SUB-LEASE

          BY:  UNIVERSITY OF NEW ORLEANS          STATE OF LOUISIANA
               RESEARCH AND TECHNOLOGY
               FOUNDATION, INC.

               TO:AVONDALE INDUSTRIES, INC.  PARISH OF JEFFERSON

               This Sub-Lease is effective as of the 16th day of May, 1997,
               by and between:

                            UNIVERSITY OF NEW ORLEANS RESEARCH
                             AND TECHNOLOGY FOUNDATION, INC.
               a  Louisiana non-profit corporation, represented herein
               by its duly authorized  President,  Paul A. Nalty, with
               its registered office located at UNO  TEC  Center, 1600
               Canal Street, Suite 1400, New Orleans, Louisiana 70112,
               (hereinafter    "Sub-Lessor"    or   the   "Foundation"
               interchangeably); and

                              AVONDALE INDUSTRIES, INC.
               a  Louisiana  corporation, with its  registered  office
               located at 5100  River Road, Avondale, Louisiana 70094,
               represented herein  by  its  duly  authorized  officer,
               Thomas  M.  Kitchen, Vice President and Chief Financial
               Officer,  (hereinafter   "Sub-Lessee"   or   "Avondale"
               interchangeably)

          upon the following terms and conditions:

                              ARTICLE I - DEFINED TERMS
               The  terms  as  used in this Sub-Lease shall have  the  same
          meanings as the terms  used in the Ground Lease between the Board
          of Supervisors of Louisiana State University and Agricultural and
          Mechanical College, acting on behalf of University of New Orleans
          (the "Lessor"), and the  Foundation  effective as of 16th day of
                                                               ---- 
          May, 1997 (the "Ground Lease"), unless otherwise stated herein.

                           ARTICLE II - SUB-LEASED PREMISES
               The Sub-Leased premises shall be  the  same  as  the  Leased
          Premises  as  defined  in  the  Ground Lease which is the Land as
          described below together with the Facilities to be constructed on
          the Land, the Facility Equipment located therein and the right of
          uninterrupted access to and from  all  streets  and  roads now or
          hereafter adjoining the Land for vehicular and pedestrian ingress
          and egress (the "Sub-Leased Premises").

               The Land is described as follows:

               A  certain  portion  of  ground  located  in  Fairfield
               Plantation,   in   Section  1,  T13S,  R23E,  Southeast
               District of Louisiana,  West  of the Mississippi River,
               Jefferson Parish, Louisiana, in  an area bounded by La.
               State Highway No. 18, La. State Highway  No.  541,  and
               the   Mississippi   River,   designated   as  Lot  AV-2
               containing  4.5772 acres more or less and described  as
               follows:

               Commence from  the  point  where the northerly right of
               way line of La. State Highway No. 18 turns to intersect
               the westerly right of way line of La. State Highway No.
               541 and go in a westerly direction  along the northerly
               right  of  way  line  of  La. State Highway  No.  18  a
               distance of 2292.24 feet to the southeast corner of Lot
               AV-2, the POINT OF BEGINNING.   Thence  continue  along
               the  northerly  right  of way line of La. State Highway
               No. 18, North 83 degrees  08  minutes 16 seconds West a
               distance of 514.10 feet; thence  go North 17 degrees 09
               minutes  16  seconds East a distance  of  479.00  feet;
               thence go South 59 degrees 13 minutes 41 seconds East a
               distance of 259.78  feet; thence go North 54 degrees 57
               minutes 45 seconds East  a  distance  of  224.16  feet;
               thence go South 4 degrees 10 minutes 36 seconds West  a
               distance of 516.27 feet to the POINT OF BEGINNING.

               All  as  shown  on  a  survey  by  Dufrene  Surveying &
               Engineering  Inc.  dated  January  8,  1997  for  First
               American  Title Insurance Company, Avondale Industries,
               Inc. and Marrero  Land  and  Improvements Assn., LTD; a
               copy of which is attached hereto as Exhibit "A".

                               ARTICLE III - SUB-LEASE
               The Sub-Lessor hereby sub-leases  to  the Sub-Lessee and the
          Sub-Lessee lets from the Sub-Lessor the Sub-Leased Premises above
          described on the following terms and conditions.

                          ARTICLE IV - CONDITION PRECEDENT
               This  Sub-Lease  is  contingent  upon the execution  of  the
          Cooperative Endeavor Agreement as defined in the Ground Lease and
          the execution of the Ground Lease.

                            ARTICLE V - TERM OF SUB-LEASE
               This Sub-Lease is for a term of fifty (50) years, commencing
          on the "Effective Date" of the Ground Lease.

                            ARTICLE VI - SUB-LEASE RENTAL
               Sub-Lessee agrees during the first  twelve (12) years of the
          Sub-Lease from 1997-2008 to pay as rental  the sum of One Hundred
          Thousand and no/100 ($100,000.00) Dollars per  year that shall be
          due  on the later of September 1 of each year or  the  day  after
          written   confirmation   is   received  by  Sub-Lessee  that  the
          Foundation has received the payment  set  forth in Article IV (C)
          of the Cooperate Endeavor Agreement from the  State  of Louisiana
          and that the Foundation has made the required payment  due on the
          loan for the Facilities and/or the Facility Equipment.

               In  the event a payment from the State referred to above  is
          not received  by the Foundation for a particular year and if Sub-
          Lessee makes a  payment  for the Foundation on the loan financing
          the Facilities and/or the  Facility Equipment as a result of non-
          payment by the State, Sub-Lessee  will  not  be  obligated to pay
          rent for that year.  However, if the State subsequently  makes  a
          payment  that  reimburses the Foundation for a missed payment, if
          any,  and  Sub-Lessee  recovers  the  payment  it  made  for  the
          Foundation,   then   Sub-Lessee   shall   simultaneously  make  a
          retroactive rental payment of $100,000.00 for that year.

               Beginning  September  1, 2009 and for each  year  thereafter
          during the term of the Sub-Lease,  rent  in  the  amount  of  One
          Hundred Thousand and No/100 ($100,000.00) Dollars shall be due on
          September 1 of each year.

               Rent  payments  shall  be  paid  to Sub-Lessor at 1600 Canal
          Street, Suite 1400, New Orleans, Louisiana 70112.

               Rent not paid within ten (10) days  of the date due shall be
          considered delinquent, at which time a late  charge  of ten (10%)
          percent  per  annum until paid shall be assessed to and  paid  by
          Sub-Lessee.

               Notwithstanding  anything to the contrary set forth above in
          this  Article, during the  initial  year  of  the  lease  if  the
          Facilities are not ready for occupancy by September 1, 1997, rent
          shall be  due  on  the  Date  of Opening as defined in the Ground
          Lease  and  for  each  month the Date  of  Opening  occurs  after
          September 1, 1997, the rent  due  for  the  initial year shall be
          reduced by Eight Thousand Three Hundred Thirty-Three  and  No/100
          ($8,333.00) Dollars.

                        ARTICLE VII - CREDIT FOR DEBT PAYMENT
          In  the  event  that Avondale is called upon and  does  make
          payment  on  any  debt obligations  of  the  Foundation  for  the
          Facilities and/or the Facility Equipment, Avondale shall be given
          a dollar for dollar credit towards any price paid by Avondale for
          the Facilities if Avondale is ever granted the option to purchase
          the Facilities from  the  Foundation  and  does  so  complete the
          purchase.

                    ARTICLE VIII - SPECIAL CONDITIONS OF SUB-LEASE
               8.1  Right of Use.   Sub-Lessor shall enter into  a Right of
          Use  Agreement  with the Lessor for the benefit of the University
          of  New  Orleans  School   of   Naval   Architecture  and  Marine
          Engineering (the "University") providing  to  the  University the
          initial  right  to  use  approximately  twelve  thousand (12,000)
          square  feet  of  space  (to be increased to twenty-one  thousand
          (21,000) square feet of space  no  later than January 1, 2002) in
          the Facilities to be built on the Land,  all as more particularly
          shown on Exhibit "A", attached to the Ground  Lease.   The  space
          furnished  to the University in the Facilities shall be furnished
          and equipped  as  mutually  agreed  upon  by  the  University and
          Avondale.

               8.2  Construction  Contract and Supervision of Construction.
          Avondale has entered into  a Construction Contract with Broadmoor
          Construction Company as general  contractor  for  construction of
          the  Facilities.  Within ten (10) days of the execution  of  this
          Sub-Lease, Avondale shall assign the Construction Contract to the
          Foundation.   However,  Avondale  agrees to supervise and monitor
          the construction of the Facilities  through  completion  as agent
          for the Foundation.

               8.3  Triple Net Sub-Lease.   Sub-Lessee shall be responsible
          and  assume  all  obligations imposed on Sub-Lessor by the Ground
          Lease.  In particular,  but not as a limitation, Sub-Lessee shall
          pay all utilities, insurance  costs,  taxes  assessed to the Land
          and  Facilities, if any, and shall pay all costs  of  maintenance
          and repair  for the Facilities and other improvements without the
          Sub-Lessor having any responsibility therefor.

                       ARTICLE IX - USE OF SUB-LEASED PREMISES
               9.1  The  Sub-Leased  Premises described above are leased to
          Sub-Lessee for the purpose of  using  the Premises for support of
          Avondale's  LPD-17  contract  with the Navy,  other  marine  ship
          building or conversion contracts  and for providing space for the
          University's School of Naval Architecture  and Marine Engineering
          or  for any purpose within its mission that is  not  incompatible
          with Avondale's use of the Facilities.  Use for any other purpose
          shall require Sub-Lessor's and Lessor's prior written consent.

               9.2  Sub-Lessee  agrees  to  comply with all applicable law,
          ordinances and regulations in connection with its use of the Sub-
          Leased Premises and agrees to keep  the  Sub-Leased Premises in a
          clean and sanitary condition.

               9.3  Sub-Lessee shall not store any hazardous  chemicals  or
          waste  on  the  Sub-Leased  Premises  nor  shall  it  conduct any
          activity thereon which shall results in the contamination  of all
          or any part of the Sub-Leased Premises with hazardous materials.

               9.4  Sub-Lessee shall not conduct on the Sub-Leased Premises
          any  business  deemed extra hazardous, a nuisance, or which might
          require Sub-Lessor's insurance premiums to increase.

                         ARTICLE X - MEMORANDUM OF SUB-LEASE
          Neither  Sub-Lessor nor Sub-Lessee shall file this Sub-Lease
          for record in the public  records or any public place without the
          written consent of the other.   In  lieu  thereof, Sub-Lessor and
          Sub-Lessee agree to execute in recordable form  a  Memorandum  of
          Lease  in  the  form  of  Exhibit  "_____" attached hereto.  Such
          Memorandum shall be filed of record  in  the Parish of Jefferson,
          State of Louisiana.

                     ARTICLE XI - GROUND LEASE TERMS APPLICABLE
               Lease Terms Applicable to Sub-Lease:  All terms, conditions,
          and obligations of the Ground Lease are incorporated herein as if
          copied herein in extenso.  Sub-Lessee shall  be  bound  by, shall
          assume  and  comply  with  and  shall  discharge  each  and every
          obligation, covenant, condition or restriction imposed upon  Sub-
          Lessor  under  the  terms  of the Ground Lease with regard to the
          Sub-Leased Premises or its use and occupancy.  Without limitation
          of the foregoing, each and every  provision  of  the Ground Lease
          whereby Sub-Lessor releases Lessor, agrees to the  limitation  of
          liability  of  Lessor  or  agrees  to  indemnify  Lessor shall be
          binding upon Sub-Lessee and shall enure to the benefit of Lessor,
          as  if  the  name  of  Sub-Lessee  were substituted in each  such
          provision in place of the name of Sub-Lessor.   In the event of a
          conflict between the Ground Lease and this Sub-Lease,  the  terms
          of  the Ground Lease shall control.  Except as otherwise provided
          herein,  all  rights and obligations of Sub-Lessor and Sub-Lessee
          shall be the same as those of Lessor and Lessee, respectively, as
          provided by the  Ground  Lease,  as if the name of the Sub-Lessor
          were substituted for Lessor and the  name  of the Sub-Lessee were
          substituted for Lessee.

                                ARTICLE XII - NOTICES
               Notices.  Notices or communications to  Sub-Lessor  or  Sub-
          Lessee  required  or appropriate under this Sub-Lease shall be in
          writing, sent by (a) personal delivery, or (b) expedited delivery
          service with proof  of  delivery,  or (c) registered or certified
          United States mail, postage prepaid,  or  (d) prepaid telecopy if
          confirmed by expedited delivery service or  by mail in the manner
          previously described, addressed as follows:

          IF TO SUB-LESSOR:
               Norma Grace
               University of New Orleans Research and Technology Foundation
               UNO TEC Center
               1600 Canal Street, Suite 1400
               New Orleans, Louisiana   70112
               Telecopy: (504) 539-9205

               IF TO SUB-LESSEE:
               Thomas M. Kitchen,
               Vice President and Chief Financial Officer
               Avondale Industries, Inc.
               (with copy to Eugene K. Simon, Jr.)
               5100 River Road
               Avondale, Louisiana   70094
               Telecopy: (504) 436-5304

               or to such other address or to the attention  of  such other
               person as hereafter shall be designated in writing  by  such
               party.  Any such notice or communication shall be deemed  to
               have  been given either at the time of personal delivery or,
               in the  case  of  delivery service or mail as of the date of
               deposit in the mail in the manner provided herein, or in the
               case of telecopy, upon receipt.

                            ARTICLE XIII - RIGHT OF SUB-LESSEE
                              TO CURE DEFAULT OF SUB-LESSOR
               Both Lessor and Sub-Lessor  shall  give Sub-Lessee notice of
               any default of Sub-Lessor, and Sub-Lessee  shall  be granted
               thirty (30) days in which to cure any default of Sub-Lessor.
               Any payment made by Sub-Lessor or its designees on behalf of
               Sub-Lessee shall be credited against any rental payments due
               under this Agreement.

                           ARTICLE XIV - DEFAULT OF SUB-LESSEE
               Any of the following events shall be deemed to be an  "event
               of default" by Sub-Lessee under this Sub-Lease.

               14.1.Sub-Lessee  shall  fail  to  pay any sum required to be
               paid to Sub-Lessor under the terms  and  provisions  of this
               Sub-Lease  and such failure shall not be cured within thirty
               (30) days after  Sub-Lessee's receipt of written notice from
               Sub-Lessor of such  failure, provided that on the third such
               failure no notice of default shall be required.


               14.2.The  taking  by  execution  of  Sub-Lessee's  leasehold
               interest for the benefit of any Person.

               14.3.Sub-Lessee  shall  fail  to  perform  any  covenant  or
               agreement, other than the  payment  of money, required to be
               performed by Sub-Lessee under the terms  and  provisions  of
               this  Sub-Lease  and  such failure shall not be cured within
               thirty (30) days  after  receipt of written notice from Sub-
               Lessor of such failure; provided  that if during such thirty
               (30)  day  period,  Sub-Lessee  takes action  to  cure  such
               failure but is unable, by reason  of  the nature of the work
               involved  to  cure  such  failure  within  such  period  and
               continues  such  work  thereafter  diligently  and   without
               unnecessary  delays,  such  failure shall not constitute  an
               Event of Default hereunder until  the  expiration  of ninety
               (90)  days  after  such thirty (30) day period to cure  such
               failure.

               14.4.A court having jurisdiction in the premises shall enter
               an  order  for relief  in  any  involuntary  case  commenced
               against Sub-Lessee,  as debtor, under the Federal Bankruptcy
               Code, as now or hereafter  constituted,  or  the  entry of a
               decree  or  order  by  a  court  having  jurisdiction in the
               premises  appointing  a  custodian,  receiver,   liquidator,
               assignee,  trustee, sequestrator, or other similar  official
               of  or  for  Sub-Lessee  or  any  substantial  part  of  the
               properties of  Sub-Lessee  or  ordering  the  winding  up or
               liquidation   of   the   affairs   of  Sub-Lessee,  and  the
               continuance  of  any such decree or order  unstayed  and  in
               effect for a period of ninety (90) consecutive days.

               14.5.The commencement  by  Sub-Lessee  of  a  voluntary case
               under  the  Federal  Bankruptcy  Code,  as  now or hereafter
               constituted, or the consent or acquiescence by Sub-Lessee to
               the  commencement  of  a  case  under  such Code or  to  the
               appointment   of  or  taking  possession  by  a   custodian,
               receiver, liquidator,  assignee,  trustee,  sequestrator, or
               other   similar  official  of  or  for  Sub-Lessee  or   any
               substantial part of the properties of the Sub-Lessee.

                              ARTICLE XV - INTERVENTION
               15.1 Intervention  of  Lessor:   And now into these presents
               intervenes  the  Board  of Supervisors  of  Louisiana  State
               University and Agricultural  and  Mechanical College, acting
               herein on behalf of University of New  Orleans,  Lessor, who
               consents  to  this  Sub-Lease  in  favor of Sub-Lessee,  but
               without waiving, modifying or abridging any provision of the
               Ground Lease and to consent to Article XI.

               Sub-Lessor has executed this Sub-Lease in New Orleans,
                                                         -----------
               Louisiana, in the presence of the undersigned witnesses on
               the 20 day of May, 1997.
                   --
               WITNESSES AS TO SUB-LESSOR:   SUB-LESSOR:
                                             UNIVERSITY OF NEW ORLEANS
                                             RESEARCH AND TECHNOLOGY
                                             FOUNDATION, INC.

               /s/ ROBERT GREMILLION JR
                   --------------------

               /s/ LESLIE C. LEVY            By: /s/ PAUL A. NALTY
                   --------------                    ------------- 
                                                 Paul A. Nalty,
                                                 President

                                             TIN:__________________

               Sub-Lessee has executed this Sub-Lease in Avondale,
                                                         --------
               Louisiana in the presence of the undersigned witnesses on
               the 16th day of May, 1997.
                   ----

               WITNESSES AS TO SUB-LESSEE:   SUB-LESSEE:
                                             AVONDALE INDUSTRIES, INC.

               /s/ ROBIN L. DEMPSEY
                   ----------------

               /s/ JACKIE H. WALKER          By: /s/ THOMAS M. KITCHEN
                   ----------------                  -----------------
                                             Thomas M. Kitchen, Vice
                                               President and Chief
                                               Financial Officer

                                             TIN: 39-1097012
                                                  ----------


               Intervenor has executed this Sub-Lease in Baton Rouge,
                                                         -----------
               Louisiana, in the presence of the undersigned witnesses
               on the 25th day of May, 1997.
                      ----
               WITNESSES AS TO INTERVENOR:   INTERVENOR:
                                             BOARD OF SUPERVISORS OF
                                             LOUISIANA STATE UNIVERSITY
                                             AND AGRICULTURAL AND
                                             MECHANICAL COLLEGE
                                          
               /s/ JANICE M. WILLIAMS
                   ------------------
               
               /s/ (illegible) G. HOWELL     By: /s/ ALLEN A. COPPING
                   ------------------            -------------------- 
                                             Allen A. Copping,
                                             President,
                                             The Louisiana State University
                                             System




               STATE OF LOUISIANA
               PARISH OF __________________

                     On this 20th day of May, 1997, before the undersigned
               Notary  Public, personally appeared: PAUL A. NALTY
                                                    -------------
               who after being duly sworn, declared that he is the President
               of the University of New Orleans Research and Technology
               Foundation, Inc. and that he is duly authorized to execute the
               foregoing Sub-Lease on behalf of the University of New Orleans
               Research and Technology Foundation, Inc. and acknowledges that 
               he has done so as his free act and deed.

                                        UNIVERSITY OF NEW ORLEANS RESEARCH
                                        AND TECHNOLOGY FOUNDATION, INC.

                                        By: /s/ PAUL A. NALTY
                                                ------------- 
                                        Paul A. Nalty, President



                                        /s/ ELIZABETH M. WILLIAMS
                                            ---------------------
                                            Notary Public

                STATE OF LOUISIANA
                PARISH OF Jefferson
                          ---------
                On this 16th day of May, 1997, before the undersigned Notary
                        ----
                Public, personally appeared: THOMAS M. KITCHEN
                                             -----------------
                who after being duly sworn, declared that he is the Vice-
                President and Chief Financial Officer of AVONDALE INDUSTRIES,
                INC. and that he is duly authorized to execute the foregoing
                Sub-Lease on behalf of Avondale Industries, Inc. and
                acknowledges that he has done so as his free act and deed.

                                        AVONDALE INDUSTRIES, INC.

                                        By: /s/ THOMAS M. KITCHEN
                                            ---------------------
                                        Thomas M. Kitchen
                                        Vice President and Chief Financial
                                         Officer

  
                                        /s/ A. BLOMKALNS
                                            ------------
                                        Notary Public

                 STATE OF LOUISIANA
                 PARISH OF EAST BATON ROUGE
                           ----------------

                 On this 25th day of May, 1997, before the undersigned Notary
                         ----
                 Public, personally appeared: ALLEN A. COPPING
                                              ----------------
                 who after being duly sworn, declared that he is the President
                 of the Louisiana State University System and that he is duly
                 authorized to execute the foregoing Sub-Lease on behalf of The
                 Louisiana State University System, and acknowledges that he
                 has done so as his free act and deed.

                                        BOARD OF SUPERVISORS LOUISIANA STATE
                                        UNIVERSITY AND AGRICULTURAL AND
                                        MECHANICAL COLLEGE

                                        By: /s/ ALLEN A. COPPING
                                                ----------------
                                        Allen A. Copping, President
                                        The Louisiana State University System


                                        /s/ LAURA A. DAVIS
                                            --------------
                                            Notary Public