<PAGE>   1
                                                                    Exhibit 10


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


                          PLAN AND AGREEMENT OF MERGER

                                       OF

                                   ITEQ, INC.

                                      AND

                      ASTROTECH INTERNATIONAL CORPORATION


                                 ----------

                           DATED AS OF JUNE 30, 1997


--------------------------------------------------------------------------------
<PAGE>   2


                               TABLE OF CONTENTS


                                   ARTICLE I

<TABLE>
<S>     <C>                                                             <C>
                                     MERGER  . . . . . . . . . . . . .  2
1.1.    Surviving Corporation  . . . . . . . . . . . . . . . . . . . .  2
1.2.    Stockholder Approval.  . . . . . . . . . . . . . . . . . . . .  2
1.3.    Effective Date.  . . . . . . . . . . . . . . . . . . . . . . .  2
1.4.    Name and Continued Corporate Existence of Surviving
        Corporation  . . . . . . . . . . . . . . . . . . . . . . . . .  2
        1.4.1.    Name and Existence.  . . . . . . . . . . . . . . . .  2
        1.4.2.    Federal Income Tax Treatment of Merger.  . . . . . .  2
1.5.    Governing Law and Certificate of Incorporation of Surviving
        Corporation  . . . . . . . . . . . . . . . . . . . . . . . . .  2
1.6.    Bylaws of Surviving Corporation  . . . . . . . . . . . . . . .  3
1.7.    Directors of Surviving Corporation   . . . . . . . . . . . . .  3
        1.7.1.    Directors of Surviving Corporation.  . . . . . . . .  3
        1.7.2.    Vacancies.   . . . . . . . . . . . . . . . . . . . .  3
1.8.    Capital Stock of Surviving Corporation   . . . . . . . . . . .  4
1.9.    Conversion of Securities upon Merger   . . . . . . . . . . . .  4
        1.9.1.    General.   . . . . . . . . . . . . . . . . . . . . .  4
        1.9.2.    Conversion of AIX Common Stock.    . . . . . . . . .  4
        1.9.3.    Exchange of AIX Common Stock Certificates.   . . . .  4
        1.9.4.    ITEQ Fractional Shares.  . . . . . . . . . . . . . .  4
        1.9.5.    AIX's Transfer Books Closed.   . . . . . . . . . . .  5
1.10.   Treatment of Stock Options.  . . . . . . . . . . . . . . . . .  5
1.11.   Assets and Liabilities   . . . . . . . . . . . . . . . . . . .  5
        1.11.1.   Assets and Liabilities of Merging Corporations 
                  Become Those of Surviving Corporation. . . . . . . .  5
        1.11.2.   Conveyances to Surviving Corporation.  . . . . . . .  6
        1.11.3.   Accounting Treatment.  . . . . . . . . . . . . . . .  6
        1.11.4.   Unclaimed Merger Consideration; No Escheat.  . . . .  6
        1.11.5.   Dissenting Stockholders of AIX.  . . . . . . . . . .  6
1.12.   Material Adverse Effect  . . . . . . . . . . . . . . . . . . .  6

                            ARTICLE II

                     REPRESENTATIONS AND WARRANTIES
                              OF AIX . . . . . . . . . . . . . . . . .  7
2.1.    Representations and Warranties of AIX  . . . . . . . . . . . .  7
        2.1.1.    Organization and Standing. . . . . . . . . . . . . .  7
        2.1.2.    Agreement Authorized and its Effect on Other
                  Obligations.   . . . . . . . . . . . . . . . . . . .  7
        2.1.3.    Capitalization.  . . . . . . . . . . . . . . . . . .  8
</TABLE>




                                      i
<PAGE>   3
<TABLE>
<S>     <C>                                                            <C>
        2.1.4.    Subsidiaries   . . . . . . . . . . . . . . . . . . .  8
        2.1.5.    Reports and Financial Statements   . . . . . . . . .  8
        2.1.6.    Liabilities  . . . . . . . . . . . . . . . . . . . .  9
        2.1.7.    Additional AIX Information   . . . . . . . . . . . .  9
                  2.1.7.1.  Employee Compensation Plans  . . . . . . .  9
                  2.1.7.2.  Certain Salaries   . . . . . . . . . . . .  9
                  2.1.7.3.  Employee Agreements  . . . . . . . . . . .  9
                  2.1.7.4.  Guaranties   . . . . . . . . . . . . . . . 10
                  2.1.7.5.  Environmental. . . . . . . . . . . . . . . 10
        2.1.8.    No Undisclosed Defaults  . . . . . . . . . . . . . . 10
        2.1.9.    Absence of Certain Changes and Events  . . . . . . . 10
                  2.1.9.1.  Financial Change   . . . . . . . . . . . . 10
                  2.1.9.2.  Property Damage  . . . . . . . . . . . . . 10
                  2.1.9.3.  Dividends  . . . . . . . . . . . . . . . . 10
                  2.1.9.4.  Capitalization Change  . . . . . . . . . . 10
                  2.1.9.5.  Labor Disputes   . . . . . . . . . . . . . 10
                  2.1.9.6.  Other Material Changes   . . . . . . . . . 10
        2.1.10.   Taxes  . . . . . . . . . . . . . . . . . . . . . . . 11
        2.1.11.   Intellectual Property  . . . . . . . . . . . . . . . 11
        2.1.12.   Title to Properties  . . . . . . . . . . . . . . . . 11
        2.1.13.   Litigation . . . . . . . . . . . . . . . . . . . . . 12
        2.1.14.   Environmental Compliance.  . . . . . . . . . . . . . 12
                  2.1.14.1. Environmental Conditions . . . . . . . . . 12
                  2.1.14.2. Permits, etc . . . . . . . . . . . . . . . 12
                  2.1.14.3. Compliance.  . . . . . . . . . . . . . . . 12
                  2.1.14.4. Environmental Claims.  . . . . . . . . . . 13
                  2.1.14.5. Renewals. .  . . . . . . . . . . . . . . . 13
        2.1.15.   Compliance with Other Laws . . . . . . . . . . . . . 13
        2.1.16.   Finder's Fee . . . . . . . . . . . . . . . . . . . . 13
        2.1.17.   Compliance with ERISA  . . . . . . . . . . . . . . . 13
        2.1.18.   Investigations; Litigation . . . . . . . . . . . . . 14
        2.1.19.   Product Warranty . . . . . . . . . . . . . . . . . . 14
        2.1.20.   Information for Proxy Statement. . . . . . . . . . . 15
        2.1.21.   Investment Company.    . . . . . . . . . . . . . . . 15

                            ARTICLE III

                     REPRESENTATIONS AND WARRANTIES OF ITEQ  . . . . . 15
3.1.    Representations and Warranties of ITEQ   . . . . . . . . . . . 15
        3.1.1.    Organization and Standing.   . . . . . . . . . . . . 15
        3.1.2.    Agreement Authorized and its Effect on Other
                  Obligations.   . . . . . . . . . . . . . . . . . . . 15
        3.1.3.    Capitalization.  . . . . . . . . . . . . . . . . . . 16
        3.1.4.    Subsidiaries   . . . . . . . . . . . . . . . . . . . 16
</TABLE>





                                       ii
<PAGE>   4
<TABLE>
<S>     <C>                                                            <C>
        3.1.5.    Reports and Financial Statements.  . . . . . . . . . 16
        3.1.6.    Liabilities  . . . . . . . . . . . . . . . . . . . . 17
        3.1.7.    No Undisclosed Defaults  . . . . . . . . . . . . . . 17
        3.1.8.    Absence of Certain Changes and Events in ITEQ.   . . 17
                  3.1.8.1.  Financial Change.  . . . . . . . . . . . . 17
                  3.1.8.2.  Property Damage  . . . . . . . . . . . . . 17
                  3.1.8.3.  Dividends.   . . . . . . . . . . . . . . . 17
                  3.1.8.4.  Capitalization Change  . . . . . . . . . . 17
                  3.1.8.5.  Labor Disputes   . . . . . . . . . . . . . 17
                  3.1.8.6.  Other Material Changes.  . . . . . . . . . 17
        3.1.9.    Taxes.   . . . . . . . . . . . . . . . . . . . . . . 17
        3.1.10.   Intellectual Property.   . . . . . . . . . . . . . . 18
        3.1.11.   Title to Properties.   . . . . . . . . . . . . . . . 18
        3.1.12.   Litigation.  . . . . . . . . . . . . . . . . . . . . 19
        3.1.13.   Environmental Compliance.  . . . . . . . . . . . . . 19
                  3.1.13.1.  Environmental Conditions  . . . . . . . . 19
                  3.1.13.2.  Permits, etc  . . . . . . . . . . . . . . 19
                  3.1.13.3.  Compliance.   . . . . . . . . . . . . . . 19
                  3.1.13.4.  Environmental Claims.   . . . . . . . . . 19
                  3.1.13.5.  Renewals.   . . . . . . . . . . . . . . . 19
        3.1.14.   Compliance with Other Laws.  . . . . . . . . . . . . 19
        3.1.15.   Finder's Fee.  . . . . . . . . . . . . . . . . . . . 20
        3.1.16.   Compliance With ERISA  . . . . . . . . . . . . . . . 20
        3.1.17.   Investigations; Litigation.  . . . . . . . . . . . . 21
        3.1.18.   Product Warranty   . . . . . . . . . . . . . . . . . 21
        3.1.19.   Information for Proxy Statement.   . . . . . . . . . 21
        3.1.20.   Investment Company.  . . . . . . . . . . . . . . . . 21

                            ARTICLE IV

                     OBLIGATIONS PENDING EFFECTIVE DATE  . . . . . . . 21
4.1.    Agreements of ITEQ and AIX.  . . . . . . . . . . . . . . . . . 21
        4.1.1.    Maintenance of Present Business.   . . . . . . . . . 21
        4.1.2.    Maintenance of Properties.   . . . . . . . . . . . . 22
        4.1.3.    Maintenance of Books and Records.  . . . . . . . . . 22
        4.1.4.    Compliance with Law.   . . . . . . . . . . . . . . . 22
        4.1.5.    Compliance with Agreement.   . . . . . . . . . . . . 22
        4.1.6.    Inspection of Each Merging Corporation.  . . . . . . 22
4.2.    Additional Agreements of ITEQ and AIX.   . . . . . . . . . . . 22
        4.2.1.    Hart-Scott-Rodino.   . . . . . . . . . . . . . . . . 22
        4.2.2.    Proxy Statement.   . . . . . . . . . . . . . . . . . 22
        4.2.3.    Notice of Material Developments.   . . . . . . . . . 23
4.3.    Additional Agreements of AIX.  . . . . . . . . . . . . . . . . 23
</TABLE>





                                      iii
<PAGE>   5
<TABLE>
<S>     <C>                                                         <C>
        4.3.1.    Prohibition of Certain Employment Contracts.   . . . 23
        4.3.2.    Prohibition of Certain Loans.  . . . . . . . . . . . 23
        4.3.3.    Prohibition of Certain Commitments.  . . . . . . . . 23
        4.3.4.    Disposal of Assets.  . . . . . . . . . . . . . . . . 23
        4.3.5.    Maintenance of Insurance.  . . . . . . . . . . . . . 23
        4.3.6.    AIX Acquisition Proposals.   . . . . . . . . . . . . 24
                  4.3.6.1.  No Solicitation.   . . . . . . . . . . . . 24
                  4.3.6.2.  Acceptance of Superior AIX Transaction
                  Proposals  . . . . . . . . . . . . . . . . . . . . . 25
        4.3.7.    No Amendment to Certificate of Incorporation, etc.   25
        4.3.8.    No Issuance, Sale, or Purchase of Securities.  . . . 26
        4.3.9.    Prohibition on Dividends.  . . . . . . . . . . . . . 26
        4.3.10.   Supplemental Financial Statements.   . . . . . . . . 26
        4.3.11.   Notice of Material Developments.   . . . . . . . . . 26
        4.3.12.   Stockholders' Meeting  . . . . . . . . . . . . . . . 26
4.4.    Additional Agreements of ITEQ.   . . . . . . . . . . . . . . . 26
        4.4.1.    Prohibition of Certain Employment Contracts.   . . . 26
        4.4.2.    Prohibition of Certain Loans.  . . . . . . . . . . . 27
        4.4.3.    Prohibition of Certain Commitments.  . . . . . . . . 27
        4.4.4.    Disposal of Assets.  . . . . . . . . . . . . . . . . 27
        4.4.5.    Maintenance of Insurance.  . . . . . . . . . . . . . 27
        4.4.6.    No Amendment to Certificate of Incorporation, etc.   27
        4.4.7.    No Issuance, Sale, or Purchase of Securities.  . . . 27
        4.4.8.    Prohibition on Dividends.  . . . . . . . . . . . . . 28
        4.4.9.    Stockholders' Meeting.   . . . . . . . . . . . . . . 28
        4.4.10.   Issuance of ITEQ Common Stock.   . . . . . . . . . . 28
        4.4.11.   Listing of ITEQ Stock.   . . . . . . . . . . . . . . 28
        4.4.12.   Notice of Material Developments.   . . . . . . . . . 28
        4.4.13.   Refinancing of Outstanding Indebtedness.   . . . . . 28

                             ARTICLE V

                  CONDITIONS PRECEDENT TO OBLIGATIONS  . . . . . . . . 29
5.1.    Conditions Precedent to Obligations of AIX.  . . . . . . . . . 29
        5.1.1.    Representations and Warranties of ITEQ True at
                  Effective Date.  . . . . . . . . . . . . . . . . . . 29
        5.1.2.    No Material Litigation.  . . . . . . . . . . . . . . 29
        5.1.3.    Opinion of ITEQ Counsel.   . . . . . . . . . . . . . 29
        5.1.4.    Stockholder Approval.  . . . . . . . . . . . . . . . 30
        5.1.5.    Hart-Scott-Rodino, etc.  . . . . . . . . . . . . . . 30
        5.1.6.    Registration; Listing of ITEQ Common Stock.  . . . . 30
        5.1.7.    Consent of Certain Parties in Privity With ITEQ.   . 30
5.1.8.  Stock Options and Other Employee Benefit Plans of AIX  . . . . 30
        5.1.9.    Ancillary Matters.   . . . . . . . . . . . . . . . . 31
        5.1.10.   Tax Opinion  . . . . . . . . . . . . . . . . . . . . 31
</TABLE>





                                       iv
<PAGE>   6
<TABLE>
<S>     <C>                                                            <C>
5.2.    Conditions Precedent to Obligations of ITEQ  . . . . . . . . . 31
        5.2.1.    Representations and Warranties of AIX True at
                  Effective Date.  . . . . . . . . . . . . . . . . . . 31
        5.2.2.    No Material Litigation.  . . . . . . . . . . . . . . 31
        5.2.3.    Opinion of AIX's Counsel.  . . . . . . . . . . . . . 32
        5.2.4.    Stockholder Approval.  . . . . . . . . . . . . . . . 32
        5.2.5.    Hart-Scott-Rodino, etc.  . . . . . . . . . . . . . . 32
        5.2.6.    Consent of Certain Parties in Privity with AIX.  . . 32
        5.2.7.    Ancillary Matters  . . . . . . . . . . . . . . . . . 32

                            ARTICLE VI

                     TERMINATION AND ABANDONMENT   . . . . . . . . . . 33
6.1.    Termination.   . . . . . . . . . . . . . . . . . . . . . . . . 33
        6.1.1.    By Mutual Consent.   . . . . . . . . . . . . . . . . 33
        6.1.2.    By ITEQ Because of Conditions Precedent.   . . . . . 33
        6.1.3.    By ITEQ Because of Material Adverse Change.  . . . . 33
        6.1.4.    By AIX Because of Conditions Precedent.  . . . . . . 33
        6.1.5.    By AIX Due to a Superior AIX Transaction Proposal.   33
        6.1.6.    By AIX Because of Material Adverse Change.   . . . . 33
        6.1.7.    By ITEQ or AIX Because of Legal Proceedings.   . . . 33
        6.1.8.    By ITEQ or AIX if Merger not Effective by November 
                  30, 1997.  . . . . . . . . . . . . . . . . . . . . . 34
        6.1.9.    By ITEQ or AIX if Merger Cannot be Accounted for 
                  as a Pooling.  . . . . . . . . . . . . . . . . . . . 34
6.2.    Termination by Board of Directors.   . . . . . . . . . . . . . 34
6.3.    Effect of Termination.   . . . . . . . . . . . . . . . . . . . 34
6.4.    Waiver of Conditions.  . . . . . . . . . . . . . . . . . . . . 34
6.5.    Expense on Termination.  . . . . . . . . . . . . . . . . . . . 34

                            ARTICLE VII
                     ADDITIONAL AGREEMENTS   . . . . . . . . . . . . . 34
7.1.    Exchange of Options  . . . . . . . . . . . . . . . . . . . . . 34
7.2.    Indemnity.   . . . . . . . . . . . . . . . . . . . . . . . . . 34
        7.2.1.    Indemnification by ITEQ as to Proxy Statement  . . . 35
        7.2.2.    Indemnification of Directors and Officers  . . . . . 35
        7.2.3.    Indemnification Procedure  . . . . . . . . . . . . . 35
        7.2.4.    Benefits   . . . . . . . . . . . . . . . . . . . . . 36
7.3.    Registration of Certain AIX Control Person Shares.   . . . . . 36
        7.3.1.    Agreement to Register Resales  . . . . . . . . . . . 36
        7.3.2.    Procedures   . . . . . . . . . . . . . . . . . . . . 36
        7.3.3.    Registration Expenses  . . . . . . . . . . . . . . . 36
        7.3.4.    Preparation; Reasonable Investigation  . . . . . . . 37
        7.3.5.    Rights Non-Transferable  . . . . . . . . . . . . . . 37
        7.3.6.    Indemnification by ITEQ  . . . . . . . . . . . . . . 37
</TABLE>





                                       v
<PAGE>   7
<TABLE>
<S>                                                                    <C>
             7.3.7.    Notices of Claims, etc   . . . . . . . . . . . . . . 38
             7.3.8.    Undertaking to File Reports and Cooperate in Rule      
                       144 Transactions   . . . . . . . . . . . . . . . . . 38
             7.3.9.    Beneficiaries  . . . . . . . . . . . . . . . . . . . 38
       7.4.  Affiliate Agreements.  . . . . . . . . . . . . . . . . . . . . 39
             7.4.1.    AIX Affiliates   . . . . . . . . . . . . . . . . . . 39
             7.4.2.    ITEQ Affiliates  . . . . . . . . . . . . . . . . . . 39
       7.5.  Publication of Combined Results  . . . . . . . . . . . . . . . 39

                           ARTICLE VIII

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
       8.1.  Entirety.  . . . . . . . . . . . . . . . . . . . . . . . . . . 39
       8.2.  Counterparts.  . . . . . . . . . . . . . . . . . . . . . . . . 39
       8.3.  Notices and Waivers.   . . . . . . . . . . . . . . . . . . . . 39
       8.4.  Termination of Representations, Warranties, etc.   . . . . . . 40
       8.5.  Table of Contents and Captions.  . . . . . . . . . . . . . . . 40
       8.6.  Successors and Assigns.  . . . . . . . . . . . . . . . . . . . 40
       8.7.  Severability.  . . . . . . . . . . . . . . . . . . . . . . . . 40
       8.8.  Applicable Law.  . . . . . . . . . . . . . . . . . . . . . . . 41
       8.9.  Public Announcements.  . . . . . . . . . . . . . . . . . . . . 41
       8.10. Definitions.   . . . . . . . . . . . . . . . . . . . . . . . . 41
                                                                              
                                 APPENDICES                                   
                                                                              
       Amended and Restated Certificate of Incorporation of ITEQ    . . App. I
       Amended and Restated Bylaws of ITEQ  . . . . . . . . . . . . .  App. II
       AIX Affiliate Agreement  . . . . . . . . . . . . . . . . . . . App. III
       ITEQ Affiliate Agreement   . . . . . . . . . . . . . . . . . .  App. IV
</TABLE>





                                       vi
<PAGE>   8
                          PLAN AND AGREEMENT OF MERGER


       PLAN AND AGREEMENT OF MERGER ("Agreement"), dated as of June 30, 1997,
by and between ITEQ, Inc., a Delaware corporation ("ITEQ" or the "Surviving
Corporation"), and Astrotech International Corporation, a Delaware corporation
("AIX").  ITEQ and AIX are hereinafter collectively referred to as the "Merging
Corporations."

                              W I T N E S S E T H:

       WHEREAS, ITEQ is a corporation duly organized and validly existing under
the laws of the State of Delaware, with its registered office at 1013 Centre
Road, Wilmington, Delaware 19805 and its principal executive office at 2727
Allen Parkway, Suite 760, Houston, Texas 77019;

       WHEREAS, the authorized capital stock of ITEQ consists of 1,000,000
shares of preferred stock, par value $.01 per share, of which at June 30, 1997,
no shares were issued or outstanding; and 30,000,000 shares of common stock,
par value $.001 per share ("ITEQ Common Stock"), of which at June 30, 1997,
16,966,231 shares were issued and outstanding; 1,052,325 shares were reserved
for issuance in conjunction with options outstanding under various ITEQ benefit
plans and another 1,927,221 shares were reserved for issuance upon exercise of
outstanding warrants; at the same date, 791 shares of Common Stock were held in
ITEQ's treasury;

       WHEREAS, AIX is a corporation duly organized and validly existing under
the laws of the State of Delaware, with its registered office at 1209 Orange
Street, Wilmington, Delaware 19801 and its principal executive office at 960
Penn Avenue, Suite 800, Pittsburgh, Pennsylvania 15222;

       WHEREAS, the authorized capital stock of AIX consists of 20,000,000
shares of common stock, par value $.01 per share (the "AIX Common Stock"), of
which at June 30, 1997, 9,962,920 shares were issued and outstanding, and an
additional 832,832 shares were reserved for issuance in conjunction with
various employee benefit plans; at the same date, no shares were held in AIX's
treasury; and

       WHEREAS, the respective boards of directors of ITEQ and AIX deem it
desirable and in the best interests of their respective corporations and their
respective stockholders that AIX be merged into ITEQ, pursuant to the
provisions of Section 251 of the General Corporation Law of the State of
Delaware ("DGCL"), in exchange for the consideration herein provided for, and
have proposed, declared advisable, and approved such merger pursuant to this
Plan and Agreement of Merger (the "Agreement"), which Agreement has been duly
approved by resolutions of the respective boards of directors of ITEQ and AIX;

       NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and in order to set forth the terms
and conditions of the merger, the mode of carrying the same into effect, the
manner and basis of converting the presently outstanding shares of AIX Common
Stock into shares of ITEQ Common Stock, and such other details and provisions
as are deemed necessary or proper, the parties hereto agree as follows:





                                      A-1
<PAGE>   9
                                   ARTICLE I

                                     MERGER

       1.1.   Surviving Corporation.  Subject to the adoption and approval of
this Agreement by the requisite vote of the stockholders of each of the Merging
Corporations and to the other conditions hereinafter set forth, ITEQ and AIX
shall be, upon the Effective Date of the merger (as defined in Section 1.3
hereof), merged into a single surviving corporation, which shall be ITEQ, one
of the Merging Corporations, which shall continue its corporate existence and
remain a Delaware corporation governed by and subject to the laws of that
state.

       1.2.   Stockholder Approval.  This Agreement shall be submitted for
adoption and approval by the stockholders of each of the Merging Corporations
in accordance with their respective certificates of incorporation and the
applicable laws of the State of Delaware, at separate meetings called and held
for such purpose.

       1.3.   Effective Date.  The merger shall become effective upon the
filing by ITEQ of a Certificate of Merger with the Secretary of State of the
State of Delaware in accordance with Section 251(c) of the DGCL.  The date upon
which the merger shall become effective is referred to in this Agreement as the
"Effective Date."

       1.4.   Name and Continued Corporate Existence of Surviving Corporation

              1.4.1. Name and Existence.  On the Effective Date, the
       Certificate of Incorporation of ITEQ, the corporation whose corporate
       existence is to survive the merger and continue thereafter as the
       surviving corporation, shall be amended and restated in its entirety
       [reference to omitted appendix] (the "Restated Certificate of
       Incorporation").  In all other respects the identity, existence,
       purposes, powers, objects, franchises, rights, and immunities of ITEQ,
       the surviving corporation of the merger, shall continue unaffected and
       unimpaired by the merger, and the corporate identity, existence,
       purposes, powers, objects, franchises, rights, and immunities of AIX
       shall be wholly merged into ITEQ, the Surviving Corporation, and ITEQ
       shall be fully vested therewith.  Accordingly, on the Effective Date,
       the separate existence of AIX, except insofar as continued by statute,
       shall cease.

              1.4.2. Federal Income Tax Treatment of Merger.  The merger is
       intended to qualify as and, subject to the requirements of Section
       368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
       "Code"), shall be characterized as a tax-free merger  transaction
       described in Section  368(a)(1)(A) of the Code.





                                      A-2
<PAGE>   10
       1.5.   Governing Law and Certificate of Incorporation of Surviving
Corporation.  The laws of Delaware shall continue to govern the Surviving
Corporation.  On the Effective Date, the Restated Certificate of Incorporation
shall be the certificate of incorporation of ITEQ until further amended in the
manner provided by law.

       1.6.   Bylaws of Surviving Corporation.  Effective as of the Effective
Date, the bylaws of ITEQ shall be amended and restated in their entirety
[reference to omitted appendix] (the "Restated Bylaws"), and the Restated
Bylaws shall be the bylaws of the Surviving Corporation until altered, amended,
or repealed, or until new bylaws shall be adopted in accordance with the
provisions of law, the Restated Certificate of Incorporation and the Restated
Bylaws.

       1.7.   Directors of Surviving Corporation

              1.7.1. Directors of Surviving Corporation.  The names and
       addresses of the persons who, upon the Effective Date, shall constitute
       the board of directors of the Surviving Corporation, and who shall hold
       office until the first annual meeting of stockholders of the Surviving
       Corporation next following the Effective Date, are as follows:

<TABLE>
<CAPTION>
                       NAME                         ADDRESS
                       ----                         -------
       <S>                                    <C>
       Thomas N. Amonett                      515 Post Oak Boulevard
                                              Houston, Texas 77027

       Nathan M. Avery                        4900 Woodway
                                              Houston, Texas 77056
                                              
       Mark E. Johnson, Chairman              2727 Allen Parkway
                                              Houston, Texas  77019

       Lawrance W. McAfee                     2727 Allen Parkway
                                              Houston, Texas  77019
                                              
       Pierre S. Melcher                      2727 Allen Parkway
                                              Houston, Texas  77019
                                              
       T. William Porter                      700 Louisiana Street
                                              Houston, Texas  77002

       James L. Rainey                        4009 Birdneck
                                              Edmond, Oklahoma 73003
                                              
       James A. Read                          Manfield House
                                              One Southampton Street
                                              London WC2R OLR
                                              England

       S. Kent Rockwell                       960 Penn Avenue, Suite 800
                                              Pittsburgh, Pennsylvania 15222
</TABLE>





                                      A-3
<PAGE>   11
              1.7.2. Vacancies.  On or after the Effective Date, if a vacancy
       shall exist for any reason in the board of directors of the Surviving
       Corporation, such vacancy shall be filled in the manner provided in the
       Restated Certificate of Incorporation and/or Restated Bylaws of the
       Surviving Corporation.

       1.8.   Capital Stock of Surviving Corporation.  The authorized number of
shares of capital stock of the Surviving Corporation, and the par value,
designations, preferences, rights, and limitations thereof, and the express
terms thereof, shall be as set forth in the Restated Certificate of
Incorporation.

       1.9.   Conversion of Securities upon Merger

              1.9.1. General.  The manner and basis of converting the issued
       and outstanding shares of the capital stock of AIX into shares of the
       capital stock of ITEQ shall be as hereinafter set forth in this Section
       1.9.

              1.9.2. Conversion of AIX Common Stock.  On the Effective Date,
       each share of AIX Common Stock then issued and outstanding, without any
       action on the part of the holders thereof, shall automatically become
       and be converted into the right to receive certificates evidencing 0.93
       of a fully paid and nonassessable share of issued and outstanding ITEQ
       Common Stock (the "ITEQ Shares") upon surrender, in accordance with
       Paragraph 1.9.3 hereof, of certificates theretofore evidencing shares of
       AIX Common Stock.  The ITEQ Shares are hereinafter referred to
       collectively as the "Merger Consideration."

              1.9.3. Exchange of AIX Common Stock Certificates.  Commencing on
       the Effective Date, each holder of an outstanding certificate or
       certificates theretofore representing shares of AIX Common Stock may
       surrender the same to an exchange agent designated by ITEQ, and such
       holder shall be entitled upon such surrender to receive in exchange
       therefor a certificate or certificates representing the number of whole
       ITEQ Shares into which the shares of AIX Common Stock theretofore
       represented by the certificate or certificates so surrendered shall have
       been converted as aforesaid.  However, before surrender, each
       outstanding certificate representing issued and outstanding AIX Common
       Stock shall be deemed, for all purposes, only to evidence ownership of
       the number of whole ITEQ Shares into which such shares have been so
       converted.  Unless and until such outstanding certificates formerly
       representing AIX Common Stock are so surrendered, no dividend payable to
       holders of record of ITEQ Common Stock as of any date after the
       Effective Date shall be paid to the holders of such outstanding
       certificates in respect thereof.  Upon surrender of such outstanding
       certificates, however, there shall be paid to the holders of the
       certificates of ITEQ Shares issued in partial exchange therefor the
       amount of dividends, if any, which theretofore (but after the Effective
       Date) became payable with respect to such full ITEQ Shares.  No interest
       shall be payable with respect to the payment of such dividends on
       surrender of outstanding certificates.  The holder of fractional share
       interests, as such, shall





                                      A-4
<PAGE>   12
       not be entitled to any dividends or to any distribution in the event of
       liquidation or to any voting or other privileges of a stockholder of
       ITEQ.

              1.9.4. ITEQ Fractional Shares.  No certificates for fractional
       share interests of ITEQ Common Stock will be issued, but, in lieu
       thereof, ITEQ will settle all such fractional share interests in cash on
       the basis of the closing price for ITEQ Common Stock on the Nasdaq
       National Market (as reported in The Wall Street Journal) on the last
       trading day before the Effective Date.

              1.9.5. AIX's Transfer Books Closed.  Upon the Effective Date, the
       stock transfer books of AIX shall be deemed closed, and no transfer of
       any certificates theretofore representing shares of AIX shall thereafter
       be made or consummated.

       1.10.  Treatment of Stock Options.  On the Effective Date, each of the
then outstanding options to purchase AIX Common Stock (collectively, the "AIX
Options")(which includes all outstanding options granted under AIX's stock
option plans (the "AIX Option Plans")) will and without any further action on
the part of any holder thereof (herein, an "optionholder"), be exchanged for an
option to purchase that number of shares of ITEQ Common Stock determined by
multiplying the number of shares of AIX Common Stock subject to such AIX Option
at the Effective Date by 0.93, at an exercise price per share of ITEQ Common
Stock equal to the exercise price per share of such AIX Option divided by 0.93.
If the foregoing calculation results in an exchanged AIX Option being
exercisable for a fraction of a share of ITEQ Common Stock, then the number of
shares of ITEQ Common Stock subject to such option will be rounded down to the
nearest whole number of shares, and the total exercise price for the option
will be reduced by the exercise price of the fractional share.  The term,
exerciseability, vesting schedule, and all other terms and conditions of the
AIX Options will otherwise be unchanged by the provisions of this Section 1.10
and shall operate in accordance with their terms.  All shares of ITEQ Common
Stock issued upon exercise of the exchanged AIX Options shall be registered
under an effective Form S-8 Registration Statement (or other comparable form)
filed with the Securities and Exchange Commission (the "Commission").

       1.11.  Assets and Liabilities

              1.11.1.  Assets and Liabilities of Merging Corporations Become
       Those of Surviving Corporation.  On the Effective Date, all rights,
       privileges, powers, immunities, and franchises of each of the Merging
       Corporations, both of a public and private nature, and all property,
       real, personal, and mixed, and all debts due on whatever account, as
       well as stock subscriptions and all other choses or things in action,
       and all and every other interest of or belonging to or due to either of
       the Merging Corporations, shall be taken by and shall be vested in the
       Surviving Corporation without further act or deed, and all such rights,
       privileges, powers, immunities, and franchises, property, debts, choses
       or things in action, and all and every other interest of each of the
       Merging Corporations shall be thereafter as effectually the property of
       the Surviving Corporation as they were of the respective Merging
       Corporations, and the title to any real or other property, or any
       interest therein, whether





                                      A-5
<PAGE>   13
       vested by deed or otherwise, in either of the Merging Corporations,
       shall not revert or be in any way impaired by reason of the merger,
       provided, however, that all rights of creditors and all liens upon any
       properties of each of the Merging Corporations shall be preserved
       unimpaired, and all debts, liabilities, restrictions, obligations, and
       duties of the respective Merging Corporations, including without
       limitation all obligations, liabilities and duties as lessee under any
       existing lease, shall thenceforth attach to the Surviving Corporation
       and may be enforced against and by it to the same extent as if such
       debts, liabilities, duties, restrictions and obligations had been
       incurred or contracted by it.  Any action or proceeding pending by or
       against either of the Merging Corporations may be prosecuted to judgment
       as if the merger had not taken place, or the Surviving Corporation may
       be substituted in place of either of the Merging Corporations.

              1.11.2.  Conveyances to Surviving Corporation.  The Merging
       Corporations hereby agree, respectively, that from time to time, as and
       when requested by the Surviving Corporation, or by its successors and
       assigns, they will execute and deliver or cause to be executed and
       delivered, all such deeds, conveyances, assignments, permits, licenses
       and other instruments, and will take or cause to be taken such further
       or other action as the Surviving Corporation, its successors or assigns,
       may deem necessary or desirable to vest or perfect in or confirm to the
       Surviving Corporation, its successors and assigns, title to and
       possession of all the property, rights, privileges, powers, immunities,
       franchises, and interests referred to in this Paragraph 1.11.2 and
       otherwise carry out the intent and purposes of this Agreement.

              1.11.3.  Accounting Treatment.  The assets and liabilities of the
       Merging Corporations shall be taken up on the books of the Surviving
       Corporation in accordance with generally accepted accounting principles,
       and the capital surplus and retained earnings accounts of the Surviving
       Corporation shall be determined, in accordance with generally accepted
       accounting principles, by the board of directors of the Surviving
       Corporation.  Nothing herein shall prevent the board of directors of the
       Surviving Corporation from making any future changes in its accounts in
       accordance with law.

              1.11.4.  Unclaimed Merger Consideration; No Escheat.  Subject to
       any contrary provision of governing law, all consideration deposited
       with the exchange agent or held by ITEQ for the payment of the
       consideration into which the outstanding shares of AIX Common Stock
       shall have been converted, and remaining unclaimed for one year after
       the Effective Date, shall be paid or delivered to ITEQ; and the holder
       of any unexchanged certificate or certificates which before the
       Effective Date represented shares of AIX Common Stock shall thereafter
       look only to ITEQ for exchange or payment thereof upon surrender of such
       certificate or certificates to ITEQ.

              1.11.5.  Dissenting Stockholders of AIX.  AIX (or ITEQ on behalf
       of AIX) agrees that, if the merger contemplated hereby becomes
       effective, it will promptly pay to any dissenting stockholder of AIX the
       amount, if any, to which such holder is entitled under the provisions





                                      A-6
<PAGE>   14
       of Section 262 of the DGCL, provided such dissenter acts in strict
       compliance with such provisions.

       1.12.  Material Adverse Effect.  "Material Adverse Effect" or "Material
Adverse Change" means any effect, change, event, circumstance or condition
which when considered with all other effects, changes, events, circumstances or
conditions would reasonably be expected to result in a "loss" having the effect
of adversely affecting the business, results of operations, or financial
prospects of ITEQ or AIX, in each case including its respective subsidiaries
together with it taken as a whole, as the case may be, so that the benefits
reasonably expected to be obtained by the other party to the merger
contemplated by this Agreement more likely than not would be jeopardized.  In
no event shall any of the following constitute a Material Adverse Effect or a
Material Adverse Change: (i) a change in the trading prices of either of ITEQ's
or AIX's equity securities between the date hereof and the Effective Date, in
and of itself; (ii) effects, changes, events, circumstances or conditions
generally affecting the industry in which either ITEQ or AIX operate or arising
from changes in general business or economic conditions; (iii) effects,
changes, events, circumstances or conditions directly attributable to (a) out-
of-pocket fees and expenses (including without limitation legal, accounting,
investigatory, investment banking, and other fees and expenses) incurred in
connection with the transactions contemplated by this Agreement, or (b) the
payment by ITEQ or AIX of all amounts due to any officers or employees of AIX
under employment contracts, non-competition agreements, employee benefit plans
or severance arrangements; (iv) any effects, changes, events, circumstances or
conditions resulting from any change in law or generally accepted accounting
principles, which affect generally entities such as ITEQ and AIX; and (v) any
effect resulting from compliance by ITEQ or AIX with the terms of this
Agreement.  For purposes of this subparagraph, the term "loss" shall mean any
and all direct or indirect payments, obligations, assessments, losses, loss of
income, liabilities, fines, penalties, costs and expenses paid or incurred or
more likely than not to be paid or incurred, or diminutions in value of any
kind or character (whether known or unknown, conditional or unconditional,
choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise) that are more likely than not to occur,
including without limitation penalties, interest on any amount payable to a
third party as a result of the foregoing and any legal or other expenses
reasonably incurred or more likely than not to be incurred in connection with
investigating or defending any demands, claims, actions or causes of action
that, if adversely determined, would likely result in losses, and all amounts
paid in settlement of claims or actions; provided, however, that losses shall
be net of any insurance proceeds entitled to be received from a nonaffiliated
insurance company on account of such losses (after taking into account any
costs incurred in obtaining such proceeds and any increase in insurance
premiums as a result of a claim with respect to such proceeds).





                                      A-7
<PAGE>   15
                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES
                                     OF AIX

       2.1.   Representations and Warranties of AIX.  AIX represents and
warrants as follows:

              2.1.1. Organization and Standing.  AIX is a corporation duly
       organized, validly existing and in good standing under the laws of the
       State of Delaware, has full requisite corporate power and authority to
       carry on its business as it is currently conducted, and to own and
       operate the properties currently owned and operated by it, and is duly
       qualified or licensed to do business and is in good standing as a
       foreign corporation authorized to do business in all jurisdictions in
       which the character of the properties owned or the nature of the
       business conducted by it would make such qualification or licensing
       necessary, except where the failure to be so qualified or licensed could
       not reasonably be expected to have a Material Adverse Effect on AIX.

              2.1.2. Agreement Authorized and its Effect on Other Obligations.
       Upon approval of this Agreement by the stockholders of AIX, the
       consummation of the transactions contemplated hereby will have been duly
       and validly authorized by all necessary corporate action on the part of
       AIX, and this Agreement will be a valid and binding obligation of AIX
       enforceable against AIX (subject to normal equitable principles) in
       accordance with its terms, except as enforceability may be limited by
       bankruptcy, insolvency, reorganization, debtor relief or similar laws
       affecting the rights of creditors generally.  At the Effective Date, and
       except as specified in Schedule 2.1.2 [omitted], the consummation of the
       merger contemplated by this Agreement will not conflict with or result
       in a violation or breach of any term or provision of, nor constitute a
       default under (i) the certificate of incorporation or bylaws of AIX or
       (ii) any obligation, indenture, mortgage, deed of trust, lease, contract
       or other agreement to which AIX or any of its subsidiaries is a party or
       by which any of them or their properties are bound, other than such
       violations, breaches or defaults as could not reasonably be expected to
       have a Material Adverse Effect on AIX.

              2.1.3. Capitalization.  The authorized capitalization of AIX
       consists of 20,000,000 shares of common stock, par value $.01 per share
       (the "AIX Common Stock"), of which at June 30, 1997, 9,962,920 shares
       were issued and outstanding, and an additional 832,832 shares were
       reserved for issuance in conjunction with various employee benefit
       plans; at the same date, no shares were held in AIX's treasury.

              2.1.4. Subsidiaries.  Schedule 2.1.4 [omitted] lists the
       subsidiary corporations of AIX existing at June 30, 1997, and shows as
       to each of such subsidiary corporations the percentage of the total
       outstanding stock thereof which is owned by AIX.  Except as specified in
       Schedule 2.1.4 [omitted], all outstanding shares of stock of the
       subsidiary corporations owned by AIX are validly issued, fully paid, and
       nonassessable, and AIX has





                                      A-8
<PAGE>   16
       good and marketable title thereto free and clear of any mortgage,
       pledge, lien, charge, security interest, option, right of first refusal,
       preferential purchase right, defect, encumbrance or other right or
       interest of any other person (collectively, an "Encumbrance").  Each
       such subsidiary is a corporation duly organized, validly existing, and
       in good standing under the laws of the jurisdiction under which it is
       incorporated and has full requisite corporate power and authority to own
       its property and carry on its business as presently conducted by it and
       is, or on the Effective Date will be, duly qualified or licensed to do
       business and is, or on the Effective Date will be, in good standing as a
       foreign corporation authorized to do business in all jurisdictions in
       which the character of the properties owned or the nature of the
       business conducted makes such qualification or licensing necessary,
       except where the failure to be so qualified or licensed could not
       reasonably be expected to have a Material Adverse Effect on AIX.  As
       hereinafter used in this Article II, the term "AIX" also includes any
       and all of its directly and indirectly held subsidiaries, except where
       the context indicates to the contrary.

              2.1.5. Reports and Financial Statements.  AIX has previously
       furnished to ITEQ true and complete copies of (a) all annual reports
       filed with the Commission pursuant to the Securities Exchange Act of
       1934, as amended (the "Exchange Act"), since September 30, 1994, (b)
       AIX's quarterly and other reports filed with the Commission since
       September 30, 1994, (c) all definitive proxy solicitation materials
       filed with the Commission since September 30, 1994, and (d) any
       registration statements declared effective by the Commission since
       September 30, 1994.  The consolidated financial statements of AIX and
       its subsidiaries included in AIX's most recent report on Form 10-K and
       most recent report on Form 10-Q, and any other reports filed with the
       Commission by AIX under the Exchange Act (collectively, the "AIX
       Reports") were, or (if filed after the date hereof) will be, prepared in
       accordance with generally accepted accounting principles applied on a
       consistent basis during the periods involved and fairly present, or will
       present, the consolidated financial position for AIX and its
       subsidiaries as of the dates thereof and the consolidated results of
       their operations and changes in financial position for the periods then
       ended (except with respect to interim period financial statements, for
       normal year-end adjustments which are not material); and the AIX Reports
       did not and will not contain any untrue statement of a material fact or
       omit to state a material fact required to be stated therein or necessary
       to make the statements therein, in light of the circumstances under
       which they were made, not misleading.  Since September 30, 1994, AIX has
       filed with the Commission all reports required to be filed by AIX under
       the Exchange Act and the rules and regulations of the Commission.

              2.1.6. Liabilities.  AIX does not have any liabilities or
       obligations, either accrued, absolute, contingent, or otherwise, or have
       any knowledge of any potential liabilities or obligations, which could
       reasonably be expected to have a Material Adverse Effect on AIX, other
       than those (i) disclosed in the AIX Reports or (ii) set forth on
       Schedule 2.1.6 hereto [omitted].





                                      A-9
<PAGE>   17
              2.1.7. Additional AIX Information.  Attached as Schedule 2.1.7
       [omitted] are true, complete and correct lists of the following items
       (which will be periodically updated by AIX and delivered to ITEQ through
       the Effective Date), and AIX agrees that upon the request of ITEQ, it
       will furnish to ITEQ true, complete and correct copies of any documents
       referred to in such lists:

                     2.1.7.1.  Employee Compensation Plans.  All bonus,
              incentive compensation, stock option, deferred compensation,
              profit-sharing, retirement, pension, welfare, group insurance,
              death benefit, or other fringe benefit plans, arrangements or
              trust agreements covering active, former or retired employees of
              AIX (collectively, "AIX Plans"), together with copies of the most
              recent reports with respect to such plans, arrangements, or trust
              agreements filed with any governmental agency and all Internal
              Revenue Service determination letters that have been received
              with respect to such plans;

                     2.1.7.2.  Certain Salaries.  The names and salary rates of
              all present officers and employees of AIX whose current regular
              annual salary rate is $50,000 or more, together with any bonuses
              paid or payable to such persons for the fiscal year ended
              September 30, 1996, or since that date, and, to the extent
              existing on the date of this Agreement, all arrangements with
              respect to any bonuses to be paid to them from and after the date
              of this Agreement;

                     2.1.7.3.  Employee Agreements.  Any collective bargaining
              agreements of AIX with any labor union or other representative of
              employees, including amendments, supplements, and understandings,
              and all employment and consulting agreements of AIX;

                     2.1.7.4.  Guaranties.  All third party indebtedness,
              liabilities and commitments of others as to which AIX is a
              guarantor, endorser, co-maker, surety, or accommodation maker, or
              is contingently liable therefor (excluding liabilities as an
              endorser of checks and the like in the ordinary course of
              business) and all letters of credit, whether stand-by or
              documentary, issued by any third party;

                     2.1.7.5.  Environmental. All environmental orders and
              decrees material to current operations conducted by AIX and all
              environmental audits, assessments, investigations and reviews
              conducted within the last five years on any property owned or
              used by AIX.

              Schedule 2.1.7   [omitted] shall be true, complete and correct as
       of the Effective Date.

              2.1.8. No Undisclosed Defaults.  Except as may be specified in
       the AIX Reports or Schedule 2.1.8 [omitted], AIX is not a party to, or
       bound by, any material contract or arrangement of any kind to be
       performed after the Effective Date, nor is AIX in default in





                                      A-10
<PAGE>   18
       any material obligation or covenant on their part to be performed under
       any material obligation, lease, contract, order, plan or other
       arrangement except as identified in Schedule 2.1.8 [omitted].

              2.1.9. Absence of Certain Changes and Events.  Except as set
       forth in Schedule 2.1.9 hereto [omitted], other than as a result of the
       transactions contemplated by this Agreement, since March 31, 1997, there
       has not been:

                     2.1.9.1.  Financial Change.  Any adverse change in the
              financial condition, backlog, operations, assets, liabilities or
              business of AIX which could reasonably be expected to have a
              Material Adverse Effect on AIX;

                     2.1.9.2.  Property Damage.  Any damage, destruction, or
              loss to the business or properties of AIX (whether or not covered
              by insurance) that could reasonably be expected to have a
              Material Adverse Effect on AIX;

                     2.1.9.3.  Dividends.  Any declaration, setting aside, or
              payment of any dividend or other distribution in respect of the
              common stock of AIX, or any direct or indirect redemption,
              purchase or any other acquisition by AIX of any such stock;

                     2.1.9.4.  Capitalization Change.  Any change in the
              capital stock or in the number of shares or classes of AIX's
              authorized or outstanding capital stock as described in Paragraph
              2.1.3;

                     2.1.9.5.  Labor Disputes.  Any labor dispute (other than
              routine grievances); or

                     2.1.9.6.  Other Material Changes.  Any other event or
              condition known to AIX particularly pertaining to and adversely
              affecting the operations, assets or business of AIX (other than
              events or conditions which are of a general or industry-wide
              nature and of general public knowledge) which could reasonably be
              expected to have a Material Adverse Effect on AIX.

              2.1.10.  Taxes.  Except as set forth in Schedule 2.1.10
       [omitted], and except with respect to failures which, in the aggregate,
       could not reasonably be expected to have a Material Adverse Effect on
       AIX, proper and accurate Federal, state and local income, value added,
       sales, use, franchise, gross revenue, turnover, excise, payroll,
       property, employment, customs duties and any and all other tax returns,
       reports, and estimates have been filed with appropriate governmental
       agencies, domestic and foreign, by AIX for each period for which any
       returns, reports, or estimates were due (taking into account any
       extensions of time to file before the date hereof); all taxes shown by
       such returns to be payable and any other taxes due and payable have been
       paid other than those being contested in good faith by AIX; and the tax
       provision reflected in AIX's most recent balance sheet included in the
       AIX Reports is





                                      A-11
<PAGE>   19
       adequate, in accordance with generally accepted accounting principles,
       to cover liabilities of AIX at the date thereof for all taxes, including
       any interest, penalties and additions to taxes of any character
       whatsoever applicable to AIX or its assets or business.  Except as set
       forth on Schedule 2.1.10 [omitted], no waiver of any statute of
       limitations executed by AIX with respect to federal or state income or
       other tax is in effect for any period.  The Federal income tax returns
       of AIX have never been examined by the Internal Revenue Service.  There
       are no tax liens on any assets of AIX except for taxes not yet currently
       due and those which could not reasonably be expected to have a Material
       Adverse Effect on AIX.

              2.1.11.  Intellectual Property.  Except as set forth in Schedule
       2.1.11 [omitted], AIX owns or possesses licenses to use all patents,
       patent applications, trademarks and service marks (including
       registrations and applications therefor), trade names, copyrights and
       written know-how, trade secrets and all other similar proprietary data
       and the goodwill associated therewith (collectively, the "Intellectual
       Property") that are either material to the business of AIX or that are
       necessary for the manufacture, use or sale of any products manufactured,
       used or sold by AIX.  The AIX Intellectual Property is owned or licensed
       by AIX free and clear of any Encumbrance other than such Encumbrances as
       are listed in Schedule 2.1.11 [omitted].  Except as otherwise indicated
       in such Schedule, AIX has not granted to any other person any license to
       use any Intellectual Property.  AIX has not received any notice of
       infringement, misappropriation, or conflict with, the intellectual
       property rights of others in connection with the use by AIX of the AIX
       Intellectual Property.

              2.1.12.  Title to Properties.  With minor exceptions which in the
       aggregate are not material, and except for merchandise and other
       property sold, used or otherwise disposed of in the ordinary course of
       business for fair value, AIX has good and marketable title to all its
       properties, interests in properties and assets, real and personal,
       reflected in the most recent balance sheet of AIX included in the AIX
       Reports, free and clear of any Encumbrance of any nature whatsoever,
       except (i) liens and Encumbrances reflected in the most recent balance
       sheet of AIX included in the AIX Reports, (ii) liens for current taxes
       not yet due and payable, and (iii) such imperfections of title,
       easements and Encumbrances, if any, as are not substantial in character,
       amount, or extent and do not and will not materially detract from the
       value, or interfere with the present use, of the property subject
       thereto or affected thereby, or otherwise materially impair business
       operations.  All leases pursuant to which AIX leases (whether as lessee
       or lessor) any substantial amount of real or personal property are in
       good standing, valid, and effective; and there is not, under any such
       leases, any existing or prospective default or event of default or event
       which with notice or lapse of time, or both, would constitute a default
       by AIX and in respect to which AIX has not taken adequate steps to
       prevent a  default from occurring.  The buildings and premises of AIX
       that are used in its business are in good operating condition and
       repair, subject only to ordinary wear and tear.  All major items of
       equipment of AIX are in good operating condition and in a state of
       reasonable maintenance and repair, ordinary wear and tear excepted, and
       are free from any known defects except as may be repaired by routine
       maintenance and such minor defects as





                                      A-12
<PAGE>   20
       do not substantially interfere with the continued use thereof in the
       conduct of normal operations.

              2.1.13.  Litigation.  Except to the extent set forth in the AIX
       Reports or in Schedule 2.1.13 [omitted], there is no suit, action, or
       legal, administrative, arbitration, or other proceeding or governmental
       investigation pending to which AIX is a party or, to the knowledge of
       AIX, might become a party or which particularly affects AIX, nor is any
       change in the zoning or building ordinances directly affecting the real
       property or leasehold interests of AIX, pending or, to the knowledge of
       AIX, threatened.

              2.1.14.  Environmental Compliance.  Except as set forth in
       Schedule 2.1.14 [omitted];

                       2.1.14.1.  Environmental Conditions.  There are no
              environmental conditions or circumstances, such as the presence
              or release of any hazardous substance, on any real property owned
              by AIX that could reasonably be expected to have a Material
              Adverse Effect on AIX.

                       2.1.14.2.  Permits, etc.  AIX has in full force and 
              effect all environmental permits, licenses, approvals and other
              authorizations required to conduct its operations and is
              operating in material compliance thereunder.

                       2.1.14.3.  Compliance.  AIX's operations and use of its
              assets do not violate any applicable federal, state or local law,
              statute, ordinance, rule, regulation, order or notice requirement
              pertaining to (a) the condition or protection of air,
              groundwater, surface water, soil, or other environmental media,
              (b) the environment, including natural resources or any activity
              which affects the environment, or (c) the regulation of any
              pollutants, contaminants, waste, substances (whether or not
              hazardous or toxic), including, without limitation, the
              Comprehensive Environmental Response Compensation and Liability
              Act (42 U.S.C. Section  9601 et seq.), the Hazardous Materials
              Transportation Act (49 U.S.C. Section  1801 et seq.), the
              Resource Conservation and Recovery Act (42 U.S.C. Section  1609
              et seq.), the Clean Water Act (33 U.S.C.  1251 et seq.), the
              Clean Air Act (42 U.S.C. Section  7401 et seq.), the Toxic
              Substances Control Act (17 U.S.C. Section  2601  et seq.), the
              Safe Drinking Water Act (42 U.S.C. Section  201 and Section  300f
              et seq.), the Rivers and Harbors Act (33 U.S.C. Section  401 et
              seq.), the Oil Pollution Act (33 U.S.C. Section  2701 et seq.)
              and analogous state and local provisions, as any of the foregoing
              may have been amended or supplemented from time to time
              (collectively the "Applicable Environmental Laws"), except for
              violations which, either singly or in the aggregate, could not
              reasonably be expected to have a Material Adverse Effect on AIX.

                       2.1.14.4.  Environmental Claims.  No notice has been
              served on AIX from any entity, governmental agency or individual
              regarding any existing, pending or threatened investigation or
              inquiry related to alleged violations under any Applicable





                                      A-13
<PAGE>   21
              Environmental Laws, or regarding any claims for remedial
              obligations or contribution under any Applicable Environmental
              Laws, other than any of the foregoing which, either singly or in
              the aggregate, could not reasonably be expected to have a
              Material Adverse Effect on AIX.

                       2.1.14.5.  Renewals.  AIX does not know of any reason 
              ITEQ would not be able to renew any of the permits, licenses, or 
              other authorizations required pursuant to any Applicable 
              Environmental Laws to operate and use any of AIX's assets for 
              their current purposes and uses.

              2.1.15.  Compliance with Other Laws.  Except as set forth in the
       AIX Reports or in Schedule 2.1.15 [omitted], AIX is not in violation of
       or in default with respect to, or in alleged violation of or alleged
       default with respect to, the Occupational Safety and Health Act (29
       U.S.C. Section 651 et seq.) as amended ("OSHA"), or any other applicable
       law or any applicable rule, regulation, or any writ or decree of any
       court or any governmental commission, board, bureau, agency, or
       instrumentality, or delinquent with respect to any report required to be
       filed with any governmental commission, board, bureau, agency or
       instrumentality, except for violations which, either singly or in the
       aggregate, could not reasonably be expected to have a Material Adverse
       Effect on AIX.

              2.1.16.  Finder's Fee.  All negotiations relative to this
       Agreement and the transactions contemplated hereby have been carried on
       by AIX and its counsel directly with ITEQ and its counsel, without the
       intervention of any other person as the result of any act of AIX, and so
       far as is known to AIX, without the intervention of any other person in
       such manner as to give rise to any valid claim against any of the
       parties hereto for a brokerage commission, finder's fee or any similar
       payments, other than financial advisory fees to be paid (i) by ITEQ to
       Simmons & Company International, Inc. ("Simmons") and Deutsche Morgan
       Grenfell ("DMG") in connection with the transaction (including the
       rendition of a fairness opinion to ITEQ) and (ii) by AIX to Rauscher
       Pierce Refsnes, Inc. ("RPR") under financial arrangements approved in
       advance by ITEQ for the rendition of a fairness opinion to AIX in
       connection with the merger contemplated by this Agreement.

              2.1.17.  Compliance with ERISA. AIX has made available to ITEQ a
       copy of each AIX Plan, any related trust agreement and annuity or
       insurance contract, if any, and each plan's most recent annual report
       filed with the Internal Revenue Service, if any, and: (i) each AIX Plan
       has been maintained and administered in material compliance with its
       terms and with the requirements prescribed by any and all applicable
       statutes, orders, rules and regulations, and is, to the extent required
       by applicable law or contract, fully funded without having any deficit
       or unfunded actuarial liability; (ii) all required employer
       contributions under any such plans have been made and the applicable
       funds have been funded in accordance with the terms thereof and no past
       service funding liabilities exist thereunder; (iii) each AIX Plan that
       is required or intended to be qualified under applicable law or
       registered or approved by a governmental agency or authority has been so
       qualified, registered or





                                      A-14
<PAGE>   22
       approved by the appropriate governmental agency or authority, and
       nothing has occurred since the date of the last qualification,
       registration or approval to materially and adversely affect, or cause,
       the appropriate governmental agency or authority to revoke such
       qualification, registration or approval; (iv) to the extent applicable,
       the AIX Plans comply, in all material respects, with the requirements of
       the Employee Retirement Income Security Act of 1974, as amended
       ("ERISA"), and the Code, and any AIX Plan intended to be qualified under
       Section 401(a) of the Code has been determined by the Internal Revenue
       Service to be so qualified and nothing has occurred to cause the loss of
       such qualified status; (v) no AIX Plan is covered by Title IV of ERISA
       or Section 412 of the Code; (vi) there are no pending or anticipated
       material claims against or otherwise involving any of the AIX Plans and
       no suit, action or other litigation (excluding claims for benefits
       incurred in the ordinary course of AIX Plan activities) has been brought
       against or with respect to any AIX Plan; (vii) all material
       contributions, reserves or premium payments, required to be made as of
       the date hereof to the AIX Plans have been made or provided for; (viii)
       AIX has not incurred any liability under subtitle C or D of Title IV of
       ERISA with respect to any "single-employer plan," within the meaning of
       Section 4001(a)(15) of ERISA, currently or formerly maintained by AIX or
       any entity which is considered one employer with AIX under Section 4001
       of ERISA; (ix) AIX has not incurred any withdrawal liability under
       Subtitle E of Title IV of ERISA with respect to any "multiemployer
       plan," within the meaning of Section 4001(a)(3) of ERISA; and (x) AIX
       has no obligations for retiree health and life benefits under any AIX
       Plan, except as set forth on Schedule 2.1.17 [omitted], and there are no
       restrictions on the rights of AIX to amend or terminate any such AIX
       Plan without incurring any liability thereunder.

              2.1.18.  Investigations; Litigation.   Except as required
       pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1978 and
       the rules and regulations promulgated thereunder (collectively, "HSR")
       and any applicable comparable foreign laws and regulations, (i) no
       investigation or review by any governmental entity with respect to AIX
       or any of the transactions contemplated by this Agreement is pending or,
       to the best of AIX's knowledge, threatened, nor has any governmental
       entity indicated to AIX an intention to conduct the same, and (ii) there
       is no action, suit or proceeding pending or, to the best of AIX's
       knowledge, threatened against or affecting AIX at law or in equity, or
       before any federal, state, municipal or other governmental department,
       commission, board, bureau, agency or instrumentality, which either
       individually or in the aggregate, could reasonably be expected to have a
       Material Adverse Effect on AIX.

              2.1.19.  Product Warranty.  There are no existing liabilities or,
       to the knowledge of AIX, potential liabilities, arising from claims
       regarding the performance or design of the products and services sold by
       AIX either in the past or at present that in the aggregate could
       reasonably be expected to have a Material Adverse Effect on AIX.

              2.1.20.  Information for Proxy Statement.  All information and
       data (including financial statements) concerning AIX which is or will be
       included in the registration





                                      A-15
<PAGE>   23
       statement and proxy statement (collectively, the "Proxy Statement")
       issued in connection with the transactions contemplated by this
       Agreement will be furnished by AIX for inclusion therein and will not
       contain any untrue statement of a material fact or omit to state a
       material fact necessary in order to make the statements contained
       therein not misleading.

              2.1.21.  Investment Company.  AIX is not an "investment company,"
       or an "affiliated person of" or "promoter" or "principal underwriter" of
       an investment company, as those terms are defined in the Investment
       Company Act of 1940, as amended (the "Investment Company Act").

                                  ARTICLE III

                     REPRESENTATIONS AND WARRANTIES OF ITEQ

       3.1.   Representations and Warranties of ITEQ.  ITEQ represents and
warrants as follows:

              3.1.1. Organization and Standing.  ITEQ is a corporation duly
       organized, validly existing and in good standing under the laws of the
       State of Delaware, has full requisite corporate power and authority to
       carry on its business as it is currently conducted, and to own and
       operate the properties currently owned and operated by it, and is duly
       qualified or licensed to do business and is in good standing as a
       foreign corporation authorized to do business in all jurisdictions in
       which the character of the properties owned or the nature of the
       business conducted by it would make such qualification or licensing
       necessary, except where the failure to be so qualified or licensed could
       not reasonably be expected to have a Material Adverse Effect on ITEQ.

              3.1.2. Agreement Authorized and its Effect on Other Obligations.
       Upon approval of this Agreement by the stockholders of ITEQ, the
       consummation of the transactions contemplated hereby will have been duly
       and validly authorized by all necessary corporate action on the part of
       ITEQ, and this Agreement will be a valid and binding obligation of ITEQ
       enforceable against ITEQ (subject to normal equitable principles) in
       accordance with its terms, except as enforceability may be limited by
       bankruptcy, insolvency, reorganization, debtor relief or similar laws
       affecting the rights of creditors generally.  At the Effective Date and
       except as specified in Schedule 3.1.2 [omitted], the consummation of the
       merger contemplated by this Agreement will not conflict with or result
       in a violation or breach of any term or provision of, nor constitute a
       default under (i) the certificate of incorporation or bylaws of ITEQ or
       (ii) any obligation, indenture, mortgage, deed of trust, lease, contract
       or other agreement to which ITEQ or any of its subsidiaries is a party
       or by which any of them or their properties are bound, other than such
       violations, breaches or defaults as could not reasonably be expected to
       have Material Adverse Effect on ITEQ.

              3.1.3. Capitalization.  The capitalization of ITEQ consists of
       1,000,000 shares of preferred stock, par value $.01 per share, of which
       at June 30, 1997 no shares were issued





                                      A-16
<PAGE>   24
       or outstanding; and 30,000,000 shares of ITEQ Common Stock, par value
       $.001 per share, of which at June 30, 1997, 16,966,231 shares were
       issued and outstanding, 1,052,325 shares were reserved for issuance in
       connection with options outstanding under various ITEQ benefit plans and
       another 1,927,221 shares were reserved for issuance upon exercise of
       outstanding warrants; at the same date, 791 shares of ITEQ Common Stock
       were held in ITEQ's treasury.

              3.1.4. Subsidiaries.  All outstanding shares of stock of the
       subsidiary corporations owned by ITEQ are validly issued, fully paid,
       and nonassessable, ITEQ has good and marketable title thereto free and
       clear of any Encumbrance, except as specified in Schedule 3.1.4
       [omitted], and ITEQ owns all outstanding shares of stock of said
       subsidiary corporations.  Each such subsidiary is a corporation duly
       organized, validly existing, and in good standing under the laws of the
       jurisdiction under which it is incorporated and has full requisite
       corporate power and authority to own its property and carry on its
       business as presently conducted by it and is, or on the Effective Date
       will be, duly qualified or licensed to do business and is, or on the
       Effective Date will be, in good standing as a foreign corporation
       authorized to do business in all jurisdictions in which the character of
       the properties owned or the nature of the business conducted makes such
       qualification or licensing necessary, except where the failure to be so
       qualified or licensed could not reasonably be expected to have a
       Material Adverse Effect on ITEQ.  As hereinafter used in this Article
       III, the term "ITEQ" also includes any and all of its directly and
       indirectly held subsidiaries, except where the context indicates to the
       contrary.

              3.1.5. Reports and Financial Statements.  ITEQ has previously
       furnished to AIX true and complete copies of (a) all annual reports
       filed with the Commission pursuant to the Exchange Act, since December
       31, 1994, (b) ITEQ's quarterly and other reports filed with the
       Commission since December 31, 1994, (c) all definitive proxy
       solicitation materials filed with the Commission since December 31,
       1994, and (d) any registration statements declared effective by the
       Commission since December 31, 1994.  The consolidated financial
       statements of ITEQ and its subsidiaries included in ITEQ's most recent
       report on Form 10-K and most recent report on Form 10-Q, and any other
       reports filed with the Commission by ITEQ under the Exchange Act (the
       "ITEQ Reports") were, or (if filed after the date hereof) will be,
       prepared in accordance with generally accepted accounting principles
       applied on a consistent basis during the periods involved and fairly
       present, or will present, the consolidated financial position for ITEQ
       and its subsidiaries as of the dates thereof and the consolidated
       results of their operations and changes in financial position for the
       periods then ended (except with respect to interim period financial
       statements, for normal year-end adjustments which are not material); and
       the ITEQ Reports did not and will not contain any untrue statement of a
       material fact or omit to state a material fact required to be stated
       therein or necessary to make the statements therein, in light of the
       circumstances under which they were made, not misleading.  Since
       December 31, 1994, ITEQ has filed with the Commission all reports
       required to be filed by ITEQ under the Exchange Act and the rules and
       regulations of the Commission.





                                      A-17
<PAGE>   25
              3.1.6. Liabilities.  ITEQ does not have any liabilities or
       obligations, either accrued, absolute, contingent, or otherwise, or have
       any knowledge of any potential liabilities or obligations, which would
       have a Material Adverse Effect on ITEQ, other than those (i) disclosed
       in the ITEQ Reports or (ii) set forth on Schedule 3.1.6 hereto
       [omitted].

              3.1.7. No Undisclosed Defaults.  Except as may be specified in
       the ITEQ Reports or in Schedule 3.1.7 [omitted], ITEQ is not a party to,
       or bound by, any material contract or arrangement of any kind to be
       performed after the Effective Date, nor is ITEQ in default in any
       material obligation or covenant on its part to be performed under any
       material obligation, lease, contract, order, plan or other arrangement
       except as identified in Schedule 3.1.7 [omitted].

              3.1.8. Absence of Certain Changes and Events in ITEQ.  Except as
       set forth in Schedule 3.1.8 hereto [omitted], other than as a result of
       the transactions contemplated by this Agreement, since March 31, 1997,
       there has not been:

                     3.1.8.1.  Financial Change.  Any adverse change in the
              financial condition, operations, assets or business of ITEQ which
              could reasonably be expected to have a Material Adverse Effect on
              ITEQ;

                     3.1.8.2.  Property Damage.  Any material damage,
              destruction, or loss to the business or properties of ITEQ
              (whether or not covered by insurance);

                     3.1.8.3.  Dividends.  Any declaration, setting aside, or
              payment of any dividend or other distribution in respect of
              ITEQ's capital stock, or any direct or indirect redemption,
              purchase or any other acquisition of such stock;

                     3.1.8.4.  Capitalization Change.  Any change in the
              capital stock or in the number of shares or classes of ITEQ's
              authorized or outstanding capital stock as described in Paragraph
              3.1.3;

                     3.1.8.5.  Labor Disputes.  Any labor dispute (other than
              routine grievances); or

                     3.1.8.6.  Other Material Changes.  Any other event or
              condition known to ITEQ particularly pertaining to and adversely
              affecting the operations, assets or business of ITEQ (other than
              events or conditions which are of a general or industry-wide
              nature and of general public knowledge) which could reasonably be
              expected to have a Material Adverse Effect on ITEQ.

              3.1.9.  Taxes.  Except as set forth in Schedule 3.1.9 [omitted],
       and except with respect to failures which in the aggregate, could not
       reasonably be expected to have a Material Adverse Effect on ITEQ, proper
       and accurate Federal, state and local income, value added,





                                      A-18
<PAGE>   26
       sales, use, franchise, gross revenue, turnover, excise, payroll,
       property, employment, customs duties and any and all other tax returns,
       reports, and estimates have been filed with appropriate governmental
       agencies, domestic and foreign, by ITEQ for each period for which any
       returns, reports, or estimates were due (taking into account any
       extensions of time to file before the date hereof); all taxes shown by
       such returns to be payable and any other taxes due and payable have been
       paid other than those being contested in good faith by ITEQ; and the tax
       provision reflected in ITEQ's most recent balance sheet included in the
       ITEQ Reports is adequate, in accordance with generally accepted
       accounting principles, to cover liabilities of ITEQ at the date thereof
       for all taxes, including any interest, penalties and additions to taxes
       of any character whatsoever applicable to ITEQ or its assets or
       business.  Except as set forth on Schedule 3.1.9 [omitted], no waiver of
       any statute of limitations executed by ITEQ with respect to Federal or
       state income or other tax is in effect for any period.  The Federal
       income tax returns of ITEQ have never been examined by the Internal
       Revenue Service, but notice with respect to an audit of the year ended
       December 31, 1994 has been received by ITEQ.  There are no tax liens on
       any assets of ITEQ except for taxes not yet currently due and those
       which could not reasonably be expected to have a Material Adverse Effect
       on ITEQ.

              3.1.10.  Intellectual Property.  Except as set forth in Schedule
       3.1.10 [omitted], ITEQ owns or possesses licenses to use all ITEQ
       Intellectual Property that is either material to the business of ITEQ or
       that is necessary for the manufacture, use or sale of any products
       manufactured, used or sold by ITEQ.  The ITEQ Intellectual Property is
       owned or licensed by ITEQ free and clear of any Encumbrance other than
       such Encumbrances as are listed in Schedule 3.1.10 [omitted].  Except as
       otherwise indicated in such Schedule, ITEQ has not granted to any other
       person any license to use any ITEQ Intellectual Property.  ITEQ has not
       received any notice of infringement, misappropriation, or conflict with,
       the intellectual property rights of others in connection with the use by
       ITEQ of the ITEQ Intellectual Property.

              3.1.11.  Title to Properties.  With minor exceptions which in the
       aggregate are not material, and except for merchandise and other
       property sold, used or otherwise disposed of in the ordinary course of
       business for fair value, ITEQ has good and marketable title to all its
       properties, interests in properties and assets, real and personal,
       reflected in the most recent financial statements contained in the ITEQ
       Reports, free and clear of any Encumbrance of any nature whatsoever,
       except (i) liens and Encumbrances reflected in the most recent balance
       sheet of ITEQ included in the ITEQ Reports, (ii) liens for current taxes
       not yet due and payable, and (iii) such imperfections of title,
       easements and Encumbrances, if any, as are not substantial in character,
       amount, or extent and do not and will not materially detract from the
       value, or interfere with the present use, of the property subject
       thereto or affected thereby, or otherwise materially impair business
       operations.  All leases pursuant to which ITEQ leases (whether as lessee
       or lessor) any substantial amount of real or personal property are in
       good standing, valid, and effective; and there is not, under any such
       leases, any existing or prospective default or event of default or event
       which with notice or lapse of time, or both,





                                      A-19
<PAGE>   27
       would constitute a default by ITEQ and in respect to which ITEQ has not
       taken adequate steps to prevent a  default from occurring.  The
       buildings and premises of ITEQ that are used in its business are in good
       operating condition and repair, subject only to ordinary wear and tear.
       All major items of equipment of ITEQ are in good operating condition and
       in a state of reasonable maintenance and repair, ordinary wear and tear
       excepted, and are free from any known defects except as may be repaired
       by routine maintenance and such minor defects as to not substantially
       interfere with the continued use thereof in the conduct of normal
       operations.

              3.1.12.  Litigation.  Except to the extent set forth in the ITEQ
       Reports or in Schedule 3.1.12 [omitted], there is no suit, action, or
       legal, administrative, arbitration, or other proceeding or governmental
       investigation pending to which ITEQ is a party or, to the knowledge of
       ITEQ, might become a party or which particularly affects ITEQ, nor is
       any change in the zoning or building ordinances directly affecting the
       real property or leasehold interests of ITEQ, pending or, to the
       knowledge of ITEQ, threatened.

              3.1.13.  Environmental Compliance.  Except as set forth in
       Schedule 3.1.13 [omitted];

                     3.1.13.1.  Environmental Conditions.  There are no
              environmental conditions or circumstances such as the presence or
              release of any hazardous substance on any real property owned by
              ITEQ that could reasonably be expected to have a Material Adverse
              Effect on ITEQ.

                     3.1.13.2.  Permits, etc.  ITEQ has in full force and
              effect all environmental permits, licenses, approvals and other
              authorizations required to conduct its operations and is
              operating in material compliance thereunder.

                     3.1.13.3.  Compliance.  ITEQ's operations and use of its
              assets do not violate any Applicable Environmental Laws, except
              for violations which, either singly or in the aggregate, could
              not reasonably be expected to have a Material Adverse Effect on
              ITEQ.

                     3.1.13.4.  Environmental Claims.  No notice has been
              served on ITEQ from any entity, governmental agency or individual
              regarding any existing, pending or threatened investigation or
              inquiry related to alleged violations under any Applicable
              Environmental Laws, or regarding any claims for remedial
              obligations or contribution under any Applicable Environmental
              Laws, other than any of the foregoing which, either singly or in
              the aggregate, could not reasonably be expected to have a
              Material Adverse Effect on ITEQ.

                     3.1.13.5.  Renewals.  ITEQ does not know of any reason
              ITEQ would not be able to renew any of the permits, licenses, or
              other authorizations required pursuant





                                      A-20
<PAGE>   28
              to any Applicable Environmental Laws to operate and use any of 
              ITEQ's assets for their current purposes and uses.

              3.1.14.  Compliance with Other Laws.  Except as set forth in the
       ITEQ Reports or in Schedule 3.1.14 [omitted], ITEQ is not in violation
       of or in default with respect to, or in alleged violation of or alleged
       default with respect to, OSHA or any other applicable law or any
       applicable rule, regulation, or any writ or decree of any court or any
       governmental commission, board, bureau, agency, or instrumentality, or
       delinquent with respect to any report required to be filed with any
       governmental commission, board, bureau, agency or instrumentality,
       except for violations which, either singly or in the aggregate, could
       not reasonably be expected to have a Material Adverse Effect on ITEQ.

              3.1.15.  Finder's Fee.  All negotiations relative to this
       Agreement and the transactions contemplated hereby have been carried on
       by ITEQ and its counsel, directly with AIX or its counsel, without the
       intervention of any other person as the result of an act of ITEQ and, so
       far as known to ITEQ, without the intervention of any other person in
       such manner as to give rise to any valid claim against any of the
       parties hereto for a brokerage commission, finder's fee, or any similar
       payments, other than financial advisory fees to be paid by (i) ITEQ to
       Simmons and DMG and (ii) AIX to RPR in connection with the merger
       contemplated by this Agreement.

              3.1.16.  Compliance With ERISA.  All bonus, incentive
       compensation, stock option, deferred compensation, profit-sharing,
       retirement, pension, welfare, group insurance, death benefit, or other
       fringe benefit plans, arrangements or trust agreements covering active,
       former or retired employees of ITEQ (collectively, the "ITEQ Plans") are
       listed in Schedule 3.1.16 [omitted].  ITEQ has made available to AIX a
       copy of each ITEQ Plan, any related trust agreement and annuity or
       insurance contract, if any, and each plan's most recent annual report
       filed with the Internal Revenue Service, if any, the most recent reports
       with respect to such plans, trust agreements and annuity or insurance
       contracts filed with any governmental agency, all Internal Revenue
       Service determination letters that have been received with respect to
       such plans and: (i) each ITEQ Plan has been maintained and administered
       in material compliance with its terms and with the requirements
       prescribed by any and all applicable statutes, orders, rules and
       regulations, and is, to the extent required by applicable law or
       contract, fully funded without having any deficit or unfunded actuarial
       liability; (ii) all required employer contributions under any such plans
       have been made and the applicable funds have been funded in accordance
       with the terms thereof and no past service funding liabilities exist
       thereunder; (iii) each ITEQ Plan that is required or intended to be
       qualified under applicable law or registered or approved by a
       governmental agency or authority has been so qualified, registered or
       approved by the appropriate governmental agency or authority, and
       nothing has occurred since the date of the last qualification,
       registration or approval to adversely affect, or cause, the appropriate
       governmental agency or authority to revoke such qualification,
       registration or approval; (iv) to the extent applicable, the ITEQ Plans
       comply, in all material respects, with the requirements of ERISA





                                      A-21
<PAGE>   29
       and the Code, and any ITEQ Plan intended to be qualified under Section
       401(a) of the Code has been determined by the Internal Revenue Service
       to be so qualified and nothing has occurred to cause the loss of such
       qualified status; (v) no ITEQ Plan is covered by Title IV of ERISA or
       Section 412 of the Code; (vi) there are no pending or anticipated
       material claims against or otherwise involving any of the ITEQ Plans and
       no suit, action or other litigation (excluding claims for benefits
       incurred in the ordinary course of ITEQ Plan activities) has been
       brought against or with respect to any ITEQ Plan; (vii) all material
       contributions, reserves or premium payments, required to be made as of
       the date hereof to the ITEQ Plans have been made or provided for; (viii)
       ITEQ has not incurred any liability under subtitle C or D of Title IV of
       ERISA with respect to any "single-employer plan," within the meaning of
       Section 4001(a)(15) of ERISA, currently or formerly maintained by ITEQ
       or any entity which is considered one employer with ITEQ under Section
       4001 of ERISA; (ix) ITEQ has not incurred any withdrawal liability under
       Subtitle E of Title IV of ERISA with respect to any "multiemployer
       plan," within the meaning of Section 4001(a)(3) of ERISA; and (x) ITEQ
       does not have any obligations for retiree health and life benefits under
       any ITEQ Plan, except as set forth on Schedule 3.1.16 [omitted], and
       there are no restrictions on the rights of ITEQ to amend or terminate
       any such ITEQ Plan without incurring any liability thereunder.

              3.1.17.  Investigations; Litigation.  Except as required pursuant
       to HSR and any applicable comparable foreign laws and regulations, (i)
       no investigation or review by any governmental entity with respect to
       ITEQ in connection with any of the transactions contemplated by this
       Agreement is pending or, to the best of ITEQ's knowledge, threatened,
       nor has any governmental entity indicated to ITEQ an intention to
       conduct the same and (ii) there is no action, suit or proceeding pending
       or, to the best of ITEQ's knowledge, threatened against or affecting
       ITEQ or its subsidiaries at law or in equity, or before any federal,
       state, municipal or other governmental department, commission, board,
       bureau, agency or instrumentality, which either individually or in the
       aggregate, could reasonably be expected to have a Material Adverse
       Effect on ITEQ.

              3.1.18.  Product Warranty.  There are no existing liabilities or,
       to the knowledge of ITEQ, potential liabilities, arising from claims
       regarding the performance or design of the products sold by ITEQ either
       in the past or at present that in the aggregate could reasonably be
       expected to have a Material Adverse Effect on ITEQ.

              3.1.19.  Information for Proxy Statement.  All information and
       data (including financial statements) concerning ITEQ which is or will
       be included in the Proxy Statement to be issued in connection with the
       transactions contemplated by this Agreement will be furnished by ITEQ
       for inclusion therein and will not contain any untrue statement of a
       material fact or omit to state a material fact necessary in order to
       make the statements contained therein not misleading.





                                      A-22
<PAGE>   30
              3.1.20.  Investment Company.  ITEQ is not an "investment
       company," or an "affiliated person of" or "promoter" or "principal
       underwriter" of an investment company, as those terms are defined in the
       Investment Company Act.

                                   ARTICLE IV

                       OBLIGATIONS PENDING EFFECTIVE DATE

       4.1.   Agreements of ITEQ and AIX.  Each of ITEQ and AIX agrees that
from the date hereof to the Effective Date, it will:

              4.1.1. Maintenance of Present Business.  Other than as
       contemplated by this Agreement, operate its business only in the usual,
       regular, and ordinary manner so as to maintain the goodwill it now
       enjoys and, to the extent consistent with such operation, use all
       reasonable efforts to preserve intact its present business organization,
       keep available the services of its present officers and employees, and
       preserve its relationships with customers, suppliers, jobbers,
       distributors, and others having business dealings with it;

              4.1.2. Maintenance of Properties.  At its expense, maintain all
       of its property and assets in customary repair, order, and condition,
       reasonable wear and use and damage by fire or unavoidable casualty
       excepted;

              4.1.3. Maintenance of Books and Records.  Maintain its books of
       account and records in the usual, regular, and ordinary manner, in
       accordance with generally accepted accounting principles applied on a
       consistent basis;

              4.1.4. Compliance with Law.  Duly comply in all material respects
       with all laws applicable to it and to the conduct of its business; and

              4.1.5. Compliance with Agreement.  At its expense, take all
       commercially reasonable actions as may be necessary (i) to insure that
       the representations and warranties made by it herein are true and
       correct at the Effective Date, (ii) to fully perform all covenants made
       by it herein and (iii) to satisfy timely all other obligations imposed
       upon it by this Agreement (including, without limitation, the obligation
       from the date of this Agreement to take no action which either alone or
       in combination with actions previously taken would disqualify the merger
       from "pooling of interests" accounting treatment).

              4.1.6. Inspection of Each Merging Corporation.  Permit the other
       party hereto, and their officers and authorized representatives, during
       normal business hours, to inspect its records and to consult with its
       officers, employees, attorneys, and agents for the purpose of
       determining the accuracy of the representations and warranties
       hereinabove made and the compliance with covenants contained in this
       Agreement.





                                      A-23
<PAGE>   31
       4.2.   Additional Agreements of ITEQ and AIX.  ITEQ and AIX agree to
take the following actions after the date hereof:

              4.2.1. Hart-Scott-Rodino.  Each party shall file such materials
       as are required under the HSR Act with respect to the transaction
       contemplated hereby and shall cooperate with the other party to the
       extent necessary to assist the other party in the preparation of such
       filings.

              4.2.2. Proxy Statement.  ITEQ and AIX shall cooperate in the
       preparation and prompt filing of the Proxy Statement with the Commission
       with respect to the meetings of their stockholders called for the
       purpose of, among other things, securing stockholder approval of the
       merger contemplated by this Agreement and the consummation of the
       transaction herein contemplated.  Each of ITEQ and AIX shall use all
       reasonable efforts to have the Proxy Statement cleared by the
       Commission.

              4.2.3.  Notice of Material Developments.  Each of ITEQ and AIX
       will promptly notify the other party in writing of (i) any event
       occurring subsequent to the date of this Agreement which would render
       any representation or warranty of such party contained in this Agreement
       untrue or inaccurate in any material respect, (ii) any Material Adverse
       Effect on such party and (iii) breach by such party of any covenant or
       agreement contained in this Agreement.

       4.3.   Additional Agreements of AIX.  AIX agrees that from the date
hereof to the Effective Date, it will:

              4.3.1. Prohibition of Certain Employment Contracts.  Not enter
       into any contracts of employment which (i) cannot be terminated on
       notice of 14 days or less or (ii) provide for any severance payments or
       benefits covering a period beyond the termination date (other than those
       which ITEQ has previously approved) except as may be required by law;

              4.3.2. Prohibition of Certain Loans.  Not incur any borrowings
       except (i) the refinancing of indebtedness now outstanding or additional
       borrowings under its existing revolving credit facilities, (ii) the
       prepayment by customers of amounts due or to become due for goods sold
       or services rendered or to be rendered in the future, (iii) trade
       payables incurred in the ordinary course of business, (iv) other
       borrowings incurred in the ordinary course of business to finance normal
       operations or (v) as is otherwise agreed to in writing by ITEQ;

              4.3.3. Prohibition of Certain Commitments.  Not enter into
       commitments of a capital expenditure nature or incur any contingent
       liability which would exceed $1,000,000, in the aggregate, except (i) as
       may be necessary for the maintenance of existing facilities, machinery
       and equipment in good operating condition and repair in the ordinary
       course of business, (ii) as may be required by law or (iii) as is
       otherwise agreed to in writing by ITEQ;




                                        
                                      A-24
<PAGE>   32
              4.3.4. Disposal of Assets.  Not sell, dispose of, or encumber,
       any property or assets, except (i) in the ordinary course of business or
       (ii) as is otherwise agreed to in writing by ITEQ;

              4.3.5. Maintenance of Insurance.  Maintain insurance (or self
       insurance reserves) upon all its properties and with respect to the
       conduct of its business of such kinds and in such amounts as is
       customary in the type of business in which it is engaged, but not less
       than that presently carried by it, which insurance (or self insurance
       reserves) may be added to from time to time in its discretion; provided,
       that if during the period from the date hereof to and including the
       Effective Date any of its property or assets are damaged or destroyed by
       fire or other casualty, the obligations of ITEQ and AIX under this
       Agreement shall not be affected thereby (subject, however, to the
       provision that the coverage limits of such policies are adequate in
       amount to cover the replacement value of such property or assets and
       loss of profits during replacement, less commercially reasonable
       deductibles, if of material significance to the assets or operations of
       AIX) but it shall promptly notify ITEQ in writing thereof and proceed
       with the repair or restoration of such property or assets in such manner
       and to such extent as may be approved by ITEQ, and upon the Effective
       Date all proceeds of insurance and claims of every kind arising as a
       result of any such damage or destruction shall remain the property of
       Surviving Corporation;

              4.3.6. AIX Acquisition Proposals.  Not directly or indirectly:

                     4.3.6.1.  No Solicitation.  Authorize or permit any of its
              respective agents to:  (i) solicit, initiate, encourage
              (including by way of furnishing information) or take any other
              action to facilitate, any inquiry or the making of any proposal
              which constitutes, or may reasonably be expected to lead to, any
              acquisition or purchase of a substantial amount of assets of, or
              an equity interest of 30% or more in, AIX or any merger,
              consolidation, business combination, sale of substantially all
              assets, sale of securities, recapitalization, liquidation,
              dissolution or similar transaction involving AIX (other than the
              transactions contemplated by this Agreement) or any other
              material corporate transaction the consummation of which would,
              or could reasonably be expected to, impede, interfere with,
              prevent or materially delay the merger contemplated by this
              Agreement (collectively, "AIX Transaction Proposals") or agree to
              or endorse any AIX Transaction Proposal or (ii) propose, enter
              into or participate in any discussions or negotiations regarding
              any of the foregoing, or furnish to another person any
              information with respect to its business, properties or assets or
              any of the foregoing, or otherwise cooperate in any way with, or
              assist or participate in, facilitate or encourage, an effort or
              attempt by any other person to do or seek any of the foregoing,
              provided, however, that the foregoing clauses (i) and (ii) shall
              not prohibit AIX from (A) furnishing information pursuant to an
              appropriate confidentiality letter concerning AIX and its
              businesses, properties or assets to a third party who has made a
              Superior AIX Transaction Proposal (as defined below), (B)
              engaging in discussions or negotiations with a third party who
              has made a Superior





                                      A-25
<PAGE>   33
              AIX Transaction Proposal or (C) following receipt of a Superior
              AIX Transaction Proposal, taking and disclosing to its
              stockholders a position with respect thereto or changing the
              recommendation by AIX's board of directors but in each case
              referred to in the foregoing clauses (A) through (C) only after
              the board of directors of AIX concludes in good faith following
              advice of its outside counsel that such action is reasonably
              necessary in order for the board of directors of AIX to comply
              with its fiduciary obligations to stockholders under applicable
              law.  If the board of directors of AIX receives an AIX
              Transaction Proposal, then AIX shall immediately inform ITEQ of
              the terms and conditions of such proposal and the identity of the
              person making it and shall keep ITEQ fully informed of the status
              and details of any such AIX Transaction Proposal and of all steps
              it is taking in response to such AIX Transaction Proposal;
              provided that nothing contained in this Paragraph 4.3.6.1 shall
              prohibit AIX or its board of directors from making such
              disclosure to AIX's stockholders or taking any action which, in
              the good faith judgment of AIX's board of directors, may be
              required under applicable law, including Rules 14d-9 and 14e-2
              promulgated under the Exchange Act.  For purposes of this
              Agreement, the term "Superior AIX Transaction Proposal" shall
              mean a bona fide AIX Transaction Proposal that the board of
              directors of AIX determines in good faith after consultation with
              (and based in part on the advice of) its independent financial
              advisors to be more favorable to AIX's stockholders than the
              merger contemplated by this Agreement, is reasonably capable of
              being financed and is not subject to any material contingencies
              relating to financing.

                     4.3.6.2.  Acceptance of Superior AIX Transaction
              Proposals. If (i) (A) this Agreement is terminated by AIX
              pursuant to Paragraph 6.1.5 hereof, (B) AIX shall violate the
              covenant set forth in Paragraph 4.3.6.1 hereof, or (C) AIX
              modifies or withdraws its board of directors' recommendation in
              favor of the transactions contemplated by this Agreement or (ii)
              AIX enters into an agreement which provides for Another AIX
              Transaction (as defined below) or Another AIX Transaction is
              consummated (in each case with any third party which after the
              date of this Agreement and before termination of this Agreement
              has communicated to it an AIX Transaction Proposal), in either
              case within twelve months after the date of termination of this
              Agreement, then, in any such event, AIX shall pay to ITEQ within
              two days after demand by ITEQ in the case of the occurrence of
              any of the events specified in clause (i) above, and immediately
              upon the first to occur of the entering into an agreement
              providing for, or the consummation of, Another AIX Transaction in
              the case of clause (ii) above (by wire transfer of immediately
              available funds to an account designated by ITEQ for such
              purpose), a fee (the "Break-Up Fee") in an amount equal to
              $2,500,000.  AIX agrees that the Break-Up Fee is a reasonable
              determination, in light of the uncertainty and difficulty of
              ascertaining the exact amount thereof, of the loss that ITEQ
              would actually sustain in respect of one of the events described
              in this Paragraph 4.3.6.2.  For purposes of this Paragraph
              4.3.6.2, the term "Another AIX Transaction" shall mean any
              transaction pursuant to which





                                      A-26
<PAGE>   34
              (i) any person, entity or group (within the meaning of Section
              13(d)(3) of the Exchange Act) (each, a "Third Party") acquires
              50% or more of the outstanding AIX Common Stock, (ii) a Third
              Party acquires 25% or more of the total assets of AIX taken as a
              whole, (iii) a Third Party merges, consolidates or combines in
              any other way with AIX other than in a transaction in which
              holders of AIX Common Stock continue to own at least 75% of the
              equity of the surviving corporation, or (iv) AIX distributes or
              transfers to its stockholders, by dividend or otherwise, assets
              constituting 25% or more of the market value or earning power of
              AIX on a consolidated basis (it being understood that stock of
              subsidiaries constitute assets of AIX for purposes of this
              Paragraph 4.3.6.2).  Notwithstanding anything contained in this
              Agreement to the contrary, ITEQ agrees that if AIX pays the
              Break-Up Fee to ITEQ in accordance with this Paragraph 4.3.6.2
              either because AIX shall have violated the covenant set forth in
              Paragraph 4.3.6.1 hereof, or under any other circumstances where
              ITEQ has been paid the Break-Up Fee by AIX, then following such
              payment AIX shall have no further liability to ITEQ under this
              Agreement.

              4.3.7. No Amendment to Certificate of Incorporation, etc.  Prior
       to the receipt by ITEQ of the Break-Up Fee pursuant to Section 4.3.6.2
       or without the consent of ITEQ, not amend its certificate of
       incorporation or bylaws or other organizational documents or merge or
       consolidate with or into any other corporation or change in any manner
       the rights of its capital stock or the character of its business;

              4.3.8. No Issuance, Sale, or Purchase of Securities.  Prior to
       the receipt by ITEQ of the Break-Up Fee pursuant to Section 4.3.6.2 or
       without the consent of ITEQ, not issue or sell, or issue options or
       rights to subscribe to, or enter into any contract or commitment to
       issue or sell (upon conversion or otherwise), any shares of its capital
       stock or subdivide or in any way reclassify any shares of its capital
       stock, or acquire, or agree to acquire, any shares of its capital stock;
       provided, that nothing in this Paragraph shall restrict or prohibit the
       issuance by AIX of shares of AIX Common Stock upon exercise of options
       previously granted under existing benefit plans;

              4.3.9. Prohibition on Dividends.  Prior to the receipt by ITEQ of
       the Break-Up Fee pursuant to Section 4.3.6.2 or without the consent of
       ITEQ, not declare or pay any dividend on shares of its capital stock or
       make any other distribution of assets to the holders thereof;

              4.3.10.  Supplemental Financial Statements.  Deliver to ITEQ,
       within 45 days after the end of each fiscal quarter of AIX beginning
       June 30, 1997 and through the Effective Date, unaudited consolidated
       balance sheets and related unaudited statements of income, retained
       earnings and cash flows as of the end of each fiscal quarter of AIX, and
       as of the corresponding fiscal quarter of the previous fiscal year.  AIX
       hereby represents and warrants that such unaudited consolidated
       financial statement shall (i) be complete in all material respects
       except for the omission of notes and schedules contained in audited
       financial statements, (ii) present fairly the financial condition of AIX
       as at the dates indicated and the





                                      A-27
<PAGE>   35
       results of operations for the respective periods indicated (except for
       normal year-end adjustments which are not material) (iii) shall have
       been prepared in accordance with generally accepted accounting
       principles applied on a consistent basis, except as noted therein and
       (iv) shall contain all adjustments which AIX considers necessary for a
       fair presentation of its results for each respective fiscal period;

              4.3.11.  Notice of Material Developments.  Promptly furnish to
       ITEQ copies of all communications from AIX to its stockholders and all
       AIX Reports.

              4.3.12.  Stockholders' Meeting.  Call and hold a meeting of
       stockholders within 45 days after the Commission has indicated that it
       has no further comments on the Proxy Statement for the purpose of
       considering and acting a proposal to approve this Agreement and the
       merger contemplated hereby.

       4.4.   Additional Agreements of ITEQ.  ITEQ agrees that from the date
hereof to the Effective Date, it will:

              4.4.1. Prohibition of Certain Employment Contracts.  Not enter
       into any contracts of employment which (i) cannot be terminated on
       notice of 14 days or less or (ii) provide for any severance payments or
       benefits covering a period beyond the termination date (other than those
       which AIX has previously been approved) except as may be required by
       law; provided, however, that nothing in this Paragraph shall prohibit
       ITEQ from entering into an employment agreement with its chief executive
       officer on substantially the terms previously disclosed in writing to
       AIX;

              4.4.2. Prohibition of Certain Loans.  Except as contemplated by
       Paragraph 4.4.13, not incur any borrowings except (i) the refinancing of
       indebtedness now outstanding, or additional borrowings under its
       existing revolving credit facilities, (ii) the prepayment by customers
       of amounts due or to become due for goods sold or services rendered or
       to be rendered in the future, (iii) trade payables incurred in the
       ordinary course of business, (iv) other borrowings incurred in the
       ordinary course of business to finance normal operations or (v) as is
       otherwise agreed to in writing by AIX;

              4.4.3. Prohibition of Certain Commitments.  Not enter into
       commitments of a capital expenditure nature or incur any contingent
       liability which would exceed $1,000,000, in the aggregate, except (i) as
       may be necessary for the maintenance of existing facilities, machinery
       and equipment in good operating condition and repair in the ordinary
       course of business, (ii) as may be required by law or (iii) as is
       otherwise agreed to in writing by AIX;

              4.4.4. Disposal of Assets.  Not sell, dispose of, or encumber,
       any property or assets, except (i) in the ordinary course of business or
       (ii) as is otherwise agreed to in writing by AIX;





                                      A-28
<PAGE>   36
              4.4.5. Maintenance of Insurance.  Maintain insurance upon all its
       properties and with respect to the conduct of its business of such kinds
       and in such amounts as is customary in the type of business in which it
       is engaged, but not less than that presently carried by it, which
       insurance may be added to from time to time in its discretion; provided,
       that if during the period from the date hereof to and including the
       Effective Date any of its property or assets are damaged or destroyed by
       fire or other casualty, the obligations of ITEQ and AIX under this
       Agreement shall not be affected thereby (subject, however, to the
       provision that the coverage limits of such policies are adequate in
       amount to cover the replacement value of such property or assets and
       loss of profits during replacement, less commercially reasonable
       deductible, if of material significance to the assets or operations of
       ITEQ) but it shall promptly notify AIX in writing thereof and proceed
       with the repair or restoration of such property or assets in such manner
       and to such extent as may be approved by AIX, and upon the Effective
       Date all proceeds of insurance and claims of every kind arising as a
       result of any such damage or destruction shall remain the property of
       Surviving Corporation;

              4.4.6. No Amendment to Certificate of Incorporation, etc.  Except
       as otherwise provided herein, not amend its certificate of incorporation
       or bylaws or other organizational documents or merge into any other
       corporation or change in any manner the rights of its Common Stock;

              4.4.7. No Issuance, Sale, or Purchase of Securities.  Not issue
       or sell, or issue options (other than (i) options previously authorized
       by the compensation committee of ITEQ's board of directors or (ii)
       options granted to new personnel upon commencement of employment) or
       rights to subscribe to, or enter into any contract or commitment to
       issue or sell (upon conversion or otherwise), any shares of its capital
       stock or subdivide or in any way reclassify any shares of its capital
       stock, or acquire, or agree to acquire, any shares of its capital stock;
       provided, that nothing in this Paragraph shall restrict or prohibit the
       issuance by ITEQ of shares of ITEQ Common Stock upon exercise of options
       previously granted under existing employee benefit plans, the issuance
       of shares of ITEQ Common Stock upon exercise of outstanding warrants, or
       the issuance of up to 1,000,000 shares of ITEQ Common Stock in the
       acquisition of other businesses in "non-dilutive" (for financial
       reporting purposes) transactions if such acquired businesses would not
       individually or collectively constitute a "significant subsidiary" of
       ITEQ;

              4.4.8. Prohibition on Dividends.  Not declare or pay any dividend
       on shares of its capital stock or make any other distribution of assets
       to the holders thereof;

              4.4.9.  Stockholders' Meeting.  Call and hold a meeting of
       stockholders within 45 days after the Commission has indicated that it
       has no further comments on the Proxy Statement for the purpose of
       considering and acting upon proposals to approve this Agreement and the
       merger contemplated hereby;





                                      A-29
<PAGE>   37
              4.4.10.  Issuance of ITEQ Common Stock.  Take all action it deems
       reasonably necessary to register the "issuance" of ITEQ Common Stock to
       the stockholders of AIX in connection with the merger contemplated by
       this Agreement under the Securities Act of 1933, as amended (the
       "Securities Act").  ITEQ also shall take any action reasonably required
       to be taken under state blue sky or securities laws in connection with
       the issuance of the ITEQ Common Stock pursuant to the merger;

              4.4.11.  Listing of ITEQ Stock.  Take such steps as are required
       to accomplish, as of the Effective Date, the Notification of Additional
       Listing of the shares of ITEQ Common Stock to be issued pursuant to this
       Agreement on the Nasdaq National Market;

              4.4.12.  Notice of Material Developments.  Promptly furnish to
       AIX copies of all communications from ITEQ to its stockholders and all
       ITEQ Reports; and

              4.4.13.  Refinancing of Outstanding Indebtedness.  Use all
       reasonable commercial efforts to arrange for the payment or assumption
       by it of all outstanding debt of AIX on the Effective Date on such terms
       as could not reasonably be expected to have a Material Adverse Effect on
       ITEQ, including (i) the borrowing by ITEQ of up to an additional
       $35,000,000 to fund any such repayment and (ii) the amendment or
       refunding of its present long-term and revolving indebtedness (the
       "Refinancing").

                                   ARTICLE V

                       CONDITIONS PRECEDENT TO OBLIGATIONS

       5.1.   Conditions Precedent to Obligations of AIX.  The obligations of 
AIX to consummate and effect the merger hereunder shall be subject to the
satisfaction of the following conditions, or to the waiver thereof by AIX in
the manner contemplated by Section 6.4 before the Effective Date:

              5.1.1.   Representations and Warranties of ITEQ True at Effective
       Date.  The representations and warranties of ITEQ herein contained shall
       be, in all material respects, true as of and at the Effective Date with
       the same effect as though made at such date, except as affected by
       transactions permitted or contemplated by this Agreement; ITEQ shall
       have performed and complied with all covenants required by this
       Agreement to be performed or complied, in all material respects, with by
       ITEQ before the Effective Date; and ITEQ shall have delivered to AIX a
       certificate, dated the Effective Date and signed by its chairman of the
       board or its president, and by its chief financial or accounting
       officer, and its secretary, to both such effects.

              5.1.2.   No Material Litigation.  No suit, action, or other
       proceeding shall be pending, or to ITEQ's knowledge, threatened, before
       any court or governmental agency in which it will be, or it is, sought
       to restrain or prohibit or to obtain damages or other relief in





                                      A-30
<PAGE>   38
       connection with this Agreement or the consummation of the merger
       contemplated hereby or which could reasonably be expected to have a
       Material Adverse Effect on ITEQ.

              5.1.3. Opinion of ITEQ Counsel.  AIX shall have received a
       favorable opinion, dated as of the Effective Date, from Porter & Hedges,
       L.L.P., counsel for ITEQ, to the effect that (i) ITEQ has been duly
       incorporated and is validly existing as a corporation in good standing
       under the laws of the State of Delaware; (ii) all corporate proceedings
       required to be taken by or on the part of ITEQ to authorize the
       execution of this Agreement and the implementation of the merger
       contemplated hereby have been taken; (iii) the shares of ITEQ Common
       Stock which are to be delivered in accordance with this Agreement will,
       when issued, be validly issued, fully paid and nonassessable outstanding
       securities of ITEQ; (iv) this Agreement has been duly executed and
       delivered by ITEQ; (v) the Registration Statement on Form S-4 (which
       contains the Proxy Statement relating to the merger contemplated hereby)
       has become effective and no stop order has been issued by the
       Commission; and (vi) except as specified by such counsel (such
       exceptions to be acceptable to AIX) such counsel does not know of any
       material litigation, proceedings, or governmental investigation pending
       or threatened against or relating to ITEQ, any of its subsidiaries, or
       their respective properties or businesses in which it is sought to
       restrain, prohibit or otherwise affect the consummation of the
       transactions contemplated by this Agreement.  Such opinion also shall
       cover such other matters incident to the transactions herein
       contemplated as AIX and its counsel may reasonably request.  In
       rendering such opinion, such counsel may rely upon (i) certificates of
       public officials and of officers of ITEQ as to matters of fact and (ii)
       the opinion or opinions of other counsel, which opinions shall be
       reasonably satisfactory to AIX, as to matters other than federal or
       Texas law.

              5.1.4. Stockholder Approval.  At the meeting of stockholders of
       AIX to be held before the Effective Date, the holders of the requisite
       majority of the outstanding shares of AIX Common Stock shall have
       approved the merger contemplated by this Agreement.

              5.1.5. Hart-Scott-Rodino, etc.  All waiting periods required by
       HSR shall have expired with respect to the transactions contemplated by
       this Agreement, or early termination with respect thereto shall have
       been obtained without the imposition of any governmental request or
       order requiring the sale or disposition or holding separate (through a
       trust or otherwise) of particular assets or businesses of ITEQ, its
       affiliates or any component of AIX or other actions as a precondition to
       the expiration of any waiting period or the receipt of any necessary
       governmental approval or consent.  In addition, any approvals required
       under any state or foreign laws comparable to HSR shall have been
       obtained.

              5.1.6. Registration; Listing of ITEQ Common Stock.  On the
       Effective Date (i) the Proxy Statement shall have become effective under
       the Securities Act, and (ii) the shares of ITEQ Common Stock issuable at
       the Effective Date of this Agreement shall have become eligible for
       trading on the Nasdaq National Market.





                                      A-31
<PAGE>   39
              5.1.7. Consent of Certain Parties in Privity With ITEQ.  The
       holders of any material indebtedness of ITEQ, the lessors of any
       material property leased by ITEQ, and the other parties to any other
       material agreements to which ITEQ is a party shall, when and to the
       extent necessary in the reasonable opinion of AIX, have consented to the
       merger contemplated hereby.

              5.1.8. Stock Options and Other Employee Benefit Plans of AIX.
       ITEQ shall have made effective provision (i) for the assumption at the
       Effective Date of all stock options outstanding under plans maintained
       by AIX and/or its subsidiaries, (ii) for the assumption, termination or
       discontinuation of all other AIX Plans, and (iii) except for benefits
       provided by AIX Plans assumed by ITEQ, make available to employees of
       AIX and its subsidiaries ("AIX Employees") participation following the
       Effective Date in the ITEQ Plans extended by ITEQ to similarly situated
       employees.  If an AIX Plan that is terminated or discontinued by ITEQ is
       a group health plan, then ITEQ shall permit each AIX Employee
       participating  in such group health plan and his or her eligible
       dependents (including, without limitation, all such AIX Employee's
       dependents covered by such group health plan as of the time such
       coverage ceases) to be covered under an ITEQ Plan that (i) provides
       medical and dental benefits to each such AIX Employee and such eligible
       dependents effective immediately upon the cessation of coverage of such
       individuals under such group health plan, (ii) credits such AIX
       Employee, for the year during which such coverage under such ITEQ Plan
       begins, with any deductibles and copayments already incurred during such
       year under such group health plan, and (iii) waives any preexisting
       condition restrictions to the extent necessary to provide immediate
       coverage.  ITEQ and the ITEQ Plans shall recognize each AIX Employee's
       years of service and level of seniority with AIX and its subsidiaries
       for purposes of terms of employment and eligibility, vesting and benefit
       determination under the ITEQ Plans (other than benefit accruals under
       any defined benefit pension plan).

              5.1.9. Ancillary Matters.  ITEQ shall have concluded the
       Refinancing, subject only to consummation of the merger contemplated by
       this Agreement, and AIX shall have received a favorable opinion from RPR
       for inclusion in the Proxy Statement as to the fairness, from a
       financial point of view, to the AIX stockholders of the Merger
       Consideration, which opinion shall not have been withdrawn at the
       Effective Date.

              5.1.10.Tax Opinion.  AIX shall have received an opinion,
       dated as of the Effective Date, from Porter & Hedges, L.L.P., counsel
       for ITEQ, to the effect that (i) the merger of AIX into ITEQ as provided
       in this Agreement will constitute a reorganization within the meaning of
       Section  368(a)(1)(A) of the Code, and AIX and ITEQ will be parties to
       the reorganization; (ii) no gain or loss will be recognized to AIX or
       ITEQ upon such merger; (iii) no gain or loss will be recognized to any
       stockholder of AIX as a consequence of the merger, except to the extent
       of any cash received in lieu of fractional share interests; (iv) the
       aggregate tax basis of the ITEQ Common Stock received by an AIX
       stockholder as a result of the merger will be the same as the aggregate
       tax basis of the AIX Common Stock exchanged for such shares, reduced by
       basis allocable to fractional shares redeemed for cash;





                                      A-32
<PAGE>   40
       (v) the holding period of the ITEQ Common Stock received in exchange for
       AIX Common Stock pursuant to the merger will include the holding period
       of such AIX Common Stock; (vi) ITEQ's basis and holding period for all
       the assets of AIX acquired pursuant to the merger will be determined
       solely with respect to the basis and holding period of such assets in
       the hands AIX; and (vii) no gain or loss will be recognized to holders
       of AIX Options upon their exchange into options to purchase ITEQ Common
       Stock pursuant to the merger.

       5.2.   Conditions Precedent to Obligations of ITEQ.  The obligations of
ITEQ to consummate and effect the merger hereunder shall be subject to the
satisfaction of the following conditions, or to the waiver thereof by ITEQ in
the manner contemplated by Section 6.4 before the Effective Date.

              5.2.1. Representations and Warranties of AIX True at Effective
       Date.  The representations and warranties of AIX herein contained shall
       be, in all material respects, true as of and at the Effective Date with
       the same effect as though made at such date, except as affected by
       transactions permitted or contemplated by this Agreement; AIX shall have
       performed and complied with all covenants required by this Agreement to
       be performed or complied with, in all material respects, by it before
       the Effective Date; and AIX shall have delivered to ITEQ a certificate,
       dated the Effective Date and signed by its chairman of the board or its
       president, and by its chief financial or accounting officer, and by its
       secretary to both such effects.

              5.2.2. No Material Litigation.  No suit, action, or other
       proceeding shall be pending, or to AIX's knowledge, threatened, before
       any court or governmental agency in which it will be, or it is, sought
       to restrain or prohibit or to obtain damages or other relief in
       connection with this Agreement or the consummation of the merger
       contemplated hereby or which could reasonably be expected to have a
       Material Adverse Effect on AIX.

              5.2.3. Opinion of AIX's Counsel.  ITEQ shall have received a
       favorable opinion, dated the Effective Date, from Vinson & Elkins
       L.L.P., counsel to AIX to the effect that (i) AIX has been duly
       incorporated and is validly existing as a corporation in good standing
       under the laws of the State of Delaware; (ii) all outstanding shares of
       the AIX Common Stock have been validly issued and are fully paid and
       nonassessable; (iii) all corporate or other proceedings required to be
       taken by or on the part of AIX to authorize the execution of this
       Agreement and the implementation of the merger contemplated hereby have
       been taken; (iv) this Agreement has been duly executed and delivered by
       AIX; and (v) except as specified by such counsel (such exceptions to be
       acceptable to ITEQ) such counsel does not know of any material
       litigation, proceedings or governmental investigation, pending or
       threatened against or relating to AIX or its properties or businesses in
       which it is sought to restrain, prohibit or otherwise affect
       consummation of the transactions contemplated by this Agreement.  Such
       opinion shall also cover such other matters incident to the transactions
       herein contemplated as ITEQ and its counsel may reasonably request.  In
       rendering such





                                      A-33
<PAGE>   41
       opinion, such counsel may rely upon (i) certificates of public officials
       and of officers of AIX as to matters of fact and (ii) on the opinion or
       opinions of other counsel, which opinions shall be reasonably
       satisfactory to ITEQ, as to matters other than federal or Texas law.

              5.2.4. Stockholder Approval.  At the meeting of stockholders of
       ITEQ to be held before the Effective Date, the holders of the requisite
       majority of the outstanding shares of ITEQ Common Stock shall have
       approved the merger contemplated by this Agreement.

              5.2.5. Hart-Scott-Rodino, etc.  All waiting periods required by
       HSR shall have expired with respect to the transactions contemplated by
       this Agreement, or early termination with respect thereto shall have
       been obtained without the imposition of any governmental request or
       order requiring the sale or disposition or holding separate (through a
       trust or otherwise) of particular assets or businesses of ITEQ, its
       affiliates or any component of AIX or other actions as a precondition to
       the expiration of any waiting period or the receipt of any necessary
       governmental approval or consent.  In addition, any approvals required
       under any state or foreign laws comparable to HSR shall have been
       obtained.

              5.2.6. Consent of Certain Parties in Privity with AIX.  The
       holders of any material indebtedness of AIX, the lessors of any material
       property leased by AIX, and the other parties to any other material
       agreements to which AIX is a party shall, when and to the extent
       necessary in the reasonable opinion of ITEQ, have consented to the
       merger contemplated hereby.

              5.2.7. Ancillary Matters.  ITEQ shall have concluded the
       Refinancing, subject only to consummation of the merger contemplated by
       this Agreement, and it shall have received a favorable opinion from
       Simmons for inclusion in the Proxy Statement as to the fairness, from a
       financial point of view, to ITEQ of the Merger Consideration, which
       opinion shall not have been withdrawn at the Effective Date.

                                   ARTICLE VI

                          TERMINATION AND ABANDONMENT

       6.1.   Termination.  Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated and the merger
contemplated hereby abandoned at any time (whether before or after the approval
and adoption thereof by the stockholders of AIX or ITEQ) before the Effective
Date:

              6.1.1. By Mutual Consent.  By mutual consent of ITEQ and AIX.

              6.1.2. By ITEQ Because of Conditions Precedent.  By ITEQ, if
       there has been a breach by AIX of any of its representations,
       warranties, covenants, or agreements set forth in this Agreement, or if
       any representation or warranty of AIX shall have become untrue, in





                                      A-34
<PAGE>   42
       either case which could reasonably be expected to have a Material
       Adverse Effect on AIX, and which AIX fails to cure within 15 business
       days after written notice thereof from ITEQ (except that no cure period
       shall be provided for any breach by AIX which by its nature cannot be
       cured).

              6.1.3. By ITEQ Because of Material Adverse Change.  By ITEQ, if
       there has been since March 31, 1997, a Material Adverse Change with
       respect to AIX.

              6.1.4. By AIX Because of Conditions Precedent.  By AIX, if there
       has been a breach by ITEQ of any of its representations, warranties,
       covenants or agreements set forth in this Agreement, or if any
       representation or warranty of ITEQ shall have become untrue, in either
       case which could reasonably be expected to have a Material Adverse
       Effect on ITEQ, and which ITEQ fails to cure within 15 business days
       after written notice thereof from AIX (except that no cure period shall
       be provided for any breach by ITEQ which by its nature cannot be cured).

              6.1.5. By AIX Due to a Superior AIX Transaction Proposal.  By AIX
       if, before the Effective Date, AIX's board of directors shall have
       withdrawn or modified in a manner adverse to ITEQ its approval of this
       Agreement or the merger contemplated hereby under the terms, conditions
       and procedures set forth in Paragraph 4.3.6.2.

              6.1.6. By AIX Because of Material Adverse Change. By AIX, if
       there has been since March 31, 1997, a Material Adverse Change with
       respect to ITEQ.

              6.1.7. By ITEQ or AIX Because of Legal Proceedings.  By either
       ITEQ or AIX if any suit, action, or other proceeding shall be pending or
       threatened by the federal or a state government before any court or
       governmental agency, in which it is sought to restrain, prohibit, or
       otherwise affect the consummation of the merger contemplated hereby.

              6.1.8.  By ITEQ or AIX if Merger not Effective by November 30,
       1997.  By either ITEQ or AIX, if all conditions to consummation of the
       merger shall not have been satisfied or waived on or before November 30,
       1997, other than as a result of a breach of this Agreement by the
       terminating party.

              6.1.9.  By ITEQ or AIX if Merger Cannot be Accounted for as a
       Pooling.  By ITEQ or AIX if the merger contemplated by this Agreement
       cannot for financial reporting purposes be accounted for as a "pooling
       of interests"; provided, however, this provisions shall not be available
       to a party which has engaged in any transaction after June 30, 1997,
       that either alone or in combination with actions previously taken
       disqualifies the merger from such accounting treatment.

       6.2.   Termination by Board of Directors.  An election of ITEQ to
terminate this Agreement and abandon the merger as provided in Section 6.1
shall be exercised on behalf of ITEQ by its board





                                      A-35
<PAGE>   43
of directors.  An election of AIX to terminate this Agreement and abandon the
merger as provided in Section 6.1 shall be exercised on behalf of AIX by its
board of directors.

       6.3.   Effect of Termination.  In the event of the termination and
abandonment of this Agreement pursuant to and in accordance with the provisions
of Section 6.1 hereof, this Agreement shall become void and have no effect,
without any liability on the part of any party hereto (or its stockholders or
controlling persons or directors or officers), except (i) the provisions of the
confidentiality agreements dated July 23, 1997, between ITEQ and AIX shall
survive such termination, and abandonment, (ii) the provisions of Paragraphs
4.3.6.1 and 4.3.6.2 shall survive such termination and abandonment and (iii)
except as otherwise provided in Paragraph 4.3.6.2, neither party shall be
released or relieved from any liability arising from the willful breach by such
party of any of its representations, warranties, covenants or agreements as set
forth in this Agreement.

       6.4.   Waiver of Conditions.  Subject to the requirements of any
applicable law, any of the terms or conditions of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof, by action
taken by its board of directors.

       6.5.   Expense on Termination.  If the merger contemplated hereby is
abandoned pursuant to and in accordance with the provisions of Section 6.1
hereof, all expenses will be paid by the party incurring them.

                                  ARTICLE VII

                             ADDITIONAL AGREEMENTS

              7.1.   Exchange of Options.  Promptly after the Effective Date,
ITEQ will notify in writing each holder of an AIX Option of the exchange of the
AIX Option for an option to purchase ITEQ Common Stock in accordance with
Section 1.10 hereof.

       7.2.   Indemnity.

              7.2.1. Indemnification by ITEQ as to Proxy Statement.  ITEQ
       agrees to indemnify and hold harmless AIX and its officers and directors
       and each person who controls AIX within the meaning of Section 15 of the
       Securities Act or Section 20 of the Exchange Act against any and all
       losses, claims, damages, or liabilities, joint or several, to which any
       of them may become subject under the Securities Act, the Exchange Act or
       any other statute or common law, and to reimburse them for any legal or
       other expenses incurred by them in connection with investigating any
       claims and defending any actions, to the extent such losses, claims,
       damages, liabilities, or actions arise out of or are based upon (i) any
       false, misleading or untrue statement or alleged false, misleading or
       untrue statement of a material fact, insofar as it relates to ITEQ
       contained in the Proxy Statement in the form mailed to the stockholders
       of ITEQ or (ii) the omission or alleged omission to state in the Proxy
       Statement





                                      A-36
<PAGE>   44
       (including the Prospectus used in connection with the "issuance" of the
       Merger Consideration) a material fact required to be stated therein or
       necessary to make the statements therein not misleading, except for such
       statements or omissions made in reliance upon and in conformity with the
       information furnished to ITEQ in writing by AIX specifically for use in
       connection with the preparation of the Proxy Statement.

              7.2.2. Indemnification of Directors and Officers.  ITEQ shall
       indemnify and hold harmless each present and former director and officer
       of AIX, determined as of the Effective Date, against any claims, losses,
       liabilities, damages, judgments, fines, fees, costs or expenses,
       including without limitation attorneys' fees and disbursements incurred
       in connection with any claim, action, suit, proceeding or investigation,
       whether civil, criminal, administrative or investigative, arising out of
       or pertaining to matters existing or occurring at or prior to the
       Effective Date (including, without limitation, the merger, the
       preparation, filing and mailing of the Proxy Statement and the other
       transactions and actions contemplated by this Agreement), whether
       asserted or claimed prior to, at or after the Effective Date, to the
       fullest extent that AIX would have been permitted, under applicable law,
       indemnification agreements existing on the date hereof, the Certificate
       of Incorporation or Bylaws of AIX in effect on the date hereof, to
       indemnify such person (and ITEQ shall also advance expenses as incurred
       to the fullest extent permitted under applicable law provided the person
       to whom expenses are advanced provides an undertaking to repay such
       advances if it is ultimately determined that such person is not entitled
       to indemnification).

              7.2.3. Indemnification Procedure.  Any indemnified party wishing
       to claim indemnification under this Section 7.2, upon learning of any
       such claim, action, suit, proceeding or investigation, shall promptly
       notify ITEQ thereof, but the failure to so notify shall not relieve ITEQ
       of any liability or obligation it may have to such indemnified party
       except, and only to the extent, that such failure materially prejudices
       ITEQ.  In the event of any such claim, action, suit, proceeding or
       investigation (whether arising before, at or after the Effective Date),
       ITEQ shall have the right to assume the defense thereof and ITEQ shall
       not be liable to such indemnified parties for any legal expenses of
       other counsel or any other expenses subsequently incurred by such
       indemnified parties in connection with the defense thereof, except that
       if ITEQ elects not to assume such defense, or counsel for the
       indemnified parties advises that there are bona fide issues that raise
       conflicts of interest between ITEQ and indemnified party, the
       indemnified parties may retain counsel satisfactory to them, and ITEQ
       shall pay all reasonable fees and expenses of such counsel for the
       indemnified party promptly as statements therefor are received.  If such
       indemnity is not available with respect to any indemnified party, then
       ITEQ and the indemnified party shall contribute to the amount payable in
       such proportion as is appropriate to reflect relative faults and
       benefits.

              7.2.4. Benefits.  The provisions of this Section 7.2 is intended
       to be for the benefit of, and shall be enforceable by, each of the
       indemnified parties and their respective heirs and legal
       representatives.  The indemnification provided for herein shall not be
       exclusive of any





                                      A-37
<PAGE>   45
       rights to which an indemnified party is entitled, whether pursuant to
       law, contract or otherwise.

       7.3.   Registration of Certain AIX Control Person Shares.

              7.3.1. Agreement to Register Resales.  ITEQ agrees that promptly
       following the Effective Date, it will file with the Commission on Form
       S-3, a shelf registration statement pursuant to Rule 415 of the
       Securities Act (the "Registration Statement") covering the resale by
       each of the former stockholders of AIX who has complied with Paragraph
       7.4.1 ("Stockholders") of all the shares of ITEQ Common Stock received
       by them in the merger or receivable upon exercise of AIX Options (the
       "Stock"), and will use its best efforts to cause the same to be declared
       effective promptly by the Commission (and in any event, not later than
       10 days following the publication by ITEQ of financial results
       containing at least 30 days of post-merger operations).  ITEQ agrees to
       maintain such Registration Statement in effect for the maximum period
       allowable under the regulations promulgated by the Commission, and in
       any event to maintain the same (or, to the extent necessary, successive
       registration statements) through at least December 31, 2002.  In any
       offering pursuant to this Paragraph, ITEQ will use its best efforts to
       effect any such registration and use its best efforts to effect such
       qualification and compliance as may be required and as would permit or
       facilitate the resale of such Stock, including, without limitation,
       registration under the Securities Act, appropriate qualifications under
       applicable blue-sky or other state securities laws, and appropriate
       compliance with any other governmental requirements.

              7.3.2. Procedures.  Unless otherwise agreed between ITEQ and any
       Stockholder, the Registration Statement will cover resales of Stock in
       the open market by the Stockholders, among others.  In no event shall
       the plan of distribution of Stock include the use of a contractual
       underwriter, nor shall ITEQ have any obligation to enter into an
       underwriting agreement with any investment banking firm participating as
       a broker in the execution of any such resales.  ITEQ agrees that it will
       furnish to each Stockholder such number of prospectuses, prospectus
       supplements, or other documents incident to any registration,
       qualification or compliance referred to herein as the Stockholder from
       time to time may reasonably request.

              7.3.3. Registration Expenses.  All expenses (except for
       commissions and any legal fees for Stockholder's counsel) of any
       registrations of Stock effected pursuant to this Agreement (including,
       but not limited to, the expenses of any qualifications under the blue-
       sky or other state securities laws and compliance with governmental
       requirements of preparing and filing any post-effective amendments or
       prospectus supplements required for the lawful distribution of the Stock
       to the public in connection with such registration) will be paid by
       ITEQ.

              7.3.4. Preparation; Reasonable Investigation.  In connection with
       the preparation and filing of any registration statement under the
       Securities Act pursuant to this Agreement,





                                      A-38
<PAGE>   46
       ITEQ will give each Stockholder (and any single counsel designated by
       all Stockholders), the opportunity to participate in the preparation of
       such registration statement, each prospectus included therein or filed
       with the Commission, and each amendment thereof or supplement thereto,
       and will give each of them such access to its books and records and such
       opportunities to discuss the business of ITEQ with its officers and the
       independent public accountants who have certified its financial
       statements as shall be necessary to conduct a reasonable investigation
       within the meaning of the Securities Act.

              7.3.5. Rights Non-Transferable.  The registration rights provided
       by this Section 7.3 are for the benefit solely of the Stockholders, are
       personal in nature, and shall not be available to any subsequent holder
       of Stock (other than subsequent holders who have become such by gift or
       other transfer by a Stockholder to an immediate family member of such
       Stockholder, by will or through operation of the laws of descent and
       distribution ("Heirs") and the Stockholders' and their Heirs' respective
       administrators, guardians, receivers, executors or other persons acting
       in a similar capacity).

              7.3.6. Indemnification by ITEQ.  ITEQ agrees to indemnify and
       hold harmless each Stockholder and each person, if any, who controls a
       Stockholder, against any and all claims, demands, losses, costs,
       expenses, obligations, liabilities, joint or several, damages,
       recoveries and deficiencies, including interest, penalties and
       attorneys' fees (collectively, "Claims"), to which such Stockholder may
       become subject under the Securities Act or otherwise, insofar as such
       Claims (or actions or proceedings, whether commenced or threatened, in
       respect thereof) arise out of or are based upon any untrue statement or
       alleged untrue statement of any material fact contained in the
       Registration Statement, any preliminary prospectus, final prospectus or
       summary prospectus contained therein, or any amendment or supplement
       thereto, or any omission or alleged omission to state therein a material
       fact required to be stated therein or necessary to make the statements
       therein not misleading, and ITEQ will reimburse such Stockholder and
       each such controlling person for any legal or any other expenses
       reasonably incurred by them in connection with investigating or
       defending any such Claim (or action or proceeding in respect thereof);
       provided that ITEQ shall not be liable in any such case to the extent
       that any such Claim (or action or proceeding in respect thereof) or
       expense arises out of or is based upon an untrue statement or alleged
       untrue statement or omission or alleged omission made in such
       Registration Statement, any such preliminary prospectus, final
       prospectus, summary prospectus, amendment or supplement, in reliance
       upon and in conformity with written information furnished to ITEQ
       through an instrument duly executed by such Stockholder specifically
       stating that it is for use in the preparation thereof.  Such indemnity
       shall remain in full force and effect regardless of any investigation
       made by or on behalf of any Stockholder or any such controlling person
       and shall survive any transfer of Stock by a Stockholder.

              7.3.7. Notices of Claims, etc.  Promptly after receipt by an
       indemnified party of notice of the commencement of any action or
       proceeding involving a Claim referred to in this Section 7.3, such
       indemnified party will, if a claim in respect thereof is to be made
       against





                                      A-39
<PAGE>   47
       ITEQ, give written notice to ITEQ, in the manner and to the address
       specified in Section 8.3 hereof, of the commencement of such action,
       provided that the failure of any indemnified party to give notice as
       provided herein shall not relieve ITEQ of its obligations under this
       Section 7.3, except and only to the extent that ITEQ is actually
       prejudiced by such failure to give notice.  In case any such action is
       brought against ITEQ, unless in such indemnified party's reasonable
       judgment a conflict of interest between such indemnified and
       indemnifying parties may exist in respect of such Claim, ITEQ shall be
       entitled to participate in and to assume the defense thereof with
       counsel reasonably satisfactory to such indemnified party, and after
       notice from ITEQ to such indemnified party of its election so to assume
       the defense thereof, ITEQ shall not be liable to such indemnified party
       for any legal expenses subsequently incurred by the latter in connection
       with the defense thereof other than reasonable costs of investigation.
       ITEQ shall not, without the consent of the indemnified party, consent to
       entry of any judgment or enter into any settlement which does not
       include as an unconditional term thereof the giving by the claimant or
       plaintiff to such indemnified party of a release from all liability in
       respect of such Claim.

              7.3.8. Undertaking to File Reports and Cooperate in Rule 144
       Transactions.  For as long as any of the Stockholders shall continue to
       hold any Stock, ITEQ will undertake, on a reasonable commercial basis,
       to timely file all annual, quarterly and other reports required to be
       filed by it under Section 13 or 15(d) of the Exchange Act, and the
       regulations of the Commission thereunder.  In the event of any proposed
       sale of Stock by any of the Stockholders pursuant to Rule 144 under the
       Securities Act, ITEQ shall cooperate with such Stockholder so as to
       enable such sales to be made in accordance with applicable laws, rules
       and regulations, the requirements of ITEQ's transfer agents, and the
       reasonable requirements of any broker through which the sales are
       proposed to be executed.  Without limiting the generality of the
       foregoing, ITEQ shall, upon request, furnish with respect to each such
       sale (i) a written statement certifying that ITEQ has filed all reports
       required to be filed by it under the Exchange Act for a period of at
       least one year preceding the date of the proposed sale, and, in
       addition, has filed the most recent annual report required to be filed
       by it thereunder; (ii) an opinion of ITEQ's counsel regarding such
       matters as ITEQ's transfer agents or such Stockholder's broker may
       reasonably desire to confirm; and (iii) upon surrender of a certificate
       or certificates for the same or a greater number of Stock, unlegended
       certificates representing Stock in such numbers and denominations as
       such Stockholder shall reasonably require for delivery pursuant to such
       resales.

              7.3.9. Beneficiaries.  The provisions of this Section 7.3 are for
       the benefit of the Stockholders and ITEQ, and no other person shall
       acquire or have any rights under or by virtue of this Agreement except
       as set forth in Paragraph 7.3.5.  As express third-party beneficiaries
       of this Section 7.3, any Stockholder may independently enforce the
       provisions hereof against ITEQ.





                                      A-40
<PAGE>   48
       7.4.   Affiliate Agreements.

              7.4.1. AIX Affiliates.  To insure that the merger contemplated by
       this Agreement will be treated as a "pooling of interests" and to insure
       compliance with Rule 145 of the rules and regulations promulgated by the
       Commission and the Securities Act, each of AIX's directors, executive
       officers and beneficial owners of 5% or more of AIX's Common Stock has
       concurrently signed and delivered to ITEQ the AIX affiliate agreements
       in the form attached as [reference to omitted appendix].

              7.4.2.  ITEQ Affiliates.  To insure that the merger contemplated
       by this Agreement will be treated as a "pooling of interests," each of
       ITEQ's directors, executive officers and beneficial owners of 5% or more
       of ITEQ's Common Stock has concurrently signed and delivered to ITEQ the
       ITEQ affiliate agreements in the form attached as [reference to omitted
       appendix].

       7.5.   Publication of Combined Results.  ITEQ agrees to publicly release
a report in the form of a quarterly earnings report, registration statement
filed with the Commission, a report filed with the Commission on Form 10-K, 10-
Q, or 8-K or any other public filing, statement or announcement which includes
the combined financial results (including combined sales and net income) of
ITEQ and AIX for a period of at least 30 days of combined operations of ITEQ
and AIX following the Effective Date within 30 days after the end of the first
full calendar month of combined operations.

                                  ARTICLE VIII

                                 MISCELLANEOUS

       8.1.   Entirety.  This Agreement embodies the entire agreement between 
the parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.

       8.2.   Counterparts.  Any number of counterparts of this Agreement may
be executed and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
instrument.

       8.3.   Notices and Waivers.  Any notice or waiver to be given to any
party hereto shall be in writing and shall be delivered by courier, sent by
facsimile transmission or first class registered or certified mail, postage
prepaid.





                                      A-41
<PAGE>   49
                                  IF TO ITEQ

<TABLE>
 <S>                                            <C>
 Addressed to:                                  With a copy to:
                                                
 ITEQ, Inc.                                     Porter & Hedges, L.L.P.
 2727 Allen Parkway, Suite 760                  700 Louisiana, 35th Floor
 Houston, Texas 77019                           Houston, Texas 77210-4744
 Attention: Lawrance W. McAfee                  Attention:  T. William Porter
 Facsimile:  (713) 522-1759                     Facsimile:  (713) 226-0235
                                                
                                  IF TO AIX
                                                
 Addressed to:                                  With a copy to:
                                                
 Astrotech International Corporation            Vinson & Elkins L.L.P.
 960 Penn Avenue, Suite 800                     1001 Fannin
 Pittsburgh, Pennsylvania 15222                 2300 First City Tower
 Attention: S. Kent Rockwell                    Houston, Texas 77002
 Facsimile: (412) 391-3347                      Attention: John S. Watson
                                                Facsimile: (713) 615-5236
</TABLE>

       Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, shall be deemed to be received on the fifth
business day after so mailed, and if delivered by courier or facsimile to such
address, upon delivery during normal business hours on any business day.

       8.4.   Termination of Representations, Warranties, etc.  The respective
representations and warranties contained in Articles II and III shall expire
with, and be terminated and extinguished by, the merger pursuant to this
Agreement at the time of the consummation thereof on the Effective Date.  This
Section 8.4 shall not limit any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Effective Date or after
termination of this Agreement.

       8.5.   Table of Contents and Captions.  The table of contents and
captions contained in this Agreement are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of any article,
section, or paragraph hereof.

       8.6.   Successors and Assigns.  This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the successors and assigns
of the parties hereto and the employees of AIX shall be considered third-party
beneficiaries of the covenants and agreements contained in Section 1.10 and
5.18 of this Agreement.  As express third-party beneficiaries of Sections 1.10
and 5.18, the employees of AIX may independently enforce such provisions
against ITEQ.





                                      A-42
<PAGE>   50
       8.7.   Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.  It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.

       8.8.   Applicable Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas
(except to the extent that the form and content of the Certificate of Merger
and the consequences of the filing thereof shall be governed by the DGCL).

       8.9.   Public Announcements.  The parties agree that before the
Effective Date that they shall consult with each other before the making of any
public announcement regarding the existence of this Agreement, the contents
hereof or the transactions contemplated hereby, and to obtain the prior
approval of the other party as to the content of such announcement, which
approval shall not be unreasonably withheld.  However, the foregoing shall not
apply to any announcement or written statement which, upon the written advice
of counsel, is required by law to be made, except that the party required to
make such announcement shall, whenever practicable, consult with and solicit
prior approval from such other party concerning the timing and content of such
legally required announcement or statement before it is made.

       8.10.  Definitions.  The following terms are defined in the indicated
place:

<TABLE>
<CAPTION>
                                                                Section or
       Term                                                     Paragraph
       ----                                                     ---------
       <S>                                                      <C>
       Agreement                                                Premises
       AIX Common Stock                                         Premises
       AIX Employee                                             5.1.8
       AIX Options                                              1.10
       AIX Option Plans                                         1.10
       AIX Plans                                                2.1.7.1
       AIX Reports                                              2.1.5
       AIX Transaction Proposals                                4.3.6.1
       Another AIX Transaction                                  4.3.6.2
       Applicable Environmental Laws                            2.1.14.3
       Break-Up Fee                                             4.3.6.2
       Claims                                                   7.3.6
       Code                                                     1.4.2
       Commission                                               1.10
       DGCL                                                     Premises
       DMG                                                      2.1.16
       Effective Date                                           1.3
</TABLE>





                                      A-43
<PAGE>   51
<TABLE>
       <S>                                                      <C>
       Encumbrance                                              2.1.4
       ERISA                                                    2.1.17
       Exchange Act                                             2.1.5
       Heirs                                                    7.3.5
       HSR                                                      2.1.18
       Intellectual Property                                    2.1.11
       Investment Company Act                                   2.1.21
       ITEQ Common Stock                                        Premises
       ITEQ Plans                                               3.1.16
       ITEQ Reports                                             3.1.5
       ITEQ Shares                                              1.9.2
       Material Adverse Effect                                  1.12
       Merger Consideration                                     1.9.2
       Merging Corporations                                     Premises
       OSHA                                                     2.1.15
       Proxy Statement                                          2.1.20
       RPR                                                      2.1.16
       Refinancing                                              4.4.13
       Registration Statement                                   7.3.1
       Restated Bylaws                                          1.6
       Restated Certificate of Incorporation                    1.4.1
       Securities Act                                           4.4.10
       Simmons                                                  2.1.16
       Stock                                                    7.3.1
       Stockholders                                             7.3.1
       Superior AIX Transaction Proposal                        4.3.6.1
</TABLE>


                            [Signature Page Follows]





                                      A-44
<PAGE>   52
       IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written (but executed
and delivered as of the 23rd of day of July, 1997).

       THE PARTIES TO THE MERGER CONTEMPLATED BY THIS AGREEMENT:



                                       ITEQ, INC.



                                       By:       /s/ Mark E. Johnson           
                                          --------------------------------------
                                              Mark E. Johnson, Chairman of the
                                              Board and Chief Executive Officer


                                       ASTROTECH INTERNATIONAL CORPORATION



                                       By:       /s/ S. Kent Rockwell          
                                          --------------------------------------
                                              S. Kent Rockwell, Chairman of the
                                              Board and Chief Executive Officer





                                      A-45