the Previously
Disclosed Information; and

(e) The parties further agree that (i) for purposes of the condition set
forth in Section 6.3(d) of the Merger Agreement, the Previously Disclosed
Information shall be deemed to have been disclosed by Unit to Parent not
less than five (5) business days prior to the Investigation Date and (ii)
any deterioration in Unit's prospects or operating results after July 22,
1998, to the extent such deterioration is attributable to a decline after
such date in the market demand for semiconductor manufacturing equipment,
shall not be deemed a Material Adverse Change for the purposes of Section
4.7 or Section 8.3(b) of the Merger Agreement.

Section 5. Miscellaneous.

(a) Effect of Amendment. The provisions of this Amendment are hereby
incorporated into and made part of the Merger Agreement. Except as amended
by this Amendment, all of the provisions of the Merger Agreement shall
continue in full force and effect.

(b) Definitions. Unless otherwise defined in this Amendment, capitalized
terms have the meanings given in the Merger Agreement.

(c) Entire Agreement. The Merger Agreement (including the documents and
the instruments referred to therein), the Confidentiality Agreement, and
this Amendment constitute the entire agreement among the parties and
supersede all prior agreements, understandings and representations by or
among the parties, written and oral, with respect to the subject matter
hereof and thereof.

(d) Counterparts. This Amendment may be executed in counterparts, which
shall constitute one and the same instrument. The parties may execute more
than one copy of this Amendment, each of which shall constitute an
original.

2
<PAGE>

IN WITNESS WHEREOF, Parent, Subcorp and Unit have signed this Amendment as of
the date first written above.

"PARENT"

UNITED STATES FILTER CORPORATION, a
Delaware corporation

By: /s/ David J. Shimmon
------------------------------
Name: DAVID J. SHIMMON
Title: President & COO

"SUBCORP"

KINETICS ACQUISITION CORP.,
a California corporation

By: /s/ Kevin L. Spence
------------------------------
Name: KEVIN L. SPENCE
Title: Executive Vice President, CFO

"UNIT"

UNIT INSTRUMENTS, INC., a California
corporation

By: /s/ Gary N. Patten
------------------------------
Name: GARY N. PATTEN
Title: Vice President & CEO

S-1
<PAGE>

SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER

This Second Amendment to Agreement and Plan of Merger (this "AMENDMENT") is
made and entered into as of November 10, 1998, by and among United States
Filter Corporation, a Delaware corporation ("PARENT"), Kinetics Acquisition
Corp., a California corporation and a wholly owned subsidiary of Parent
("SUBCORP"), and Unit Instruments, Inc., a California corporation ("UNIT").

PRELIMINARY STATEMENTS

A. The parties have entered into an Agreement and Plan of Merger dated as of
July 2, 1998, as amended by a First Amendment to Agreement and Plan of Merger
dated August 5, 1998 (as so amended, the "AGREEMENT").

B. The parties have decided to further amend the Agreement by amending,
restating and supplementing certain provisions of the Agreement as set forth
in this Amendment.

AGREEMENT

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

Section 1. Section 2.2(a) of the Agreement is amended and restated in its
entirety as follows:

"(a) The "EXCHANGE RATIO" shall equal the Merger Consideration divided by
the Parent Share Value. The "MERGER CONSIDERATION" shall be determined as
follows: (i) if the Parent Share Value is greater than or equal to $22.00,
then the Merger Consideration shall equal $10.00; (ii) if the Parent Share
Value is less than $22.00 and greater than $12.00, then the Merger
Consideration shall equal $8.00 plus the dollar amount equal to a fraction,
the numerator of which shall be the Parent Share Value minus $12.00 and the
denominator of which shall be five (5); and (iii) if the Parent Share Value
is less than or equal to $12.00, then the Merger Consideration shall equal
$8.00. The "PARENT SHARE VALUE" shall be the average of the closing price
per share for shares of Parent Common Stock as reported on the New York
Stock Exchange ("NYSE") Composite Tape ("NYSE COMPOSITE TAPE") on each of
the twenty (20) consecutive trading days ending on the fifth (5th) trading
day preceding the Closing Date (the "AVERAGE SHARE PRICE"). No certificates
for fractional Shares of Parent Common Stock shall be issued as a result of
the conversion provided for in Section 2.1(b)."

Section 2. Section 7.1(c) of the Agreement is amended and restated in its
entirety as follows:

"(c) by either Parent or Unit if the Merger shall not have been
consummated before January 29, 1999, 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."

Section 3. Section 7.1(i) of the Agreement is amended and restated in its
entirety as follows:

"(i) by Parent, if the Average Share Price is less than $11.00."

Section 4. In order to induce Subcorp and Parent to enter into this
Amendment, Unit hereby represents and warrants to Parent and Subcorp as
follows:

1
<PAGE>

(b) The Board of Directors of Unit has authorized this Amendment and, at
a meeting duly called and held, has by unanimous vote of all of Unit's
directors (i) determined that the Agreement, as amended by this Amendment,
and the transactions contemplated thereby and hereby, including the Merger,
taken together, are fair to and in the best interests of the Unit
Shareholders, and (ii) resolved to recommend that the Unit Shareholders
approve the Agreement, as amended by this Amendment, and the transactions
contemplated therein and herein, including the Merger (which recommendation
shall be deemed part of the Unit Board Recommendation).

Section 5. In addition to the conditions set forth in Section 6.3 of the
Agreement, the obligations of Parent and Subcorp to consummate the Merger and
the other transactions contemplated by the Agreement, as amended by this
Amendment, shall be subject to the conditions that (a) the representations and
warranties of Unit set forth in this Amendment shall be true and correct in
all material respects on and as of the Closing Date and (b) a Unit Affiliate
Letter (as defined below) shall have been delivered to Parent by each Unit
Affiliate (as defined below) who is also an officer of Unit, duly executed by
such Unit Affiliate, at least twenty (20) days prior to the Closing Date.

Section 6. Preliminary Statement "E", Section 5.1(d) and Section 5.3(f) are
hereby deleted in their entirety.

Section 7. Affiliates of Unit. Unit shall use all reasonable efforts to
cause such officers and directors of Unit as may be requested by Parent and,
in any event, each person who may be at the Effective Time or was on the date
hereof an "affiliate" of Unit for purposes of Rule 145 under the Securities
Act (each a "UNIT AFFILIATE"), to execute and deliver to Parent no less than
30 days prior to the date of the Unit Shareholders Meeting, the written
undertakings in the form attached hereto as EXHIBIT A (the "UNIT AFFILIATE
LETTER"). Concurrently with the delivery of this Amendment, Unit, after
consultation with its outside counsel, shall provide Parent with a letter
(reasonably satisfactory to outside counsel to Parent) specifying all of the
persons or entities who, in Unit's opinion, may be deemed to be "affiliates"
of Unit under the preceding sentence.

Section 8. Miscellaneous.

(a) Effect of Amendment. The provisions of this Amendment are hereby
incorporated into and made part of the Agreement. Except as amended by this
Amendment, all of the provisions of the Agreement shall continue in full
force and effect.

(b) Definitions. Unless otherwise defined in this Amendment, capitalized
terms have the meanings given in the Agreement.

(c) Entire Agreement. The Agreement (including the documents and the
instruments referred to therein), the First Amendment to Agreement and Plan
of Merger dated August 5, 1998 among Parent, Subcorp and Unit, the
Confidentiality Agreement, and this Amendment constitute the entire
agreement among the parties and supersede all prior agreements,
understandings and representations by or among the parties, written and
oral, with respect to the subject matter hereof and thereof.

[Signature Page Follows]

2
<PAGE>

IN WITNESS WHEREOF, Parent, Subcorp and Unit have signed this Amendment as of
the date first written above.

"PARENT"

UNITED STATES FILTER
CORPORATION,
a Delaware corporation

By: /s/ David J. Shimmon
--------------------------------
Name: DAVID J. SHIMMON
Title: President and Chief
Operating Officer,
Industrial Products and Services
Group

"SUBCORP"

KINETICS ACQUISITION CORP.,
a California corporation

By: /s/ David J. Shimmon
--------------------------------
Name: DAVID J. SHIMMON
Title: President and Chief
Executive Officer

"UNIT"

UNIT INSTRUMENTS, INC.,
a California corporation

By: /s/ Gary N. Patten
--------------------------------
Name: GARY N. PATTEN
Title: Vice President

S-1
<PAGE>

EXHIBIT A

[Form of Unit Affiliate Letter]
November , 1998

Ladies and Gentlemen:

I have been advised that as of the date hereof I may be deemed an
"affiliate" of Unit Instruments, Inc., a California corporation (the
"Company"), as that term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the U.S.
Securities Act of 1933 (the "Act").

Pursuant to the terms of the Agreement and Plan of Merger, dated as of July
2, 1998, as amended as of August 5, 1998 and November 10, 1998 (as so amended,
the "Agreement"), among United States Filter Corporation, a Delaware
corporation ("Parent"), Kinetics Acquisition Corp., a California corporation
("Subcorp"), and the Company providing for the Merger of Subcorp with and into
the Company (the "Merger"), and as a result of the Merger, I may receive
shares of common stock of Parent, par value $.01 per share (the "Parent Common
Stock"), in exchange for the shares of common stock of the Company, par value
$.15 per share (the "Company Common Stock") owned by me at the Closing of the
Merger as determined pursuant to the Agreement. As used herein the term
"Parent Common Stock" means and includes those shares of Parent Common Stock
issued to me as a result of the Merger.

I represent, warrant and covenant to Parent and Subcorp that in such event:

A. I shall not make any sale, transfer or other disposition of the Parent
Common Stock in violation of the Act or the Rules and Regulations. In this
connection, I understand that the issuance of the Parent Common Stock to me
has been or will be registered under the Act, but that such registration would
not cover resales by affiliates. Accordingly, the Parent Common Stock must be
held by me indefinitely unless (a) the Parent Common Stock has been registered
under the Act for sale by me, (b) a sale of the Parent Common Stock is made in
conformity with the volume and other applicable limitations of paragraph (d)
of Rule 145, or (c) another exemption from registration is available.

B. I understand that neither Parent nor Subcorp is under any obligation to
register the sale or other disposition of the Parent Common Stock by me or on
my behalf or to take any other action to qualify for an exemption from
registration.

C. I have carefully read this letter and the Agreement and have discussed
their requirements and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of the Parent Common Stock, to the extent I felt
necessary, with my counsel or counsel for the Company.

D. I understand that stop transfer instructions will be given to Parent's
transfer agents with respect to my Parent Common Stock and that there will be
placed on the certificates for my Parent Common Stock a legend stating in
substance:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED, APPLIES AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IN
COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A REGISTRATION
STATEMENT UNDER THAT ACT OR AN EXEMPTION FROM SUCH REGISTRATION."

E. I also understand that unless the transfer by me of my Parent Common
Stock has been registered under the Act or is a sale made in conformity with
the provisions of Rule 145, Parent reserves the right to put a legend on the
certificates issued to my transferee stating in substance:

Exhibit A - Page 1
<PAGE>

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE U.S. SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY
THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION OF SUCH SHARES, AND SUCH SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE U.S. SECURITIES ACT OF 1933."

Very truly yours,

Exhibit A - Page 2
<PAGE>

APPENDIX B

[LETTERHEAD OF NEEDHAM & COMPANY, INC.]

November 10, 1998

Board of Directors
Unit Instruments, Inc.
22600 Savi Ranch Parkway
Yorba Linda, California 92887

Gentlemen:

We understand that United States Filter Corporation ("US Filter"), Unit
Instruments, Inc. ("Unit") and Kinetics Acquisition Corp., a wholly-owned
subsidiary of US Filter ("Acquisition Sub"), have entered into an Agreement
and Plan of Merger dated as of July 2, 1998, as amended by a First Amendment
to Agreement and Plan of Merger dated as of August 5, 1998 and a Second
Amendment to Agreement and Plan of Merger dated as of November 10, 1998 (such
Agreement, as amended, the "Merger Agreement") whereby Acquisition Sub will be
merged with and into Unit and Unit will become a wholly-owned subsidiary of US
Filter (the "Merger"). The terms of the Merger are set forth more fully in the
Merger Agreement.

Pursuant to the Merger Agreement, we understand that at the Effective Time
(as defined in the Merger Agreement), each share of common stock, par value
$.15 per share, of Unit ("Unit Common Stock") will be converted into the right
to receive a number of shares of common stock of US Filter, par value $.01 per
share ("US Filter Common Stock"), equal to the Exchange Ratio, which is
defined in the Merger Agreement as the Merger Consideration divided by the
Parent Share Value. The "Merger Consideration" is determined pursuant to the
Merger Agreement as follows: (i) if the Parent Share Value is greater than
$22.00, then the Merger Consideration shall equal $10.00; (ii) if the Parent
Share Value is less than $22.00 but greater than $12.00, then the Merger
Consideration shall equal $8.00 plus the dollar amount equal to a fraction,
the numerator of which shall be the Parent Share Value minus $12.00 and the
denominator of which shall be five; and (iii) if the Parent Share Value is
less than or equal to $12.00, then the Merger Consideration shall equal $8.00.
"Parent Share Value" is defined in the Merger Agreement as the average of the
closing price per share for shares of US Filter Common Stock as reported on
the New York Stock Exchange Composite Tape on each of the twenty consecutive
trading days ending on the fifth trading day preceding the closing date under
the Merger Agreement.

You have asked us to advise you as to the fairness, from a financial point
of view, of the Exchange Ratio to the holders of shares of Unit Common Stock
("Unit Shareholders"). Needham & Company, Inc., as part of its investment
banking business, is regularly engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements and
other purposes. We have acted as financial advisor to Unit in connection with
the Merger and will receive a fee for our services, a substantial portion of
which is contingent on the consummation of the Merger. In addition, Unit has
agreed to indemnify us for certain liabilities arising from our role as
financial advisor and out of the rendering of this opinion.

For purposes of this opinion we have, among other things: (a) reviewed the
Merger Agreement; (b) reviewed certain publicly available information
concerning Unit and US Filter and certain other relevant financial and
operating data of Unit made available from the internal records of Unit; (c)
reviewed the historical stock prices and trading volumes of the Unit Common
Stock and US Filter Common Stock; (d) held discussions with members of senior
management of Unit concerning the current and future business prospects of
Unit;

B-1
<PAGE>

(e) reviewed certain financial forecasts and projections prepared by the
management of Unit; (f) compared certain publicly available financial data of
companies whose securities are traded in the public markets and that we deemed
relevant to similar data for Unit; (g) reviewed the financial terms of certain
other business combinations that we deemed generally relevant; and (h)
performed and/or considered such other studies, analyses, inquiries and
investigations as we deemed appropriate.

In connection with our review and in arriving at our opinion, we have
assumed and relied on the accuracy and completeness of all of the financial
and other information publicly available or furnished to or otherwise reviewed
by or discussed with us for purposes of rendering this opinion and have
neither attempted to verify independently nor assumed responsibility for
verifying any of such information. In addition, we have assumed, with your
consent, that (i) the Merger will be accounted for under the purchase method
of accounting, (ii) the Merger will constitute a tax-free reorganization, and
(iii) any material liabilities (contingent or otherwise, known or unknown) of
Unit and US Filter are as set forth in the consolidated financial statements
of Unit and US Filter, respectively. With respect to Unit's financial
forecasts provided to us by its management, we have assumed for purposes of
our opinion that such forecasts have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of such
management, at the time of preparation, of the future operating and financial
performance of Unit. We express no opinion with respect to such forecasts or
the assumptions on which they were based. We have not assumed any
responsibility for or made or obtained any independent evaluation, appraisal
or physical inspection of the assets or liabilities of Unit or US Filter.
Further, our opinion is based on economic, monetary and market conditions as
they exist and can be evaluated as of the date hereof. Our opinion as
expressed herein is limited to the fairness, from a financial point of view,
to the Unit Shareholders of the Exchange Ratio and does not address Unit's
underlying business decision to engage in the Merger. Our opinion does not
constitute a recommendation to any Unit Shareholder as to how such Shareholder
should vote on the proposed Merger.

We are not expressing any opinion as to what the value of US Filter Common
Stock will be when issued to the Unit Shareholders pursuant to the Merger or
the prices at which US Filter Common Stock will actually trade at any time.

In the ordinary course of our business, we may actively trade the equity
securities of US Filter or Unit for our own account or for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.

This letter and the opinion expressed herein are provided at the request and
for the information of the Board of Directors of Unit and may not be quoted or
referred to or used for any purpose without our prior written consent, except
that this letter may be disclosed in connection with any registration
statement or proxy statement used in connection with the Merger so long as
this letter is quoted in full in such registration statement or
proxy statement.

Based upon and subject to the foregoing, it is our opinion that as of the
date hereof the Exchange Ratio is fair to the Unit Shareholders from a
financial point of view.

Very truly yours,

/s/ Needham & Company, Inc.

B-2
<PAGE>

APPENDIX C
CHAPTER 13 OF THE CALIFORNIA GENERAL CORPORATION LAW
DISSENTERS' RIGHTS

SECTION 1300. RIGHT TO REQUIRE PURCHASE--"DISSENTING SHARES" AND "DISSENTING
SHAREHOLDER" DEFINED.

(a) If the approval of the outstanding shares (Section 152) of a corporation
is required for a reorganization under subdivisions (a) and (b) or subdivision
(e) or (f) of Section 1201, each shareholder of the corporation entitled to
vote on the transaction and each shareholder of a subsidiary corporation in a
short-form merger may, by complying with this chapter, require the corporation
in which the shareholder holds shares to purchase for cash at their fair
market value the shares owned by the shareholder which are dissenting shares
as defined in subdivision (b). The fair market value shall be determined as of
the day before the first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or
depreciation in consequence of the proposed action, but adjusted for any stock
split, reverse stock split, or share dividend which becomes effective
thereafter.

(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:

(1) Which were not immediately prior to the reorganization or short-form
merger either (A) listed on any national securities exchange certified by
the Commissioner of Corporations under subdivision (o) of Section 25100 or
(B) listed on the list of OTC margin stocks issued by the Board of
Governors of the Federal Reserve System, and the notice of meeting of
shareholders to act upon the reorganization summarizes this section and
Sections 1301, 1302, 1303 and 1304; provided, however, that this provision
does not apply to any shares with respect to which there exists any
restriction on transfer imposed by the corporation or by any law or
regulation; and provided, further, that this provision does not apply to
any class of shares described in subparagraph (A) or (B) if demands for
payment are filed with respect to 5 percent or more of the outstanding
shares of that class.

(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in subparagraph (A) or
(B) of paragraph (1) (without regard to the provisos in that paragraph),
were voted against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case
where the approval required by Section 1201 is sought by written consent
rather than at a meeting.

(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.

(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.

(c) As used in this chapter, "dissenting shareholder" means the recordholder
of dissenting shares and includes a transferee of record.

SECTION 1301. DEMAND FOR PURCHASE.

(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3) and
(4) of subdivision (b) thereof, to require the corporation to purchase their
shares for cash, such corporation shall mail to each such shareholder a notice
of the approval of the reorganization by its outstanding shares (Section 152)
within 10 days after the date of such approval, accompanied by a copy of
Sections 1300, 1302, 1303, 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of the
dissenting shares, and a brief description of the procedure to be followed if
the shareholder desires to exercise the shareholder's right under such
sections. The statement of price constitutes an offer by the corporation to
purchase at the price stated any dissenting shares as defined in subdivision
(b) of Section 1300, unless they lose their status as dissenting shares under
Section 1309.

C-1
<PAGE>

(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance
with paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.

(c) The demand shall state the number and class of the shares held of record
by the shareholder which the shareholder demands that the corporation purchase
and shall contain a statement of what such shareholder claims to be the fair
market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market
value constitutes an offer by the shareholder to sell the shares at such
price.

SECTION 1302. ENDORSEMENT OF SHARES.

Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110
was mailed to the shareholder, the shareholder shall submit to the corporation
at its principal office or at the office of any transfer agent thereof, (a) if
the shares are certificated securities, the shareholder's certificates
representing any shares which the shareholder demands that the corporation
purchase, to be stamped or endorsed with a statement that the shares are
dissenting shares or to be exchanged for certificates of appropriate
denomination so stamped or endorsed or (b) if the shares are uncertificated
securities, written notice of the number of shares which the shareholder
demands that the corporation purchase. Upon subsequent transfers of the
dissenting shares on the books of the corporation, the new certificates,
initial transaction statement, and other written statements issued therefor
shall bear a like statement, together with the name of the original dissenting
holder of the shares.

SECTION 1303. AGREED PRICE--TIME FOR PAYMENT.

(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the
fair market value of any dissenting shares as between the corporation and the
holders thereof shall be filed with the secretary of the corporation.

(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount
thereof has been agreed or within 30 days after any statutory or contractual
conditions to the reorganization are satisfied, whichever is later, and in the
case of certificated securities, subject to surrender of the certificates
therefor, unless provided otherwise by agreement.

SECTION 1304. DISSENTER'S ACTION TO ENFORCE PAYMENT

(a) If the corporation denies that the shares are dissenting shares, or the
corporation and the shareholder fail to agree upon the fair market value of
the shares, then the shareholder demanding purchase of such shares as
dissenting shares or any interested corporation, within six months after the
date on which notice of the approval by the outstanding shares (Section 152)
or notice pursuant to subdivision (i) of Section 1110 was mailed to the
shareholder, but not thereafter, may file a complaint in the superior court of
the proper county praying the court to determine whether the shares are
dissenting shares or the fair market value of the dissenting shares or both or
may intervene in any action pending on such a complaint.

(b) Two or more dissenting shareholders may join as plaintiffs or be joined
as defendants in any such action and two or more such actions may be
consolidated.

C-2
<PAGE>

(c) On the trial of the action, the court shall determine the issues. If the
status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.

SECTION 1305. APPRAISERS' REPORT--PAYMENT--COSTS.

(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed
by the court, the appraisers, or a majority of them, shall make and file a
report in the office of the clerk of the court. Thereupon, on the motion of
any party, the report shall be submitted to the court and considered on such
evidence as the court considers relevant. If the court finds the report
reasonable, the court may confirm it.

(b) If a majority of the appraisers appointed fail to make and file a report
within 10 days from the date of their appointment or within such further time
as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.

(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market
value of each dissenting share multiplied by the number of dissenting shares
which any dissenting shareholder who is a party, or who has intervened, is
entitled to require the corporation to purchase, with interest thereon at the
legal rate from the date on which judgment was entered.

(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for
the shares described in the judgment. Any party may appeal from the judgment.

(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than
125 percent of the price offered by the corporation under subdivision (a) of
Section 1301).

SECTION 1306. DISSENTING SHAREHOLDER'S STATUS AS CREDITOR.

To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.

SECTION 1307. DIVIDENDS PAID AS CREDIT AGAINST PAYMENT.

Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor.

SECTION 1308. CONTINUING RIGHTS AND PRIVILEGES OF DISSENTING SHAREHOLDERS.

Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until
the fair market value of their shares is agreed upon or determined.
A dissenting shareholder may not withdraw a demand for payment unless the
corporation consents thereto.

C-3
<PAGE>

SECTION 1309. TERMINATION OF DISSENTING SHAREHOLDER STATUS.

(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter
all necessary expenses incurred in such proceedings and reasonable
attorneys' fees.

(b) The shares are transferred prior to their submission for endorsement
in accordance with Section 1302 or are surrendered for conversion into
shares of another class in accordance with the articles.

(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice
of the approval by the outstanding shares or notice pursuant to subdivision
(i) of Section 1110 was mailed to the shareholder.

(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.

SECTION 1310. SUSPENSION OF PROCEEDINGS FOR PAYMENT PENDING LITIGATION

If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings
under Sections 1304 and 1305 shall be suspended until final determination of
such litigation.

SECTION 1311. EXEMPT SHARES.

This chapter, except Section 1312, does not apply to classes of shares whose
terms and provisions specifically set forth the amount to be paid in respect
to such shares in the event of a reorganization or merger.

SECTION 1312. ATTACKING VALIDITY OF REORGANIZATION OR MERGER.

(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or
short-form merger, or to have the reorganization or short-form merger set
aside or rescinded, except in an action to test whether the number of shares
required to authorize or approve the reorganization have been legally voted in
favor thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event
of a reorganization or short-form merger is entitled to payment in accordance
with those terms and provisions or, if the principal terms of the
reorganization are approved pursuant to subdivision (b) of Section 1202, is
entitled to payment in accordance with the terms and provisions of the
approved reorganization.

(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash
for such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-
form merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand
payment of cash for the shareholder's shares pursuant to this chapter. The
court in any action attacking the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded shall not restrain or enjoin the consummation of the transaction
except upon 10 days' prior notice to the corporation and upon a determination
by the court that clearly no other remedy will adequately protect the
complaining shareholder or the class of shareholders of which such shareholder
is a member.

C-4
<PAGE>

(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable
as to the shareholders of any party so controlled.

C-5
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Certificate of Incorporation and the Bylaws 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>
5.01 Opinion of Kirkpatrick & Lockhart LLP as to the legality of the
securities being registered (filed herewith)
8.01 Opinion of Stradling Yocca Carlson & Rauth as to certain tax matters
(filed herewith)
23.01 Consent of KPMG Peat Marwick LLP (filed herewith)
23.02 Consent of Ernst & Young LLP (filed herewith)
23.03 Consent of PricewaterhouseCoopers (filed herewith)
23.04 Consent of PricewaterhouseCoopers LLP (filed herewith)
23.05 Consent of Kirkpatrick & Lockhart LLP (included in Exhibit 5.01 filed
herewith)
23.06 Consent of Stradling Yocca Carlson & Rauth (included in Exhibit 8.01
filed herewith)
24.01 Powers of Attorney (included on signature page of this registration
statement)
99.1 Form of Unit Proxy (filed herewith)
99.2 Consent of Needham & Company (filed herewith)
</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 registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Palm Desert, State of
California, on December 16, 1998.

UNITED STATES FILTER CORPORATION

By: /s/ Richard J. Heckmann
-------------------------------
Richard J. Heckmann
Chairman of the Board
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
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----

<S> <C> <C>
/s/ Richard J. Heckmann Chairman of the Board and Chief December 16, 1998
____________________________________ Executive Officer (Principal
Richard J. Heckmann Executive Officer) and a Director

/s/ David J. Shimmon President and Chief Operating Officer December 16, 1998
____________________________________
David J. Shimmon

/s/ Kevin L. Spence Executive Vice President and December 16, 1998
____________________________________ Chief Financial Officer (Principal
Kevin L. Spence Financial and Accounting Officer)

President and Chief Operating December , 1998
____________________________________ Officer--North American
Andrew D. Seidel Wastewater Group and a Director

President/Chief Operating Officer-- December , 1998
____________________________________ North American Process Water
Nicholas C. Memmo Group and a Director

/s/ James E. Clark Director December 16, 1998
____________________________________
James E. Clark

</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----

<C> <S> <C>
/s/ John L. Diederich Director December 16, 1998
____________________________________
John L. Diederich

/s/ Robert S. Hillas Director December 16, 1998
____________________________________
Robert S. Hillas

/s/ Arthur B. Laffer Director December 16, 1998
____________________________________
Arthur B. Laffer

/s/ Ardon E. Moore Director December 16, 1998
____________________________________
Ardon E. Moore

/s/ Alfred E. Osborne, Jr. Director December 16, 1998
____________________________________
Alfred E. Osborne, Jr.

/s/ J. Danforth Quayle Director December 16, 1998
____________________________________
J. Danforth Quayle

/s/ C. Howard Wilkins, Jr. Director December 16, 1998
____________________________________
C. Howard Wilkins, Jr.
</TABLE>

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.01 Agreement and Plan of Merger, dated as of July 2, 1998, by and among
United States Filter Corporation, Kinetics Acquisition Corp. and Unit
Instruments, Inc. (included as Appendix A to the Proxy
Statement/Prospectus included in this Registration Statement)
2.02 First Amendment to Agreement and Plan of Merger, dated as of August 5,
1998, by and among United States Filter Corporation, Kinetics
Acquisition Corp. and Unit Instruments, Inc. (included as Appendix A
to the Proxy Statement/Prospectus included in this Registration
Statement)
2.03 Second Amendment to Agreement and Plan of Merger, dated as of November
10, 1998, by and among United States Filter Corporation, Kinetics
Acquisition Corp. and Unit Instruments, Inc. (included as Appendix A
to the Proxy Statement/Prospectus included in this Registration
Statement)
4.01 Rights Agreement between United States Filter Corporation and The Bank
of New York, as Rights Agent, dated as of November 27, 1998
(incorporated by reference to Exhibit 1 of U.S. Filter's Registration
Statement on Form 8-A dated December 2, 1998)
5.01 Opinion of Kirkpatrick & Lockhart LLP as to the legality of the
securities being registered (filed herewith)
8.01 Opinion of Stradling Yocca Carlson & Rauth as to certain tax matters
(filed herewith)
23.01 Consent of KPMG Peat Marwick LLP (filed herewith)
23.02 Consent of Ernst & Young LLP (filed herewith)
23.03 Consent of PricewaterhouseCoopers (filed herewith)
23.04 Consent of PricewaterhouseCoopers LLP (filed herewith)
23.05 Consent of Kirkpatrick & Lockhart LLP (included in Exhibit 5.01 filed
herewith)
23.06 Consent of Stradling Yocca Carlson & Rauth (included in Exhibit 8.01
filed herewith)
24.01 Powers of Attorney (included on signature page of this registration
statement)
99.1 Form of Unit Proxy (filed herewith)
99.2 Consent of Needham & Company (filed herewith)
</TABLE>

<PAGE>

EXHIBIT 5.01

[LETTERHEAD OF KIRKPATRICK & LOCKHART LLP]

December 16, 1998

United States Filter Corporation
40-004 Cook Street
Palm Desert, California 92211

Ladies and Gentlemen:

We have acted as special counsel to United States Filter Corporation, a
Delaware corporation (the "Company"), in connection with the Registration
Statement on Form S-4 (the "Registration Statement") to be filed by the
Company on December 17, 1998 with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, with respect to an
aggregate of up to 3,196,094 shares (the "Shares") of the Company's Common
Stock, par value $.01 per share, and the associated Preferred Stock Purchase
Rights (the "Rights") that may be issued by the Company pursuant to the
Agreement and Plan of Merger among the Company, Kinetics Acquisition Corp., a
wholly owned subsidiary of the Company, and Unit Instruments, Inc., dated as
of July 2, 1998, and amended by the First Amendment thereto dated August 5,
1998 and the Second Amendment thereto dated November 10, 1998 (the "Merger
Agreement"). The Rights would be issued in accordance with the Rights
Agreement dated as of November 27, 1998 between the Company and The Bank of
New York, as Rights Agent (the "Rights Agreement").

We have reviewed the Company's Certificate of Incorporation and By-laws,
each as amended and restated, the Merger Agreement and the Rights Agreement.
We have examined such other public and corporate documents, certificates,
instruments and corporate records and such questions of law as we have deemed
necessary for purposes of expressing an opinion on the matters hereinafter set
forth. In all examinations of documents, instruments and other papers, we have
assumed the genuineness of all signatures on original and certified documents
and the conformity to original and certified documents of all copies submitted
to us as conformed, photostatic or other copies.

On the basis of the foregoing, we are of the opinion that the Shares and the
Rights, when issued pursuant to the Merger Agreement and in accordance with
the Rights Agreement, will be validly issued, fully paid and non-assessable.

We consent to the filing of this opinion as Exhibit 5.01 to the Registration
Statement and to the use of our name in the Prospectus forming a part thereof
under the caption "Legal Matters."

Yours truly,

/s/ Kirkpatrick & Lockhart LLP

<PAGE>

EXHIBIT 8.01

[LETTERHEAD OF STRADLING YOCCA CARLSON & RAUTH]

December 16, 1998

Unit Instruments, Inc.
22600 Savi Ranch Parkway
Yorba Linda, California 92887

Ladies and Gentlemen:

We have acted as counsel for Unit Instruments, Inc., a California
corporation ("Unit"), in connection with the preparation and execution of the
Agreement and Plan of Merger dated as of July 2, 1998, as amended by the First
Amendment to Agreement and Plan of Merger dated as of August 5, 1998, and the
Second Amendment to Agreement and Plan of Merger dated as of November 10, 1998
(such Agreement and Plan of Merger, as amended by such First Amendment and
Second Amendment thereto, is referred to herein as the "Merger Agreement"),
among United States Filter Corporation, a Delaware corporation ("Filter"),
Kinetics Acquisition Corp., a California corporation, a newly formed and
wholly-owned subsidiary of Filter ("Subcorp"), and Unit. Pursuant to the
Merger Agreement, Subcorp will merge with and into Unit (the "Merger") with
Unit as the surviving corporation, which will become a wholly-owned subsidiary
of Filter. Unless otherwise defined, capitalized terms referred to herein have
the meanings set forth in the Merger Agreement. All section references, unless
otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").

You have requested our opinion regarding certain United States federal
income tax consequences of the Merger. In delivering this opinion, we have
reviewed and relied upon the facts, statements, descriptions and
representations set forth in the Registration Statement on Form S-4 filed by
Filter with the Securities and Exchange Commission (which contains a Proxy
Statement/Prospectus) (the "Registration Statement"), the Merger Agreement
(including Exhibits) and such other documents pertaining to the Merger as we
have deemed necessary or appropriate. We have also received and relied upon
certificates of officers of Filter, Subcorp and Unit (the "Officers'
Certificates"). We have assumed that the Officer's Certificates will be
updated as of the Effective Time and that such updated Officer's Certificates
will be duly executed and delivered by the appropriate officers of Filter,
Subcorp and Unit. We have assumed the representations referred to in this
letter remain accurate in all respects that are material to this opinion at
all relevant times and we have made no investigation or inquiry whatsoever
with respect to the accuracy of any such representations. Any variance of the
actual facts or the representations of principal stockholders could materially
affect our opinion as expressed herein and possibly render it wholly or
partially inapplicable.

In connection with rendering this opinion, we have also assumed (without any
independent investigation) that:

1. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has
been (or will be by the Effective Time) due execution and delivery of all
documents where due execution and delivery are prerequisites to effectiveness
thereof;

2. The number of Shares for which dissenter's rights will be exercise in
connection with the Merger will not adversely affect the qualification of the
Merger as a "reorganization."

3. Any statement made in any of the documents referred to herein as being
"to the best of the knowledge" of any person or party, is correct without such
qualification;

4. All statements, descriptions and representations contained in any of the
documents referred to herein or otherwise made to us are true and correct in
all material respects and no actions have been (or will be) taken which are
inconsistent with such representations; and

5. The Merger will be reported by Filter and Unit on their respective
federal income tax returns in a manner consistent with the opinion set forth
below.
<PAGE>

Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we
are of the opinion that, if the Merger is consummated in accordance with the
Merger Agreement (and without any waiver, breach or amendment of any of the
provisions thereof) and the statements set forth in the Officers' Certificates
are true and correct as of the date hereof, on the date on which the
Registration Statement is deemed effective under the Securities Act by the
Commission, and at the Effective Time, then, for federal income tax purposes,
the Merger will qualify as a "reorganization" as defined in Section 368(a) of
the Code.

This opinion represents and is based upon our best judgment regarding the
application of federal income tax laws arising under the Code, existing
judicial decisions, administrative regulations and published rulings and
procedures. Our opinion is not binding upon the Internal Revenue Service or
the courts, and there is no assurance that the Internal Revenue Service will
not successfully assert a contrary position. Furthermore, no assurance can be
given that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the accuracy of
the conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.

This opinion addresses only the classification of the Merger as a
reorganization under Section 368(a) of the Code, and does not address any
other federal, state, local or foreign tax consequences that may result from
the Merger or any other transaction (including any transaction undertaken in
connection with the Merger).

No opinion is expressed as to any transaction other than the Merger as
described in the Merger Agreement. In the event any one of the statements,
representations, warranties or assumptions upon which we have relied to issue
this opinion is incorrect, our opinion might be adversely affected and may not
be relied upon.

This opinion has been delivered to you solely for the purpose of being
included as an exhibit to the Registration Statement. It may not be relied
upon for any other purpose without our prior written consent. We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name under the heading "Certain Federal Income
Tax Consequences" in the Registration Statement.

Very truly yours,

/s/ STRADLING YOCCA CARLSON & RAUTH
STRADLING YOCCA CARLSON & RAUTH
a Professional Corporation

<PAGE>

EXHIBIT 23.01

INDEPENDENT AUDITORS' CONSENT

Board of Directors and Stockholders
United States Filter Corporation:

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Prospectus of United States
Filter Corporation for the registration of an aggregate of up to 3,196,094
shares of Common Stock, par value $.01 per share, of United States Filter
Corporation, that may be issued pursuant to the Agreement and Plan of Merger
dated as of July 2, 1998, as amended as of August 5, 1998, and November 10,
1998, among United States Filter Corporation, Kinetics Acquisition Corp., and
Unit Instruments, Inc., and to the incorporation by reference herein of our
report dated June 1, 1998 and subsequent report dated June 1, 1998, except as
to the acquisition of Culligan described in notes 9 and 21, which is as of
June 15, 1998, relating to the consolidated balance sheets of United States
Filter Corporation and subsidiaries as of March 31, 1997 and 1998, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the years in the three-year period ended March 31, 1998
which reports appear in the March 31, 1998 Annual Report on Form 10-K and
Current Report on Form 8-K/A dated June 15, 1998, respectively, of United
States Filter Corporation, filed with the Securities and Exchange Commission.

/s/ KPMG Peat Marwick LLP

Orange County, California
December 16, 1998

<PAGE>

EXHIBIT 23.02

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of United States
Filter Corporation for the registration of an aggregate of up to 3,196,094
shares of its common stock and to the incorporation by reference herein 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.

/s/ Ernst & Young LLP

Walnut Creek, California
December 16, 1998

<PAGE>

EXHIBIT 23.03

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of United States
Filter Corporation of our report, issued in the name Price Waterhouse, dated
September 25, 1997 relating to the consolidated balance sheets of Memtec
Limited at June 30, 1997 and 1996 and the related consolidated statements of
income, cash flows and of shareholders' equity for each of 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. We also consent to
the reference to us, as Price Waterhouse, under the heading "Experts" in such
Prospectus.

/s/ PricewaterhouseCoopers
Sydney

December 16, 1998

<PAGE>

EXHIBIT 23.04

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Unit
Instruments, Inc. of our report dated July 17, 1998 appearing on page 21 of
the Unit Instruments, Inc. Annual Report on Form 10-K for the year ended May
31, 1998. We also consent to the references to us under the headings "Experts"
and "Selected Financial Data" in such Prospectus. However, it should be noted
that PricewaterhouseCoopers LLP has not prepared or certified such "Selected
Financial Data."

/s/ PricewaterhouseCoopers LLP
Costa Mesa, California

December 16, 1998

<PAGE>

EXHIBIT 99.1

UNIT INSTRUMENTS, INC.
22600 SAVI RANCH PARKWAY
YORBA LINDA, CA 92887
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned appoints Michael J. Doyle and Gary N. Patten as Proxies, each
with the power to appoint his substitute, and hereby authorizes each of them to
represent and to vote, as designated below, all the shares of Common Stock of
Unit Instruments, Inc. held of record by the undersigned on December 4, 1998,
at a Special Meeting of Shareholders to be held on January 22, 1999 and at any
adjournment or postponement thereof.

1. Approval of (a) the Agreement and Plan of Merger dated as of July 2, 1998
among Unit Instruments, Inc., a California corporation ("Unit"),
United States Filter Corporation, a Delaware corporation ("U.S. Filter"),
and Kinetics Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of U.S. Filter ("Subcorp"), as amended by a First Amendment to
Agreement and Plan of Merger dated August 5, 1998 and a Second Amendment to
Agreement and Plan of Merger dated November 10, 1998 (such Agreement and
Plan of Merger, as amended by such First Amendment and Second Amendment
thereto, is referred to as the "Merger Agreement"), and (b) the Merger of
Subcorp with and into Unit in accordance with the Merger Agreement, as more
fully described in the accompanying proxy statement.

[_] FOR [_] AGAINST [_] ABSTAIN

- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon procedural
matters, including, without limitation, potential adjournments of the
Special Meeting, and such other business as may properly come before the
meeting or any adjournment or postponement thereof, for which discretionary
authority may be exercised.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED IN FAVOR OF THE PROPOSAL TO APPROVE THE MERGER AGREEMENT AND THE MERGER.

(To be signed and dated on other side)

(Continued from other side)

Dated: ____________________________, 199_

_________________________________________
Signature

_________________________________________
Signature if held jointly

Please date this Proxy and sign it
exactly as your name or names appear
below. When shares are held by joint
tenants, both should sign. When signing
as an attorney, executor, administrator,
trustee or guardian, please give full
title as such. If shares are held by a
corporation, please sign in full
corporate name by the President or other
authorized director. If shares are held
by a partnership, please sign in
partnership name by an authorized person.

All other proxies heretofore given by the
undersigned to vote shares of stock of
Unit Instruments, Inc., which the
undersigned would be entitled to vote if
personally present at the Special Meeting
or any adjournment or postponement
thereof, are hereby expressly revoked.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. IF YOUR ADDRESS IS INCORRECTLY SHOWN, PLEASE PRINT CHANGES.

<PAGE>

EXHIBIT 99.2

CONSENT OF NEEDHAM & COMPANY, INC.

We hereby consent to the inclusion in the Proxy Statement/Prospectus of
United States Filter Corporation and Unit Instruments, Inc. forming part of
this Registration Statement on Form S-4 of our opinion dated November 10, 1998
to the Board of Directors of Unit Instruments, Inc. attached as Appendix B to
such Proxy Statement/Prospectus and to the references to our opinion under the
captions "Summary--Opinion of Financial Advisor" and "The Merger and Related
Transactions--Background of the Merger," "--Reasons for the Merger," and "--
Opinion of Financial Advisor." In giving such consent, we do not admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 and the rules and regulations of the Securities
and Exchange Commission thereunder, nor do we thereby admit that we are
experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.

/s/ NEEDHAM & COMPANY, INC.

December 16, 1998