CHANGE OF CONTROL AGREEMENT


     This  Change  of  Control Agreement ("the Agreement") between Avondale
Industries, Inc., a Louisiana  corporation  (the  "Company"),  and  R. Dean
Church (the "Employee") is dated effective as of March 5, 1998 (the "Change
of Control Agreement Date").


                             ARTICLE I
                            DEFINITIONS

     1.1  EMPLOYMENT  AGREEMENT  DEFINED.   Notwithstanding  any  provision
thereof,  after  a  Change  of  Control  (defined  below),  this  Agreement
supersedes  the  Employment  Agreement  dated  as  of March 5, 1998  or any
subsequent employment agreement between Employee and  the  Company  that so
provides (the "Employment Agreement").

     1.2  COMPANY DEFINED.  As used in this Agreement, "Company" shall mean
the  Company  as defined above and any successor to or assignee of (whether
direct or indirect, by purchase, merger, consolidation or otherwise) all or
substantially all of the assets or business of the Company.

     1.3  CHANGE OF CONTROL DEFINED.  "Change of Control" shall mean:

          (a) the  acquisition  by  any individual, entity or group (within
     the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
     Act of 1934 of beneficial ownership  (within the meaning of Rule 13d-3
     promulgated  under  the  Exchange  Act)  of   more  than  25%  of  the
     outstanding shares of the Company's Common Stock,  $1.00 par value per
     share (the "Common Stock"); provided, however, that  for  purposes  of
     this subsection (a), the following acquisitions shall not constitute a
     Change of Control:

               (i)  any  acquisition  of  Common  Stock  directly  from the
          Company,

               (ii) any acquisition of Common Stock by the Company,

               (iii)  any  acquisition  of  Common  Stock  by  any employee
          benefit  plan (or related trust) sponsored or maintained  by  the
          Company or any corporation controlled by the Company, or

               (iv)  any  acquisition  of  Common  Stock by any corporation
          pursuant to a transaction that complies with  clauses  (i),  (ii)
          and (iii) of subsection (c) of this Section 1.3; or
<PAGE>
          (b)  individuals who, as of the Change of Control Agreement Date,
     constitute  the  Board (the "Incumbent Board") cease for any reason to
     constitute at least  a  majority of the Board; provided, however, that
     any individual becoming a director subsequent to the Change of Control
     Agreement Date whose election,  or  nomination  for  election  by  the
     Company's  shareholders, was approved by a vote of at least a majority
     of  the  directors  then  comprising  the  Incumbent  Board  shall  be
     considered  a  member of the Incumbent Board, unless such individual's
     initial assumption  of  office  occurs  as  a  result  of an actual or
     threatened election contest with respect to the election or removal of
     directors  or  other actual or threatened solicitation of  proxies  or
     consents by or on  behalf  of a person other than the Incumbent Board;
     or

          (c) consummation of a reorganization, merger or consolidation, or
     sale or other disposition of all of substantially all of the assets of
     the  Company  (a  "Business  Combination"),   in  each  case,  unless,
     following such Business Combination,

               (i) all or substantially all of the individuals and entities
          who  were  the  beneficial  owners  of the Company's  outstanding
          common stock and the Company's voting securities entitled to vote
          generally in the election of directors  immediately prior to such
          Business   Combination   have   direct  or  indirect   beneficial
          ownership, respectively, of more than 50% of the then outstanding
          shares of common stock, and more  than 50% of the combined voting
          power of the then outstanding voting  securities entitled to vote
          generally  in  the  election  of directors,  of  the  corporation
          resulting from such Business Combination  (which, for purposes of
          this paragraph (i) and paragraphs (ii) and (iii), shall include a
          corporation  which as a result of such transaction  controls  the
          Company or all  or  substantially  all  of  the  Company's assets
          either directly or through one or more subsidiaries), and

               (ii) except to the extent that such ownership  existed prior
          to the Business Combination, no person (excluding any corporation
          resulting from such Business Combination or any employee  benefit
          plan  or  related  trust  of  the  Company  or  such  corporation
          resulting  from  such  Business  Combination) beneficially  owns,
          directly  or  indirectly, 20% or more  of  the  then  outstanding
          shares of common  stock  of  the  corporation resulting from such
          Business Combination or 20% or more  of the combined voting power
          of the then outstanding voting securities  of  such  corporation,
          and

               (iii)  at  least  a majority of the members of the board  of
          directors  of  the  corporation   resulting  from  such  Business
          Combination were members of the Incumbent  Board  at  the time of
          the execution of the initial agreement, or of the action  of  the
          Board, providing for such Business Combination; or

          (d)  approval  by  the  shareholders of the Company of a complete
     liquidation or dissolution of the Company.
<PAGE>
     1.4  AFFILIATE DEFINED.  "Affiliate"  or  "affiliated companies" shall
mean any company controlled by, controlling, or  under common control with,
the Company.

     1.5  CAUSE DEFINED.  "Cause" shall mean:

               (a) the willful and continued failure  of  the  Employee  to
          perform  substantially  the Employee's duties with the Company or
          its  affiliates  (other than  any  such  failure  resulting  from
          incapacity due to  physical  or  mental illness), after a written
          demand for substantial performance  is  delivered to the Employee
          by  the  Board of the Company which specifically  identifies  the
          manner in  which  the  Board  believes  that the Employee has not
          substantially performed the Employee's duties, or

               (b) the willful engaging by the Employee  in illegal conduct
          or gross misconduct.

For purposes of this provision, no act or failure to act,  on  the  part of
the  Employee,  shall be considered "willful" unless it is done, or omitted
to be done, by the  Employee in bad faith or without reasonable belief that
the Employee's action  or omission was in the best interests of the Company
or its Affiliates.  Any  act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the instructions
of a senior officer of the  Company or based upon the advice of counsel for
the Company or its Affiliates shall be conclusively presumed to be done, or
omitted to be done, by the Employee in good faith and in the best interests
of the Company or its Affiliates.   The  cessation  of  employment  of  the
Employee  shall  not be deemed to be for Cause unless and until there shall
have been delivered  to the Employee a copy of a resolution duly adopted by
the  affirmative  vote of  not  less  than  three-quarters  of  the  entire
membership of the Board  at a meeting of the Board called and held for such
purpose (after reasonable  notice  is  provided  to  the  Employee  and the
Employee is given an opportunity, together with counsel, to be heard before
the  Board),  finding  that,  in  the  good faith opinion of the Board, the
Employee is guilty of the conduct described  in  subparagraph  (a)  or  (b)
above, and specifying the particulars thereof in detail.

     1.6  DISABILITY  DEFINED.   "Disability"  shall  mean a condition that
would  entitle the Employee to receive benefits under the  Company's  long-
term disability insurance policy in effect at the time either because he is
Totally  Disabled  or  Partially Disabled, as such terms are defined in the
Company's policy in effect  as  of the date of this Agreement or as similar
terms are defined in any successor policy.  If the Company has no long-term
disability plan in effect, "Disability"  shall occur if (a) the Employee is
rendered incapable because of physical or  mental illness of satisfactorily
discharging his duties and responsibilities  to the Company for a period of
90 consecutive days, (b) a duly qualified physician  chosen  by the Company
and acceptable to the Employee or his legal representatives so certifies in
writing,  and  (c)  the  Board  determines  that  the  Employee  has become
disabled.
<PAGE>
     1.7  GOOD REASON DEFINED.  "Good Reason" shall mean:

          (a)  Any failure of the Company or its Affiliates to provide  the
     Employee with  the position, authority, duties and responsibilities at
     least commensurate  in all material respects with the most significant
     of those held, exercised  and  assigned at any time during the 120-day
     period  immediately  preceding  the  Change  of  Control.   Employee's
     position, authority, duties and responsibilities  after  a  Change  of
     Control  shall not be considered commensurate in all material respects
     with Employee's position, authority, duties and responsibilities prior
     to a Change  of  Control  unless  after the Change of Control Employee
     holds  (i) an equivalent position in  the  Company  or,  (ii)  if  the
     Company  is  controlled or will after the transaction be controlled by
     another company  (directly  or  indirectly), an equivalent position in
     the ultimate parent company.

          (b) The assignment to the Employee  of any duties inconsistent in
     any  material  respect  with  Employee's position  (including  status,
     offices,  titles  and reporting requirements),  authority,  duties  or
     responsibilities as  contemplated by Section 2.1(b) of this Agreement,
     or any other action that  results  in  a  diminution in such position,
     authority, duties or responsibilities, excluding  for  this purpose an
     isolated, insubstantial and inadvertent action not taken  in bad faith
     that  is  remedied  within  10  days  after  receipt of written notice
     thereof from the Employee to the Company;

          (c) Any failure by the Company or its Affiliates  to  comply with
     any  of  the  provisions  of  this  Agreement, other than an isolated,
     insubstantial and inadvertent failure  not occurring in bad faith that
     is remedied within 10 days after receipt  of  written  notice  thereof
     from the Employee to the Company;

          (d)  The  Company or its Affiliates requiring the Employee to  be
     based at any office  or  location  other  than  as provided in Section
     2.1(b)(ii) hereof or requiring the Employee to travel on business to a
     substantially greater extent than required immediately  prior  to  the
     Change of Control;

          (e)  Any  purported  termination  of  the  Employee's  employment
     otherwise than as expressly permitted by this Agreement; or

          (f)  Any  failure  by  the  Company  to  comply  with and satisfy
     Sections 3.1(c) and (d) of this Agreement.

<PAGE>
                            ARTICLE II
                     CHANGE OF CONTROL BENEFIT

     2.1   EMPLOYMENT TERM AND CAPACITY AFTER CHANGE OF CONTROL.   (a) If a
Change  of  Control  occurs  on  or  before  December  31,  2000,  then the
Employee's  employment  term (the "Employment Term") shall continue through
the third anniversary of  the  Change  of  Control,  subject to any earlier
termination of Employee's status as an employee pursuant to this Agreement.

     (b)  After a Change of Control and during the Employment Term, (i) the
Employee's  position  (including  status,  offices,  titles  and  reporting
requirements), authority, duties and responsibilities  shall  be  at  least
commensurate  in  all  material respects with the most significant of those
held,  exercised  and assigned  at  any  time  during  the  120-day  period
immediately preceding the Change of Control and (ii) the Employee's service
shall be performed  during  normal business hours at the location where the
Employee was employed immediately  preceding  the  Change of Control or any
office  or  location  less  than  35 miles from such location.   Employee's
position, authority, duties and responsibilities  after a Change of Control
shall  not  be  considered  commensurate  in  all  material  respects  with
Employee's  position,  authority, duties and responsibilities  prior  to  a
Change of Control unless  after the Change of Control Employee holds (x) an
equivalent position in the  Company or, (y) if the Company is controlled or
will after the transaction be  controlled  by  another company (directly or
indirectly),  an  equivalent  position  in  the  ultimate  parent  company.
Employee shall devote himself to his employment responsibilities  with  the
Company  (or, if applicable, the ultimate parent entity) as provided in the
Employment Agreement.

     2.2  COMPENSATION  AND BENEFITS.  During the Employment Term, Employee
shall be entitled to the following compensation and benefits:

          (a) BASE SALARY.   The  Employee  shall  receive  an  annual base
     salary  ("Base  Salary"),  which  shall be paid at a monthly rate,  at
     least  equal  to 12 times the highest  monthly  base  salary  paid  or
     payable, including  any base salary which has been earned but deferred
     by  the Employee, by the  Company  and  its  affiliated  companies  in
     respect  of  the  12-month  period  immediately preceding the month in
     which the Change of Control occurs.   During  the Employment Term, the
     Base Salary shall be reviewed no more than 12 months  after  the  last
     salary increase awarded to the Employee prior to the Change of Control
     and  thereafter at least annually and shall be first increased no more
     than 12 months after the  last salary increase awarded to the Employee
     prior  to the Change of Control and thereafter at least annually in an
     amount  equal   to  the  percentage  increase  (excluding  promotional
     increases) in base  salary generally awarded to peer executives of the
     Company and its affiliated  companies  for  the year of determination.
     Any increase in Base Salary shall not serve to  limit  or  reduce  any
     other  obligation  to  the Employee under this Agreement.  Base Salary
     shall not be reduced after  any such increase and the term Base Salary
     as  utilized in this Agreement  shall  refer  to  Base  Salary  as  so
     increased.
<PAGE>
          (b) ANNUAL BONUS.  In addition to Base Salary, the Employee shall
     be awarded, for each fiscal year ending during the Employment Term, an
     annual  bonus  (the "Bonus") in cash at least equal to the executive's
     target bonus under  the  Company's  Management  Incentive Plan, or any
     comparable bonus under a successor plan, for the last full fiscal year
     prior  to the Change of Control.  Each such Bonus  shall  be  paid  no
     later than  the  end  of  the  third  month  of  the  fiscal year next
     following the fiscal year for which the Bonus is awarded,  unless  the
     Employee shall elect to defer the receipt of such Bonus.

          (c)  FRINGE  BENEFITS.   The Employee shall be entitled to fringe
     benefits  (including,  but  not  limited   to,  automobile  allowance,
     reimbursement  for membership dues, and first  class  air  travel)  in
     accordance with  the  most  favorable  agreements,  plans,  practices,
     programs  and policies of the Company and its affiliated companies  in
     effect for  the  Employee  at  any  time  during  the  120-day  period
     immediately  preceding the Change of Control or, if more favorable  to
     the Employee,  as  in  effect  generally  at  any time thereafter with
     respect  to  other peer employees of the Company  and  its  affiliated
     companies.

          (d) EXPENSES.   The  Employee shall be entitled to receive prompt
     reimbursement for all reasonable  expenses incurred by the Employee in
     accordance with the most favorable agreements, policies, practices and
     procedures of the Company and its affiliated  companies  in effect for
     the  Employee  at  any  time  during  the  120-day  period immediately
     preceding the Change of Control or, if more favorable to the Employee,
     as  in effect generally at any time thereafter with respect  to  other
     peer employees of the Company and its affiliated companies.

          (e)  INCENTIVE, SAVINGS AND RETIREMENT PLANS.  The Employee shall
     be entitled  to  participate  in all incentive, savings and retirement
     plans, practices, policies and  programs applicable generally to other
     peer employees of the Company and  its affiliated companies, but in no
     event shall such plans, practices, policies  and  programs provide the
     Employee with incentive opportunities (measured with  respect  to both
     regular  and  special  incentive opportunities, to the extent, if any,
     that  such  distinction  is  applicable),  savings  opportunities  and
     retirement benefit opportunities,  in  each  case, less favorable than
     the most favorable of those provided by the Company and its affiliated
     companies  for  the Employee under any agreements,  plans,  practices,
     policies and programs  as  in  effect  at  any time during the 120-day
     period  immediately  preceding  the  Change  of Control  or,  if  more
     favorable to the Employee, those provided generally  at any time after
     the Change of Control to other peer employees of the Company  and  its
     affiliated companies.
<PAGE>
          (f)  WELFARE  BENEFIT  PLANS.  The Employee and/or the Employee's
     family, as the case may be, shall be eligible for participation in and
     shall receive all benefits under  welfare  benefit  plans,  practices,
     policies  and  programs  provided  by  the  Company and its affiliated
     companies  (including,  without  limitation,  medical,   prescription,
     dental,  disability, employee life, group life, accidental  death  and
     travel accident insurance plans and programs) to the extent applicable
     generally  to  other  peer employees of the Company and its affiliated
     companies, but in no event  shall  such plans, practices, policies and
     programs  provide  the  Employee with benefits,  in  each  case,  less
     favorable than the most favorable of any agreements, plans, practices,
     policies and programs in  effect  for  the Employee at any time during
     the 120-day period immediately preceding  the Change of Control or, if
     more favorable to the Employee, those provided  generally  at any time
     after the Change of Control to other peer employees of the Company and
     its affiliated companies.

          (g) OFFICE AND SUPPORT STAFF.  The Employee shall be entitled  to
     an  office  or  offices  of  a  size  and  with  furnishings and other
     appointments,  and  to  exclusive  personal  secretarial   and   other
     assistance,  at  least  equal  to  the most favorable of the foregoing
     provided to the Employee by the Company  and  its affiliated companies
     at any time during the 120-day period immediately preceding the Change
     of  Control  or,  if  more  favorable  to  the Employee,  as  provided
     generally at any time thereafter with respect  to other peer employees
     of the Company and its affiliated companies.

          (h) VACATION.  The Employee shall be entitled to paid vacation in
     accordance  with  the  most  favorable  agreements,  plans,  policies,
     programs and practices of the Company and its affiliated  companies as
     in  effect  for  the  Employee  at  any time during the 120-day period
     immediately preceding the Change of Control  or,  if more favorable to
     the  Employee,  as  in  effect  generally at any time thereafter  with
     respect to other peer employees of  the  Company  and  its  affiliated
     companies.

     2.3  OBLIGATIONS UPON TERMINATION AFTER A CHANGE OF CONTROL.

          (a)   TERMINATION  BY  COMPANY  FOR  REASONS  OTHER  THAN  DEATH,
     DISABILITY OR  CAUSE  OR  BY  EMPLOYEE  FOR  GOOD REASON.  If, after a
     Change  of  Control  and  during  the  Employment  Term,  the  Company
     terminates the Employee's employment other than for  Cause,  death  or
     Disability, or the Employee terminates employment for Good Reason,

               (i)  the  Company shall pay to the Employee in a lump sum in
          cash within 30 days of the date of termination an amount equal to
          three times the sum of (i) the amount of Base Salary in effect at
          the date of termination, plus (ii) the greater of (x) the highest
          annual Bonus paid  or  to be paid to the Employee with respect to
          the last three fiscal years or (y) the target Bonus for which the
          Employee is eligible for the 12-month period in which the date of
          termination occurs;
<PAGE>
               (ii) for a period of  thirty-six  (36)  months following the
          date  of  termination of employment (the "Continuation  Period"),
          the Company  shall  at  its  expense  continue  on  behalf of the
          Employee and his dependents and beneficiaries the life insurance,
          disability, medical, dental and hospitalization benefits provided
          (x) to the Employee at any time during the 90-day period prior to
          the Change in Control or at any time thereafter or (y)  to  other
          similarly  situated  executives who continue in the employ of the
          Company during the Continuation Period. The coverage and benefits
          (including  deductibles  and  costs)  provided  in  this  Section
          2.3(a)(ii) during  the  Continuation  Period  shall  be  no  less
          favorable  to  the Employee and his dependents and beneficiaries,
          than the most favorable of such coverages and benefits during any
          of the periods referred  to  in  clauses  (x)  or  (y) above. The
          Company's  obligation  hereunder  with  respect  to the foregoing
          benefits shall be limited to the extent that the Employee obtains
          any  such  benefits  pursuant to a subsequent employer's  benefit
          plans, in which case the  Company  may reduce the coverage of any
          benefits it is required to provide the Employee hereunder as long
          as the aggregate coverages and benefits  of  the combined benefit
          plans is no less favorable to the Employee than the coverages and
          benefits required to be provided hereunder.  The Employee will be
          eligible  for  coverage  under  the  Consolidated Omnibus  Budget
          Reconciliation  Act  at  the  end of the Continuation  Period  or
          earlier cessation of the Company's obligation hereunder.

               (iii)  the Employee shall immediately  become  fully  (100%)
          vested  in  his   benefit   under  each  supplemental  or  excess
          retirement  plan of the Company  in  which  the  Employee  was  a
          participant,   including,   but   not  limited  to  the  Avondale
          Industries,  Inc.  Supplemental Pension  Plan  and  the  Avondale
          Industries,  Inc.  Executive   Excess  Retirement  Plan  and  any
          successor plans;

               (iv)  notwithstanding  any  plan   provision  regarding  the
          payment of benefits following a change of  control of the Company
          which shall be superseded hereby, the Company  shall  pay  to the
          Employee  in  a  lump  sum  in cash within 30 days of the date of
          termination an amount equal to  the  then  present  value  of the
          actuarial equivalent of the additional benefits, if any, to which
          the  Employee  would  be  entitled under the Avondale Industries,
          Inc. Pension Plan, and any  other  qualified defined benefit plan
          maintained  by  the  Company and covering  the  Employee  if  the
          Employee had continued  to  be  employed by the Company until the
          third  anniversary of the Change of  Control,  assuming  Employee
          were fully  vested thereunder, without regard to any amendment to
          such  plans made  after  the  Change  of  Control  but  prior  to
          Employee's  date  of  termination  of employment, which amendment
          adversely  affects in any manner the  computation  of  retirement
          benefits under such plans; and
<PAGE>
               (v) notwithstanding any plan provision regarding the payment
          of benefits  following  a  change of control of the Company which
          shall be superseded hereby, the Company shall pay to the Employee
          in a lump sum in cash within  30  days of the date of termination
          of employment an amount equal to the  then  present  value of the
          actuarial equivalent of the benefits to which the Employee  would
          be  entitled  under  the Supplemental Pension Plan, the Executive
          Excess  Retirement  Plan  and  any  other  non-qualified  defined
          benefit plan maintained  by the Company and covering the Employee
          if  the  Employee had an additional  period  of  service  to  the
          Company ending on the third anniversary of the Change of Control,
          assuming the  Employee  were fully vested thereunder and assuming
          retirement at age 55 if Employee is age 52 or younger at the time
          of the Change of Control or assuming retirement at the age of the
          Employee three years following  the Change of Control if Employee
          is  over  age  52 at the time of the  Change  of  Control.   Such
          payment shall be  made  without  regard  to any amendment to such
          plans made after the Change of Control but  prior  to  Employee's
          date  of  termination  of  employment,  which amendment adversely
          affects  in  any  manner the computation of  retirement  benefits
          under such plans.


          (b)  DEATH.   If, after  a  Change  of  Control  and  during  the
     Employment Term, the Employee's status as an employee is terminated by
     reason of the Employee's death, this Agreement shall terminate without
     further obligation to the Employee's legal representatives (other than
     those already accrued  to  the Employee), other than the obligation to
     make any payments due pursuant to employee benefit plans maintained by
     the Company or its affiliated companies.

          (c) DISABILITY.  If, after  a  Change  of  Control and during the
     Employment  Term, Employee's status as an employee  is  terminated  by
     reason  of  Employee's  Disability,  this  Agreement  shall  terminate
     without further  obligation  to the Employee (other than those already
     accrued  to the Employee), other  than  the  obligation  to  make  any
     payments due  pursuant  to  employee  benefit  plans maintained by the
     Company or its affiliated companies.

          (d)  CAUSE.   If,  after  a  Change  of  Control and  during  the
     Employment Term, the Employee's status as an employee is terminated by
     the Company for Cause, this Agreement shall terminate  without further
     obligation to the Employee other than for obligations imposed  by  law
     and   obligations  imposed  pursuant  to  any  employee  benefit  plan
     maintained by the Company or its affiliated companies.

          (e)  VOLUNTARY  TERMINATION.   If,  after a Change of Control and
     during  the Employment Term, the Employee voluntarily  terminates  his
     employment with the Company other than for Good Reason, this Agreement
     shall terminate  without further obligation to the Employee other than
     for obligations imposed by law and obligations imposed pursuant to any
     employee benefit plan  maintained  by  the  Company  or its affiliated
     companies.
<PAGE>
     2.4  ACCRUED OBLIGATIONS AND OTHER BENEFITS.  It is the intent of this
Agreement that upon termination of employment for any reason  the  Employee
be  entitled  to  receive  promptly,  and in addition to any other benefits
specifically provided, (a) the Employee's  Base  Salary through the date of
termination to the extent not theretofore paid, (b)  any  accrued  vacation
pay,  to  the  extent  not  theretofore  paid, and (c) any other amounts or
benefits required to be paid or provided or  which the Employee is entitled
to receive under any plan, program, policy practice  or  agreement  of  the
Company.

     2.5  STOCK  OPTIONS.   The  foregoing  benefits  are intended to be in
addition to the value of any options to acquire Common Stock of the Company
the exercisability of which is accelerated pursuant to  the  terms  of  any
stock  option,  incentive  or  other  similar  plan heretofore or hereafter
adopted by the Company.

     2.6  PROTECTION OF BENEFITS.  To the extent  permitted  by  applicable
law,  the  Company  shall  take  all  reasonable  steps  to ensure that the
Employee is not, by reason of a Change of Control, deprived of the economic
value   (including   any  value  attributable  to  the  Change  of  Control
transaction) of (a) any  options  to acquire Common Stock of the Company or
(b) any Common Stock of the Company beneficially owned by the Employee.

     2.7  CERTAIN  ADDITIONAL PAYMENTS.   If  after  a  Change  of  Control
Employee is subjected to an excise tax as a result of the "excess parachute
payment" provisions  of  section 4999 of the Internal Revenue Code of 1986,
as amended, whether by virtue  of  the  benefits  of  this  Agreement or by
virtue  of  any  other benefits provided to Employee in connection  with  a
Change  of Control  pursuant  to  Company  plans,  policies  or  agreements
(including  the value of any options to acquire Common Stock of the Company
the exercisability  of  which  is  accelerated pursuant to the terms of any
stock option, incentive or similar plan  heretofore or hereafter adopted by
the  Company),  the  Company  shall pay to Employee  (whether  or  not  his
employment has terminated) such  amounts as are necessary to place Employee
in the same position after payment of federal income and excise taxes as he
would have been if such provisions had not been applicable to him.

     2.8  LEGAL FEES.  The Company  agrees  to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Employee may
reasonably  incur  as a result of any contest (regardless  of  the  outcome
thereof)  by the Company,  the  Employee  or  others  of  the  validity  or
enforceability  of,  or  liability  under,  any provision of this Agreement
(including as a result of any contest by the  Employee  about the amount or
timing of any payment pursuant to this Agreement.)
<PAGE>
     2.8  SET-OFF;  MITIGATION.  After a Change of Control,  the  Company's
and its Affiliates' obligations  to  make the payments provided for in this
Agreement and otherwise to perform its  obligations  hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense  or other claim,
right  or action which the Company or its Affiliates may have  against  the
Employee  or  others;  except that to the extent the Employee accepts other
employment  in connection  with  which  he  is  provided  health  insurance
benefits, the  Company  shall  only be required to provide health insurance
benefits to the extent the benefits provided by the Employee's employer are
less favorable than the benefits  to  which  he would otherwise be entitled
hereunder.  It is the intent of this Agreement  that  in no event shall the
Employee be obligated to seek other employment or take  any other action by
way of mitigation of the amounts payable to the Employee  under  any of the
provisions of this Agreement.

     2.9  OUTPLACEMENT  ASSISTANCE.  Upon any termination of employment  of
the Employee other than for  Cause within three years following a Change of
Control, the Company shall provide  to the Employee outplacement assistance
by a reputable firm specializing in such  services for the period beginning
with the termination of employment and ending  three  years  following  the
Change of Control.

<PAGE>
                            ARTICLE III
                           MISCELLANEOUS

     3.1  BINDING EFFECT; SUCCESSORS.

          (a)  This  Agreement  shall  be  binding  upon  and  inure to the
benefit of the Company and any of its successors or assigns.

          (b)  This Agreement is personal to the Employee and shall  not be
assignable  by the Employee without the consent of the Company (there being
no obligation  to  give such consent) other than such rights or benefits as
are transferred by will or the laws of descent and distribution.

          (c)  The Company  shall  require  any successor to or assignee of
(whether  direct  or  indirect,  by  purchase,  merger,   consolidation  or
otherwise)  all  or  substantially all of the assets or businesses  of  the
Company (i) to assume unconditionally and expressly this Agreement and (ii)
to agree to perform or  to  cause  to  be  performed all of the obligations
under this Agreement in the same manner and  to  the  same  extent as would
have been required of the Company had no assignment or succession occurred,
such assumption to be set forth in a writing reasonably satisfactory to the
Employee.

          (d)  The Company shall also require all entities that  control or
that  after  the  transaction  will  control  (directly  or indirectly) the
Company or any such successor or assignee to agree to cause to be performed
all of the obligations under this Agreement, such agreement to be set forth
in a writing reasonably satisfactory to the Employee.

     3.2  NOTICES.  All notices hereunder must be in writing  and  shall be
deemed to have been given upon receipt of delivery by: (a) hand (against  a
receipt  therefor),  (b)  certified  or  registered  mail, postage prepaid,
return  receipt  requested, (c) a nationally recognized  overnight  courier
service (against a  receipt  therefor)  or  (d)  telecopy transmission with
confirmation of receipt.  All such notices must be addressed as follows:

     If to the Company, to:

     Avondale Industries, Inc.
     5100 River Road
     Avondale, Louisiana   70094

     Attn:  Albert L. Bossier, Jr.

     If to the Employee, to:

     R. Dean Church
     Avondale Industries, Inc.
     5100 River Road
     Avondale, Louisiana   70094

or such other address as to which any party hereto  may  have  notified the
other in writing.
<PAGE>
     3.3  GOVERNING LAW.  This Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of Louisiana
without regard to principles of conflict of laws.

     3.4  WITHHOLDING.  The Employee agrees that the Company has  the right
to  withhold,  from  the  amounts  payable  pursuant to this Agreement, all
amounts required to be withheld under applicable  income  and/or employment
tax  laws,  or  as otherwise stated in documents granting rights  that  are
affected by this Agreement.

     3.5  AMENDMENT,  WAIVER.   No  provision  of  this  Agreement  may  be
modified,  amended  or  waived except by an instrument in writing signed by
both parties.

     3.6  SEVERABILITY.  If any term or provision of this Agreement, or the
application thereof to any  person or circumstance, shall at any time or to
any extent be invalid, illegal  or unenforceable in any respect as written,
Employee and the Company intend for  any court construing this Agreement to
modify or limit such provision so as to  render it valid and enforceable to
the  fullest  extent  allowed  by  law.  Any such  provision  that  is  not
susceptible of such reformation shall  be  ignored  so as to not affect any
other term or provision hereof, and the remainder of this Agreement, or the
application  of  such  term or provision to persons or circumstances  other
than those as to which it  is held invalid, illegal or unenforceable, shall
not be affected thereby and each term and provision of this Agreement shall
be valid and enforced to the fullest extent permitted by law.

     3.7  WAIVER OF BREACH.   The waiver by either party of a breach of any
provision of this Agreement shall  not  operate or be construed as a waiver
of any subsequent breach thereof.

     3.8  REMEDIES  NOT EXCLUSIVE.  No remedy  specified  herein  shall  be
deemed to be such party's exclusive remedy, and accordingly, in addition to
all of the rights and  remedies provided for in this Agreement, the parties
shall have all other rights  and  remedies  provided  to them by applicable
law, rule or regulation.

     3.9  COMPANY'S  RESERVATION  OF  RIGHTS.   Employee  acknowledges  and
understands that the Employee serves at the pleasure of the  Board and that
the Company has the right at any time to terminate Employee's  status as an
employee  of  the  Company, or to change or diminish his status during  the
Employment Term, subject  to  the  rights  of  the  Employee  to  claim the
benefits conferred by this Agreement.

     3.10 COUNTERPARTS.   This  Agreement  may  be  executed in one or more
counterparts, each of which shall be deemed to be an  original  but  all of
which together shall constitute one and the same instrument.
<PAGE>
     IN  WITNESS  WHEREOF,  the  Company  and the Employee have caused this
Agreement to be executed as of the Change of Control Agreement Date.

                              AVONDALE INDUSTRIES, INC.



                              By:    /s/ Hugh A. Thompson
                                    ------------------------
                                         Hugh A. Thompson
                                Chairman, Compensation Committee


                              EMPLOYEE:


                                        /s/ R. Dean Church
                                      ----------------------
                                            R. Dean Church