SUBCONTRACT FOR LPD-17 CLASS WORK

                                By and Between

                           AVONDALE INDUSTRIES INC.

                                      and

                              HUGHES AIRCRAFT CO


                                   PREAMBLE


   This Subcontract ("Subcontract") is made and entered into by and between 
AVONDALE INDUSTRIES INC., a corporation organized and existing under the laws of
the State of Louisiana ("Avondale" or "Prime Contractor") and HUGHES AIRCRAFT 
CO, a corporation organized and existing under the laws of the State of Delaware
("Hughes" or "Subcontractor").

   WHEREAS, the U.S. Naval Sea Systems Command ("NAVSEA", the "Government") has 
issued Solicitation No. N00024-96-R-2101 (the RFP) for the design and 
construction of up to three (3) vessels of the LPD-17 Class (the "Project"); and

   WHEREAS, Avondale and Hughes, in view of their complimentary capabilities 
have determined that they would mutually benefit from the teaming of their 
respective organizations to develop and to submit to NAVSEA a proposal in
response to the RFP (the "Proposal") in accordance with the existing Teaming 
Agreement 29, March, 1996 between the parties; and if the Proposal results in a 
contract award (the "Contract" or "Prime Contract"), to perform the services and
work, and to provide the supplies required under the Contract, with Avondale 
acting as the prime contractor and Hughes participating as one of two principal 
subcontractors; and,

   WHEREAS, Avondale has entered into a similar subcontract with the other 
principal subcontractor, Bath Iron Works (Bath) for enhancing the respective 
capabilities of all the


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parties for a successful Proposal; and

   WHEREAS, an objective of the Alliance is the cooperative performance and 
completion of the Project for the Government and thereby earning and sharing the
highest possible award fees and incentives;

   THEREFORE, in consideration of the premises, and the expectation that NAVSEA 
will award the Contract to Avondale, the parties hereto agree to this 
Subcontract.

SECTION A SPECIAL PROVISIONS

A-1.  AUTHORITY

The existence of this Subcontract is contingent upon the precedent condition of 
successful negotiations between NAVSEA and Avondale for the award of the Prime 
Contract to Avondale.  This Subcontract shall have no force or effect unless and
until Avondale and NAVSEA have executed the Prime Contract.

A-2  RELATIONSHIP OF THE PARTIES

2.1  Pursuant to their Statements of Work (SOW), for the purposes of this
     Subcontract, the term "Alliance" shall mean the Avondale/Bath/Hughes
     cooperative joint work effort.

2.2  Subcontractor obligations stated in this Subcontract shall be read,
     interpreted and understood, to mean the required performance of the
     incremental obligations of the Subcontractor pursuant to its Statement of
     Work, which performance is sufficient for acceptance by the Government
     pursuant to the Prime Contract.

2.3  Avondale, as the Prime Contractor, is the principal interface with the
     Government for the Alliance. Any communications of a contractual nature
     initiated by the Subcontractor with the Government regarding the Project,
     whether written or oral,

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     shall be communicated and coordinated in advance with Avondale. In the
     event that the Government initiates such communication with the
     Subcontractor regarding the Project, Subcontractor will promptly notify
     Avondale of the event and the contents of the communications.

2.4  Members of the Alliance accept and endorse the relationship of teaming and
     cooperation established between them by this Subcontract. The Alliance
     members agree to cooperate and further their mutual interests in completing
     the Prime Contract. Hughes will make all reasonable, cooperative efforts to
     exchange technical information with other Avondale subcontractors to
     facilitate performance of the work.

A-3.  DELIVERY

Except as specifically indicated otherwise in this Subcontract, and except for 
the construction, test and delivery of the third vessel at the Alliance member's
Bath, Maine shipyard, all deliverables shall be delivered to Avondale's main 
shipyard.

A-4.  COMPLIANCE WITH LAWS, CERTIFICATIONS AND APPROVALS

Except as otherwise provided in this Subcontract, each party shall be 
responsible for obtaining any required certifications and approvals with respect
to such party's Statement of Work from the relevant classification societies or
regulatory bodies having jurisdiction.  Each party, for their part, will be 
responsible for ensuring compliance with all applicable laws, regulations, and 
classification society rules and regulations in the performance of the work.

A-5.  PRIME CONTRACT REQUIREMENTS

5.1  Particular provisions of the Prime Contract have been incorporated (either
     in full text or by reference) into this Subcontract. For purposes of
     Sections B through J, the terms "Contracting Officer", "Contracting
     Officer's Representative", "the Government", "the Navy", "NAVSEA",
     "Contracting Administration Office", and

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     the like shall mean the Prime Contractor unless in such context the term
     can only refer to the Government. The incorporated terms "Contractor" or
     "Offeror" shall mean Subcontractor unless in such context the term can only
     refer to the Prime Contractor. Instructions or requirements for
     documentation, certification or other writing reasonably applicable to the
     Subcontractor, shall be submitted by the Subcontractor to the Prime
     Contractor, unless otherwise required by federal law or by express
     provision of the Subcontract.

5.2  Any and all clauses or provisions which are required by the Federal
     Acquisition Regulation, 48 C.F.R. Part 1 (FAR), the Department of Defense
     FAR Supplement ("DFARS"), and the Navy FAR Supplement to be included in 
     major subcontracts in the Prime Contract are hereby incorporated in this
     Subcontract by reference.

5.3  Notwithstanding any provision of this Subcontract to the contrary, the
     Prime Contractor may exercise its rights under the following clauses or
     subclauses only if the Government exercises its rights under these clauses
     with respect to the Prime Contractor:

FAR 52.249-1            TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-
                        PRICE)(SHORT FORM)(APR 1984) (Applies if this contract 
                        is $100,000 or less)
FAR 52.249-2            TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED
                        PRICE)(APR 1984) (Applies if this Contract exceeds 
                        $100,000)
Paragraph (a)(1) of     
FAR 52.249-6            TERMINATION (COST-REIMBURSEMENT) (MAY 1986)
DFAR252.246-7001        WARRANTY OF DATA (DEC 1991)
DFAR252.227-7030        TECHNICAL DATA-WITHHOLDING OF PAYMENT (OCT 1988) except
                        as provided in paragraph 5.4 below

5.4  With respect to the clause of this Subcontract entitled DFAR 252.227-7030
     "Technical Data - Withholding of Payment" the parties agree that the 
     following limitations will apply if an action is taken hereunder, and the
     Government has not taken an associated action under the Prime Contract.


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        i)    If Avondale suffers delay in actual ship construction as a result
     of Hughes' failure to deliver technical data in accordance with its
     Subcontract obligations; and
        ii)   If Avondale is able to demonstrate harm and provide the specifics
     of the delay and the technical data giving rise to the action; and
        iii)  Hughes' failure is the result of some action or inaction of Hughes
     and not the result of performance of Avondale or one of its 
     subcontractors; and
        iv)   If prior to exercising any of its rights pursuant to this clause
     Avondale shall notify the Subcontractor by written notice to the contract
     point listed in Section G of this Subcontract via certified mail. Such
     notice shall specify the failure (including identification of the technical
     data) giving rise to the intended action. Subcontractor shall be afforded a
     period of not less than 10 days from Subcontractor's receipt of the notice
     to cure the failure before Avondale shall implement any withholding of
     funds pursuant thereto.

     In the event the conditions specified above exist, then Avondale may
     exercise its rights hereunder, however, the amount to be withheld shall not
     exceed $500,000 in aggregate for all occurrences.

A-6.  ASSIGNMENT AND SUBCONTRACTING

6.1  This Subcontract may not be assigned or otherwise transferred by either
     party, in whole or in part, without the express, prior written consent of
     the other party, which consent shall not be unreasonably withheld. The
     foregoing shall not apply in the event either party shall change its
     corporate name or merge with another corporation.

6.2  Subject to any approval of the Prime Contractor, and any relevant
     provisions contained herein, including without limitation any required
     approvals of the Government, Subcontractor shall be entitled to subcontract
     any portion of its responsibilities under the SOW. Subcontractor shall not
     by reason of any such subcontract be relieved of its responsibilities and
     liabilities under this Subcontract.

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     In the event of such subcontract, Subcontractor shall without delay notify
     Avondale in writing of the name of its proposed subcontractor and the
     details of the portion of its SOW to be subcontracted.

A-7.  DISPUTES

7.1  If during performance of this Subcontract, disputes arise between the Prime
     Contractor and/or the Subcontractor and the Government concerning any of
     the work, the parties agree to follow the disputes resolution procedure
     defined FAR clause 52.233-1 (Reference Clause). Either party may assert a
     claim arising out of such a dispute with the Government.

7.2  Notwithstanding any provision herein to the contrary, if a decision on any
     question arising under the Contract is made by the Contracting Officer and
     such question is also related to this Subcontract, said decision, if
     binding upon Avondale under the Contract, shall in turn be binding upon the
     Subcontractor insofar as it relates to this Subcontract. If Avondale elects
     not to appeal such a decision pursuant to the "Disputes" clause in the
     Contract, Avondale may permit (and such permission will not be unreasonably
     withheld) the Subcontractor to assert in Avondale's name at Subcontractor's
     expense, Avondale's right to appeal such a decision under the "Disputes"
     clause in the Contract. Any decision upon such an appeal if binding upon
     Avondale under the Contract shall in turn be binding upon Subcontractor
     insofar as it relates to this Subcontract. The decision of the Contracting
     Officer regarding any such question or subsequent appeal shall be
     conclusive between Avondale and Subcontractor except that Avondale may
     permit (and such permission will not be unreasonably withheld)
     Subcontractor to submit the question to a court of competent jurisdiction
     if Subcontractor desires to assert in Avondale's name and at
     Subcontractor's expense, Avondale's rights described in the "Disputes"
     clause of the Contract to have the question decided by the courts, and any
     final judgment by the courts, if binding upon Avondale under the Contract,
     shall in turn be binding upon Subcontractor insofar as it relates to this
     Subcontract.

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7.3  It is the intent of the parties to engage in cooperative decision-making
     and communication of information as set forth in this Subcontract. In the
     event that a dispute arises between Avondale and Hughes that cannot be
     resolved by the individuals involved in the performance of the Contract,
     such matter shall be referred to the highest levels of management of each
     company for resolution. Should these individuals be unable to resolve any
     claim, controversy or dispute between the parties involving issues of
     either law or fact arising under or relating to this Subcontract, it shall
     be finally resolved by binding arbitration pursuant to this provision.

7.4  Any arbitration contemplated by this Subcontract shall be conducted in New
     York, New York, in accordance with the Rules (the "Rules")of the American
     Arbitration Association (the "AAA"). The arbitration will be before a panel
     of three arbitrators, one selected by Avondale, one selected by Hughes, and
     one who will be selected by the aforementioned selected arbitrators. Each
     arbitrator shall be knowledgeable about the United States shipbuilding
     industry and federal procurement laws, regulations and practices, and shall
     not have any direct or indirect, past, present, or expected future
     association with either or both of the parties, and who shall otherwise be
     neutral. The parties shall share equally the costs of the arbitration as
     provided in the Rules of the AAA.

7.5  The decision of the arbitrators shall be rendered in writing and the
     reasons shall be given therefore. The decision of the arbitrators shall be
     final and conclusive on the parties, unless determined by the United States
     District Court for the Southern District of New York to be subject to being
     vacated, modified, or corrected on any of the grounds specified or referred
     to in the Uniform Arbitration Act, or for "manifest disregard of law" as
     judicially defined by that court. Judgment upon an award rendered by the
     arbitrators may be entered in any court of competent jurisdiction. Except
     as specifically provided for in this clause, or as may be necessary to
     enforce an award of the arbitrators, neither party shall institute any

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     action or proceeding against the other in any court with respect to any
     claim, controversy, or dispute which is or could be subject to this
     provision. Neither party may interpose any objection to the procedures set
     forth herein or otherwise seek directly or indirectly to challenge the
     application thereof to any such claim, controversy or dispute, or any
     decision thereunder, in any court.

7.6  Pending the final disposition of any arbitration proceeding initiated
     pursuant to this provision, the parties shall at all times proceed
     diligently with the performance of this Subcontract.

A-8.  AMENDMENT/WAIVER

This Subcontract shall not be amended or modified unless set forth in a document
executed by duly authorized representatives of both Avondale and the 
Subcontractor.  The failure of either party to exercise any right provided under
this Subcontract shall not be deemed to be a waiver of such right for any future
purpose.

A-9.  ENTIRE AGREEMENT AND SEVERABILITY

9.1  This Subcontract contains the entire agreement between the parties with
     respect to the Prime Contract and supersedes any prior oral or written
     agreements, drafts of this agreement, commitments, understandings, or
     communications. The Teaming Agreement shall remain in effect between the
     parties for potential future work of the LPD-17 class of vessels for
     construction, planning yard services and related solicitations.

9.2  If any part, term, or provision of this Subcontract shall be held void,
     illegal, unenforceable, or in conflict with any law of a federal, state or
     local government having jurisdiction over this Subcontract, the validity of
     the remaining portions or provisions shall not be affected thereby.

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<PAGE>
 
9.3  Section headings in this Subcontract are for convenience only and shall not
     be used interpreting any provision hereof.

A-10.  ORDER OF PRECEDENCE

In the event of any inconsistency in this Subcontract, the inconsistency shall 
be resolved by giving precedence in the order described herein:


1  Section A - Special Provisions
2  Section B - Supplies, Services, and Pricing
3  Section C - Description, Specification, Statement of Work (exclusive of the
   Statement of Work)
4  Section D - Packaging and Marking
   Section E - Inspection and Acceptance
   Section F - Deliveries or Performance
   Section G - Contract Administration Data
   Section H - Special Contract Requirements
5  Section I - Contract Clauses
6  Statement of Work and Exhibits thereto
7  Section J - List of Attachments


A-11.  CONSEQUENTIAL, SPECIAL, AND INCIDENTAL DAMAGES

Neither party shall be liable to the other party under this Subcontract for any 
claim for loss of profits or consequential, special, punitive or indirect 
damages suffered by the other party.

A-12.  INDEPENDENT CONTRACTOR

This Subcontract shall not be construed as creating a joint venture, agency, 
partnership, or any other form of business organization, nor does it constitute 
a merger into any form of corporation or other business enterprise of the Prime 
Contractor, the Subcontractor or the Alliance.  At all times each party is and 
will remain an independent contractor.  Each

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party is responsible for its own officers, employees, agents and parent and 
subsidiary business elements.  Except as otherwise provided expressly in this 
Subcontract, each party is solely and separately responsible for its costs, 
expenses, profits, losses, causes of action, suits, damages, demands, 
liabilities, and obligations of any kind whatsoever.

A-13.  LIABILITIES

For all claims occurring in connection with or arising out of the meetings, 
inspections, and/or visits to their respective premises in the performance of 
the Project, Prime Contractor and Subcontractor shall defend, indemnify and hold
harmless each other and their officers, directors, employees and agents for 
injury to, death of, their respective employees, subcontractors, guests and 
visitors, whether or not caused by the acts or omissions or the sole or 
concurrent negligence of an indemnified party.  The party seeking indemnity 
shall provide prompt notice to the other of any event which gives rise to its 
claim under the this provision, fully cooperate in its defense and assign the 
right to defend and/or settle any such claim to the responsible party.

A-14 RESTRICTIONS ON HIRING

During the term of this Subcontract, the parties agree that the Prime Contractor
and the Subcontractor will not solicit to hire either party's employees who are
assigned to work on the Project, without the prior written approval of the
affected party. There is no restriction on the open solicitation in public media
for recruitment of personnel. No employee, officer, agent, supplier,
subcontractor, or vendor of either party will be restricted from pursuing
employment or business opportunities on their own initiative.

A-15.  PAYMENT

This clause applies to payment for work performed under this Subcontract for 
CLINS 0001, 0002, 0003, 0004, 0005, 0007, 0009 and 0012 exclusive of award fee 
payments, which are covered under Special Provision A-16 - Distribution of Award
Fee.

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15.1 Interim Payments: Hughes will submit invoices to Avondale as work
     progresses, but not more frequently than once every two weeks, in amounts
     determined to be allowable in accordance with Subpart 31.2 of the Federal
     Acquisition Regulation (FAR). Avondale will include Hughe's invoice in it's
     next bill to the NAVSEA and funds will be provided to Hughes accordingly.

     Invoices will be prepared on a per vessel basis and shall reflect the total
     allowable costs in the performance of work, as certified by Hughes. For
     purposes of this clause, the term "costs" shall include those items listed
     in FAR 52.216-7(b). No payment, however, shall be made in an amount that,
     when added to the total of all payments previously made, exceeds one
     hundred precent (100%) of the cumulative allowable costs certified by
     Hughes.

     Each invoice submitted by Hughes shall include the following information:

       (1) Applicable contract line item numbers (CLIN's)
       (2) Date supplies provided or services performed
       (3) Costs incurred and allowable by CLIN, as follows:
             (a) Cumulative allowable costs incurred (by cost element), less
             (b) Previously billed allowable costs, giving
             (c) Current billing amount
       (4) An estimate at completion (EAC) by CLIN

     In addition, Hughes will provide, with each invoice, a certificate, signed
     by a Company Officer or his designee, verifying, to the best of his
     knowledge and belief, the allowability of all billed costs, consistent with
     FAR Subpart 31.2 Hughes will provide Avondale with a listing of those
     employees authorized to sign the certificate that accompanies each invoice.
     The certificate will not apply to the CLIN EAC provided with the invoice.

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     Prior to submitting the first invoice, Hughes shall submit a sample billing
     format and sample certificate for review and approval by Avondale.

     Avondale and Hughes agree that invoice submission and/or payment may take
     place electronically. The parties agree to work together to determine the
     appropriate means of providing supporting documentation in the event of
     such electronic transmissions and/or payments.

15.2 Final Payment: Upon completion of the guarantee period of the final vessel
     in the contract, Hughes will prepare a final invoice by CLIN that
     incorporates 1) all allowable costs incurred plus 2) an estimate of
     projected allowable costs to complete the contract closeout process. Such
     allowable costs shall incorporate indirect costing rates approved by the
     Administrative Contracting Officer in connection with Hughes' prime
     contracts with the Government. Any projected allowable costs shall be
     subject to the prior agreement of the Government and approval by Avondale,
     which approval shall not be unreasonably withheld.

15.3 Potential Alternative Approach to Payments: Avondale has stated an intent,
     which Hughes supports, to approach the Government after Prime Contract
     award to establish an alternative approach to payments. Under such an
     alternative approach, Avondale, with data provided by Hughes (and Bath),
     would prepare a "combined invoice," which clearly reflects the allowable
     costs incurred by each Alliance member. The NAVSEA then would distribute
     funds directly to each party in the amounts specified in the combined
     invoice. Should NAVSEA accept this concept in a manner also mutually
     acceptable to Hughes, Avondale, and Bath. Hughes and Avondale agree to
     modify this Special Provision A-15 to incorporate such an approach.

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A-16.  DISTRIBUTION OF AWARD FEE

16.1 The award fee, as paid by the Government to the Alliance, shall be
     distributed among Avondale, Hughes, and Bath, on the basis of a) earned
     value and b) performance, as described below. A sample calculation of the
     formula is attached as Table 16-1.

a)   Earned Value:
     Seventy (70) percent of the cumulative award fee payment by the Government
     shall be assigned to the Earned Value Pool. The portion of this pool then
     distributed to each of Avondale, Hughes, and HUGHES shall be based on the
     Cumulative Earned Value Weighting of each Alliance member. The Cumulative
     Earned Value Weighting for each Alliance member shall equal the Cumulative
     Earned Value for that Alliance member divided by the sum of Cumulative
     Earned Values for all Alliance members. The Cumulative Earned Value for
     each Alliance member shall equal the product of 1) the Baseline Value
     Weighting and 2) the Cumulative Percent Complete.

        .  The Baseline Value Weighting for each Alliance member shall equal
           the contractual cost baseline (original contract award plus signed
           contract modifications) of that Alliance member divided by the 
           total contractual cost baseline for all Alliance members.
        .  The Cumulative Percent Complete for each Alliance member shall equal
           the weighted progress (reflecting labor, overhead, facilities cost
           of capital, and material) at the end of the evaluation period.  Such
           weighted progress for each Alliance member shall be determined by an
           earned value system, approved by the Government in accordance with
           Department of Defense Instruction (DODI) 5000.2.

     The current amount of the Earned Value award fee component assigned to each
     Alliance member shall equal the Cumulative Earned Value Weighting 
     multiplied by the Cumulative Earned Value Pool (70 percent of the 
     cumulative award fee paid

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     by the Government) less the prior period cumulative Earned Value.

b)   Performance:
     Thirty (30) percent of the award fee paid by the Government in each period
     shall be assigned to the Performance Pool. The portion of this pool then
     distributed to each of Avondale, Hughes, and Bath shall be determined by
     normalizing the Weighted Performance Score of each Alliance member. The
     Weighted Performance Score for each Alliance member shall equal the product
     of 1) the Baseline Value Weighting (as defined above) and 2) the Normalized
     Performance Score. The Performance Award Fee for each Alliance member shall
     equal the product of 1) Weighted Performance Scores of each Alliance member
     and 2) the current period performance pool. The Normalized Performance
     Score for each Alliance member shall reflect the Performance Scores
     provided by the intra-Alliance Performance Evaluation Board (PEB).

16.2 The intra-Alliance PEB shall consist of the Chief Executive Officers from
     each of Avondale, Hughes, and Bath. The PEB will meet within three business
     days after each NAVSEA award fee session. At the PEB meeting, each CEO will
     provide a performance score (from 0 to 100) to each member of the Alliance.
     Such scoring shall reflect, in the judgment of each CEO, the performance of
     each Alliance member during the evaluation period. For each evaluation
     period, the Performance Score shall equal the simple average of the scores
     given by members of the PEB. Weighted criteria that each CEO will use to
     determine such scoring will be established within 30 days after the start
     of the evaluation period via Memorandum of Agreement.

16.3 For each Alliance member, the total award fee payment in any given 
     evaluation period shall equal the sum of the Earned Value and Performance 
     components, as calculated above.

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16.4 The attached example (Table 16-1) illustrates the calculation described in
     this clause. In the event of a conflict between the example and the text of
     this clause the example shall take precedence.

16.5 Within five business days after each PEB meeting, Avondale shall issue to
     each of the other Alliance members a contract modification that specifies
     the current amount payable, as calculated above. Avondale will then issue
     payment to each Alliance member within two business days after receipt of
     the funds from the customer.



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A-17  FINAL CONTRACT PERFORMANCE INCENTIVES

The Final Contract Performance Incentive paid by the Government to the Prime 
Contractor shall be distributed between Avondale, Bath and Hughes as the final 
percentage determined for the Award Fee of Special Provision A-16 of this 
Subcontract.

A-18.  RECIPROCAL FACILITIES

Avondale and HUGHES shall provide office facilities at their respective 
principal places of business for each others personnel engaged in the Project.  
Such facilities shall be equivalent to those provided for its own employees for 
similar purposes.  These facilities shall include telephone, photocopy machines 
and FAX machine access, and the use of other similar office equipment.  Each 
shall also provide vehicle parking facilities consistent with the facilities 
provided for its own employees for similar purposes.

A-19.  APPLICABLE LAW

Irrespective of the place of performance, this Subcontract shall be construed 
and interpreted according to the federal common law of government contracts.  To
the extent that the federal common law of government contracts is not 
dispositive, the laws of the State of New York shall apply.  Any civil action 
pursuant to this Subcontract shall be brought in the United States District 
Court for the Southern District of New York.


In witness hereof, the parties hereto have executed this Subcontract on the 
indicated dates.


HUGHES AIRCRAFT CO.                     AVONDALE INDUSTRIES, INC.


/s/  R. J. ABBOTT                       /s/  ALBERT L. BOSSIER, JR.
---------------------------------       ---------------------------------
BY:  R. J. Abbott                       BY:  Albert L. Bossier, Jr.
   ------------------------------          ------------------------------

TITLE: Contracts Manager                TITLE:  President, Chairman & CEO
      ---------------------------             ---------------------------
       Naval & Maritime Systems         
       Business Unit
DATE:  June 20, 1996                    DATE:   June 20, 1996
     ----------------------------            ----------------------------


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