AMENDMENT NUMBER ONE
                                          TO
                              AVONDALE INDUSTRIES, INC.
                                 401(K) SAVINGS PLAN


               WHEREAS,  Avondale  Industries,  Inc.,  ("Employer")  is the
          sponsor of the Avondale Industries, Inc. 401(k) Savings Plan (the
          "Plan") which was adopted effective January 1, 1996;

               WHEREAS, the Plan can be amended by the Employer.

               WHEREAS,  it  is desirable to amend the Plan as required  or
               allowed by the  Family  and  Medical  Leave Act of 1993, the
               Uniformed Services Employment and Reemployment Rights Act of
               1994, and the Small Business Job Protection  Act of 1996; to
               clarify  the  employees who are eligible to participate;  to
               change "Year of  Service"  from an elapsed time method to an
               Hours of Service method; and to make further clarifications:

               NOW, THEREFORE, as authorized  by  Section 13.1, the Plan is
               hereby amended, effective as of the  date  executed,  unless
               stated otherwise, as follows:

                                          I.

               The  family aggregation rules under Code Sections 401(a)(17)
               and  414(q)(6)   are  hereby  deleted  for  all  Plan  Years
               beginning  after  1996.    This  applies  to  the  last  two
               sentences   of   the   last  paragraph   of   Section   1.9,
               Compensation,  and  the sixth  paragraph  of  Section  1.23,
               Highly Compensated Employee.   These  provisions continue to
               apply for Plan Years beginning prior to January 1, 1997.

                                         II.

               Article I, Section 1.9, Compensation is  amended,  effective
               January 1, 1996, to add the following paragraph at the  end,
               to read as follows:

                         The  Compensation of a Returning Veteran
                    for  a  prior   year   in   which   a  makeup
                    contribution  is required under the Uniformed
                    Services Employment  and  Reemployment Rights
                    Act  shall  be  (a)  the  pay  the  Returning
                    Veteran  would  have received if not  in  the
                    Uniformed Services  (including wage increases
                    and bonuses) or (b) if  it is not "reasonably
                    certain"  what  the  pay  rate   during   the
                    Uniformed   Services  would  have  been,  the
                    Returning Veteran's  average  earnings during
                    the  twelve  months  (or  shorter period,  if
                    applicable)  prior  to  the  Service  in  the
                    Uniformed Services.

<PAGE>
                                         III.

               Article I, Section 1.9(b) is amended,  effective  January 1,
          1997, to add the following sentence at the end:

                         Beginning   in   Plan   Year  1997,  the
                    reference   to  an  Employee's  Section   415
                    Compensation  includes any amount an Employee
                    contributes to a qualified plan under Section
                    401(k) or Section 125 of the Code.

                                         IV.

               Article I, Section 1.12  is  amended and restated to read as
          follows:

                         1.12 An Eligible Employee shall mean any
                    Employee   of   a   Participating   Employer;
                    provided, however, that  an Eligible Employee
                    shall not include:  (a) any  Employee  who is
                    included in a unit of employees covered  by a
                    negotiated  collective  bargaining  agreement
                    which  does not provide for his participation
                    in  this   Plan;   (b) any  Employee  who  is
                    providing services pursuant  to  an  oral  or
                    written  contract or leasing arrangement with
                    an unrelated employer, including any Employee
                    who under a Participating Employer's standard
                    personnel     practices,    is    deemed    a
                    subcontractor or  a  leased employee; (c) any
                    Employee who is a Leased  Employee;  (d)  any
                    Employee    who,    under   a   Participating
                    Employer's standard personnel  practices,  is
                    deemed  an  independent  contractor  (without
                    regard  to  such  person's status for Federal
                    income tax purposes and without regard to any
                    subsequent determination  that such person is
                    a common law employee) and  (e) any  Employee
                    who,   under   a   Participating   Employer's
                    standard  personnel  practices,  is deemed  a
                    contractor,  jobber,  or  a consultant.   All
                    determinations  shall  be made  in  the  sole
                    discretion of the Participating Employer in a
                    uniform non-discriminatory manner.

                                          V.

               Article I, Section 1.13, Employee,  is  amended and restated
          to read as follows:

                         1.13 Employee shall mean any person  who
                    is  employed  by  a Participating Employer or
                    Non-Participating Employer  as  a  common law
                    employee  receiving  remuneration subject  to
                    withholding  for  purposes   of  the  Federal
                    Insurance   Contribution  Act  (except   that
                    Leased  Employees  as  described  in  Section
                    414(n)(2)  of  the  Code  shall be considered
                    Employees solely for purposes  of determining
<PAGE>
                    whether the requirements of Section 414(n)(3)
                    of  the  Code are satisfied).  A director  of
                    the Company is not eligible for participation
                    in the Plan unless he is also an Employee.

                                         VI.

               Article I is amended  to  add  Section 1.20A, effective with
          respect  to  each  Employee  as  of  the  first  Employment  Year
          beginning on or after January 1, 1997, to read as follows:

                         1.20A  Employment  Year shall  mean  the
                    twelve consecutive month period of employment
                    commencing on the date the  Employee performs
                    his  first Hour of Service for  the  Employer
                    and each anniversary thereof.

                                         VII.

               Article I,  Section  1.23,  Highly  Compensated Employee, is
          amended,  effective  January  1,  1997,  to  add   the  following
          paragraph at the end, to read as follows:

                         Highly    Compensated    Employee,    as
                    determined  for  any Plan Year after the Plan
                    Year  ending December  31,  1996,  means  any
                    Employee  who  (a) was a 5% owner (as defined
                    at Section 416(i)(1)(B)(i)  of  the  Code) at
                    any  time  during  the  current  year  or the
                    previous year or (b) received Compensation in
                    excess  of  $80,000  (as  adjusted after 1997
                    under   Code   Section  414(q)(1))   in   the
                    preceding  Plan  Year  and  was  one  of  the
                    highest-paid 20% of Employees.

                                        VIII.

               Article I, Section 1.24,  Hour of Service, is amended to add
          a new paragraph (d), effective   January  1,  1996,  to  read  as
          follows:

                         (d)  If  an  Employee is absent from his
                              or her employment with the Employer
                              for  any  period   on   account  of
                              (i) Parental  Absence, or  (ii) any
                              period  of leave  recognized  under
                              the Family and Medical Leave Act of
                              1993   such   Employee   shall   be
                              credited  with  sufficient Hours of
                              Service (not in excess  of  501  in
                              any  Plan  Year) so that a Break in
                              Service does  not  occur  in either
                              the  Employment Year in which  such
                              absence   begins   (if   credit  is
                              required  to  preclude  a Break  in
                              Service  in  such year) or  in  the
                              immediately  following   Employment
                              Year  (if no credit was awarded  in
                              the   preceding    year).    If   a
<PAGE>
                              Returning Veteran was  absent  from
                              his  or  her  employment  with  the
                              Employer  on  account of Service in
                              the    Uniformed   Services,    the
                              Returning Veteran shall be credited
                              with sufficient Hours of Service so
                              that a Break  in  Service  does not
                              occur.   For  purposes of computing
                              Hours  of  Service  credited  under
                              this  paragraph  (d),  an  Employee
                              shall be credited with (i) Hours of
                              Service  which  would  otherwise be
                              credited  to such Employee  without
                              regard to the  absence,  or  (ii) 8
                              Hours  of  Service for each day  of
                              the absence.  The Committee, in its
                              sole   discretion,    may   require
                              (i) evidence that the absence is on
                              account  of a reason enumerated  in
                              this     paragraph     (d),     and
                              (ii) evidence as to the duration of
                              the absence.

                                         IX.

               Article I, Section 1.24(b),  Hour  of  Service,  is amended,
          effective January 1, 1996 to delete the phrase "military service"
          and  to  restate  the  second  to the last paragraph, to read  as
          follows:

                    To the extent not credited  above,  Hours  of
                    Service  will  also  be credited, for vesting
                    purposes, based on the customary work week of
                    the Employee for periods  of  Service  in the
                    Uniformed Services (as required by applicable
                    law).

                                          X.

               Article I is amended to add Section 1.24A, to  read  in  its
          entirety as follows:

                         1.24A  A  Leased Employee shall mean any
                    person (excluding  a  person  who is a common
                    law employee of the Participating Employer or
                    Non-Participating Employer) who,  pursuant to
                    an agreement between a Participating Employer
                    (or  an  Affiliated  Company)  and any  other
                    person ("leasing organization") has performed
                    services  for the Participating Employer  (or
                    an Affiliated  Company)  and  related persons
                    determined   in   accordance   with   Section
                    414(n)(6)  of  the  Code, on a "substantially
                    full-time basis" for a period of at least one
                    year and:  for Plan Years  after  1996,  such
                    services  are  performed  under  the  primary
                    direction   or  control  of  a  Participating
                    Employer (or  an  Affiliated  Employer);  for
<PAGE>
                    Plan  Years  prior to 1997, such services are
                    of the type historically  performed,  in  the
                    business  field of the Participating Employer
                    (or an Affiliated Employer) by employees.

                         A person is considered to have performed
                    services on a "substantially full-time basis"
                    for  a  period  of  at  least  one  year  if:
                    (a) during  any  consecutive  12-month period
                    such  person  has  performed  at least  1,500
                    Hours   of   Service  for  the  Employer   or
                    (b) during any  consecutive  12-month  period
                    such   person   performed  services  for  the
                    Employer for a number  of Hours of Service at
                    least equal to 75% of the  average  number of
                    hours  that are customarily performed  by  an
                    employee  of  the  Employer in the particular
                    position.

                         Such  a  person will  not  be  a  Leased
                    Employee if the  person  (a)  is covered by a
                    money purchase pension plan providing  (i)  a
                    nonintegrated  employer  contribution rate of
                    at least 10% of such person's W-2 wages, (ii)
                    immediate participation, and  (iii)  full and
                    immediate  vesting,  and  (b)  provided,  the
                    Leased Employee, determined without regard to
                    whether  such  person is a participant in the
                    above described  money  purchase plan, do not
                    constitute  more  than  20  percent   of  the
                    recipient's nonhighly compensated workforce.

                         In  the  event  that any Leased Employee
                    subsequently  becomes an  Eligible  Employee,
                    then unless the Plan is otherwise excluded by
                    applicable  Treasury   Regulations  from  the
                    requirements  of  Code  Section  414(n),  the
                    total period that such former Leased Employee
                    provided   services   to  the   Participating
                    Employer shall be treated under the Plan, for
                    participation   eligibility    and    vesting
                    purposes as though he had been an Employee of
                    the    Participating    Employer    or   Non-
                    Participating Employer.

                                         XI.

               Article I, Section 1.29, One Year Break in  Service or Break
          in Service, is amended, effective with respect to  each  Employee
          as of his first Employment Year beginning on or after January  1,
          1997, to read as follows:

                         One  Year  Break  in Service or Break in
                    Service  shall  mean  an Employment  Year  in
                    which a Participant has  500 or less Hours of
                    Service.




<PAGE>
                                         XII.

               Article  I,  Section  1.31,  Participant,   is  amended  and
          restated to read as follows:

                         Participant  shall mean (a) any Eligible
                    Employee  who  satisfies   the  participation
                    requirements  set  forth in Article  II,  and
                    (b) any former Employee  on  whose  behalf an
                    Account  continues  to  be maintained in  the
                    Plan  pursuant to Article  II.   An  Eligible
                    Employee  remains a Participant as long as he
                    has  an  Account   balance,  as  provided  in
                    Section 2.2.

                         In the event the  Plan fails to pass the
                    coverage requirements of  Section  410(b)  of
                    the  Code  for a Plan Year, certain Employees
                    will be given "Eligible Employee" status in a
                    number  necessary  to  satisfy  the  coverage
                    requirements  of  Section 410(b) of the Code.
                    "Eligible Employee"  status  will be given to
                    certain  Employees beginning first  with  the
                    Employee   who   has   both   satisfied   the
                    participation  requirements of Article II and
                    has the most recent  original employment date
                    and   continuing   in   descending   original
                    employment   date   order,  to   the   extent
                    necessary for the Plan  to  pass the coverage
                    requirements of Section 410(b)  of  the Code.
                    If  two or more Employees have satisfied  the
                    participation  requirements of Article II and
                    have  the  same  original   employment  date,
                    Employees  will be given "Eligible  Employee"
                    status determined  in  alphabetical  order of
                    the  Employees' last names until the coverage
                    requirements  are  met.   Coverage under this
                    paragraph  only  applies  to  the   year   in
                    question.

                                        XIII.

               Article  I  is  amended to add the following Section  1.34A,
          effective January 1, 1996, to read in its entirety as follows:

                         Section  1.34A Returning Veteran means a
                    reemployed Employee  who  gave  notice to the
                    Company  of  his  impending  service  in  the
                    Uniformed Services, (unless such  notice  was
                    precluded   by   military  necessity  or  was
                    otherwise impossible  or  unreasonable),  and
                    the  cumulative  length  of  absence from the
                    Company by reason of Service in the Uniformed
                    Services does not exceed five years.

                                         XIV.

               Article I, is amended to add a new  Section  1.34B, Required
          Beginning Date to read in its entirety as follows:
<PAGE>
                         1.34B   Required  Beginning  Date  shall
                    mean, effective  January  1, 1997, for anyone
                    other  than  a 5% owner (as defined  in  Code
                    Section 416(i)(1)(B)(i))  April  1st  of  the
                    calendar  year following the later of (a) the
                    calendar year  in  which the employee attains
                    age 70 1/2, or (b) the calendar year in which
                    the Employee terminates  employment  with the
                    Employer.  For Plan Years beginning prior  to
                    January  1,  1997,  Required  Beginning  Date
                    shall  mean  April  1st  of the calendar year
                    following  the  calendar  year   in  which  a
                    Participant attains age 70 1/2.

                                         XV.

               Article  I  is amended to add the following  Section  1.34C,
          effective January 1, 1996, to read in its entirety as follows:

                         Section  1.34C  Service in the Uniformed
                    Services means the performance  of  duty on a
                    voluntary   or   involuntary   basis   in   a
                    "Uniformed  Service"  and  includes:   active
                    duty,   active  duty  for  training,  initial
                    active  duty   for  training,  inactive  duty
                    training, full-time  National Guard duty, and
                    a period for which a person  is absent from a
                    position of employment for the  purpose of an
                    examination to determine the fitness  of  the
                    person   to   perform  any  such  duty.   The
                    "Uniformed  Services"   include   the   Armed
                    Forces, the Army National Guard, and the  Air
                    National  Guard  when  engaged in active duty
                    for  training,  inactive  duty  training,  or
                    full-time    National    Guard   duty;    the
                    commissioned  corps  of  the   Public  Health
                    Service;  and any other category  of  persons
                    designated  by  the  President  of the United
                    States in time of war or emergency.

                                         XVI.

               Article I, Section 1.36, Service Termination Date is deleted
          effective  with  respect  to  each  Employee  as   of  his  first
          Employment Year beginning on or after January 1, 1997.

                                        XVII.

               All  references  to Service Termination Date throughout  the
          Plan are changed to termination of employment with the Employer.

                                        XVIII.

               Article I, Section 1.42, Year of Service, is amended to read
          as follows:

                         1.42 Year  of  Service  shall  mean  any
                    Employment Year beginning on or after January
                    1,  1997  in which an Employee completes 1000
<PAGE>
                    Hours  of  Service  with  the  Employer.   An
                    Employee's  Years   of  Service  include  all
                    periods counted as the  Employee's  Years  of
                    Service  earned  prior  to  1997  under  Plan
                    provisions then in effect.

                         All the Employee's Years of Service with
                    the  Employer  shall  be  taken  into account
                    including  service  prior  to  the  year  the
                    Employee  meets  the  definition  of Eligible
                    Employee,  for  purposes  of  satisfying  the
                    Plan's  eligibility  requirements   and   for
                    calculating  a  Participant's Vested Interest
                    in his Employer Contribution  Account  unless
                    such   periods  of  service  are  disregarded
                    pursuant to Section 2.3 of the Plan.

                                         XIX.

               The phrase "Service Termination Date" in Article II, Section
          2.3 is replaced with "terminated employment."

                                         XX.

               Article III,  Section  3.4,  Dollar  Limitation, is amended,
          effective January 1, 1996, to add the following  paragraph at the
          end:

                         However,  a Returning Veteran is allowed
                    to make the Employee Deferrals that he or she
                    could have made if employed during the period
                    of Service in the  Uniformed  Services.   The
                    makeup Employee Deferrals can be made over  a
                    period  of  years  equal  to  three times the
                    period  of Uniformed Service, not  to  exceed
                    five years.   The  makeup  Employee Deferrals
                    cannot exceed the amount that  the  Returning
                    Veteran  could  have  contributed during  his
                    Service in the Uniformed  Services, and shall
                    be deemed to apply to the earliest  period of
                    such service first.

                                         XXI.

               Article   III,   Section   3.6,  Non-Discrimination   Rules,
          paragraph (d) Special Rules in Connection  with  ADP  Testing, is
          amended,   effective   January  1,  1996  to  add  the  following
          subparagraph:

                    (vii)Makeup  Employee  Deferrals  made  by  a
                         Returning  Veteran  shall not be subject
                         to the ADP test.

                                        XXII.

               Article IV, Section 4.1, Matching  Contribution, is amended,
          effective October 13, 1996, to add the following paragraph at the
          end:

<PAGE>
                         If  a  Returning  Veteran  makes  makeup
                    Employee Deferrals described in Section  3.4,
                    the    Company   will   make   the   Matching
                    Contributions,  if  any, that would have been
                    made to the account of  the Returning Veteran
                    if he or she had made the  Employee Deferrals
                    in  the  years  to  which  they  apply.   The
                    Returning  Veteran  will not be eligible  for
                    (i)  an allocation of  earnings  before  such
                    contributions  are  made, or (ii) forfeitures
                    allocated  during  the   period  of  military
                    service.    The   allocation   of    Matching
                    Contributions will be made no later than  the
                    time   allowed  under  the  Internal  Revenue
                    Service's interpretation of the Act.

                                        XXIII.

               Article  IV,  Section   4.2,  Forfeitures,  is  amended  and
          restated to read as follows:

                         4.2  Forfeitures.   After  a  forfeiture
                    occurs, the  forfeiture  shall  be applied to
                    reduce matching contributions, determined  by
                    the  Board  of  Directors pursuant to Section
                    4.1,  until  the  forfeitures  are  used  up.
                    Until applied in this  way,  the  forfeitures
                    are  held  in the Trust and will continue  to
                    share in the allocation of earnings.

                                        XXIV.

               Article IV, Section  4.5,  Discrimination  Test  -  Matching
          Contributions, paragraph (d) Special Rules, is amended, effective
          January 1, 1996, to add a new subparagraph, to read as follows:

                    (vi) Makeup   Matching   Contributions  to  a
                         Returning Veteran are not subject to the
                         ACP test.

                                         XXV.

               The last sentence of Article V,  Section  5.2, Allocation of
          Employer Discretionary Contributions, is deleted.

                                        XXVI.

               Article V, Section 5.2, Allocation of Employer Discretionary
          Contributions, is amended, effective January 1,  1996, to add the
          following at the end of the first paragraph, to read as follows:

                         The Returning Veteran who is entitled to
                    an  allocation  under  the Uniformed Services
                    Employment and Reemployment  Rights  Act (the
                    "Act")  shall  receive  an allocation of  the
                    employer contribution that  he  or  she would
                    have received if he or she had been employed.
                    The  Returning  Veteran  will not be eligible
                    for (i) an allocation of earnings before such
<PAGE>
                    contributions are made, or  (ii)  forfeitures
                    allocated   during  the  period  of  military
                    service.  The  allocation  will  be  made  no
                    later   than   the  time  allowed  under  the
                    Internal Revenue  Service's interpretation of
                    the Act.

                                         27.

               Article  VI, Section 6.4(a),  Forfeitures,  is  amended  and
          restated to read as follows:

                         (a)  The   non-vested   portion   of   a
                              Participant's   Accounts  shall  be
                              forfeited at the  end  of  the Plan
                              Year   in   which   he   incurs   5
                              consecutive   One  Year  Breaks  in
                              Service, and shall  be  reallocated
                              among   the   Accounts   of  Active
                              Participants as provided in Section
                              4.2.

                                         28.

               The last sentence of Article VI, Section 6.6(c)(i) is hereby
          deleted.

                                         29.

               Article  VII,  Section  7.3, Annual Additions,  is  amended,
          effective January 1, 1996, to  add  the following sentence at the
          end of the first paragraph:

                         Makeup   contributions   by    and   for
                    Returning  Veterans  will be subject to  this
                    limitation with respect  to the year to which
                    the contributions relate,  not in the year in
                    which the contributions are made.

                                         30.

               Article X, Section 10.1 is amended  and  restated, effective
          January 1, 1997, to read as follows:

                         10.1  Time  of  Payment.   A Participant
                    shall  be  eligible to receive a distribution
                    of his Vested Interest when he has terminated
                    employment.

                    Such  a  Participant  shall  be  entitled  to
                    receive his  Vested Interest at any time that
                    he elects, provided  that  payment  cannot be
                    made  sooner than 30 days following his  date
                    of termination and no later than the later of
                    the Participant's  Normal  Retirement  Age or
                    his  date  of  termination of employment.   A
                    distribution is  based  upon the value of the
                    Participant's  Vested  Interest   as  of  the
                    Valuation Date coincident with or immediately
<PAGE>
                    preceding the date of distribution.

                    The foregoing notwithstanding:

                    a.   If  the value of a Participant's  Vested
                         Interest is less than $3,500, the Vested
                         Interest  will be distributed as soon as
                         administratively  practicable  following
                         the termination date;

                    b.   If  the value of a Participant's  Vested
                         Interest  is  greater  than  $3,500, the
                         Participant    must   consent   to   the
                         distribution;

                    c.   A Participant's Vested Interest shall be
                         distributed    no   later    than    the
                         Participant's Required Beginning Date.

                    In no event shall a distribution  occur while
                    a  participant  remains in the employ  of  an
                    Employer, except in the event of a withdrawal
                    by reason of Financial  Hardship or after age
                    59  1/2,  as described in Sections  11.1  and
                    11.2, below.

                    The  distribution  rules  that  apply  to  an
                    "alternate  payee"  pursuant  to a "qualified
                    domestic  relations  order"  are  stated   in
                    Section 9.4 herein.

                                         31.

               Article XI, Section 11.3, Loans to Participants, is amended,
          effective January 1, 1996, to add a new paragraph (l)  to read as
          follows:

                    (l)  Any  loan  repayment  suspension  for  a
                         Participant   will  not  be  taken  into
                         account for purposes  of  Code  sections
                         taxing unpaid loans for any part  of any
                         period during which such Participant  is
                         in   the   Service   in   the  Uniformed
                         Services,  will  not  be  considered  in
                         testing for discriminatory  benefits  or
                         treated  as  a  "prohibited transaction"
                         between the Plan and Participant.












<PAGE>
               IN WITNESS WHEREOF, Avondale  Industries,  Inc.  has  caused
          this  amendment  to  be  executed  in  multiple  originals by its
          officers thereunto duly authorized and its corporate  seal  to be
          hereunto affixed, as of the 31st day of December, 1996.
                                      ----        --------

          WITNESS:                      AVONDALE INDUSTRIES, INC


          /s/ JOY T. RINALDI                BY: /s/ THOMAS M. KITCHEN
          ------------------                    --------------------- 
                                             Thomas M. Kitchen, Secretary
          /s/ JACKIE H. WALKER
          --------------------

          ATTEST

          BL HICKS
          --------
          (Corporate Seal)







































<PAGE>
                                    ACKNOWLEDGMENT

               STATE OF LOUISIANA

               PARISH OF JEFFERSON

               BEFORE  ME,  the  undersigned Notary Public, personally came
               and  appeared  Thomas M. Kitchen, who  being by me sworn did
               depose  and  state  that  he  signed the foregoing Amendment 
               Number  One to the  Avondale  Industries,Inc. 401(k) Savings
               Plan as a free act and deed on behalf of Avondale Industries,
               Inc. for the purposes therein set forth.

               WITNESS:

               /s/ JOY T. RINALDI                /s/ THOMAS M. KITCHEN
               ------------------                ---------------------         
                                                 Thomas M. Kitchen
               /s/ JACKIE H. WALKER
               --------------------



               SWORN TO AND SUBSCRIBED
               BEFORE ME THIS 31st DAY
                              ----
               OF DECEMBER, 1996.

               /s/ A. BLOMKALNS
               ----------------
               NOTARY PUBLIC