AMENDMENT NO. 6
                                                                         TO
                                                      TITLE XI RESERVE FUND
                                                    AND FINANCIAL AGREEMENT

                                                               CONTRACT NO.
                                                                    MA-8085

                                                       Contract No. MA-8085












































<PAGE>



                                   AMENDMENT NO. 6

                                          TO

                                       TITLE XI

                         RESERVE FUND AND FINANCIAL AGREEMENT

               This  Amendment No. 6 to Title XI Reserve Fund and Financial
          Agreement ("Amendment  No.  6")  dated  as  of  August 22,  1996,
          between  Avondale  Industries, Inc., a Louisiana corporation (the
          "Company"), and the  United States of America, represented by the
          Secretary of Transportation,  acting  by and through the Maritime
          Administrator (successor by operation of  law to the Secretary of
          Commerce,  acting  by  and  through  the Assistant  Secretary  of
          Commerce for Maritime Affairs) (the "Secretary"), pursuant to the
          provisions  of  Title XI of the Merchant  Marine  Act,  1936,  as
          amended.

                                       RECITALS

               A.   The Company and the Secretary entered into the Title XI
          Reserve Fund and Financial Agreement, dated October 21, 1975 (the
          "Original Agreement"),  in  connection  with the financing of the
          vessel named AVONDALE DRYDOCK;

               B.   The  Original  Agreement  was  amended   by  Assumption
          Agreement  and  Amendment  No. 1  to  Title  XI Reserve Fund  and
          Financial Agreement on September 16, 1985 ("Amendment No. 1"), by
          Amendment No. 2 to Title XI Reserve Fund and Financial  Agreement
          on  March 27,  1987  ("Amendment  No. 2"),  by  Master Assumption
          Agreement, Supplemental Indenture No. 2 and Amendment to Title XI
          Financing  Agreements on March 13, 1991 ("Amendment  No. 3"),  by
          Amendment to  Title XI Reserve Fund and Financial Agreement dated
          as of April __,  1993 ("Amendment No. 4"), and by Amendment No. 5
          to  Title  XI  Reserve   Fund   and   Financial  Agreement  dated
          February 9, 1995 ("Amendment No. 5"; and  collectively,  together
          with  the  Original  Agreement, Amendment No. 1, Amendment No. 2,
          Amendment  No.  3  and  Amendment   No.   4   herein  called  the
          "Agreement"); and,

               C.   The Company and the Secretary desire  further  to amend
          the  Agreement  to  reflect  modifications  to  certain covenants
          contained in the Agreement.

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


                                    ARTICLE FIRST

                         ADDITIONS, DELETIONS AND AMENDMENTS

               1.   Concerning  Article  Third of the Special Provisions of
          the Agreement.  Article Third of  the  Special  Provisions to the
<PAGE>
          Agreement is hereby amended as follows:

                    (a)  Concerning Section 13 of Exhibit 1:

                         (1)  Concerning Subsection 13(b)(13).   Subsection
                    13(b)(13)  of  Exhibit  1 hereto is amended by deleting
                    the  word  "and"  before  the   number   "(iii)"    and
                    substituting  a  comma  therefor, and, after the number
                    "(iii)"  deleting  the  rest   of  the  subsection  and
                    inserting the following in lieu thereof:

                         "(A)   mortgages,  liens,  security
                         interests,  charges or encumbrances
                         (hereinafter   a   *Lien*)  on  any
                         property  or  other assets  of  the
                         Company  of  the   type   that  are
                         subject  to  a  Lien  on  the  date
                         hereof  (whether  or  not such Lien
                         may  subsequently  be released  and
                         then regranted and whether  or  not
                         such  property or assets now exists
                         or may  hereafter arise) other than
                         the   Security,    the    Increased
                         Security,  the  Premises  and   the
                         Shipyard  Project,  as  each of the
                         foregoing  capitalized  terms   are
                         defined   in  either  that  certain
                         Title XI Reserve Fund and Financial
                         Agreement dated  February  9,  1995
                         between  the Company and the United
                         States of America, Contract No. MA-
                         12953,  or   Schedule   X  to  that
                         certain  Security  Agreement  dated
                         February   9,   1995  between   the
                         Company  and the United  States  of
                         America,  Contract   No.  MA-12951,
                         (hereinafter   the  Security,   the
                         Increased  Security,  the  Premises
                         and   the  Shipyard   Project   are
                         referred  to  collectively  as  the
                         *Secretary's  Collateral*)  and (B)
                         Liens  on the proceeds and products
                         of  any  such  property  or  assets
                         (other   than    the    Secretary's
                         Collateral), any property or assets
                         acquired with the proceeds of or in
                         exchange  for any such property  or
                         assets (other  than the Secretary's
                         Collateral),   or    the   accounts
                         receivable generated from  any such
                         property or assets (other than  the
                         Secretary's  Collateral),  and (iv)
                         Liens  to  secure  indebtedness  or
                         obligations  incurred   to  extend,
                         refinance, renew, replace or refund
                         (or      successive     extensions,
                         refinancings,             renewals,
                         replacements or refundings  of) any
                         indebtedness or obligations secured
<PAGE>
                         by   any   Lien  permitted  by  the
                         foregoing clause  (iii)  so long as
                         such  Lien does not extend  to  any
                         other property  (including, without
                         limitation,     the     Secretary's
                         Collateral.

                         Notwithstanding any other provision
                         of  this subsection 13(b)(13),  the
                         Company  shall  not  consummate the
                         Disposition   or   Lien   permitted
                         hereby if it would adversely affect
                         the  priority  of  the  Secretary's
                         security interests in the Vessel or
                         the  Secretary's Collateral."

                         (2)  Concerning    Subsection    13(c)(7).     The
                    provisions of Subsection  13(c)(7)  of Exhibit 1 hereto
                    are  hereby amended and restated in their  entirety  to
                    read as follows:

                         "Enter  into  any  merger or consolidation or
                         convey, sell, lease,  transfer  or dispose of
                         (hereinafter  a  *Disposition*) or  mortgage,
                         grant  a  security  interest   in,   lien  or
                         otherwise  encumber  (hereinafter,  a *Lien*)
                         any substantial portion of its properties  or
                         assets.   The foregoing restriction, however,
                         shall not apply  to  (i)  (A)  Liens  on  any
                         property  or  other  assets of the Company of
                         the type that are subject  to  a  Lien on the
                         date  hereof  (whether  or not such Lien  may
                         subsequently be released  and  then regranted
                         and  whether or not such property  or  assets
                         now exists or may hereafter arise) other than
                         the Security,  the  Increased  Security,  the
                         Premises and the Shipyard Project, as each of
                         the  foregoing  capitalized terms are defined
                         in either that certain  Title XI Reserve Fund
                         and  Financial  Agreement dated  February  9,
                         1995  between  the  Company  and  the  United
                         States of America,  Contract No. MA-12953, or
                         Schedule X to that certain Security Agreement
                         dated February 9, 1995  between  the  Company
                         and  the  United  States of America, Contract
                         No. MA-12951, (hereinafter  the Security, the
                         Increased  Security,  the  Premises  and  the
                         Shipyard Project are referred to collectively
                         as  the  *Secretary's  Collateral*)  and  (B)
                         Liens  on the proceeds and  products  of  any
                         such  property  or  assets  (other  than  the
                         Secretary's   Collateral),  any  property  or
                         assets acquired  with  the  proceeds of or in
                         exchange  for  any  such property  or  assets
                         (other  than the Secretary's  Collateral)  or
                         the accounts  receivable  generated  from any
                         such  property  or  assets  (other  than  the
                         Secretary's  Collateral),  and  (ii) Liens to
                         secure  indebtedness or obligations  incurred
<PAGE>
                         to  extend,   refinance,  renew,  replace  or
                         refund     (or     successive     extensions,
                         refinancings,   renewals,   replacements   or
                         refundings    of)   any    indebtedness    or
                         obligations secured  by any Lien permitted by
                         the foregoing clause (i) so long as such Lien
                         does  not  extend  to  any   other   property
                         (including,     without    limitation,    the
                         Secretary's  Collateral),   and   (iii)   any
                         Disposition  of or Lien on property or assets
                         of the Company  (and,  in  the case of Liens,
                         any    extension,    refinancing,    renewal,
                         replacement or refundings of the indebtedness
                         or other obligations secured  by such Liens),
                         provided that (A) after giving  effect to any
                         such Disposition or Lien the Net  Book  Value
                         (as defined below) of the aggregate of all of
                         the assets that have been the subject of  any
                         Disposition or Lien (excluding assets subject
                         to  Liens  permitted  by clauses (i) and (ii)
                         above) during the immediately  prior 12 month
                         period does not exceed an amount  equal to 10
                         percent  of  the  sum  of the total Net  Book
                         Value   of   all  of  the  Company's   assets
                         (excluding the  assets  subject  to the Liens
                         permitted by clauses (i) and (ii)  above)  as
                         indicated  on  the most recent audited annual
                         financial statement  required to be submitted
                         pursuant  to  Section  14   hereof,  (B)  the
                         Company  retains  the proceeds   of  (x)  the
                         Disposition or (y)  the indebtedness or other
                         obligations secured by  the  Lien  for use in
                         accordance   with   the   Company's   regular
                         business    activities,   including   without
                         limitation, the  repayment of indebtedness of
                         the Company and (C)  the  Disposition or Lien
                         is  not  otherwise prohibited  by  subsection
                         13(c)(3) above.   *Net Book Value* is defined
                         as the original book  value  of an asset less
                         depreciation  calculated  on a straight  line
                         basis over its useful life.

                         Notwithstanding   clause   (iii)    of   this
                         subsection  13(c)(7),  the Company shall  not
                         consummate the Disposition  or Lien permitted
                         by such provision without the  prior  written
                         consent  of the Secretary if the Company  has
                         not, prior to the time of such Disposition or
                         Lien,  submitted   to   the   Secretary   the
                         financial  statement  required  by Section 14
                         hereof, and any attempt to so consummate such
                         Disposition  or  Lien  absent  such  approval
                         shall be null and void ab initio.

                         Notwithstanding  any other provision of  this
                         subsection 13(c)(7),  the  Company  shall not
                         consummate  the Disposition or Lien permitted
                         hereby  if  it  would  adversely  affect  the
                         priority   of   the    Secretary's   security
<PAGE>
                         interests in the Vessel  or  the  Secretary's
                         Collateral."

                                    ARTICLE SECOND

                                     COUNTERPARTS

               This  Amendment  No.  6  may  be  executed in any number  of
          counterparts.  Each of said counterparts shall be deemed to be an
          original, but together shall constitute  but  one  and  the  same
          instrument.

                                    ARTICLE THIRD

                                      AMENDMENT

               The Agreement, as amended and supplemented by this Amendment
          No.  6,  is  in  all  respects confirmed and shall remain in full
          force and effect.


          

               IN WITNESS WHEREOF,  this  Amendment No. 6 has been executed
          by the parties hereto on the day and year first above written.


                                     AVONDALE INDUSTRIES, INC., as Shipowner

                                     By:/s/ THOMAS M. KITCHEN
                                     _________________________________________
                                         Thomas M. Kitchen, Vice President


(SEAL)

ATTEST:

/s/ BL HICKS
_____________________________
Assistant Secretary


                                     UNITED STATES OF AMERICA
                                     DEPARTMENT OF TRANSPORTATION

                                     BY: MARITIME ADMINISTRATOR

                                     By: JOEL C. RICHARD
                                     _________________________________________
                                             Secretary, Maritime Administration
                                             ATTEST:

(SEAL)

ATTEST:

/s/ PATRICIA E. BRYNE
_____________________________
Assistant Secretary
Maritime Administration