<PAGE>

                                                                   EXHIBIT 4.01
 
                               THIRD AMENDMENT TO
                              AMENDED AND RESTATED
                         MULTICURRENCY CREDIT AGREEMENT
                          AND FIRST OMNIBUS AMENDMENT
                          ---------------------------

     This THIRD AMENDMENT TO AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT
AND FIRST OMNIBUS AMENDMENT (this "Third Amendment") is made and entered into as
of November 10, 1998, by and among UNITED STATES FILTER CORPORATION, a Delaware
corporation with its chief executive office at 40-004 Cook Street, Palm Desert,
California 92211 (the "Borrower"), BANKBOSTON, N.A., a national banking
association having its principal place of business at 100 Federal Street,
Boston, Massachusetts 02110 ("BKB"), DLJ CAPITAL FUNDING, INC. ("DLJ"), ABN AMRO
BANK N.V. ("ABN"), THE BANK OF NEW YORK ("BNY"), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION ("BOA"), FLEET BANK, N.A. ("Fleet"), NATIONSBANK, N.A.
("NationsBank"), DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
("Deutsche Bank"), THE LONG-TERM CREDIT BANK OF JAPAN LTD. (LOS ANGELES AGENCY),
UNION BANK OF CALIFORNIA, N.A., ("Union"), THE SANWA BANK LIMITED, LOS ANGELES
BRANCH ("Sanwa"), THE FIRST NATIONAL BANK OF CHICAGO ("First Chicago") and the
other financial institutions which are party to the Credit Agreement (defined
below) (each a "Lender" and, collectively, the "Lenders"), BKB as Administrative
Agent, FIRST CHICAGO as Documentation Agent, BOA as Syndication Agent, DEUTSCHE
BANK and FLEET as Co-Agents, AND UNION, ABN, BNY and SANWA as Lead Managers.
Capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Credit Agreement.

     WHEREAS, the Borrower, the Lenders, and the Agents entered into an Amended
and Restated Multicurrency Credit Agreement dated as of October 20, 1997 (as
amended and in effect from time to time, the "Credit Agreement"), pursuant to
which the lenders extended credit to the Borrower on the terms set forth
therein;

     WHEREAS, the Borrower, the Lenders, and the Agents have agreed to amend the
Credit Agreement and other loan documents as set forth herein;

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

     1.  AMENDMENT TO THE LOAN DOCUMENTS.  For the Agreement Regarding Existing
         -------------------------------                                       
Letters of Credit between the Borrower and BKB (the "L/C Agreement") and each of
the Loan Documents, any and all references to "Managing Agent" shall be deemed
to be references to "Administrative Agent".  The L/C Agreement and each of the
Loan Documents are hereby 
<PAGE>
 
                                      -2-


further amended mutatis mutandis as appropriate to reflect the fact that BKB's
                ------- --------
title has been changed from Managing Agent to Administrative Agent.

     2.  AMENDMENT TO PREAMBLE.  The Preamble to the Credit Agreement is hereby
         ---------------------                                                 
amended by deleting the Preamble in its entirety and restating it as follows:

          "This AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT is made as
     of October 20, 1997 among UNITED STATES FILTER CORPORATION, a Delaware
     corporation with its chief executive office at 40-004 Cook Street, Palm
     Desert, California 92211 (the "Borrower"), BANKBOSTON, N.A., a national
     banking association having its principal place of business at 100 Federal
     Street, Boston, Massachusetts 02110 ("BKB"), DLJ CAPITAL FUNDING, INC.
     ("DLJ"), ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL BRANCH ("ABN"), THE
     BANK OF NEW YORK ("BNY"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
     ASSOCIATION ("BOA"), FLEET BANK, N.A. ("Fleet"), NATIONSBANK, N.A.
     ("NationsBank") THE INDUSTRIAL BANK OF JAPAN, LIMITED (LOS ANGELES AGENCY)
     ("IBJ"), DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
     ("Deutsche Bank"), THE LONG-TERM CREDIT BANK OF JAPAN LTD. (LOS ANGELES
     AGENCY) ("LTCB"), UNION BANK OF CALIFORNIA, N.A. ("Union"), THE SANWA BANK
     LIMITED, LOS ANGELES BRANCH ("Sanwa"), UNICREDITO ITALIANO ("Unicredito"),
     BANCA NAZIONALE DEL LAVORO S.P.A., and THE FIRST NATIONAL BANK OF CHICAGO
     ("First Chicago") (such financial institutions and any financial
     institutions which become parties hereto in accordance with (S)22 hereof
     are collectively referred to herein as the "Lenders" and individually as a
     "Lender"), BKB as administrative and managing agent for the Lenders (in
     such capacity, the "Administrative Agent"), FIRST CHICAGO as documentation
     agent (the "Documentation Agent"), BOA as syndication agent (the
     "Syndication Agent"), DEUTSCHE BANK and FLEET As co-agents (the "Co-Agents"
     and, collectively with the Managing Agent, the Documentation Agent, and the
     Syndication Agent, the "Agents"), and ABN, UNION, BNY and SANWA as lead
     managers (the "Lead Managers")."

     3.  AMENDMENT TO DEFINITIONS.  Section 1.1 is hereby amended by
         ------------------------                                   

     (a) inserting the following definitions in their proper alphabetical place:

               "Financial L/C(s).  Letter(s) of credit where the event which
                ----------------                                            
          triggers payment is financial, such as the failure to pay money, and
          not performance related, such as failure to ship a product or provide
          a service, as set forth in greater detail in the letter dated March
          30, 1995 from the Board of Governors of the Federal Reserve System or
          in any applicable directive or letter 
<PAGE>
 
                                      -3-

          ruling of the Board of Governors of the Federal Reserve System issued
          subsequent thereto.

               Third Amendment Effective Date.  November 10, 1998."
               ----- --------- --------- ----                      

     and (b) deleting the following definitions in their entirety and restating
     them as follows:

               "Arranger.  BancBoston Robertson Stephens Inc. (f/k/a BancBoston
                --------                                                       
          Securities Inc.).

               Funded Debt.  Consolidated Indebtedness of the Borrower and its
               -----------                                                    
          Subsidiaries (other than Unrestricted Subsidiaries) for borrowed
          money, including (without duplication) guarantees of such debt,
          recorded on the Consolidated balance sheet of the Borrower and its
          Subsidiaries, and including (without duplication) the amount of any
          such indebtedness for Capitalized Leases which corresponds to
          principal and all contingent Reimbursement Obligations with respect to
          outstanding Financial L/Cs (including the Letters of Credit), but
          excluding contingent obligations with respect to letters of credit
          which are not Financial L/Cs.

               Issuing Lender.  The Lender(s) issuing Letters of Credit, which
               --------------                                                 
          shall initially be BKB or any of its Affiliates, and such other
          Lenders as are agreed to be issuing Lenders by the Borrower and the
          Managing Agent.

<TABLE>
<CAPTION>
                            Pricing Table:
                            -------------                                              
---------------------------------------------------------------------------------------------------------------------
                                                                                    APPLICABLE           APPLICABLE 
                                                                                    MARGIN FOR           MARGIN FOR  
                                             APPLICABLE         APPLICABLE          BASE RATE           EUROCURRENCY
                   SENIOR PUBLIC            FACILITY RATE        L/C RATE             LOANS                LOANS   
LEVEL               DEBT RATING             (PER ANNUM)         (PER ANNUM)         (PER ANNUM)          (PER ANNUM) 
---------------------------------------------------------------------------------------------------------------------
<S>           <C>                           <C>                 <C>                 <C>                 <C>         
Level I       At least BBB+ by Standard      0.1250% (M)         0.3750%             0.0000%             0.3750% (M)
              & Poor's                       0.1000% (R)                                                 0.4000% (R)
---------------------------------------------------------------------------------------------------------------------
Level         At least BBB by Standard       0.1500% (M)         0.5000%             0.0000%             0.5000% (M)
 II           & Poor's                       0.1250% (R)                                                 0.5250% (R)
---------------------------------------------------------------------------------------------------------------------
Level         At least BBB- by Standard      0.2000% (M)         0.5500%             0.0000%             0.5500% (M)
 III          & Poor's                       0.1500% (R)                                                 0.6000% (R)
---------------------------------------------------------------------------------------------------------------------
Level         At least BB+ by Standard       0.2500% (M)         0.7000%             0.0000%             0.7000% (M)
 IV           & Poor's                       0.2000% (R)                                                 0.7500% (R)
---------------------------------------------------------------------------------------------------------------------
Level         If no other level applies      0.2500% (M)         0.7500%             0.0000%             0.9500% (M)
  V                                          0.2000% (R)                                                 1.0000% (R) 
---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
 
                                      -4-

          M = Multicurrency Loans
          R = Revolving Credit Loans

          The applicable rate or margin for any day shall be determined by the
          Senior Public Debt Rating in effect as of that day, provided that
          Level II pricing shall be effective from the Third Amendment Effective
          Date through the Managing Agent's receipt of the Compliance
          Certificate for the quarter ended March 31, 1999, unless a change in
          the Senior Public Debt Rating would result in a higher pricing level.

                 Term Out Date.__October 19, 1999."
                 -------------                     

     4.  AMENDMENTS TO (S)3 (LETTERS OF CREDIT).  Section 3 is hereby amended by
         --------------------------------------                                 
deleting (S)3.6 in its entirety and restating it as follows:

          "LETTER OF CREDIT FEE. The Borrower shall pay a fee (the "Letter of
     Credit Fee") equal to the Applicable L/C Rate on the Maximum Drawing Amount
     to the Managing Agent for the account of the Lenders, to be shared pro rata
                                                                        --- ----
     by the Lenders in accordance with their respective Commitment Percentages.
     The Borrower shall also pay (a) a fee (the "Issuance Fee") to the Issuing
     Lender, for its own account, equal to 0.07% multiplied by the result of (i)
                                                 ---------- 
     one (1) minus (ii) such Issuing Lender's Commitment Percentage (expressed
             ----- 
     as a decimal), per annum on the Maximum Drawing Amount of all Letters of
     Credit issued by such Issuing Lender, plus (b) its customary administrative
     charges and such other fees as agreed between the Borrower and such Issuing
     Lender. The Letter of Credit Fee and the Issuance Fee shall be payable for
     the number of days each Letter of Credit is outstanding, and shall be
     payable quarterly in arrears on the last day of each calendar quarter for
     the quarter then ended, and on the Maturity Date."

     5.  AMENDMENTS TO (S)5 (REVOLVING CREDIT LOANS).  Section 5 is hereby
         -------------------------------------------                      
amended by

          (a) deleting (S)5.1 in its entirety and restating it as follows:

               "(S)5.1.  COMMITMENT TO LEND.
                         ------------------ 

                    (a) Subject to the terms and conditions set forth in this
               Agreement, each of the Lenders severally agrees to lend to the
               Borrower, and the Borrower may borrow and reborrow from time to
               time from the Third Amendment Effective Date until the Term Out
               Date, upon notice to the Managing Agent given in accordance with
               (S)5.3 hereof, such sums in Dollars as are requested by the
               Borrower up to a maximum aggregate principal amount outstanding
               (after giving effect to all amounts requested) at any one time
               equal to such 
<PAGE>
 
                                      -5-

               Lender's Commitment Percentage of the Revolving Credit
               Commitment. In no event shall (a) the aggregate principal
               outstanding balance of the Revolving Credit Loans (after giving
               effect to all amounts requested) exceed at any one time the
               Revolving Credit Commitment, or (b) any Lender be obligated to
               fund or maintain Revolving Credit Loans in excess of such
               Lender's Commitment Percentage of the Revolving Credit
               Commitment. The Revolving Credit Loans shall be made pro rata in
               accordance with each Lender's Commitment Percentage.

                    (b) As of the Term Out Date, the Revolving Credit Commitment
               shall terminate, and the outstanding Revolving Credit Loans shall
               convert into the Term Loan in accordance with (S)6.1."

          and (b) deleting (S)5.4 in its entirety.

     6.  AMENDMENTS TO (S)6 (THE TERM LOAN).  Section 6 is hereby amended by
         --------------   -----------------                                 
deleting (S)6.3 in its entirety and restating it as follows:

          "(S)6.3 SCHEDULED REPAYMENTS. The Borrower promises to pay to the
                  --------------------
     Managing Agent for the account of the Lenders the principal amount of the
     Term Loan in twelve (12) equal quarterly installments, commencing on
     December 31, 1999, each equal to 1/12th of the principal balance of the
     Revolving Credit Loans outstanding on the Term Out Date, with a final
     payment on the Maturity Date in an amount equal to the unpaid balance of
     the Term Loan, if any, plus interest thereon."

     7.  AMENDMENT TO (S)7 (PROVISIONS RELATING TO THE MULTICURRENCY LOANS AND
         ---------------------------------------------------------------------
REVOLVING CREDIT LOANS).  Section 7 is hereby amended by (a) deleting (S)7.1 in 
-----------------------                                 
its entirety and restating it as follows:

               "(S)7.1 THE NOTES. The Multicurrency Loans shall be evidenced by
                       ---------
          separate promissory notes of the Borrower in substantially the form of
          Exhibit A hereto (each a "Multicurrency Note") each dated as of the
          Third Amendment Effective Date and completed with appropriate
          insertions, and the Revolving Credit Loans shall be evidenced by
          separate promissory notes of the Borrower in substantially the form of
          Exhibit D hereto (each a "Revolving Credit Note") each dated as of the
          Third Amendment Effective Date and completed with appropriate
          insertions. One Multicurrency Note shall be payable to the order of
          each Lender in a principal amount equal to such Lender's Commitment
          Percentage of the Multicurrency Commitment, and shall represent the
          obligation of the Borrower to pay to such Lender such principal amount
          (or the outstanding principal amount, if less) plus interest accrued
          thereon as set forth below. One Revolving Credit Note
<PAGE>
 
                                      -6-

          shall be payable to the order of each Lender in a principal amount
          equal to such Lender's Commitment Percentage of the Revolving Credit
          Commitment, and shall represent the obligation of the Borrower to pay
          to such Lender such principal amount (or the outstanding principal
          amount, if less) plus interest accrued thereon as set forth below. The
          Borrower irrevocably authorizes each Lender to make or cause to be
          made, at or about the time of the Drawdown Date of any Multicurrency
          Loan or Revolving Credit Loan or at the time of receipt of any payment
          of principal on such Lender's Multicurrency Note or Revolving Credit
          Note, an appropriate notation on such Lender's Multicurrency Note
          record or Revolving Credit Note record, as the case may be, reflecting
          the making of such Loan or (as the case may be) the receipt of such
          payment. The outstanding amount of the Multicurrency Loans or
          Revolving Credit Loans set forth on such Lender's Multicurrency Note
          record or Revolving Credit Note record, as the case may be, shall be
          prima facie evidence of the principal amount thereof owing and unpaid
          to such Lender, but the failure to record, or any error in so
          recording, any such amount on such Lender's Multicurrency Note record
          or Revolving Credit Note record shall not limit, increase, or
          otherwise affect the obligations of the Borrower hereunder or under
          any Multicurrency Note or Revolving Credit Note to make payments of
          principal or interest on any Multicurrency Loans or Revolving Credit
          Loans advanced to the Borrower and evidenced by such Multicurrency
          Note or Revolving Credit Note when due. As of the Third Amendment
          Effective Date, all Multicurrency Notes and Revolving Credit Notes
          dated as of October 20, 1997 and previously held by the Lenders
          pursuant to this Agreement shall be returned to the Borrower."

     and (b) adding the following (S)(S)7.5 and 7.6 to the end thereof:

               "(S)7.5 LEVERAGE PREMIUM.  The Borrower agrees to pay to the
                       ----------------
          Managing Agent for the account of the Lenders a premium (the "Leverage
          Premium") equal to the outstanding portion of the Total Commitment
          multiplied by 0.20%. The Leverage Premium shall be payable initially
          for the period from (and including) the Third Amendment Effective Date
          through the date of the Managing Agent's receipt of the Compliance
          Certificate for the quarter ended March 31, 1999, and thereafter for
          each fiscal quarter during which the Leverage Ratio in (S)12.1 exceeds
          3.25:1. The Leverage Premium shall be payable quarterly in arrears on
          the date of the Managing Agent's receipt of the Compliance Certificate
          for the applicable fiscal quarter. The Leverage Premium shall be
          distributed pro rata among the Lenders in accordance with each
          Lender's Commitment Percentage.
<PAGE>
 
                                      -7-

               (S)7.6  EUROPEAN MONETARY UNION.
                       ----------------------- 

               (a) The provisions of this section apply from and after, and in
          anticipation of, the Euro Availability Date (as defined below).

               (b) For purposes of this section, the following terms shall have
          the following meanings:

               ECU:  The unit of account known as the ECU that is from time to
               ---                                                            
          time used in the European Monetary System.

               EMU:  The third stage of the economic and monetary union formed
               ---                                                            
          pursuant to the EU Treaties.

               Euro Availability Date:  The later of January 1, 1999, and the
               ----------------------                                        
          date on which the ECU is replaced by the Euro in accordance with the
          EU Treaties.

               Euro Interbank Rate:  With respect to any Loan denominated or to
               -------------------                                             
          be denominated in Euros, the rate of interest at which the Reference
          Banks are able to obtain deposits for comparable amounts in Euros for
          the relevant Interest Period in the London interbank market for a
          period comparable to the duration of such Interest Period, as
          determined by the Managing Agent.

               EU Treaties:  The Treaty Establishing the European Economic
               -----------                                                
          Community, as amended by the Treaty on the European Union (the
          Maastrict Treaty).

               Euro or e:  The currency introduced during the third stage of the
               ----    -                                                        
          EMU.

               participating member state:  Each state described as a
               --------------------------                            
          "participating member state" in the EU Treaties.

               (c)  If, as a result of the implementation of the EMU,

                    (i) any Optional Currency ceases to be lawful currency of
               the nation issuing such Optional Currency and is replaced by the
               Euro as the lawful currency of such nation, or

                    (ii) any Optional Currency and the Euro are at the same time
               recognized by the central bank or comparable authority of the
               nation issuing such Optional Currency as lawful currency of such
               nation and the Managing Agent or the Majority Lenders shall so
               request or, upon the request of 
<PAGE>
 
                                      -8-

               the Borrower, the Managing Agent or the Majority Lenders shall so
               consent, in a notice delivered to the Borrower,

          then:

                    (A) any amount payable hereunder by the Lenders to the
               Borrower, or by the Borrower to the Lenders, in such Optional
               Currency shall instead be payable in the Euro and the amount so
               payable shall be determined by translating the amount payable in
               such Optional Currency to the Euro at the exchange rate
               recognized by the European Central Bank for the purpose of
               implementing the EMU,

                    (B) the Euro itself shall be an Optional Currency for
               purposes of this Agreement, and

                    (C) if so specified in the notice delivered under the
               foregoing clause (ii) or in any subsequent notice referring to
               such clause, the Optional Currency recognized at the same time as
               the Euro shall no longer be available as an Optional Currency for
               purposes of this Agreement, effective at the expiration of the
               period of five Business Days following the Borrower's receipt of
               such notice.  Such notice shall apply to (1) any Loan to be made
               or Letter of Credit to be issued, extended or renewed on or after
               the expiration of such five Business Day period or (2) any Loan
               outstanding at the end of such five Business Day period and
               denominated in such Optional Currency, following the expiration
               of the Interest Period applicable to such outstanding Loan at the
               time of the expiration of such five Business Day period.

               (d)  The Managing Agent may in its discretion by notice to the
          Lenders and the Borrower:

                    (i) modify the definition of "Business Day" to include a
               principal financial center of any participating member state
               where Loans to bear interest by reference to the Euro Interbank
               Rate are funded, or any amounts are or are to be paid in Euros;

                   (ii) designate an account or accounts at a bank in a
               principal financial center of any participating member state for
               receiving payments to the Managing Agent, whether for the account
               of the Managing Agent or for the account of the Lenders, in
               immediately available funds, in Euros or for disbursing Loans to
               bear interest by reference to the Euro Interbank Rate;
<PAGE>
 
                                      -9-

                    (iii)  designate the date or time for fixing the Euro
               Interbank Rate for any Interest Period to be consistent with any
               practice or convention in the London interbank market;

                     (iv)  designate the fraction for rounding upwards
               quotations by Reference Banks used to determine the Euro
               Interbank Rate, to be, in the reasonable judgment of the Managing
               Agent, as nearly as may be, consistent with the rounding of
               quotations by Reference Banks for other Optional Currencies and
               also consistent with any practice or convention in the London
               interbank market;

                     (v)   designate other mechanics for fixing the Euro
               Interbank Rate to be, in the reasonable judgment of the Managing
               Agent, as nearly as may be, consistent with the mechanics for
               determining rates for other Optional Currencies and also
               consistent with any practice or convention in the London
               interbank market;

                     (vi)  designate the period of notice from the Borrower to
               the Managing Agent required for the Borrower to borrow any Loan
               to be denominated in Euros or to convert any Loan denominated in
               another Optional Currency to a Loan denominated in Euros;

                    (vii)  designate the basis of accrual of interest, fees or
               other amounts to be consistent with any practice or convention in
               the London interbank market with respect to amounts calculated or
               payable in Euros;

                    (viii)  where this Agreement specifies a minimum amount or
               integral multiple thereof, designate what the Managing Agent
               considers a reasonably comparable and convenient minimum amount
               and integral multiple for the Euro; and

                    (ix)    where this Agreement specifies an amount to be paid
               in an Optional Currency that is, under the terms of this Section,
               to be paid in Euros, designate a convenient amount in Euros to
               account for de minimis rounding.
                           -- -------          

               (e) Section 8.13(a) shall not apply in the event that an Optional
          Currency is not available or an interbank offered rate may not be
          quoted for such Optional Currency, solely because such Optional
          Currency ceases to be lawful currency of the nation issuing such
          Optional Currency and is replaced by the Euro as the lawful currency
          of such nation, so long as the Euro is available as an Optional
          Currency and the Euro Interbank Rate may be quoted for the Euro.
<PAGE>
 
                                      -10-

               (f) The Borrower agrees, at the request of the Majority Lenders,
          at the time of or at any time following the implementation of the EMU
          and within 30 days following such request, to further amend this
          Agreement in such manner as may be mutually agreed upon by the
          Borrower and the Majority Lenders in order further to reflect the
          implementation of the EMU and to place the parties hereto in the
          position they would have been in had the EMU not been implemented.

               (g) The Borrower agrees, at the request of any Lender, to
          compensate such Lender for any reasonable loss, cost, expense or
          reduction in return that shall be incurred or sustained by such Lender
          as a result of the implementation of the EMU and that would not have
          been incurred or sustained but for the transactions provided for
          herein.  A certificate of a Lender setting forth (i) the amount or
          amounts necessary to compensate such Lender, (ii) a description of the
          nature of the loss or expense sustained or incurred by such Lender as
          a consequence thereof and (iii) a reasonably detailed explanation of
          the calculation thereof shall be delivered to the Borrower and shall
          be conclusive absent manifest error.  The Borrower shall pay such
          Lender the amount shown as due on any such certificate within 10 days
          after receipt thereof."

     8.  AMENDMENT TO (S)11.1 (RESTRICTIONS ON INDEBTEDNESS).  Section 11.1(g)
         -------------   -----------------------------------                  
is hereby amended by deleting the words " the greater of $150,000,000 or"
therein.

     9.  AMENDMENT TO (S)11.2 (RESTRICTIONS ON LIENS).  Section 11.2 is hereby
         -------------   ----------------------------                         
amended by adding the following paragraph immediately following (S)11.2(h)
therein:

          "The Borrower covenants and agrees that if it or any of its
     Subsidiaries shall create or assume any lien upon any of their respective
     properties or assets, whether now owned or hereafter acquired, other than
     Permitted Liens (unless prior written consent shall have been obtained from
     the Lenders), the Borrower will make or cause to be made effective
     provisions whereby the Obligations will be secured by such lien equally and
     ratably with any and all other Indebtedness thereby secured so long as such
     other Indebtedness shall be so secured; provided, that the covenants of the
                                             --------                           
     Borrower contained in this sentence shall only be in effect for so long as
     the Borrower shall be similarly obligated under any other Indebtedness;
     provided, further, that an Event of Default shall occur for so long as such
     --------  -------                                                          
     other Indebtedness becomes secured notwithstanding any actions taken by the
     Borrower to ratably secure the Obligations hereunder."
<PAGE>
 
                                      -11-

     10.  AMENDMENTS TO (S)12 (FINANCIAL COVENANTS).  Section 12 is hereby
          --------------   ------------------------                       
amended by deleting (S)(S)12.1  12.3 in their entirety and restating them as
follows:

          "(S)12.1  LEVERAGE RATIO.  As of the end of any fiscal quarter
                    -------- -----
     commencing with the fiscal quarter ending September 30, 1998, the ratio of
     (a) Funded Debt less cash and cash equivalents in excess of $10,000,000 to
     (b) EBITDA for the four quarters ending on such date (the "Leverage Ratio")
     shall not exceed the ratio set forth below for the applicable period:

<TABLE>
<CAPTION>
------------------------------------------------------------------
         PERIOD                                    RATIO
------------------------------------------------------------------
<S>                                                <C>
Ending 9/30/98                                     4.75:1
------------------------------------------------------------------
10/1/98      through                               4.25:1
3/31/99 
------------------------------------------------------------------
4/1/99       through                               4.00:1
6/30/99 
------------------------------------------------------------------
Thereafter                                         3.25:1
------------------------------------------------------------------
</TABLE>


          (S)12.2  INTEREST COVERAGE RATIO. As of the end of any fiscal quarter
                   -------- -------- -----
     commencing with the fiscal quarter ending September 30, 1998 the ratio of
     (a) EBIT for the four quarters ending on such date to (b) Consolidated
     Total Interest Expense for such period shall not be less than the ratio set
     forth below for the applicable period:

     
<TABLE>
<CAPTION>

------------------------------------------------------------------
         PERIOD                                    RATIO
------------------------------------------------------------------
<S>                                                <C>
Ending 9/30/98                                     2.50:1
------------------------------------------------------------------
Thereafter                                         3.50:1
------------------------------------------------------------------
</TABLE>

          (S)12.3  DEBT TO CAPITAL RATIO. As at the end of any fiscal quarter
                   ---------------------
     commencing with the fiscal quarter ending September 30, 1998 the ratio of
     (a) Funded Debt to (b) Funded Debt plus total shareholders' equity
     (excluding any capital contributions from Unrestricted Subsidiaries,
     including net income earned by Unrestricted Subsidiaries, which is
     reflected in consolidated retained earnings) shall not exceed the
     percentage set forth below for the applicable period:


<TABLE>
<CAPTION>
------------------------------------------------------------------
         PERIOD                                    RATIO
------------------------------------------------------------------
<S>                                                <C>
Ending 6/30/99                                     60%
------------------------------------------------------------------
Thereafter                                         55%    
------------------------------------------------------------------
</TABLE>
<PAGE>
 
                                      -12-

     11.  AMENDMENTS TO (S)30 (CONSENTS, AMENDMENTS, WAIVERS, ETC.).  Section 30
          ---------------------------------------------------------             
is hereby amended by deleting clauses (a) and (d) thereof in their entirety and
restating them as follows:

          "(a) without the written consent of the Borrower and the written
     consent of all of the Lenders (i) the rate of interest on the Notes and the
     amount of Facility Fees, Letter of Credit Fees or Leverage Premium
     hereunder may not be decreased, and (ii) the amount of any Reimbursement
     Obligations, the amount of the Commitments of the Lenders, the Revolving
     Credit Commitment, the Multicurrency Commitment, the Total Commitment, and
     the amount or date of any scheduled payment or mandatory prepayment
     hereunder may not be changed;

          (d) the amount of any Letter of Credit Fees payable for any Issuing
     Lender's account may not be decreased without the written consent of the
     Issuing Lender, and."

     12.    AMENDMENT TO SCHEDULE 2 (BANKS; COMMITMENT PERCENTAGES; ADDRESSES).
            ------------------------------------------------------------------  
Schedule 2 is hereby amended by deleting such schedule in its entirety and
----------                                                                
substituting the Schedule 2 attached hereto in place thereof.  The parties
                 ----------                                               
hereto hereby acknowledge and agree that each reference to Schedule 2 in the
                                                           ----------       
Credit Agreement or any other Loan Document shall henceforth be a reference to
                                                                              
Schedule 2 attached hereto or as subsequently amended.
----------                                            

     13.  CONDITIONS TO EFFECTIVENESS.  This Third Amendment shall become
          ---------- -- -------------                                    
effective upon the satisfaction of the following conditions:

     (a) The execution and delivery of this Third Amendment by the parties
hereto;

     (b) Each of the Lenders shall have received an executed original of such
Lender's Revolving Credit Note in form and substance satisfactory to such Lender
signed by the Borrower;

     (c) Each of the Lenders shall have received an executed original of such
Lender's Multicurrency Note in form and substance satisfactory to such Lender
signed by the Borrower;

     (d) The Lenders shall have received opinions of counsel to the Borrower as
to the due authorization and enforceability of the Third Amendment, the
Multicurrency Notes and the Revolving Credit Notes issued to the Lenders
pursuant to the Third Amendment, the due organization, legal existence, and good
standing of the Borrower, and all other matters as the Lenders may reasonably
request;

     (d) The Borrower shall have delivered to the Managing Agent financial
projections, including a balance sheet, income statement and cash flow 
<PAGE>
 
                                      -13-

statement beginning with the period ending September 30, 1998 and for the
following five (5) fiscal years thereafter, in form and substance reasonably
satisfactory to the Managing Agent; and

     (e) The Borrower shall have paid to the Managing Agent, for the pro rata
                                                                     --------
benefit of the Lenders, an amendment fee in an amount equal to one tenth of one
percent (0.10%) of the Total Commitment.

     14.  NO EVENT OF DEFAULT.  The Borrower represents and warrants to the
          -------------------                                              
Agents and the Lenders that after giving effect to this Third Amendment, no
Default or Event of Default has occurred and is continuing.

     15.  RATIFICATION, ETC.  Except as expressly amended hereby, the Credit
          ------------  ---                                                 
Agreement, the other Loan Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect.  This Third Amendment and the Credit
Agreement shall hereafter be read and construed together as a single document,
and all references in the Credit Agreement, any other Loan Document or any
agreement or instrument related to the Credit Agreement shall hereafter refer to
the Credit Agreement as amended by this Third Amendment.

     16.  GOVERNING LAW.  THIS THIRD AMENDMENT SHALL BE GOVERNED BY AND
          -------------                                                
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(WITHOUT REFERENCE TO CONFLICT OF LAWS) AND SHALL TAKE EFFECT AS A SEALED
INSTRUMENT IN ACCORDANCE WITH SUCH LAWS.

     17.  COUNTERPARTS.  This Third Amendment may be executed in any number of
          ------------                                                        
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
counterparts taken together shall be deemed to constitute one and the same
instrument.
<PAGE>
 
     IN WITNESS WHEREOF, each of the undersigned has duly executed this Third
Amendment under seal as of the date first set forth above.


THE BORROWER:
-------------

UNITED STATES FILTER
CORPORATION
 
 
By: /s/ Kevin L. Spence
   _______________________________
    Name: Kevin L. Spence
    Title: Executive Vice President, Chief Financial Officer


THE LENDERS:
------------
                     
BANKBOSTON, N.A., individually and               DLJ CAPITAL FUNDING, INC.
as  Administrative Agent                     

    /s/ Lindsay W. McSweeney                         /s/ Dana F. Klein 
By:_______________________________               By:____________________________
    Name: Lindsay W. McSweeney                       Name: Dana F. Klein
    Title: Director                                  Title: Vice President
 
ABN AMRO BANK N.V.                               DEUTSCHE BANK AG, NEW YORK
                                                 AND/OR CAYMAN ISLANDS BRANCHES

    /s/ Ellen M. Coleman                             /s/ Jean M. Hannigan
By:______________________________                By:____________________________
    NAME: Ellen M. Coleman                           NAME: Jean M. Hannigan
    TITLE: Vice President                            TITLE: Vice President

    /s/ Catheryn N. Fuller                           /s/ Susan L. Pearson
By:_______________________________               By:____________________________
    NAME: Catheryn N. Fuller                         NAME: Susan L. Pearson
    TITLE: Senior Vice President                     TITLE: Director
           Branch Manager
 
THE BANK OF NEW YORK                             BANK OF AMERICA NATIONAL TRUST
                                                 AND SAVINGS ASSOCIATION

    /s/ Jonathan Rollins                             /s/ Chas A. McDonell
By:_______________________________               By:____________________________
    NAME: Jonathan Rollins                           NAME: Chas A. McDonell
    TITLE: Assistant Vice President                  TITLE: Vice President
<PAGE>
 
UNICREDITO ITALIANO                              FLEET BANK, N.A.
 
    /s/ Gianfranco Bisagni                           /s/ Christopher Mayrose
BY:_______________________________               By:____________________________
    NAME: Gianfranco Bisagni                         NAME: Christopher Mayrose
    TITLE: First Vice President                      TITLE: Vice President
 
    /s/ Saiyed A. Abbos
BY:_______________________________
    NAME: Saiyed A. Abbos
    TITLE: Assistant Vice President

NATIONSBANK, N.A.                                THE LONG-TERM CREDIT 
                                                 BANK OF JAPAN LTD.
                                                 (LOS ANGELES AGENCY)
 
    /s/ Chas A. McDonell                             /s/ Noboru Akahane
By:_______________________________               By:____________________________
    NAME: Chas A. McDonell                           NAME: Noboru Akahane
    TITLE: Vice President                            TITLE: Deputy General 
                                                            Manager

 
  
UNION BANK OF                                    THE SANWA BANK LIMITED, 
CALIFORNIA, N.A.                                 LOS ANGELES BRANCH

    /s/ Karyssa M. Britton                           /s/ Toshiko Boyd
By:_______________________________               By:____________________________
    NAME: Karyssa M. Britton                         NAME: Toshiko Boyd
    TITLE: Vice President                            TITLE: Vice President  
                                                
 
BANCA NAZIONALE DEL LAVORO S.P.A.                THE INDUSTRIAL BANK OF JAPAN,
                                                 LIMITED (LOS ANGELES AGENCY)
                                                    
    /s/ R. Mancone                                   /s/ Vincente L. Timiraos
By:_______________________________               By:____________________________
    NAME: R. Mancone                                 NAME: Vincente L. Timiraos
    TITLE: Assistant Vice President                  TITLE: SVP & SDGM

    /s/ L. Valentini
By:_______________________________
    NAME: L. Valentini
    TITLE: First Vice President
<PAGE>
 
THE FIRST NATIONAL BANK OF CHICAGO
 
    /s/ Mark A. Isley 
By:___________________________
    NAME: Mark A. Isley
    TITLE: First Vice President
 
 
<PAGE>
 
                                                                      SCHEDULE 2
                                                                      ----------

                   BANKS; COMMITMENT PERCENTAGES; ADDRESSES
                   ----- ----------------------------------

-----------------------------------------------------------------------------
                                                               COMMITMENT 
                LENDER                                         PERCENTAGE
-----------------------------------------------------------------------------
BANKBOSTON, N.A.                                                20.0000%
 100 FEDERAL STREET, M/S 01-08-02
 BOSTON, MA  02110
 ATTN:  LINDSAY W.  MCSWEENEY
 TEL:    617.434.7211
 FAX:    617.434.2160
-----------------------------------------------------------------------------
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN 
ISLANDS BRANCHES                                                10.0000%
 31 WEST 52ND STREET, 24TH FLOOR
 NEW YORK, NY  10019
 ATTN:  JEAN HANNIGAN
 TEL:    212.469.8648
 FAX:    212.469.3632
------------------------------------------------------------------------------
FIRST CHICAGO                                                   10.0000%
 777 S. FIGUEROA STREET, 4TH FLOOR
 LOS ANGELES, CA  90017-5800
 ATTN:  TONY MATTHEWS
 TEL:    213.683.4957
 FAX:    213.683.4999
------------------------------------------------------------------------------
FLEET BANK, N.A.                                                10.0000%
 1185 AVENUE OF THE AMERICAS, 3RD FLOOR
 NEW YORK, NY  10036
 ATTN:  CHRISTOPHER MAYROSE
 TEL:    212.819.5727
 FAX:    212.819.4113
------------------------------------------------------------------------------
NATIONSBANK, N.A.                                               10.0000%
 444 SOUTH FLOWER STREET, SUITE 4100
 LOS ANGELES, CA  90071
 ATTN:  CHAS MCDONELL
 TEL:    213.236.4914
 FAX:    213.624.5812
------------------------------------------------------------------------------
<PAGE>
 
                                      -2-
------------------------------------------------------------------------------
                                                               COMMITMENT 
                LENDER                                         PERCENTAGE
------------------------------------------------------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS 
ASSOCIATION                                                      7.3333%
 444 SOUTH FLOWER STREET, SUITE 4100
 LOS ANGELES, CA  90071
 ATTN:  CHAS MCDONELL
 TEL:    213.236.4914
 FAX:    213.624.5812
------------------------------------------------------------------------------
UNION BANK OF CALIFORNIA, N.A.                                   7.3333%
 445 SOUTH FIGUEROA, 15TH FLOOR
 LOS ANGELES, CA  90071
 ATTN:  JULIE BECKLEY
 TEL:    213.236.5779
 FAX:    213.236.4096
------------------------------------------------------------------------------
ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL 
BRANCH                                                           6.6667%
 300 SOUTH GRAND AVENUE, SUITE 2650
 LOS ANGELES, CA  90071-7519
 ATTN:  ELLEN COLEMAN
 TEL:    213.687.2306
 FAX:    213.687.2390
------------------------------------------------------------------------------
THE BANK OF NEW YORK                                             4.6667%
 10990 WILSHIRE BOULEVARD, SUITE 1125
 LOS ANGELES, CA  90024
 ATTN:  JONATHAN ROLLINS
 TEL:    310.996.8658
 FAX:    310.996.8667
------------------------------------------------------------------------------
THE SANWA BANK, LIMITED, LOS ANGELES BRANCH                      4.6667%
 SANWA BANK PLAZA, W5-4
 601 SOUTH FIGUEROA STREET
 LOS ANGELES, CA  90017
 ATTN:  TOSHIKO BOYD
 TEL:    213.896.7176
 FAX:    213.623.4912
------------------------------------------------------------------------------
<PAGE>
 
                                      -3-
------------------------------------------------------------------------------
                                                               COMMITMENT 
                LENDER                                         PERCENTAGE
------------------------------------------------------------------------------
UNICREDITO ITALIANO                                              3.3333%
 375 PARK AVENUE
 NEW YORK, NY  10152
 ATTN:  GIANFRANCO BISAGNI
 TEL:    212.546.9623
 FAX:    212.546.9675
------------------------------------------------------------------------------
BANCA NAZIONALE DEL LAVORO                                       2.0000%
 25 W. 51ST STREET
 NEW YORK, NY  10019
 ATTN:  ROBERTO MANCONE
 TEL:    212.314.0734
 FAX:    212.765.2978
------------------------------------------------------------------------------
DLJ CAPITAL FUNDING, INC.                                        1.3333%
 277 PARK AVENUE, 9TH FLOOR
 NEW YORK, NY  10172
 ATTN:  DANA KLEIN
 TEL:    212.892.7911
 FAX:    212.892.7542
------------------------------------------------------------------------------
THE INDUSTRIAL BANK OF JAPAN, LIMITED (LOS 
ANGELES AGENCY)                                                  1.3333%
 350 SOUTH GRAND AVENUE, SUITE 1500
 LOS ANGELES, CA  90071
 ATTN:  J. BLAKE SEATON
 TEL:    213.893.6448
 FAX:    213.488.9840
------------------------------------------------------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN, LTD. (LOS 
ANGELES AGENCY)                                                  1.3333%
 350 SOUTH GRAND AVENUE, SUITE 3000
 LOS ANGELES, CA  90071
 ATTN:  BRYAN READ
 TEL:    213.689.6314
 FAX:    213.622.6908
------------------------------------------------------------------------------
                        TOTAL                                  100.0000%
------------------------------------------------------------------------------