FIRST AMENDMENT TO AMENDED AND
                         RESTATED REVOLVING CREDIT AGREEMENT


               This  FIRST  AMENDMENT  TO  AMENDED  AND  RESTATED REVOLVING
          CREDIT AGREEMENT (this "First Amendment") is entered  into  as of
          March 14,  1997,  among  AVONDALE  INDUSTRIES,  INC., a Louisiana
          corporation  (the "Company"), the several financial  institutions
          party  to  this   First  Amendment  (collectively,  the  "Banks";
          individually, a "Bank"),  and  BANK OF AMERICA NATIONAL TRUST AND
          SAVINGS  ASSOCIATION,  as  agent for  the  Banks  (the  "Agent").
          Capitalized terms which are  used  herein  without definition and
          which are defined in the Credit Agreement referred to below shall
          have the meanings ascribed to them in the Credit Agreement.

               WHEREAS, the Company, the Banks, and the  Agent  are parties
          to  a  certain  Amended  and  Restated Revolving Credit Agreement
          dated as of January 28, 1997 (as at any time amended, modified or
          supplemented  and  in  effect from  time  to  time,  the  "Credit
          Agreement"); and

               WHEREAS, the Company  proposes to add ABN-Amro Bank, N.V. as
          an "Additional Bank" pursuant  to  Section  2.20  of  the  Credit
          Agreement, with a Commitment of $15,000,000; and

               WHEREAS,  pursuant  to  Section 2.20 as currently in effect,
          the Commitments of BAI and Whitney  National  Bank, respectively,
          would  decrease as a result thereof by the amount  of  $2,500,000
          each; and

               WHEREAS,  BAI  and Whitney National Bank desire to, and have
          requested that the other  parties  to the Credit Agreement, amend
          Section  2.20 of the Credit Agreement,  in  connection  with  the
          addition  of   ABN-Amro   Bank,  N.V.  as  an  "Additional  Bank"
          thereunder, so that the full amount of the aggregate reduction of
          the  Commitments of BAI and  Whitney  National  Bank  that  would
          result  from  such  addition instead would be applied entirely in
          reduction of BAI's Commitment  (such  that  the Commitment of BAI
          instead  would be reduced by the amount of $5,000,000),  with  no
          corresponding  reduction  in  the  Commitment of Whitney National
          Bank;

               NOW,  THEREFORE,  for good and valuable  consideration,  the
          receipt and sufficiency  of  which  is  hereby  acknowledged, the
          parties hereto hereby agrees as follows:
<PAGE>
               SECTION 1. Amendments to the Credit Agreement.

                    (a) The reference in Subsection 2.20(a)  of the  Credit
               Agreement to the maximum Commitments of the Additional Banks
               of "$20,000,000" is amended to read "$15,000,000."

                    (b)  Subsection  2.20(b)(ii) of the Credit Agreement is
               amended to read as follows:

                    "the  `Commitment'   of   BAI   shall  be  reduced
               automatically  in  an  aggregate  amount equal  to  the
               amount, if any, by which the aggregate  Commitments  of
               the Additional Banks exceed $10,000,000;"

                    (c)   Subsection 2.20(b)(iv) of the Credit Agreement is
          amended to read as follows:

                    "the  Company  shall  pay  to  the  Agent  for the
               account  of  and  disbursement to the Additional Banks,
               respectively, a participation fee in an amount equal to
               the product of (i)  20  Basis  Points (.20%) times (ii)
               the aggregate Commitment of such  Banks up to the first
               $10,000,000 thereof, as if such fee  had  been  payable
               pursuant  to  Section  2.9  hereof  and not in addition
               thereto, and, in the event that the aggregate amount of
               the   Commitments   of  the  Additional  Banks   exceed
               $10,000,000, BAI shall  remit  to  the  Agent,  for the
               account of and disbursement to the Additional Banks,  a
               pro rata portion of the `participation fee' paid to BAI
               pursuant  to Section 2.9(b) hereof equal to the product
               of (A) 20 Basis  Points  (.20%) times (B) the amount by
               which such Bank's Commitment  is  decreased pursuant to
               clause (ii) above, for payment over  to  the Additional
               Banks   pro   rata   relation   to   their   respective
               Commitments; and".

                    (d)   Subsection  2.20(e)  of  the  Credit Agreement is
          hereby deleted therefrom.

               SECTION 2. Representations  and  Warranties.    The  Company
          represents  and  warrants  to  the Agent and to each of the Banks
          that:

                    (a)   This First Amendment and  the Credit Agreement as
          amended hereby, have been duly authorized, executed and delivered
          by  the  Company  and  constitute  its legal, valid  and  binding
          obligations enforceable in accordance with their respective terms
          (subject,  as  to  the  enforcement  of remedies,  to  applicable
          bankruptcy, reorganization, insolvency,  moratorium  and  similar
          laws   affecting  creditors'  rights  generally  and  to  general
          principles of equity.
<PAGE>
                    (b)   The  representations and  warranties set forth in
          Section IV of the Credit Agreement are true  and  correct  in all
          material  respects  before  and after giving effect to this First
          Amendment with the same effect  as  if  made  on the date hereof,
          except   to   the  extent  such  representations  and  warranties
          expressly related  to  an  earlier  date, in which case they were
          true  and correct in all material respects  on  and  as  of  such
          earlier date.

                    (c)   As  of  the  date  hereof,  at  the time  of  and
          immediately  after  giving  effect  to  this  First Amendment, no
          Default or Event of Default has occurred and is continuing.

               SECTION 3. Conditions    of    Effectiveness.   This   First
          Amendment shall be  effective on the date (the "Effective  Date")
          of  the delivery by  the  Company  to  the  Administrative  Agent
          of the following:

                    (a)   this  First Amendment, signed by the Company, the
          Agent, and each of the Banks;

                    (b)   the  documents  required pursuant to Section 2.20
          of  the  Credit  Agreement,  as  amended  hereby,  to  effect the
          addition  of   ABN-Amro  Bank, N.V. as an  "Additional  Bank"  in
          accordance therewith; and

                    (c)   the   fees and  expenses  payable  to  the  Agent
          pursuant to Sections 2.20  and  10.5  of the Credit Agreement, in
          connection with this First Amendment and the addition of ABN-Amro
          Bank, N.V. as an "Additional Bank".

               SECTION 4. Effect  of Amendment.  This  First Amendment  (i)
          except as expressly provided  herein, shall not be deemed to be a
          consent  to the modification or  waiver  of  any  other  term  or
          condition of the Credit Agreement or of any of the instruments or
          agreements  referred  to therein and (ii) shall not prejudice any
          right or rights which the  Agent  or the Banks may now have under
          or in connection with the Credit Agreement,  as  amended  by this
          First Amendment.  Except as otherwise expressly provided by  this
          First  Amendment,  all of the terms, conditions and provisions of
          the Credit Agreement  shall  remain the same.  It is declared and
          agreed by each of the parties  hereto  that the Credit Agreement,
          as  amended  hereby,  shall continue in full  force  and  effect,
          subject to and in accordance  with  the  terms  thereof, and that
          this First Amendment and such Credit Agreement shall  be read and
          construed as one instrument.
<PAGE>
               SECTION 5. Miscellaneous.  This  First  Amendment  shall for
          all purposes be construed in accordance with and governed by  the
          laws  of  the  State  of  Illinois.   The captions  in this First
          Amendment are for convenience  of  reference  only  and shall not
          define or limit  the provisions  hereof.   This  First  Amendment
          may  be executed in separate counterparts,  each of which when so
          executed and  delivered  shall  be an original,  but all of which
          together shall  constitute  one  instrument.    In  proving  this
          First Amendment,  it shall not be necessary to produce or account
          for more than one such counterpart.

               NO ORAL AGREEMENTS.   THE  CREDIT  AGREEMENT  (AS AMENDED BY
          THIS FIRST AMENDMENT) AND THE OTHER LOAN DOCUMENTS, REPRESENT THE
          FINAL  AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
          BY  EVIDENCE  OF  PRIOR,   CONTEMPORANEOUS   OR  SUBSEQUENT  ORAL
          AGREEMENTS OF THE PARTIES.

               THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                           [SIGNATURES BEGIN ON FOLLOWING PAGE]


<PAGE>


               IN  WITNESS  WHEREOF,  the parties hereto have  caused  this
               First Amendment to be duly  executed  and delivered by their
               proper and duly authorized officers as  of the date and year
               first above written.


                                           AVONDALE INDUSTRIES, INC.

                                           By:    /s/ Thomas M. Kitchen
                                                  ---------------------
                                           Name:      Thomas M. Kitchen
                                           Title:   Vice President and
                                                    Chief Financial Officer


                                           BANK OF AMERICA NATIONAL TRUST
                                           AND SAVINGS ASSOCIATION, as Agent

                                           By:    /s/ W. Thomas Barnett
                                                  ---------------------
                                           Name:      W. Thomas Barnett
                                           Title:     Vice President


                                           BANK OF AMERICA ILLINOIS,
                                           as a Bank

                                           By:     /s/ W. Thomas Barnett
                                                   ---------------------
                                           Name:       W. Thomas Barnett
                                           Title:      Vice President


                                           WHITNEY NATIONAL BANK

                                           By:    /s/ Elmer H. Hemphill, Jr.
                                                  --------------------------
                                           Name:      Elmer H. Hemphill, Jr.
                                           Title:     Senior Vice President


                                           FIRST NATIONAL BANK OF COMMERCE

                                           By:    /s/ A. David Kocen
                                                  ------------------ 
                                           Name:      A. David Kocen
                                           Title:     Banking Officer