<PAGE>   1
 
                                                                   EXHIBIT 10.19
 
                                 March 15, 1990
 
Mr. Keith Hull
302 Highland Circle
Sylacauga, AL 35150
 
Dear Keith:
 
     Avondale's continued success depends upon the superior performance of all
of its associates working together as a team. To make the relationship mutually
beneficial, there is a system of rewards in place, including compensation,
profit sharing and other benefits as well as attractive and safe working
environments and, at certain management levels, performance incentives.
 
     An additional opportunity for reward is now being offered to you and a few
key associates. The program involves the grant of phantom stock units which
effectively provides equity participation in the growth of the company. The
program will not replace or detract from existing benefits.
 
     While the phantom stock units do not represent actual shares of equity in
Avondale and therefore do not carry voting and other rights associated with
stock ownership, their grant nonetheless represents substantial financial
recognition by the company's shareholders of the importance and role played by
key associates.
 
     Please review carefully the following terms and conditions of your grant of
phantom stock units. As questions arise, please direct them to John Hudson, Jack
Altherr or me. Because relatively few key associates will participate in the
program, I request that you recognize the need for confidentiality.
 
1.  GRANT OF PHANTOM STOCK UNITS
 
     Your participation in the program will take the form of a grant, effective
September 1, 1989, of 60 "phantom stock units". A phantom stock unit is simply a
bookkeeping measure which represents your vested and nonvested interest in the
value of the company (as defined in section 2).
 
2.  VALUE OF PHANTOM STOCK UNITS
 
     The value of each phantom stock unit on any date will be 0.002% of an
amount, which shall be determined by Avondale, equal to "EBDLIT" times five,
plus "Balance Sheet Adjustments". Avondale defines EBDLIT as the consolidated
earnings of Avondale and its subsidiaries before depreciation, amortization,
LIFO inventory adjustments, interest and income taxes, for the ten fiscal
quarters immediately preceding such date, divided by 2.5. Avondale defines
Balance Sheet Adjustments as an amount, which may be positive or negative, equal
to the consolidated cash, cash equivalents and short term investments of
Avondale and its subsidiaries minus the consolidated debt of Avondale and its
subsidiaries, determined as of the final day of the last fiscal period for which
financial statements were prepared and that immediately precedes the date such
amount is determined.
 
3.  VESTING OF PHANTOM STOCK UNITS
 
     Your vested interest in your phantom stock units will increase (subject to
section 7) at the rate of five percent per year for each full and uninterrupted
year that you continue to work for Avondale after August 31, 1989.
 
     You also will (subject to section 7) become fully vested in your phantom
stock units if you die before your employment by Avondale terminates.
 
     Finally, you will forfeit your entire interest in your phantom stock units
(whether or not vested under this section 3) if you engage in any actions
described under section 7.
<PAGE>   2
 
4.  PAYMENT AT RETIREMENT
 
     Avondale will compute and pay the value of your vested interest in your
phantom stock units to you in cash beginning as of your "Normal Payment Date",
which will be the date you reach age 65 or, if later, the date your employment
by Avondale terminates. Your payment will be made with interest in ten equal
annual installments, calculated as an annuity payable on your Normal Payment
Date and on the first nine anniversaries of your Normal Payment Date using an
interest rate equal to the one year Treasury Bill rate which Avondale deems in
effect on your Normal Payment Date.
 
5.  TERMINATION OF EMPLOYMENT
 
     If your employment with Avondale terminates (for any reason whatsoever
except death) before your Normal Payment Date, further vesting will cease and
Avondale will compute the value of your vested interest in your phantom stock
units as of your termination date. The value of your vested interest in your
phantom stock units, as so determined and without further increase, shall be
paid to you beginning on your Normal Payment Date; that is, no further
appreciation or depreciation in the value of the phantom stock units nor any
crediting of interest will occur after your employment terminates. Beginning
with your Normal Payment Date, payment will be made in ten equal annual
installments, as if you retired, in accordance with section 4 using the value of
your vested interest in your phantom stock units as calculated at termination
and the one year Treasury Bill rate which Avondale deems in effect on your
Normal Payment Date.
 
6.  DEATH BENEFIT
 
     If you die before your employment with Avondale terminates, you will become
fully vested in your phantom stock units in accordance with section 3. Avondale
will compute the value of your phantom stock units as of the date of your death
in accordance with section 2 and pay such amount to your beneficiary.
 
     If you die after your employment with Avondale terminates but before your
Normal Payment Date, Avondale will pay to your beneficiary the value of your
vested interest in your phantom stock units as calculated under section 5.
 
     If you die after your Normal Payment Date, Avondale will calculate the
present value (discounted to the date of your death using the one year Treasury
Bill rate which Avondale deems in effect on your Normal Payment Date) of any
unpaid annual installments established under section 4 and pay such amount to
your beneficiary.
 
     Any death benefit payment to your beneficiary under this section 6 will be
made in lump sum in cash within 90 days after the date of your death.
 
     Please complete and return the attached beneficiary designation form to the
corporate secretary. If you fail to designate a beneficiary for your interest in
your phantom stock units (or your beneficiary fails to survive you), Avondale
will treat your estate as your beneficiary for your interest in your phantom
stock units. You can change your beneficiary at any time by returning a new
beneficiary designation form to the corporate secretary, and such change will be
effective on the date the new beneficiary designation form is received by the
corporate secretary.
 
7.  FORFEITURE OF BENEFITS
 
     If, in Avondale's opinion, you either (a) compete directly or indirectly
with Avondale or (b) engage in any actions or make any statements which are
detrimental to Avondale's best interests, at any time while you are employed by
Avondale or before the end of the five year period following your termination of
employment with Avondale, you will forfeit your entire vested and nonvested
interest in your phantom stock units.
 
8.  AMENDMENT/TERMINATION
 
     This letter sets forth the terms and conditions of this program in their
entirety. Avondale reserves the right to amend the terms and conditions of this
program from time to time or to terminate this program at any
 
                                        2
<PAGE>   3
 
time and for any reason whatsoever. However, Avondale will not amend
retroactively the formula outlined in section 2 for valuing phantom stock units
or the rate at which you vest in such units under section 3 (other than the
forfeiture conditions).
 
     No action to amend or terminate this program shall be effective unless such
action is set forth in writing and signed by me or my successor as Chief
Executive Officer of Avondale.
 
     If this program is terminated, Avondale will compute and pay your vested
interest in your phantom stock units in accordance with section 5 as if your
employment by Avondale had terminated on the date Avondale terminated this
program.
 
9.  NOT A CONTRACT OF EMPLOYMENT
 
     You are an employee at will and you may terminate your employment, or your
employment may be terminated by Avondale, at any time without notice. Nothing in
this grant of phantom stock units shall give you any right to continue your
employment with Avondale or shall limit in any way Avondale's right to terminate
your employment, or your right to terminate your employment, at any time,
without regard to the effect of such termination on this grant.
 
10.  NON-TRANSFERABILITY/CONSTRUCTION
 
     You may not alienate, assign, transfer or otherwise encumber your interest
in your phantom stock units and any action to do so shall be treated as a
violation of your grant and shall not be binding on Avondale or this program.
The terms and conditions of this program shall be construed in accordance with
the laws of Alabama to the extent such laws are not preempted by ERISA.
 
11.  SOURCE OF BENEFITS
 
     All benefits payable to you pursuant to this grant of phantom stock units
will be paid from the general assets of Avondale, and the status of your claim
for benefits shall be the same as the status of a claim against Avondale by any
general and unsecured creditor. No assets of Avondale whatsoever shall be
earmarked or otherwise set aside or encumbered in any manner whatsoever to pay
any benefit payable to you pursuant to this grant. Further, you shall have no
right to look to any officer, director, employee or agent of Avondale in his
individual capacity for payment of any such benefits whatsoever.
 
                                          Very truly yours,
 
                                          /s/  G. STEPHEN FELKER
                                          --------------------------------------
                                               G. Stephen Felker
 
GSF/lj
 
                                        3
<PAGE>   4
 
                              AVONDALE MILLS, INC.
 
ASSOCIATE: HULL, KEITH
PHANTOM STOCK UNITS: 90
ESTIMATED VALUE ON SEPTEMBER 1, 1992: $452,700
 
VESTING AND POTENTIAL VALUE:
 
<TABLE>
<CAPTION>
                                                                               VALUE OF UNITS
                                                                          -------------------------
                                                       AGE       %          IF 5%          IF 10%
                     FISCAL YEAR                       9/1     VESTED       GROWTH         GROWTH
-----------------------------------------------------  ---     ------     ----------     ----------
<S>                                                    <C>     <C>        <C>            <C>
1992.................................................  39       15.0 %    $  452,700     $  452,700
1993.................................................  40       20.2 %       475,335        497,970
1994.................................................  41       25.0 %       499,102        547,767
1995.................................................  42       30.0 %       524,057        602,544
1996.................................................  43       35.0 %       550,260        662,798
1997.................................................  44       40.0 %       577,773        729,078
1998.................................................  45       45.0 %       606,661        801,986
1999.................................................  46       50.0 %       636,994        882,184
2000.................................................  47       55.0 %       668,844        970,403
2001.................................................  48       60.0 %       702,286      1,067,443
2002.................................................  49       65.0 %       737,401      1,174,187
2003.................................................  50       70.0 %       774,271      1,291,606
2004.................................................  51       75.0 %       812,984      1,420,767
2005.................................................  52       80.0 %       853,633      1,562,843
2006.................................................  53       85.0 %       896,315      1,719,127
2007.................................................  54       90.0 %       941,131      1,891,040
2008.................................................  55       95.0 %       988,187      2,080,144
2009.................................................  56      100.0 %     1,037,597      2,288,159
2010.................................................  57      100.0 %     1,089,477      2,516,975
2011.................................................  58      100.0 %     1,143,950      2,768,672
2012.................................................  59      100.0 %     1,201,148      3,045,539
2013.................................................  60      100.0 %     1,261,205      3,350,093
2014.................................................  61      100.0 %     1,324,266      3,685,102
2015.................................................  62      100.0 %     1,390,479      4,053,613
2016.................................................  63      100.0 %     1,460,003      4,458,974
2017.................................................  64      100.0 %     1,533,003      4,904,871
Annual Payment:
  10 Year Annuity @ 8.5%.............................................     $  215,338     $  688,977
</TABLE>
 
---------------
 
NOTES: The purpose of this schedule is to show the potential value of your
       phantom stock units for the years shown above assuming you continue to
       work for Avondale for each year shown and assuming Avondale grows at a 5%
       or 10% rate per year. However, the actual value of your phantom stock
       units will depend on the actual growth rate achieved by Avondale and the
       date your employment by Avondale terminates.
 
     The annual payment shown in the example above has been calculated as a ten
year annuity assuming (a) your employment by Avondale terminates at age 65, (b)
Avondale grows at a 5% or 10% rate per year and (c) the one year Treasury Bill
rate in effect at the time you reach age 65 is 8.5%.
 
                                        4
<PAGE>   5
 
                     PROJECTED VALUE OF PHANTOM STOCK UNIT
                              AT SEPTEMBER 1, 1992
 
<TABLE>
<S>                                                                              <C>
EBDLIT:
  FY 1992 -- Projected.........................................................  $ 88,615,469
  FY 1991......................................................................    27,572,548
  3rd quarter '90..............................................................    17,492,754
  4th quarter '90..............................................................    12,876,433
                                                                                 ------------
Ten quarters ended 8/28/92.....................................................   146,557,204
Annualizing Factor.............................................................          2.50
                                                                                 ------------
Average Annual EBDLIT..........................................................    58,622,882
Phantom Stock Multiple.........................................................          5.00
                                                                                 ------------
                                                                                  293,114,408
Plus Cash (at May 29, 1992)....................................................     8,208,214
Less Debt (at May 29, 1992)....................................................   (49,800,000)
                                                                                 ------------
Phantom Stock Base.............................................................   251,522,622
% of Base per Unit.............................................................         0.002%
                                                                                 ------------
Estimated Value of Phantom Stock Unit..........................................  $      5,030
                                                                                  ===========
</TABLE>
 
                                        5
<PAGE>   6
 
                              AVONDALE MILLS, INC.
 
ASSOCIATE: HULL, KEITH
PHANTOM STOCK UNITS: 60
ESTIMATED VALUE ON SEPTEMBER 1, 1989: $290,682
 
VESTING AND POTENTIAL VALUE:
 
<TABLE>
<CAPTION>
                                                                               VALUE OF UNITS
                                                                          -------------------------
                                                                 %          IF 5%          IF 10%
                     FISCAL YEAR                       AGE     VESTED       GROWTH         GROWTH
-----------------------------------------------------  ---     ------     ----------     ----------
<S>                                                    <C>     <C>        <C>            <C>
1990.................................................  38        0.0 %    $  290,682     $  290,682
1991.................................................  39        5.0 %       305,216        319,750
1992.................................................  40       10.0 %       320,477        351,725
1993.................................................  41       15.0 %       336,501        386,898
1994.................................................  42       20.0 %       353,326        425,588
1995.................................................  43       25.0 %       370,992        468,146
1996.................................................  44       30.0 %       389,542        514,961
1997.................................................  45       35.0 %       409,019        566,457
1998.................................................  46       40.0 %       429,470        623,103
1999.................................................  47       45.0 %       450,943        685,413
2000.................................................  48       50.0 %       473,490        753,954
2001.................................................  49       55.0 %       497,165        829,350
2002.................................................  50       60.0 %       522,023        912,285
2003.................................................  51       65.0 %       548,124      1,003,513
2004.................................................  52       70.0 %       575,531      1,103,865
2005.................................................  53       75.0 %       604,307      1,214,251
2006.................................................  54       80.0 %       634,522      1,335,676
2007.................................................  55       85.0 %       666,249      1,469,244
2008.................................................  56       90.0 %       699,561      1,616,168
2009.................................................  57       95.0 %       734,539      1,777,785
2010.................................................  58      100.0 %       771,266      1,955,564
2011.................................................  59      100.0 %       809,829      2,151,120
2012.................................................  60      100.0 %       850,321      2,366,232
2013.................................................  61      100.0 %       892,837      2,602,855
2014.................................................  62      100.0 %       937,479      2,863,141
2015.................................................  63      100.0 %       984,353      3,149,455
2016.................................................  64      100.0 %     1,033,570      3,464,400
2017.................................................  65      100.0 %     1,085,249      3,810,840
Annual Payment:
  10 Year Annuity @ 8.5%.............................................     $  152,443     $  535,301
</TABLE>
 
---------------
 
NOTES: The purpose of this schedule is to show the potential value of your
       phantom stock units for the years shown above assuming you continue to
       work for Avondale for each year shown and assuming Avondale grows at a 5%
       or 10% rate per year. However, the actual value of your phantom stock
       units will depend on the actual growth rate achieved by Avondale and the
       date your employment by Avondale terminates.
 
     The annual payment shown in the example above has been calculated as a ten
year annuity assuming (a) your employment by Avondale terminates at age 65, (b)
Avondale grows at a 5% or 10% rate per year and (c) the one year Treasury Bill
rate in effect at the time you reach age 65 is 8.5%.
 
                                        6
<PAGE>   7
 
                     ESTIMATED VALUE OF PHANTOM STOCK UNIT
                              AT SEPTEMBER 1, 1989
 
<TABLE>
<S>                                                                             <C>
EBDLIT:
  FY 1987 (3rd & 4th qtr).....................................................  $  41,769,030
  FY 1988.....................................................................     72,449,443
  FY 1989.....................................................................     58,200,711
                                                                                -------------
  Total -- 10 qtrs............................................................    172,419,154
  Annualizing Factor..........................................................            2.5
                                                                                -------------
  Annualized EBDLIT...........................................................     68,967,674
Valuation Multiple............................................................              5
                                                                                -------------
EBDLIT X 5....................................................................    344,838,370
Balance Sheet Adjustments
  Cash........................................................................      2,321,691
  Debt........................................................................   (104,925,000)
                                                                                -------------
Estimated Company Value.......................................................    242,235,061
% Company Value Per Unit......................................................          0.002%
                                                                                -------------
Estimated Value of Phantom Stock Unit.........................................  $       4,845
                                                                                 ============
</TABLE>
 
                                        7
<PAGE>   8
 
                                December 6, 1994
 
Mr. Keith Hull
302 Highland Circle
Sylacauga, Alabama 35150
 
Dear Keith:
 
     When the phantom stock program was adopted in fiscal 1990, the objective of
the Board of Directors was to provide long term incentives to management which
parallel the economic interests of Avondale's shareholders. Although the phantom
stock units do not represent actual shares of equity in Avondale, their grant
does represent a significant financial commitment by the shareholders to allow
key members of management an opportunity to participate in the growth of the
Company.
 
     In my letters granting the phantom stock units, the value of a phantom
stock unit was defined to be 0.002% of Avondale's equity value, as determined by
a specific formula (five times annualized EBDLIT for the past ten fiscal
quarters plus cash minus debt). Since this approach uses a fixed percentage of
calculated equity instead of an equivalent number of phantom shares, substantial
dilution or accretion in the value of a phantom stock unit may be created by
stock-related transactions while the value of a share of common stock may not be
affected similarly. As an example of the potential dilution, the March 1994
leveraged purchase of common stock shares from CS First Boston and Metropolitan
Life Insurance Company produced a nearly 40% decline in the calculated value of
a phantom stock unit (see Schedule A).
 
     To ensure that the original objective of the phantom stock program is
achieved, the Board of Directors has approved an amendment to the provisions of
the program such that the value of a phantom stock unit will be determined using
phantom shares. The number of phantom shares per phantom stock unit will be
defined as 0.002% of the total number of shares of common stock of Avondale (AM
Acquisition, Inc.) outstanding at September 1, 1989, including the phantom
shares. The number of phantom shares so calculated at September 1, 1989 will be
adjusted for any subsequent stock splits or stock dividends, such as the August
27, 1993 merger and stock dividend (see Schedule B). As a result, this approach
begins with the same value established at September 1, 1989 using 0.002% of
calculated equity but allows the value per phantom stock unit to "float" with
the actual number of shares outstanding and eliminates the undesired dilution or
accretion in value. Again as an example, the dilution caused by the leveraged
stock purchase is virtually eliminated by using the phantom share calculation
(see Schedule C).
 
     All 90 phantom stock units awarded to you are subject to the terms and
conditions set forth in my letters of March 15, 1990 and July 20, 1992, copies
of which are enclosed for your reference. To execute the amendment described
above, Section 2 of the terms and conditions set forth in my letter of March 15,
1990 is hereby restated and replaced in its entirety with the following:
 
     2.  VALUE OF PHANTOM STOCK UNITS
 
          The value of each phantom stock unit on any date (the "valuation
     date") will be equal to the "Equity Value of the Company Per Share"
     multiplied by 398.606 phantom shares. The "Equity Value of the Company Per
     Share", as determined by Avondale, shall be equal to the sum of "EBDLIT"
     times five, plus "Balance Sheet Adjustments", divided by the sum of the
     total number of shares of Avondale Incorporated Class A and Class B common
     stock outstanding on the valuation date plus 398,606 phantom shares.
 
          Avondale defines EBDLIT as the consolidated earnings of Avondale and
     its subsidiaries before depreciation, amortization, LIFO inventory
     adjustments, interest and income taxes, for the ten fiscal quarters
     immediately preceding such date, divided by 2.5. Avondale defines Balance
     Sheet Adjustments as an amount, which may be positive or negative, equal to
     the consolidated cash, cash equivalents and short term investments of
     Avondale and its subsidiaries minus the consolidated debt of Avondale and
     its subsidiaries, determined as of the final day of the last fiscal period
     for which financial statements were prepared and that immediately precedes
     the valuation date.
 
                                        8
<PAGE>   9
 
     All other terms and conditions contained in my letters granting your 90
phantom stock units remain in full force and effect.
 
     If you have any questions regarding this amendment, please direct them to
Jack Altherr or me. As noted in previous correspondence, due to the relatively
few key associates participating in the program, we ask that you recognize the
need for confidentiality.
 
     Please indicate your understanding and acceptance of the above amendment by
signing and returning the enclosed copy of this letter to me.
 
                                          Very truly yours,
 
                                                /s/  G. STEPHEN FELKER
                                          --------------------------------------
 
Acknowledged and accepted:
 
        /s/  KEITH M. HULL
--------------------------------------
 
Date: December 19th, 1994
 
                                        9
<PAGE>   10
 
                                                                      SCHEDULE A
 
                              AVONDALE MILLS, INC.
 
                          VALUE OF PHANTOM STOCK UNIT
                 (USING TWO PERCENT OF CALCULATED EQUITY VALUE)
 
<TABLE>
<CAPTION>
                                                                   2ND QUARTER     3RD QUARTER
                                                                     FY 1994         FY 1994
                                                                   ------------   -------------
<S>                                                                <C>            <C>
Annualized cash flow -- EBDLIT (past 10 fiscal quarters).........  $ 88,024,754   $  86,433,972
Valuation multiple...............................................          5.00            5.00
                                                                   ------------   -------------
                                                                    440,123,770     432,169,860
Cash.............................................................       372,287       1,411,191
Debt.............................................................   (42,950,000)   (204,330,590)
                                                                   ------------   -------------
Calculated equity value (per formula)............................   397,546,057     229,250,461
% equity per phantom stock unit..................................        0.0020%         0.0020%
                                                                   ------------   -------------
Value of phantom stock unit......................................  $      7,951   $       4,585
                                                                    ===========    ============
</TABLE>
 
                                       10
<PAGE>   11
 
                                                                      SCHEDULE B
 
                              AVONDALE MILLS, INC.
 
                         CALCULATION OF PHANTOM SHARES
 
<TABLE>
<CAPTION>
                                                                           SHARES      % SHARES
                                                                        ------------   --------
<S>                                                                     <C>            <C>
Shares outstanding at 9/1/89 (AM Acquisition, Inc.)
  First Boston........................................................      185.7200     15.73%
  Metropolitan Life...................................................      368.2800     31.19%
  John Maypole........................................................        4.0000      0.34%
  Walton Monroe.......................................................      501.0000     42.43%
  Stephen Felker......................................................       58.0000      4.91%
  Class B.............................................................       40.2083      3.41%
                                                                        ------------   --------
                                                                          1,157.2083     98.00%
Calculated phantom shares (AM Acquisition, Inc.)......................       23.6165      2.00%
                                                                        ------------   --------
                                                                          1,180.8248    100.00%
                                                                         ===========   =======
Calculated phantom shares (AM Acquisition, Inc.)......................       23.6165
Factor for merger with Walton Monroe..................................       67.5131
                                                                        ------------
                                                                          1,594.4240
Factor for stock dividend.............................................      250.0000
                                                                        ------------
Phantom shares........................................................  398,605.9976
                                                                         ===========
AVONDALE INCORPORATED -- AUGUST 1, 1994
Class A shares outstanding............................................    10,089,811     87.99%
Class B shares outstanding............................................       978,939      8.54%
                                                                        ------------   --------
Total common shares...................................................    11,068,750     96.52%
Phantom shares (whole shares).........................................       398,606      3.48%
                                                                        ------------   --------
                                                                          11,467,356    100.00%
                                                                         ===========   =======
</TABLE>
 
                                       11
<PAGE>   12
 
                                                                      SCHEDULE C
 
                              AVONDALE MILLS, INC.
 
                          VALUE OF PHANTOM STOCK UNIT
               (USING CALCULATED EQUITY VALUE PER PHANTOM SHARE)
 
<TABLE>
<CAPTION>
                                                                   2ND QUARTER     3RD QUARTER
                                                                     FY 1994         FY 1994
                                                                   ------------   -------------
<S>                                                                <C>            <C>
Annualized cash flow -- EBDLIT (past 10 fiscal quarters).........  $ 88,024,754   $  86,433,972
Valuation multiple...............................................          5.00            5.00
                                                                    -----------    ------------
                                                                    440,123,770     432,169,860
Cash.............................................................       372,287       1,411,191
Debt.............................................................   (42,950,000)   (204,330,590)
                                                                    -----------    ------------
Calculated equity value (per formula)............................   397,546,057     229,250,461
Total number of shares (including phantom shares)................    20,880,436      11,467,356
                                                                    -----------    ------------
Calculated equity value per share................................  $      19.04   $       19.99
Phantom shares per unit..........................................       398.606         398.606
                                                                    -----------    ------------
                                                                   $      7,589   $       7,969
                                                                    ===========    ============
</TABLE>
 
                                       12
<PAGE>   13
 
                                 July 20, 1992
 
Mr. Keith M. Hull
302 Highland Circle
Sylacauga, Alabama 35150
 
Dear Keith:
 
     This letter amends the grant of phantom stock units awarded to you by my
letter of March 15, 1990, a copy of which is attached for your reference.
Effective this date, your grant is increased by 30 phantom stock units, bringing
your total award to 90 phantom stock units.
 
     All 90 phantom stock units awarded to you are subject to the terms and
conditions set forth in my March 15, 1990 letter. Accordingly, your interest in
your 90 phantom stock units will vest at five percent per year for each full and
uninterrupted year that you continue to work for Avondale after August 31, 1989.
Should you remain so employed, you will become fully vested on August 31, 2009.
Payment in the form of ten annual installments will begin upon your 65th
birthday assuming you retire at that time.
 
     In addition, your interest in your 90 phantom stock units will become fully
vested in the event you die before your employment with Avondale terminates.
Your vested value will be computed as of the date of your death and paid to your
beneficiary in a single lump sum.
 
     If you should have any questions regarding the terms of the grant, please
direct them to Richard Monk, Jack Altherr or me. Because relatively few key
associates participate in the program, I request that you recognize the need for
confidentiality.
 
                                          Very truly yours,
 
                                                 /s/  STEPHEN FELKER
                                          --------------------------------------
                                                      Stephen Felker
 
GSF/lj
 
                                       13