WITNESSETH

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                                                                     EXHIBIT 4.1

                       FIRST AMENDMENT TO RIGHTS AGREEMENT


         This First Amendment to Rights Agreement (this "Amendment") is executed
to be effective as of November 19, 1998, between ITEQ, Inc., a Delaware
corporation (the "Company") and Xxxxxx Trust and Savings Bank, an Illinois
banking corporation (the "Rights Agent").

                                   WITNESSETH

         WHEREAS, the Company and the Rights Agent entered into the Rights
Agreement dated as of September 4, 1998 (the "Agreement"), and the parties
desire to amend the Agreement in the manner authorized in Section 27 thereof.

         NOW THEREFORE, in consideration of the premises, and other valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Company and the Rights Agent hereby agree as follows:

         1.    DEFINITIONS. All terms used in this Amendment which are not
defined in this Amendment have the meaning given those terms in the Agreement.

         2.    AMENDMENT TO THE AGREEMENT. Section 1(a) of the Agreement is
hereby amended by deleting the reference to "25%" in the second line thereof and
inserting "15%" in its place.

         3.    RATIFICATION. Except as amended hereby, the Agreement shall
remain in full force and effect, and the Company and the Rights Agent do hereby
ratify, confirm and adopt the Rights Agreement as amended hereby.

         4. HEADINGS. The headings of Sections in this Amendment have been
included for convenience only and should not be construed in interpreting this
Amendment.

         5.    SEVERABILITY. If any part of this Amendment is for any reason
found to be unenforceable, all other portions nevertheless remain enforceable.

         6.    SUCCESSORS. This Amendment binds and inures to the benefit of the
parties and their respective successors and assigns.

         7.    COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which counterparts taken together shall constitute the same
instrument.

         8.    GOVERNING LAW. This Amendment must be construed--and its
performance enforced--under Delaware law.



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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.


Attest:                                 ITEQ, INC.


By: /s/ Xxxxxxxx X. XxXxxx              By: /s/ Xxxx X. Xxxxxxx
   ---------------------------------        ------------------------------------
        Xxxxxxxx X. XxXxxx                      Xxxx X. Xxxxxxx
        Executive Vice President,               President, Chairman of the Board
        Chief Financial Officer and             and Chief Executive Officer
        Secretary



Attest:                                 XXXXXX TRUST AND SAVINGS BANK


By: /s/ Xxx X. Xxxxxxxxx                By:  /s/ Xxxxxxxx Xxxxxxxx
   ---------------------------------        ------------------------------------
        Xxx X. Xxxxxxxxx                         Xxxxxxxx Xxxxxxxx
        Vice President                           Assistant Vice President