Amended and Restated

                             REVOLVING CREDIT AGREEMENT

                            dated as of  January 28, 1997

                                        among

                             AVONDALE INDUSTRIES, INC.,

                                   as the Company

                           VARIOUS FINANCIAL INSTITUTIONS,

                                    as the Banks

                                         and

                              BANK OF AMERICA NATIONAL
                            TRUST AND SAVINGS ASSOCIATION
                             as the Agent for the Banks





                        - - - - - - - - - - - - - - - - - - -

                                     Arranged by

                            BANCAMERICA SECURITIES, INC.












                                  TABLE OF CONTENTS
                                                                    Page


            Section 1.1  Defined Terms
            Section 1.2 Other Definitional Provisions
            Section 1.3 Accounting Terms and Determinations

          SECTION II  REVOLVING LOANS
            Section 2.1 Revolving Loan Commitment
            Section 2.2 Revolving Note
            Section 2.3 Mandatory Reduction and Prepayment
            Section 2.4 Procedure for Borrowing
            Section 2.5 Voluntary Reduction of Commitments
            Section 2.6 Optional Prepayments
            Section 2.7 Continuation and Conversion Elections
            Section 2.8 Interest Rate and Payment Dates
            Section 2.9 Fees
            Section 2.10 Computation of Interest
            Section 2.11 Payments
            Section 2.12 Inability to Determine Interest Rate
            Section 2.13 Illegality
            Section 2.14 Requirements of Law
            Section 2.15 Funding Losses
            Section 2.16 Use of Proceeds
            Section 2.17 Certain Pricing Terms
            Section 2.18 Certain Provisions Regarding Release and Re-Pledge
            of
                                 Certain Collateral
            Section 2.19 Extensions of Expiration Date
            Section 2.20 Additional Banks; Optional Increase of Total
            Commitments

          SECTION III  LETTERS OF CREDIT
            Section 3.1  Requests
            Section 3.2 Issuance
            Section 3.3 Fees and Expenses
            Section 3.4 Existing Letters of Credit; Banks' Participation
            Section 3.5 Disbursements
            Section 3.6 Reimbursement
            Section 3.7 Deemed Disbursements; Other Cash Collateral
            Requirements
            Section 3.8 Nature of Reimbursement Obligations
            Section 3.9 Indemnity

          SECTION IV  REPRESENTATIONS AND WARRANTIES
            Section 4.1 Financial Condition
            Section 4.2 No Change
            Section 4.3 Corporate Existence: Compliance with Law
            Section 4.4 Corporate Power: Authorization: Enforceable
            Obligations
            Section 4.5 No Bar
            Section 4.6 No Material Litigation
            Section 4.7 No Default
            Section 4.8 Ownership of Property:  Liens
            Section 4.9 No Burdensome Restrictions
            Section 4.10 Taxes
            Section 4.11 Regulations G, T, U and X
            Section 4.12 ERISA
            Section 4.13 Subsidiaries
            Section 4.14 Government Regulation
            Section 4.15 Environmental Matters
            Section 4.16 Judgments or Litigation
            Section 4.17 Government Contracts
            Section 4.18 Modular Construction
            Section 4.19 Licenses, Permits
            Section 4.20 Navy Contracts
            Section 4.21 Loan Documents, etc.
            Section 4.22 No Federal Tax or ERISA Liens
            Section 4.23 No Bonds
            Section 4.24 Labor Controversies
            Section 4.25 Capitalization; Existing Indebtedness
            Section 4.26 Patents, Trademarks, etc.
            Section 4.27 Collateral Documents
            Section 4.28 Accuracy of Information
            Section 4.29 Solvency
            Section 4.30 The LPD-17 Contract
            Section 4.31 Qualification for MARAD Refinancing of LPD-17
            Expenditures

          SECTION V  CONDITIONS PRECEDENT TO EFFECTIVE DATE AND EACH
          EXTENSION OF CREDIT
            Section 5.1 Effective Date; Initial Credit Extensions
            Section 5.2 Conditions to Initial Letter of Credit Issuance
            Section 5.3 Conditions to Each Extension of Credit

          SECTION VI  AFFIRMATIVE COVENANTS
            Section 6.1 Financial Statements
            Section 6.2 Certificates:  Other Information
            Section 6.3 Payment of Obligations
            Section 6.4 Maintenance of Property:  Insurance
            Section 6.5 Conduct of Business and Maintenance of Existence
            Section 6.6 Inspection of Property:  Books and Records;
            Discussions
            Section 6.7 Notices
            Section 6.8 ERISA
            Section 6.9 Delivery; Further Assurances
            Section 6.10 Cash Management Letters
            Section 6.11 Delivery of Assignment of Claims Notices
            Section 6.12 Refinancing of LPD-17 Expenditures

          SECTION VII  NEGATIVE COVENANTS
            Section 7.1 Financial Condition Covenants
            Section 7.2 Limitation on Liens
            Section 7.3 Limitation on Investments and Intercompany Activity
            Section 7.4 Limitation on Fundamental Changes
            Section 7.5 Limitation on Sale of Assets
            Section 7.6 Limitation on Dividends
            Section 7.7 Limitation on Capital Expenditures
            Section 7.8 Sale and Leaseback
            Section 7.9 Acquisitions
            Section 7.10 Environmental Liabilities
            Section 7.11 Compliance with ERISA
            Section 7.12 Prepayments
            Section 7.13 Indebtedness
            Section 7.14 No Additional Subsidiaries
            Section 7.15 Change of Location or Name
            Section 7.16 Additional Negative Pledges and Other Payment
            Restrictions
                                 Affecting Subsidiaries
            Section 7.17 Additional Restrictions on Avondale Properties,
            Inc. and the
                                 Shipyard Partnership
            Section 7.18 Amendment to Other Financing Documents

          SECTION VIII  EVENTS OF DEFAULT

          SECTION IX  THE AGENT
            Section 9.1 Actions
            Section 9.2 Exculpation
            Section 9.3 Successor
            Section 9.4 Credit Decisions
            Section 9.5 Notices, etc. from Agent
            Section 9.6 Collateral Documents
            Section 9.7 Loans by the Agent
            Section 9.8 Other Collateral Matters
            Section 9.9 Arranger.

          SECTION X  MISCELLANEOUS
            Section 10.1 Notices
            Section 10.2 Amendments and Waivers
            Section 10.3 No Waiver:  Cumulative Remedies
            Section 10.4 Survival of Representations and Warranties
            Section 10.5 Payment of Expenses and Taxes; Indemnity and
            Release
            Section 10.6 Headings; Table of Contents
            Section 10.7 Successors and Assigns
            Section 10.8 Tax Forms
            Section 10.9 Setoff
            Section 10.10 Sharing
            Section 10.11 Counterparts
            Section 10.12 Severability
            Section 10.13 Governing Law
            Section 10.14 Marshalling; Recapture
            Section 10.15 Jurisdiction
            Section 10.16 Waiver of Jury Trial







         

          This  AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as of
          January  28,  1997,  by  and  among  AVONDALE INDUSTRIES, INC., a
          Louisiana  corporation  (the "Company"),  the  various  financial
          institutions signatory hereto  (collectively,  the  "Banks," and,
          individually, a "Bank"), and BANK OF AMERICA NATIONAL  TRUST  AND
          SAVINGS ASSOCIATION, as agent for the Banks (the "Agent").


                                W I T N E S S E T H:

               WHEREAS,  the  Company  wishes to amend, extend and increase
          its Line of Credit pursuant to  and  as  defined  in that certain
          Revolving Credit Agreement dated as of May 10, 1994,  as amended,
          among  the Company, various financial institutions party  thereto
          and Bank  of  America  National Trust and Savings Association, as
          agent (the "Existing Credit Agreement");

               WHEREAS, subject to  the  conditions  to  effectiveness  set
          forth in Section 5.1 hereof, this Revolving Credit Agreement is a
          renewal,  extension,  increase  and  restatement  of the Existing
          Credit  Agreement,  and  pursuant  to  this Amended and  Restated
          Revolving  Credit  Agreement,  the Company  wishes  to  obtain  a
          revolving  credit  facility  to  provide  financing  for  general
          corporate purposes, including the Company's and its Subsidiaries'
          ongoing working capital requirements,  and  for obligations to be
          supported by Letters of Credit; and

               WHEREAS,  upon the terms and subject to the  conditions  set
          forth herein, including  without  limitation  the  conditions  to
          effectiveness  set  forth in Section 5.1 hereof, the LC Issuer is
          willing to issue letters of credit for the account of the Company
          and the Banks are willing  to  (i) make loans and advances to the
          Company and (ii) purchase participations  in  Letters  of  Credit
          issued by the LC Issuer for the account of the Company;

               NOW,  THEREFORE, the Company, the Banks and the Agent hereby
          agree, and the  Existing  Credit  Agreement is hereby amended and
          restated, in each case subject to Section 5.1 hereof, as follows:

                                       SECTION I

                                     DEFINITIONS

             Section 1.1 Defined Terms.  As used  in  this  Agreement,  the
          following   terms   shall   have  the  following  meanings  (such
          definitions,  and the definitions  of  all  other  terms  defined
          herein, to be equally  applicable  to  both  their  singular  and
          plural forms):

                    "Accounts"  shall  mean  (i)  any  right to payment for
          goods sold, delivered or leased or for services rendered which is
          not evidenced by an instrument or chattel paper,  whether  or not
          it  has  been earned by performance and (ii) any right to payment
          due under  any and all contracts for the construction of ships or
          other vessels.

                    "Acquisition"  shall  mean any transaction or series of
          transactions by which the Company  acquires,  either  directly or
          through an Affiliate or Subsidiary or otherwise, (x) any  or  all
          of  the  stock  or other securities of any class of any Person or
          (y) a substantial portion of the assets, or a division or line of
          business of any Person.

                    "Additional  Bank" shall have the meaning given to said
               term in Section 2.20.

      "Adjusted Consolidated Net Income - Cash Flow Coverage"
          shall mean, for any period, the sum of:

                         (a) Consolidated Net Income for such period;

                    plus

                         (b)  depreciation   and  amortization  of  the
                    Company and its Subsidiaries for such period;

                    plus

                         (c)    extraordinary    losses    (or    minus
                    extraordinary gains) on the sale or other transfer
                    of assets or adjustment of the  carrying  value of
                    any  assets,  in each case, of the Company or  its
                    Subsidiaries for such period;

                    less

                         (d) Capital Expenditures of the Company or its
                    Subsidiaries for  such  period  (other  than those
                    Capital  Expenditures  that  are  (i) incurred  in
                    connection   with  the  Design  Center  and   (ii)
                    permitted by Section 7.7); and

                    less

                         (e) cash dividends  paid  with  respect to the
                    capital stock of the Company for such period.

                    "Adjusted Consolidated Net Income - Interest  Coverage"
          shall mean, for any period the sum of:

                          (a) Consolidated Net Income for such period;

                    plus

                         (b)   depreciation  and  amortization  of  the
                    Company and its Subsidiaries for such period;

                    plus

                         (c)    extraordinary    losses    (or    minus
                    extraordinary gains) on the sale or other transfer
                    of assets or  adjustment  of the carrying value of
                    any assets, in each case, of  the  Company  or its
                    Subsidiaries for such period;

                    plus

                         (d) Consolidated Cash Interest Expense of  the
                    Company and its Subsidiaries for such period; and

                    plus

                         (e)  income tax expense of the Company and its
                    Subsidiaries during such period.

                    "Affiliate"  of  any Person shall mean any other Person
          who, directly or indirectly,  controls or is controlled by or  is
          under common control with such  Person.  A Person shall be deemed
          to be "controlled by" any other Person who possesses, directly or
          indirectly, power:  (a) to vote 10%  or  more  of  the securities
          having  ordinary  voting  power for the election of directors  of
          such Person, or (b) to direct  or  cause  the  direction  of  the
          management  and  policies  of such Person, whether by contract or
          otherwise.

                    "Agent" shall mean  Bank  of America National Trust and
          Savings Association and its successors,  or  such  other  Bank or
          financial  institution  as shall have been subsequently appointed
          as successor Agent pursuant to Section 9.3 of this Agreement.

                    "Agreement"  shall   mean  this  Amended  and  Restated
          Revolving  Credit Agreement, as amended,  amended  and  restated,
          supplemented or otherwise modified from time to time.

                    "Alternate  Base  Rate"  shall  mean,  for  any  day, a
          fluctuating  rate  of interest per annum equal to the greater  of
          (i) the Base Rate in effect on such day or (ii) the Federal Funds
          Effective Rate in effect  on such day plus .50%.  For purposes of
          this Agreement, any change  in  the  Alternate Base Rate due to a
          change  in  the Base Rate shall be effective  on  the  date  such
          change in the  Base  Rate  is  announced  and  any  change in the
          Alternate  Base  Rate  due  to  a  change  in  the  Federal Funds
          Effective Rate shall be effective on the effective date  of  such
          change  in  the  Federal Funds Effective Rate.  If for any reason
          the Agent shall have  determined  (which  determination  shall be
          conclusive in the absence of manifest error) that it is unable to
          ascertain  the  Federal  Funds  Effective  Rate  for  any reason,
          including  the  inability  or  failure  of  the  Agent  to obtain
          sufficient  bids  or  publications  in  accordance with the terms
          hereof, the Alternate Base Rate shall be  a  fluctuating rate per
          annum equal to the Base Rate in effect from time  to  time  until
          the circumstances giving rise to such inability no longer exist.

                    "Applicable  Margin"  shall  mean,  for  any  day,  the
          specified  number  of  Basis  Points  set  forth  on Schedule III
          attached  hereto,  determined  in  accordance  with Section  2.17
          hereof.

                    "Arranger" shall have the meaning assigned to said term
          in Section 9.9.

                    "Articles of Incorporation" shall mean  the Articles of
          Incorporation of the Company dated March 16, 1990 and October 26,
          1990, as filed with the Louisiana Secretary of State  as the same
          may be amended or supplemented from time to time.

                    "Assessed  Value"  shall mean the fair market value  as
          determined  from  time  to  time  by   an  independent  appraiser
          acceptable  to  the Agent, of a piece of property  or  equipment,
          less the amount of  any  Indebtedness  secured by the property or
          equipment.

                    "Assignment  and Assumption Agreement"  shall  mean  an
          assignment and assumption  agreement entered into by an assigning
          Bank  and  an  assignee  Bank, and  accepted  by  the  Agent,  in
          accordance  with  Section 10.7,  substantially  in  the  form  of
          Exhibit A.

                    "Assignment of Claims Notice" shall mean, collectively,
          the Notices of Assignment  with  respect to the Navy Contracts of
          the Company and/or its Subsidiaries,   as applicable, sent to the
          United States government by the Agent, pursuant to the Assignment
          of Claims Act of 1940 as amended (31 U.S.C.  3727,  41 U.S.C. 15)
          and  acknowledged  by  the appropriate administrative contracting
          officer, and disbursing officer, and if applicable, any surety on
          any bond applicable to the Navy Contracts.

                    "Available Commitment"  shall  mean,  at any particular
          time, for each Bank, an amount equal to the excess,  if  any,  of
          (a)  the  amount  of such Bank's Commitment at such time over (b)
          the sum of the aggregate  unpaid principal amount at such time of
          all Loans made by such Bank  pursuant  to this Agreement plus the
          amount  of  such  Bank's  Percentage  of  the  Letter  of  Credit
          Outstandings at such time.

                    "Avondale  Drydock"  shall mean that  certain  floating
          drydock named AVONDALE DRYDOCK, Official Number 568190.

                    "BAI"  shall  mean  Bank   of   America  Illinois,  its
               successors and assigns.

                    "Bank Party" shall have the meaning  given to said term
               in Section 10.5.

                    "Base Rate" shall mean, at any time and  from  time  to
               time, the rate per annum then most recently announced by the
               Agent at its head office as its base or reference rate.  The
               Base  Rate is not necessarily intended to be the lowest rate
               of interest  determined  by  the  Agent  in  connection with
               extensions of credit.  The Agent shall give notice  promptly
               to the Company and the Banks of changes in the Base Rate.

                    "Base Rate Loan" shall mean a Loan bearing interest  at
               a  fluctuating  rate  of interest determined by reference to
               the Alternate Base Rate.

                    "Basis  Point" shall  mean  one  one-hundredth  of  one
               percent (1/100 of 1%) per annum.

                    "BofA" shall  mean  Bank  of America National Trust and
               Savings Association, a national banking association.

                    "Borrowing Date" shall mean  any Business Day specified
               in a notice pursuant to Sections 2.4  or  3.1  as  a date on
               which the Company requests the Banks to make Loans hereunder
               or the LC Issuer to issue a Letter of Credit.

                    "Borrowing   Request"   means   a   loan   request  and
               certificate  duly executed by a Responsible Officer  of  the
               Company on behalf  of  the  Company and substantially in the
               form of Exhibit B.

                    "Business Day" shall mean:

                         (a) a day other than  a  Saturday,  Sunday  or
               other  day  on which commercial banks in San Francisco,
               California, are authorized or required by law to close;
               and

                         (b) relative to the date of:

                              (i)  making  or continuing any Loans
                    as,  or converting any Loans  from  or  into,
                    Offshore Rate Loans,

                              (ii) making any payment or prepayment
                    of principal of or payment of interest on any
                    portion  of the principal amount of any Loans
                    being maintained as Offshore Rate Loans, or

                              (iii)  the Company's giving notice (or
                    the number of Business  Days  to elapse prior
                    to  the effectiveness thereof) in  connection
                    with  any matter referred to in clause (b)(i)
                    or (b)(ii),

                    any day  on  which dealings in Dollars are carried
                    on in the interbank market of the Agent's Offshore
                    Lending Office.

                    "Capital Expenditures"  shall  mean,  as to any Person,
          without  duplication and for any period, the cost  attributed  in
          accordance with GAAP consistent with those applied in preparation
          of  the financial  statements  referred  to  in  Section  4.1  to
          acquisitions  during  such  period  by  such Person of any asset,
          tangible or intangible, or replacements or  substitutes  therefor
          or  additions  thereto  which such Person treated as a noncurrent
          asset on such Person's financial  statements,  including, without
          limitation,  the acquisition or construction of assets  having  a
          useful life of more than one year.

                    "Cash Equivalent Investments" shall mean (i) securities
          issued, guaranteed  or insured by the United States or any of its
          agencies with maturities  of not more than one year from the date
          acquired;  (ii)  certificates   of   deposit   or  other  deposit
          arrangements with maturities of not more than one  year  from the
          date  acquired  issued  by  a  U.S.  federal  or  state chartered
          commercial  bank  of  recognized standing, which has capital  and
          unimpaired surplus in excess  of  $200,000,000  and which bank or
          its holding company has a short-term commercial paper  rating  of
          at  least  A-1 or the equivalent by Standard & Poor's Corporation
          and at least P-1 or the equivalent by Moody's Investors Services,
          Inc.;  (iii)   repurchase   agreements   or   reverse  repurchase
          agreements with terms of not more than thirty (30)  days from the
          date acquired, for securities of the type described in clause (i)
          above  and  entered  into  only with commercial banks having  the
          qualifications described in  clause  (ii)  above; (iv) commercial
          paper,  master  notes, or corporate debt obligations  other  than
          those issued by the  Company  or any of its Affiliates, issued by
          any Person incorporated under the  laws  of  the United States or
          any  state  thereof  and  rated  at  least A-1 or the  equivalent
          thereof by Standard & Poor's Corporation,  at  least  P-1  or the
          equivalent  thereof  by  Moody's  Investors  Service, Inc., or at
          least  D-1  or  the  equivalent thereof by Duff &  Phelps  Credit
          Rating Company, in each case with maturities of not more than one
          year from the date acquired;  and (v) investments in money market
          funds registered under the Investment  Company  Act  of  1940, as
          amended,  which  have net assets of at least $200,000,000 and  at
          least eighty-five  percent  (85%)  of  whose  assets  consist  of
          securities and other obligations of the type described in clauses
          (i) through (iv) above.

                    "Cash  Flow Coverage Ratio" shall mean, for any period,
          the ratio of (i) Adjusted  Consolidated  Net  Income  - Cash Flow
          Coverage during such period to (ii) Total Funded Debt as  of  the
          last  day  of  such  period  (subject  to  adjustment as provided
          below).  The Cash Flow Coverage Ratio shall  be  calculated as of
          the last day of each fiscal quarter of the Company  for  the four
          quarter  period  ending  on such date and no adjustment shall  be
          made thereto.

                    "Cash  Management   Letter"   shall   mean   a   letter
          substantially in the form of Exhibit C.

                    "CERCLA"  shall  mean  the  Comprehensive Environmental
          Response, Compensation and Liability Act of 1980, as amended.

                    "CERCLIS"  shall  mean the Comprehensive  Environmental
          Compensation Liability Information System List.

                    "Change of Control"  shall  mean  any  of the following
          events:

                         (i) less than a majority of the members of the
               Company's  Board  of  Directors  shall  be persons  who
               either  (A)  were serving as directors on the  date  of
               this Agreement  or  (B) were nominated as directors and
               approved by the vote  of  the majority of the directors
               who are directors referred  to  in  clause (A) above or
               this clause (B);

                         (ii) the failure of the Company  to own 100% of
                    the capital stock of any Subsidiary Guarantor; or

                         (iii)  the  stockholders  of  the Company  shall
                    approve any plan or proposal for  the  liquidation
                    or dissolution of the Company.

                    "Code" shall mean the Internal Revenue Code of 1986, as
          amended from time to time.

                    "Code  Affiliate"  shall  mean  each trade or  business
          (whether or not incorporated) which together  with the Company is
          treated as a "single employer" under subsection  (b), (c), (m) or
          (o) of Section 414 of the Code.

                    "Collateral" shall mean all of the property  in respect
          of which a Lien has been granted by the Company or any Subsidiary
          Guarantor in favor of the Agent for the benefit of the Banks  and
          the LC Issuer under the terms of the Collateral Documents.

                    "Collateral  Access  Agreement" shall mean any landlord
          waivers,   mortgagee   waivers,   bailee   letters   or   similar
          acknowledgment  agreements of any warehouseman  or  processor  in
          possession of any  Inventory, in each case, in form and substance
          acceptable to the Agent and the Required Banks.

                    "Collateral Documents" shall mean all of the contracts,
          instruments and other  documents  now  or  hereafter executed and
          delivered in connection with this Agreement,  pursuant  to  which
          Liens  are granted to the Agent in the Collateral for the benefit
          of the Banks and the LC Issuer, including, without limitation the
          900 Foot  Floating  Drydock Mortgage, the Mortgage Amendment, the
          Security  Agreement (Company),  the  Subsidiary  Guarantees,  the
          Subsidiary  Security  Agreements  and  each  Assignment of Claims
          Notice.

                    "Commitment" shall mean, for each Bank,  for the period
          from  and  including  the  Effective  Date  to but excluding  the
          Expiration  Date  the amount set forth in Schedule  I  under  the
          heading "Commitment"  as  such amount may be adjusted pursuant to
          Section 2.3, Section 2.5, Section  2.20,  Section VIII or Section
          10.7.

                    "Commitment Agreement" shall have  the meaning given to
               said term in Section 2.20.

                    "Commitment Date" shall have the meaning  given to said
               term in Section 2.20.

                    "Consent Notice" shall have the meaning given  to  said
               term in Section 2.19.

                    "Consolidated  Cash  Interest  Expense" shall mean, for
               any  period,  the amount of any cash interest  paid  by  the
               Company and its  Subsidiaries during such period, determined
               in accordance with GAAP.

                    "Consolidated  Net  Income" shall mean, for any period,
               the consolidated net income (or net loss) of the Company and
               its Subsidiaries for such  period,  determined in accordance
               with GAAP.

                    "Consolidated Net Worth" shall mean,  at  a  particular
               date,   all   amounts   which   would   be   included  under
               shareholders' equity (except amounts relating  to  the  then
               outstanding  principal  balance of any Preferred Stock which
               is, at the option of the  holder  thereof, convertible prior
               to  the Expiration Date into Indebtedness,  or  has,  or  is
               convertible into any security that has, mandatory redemption
               or repurchase  requirements prior to the Expiration Date) on
               a  consolidated  balance   sheet  of  the  Company  and  its
               Subsidiaries determined in accordance  with  GAAP as at such
               date.

                    "Contingent Obligation" shall mean, as to  any  Person,
               any  obligation  of  such  Person  guaranteeing or in effect
               guaranteeing  any  Indebtedness, lease,  dividend  or  other
               obligation (the "primary  obligations")  of any other Person
               (the "primary obligor") in any manner, whether  directly  or
               indirectly, including, without limitation, any obligation of
               such  Person,  whether or not contingent (a) to purchase any
               such primary obligation  or any property constituting direct
               or indirect security therefor,  (b)  to  advance  or  supply
               funds  (i)  for  the purchase or payment of any such primary
               obligation or (ii)  to  maintain  working  capital or equity
               capital of the primary obligor or otherwise  to maintain the
               net  worth or solvency of the primary obligor or  to  permit
               the primary  obligor  to  meet  financial  covenants, (c) to
               purchase property, securities or services primarily  for the
               purpose of assuring the owner of any such primary obligation
               of  the  ability  of the primary obligor to make payment  of
               such primary obligation  or  (d) otherwise to assure or hold
               harmless the owner of any such  primary  obligation  against
               loss  in  respect  thereof,  including,  without  limitation
               contingent obligations with respect to performance and other
               similar  bonds and instruments whether secured or unsecured;
               provided, however, that the term Contingent Obligation shall
               not include  endorsements  of  instruments  for  deposit  or
               collection  in  the ordinary course of business.  The amount
               of any Contingent Obligation shall be deemed to be an amount
               equal to the stated  or  determinable  amount of the primary
               obligation in respect of which such Contingent Obligation is
               made  or,  if  not  stated  or  determinable,   the  maximum
               reasonably  anticipated  liability  in  respect  thereof  as
               determined by the Company in good faith.

                    "Continuation/Conversion  Notice"  means  a  notice  of
               continuation or conversion and certificate duly executed  by
               a  Responsible  Officer  of the Company and substantially in
               the form of Exhibit D.

                    "Contractual Obligation"  shall mean, as to any Person,
               any provision of any security issued  by  such  Person or of
               any  agreement,  instrument  or  undertaking  to which  such
               Person is a party or by which it or any of its  property  is
               bound.

                    "Credit  Extension"  shall  mean  (i) the making of any
               Loan hereunder; or (ii) the incorporation  herein, issuance,
               renewal,  modification or extension of any Letter of Credit.

                    "Customary Permitted Liens" shall mean  (i)  Liens  for
               taxes not yet due or which are being contested in good faith
               and  by  appropriate  proceedings  if adequate reserves with
               respect thereto are maintained on the  books  of the Company
               or  the  appropriate  Subsidiary,  as  the case may  be,  in
               accordance   with   GAAP,  (ii)  carriers',  warehousemen's,
               mechanics', materialmen's,  repairmen's, vendor's, lessor's,
               workmen's,  refurbisher's, bunkerer's,  employee's,  crew's,
               stevedore's or  other  like  Liens  or Liens for salvage, in
               each  case, arising in the ordinary course  of  business  by
               operation  of law which are not overdue for a period of more
               than ninety  days or which are being contested in good faith
               and  by  appropriate  proceedings  and  for  which  adequate
               reserves have  been  made  and  (iii)  Liens for salvage and
               general average which are either unclaimed  or fully covered
               by insurance.

                    "Default"  shall  mean  any of the events specified  in
               Section  VIII  of  this  Agreement,   whether   or  not  any
               requirement for the giving of notice, the lapse of  time, or
               both, or any other condition, has been satisfied.

                    "Design Center" shall mean the building, facilities and
               related improvements to be constructed at or adjacent to the
               Company's premises in Avondale, Louisiana to be used  in the
               design  and  construction of amphibious assault ships (known
               as LPD-17 ships),  pursuant to the LPD-17 Contract, together
               with computers and equipment  used  in  connection with such
               facility.

                    "Disbursement  Date"  shall have the meaning  given  to
               said term in Section 3.5.

                    "Dividend Calculation Period"  shall  have  the meaning
               given to said term in Section 7.6.

                    "Dollars" and "$" shall mean dollars in lawful currency
               of the United States of America.

                    "Domestic  Office"  means,  relative  to any Bank,  the
               office of such Bank designated as such below  its  signature
               hereto  or  such other office of such Bank (or any successor
               or permitted  assign  of such Bank) within the United States
               as may be designated from  time  to time by notice from such
               Bank to the Agent and the Company.

                    "EBITDA"   shall   mean,  for  any   period,   Adjusted
               Consolidated Net Income - Interest Coverage for such period.

                    "Effective Date" shall  mean  the  date on which all of
               the conditions set forth in Section 5.1 hereof are satisfied
               by the Company or waived by the Required Banks, as confirmed
               in  a written confirmation of the Agent issued  pursuant  to
               Section V hereof.

                    "Environmental Laws" means:

                         (a) CERCLA;

                         (b)  the  Resource  Conservation  and Recovery
                         Act,  as  amended by the Hazardous and  Solid
                         Waste Amendment  Act  of  1984,  42  U.S.C.A.
                         Section 6901 et seq.;

                         (c)  the  Clean  Air  Act, 42 U.S.C.A. Section
                         7401 et seq.;

                         (d) the Clean Water Act  of  1977, 33 U.S.C.A.
                         Section 1251 et seq.;

                         (e)  the  Toxic  Substances  Control  Act,  15
                         U.S.C.A. Section 2601 et seq.; and

                         (f) all other Federal, state and  local  laws,
                         rules   and   regulations   relating  to  air
                         pollution,  water  pollution,  noise  control
                         and/or  the  handling, discharge,  existence,
                         disposal or recovery  of  on-site or off-site
                         hazardous,   toxic   or   dangerous    waste,
                         substances  or  materials,  as  each  of  the
                         foregoing may be amended from time to time.

                    "ERISA"  shall  mean  the  Employee  Retirement  Income
          Security Act of 1974, as amended from time to time.

                    "ERISA  Affiliate"  shall  mean  each trade or business
          (whether  or not incorporated) which together  with  the  Company
          would be deemed  to  be a "single employer" within the meaning of
          Section 4001 of ERISA.

                    "ESOP" shall  have  the  meaning  given to said term in
          Section 4.12.

                    Eurodollar Reserve Percentage" shall  mean, relative to
          any  Interest  Period,  the  reserve percentage (expressed  as  a
          decimal)  equal  to the maximum  aggregate  reserve  requirements
          (including all basic, emergency, supplemental, marginal and other
          reserves and taking  into account any transitional adjustments or
          other scheduled changes  in reserve requirements) specified under
          regulations issued from time to time by the F.R.S. Board and then
          applicable to assets or liabilities  consisting  of and including
          "Eurocurrency Liabilities", as currently defined in  Regulation D
          of  the  F.R.S.  Board,  having  a  term  approximately equal  or
          comparable to such Interest Period.

                    "Event  of  Default"  shall  mean  any  of  the  events
          specified  in Section VIII of this Agreement, provided  that  any
          requirement for the giving of notice, the lapse of time, or both,
          or any other condition has been satisfied.

                    "Existing  Credit  Agreement"  shall  have  the meaning
          given to such term in the preamble hereto.

                    "Existing  Letters  of  Credit"  shall mean Letters  of
          Credit as defined in, and issued by Bank of America Illinois (or,
          if applicable, BofA), pursuant to, the Existing  Credit Agreement
          which are outstanding on the Effective Date.

                    "Expiration Date" shall mean the earlier  to  occur  of
          (i)  the  date which is three (3) years after the Effective Date,
          or (ii) the  earliest  date  on  which all of the following shall
          have occurred: (x) the Letter of Credit Outstandings is zero, (y)
          all Obligations (including, without limitation, all Reimbursement
          Obligations) have been indefeasibly paid in full in cash and have
          otherwise  been satisfied and discharged  in  full  and  (z)  all
          Commitments have been reduced to zero.

                    "Extension  Date" shall mean the date which is one year
          prior to the then current Expiration Date.

                    "Extension Notice"  shall  mean  a  notice to the Agent
          from the Company substantially in the form of Exhibit E.

                    "Federal Funds Effective Rate" means,  for  any day, an
          interest  rate  per  annum  equal to the weighted average of  the
          rates on overnight Federal funds transactions with members of the
          Federal Reserve System arranged  by  Federal  funds  brokers,  as
          published  for  such day by the Federal Reserve Bank of New York,
          or, if such rate  is  not  so  published  for  any day which is a
          Business Day, the average of the quotations for  such day on such
          transactions  received  by  the  Agent  from three Federal  funds
          brokers of recognized standing selected by  it.  In the case of a
          day which is not a Business Day, the Federal Funds Effective Rate
          for such day shall be the Federal Funds Effective  Rate  for  the
          next preceding Business Day.

                    "Fee  Letter"  shall  mean  that  certain  letter dated
          January 2,  1997,  among the Agent, the Arranger and the  Company
          providing for, among other things, the payment of certain fees in
          connection with this Agreement.

                    "Financial  Letter  of  Credit"  shall have the meaning
          given to such term in Section 3.1(a).

                    "Financing Lease" shall mean any lease obligation which
          is  capitalized  on  a  balance  sheet  of a Person  prepared  in
          accordance with GAAP.

                    "First Preferred Ship Mortgage" shall mean that certain
          First Preferred Ship Mortgage dated October  21, 1975, granted on
          the  Avondale  Drydock by Avondale Shipyards, Inc.,  a  Louisiana
          corporation and  predecessor-in-interest to the Company, in favor
          of the United States  of America, represented by the Secretary of
          Transportation, acting by and through the Maritime Administrator,
          and recorded in the office  of  the Vessel Documentation Officer,
          U.S. Coast Guard (the "Documentation  Officer")  in  New Orleans,
          Louisiana, in Preferred Mortgage Book No. 100, Instrument  No. 1,
          on  October  21, 1975, at 10:30 a.m., as amended and supplemented
          by that certain  Assumption  Agreement  and  Supplement  No. 1 to
          First Preferred Ship Mortgage dated September 27, 1985, made  and
          executed by Avondale Industries, Inc., a Delaware corporation and
          predecessor-in-interest  to  the  Company,  and  recorded  in the
          office of the Documentation Officer in New Orleans, Louisiana, in
          Preferred  Mortgage  Book  177,  Instrument  71, on September 27,
          1985, at 10:50 a.m., and as further assumed and  supplemented  by
          that  certain  Assumption Agreement and Supplement No. 2 to First
          Preferred Ship Mortgage  dated  March 13, 1991, made and executed
          by  Company,  and  recorded in the office  of  the  Documentation
          Officer in New Orleans, Louisiana, in Preferred Mortgage Book No.
          228, Instrument No. 116, on March 13, 1991, at 10:39 a.m., and as
          further amended and supplemented by that certain Supplement No. 3
          to First Preferred Ship Mortgage dated February 9, 1995, made and
          executed  by the Company  and  recorded  in  the  office  of  the
          Documentation  Officer  in  New  Orleans,  Louisiana in Preferred
          Mortgage Book No. PM-9502, Instrument No. 91, on February 9, 1995
          at 11:01 a.m.

                    "Fixed Asset Property" shall mean  property,  plant and
          equipment  listed on the Company's consolidated balance sheet  at
          any time and which does not constitute Collateral.

                    "F.R.S. Board" shall mean the Board of Governors of the
          Federal Reserve System.

                    "GAAP"   shall   mean   generally  accepted  accounting
          principles in the United States of America in effect from time to
          time.

                    "Government Contract" shall  have  the meaning given to
          said term in Section 4.17.

                    "Governmental Authority" shall mean any sovereign state
          or nation or government, any state or other political subdivision
          thereof   and   any  entity  exercising  executive,  legislative,
          judicial, regulatory or administrative functions of or pertaining
          to government, including,  without  limitation, the United States
          Department of Defense and the United States Navy.

                    "Gulfport"  means  Avondale Gulfport  Marine,  Inc.,  a
          Delaware corporation.

                    "Hazardous Material"  shall  mean  and includes (a) any
          asbestos,  PCBs,  or  dioxins,  or  insulation or other  material
          composed  of or containing asbestos, PCBs  or  dioxins,  (b)  any
          petroleum product,  and  (c)  any  hazardous, toxic, or dangerous
          waste, substance, or material defined as such in (or for purposes
          of) CERCLA, any so-called "Superfund"  or "Superlien" law, or any
          other applicable federal, state, local,  or  other  statute, law,
          ordinance,  code,  rule,  regulation, order or decree regulating,
          relating  to,  or  imposing liability  or  standards  of  conduct
          concerning, any hazardous,  toxic, or dangerous waste, substance,
          or material, as now or at any time hereafter in effect.

                    "Impermissible Qualification"  shall  mean, relative to
          the opinion or certification of any independent public accountant
          as to any financial statement of any Person, any qualification or
          exception to such opinion or certification which:

                         (a) is of a "going concern" or similar nature;
               or

                         (b)   relates   to   the   limited   scope  of
               examination  or  matters  relevant  to  such  financial
               statement.

                    "Indebtedness" of a Person, shall mean, at a particular
          date, the sum (without duplication and in conformity  with  GAAP)
          at  such date of (a) all indebtedness of such Person for borrowed
          money  or for the deferred purchase price of property or services
          (including,   without  limitation,  all  notes  payable  and  all
          obligations  evidenced  by  bonds,  debentures,  notes  or  other
          similar instruments  but excluding trade payables incurred in the
          ordinary course of business), (b) obligations with respect to any
          installment sale or conditional sale agreement or title retention
          agreement, (c) indebtedness  arising under acceptance facilities,
          (d) unpaid reimbursement obligations  arising  in connection with
          surety, performance or other similar bonds and in connection with
          standby letters of credit issued in lieu of such  bonds,  (e) the
          outstanding  amount  of  all  other letters of credit (other than
          those referred to in clause (d))  issued  for the account of such
          Person   and,  without  duplication,  all  unpaid   reimbursement
          obligations   thereunder,   (f)  Financing  Leases,  (g)  payment
          obligations  with respect to interest  rate  swap,  cap,  collar,
          floating rate or similar agreements, (h) any withdrawal liability
          obligation  of   such   Person   or   an  ERISA  Affiliate  to  a
          Multiemployer Plan, (i) any Preferred Stock of such Person to the
          extent that such Preferred Stock is convertible  at the option of
          the  holder  thereof  into  Indebtedness  of a type described  in
          another clause of this definition or has, or  is convertible into
          any  security  that  has,  mandatory  redemption  or   repurchase
          requirements,  and  (j)  Contingent  Obligations  of such Person,
          including, without limitation Contingent Obligations with respect
          to  performance  and other similar bonds and instruments  whether
          secured or unsecured.

                    "Indemnified  Liabilities" shall have the meaning given
          to such term in Section 10.5.

                    "Initial Credit  Event"  shall  mean the initial Credit
          Extension hereunder.

                    "Interest Coverage Ratio" shall mean,  for  any period,
          the  ratio  of  (i)  Adjusted  Consolidated Net Income - Interest
          Coverage during such period to (ii)  Consolidated  Cash  Interest
          Expense during such period.  The Interest Coverage Ratio shall be
          calculated  as  of  the  last  day  of each fiscal quarter of the
          Company for the four quarter period ending on such date.

                    "Interest Period" shall mean  the  period from the date
          on  which  such  Offshore Rate Loan is made or continued  as,  or
          converted into, an  Offshore Rate Loan pursuant to Section 2.4 or
          2.7, and, unless the  maturity  of  such  Offshore  Rate  Loan is
          accelerated,  to  the  day  which numerically corresponds to such
          date  one, two or three months  thereafter  as  the  Company  may
          select  in  its  irrevocable  notice of borrowing to the Agent as
          provided  in  Section 2.4 or in its  notice  of  continuation  or
          conversion as provided  in  Section  2.7 of this Agreement as the
          case may be; provided that, the foregoing  provisions relating to
          Interest Periods are subject to the following:

                         (a)  the  Company  shall  not be permitted  to
               select Interest Periods to be in effect at any one time
               which have expiration dates occurring  on  more  than 4
               different dates;

                         (b)    if    there   exists   no   numerically
               corresponding day in such  month,  such Interest Period
               shall end on the last Business Day of such month;

                         (c)  if such Interest Period  would  otherwise
               end on a day which is not a Business Day, such Interest
               Period shall end  on  the  next  following Business Day
               (unless such next following Business  Day is a Business
               Day falling in a new calendar month, in which case such
               Interest  Period  shall  end on the Business  Day  next
               preceding such numerically corresponding day); and

                         (d)  the Company shall  not  be  permitted  to
               select, and there shall not be applicable, any Interest
               Period that would end later than the Expiration Date.

                    "Inventory" shall mean all of the Company's "inventory"
          as that term is defined in Section 9-109(4) of the UCC, and shall
          include, without limitation:   (i)  all  raw  materials,  work in
          process,  parts,  components,  assemblies, supplies and materials
          used or consumed in the Company's business; (ii) all goods, wares
          and merchandise, finished or unfinished,  held  for sale or lease
          or  leased  or  furnished  or to be furnished under contracts  of
          service;  and (iii) all goods  returned  or  repossessed  by  the
          Company.

                    "Investment" means, relative to any Person:

                         (a) any loan or advance made by such Person to
               any other  Person  (excluding  commission,  travel  and
               similar  advances to officers and employees made in the
               ordinary course of business);

                         (b)  any Contingent Obligation of such Person;
               and

                         (c) any  ownership or similar interest held by
               such Person in any other Person.

                    "Issuance Fee"  shall  have  the  meaning given to said
          term in Section 3.3.

                    "Issuance  Request"  shall  mean  a  certificate   duly
          executed by a Responsible Officer of the Company in substantially
          the  form  of  Exhibit  F, and delivered to the LC Issuer (with a
          copy to the Agent) requesting  its  issuance  of  the  Letter  of
          Credit described therein.

                    "Jo  Ann  Agreements" shall mean, collectively, (i) the
          Trust  Indenture  dated   April   1,   1994,   between  Board  of
          Commissioners of the Port of New Orleans (the "Port")  and  First
          National  Bank  of  Commerce as Trustee (the "Bond Trustee"), and
          the Series 1994 Industrial  Revenue  Bonds outstanding and issued
          pursuant to the terms thereof (the "Jo  Ann Bonds"), and (ii) the
          Refunding Agreement dated as of April 1,  1994  between  the Port
          and  the  Company,  in  the  case  of  each of the agreements and
          documents referenced in the foregoing clauses, as the same may be
          amended, supplemented or otherwise modified from time to time.

                    "Jo  Ann  Drydock"  shall  mean that  certain  floating
          drydock named JO ANN DRYDOCK, Official Number 982958.

                    "Jo Ann Drydock Assets" shall  mean  the Jo Ann Drydock
          and  the  other  property  and assets of the Company  which  were
          purchased and/or constructed  with  the  proceeds  of  the Jo Ann
          Bonds.

                    "LC  Issuer"  shall  mean Bank of America Illinois  and
          BofA (solely with respect to such  of  the  Existing  Letters  of
          Credit  as  have  been issued by it) and, with the consent of the
          Agent, the Company  and Bank of America Illinois, any Bank.  With
          respect to Letters of  Credit  issued  by  the  LC Issuer, the LC
          Issuer  shall  have  the  benefits  of  each  provision  of  this
          Agreement as if it were a Bank, and provisions  of this Agreement
          and  the other Loan Documents which are for "the benefit  of  the
          Banks"  shall also be for the benefit of the LC Issuer.  If there
          shall be  more  than  one  LC  Issuer  at any time, to the extent
          relevant, the term "LC Issuer" shall mean both LC Issuers.

                    "Letter of Credit" shall have the meaning given to said
          term in Section 3.1.  The term "Letter of  Credit"  shall include
          the Existing Letters of Credit, and from and after the  Effective
          Date such letters of credit shall be considered Letters of Credit
          and shall be governed by all of the terms of this Agreement which
          apply to Letters of Credit.

                    "Letter  of  Credit  Availability"  shall mean, at  any
          time,  the lesser of (a) $35,000,000 minus any Letter  of  Credit
          Outstanding(s)  and  (b)  the  aggregate amount of then Available
          Commitments.

                    "Letter of Credit Commission" shall mean the applicable
          Letter of Credit Commission specified  in  Schedule  III attached
          hereto, determined in accordance with Section 2.17 hereof.

                    "Letter of Credit Fee" shall have the meaning  given to
          said term in Section 3.3.

                    "Letter  of  Credit  Outstandings"  shall  mean, at any
          time,  an  amount equal to the sum of (a) the aggregate  undrawn,
          available amount  at  such  time  of  all  Letters of Credit then
          outstanding plus (b) the then aggregate amount  of all unpaid and
          outstanding Reimbursement Obligations.

                    "Lien"  shall  mean  any  security interest,  mortgage,
          pledge,    hypothecation,   assignment,   deposit    arrangement,
          encumbrance,  lien  (statutory or other), or preference, priority
          or other security agreement  or  preferential  arrangement of any
          kind  or  nature  whatsoever (including, without limitation,  any
          conditional  sale  or   other   title  retention  agreement,  any
          Financing Lease, and the filing of  any  financing statement (but
          only  to  the  extent  any such financing statement  purports  to
          record the grant of a security  interest  and  not  including any
          financing  statements filed for notice purposes only)  under  the
          UCC or comparable  law  of  any jurisdiction in respect of any of
          the foregoing).

                    "Line of Credit" shall  mean  the  aggregate  revolving
          credit  line  extended by the Banks to the Company for Loans  and
          Letters of Credit pursuant to and in accordance with the terms of
          this Agreement,  initially  in  the  amount of $75,000,000.00, as
          such amount may be adjusted from time  to time in accordance with
          Section 2.3, Section 2.5, Section 2.20 or Section VIII.

                    "Loan  Documents"  shall  mean  this   Agreement,   the
          Revolving Notes, the Letters of Credit, the Collateral Documents,
          and  all  instruments,  agreements and documents now or hereafter
          executed and delivered in connection herewith or therewith.

                    "Loans" shall have  the  meaning  given to said term in
          Section 2.1.

                    "LPD-17 Contract" shall mean Contract  No. N00024-97-C-
          2202, dated December 17, 1996, between the Company and The United
          States  of America acting through the United States  Navy,  Naval
          Sea  Systems   Command,   for  the  construction  of  25,000  ton
          amphibious assault ships designed  to carry troops, landing craft
          and  helicopters, more particularly described  in  Schedule  4.30
          attached hereto.

                    "LPD-17  Expenditures" shall mean expenditures incurred
          or anticipated to be  incurred  by the Company in connection with
          the construction and equipping of the Design Center.

                    "LPD-17 Refinancing Documents" shall mean the documents
          and instruments evidencing or otherwise  executed  in  connection
          with  the  incurrence  of  LPD-17 Refinancing Indebtedness and/or
          LPD-17 Refinancing Liens.

                    "LPD-17 Refinancing  Indebtedness"  and "refinancing of
          the  LPD-17  Expenditures"  shall  mean  Indebtedness  (excluding
          borrowings under the Line of Credit) incurred  by  the Company in
          connection   with   the   financing   or  refinancing  of  LPD-17
          Expenditures.

                    "LPD-17  Refinancing Liens" shall  mean  Liens  on  the
          Design  Center,  related   construction   contracts  and  related
          equipment  incurred  by  the  Company  in  connection   with  the
          financing or refinancing of LPD-17 Expenditures.

                    "MARAD"  shall  mean  the  United States Department  of
          Transportation Maritime Administration and its successors.

                    "MARAD Financing Documents"  shall  mean the documents,
          instruments and agreements entered into by the  Company  and  its
          Subsidiaries  in  connection  with  the  United States Government
          Guaranteed Ship Financing Bonds, 2000 Series  issued  February 9,
          1995,  relating  to the Shipyard Project, as amended through  the
          date of this Agreement  and  as  may  be further amended with the
          consent of the Required Banks.

                    "MARAD Financing Liens" shall  mean those Liens granted
          by the Company or the Subsidiaries to MARAD  or  its  designee in
          connection  with  the  Shipyard  Project  pursuant  to  the MARAD
          Financing Documents, which Liens shall, in no event, extend to or
          otherwise  attach to any of the Collateral or secure Indebtedness
          in an aggregate  principal amount in excess of $17,800,000 at any
          time.

                    "Material   Adverse  Effect"  shall  mean,  a  material
          adverse effect on the business, operations, property or financial
          or  other  condition  of the  Company  or  the  Company  and  its
          Subsidiaries, taken as  a whole, or on the ability of the Company
          or  any  Subsidiary  to  perform   its   obligations  under  this
          Agreement, the Revolving Notes or the other Loan Documents.

                    "Mortgage  Amendment"  means  a mortgage  amendment  in
          substantially the form attached hereto as Exhibit G, amending the
          900 Foot Floating Drydock Mortgage to secure the increased amount
          of the Line of Credit and otherwise in substance  satisfactory to
          the Agent.

                    "Multiemployer Plan" shall mean any multiemployer  plan
          as defined in Section 4001(a)(3) of ERISA.

                    "Navy  Contracts"  shall  mean  any  and  all contracts
          between  the  Company  and/or  any  Subsidiary Guarantor and  the
          United States Navy, including, but not  limited to (i) the LPD-17
          Contract  and (ii) those listed on Schedule  II,  which  Schedule
          lists each  Navy Contract in excess of $5,000,000 in effect as of
          the date of this  Agreement, and all contracts entered into after
          the  date  hereof between  the  Company  (and/or  any  Subsidiary
          Guarantor) and the United States Navy.

                    "900  Foot  Floating  Drydock  Mortgage" shall mean the
          Second Preferred Ship Mortgage dated as of June 14, 1994, made by
          the Company in favor of Continental Bank N.A.,  as Agent, for the
          benefit  of  the  Agent  and  the  Banks,  covering the  Avondale
          Drydock,  recorded  in  the  office  of the Vessel  Documentation
          Officer, U.S. Coast Guard in New Orleans, Louisiana, in Preferred
          Mortgage Book 9406, Instrument 156, on  June  14,  1994  at  1:29
          p.m.,  assigned  and  amended  pursuant  to  Assignment and First
          Amendment to Second Preferred Ship Mortgage, dated  May 10, 1995,
          recorded in the office of the Vessel Documentation Officer,  U.S.
          Coast  Guard,  in  New  Orleans, Louisiana, in Preferred Mortgage
          Book 9505, Instrument 169,  on  May  16,  1995  at 10:54 a.m., as
          further  amended by the Mortgage Amendment, as the  same  may  be
          amended, supplemented or otherwise modified from time to time.

                    "Non-Financial Letter of Credit" shall have the meaning
          given to such term in Section 3.1(a).

                    "Non-United  States  Person" shall mean a Person who is
          not a citizen or resident of the  United  States,  a corporation,
          partnership or other entity created or organized under  the  laws
          of  the  United States, or an estate or trust the income of which
          is subject to United States Federal income taxation regardless of
          its source.

                    "Obligations"  shall  mean all obligations (monetary or
          otherwise) of the Company to the  Agent  and/or the Banks arising
          under or in connection with this Agreement,  the  Revolving Notes
          (including, without limitation, the Reimbursement Obligations and
          the  Letters  of  Credit)  and the other Loan Documents,  whether
          direct or indirect, absolute  or contingent, due or to become due
          or now existing or hereafter incurred.

                    "Offshore Lending Office"  shall  mean  (i) relative to
          any  Bank, the office of such Bank designated as such  below  its
          signature  hereto  (or,  in  the  case of an assignee pursuant to
          Section 10.7, in the assignment executed  by  it)  or  such other
          office  of  such  Bank  as designated from time to time by notice
          from such Bank to the Company  and  the  Agent,  whether  or  not
          outside  the  United States, which shall be making or maintaining
          Offshore Rate Loans  of  such Bank hereunder and (ii) relative to
          the Agent, the office specified pursuant to the definition of the
          term "Offshore Rate" contained herein.

                    "Offshore Rate"  shall  mean,  relative to the Interest
          Period for each Offshore Rate Loan comprising  all or any part of
          the same borrowing, the rate of interest per annum  determined by
          the Agent to be the rate at which Dollar deposits in  immediately
          available funds are offered by BofA's Grand Cayman Branch,  Grand
          Cayman  B.W.I.  (or  other  such offices as may be designated for
          such purpose by BofA) to major  banks in the offshore U.S. dollar
          interbank market at their request  at  approximately  11:00 a.m.,
          New  York City time, two Business Days prior to the beginning  of
          such Interest  Period,  for  delivery  on  the  first day of such
          Interest Period, in an amount approximately equal  or  comparable
          to the amount of BAI's Offshore Rate Loan comprising part of such
          borrowing and for a period equal to such Interest Period.

                    "Offshore  Rate  (Adjusted)"  means,  relative  to  any
          portion  of  a  Loan  to  be made, continued or maintained as, or
          converted into, an Offshore  Rate Loan for any Interest Period, a
          rate per annum (rounded upwards,  if  necessary,  to  the nearest
          1/16 of 1%) determined pursuant to the following formula:

                    Offshore Rate                       Offshore Rate/
                    (Adjusted)     =                1 - the Eurodollar
                                                    Reserve Percentage

                    Offshore Rate Loan" shall mean a Loan bearing interest,
          at all times during the Interest Period applicable to such  Loan,
          at  a  rate  of  interest determined by reference to the Offshore
          Rate (Adjusted).

                    "Payment  Office"  shall have the meaning given to said
               term in Section 2.11.

                    "PBGC"  shall  mean  the   Pension   Benefit   Guaranty
               Corporation  established pursuant to Subtitle A of Title  IV
               of ERISA, and any successor to PBGC.

                    "Percentage"  of  any Bank shall mean, at any time, the
               percentage set forth opposite such Bank's name on Schedule I
               as the same may be adjusted  pursuant  to  Section  2.20  or
               Section 10.7.

                    "Permitted  Liens" shall have the meaning given to said
               term in Section 7.2.

                    "Person"  shall   mean   an   individual,  partnership,
               corporation,  limited  liability  company,  business  trust,
               joint  stock  company,  trust,  unincorporated  association,
               joint venture, Governmental Authority  or  other  entity  of
               whatever nature.

                    "Plan"  shall  mean  any employee benefit plan which is
               covered by ERISA and in respect  of  which the Company or an
               ERISA Affiliate is (or, if such plan were terminated at such
               time, would under Section 4069 of ERISA  be deemed to be) an
               "employer" as defined in Section 3(5) of ERISA.

                    "Preferred Stock" shall mean any shares of stock of the
               Company  designated  as Preferred Stock in the  Articles  of
               Incorporation of the Company.

                    "Pricing Level" shall mean the Pricing Levels I, II and
               III,  as applicable, set  forth  on  Schedule  III  attached
               hereto.

                    "Quarterly  Payment  Date" shall mean the last Business
               Day of each March, June, September and December.

                    "Reference Ratio" shall mean, for any period, the ratio
               of (i) all Total Funded Debt  of the Company and each of its
               Subsidiaries  as of the last day  of  such  period  to  (ii)
               EBITDA  for such  period.   The  Reference  Ratio  shall  be
               calculated  as of the last day of each fiscal quarter of the
               Company for the four quarter period ending on such date.

                    "Register" shall have the meaning given to said term in
               Section 10.7(e).

                    "Reimbursement Obligation" shall have the meaning given
               to said term in Section 3.6.

                    "Related  Parties" shall have the meaning given to said
               term in Section 9.2.

                    "Release" means  a "release" as such term is defined in
               CERCLA.

                    "Reportable Event"  shall  mean  any  of the events set
               forth  in  Section  4043(b)  of  ERISA  or  the  regulations
               thereunder.

                    "Required  Banks" shall mean Banks holding 51%  of  the
               aggregate Commitments, if no Loans are outstanding and there
               are no Letter of  Credit Outstandings, and, otherwise, Banks
               holding  51%  of outstanding  Loans  and  Letter  of  Credit
               Outstandings.

                    "Requirement  of  Law" shall mean as to any Person, the
               certificate or articles of incorporation and bylaws or other
               organizational or governing  documents  of  such Person, and
               any law, treaty, rule or regulation or determination  of  an
               arbitrator  or  a  court or other Governmental Authority, in
               each case applicable  to  or binding upon such Person or any
               of  its property or to which  such  Person  or  any  of  its
               property is subject.

                    "Responsible  Officer"  shall  mean the chief executive
               officer or the chief financial offer  of  the Company and/or
               any Subsidiary Guarantor, or any other officer  of  any such
               Person designated as a "Responsible Officer" for purposes of
               this Agreement and the other Loan Documents and for whom the
               Agent  has  received  a  certificate  of  incumbency in form
               satisfactory to the Agent and the Required Banks.

                    "Revolving Note" shall have the meaning  given  to said
               term in Section 2.2.

                    "Security  Agreement (Company)" shall mean the Security
               Agreement dated as  of  May  10, 1994 made by the Company in
               favor of the Agent, for the benefit  of  the Banks, covering
               certain of the personal property of the Company, as amended,
               supplemented or otherwise modified from time to time.

                    "Shipyard   Partnership"   shall  mean  Avondale   Land
               Management  Company, a general partnership  organized  under
               the laws of the State of Louisiana.

                    "Shipyard  Project"  shall mean the advanced and modern
               shipyard  technology project  of  the  Company  intended  to
               modernize  the   Company's  shipyard  located  in  Avondale,
               Louisiana and financed,  in  part,  through  Title XI of the
               Merchant Marine Act, 1936, as amended.

                    "Shipyard Real Property Assets" shall mean that portion
               of  the  real  property  underlying  the Company's  shipyard
               located in Avondale, Louisiana which is  contributed  by the
               Company  to the Shipyard Partnership in connection with  the
               Shipyard Project and leased back to the Company.

                    "Single  Employer  Plan"  shall  mean any Plan which is
               covered  by  Title  IV  of  ERISA,  but  which   is   not  a
               Multiemployer Plan.

                    "Solvent"  means,  with  respect  to  any Person at any
               time, a condition under which:

                         (a)  the fair saleable value of such  Person's
               assets on the date of determination is greater than the
               present value of  the  total  amount  of  such Person's
               liabilities   (including  contingent  and  unliquidated
               liabilities) at such time;

                         (b) such  Person  is  able  to  pay all of its
               liabilities as such liabilities mature; and

                         (c)  such  Person  does  not have unreasonably
               small capital with which to conduct its business.

               For purposes of this definition:

                         (d)  the  amount of a Person's  contingent  or
               unliquidated liabilities  at  any  time  shall  be that
               amount   which,   in   light   of  all  the  facts  and
               circumstances  then  existing,  represents  the  amount
               which can reasonably be expected to become an actual or
               matured liability;

                         (e)  the  "fair saleable value"  of  an  asset
               shall be the amount  which  may  be  realized  within a
               reasonable  time  either through collection or sale  of
               such asset at its regular market value; and

                         (f) the "regular  market  value"  of  an asset
               shall  be  the  amount  which  a  capable  and diligent
               business  person  could obtain for such asset  from  an
               interested buyer who  is willing to purchase such asset
               under ordinary selling conditions.

                    "Stated Expiry Date"  shall  have  the meaning given to
          said term in Section 3.1(b).

                    "Stock Pledge Agreement (Company)" shall  mean  a Stock
          Pledge Agreement substantially in the form of Exhibit H, executed
          by  the  Company  in  favor  of  the Agent for the benefit of the
          Banks, as the same may be amended,  supplemented or modified from
          time to time.

                    "Stock  Pledge  Agreement (Subsidiary)"  shall  mean  a
          Stock Pledge Agreement substantially  in  the  form of Exhibit I,
          executed  by  each  Subsidiary  Guarantor that owns  stock  of  a
          Subsidiary, in favor of the Agent  for  the benefit of the Banks,
          as the same may be amended, supplemented or modified from time to
          time.

                    "Subsidiary"  shall  mean  any Person  (including  each
          Subsidiary Guarantor) as to which the  Company shall at the time,
          directly or indirectly through a Subsidiary,  (i) have sufficient
          voting power to entitle it to elect immediately  or  to  have had
          elected a majority of the board of directors or similar governing
          body  of  such  Person,  or  (ii)  own  50% or more of the equity
          interests issued by such Person.

                    "Subsidiary   Guarantee"   shall   mean   a   Guarantee
          substantially  in  the  form  of  Exhibit  J  executed   by  each
          Subsidiary  Guarantor  of the Company and each Subsidiary of  the
          Company created or acquired  after  the date of this Agreement in
          favor of the Agent for the benefit of  the Banks, as the same may
          be amended, supplemented or otherwise modified from time to time.

                    "Subsidiary   Guarantor"  shall  mean   the   following
          Subsidiaries  of  the  Company:    (i)  Gulfport,  (ii)  Avondale
          Technical Services, Inc., a Louisiana corporation, (iii) Crawford
          Technical  Services, Inc., a Louisiana  corporation,  (iv)  Genco
          Industries,  Inc.,  a Texas corporation, (v) Avondale Properties,
          Inc., a Louisiana corporation, and (vi) the Shipyard Partnership.

                    "Subsidiary  Security  Agreement" shall mean a Security
          Agreement substantially in the form of Exhibit K executed by each
          Subsidiary Guarantor in favor of the Agent for the benefit of the
          Banks,  covering  certain  of  the  personal   property   of  the
          Subsidiary  Guarantor party thereto, as amended, supplemented  or
          otherwise modified from time to time.

                    "Taxes"  shall  have  the meaning given to said term in
          Section 2.14.

                    "Total Funded Debt" shall mean, at any time, the sum of
          (i) all Indebtedness of the Company  and each of its Subsidiaries
          (including  any reimbursement obligations  with  respect  to  any
          letters of credit, including the Letters of Credit, but exclusive
          of the undrawn face amount of any such letters of credit) at such
          time plus (ii)  the  greater  of  (A)  $0  or  (B) the difference
          between (1) the aggregate undrawn face amount of  all  letters of
          credit issued for the account of or guaranteed by the Company  or
          any  of its Subsidiaries and (2) cash balances of the Company and
          its Subsidiaries  in  excess  of $5,000,000, in each case at such
          time.

                    "UCC" shall mean the  Uniform  Commercial  Code  as  in
          effect from time to time in the State of Illinois.

               Section 1.2 Other Definitional Provisions.

                    (a)   Unless  otherwise  specified  therein,  all  terms
               defined in  this  Agreement  shall have the defined meanings
               given to said terms in Section  1.1  or the preamble of this
               Agreement when used in the Loan Documents or any certificate
               or other documents made or delivered pursuant hereto.

                    (b) Terms not otherwise defined herein which are defined
               in the UCC shall have the meanings given  them  in  the UCC.
               The  words  "hereof," "herein" and "hereunder" and words  of
               similar import  when  used  in this Agreement shall refer to
               this  Agreement  as  a  whole  and  not  to  any  particular
               provision  of  this Agreement, and  references  to  Section,
               Schedule, Exhibit and like references are references to this
               Agreement, and references  in  any  Section or definition to
               any clause means such clause of such  Section or definition,
               in  each  case,  unless otherwise specified.   An  Event  of
               Default shall "continue" or be "continuing" until such Event
               of Default has been  waived in accordance with Section 10.2.
               References in this Agreement  to  any  Person  shall include
               such Person's successors and permitted assigns.

               Section  .  Accounting  Terms  and  Determinations.   Unless
               otherwise specified herein, all accounting terms used herein
               shall   be   interpreted,   all  accounting   determinations
               hereunder  shall  be  made,  and  all  financial  statements
               required  to be delivered hereunder  shall  be  prepared  in
               accordance  with GAAP, applied on a basis consistent (except
               for changes concurred  in  by  the  Company's  auditors  and
               except  that  unaudited  interim  financial  statements  are
               subject  to audit and normal year-end adjustments (including
               absence  of  footnote  disclosure))  with  the  most  recent
               audited financial statements of the Company delivered to the
               Banks; provided  that, if the Company notifies the Agent and
               the Banks that the  Company  wishes to amend any covenant in
               Section  VII  or  any related definition  to  eliminate  the
               effect of any change  in  GAAP  on  the  operation  of  such
               covenant  (or  if  the  Agent  notifies the Company that the
               Agent or the Required Banks wish to amend Section VII or any
               related  definition for such purpose),  then  the  Company's
               compliance  with  such  covenant  shall be determined on the
               basis  of  GAAP in effect immediately  before  the  relevant
               change in GAAP  became  effective (and without giving effect
               to  any  previous  change  in   GAAP  subject  to  a  notice
               contemplated by this sentence), until  either such notice is
               withdrawn   or  such  covenant  is  amended  in   a   manner
               satisfactory to the Company and the Required Banks.

                                         SECTION II

                                     REVOLVING LOANS

               Section 2.1  Revolving Loan Commitment.

               Subject to the  terms  and  conditions  set  forth  in  this
               Agreement,  on  and  after  the  Effective  Date  and to and
               excluding  the  Expiration Date, each of the Banks severally
               agrees to make revolving  loans  and advances to the Company
               (the "Loans") in an aggregate amount  not  to  exceed at any
               time outstanding the amount equal to such Bank's  Commitment
               as  then  in  effect;  provided, however, that, after giving
               effect  to any Loan hereunder,  the  sum  of  the  aggregate
               amount of  Loans outstanding at such time plus the aggregate
               amount of Letter of Credit Outstandings shall not exceed the
               Line of Credit  then  in  effect; and provided further, that
               the aggregate amount of Loans  by  any  Bank  outstanding at
               such  time plus such Bank's Percentage of Letter  of  Credit
               Outstandings  shall  not  at  any  time  exceed  such Bank's
               Commitment as then in effect.

               Section 2.2  Revolving Note.

                    (a) The Loans made by each Bank pursuant hereto shall be
               evidenced  by a promissory note of the Company substantially
               in the form  of Exhibit L (as amended, supplemented, amended
               and restated, or otherwise modified, each a "Revolving Note"
               and collectively the "Revolving Notes"), made payable to the
               order of such  Bank  in  a  principal  amount  equal to such
               Bank's  Commitment  as of the Effective Date (or such  other
               amount as may otherwise  be  relevant  as  a  result  of any
               assignments permitted by this Agreement).

                    (b) The Company hereby irrevocably authorizes each  Bank
               to  make (or cause to be made) appropriate notations on such
               Bank's  books  and records (including its computer records),
               which notations,  if  made,  shall evidence, inter alia, the
               date of, the outstanding principal  of, the interest rate on
               and Interest Period, if any, applicable  from  time  to time
               to,   the  Loans  evidenced  thereby.   Any  such  notations
               indicating  the  outstanding principal amount of such Bank's
               Loans   shall  (absent   manifest   error)   be   rebuttably
               presumptive  evidence  of the principal amount thereof owing
               and unpaid, but the failure  to record any such amount shall
               not, however, limit or otherwise  affect  the obligations of
               the Company hereunder or under such Revolving  Note  to make
               payments of principal of or interest on such Loans when due.

               Section 2.3  Mandatory  Reduction  and Prepayment.   Upon the
               earlier to occur of (i) the date that is two years after the
               Effective Date or (ii) the financing  or  refinancing of all
               or   substantially   all  of  the  LPD-17  Expenditures   in
               accordance  with  Section  6.12  and  the  other  provisions
               hereof,  the  amount   of   the   Commitments  shall  reduce
               automatically to an aggregate amount  equal to the lesser of
               (x) $50,000,000 or (y) the Line of Credit as then in effect,
               and,  in  the event that, as a result of  the  corresponding
               reduction in  the  Line  of  Credit, the aggregate amount of
               Loans then outstanding plus the  aggregate  amount of Letter
               of  Credit  Outstandings  exceeds the Line of Credit  (after
               giving effect thereto), the  Company  shall immediately, and
               without  notice or demand, prepay the outstanding  principal
               amount of the Loans by an amount equal to such excess.  Said
               reduction in the Commitments shall be permanent and shall be
               made pro rata to the Commitments of the Banks.

               Section 2.4  Procedure for Borrowing.

                    (a) A  Loan  may  be  made on any Business Day; provided
               that  the  Company  shall  give  the  Agent  an  irrevocable
               Borrowing Request (i) at or  before  9:00 a.m. San Francisco
               time  at least three Business Days prior  to  the  requested
               Borrowing Date, in the case of Offshore Rate Loans, and (ii)
               at or before  9:00  a.m. San Francisco time on the requested
               Borrowing Date, in the  case  of Base Rate Loans, specifying
               (A) the amount to be borrowed,  (B)  the requested Borrowing
               Date, (C) whether the borrowing is to  be  an  Offshore Rate
               Loan  or a Base Rate Loan, (D) in the case of Offshore  Rate
               Loans,  the requested Interest Period applicable thereto and
               (E) the bank  and account number of the Company to which the
               Agent should wire  the  proceeds  of  such  Loan.  The Agent
               shall promptly notify the Banks of its receipt  of  any such
               irrevocable notice of borrowing from the Company.  Each Loan
               shall  be  in  an  aggregate  principal  amount equal to the
               lesser of (x) $1,000,000 or an integral multiple of $250,000
               in  excess  thereof  or  (y)  the sum of the then  Available
               Commitments.

                    (b) On or before 11:00 a.m.  San  Francisco  time on the
               Business  Day specified in the Company's Borrowing  Request,
               each Bank shall  provide the Agent with funds at the Payment
               Office in an amount  equal  to such Bank's Percentage of the
               requested borrowing.  The proceeds  of  each borrowing shall
               be  made  available  by  the  Agent to the Company  by  wire
               transferring  such  funds  to  such   account  as  shall  be
               designated  by the Company to the Agent  in  the  notice  of
               borrowing.  No  Bank's  obligation to make any Loan shall be
               affected  by any other Bank's  failure  to  make  any  Loan.
               Neither the  Agent nor any Bank shall have any liability for
               the failure of any Bank (other than itself) to fund a Loan.

                    (c) With respect  to  any  Loan,  unless the Agent shall
               have been notified in writing by any Bank  prior to the date
               of making such Loan that such Bank does not  intend  to make
               available to the Agent such Bank's portion of the Loan to be
               made on such date, the Agent may (but shall not be obligated
               to) assume that such Bank has made such amount available  to
               the  Agent on that date and, in reliance on such assumption,
               the Agent  may make available to the Company a corresponding
               amount.  If  such  amount is not made available by such Bank
               to the Agent on the  date  of  making  such  Loan, such Bank
               shall be obligated to pay such amount to the Agent and shall
               pay  to the Agent on demand interest on such amount  at  the
               Federal Funds Effective Rate for the number of days from and
               including  the date of making such Loan to the date on which
               such  Bank's   portion   of  the  Loan  becomes  immediately
               available   to   the  Agent,  together   with   such   other
               compensatory  amounts   (including,   but  not  limited  to,
               administrative fees) as may be required  to  be paid by such
               Bank  to  the  Agent  pursuant  to  the  Rules for Interbank
               Compensation of the Council of International  Banking  or of
               the  New  York Clearing House Compensation Committee, as the
               case may be, as in effect from time to time.  The Agent (but
               not the defaulting  Bank)  shall also be entitled to recover
               such amount, with interest thereon  at  the  rate  per annum
               then applicable to the Loans comprising such borrowing, upon
               demand,   from  the  Company.   A  statement  of  the  Agent
               submitted to  any  Bank  with  respect  to any amounts owing
               under this Section 2.4(c) shall be conclusive and binding in
               the  absence  of  manifest error.  Nothing in  this  Section
               2.4(c)  shall  be  deemed  to  relieve  any  Bank  from  its
               obligation to fulfill  its  Commitments  hereunder.   If any
               Loan  shall  not  be funded on the applicable borrowing date
               because any condition  precedent  herein specified shall not
               have  been  met,  the  Agent  shall return  the  amounts  so
               received to the respective Bank as soon as practicable.

               Section 2.5  Voluntary Reduction of Commitments.

                    (a) The Company shall have  the right from time to time,
               upon not less than five Business Days' irrevocable notice to
               the Agent, to reduce the amount of the Commitments, provided
               that  at  no  time may the Commitments  be  reduced  by  the
               Company to an amount  less  than  the sum of the outstanding
               principal  amount  of  Loans  and  the  Letter   of   Credit
               Outstandings.   Any such voluntary reduction shall be in  an
               amount of $1,000,000, or an integral multiple thereof.

                    (b) Each reduction in the Commitments shall be permanent
               and irrevocable.   All  reductions  in  Commitments shall be
               made  pro rata to the Commitments of the Banks.   The  Agent
               shall promptly  notify  each  Bank  of  the  amount  of  any
               reduction of its Commitment.

               Section 2.6  Optional Prepayments.

                    (a)  Base  Rate  Loans.   The  Company may, from time to
               time, on any Business Day, prepay the  Base  Rate  Loans, in
               whole   or   in  part,  without  premium  or  penalty,  upon
               irrevocable written  notice  to  the Agent by the Company no
               later than 9:00 a.m. San Francisco  time on the date of such
               prepayment which notice shall specify the date and amount of
               the prepayment.  If such notice is given,  the Company shall
               make such prepayment to the Agent at the Payment  Office for
               the  account of and pro rata disbursement to the Banks,  and
               the principal  payment amount specified in such notice shall
               be  due and payable  on  the  date  specified  therein  with
               accrued  interest  to  such date on such amount being due on
               the  next  succeeding  Quarterly   Payment   Date.   Partial
               prepayments of the Base Rate Loans shall be in  an aggregate
               principal amount of $250,000 or integral multiples thereof.

                    (b) Offshore Rate Loans.  The Company may, from  time to
               time,  on  the  last  Business  Day of the relevant Interest
               Period, prepay the Offshore Rate Loans, in whole or in part,
               without premium or penalty, upon  irrevocable  notice to the
               Agent  by  the  Company  of  at  least three Business  Days,
               specifying the date and amount of  prepayment.   The Company
               may,  from  time to time, on any Business Day prior  to  the
               last Business  Day  of  the relevant Interest Period, prepay
               the entire amount (and not  less  than the entire amount) of
               an Offshore Rate Loan, upon irrevocable  notice to the Agent
               by the Company of at least three Business  Days,  specifying
               the  date and amount of prepayment; provided, however,  that
               the Company  shall  pay  to the Agent for the account of the
               Banks in addition to the prepayment  amount  the  sum of the
               amounts required to be paid in accordance with Section 2.15.
               If either such notice is given, the Company shall make  such
               prepayment and payment of such other amounts to the Agent at
               the  Payment  Office  for the account of and disbursement to
               the Banks, and the payment  amount  specified in such notice
               shall  be  due  and  payable on the date  specified  therein
               together with accrued  interest  to  such date on the amount
               prepaid.   With respect only to the prepayment  of  Offshore
               Rate Loans on the last Business Day of the relevant Interest
               Period,  partial   prepayments  shall  be  in  an  aggregate
               principal amount of $250,000, or integral multiples thereof.

               Section 2.7  Continuation  and  Conversion  Elections.   At 
               the    election   of   the   Company     pursuant   to     a
               Continuation/Conversion  Notice  delivered by telephone  and
               confirmed by either delivering or faxing to the Agent a duly
               completed and executed Continuation/Conversion Notice, at or
               before 9:00 a.m., San Francisco time,  on  any Business Day,
               the  Company  may elect from time to time on not  less  than
               three Business Days' prior notice:

                    (a) that all,  or  any  portion  in  a minimum aggregate
               principal amount of $1,000,000 and an integral  multiple  of
               $250,000  in  excess  thereof,  of  any  Base  Rate Loans be
               converted into Offshore Rate Loans or, all or any portion in
               a  minimum  aggregate  amount of $1,000,000 and an  integral
               multiple of $250,000 in excess thereof, of any Offshore Rate
               Loan be converted into Base Rate Loans;

                    (b)   on  the  expiration   of   the   Interest   Period
          applicable  to  any Offshore Rate Loans, that all, or any portion
          in an aggregate minimum  principal  amount  of  $1,000,000 and an
          integral multiple of $250,000 in excess thereof, of such Offshore
          Rate Loans be continued as Offshore Rate Loans (in the absence of
          delivery of such notice under this clause prior to the expiration
          of  any  Interest  Period,  the  Company will be deemed  to  have
          elected that such Offshore Rate Loans  be  converted to Base Rate
          Loans),

          provided that:

                    (x) no portion of the outstanding principal amount
               of any Loans may be continued as, or be converted into,
               Offshore  Rate  Loans  when  any  Default or  Event  of
               Default has occurred and is continuing; and

                    (y) no portion of the outstanding principal amount
               of any Loans may be made or continued  as, or converted
               into,  Offshore Rate Loans if, after giving  effect  to
               such action,  the  aggregate  principal  amount  of any
               Offshore Rate Loans having a particular Interest Period
               is  less  than  $1,000,000  or  an integral multiple of
               $250,000 in excess thereof.

               Section 2.8  Interest  Rate  and Payment  Dates.   Interest
          on Loans shall be payable in accordance with this Section 2.8.

                    (a) From the date any Loan  is  made  to  the  date  the
               principal  amount  of  such Loan is repaid in full, interest
               shall accrue on the outstanding  principal  amount  of  such
               Loan at a rate per annum:

                         (i)   on   that  portion  of  the  outstanding
               principal amount thereof  maintained  from time to time
               as a Base Rate Loan, equal to the Alternate  Base Rate;
               and

                         (ii)   on   that  portion  of  the  outstanding
                    principal amount  thereof  maintained from time to
                    time  as  an  Offshore  Rate  Loan,   during  each
                    Interest Period applicable thereto, equal  to  the
                    Offshore  Rate (Adjusted) for such Interest Period
                    plus the Applicable Margin.

                    (b)   Notwithstanding  the provisions of Section 2.8(a),
          after the occurrence of any Event of Default until such time when
          such Event of Default shall have  been  waived, the Company shall
          pay interest on the principal amount of all Loans outstanding, to
          the fullest extent permitted by applicable  law,  at  a per annum
          rate equal to the rates set forth in Section 2.8(a) plus  2%  per
          annum.

                    (c)  Interest  accrued  on  each  Loan shall be payable,
               without duplication:

                         (i)   on  the  maturity  date  of  such   Loan
               (including the maturity date resulting from a reduction
               of the Commitments hereunder or the acceleration of the
               Loans in accordance with Section VIII),

                         (ii) with  respect  to  any portion of any Loan
                         prepaid pursuant to Section  2.6, on the date
                         specified in Section 2.6,

                         (iii)  (A)  on  that portion of the  outstanding
                    principal amount thereof maintained as a Base Rate
                    Loan, on each Quarterly  Payment  Date, commencing
                    with   the  first  such  Quarterly  Payment   Date
                    following  the date of the initial Loan hereunder,
                    and  (B)  on  that   portion  of  the  outstanding
                    principal amount thereof maintained as an Offshore
                    Rate  Loan, on the last  day  of  each  applicable
                    Interest Period.

               Section 2.9  Fees.

                    (a) Commitment  Fee.   The  Company agrees to pay to the
               Agent for the account of and disbursement  to  the  Banks  a
               commitment  fee from and including the Effective Date to but
               excluding the  Expiration  Date, equal to the applicable per
               annum  percentage designated  as  the  "Commitment  Fee"  in
               Schedule  III  attached  hereto and determined in accordance
               with the provisions of Section  2.17  hereof, based upon the
               average daily amount of the aggregate Available  Commitments
               of  the  Banks during the period for which payment is  made,
               payable  in   arrears   on   each  Quarterly  Payment  Date,
               commencing  on the first Quarterly  Payment  Date  to  occur
               after the date  of this Agreement and on the Expiration Date
               or such earlier date  as  the Commitments shall terminate as
               provided herein (such fee to be calculated on the basis of a
               360-day year for the actual number of days elapsed).

                    (b) Participation Fee.  The Company agrees to pay to the
                    Agent for the account  of  and  disbursement to each of
                    the  Banks,  respectively, a participation  fee  in  an
                    amount equal to  the  product  of  (i)  20 Basis Points
                    (.20%) times (ii) the Commitment of such  Bank  as  set
                    forth on Schedule I attached hereto, such fee to be due
                    and  payable  at  the  time  of execution hereof by the
                    parties hereto.

                    (c) Other Fees.  The Company agrees to pay to the Agent,
                    for its own account and, as applicable, for the account
                    of the Arranger, such other fees  in the amounts and at
                    the times specified in the Fee Letter.

               Section 2.10  Computation of Interest.

                    (a) Interest in respect of all Loans shall be calculated
               on the basis of a 360 day year for the actual number of days
               elapsed.  Any change in the interest rate  on  a  Base  Rate
               Loan  resulting  from  a  change  in the Alternate Base Rate
               shall become effective as of the opening  of business on the
               day  on  which  such  change in the Alternate Base  Rate  is
               established.  The Agent  shall  notify  the  Company and the
               Banks as soon as practicable of the effective  date  and the
               amount of each such change.

                    (b) Each determination of an interest rate by the  Agent
               pursuant  to  any  provision  of  this  Agreement  shall  be
               conclusive  and  binding on the Company and the Banks in the
               absence of manifest error.

                    (c) It is the  intention of the parties hereto to comply
               strictly   with   applicable    usury   laws;   accordingly,
               notwithstanding  any  provision  to  the  contrary  in  this
               Agreement,  any of the Revolving Notes  or  any  other  Loan
               Document, in  no  event  shall this agreement, any Revolving
               Note  or  any  other Loan Document  require  or  permit  the
               payment, charging,  taking,  reserving,  or receiving of any
               sums  constituting  interest  under  applicable  laws  which
               exceed the maximum amount permitted by  such  laws.   If any
               such  excess  interest  is  contracted  for, charged, taken,
               reserved, or received in documents securing  the  payment of
               the  Obligations  or  otherwise  relating hereto, or in  any
               communication by the Agent, any Bank  or any other Person to
               the Company or any other Person, or in the event all or part
               of the principal or interest hereunder  shall  be prepaid or
               accelerated,  so  that  under  any of such circumstances  or
               under  any  other  circumstance  whatsoever  the  amount  of
               interest  contracted  for,  charged,   taken,  reserved,  or
               received  on  the  amount of principal actually  outstanding
               from time to time under  this Agreement, the Revolving Notes
               or any Loan Document shall  exceed  the  maximum  amount  of
               interest  permitted  by  applicable  usury laws, then in any
               such event it is agreed as follows:  (i)  the  provisions of
               this Section shall govern and control, (ii) any  such excess
               shall  be  deemed  an  accidental  and  bona fide error  and
               canceled  automatically  to the extent of such  excess,  and
               shall not be collected or collectible, (iii) any such excess
               which is or has been paid  or  received notwithstanding this
               paragraph  shall  be  credited  against   the   then  unpaid
               principal balance of the Obligations, and (iv) the effective
               rate  of  interest  shall  be  automatically reduced to  the
               maximum  lawful  rate  allowed  under   applicable  laws  as
               construed by courts having jurisdiction hereof  or  thereof.
               Without limiting the foregoing, all calculations of the rate
               of  interest  contracted  for, charged, taken, reserved,  or
               received  in connection herewith  which  are  made  for  the
               purpose of determining whether such rate exceeds the maximum
               lawful rate  shall  be  made  to  the  extent  permitted  by
               applicable  laws  by  amortizing,  prorating, allocating and
               spreading during the period of the full  term  of the Loans,
               including all prior and subsequent renewals and  extensions,
               all  interest  at  any time contracted for, charged,  taken,
               reserved, or received.   The  terms of this Section shall be
               deemed to be incorporated in every  Loan  Document and every
               communication relating thereto.

               Section 2.11  Payments.  All payments (including prepayments)
               to be  made  by  the   Company   on  account  of  principal,
               Reimbursement Obligations, interest  and  fees,  or  by  the
               Banks,  shall  be  made  without  set off or counterclaim in
               Dollars and in immediately available  funds  no  later  than
               11:00  a.m. San Francisco time on the date due hereunder and
               shall be made to the Agent to its account at such address as
               the Agent  shall  give  notice  to the Company and the Banks
               (the "Payment Office").  Any payment  received  by the Agent
               later than 11:00 a.m. San Francisco time shall be  deemed to
               have  been  received  on the following Business Day and  any
               applicable interest or fee shall continue to accrue.  If any
               payment hereunder (other  than payments on the Offshore Rate
               Loans)  becomes  due and payable  on  a  day  other  than  a
               Business Day, such  payment  shall  be  extended to the next
               succeeding Business Day, and, with respect  to  payments  of
               principal,  interest  thereon  shall  be payable at the then
               applicable rate during such extension.   Except as otherwise
               provided  in  this  Agreement,  payments due hereunder  with
               respect to Offshore Rate Loans shall  be  made  on the final
               Business  Day  of  an  Interest  Period  as  determined   by
               reference  to  the  definition of "Interest Period".  Except
               for payments received  by  the  Agent for the account of the
               Agent  in its capacity as such, or  for  the  account  of  a
               specific  Bank  in  accordance  with  the provisions of this
               Agreement, the Agent shall forthwith distribute  like  funds
               relating  to  the  payment of principal, interest or fees or
               Reimbursement Obligations  pro  rata  to the Banks (based on
               their Percentages) to which such payment  is due and payable
               for their accounts and at the addresses as  each  such  Bank
               shall  specify in its notice to the Agent made in accordance
               with Section 10.1 of this Agreement.

               Unless the Agent shall have received notice from the Company
               prior to  the  date on which any payment is due to the Banks
               hereunder that the  Company  will  not  make such payment in
               full, the Agent may (but shall not be obligated  to)  assume
               that  the Company has made such payment in full to the Agent
               on such  date,  and  the  Agent  may,  in reliance upon such
               assumption, cause to be distributed to each Bank on such due
               date an amount equal to the amount then  due  to  such Bank.
               If and to the extent the Company shall not have so made such
               payment in full to the Agent, each Bank shall repay  to  the
               Agent  forthwith  on  demand  the amount distributed to such
               Bank together with interest thereon,  at  the  rate equal to
               the Federal Funds Effective Rate, for each day from the date
               such amount is distributed to such Bank until the  date such
               Bank repays such amount to the Agent.

               Section 2.12  Inability  to  Determine  Interest  Rate.   In  
               the event that  the  Agent  shall  have   determined  (which
               determination shall  be  conclusive  and  binding  upon  the
               Company  and  the  Banks)  that, (i) Dollar deposits are not
               available to the Agent in the offshore U.S. dollar interbank
               market  or  (ii) by reason of  circumstances  affecting  the
               offshore  U.S.   dollar   interbank   market,  adequate  and
               reasonable means do not exist for ascertaining  the Offshore
               Rate for any requested Interest Period, in either case, with
               respect to (a) proposed Loans that the Company has requested
               be made as Offshore Rate Loans, (b) Offshore Rate Loans that
               will result from the requested conversion of Base Rate Loans
               into Offshore Rate Loans or (c) the continuation of Offshore
               Rate  Loans  beyond  the  expiration  of  the  then  current
               Interest  Period  with  respect  thereto,  the  Agent  shall
               forthwith  give  notice of such determination to the Company
               and the Banks at least  one  Business  Day  prior to, as the
               case may be, the requested Borrowing Date for  such Offshore
               Rate Loans, the conversion date of such Base Rate  Loans  or
               the  last  day  of  such Interest Period.  If such notice is
               given (x) any requested Offshore Rate Loans shall be made as
               Base Rate Loans, unless  the  Company has provided notice to
               the Agent that, based upon such  unavailability, the Company
               elects not to make the borrowing,  (y)  any  Base Rate Loans
               that  were  to  have  been converted to Offshore Rate  Loans
               shall  be  continued  as  Base   Rate   Loans  and  (z)  any
               outstanding Offshore Rate Loans shall be  converted,  on the
               last  day  of  the then current Interest Period with respect
               thereto, to Base  Rate  Loans.   Until  such notice has been
               withdrawn by the Agent, no further Offshore Rate Loans shall
               be made or continued as such nor shall the  Company have the
               right to convert Base Rate Loans to Offshore Rate Loans.

               Section 2.13  Illegality. Notwithstanding any other provisions
               herein,  if any Requirement of Law or any change therein  or
               in the interpretation  or  application thereof shall make it
               unlawful  for any Bank to make  or  maintain  Offshore  Rate
               Loans as contemplated  by this Agreement, (a) the obligation
               of  such  Bank hereunder to  make  Offshore  Rate  Loans  or
               convert  Base  Rate  Loans  to  Offshore  Rate  Loans  shall
               forthwith be cancelled, (b) all requests to make or continue
               Offshore Rate  Loans  shall  in  the  case  of such Bank, be
               deemed to be requests to make Base Rate Loans  and  (c)  the
               Loans  made  by  such Bank then outstanding as Offshore Rate
               Loans, if any, shall be converted automatically to Base Rate
               Loans on the respective  next  succeeding  date(s)  on which
               interest  is  due with respect to such Loans or within  such
               earlier  period   as  is  required  by  law.   If  any  such
               prepayment of an Offshore  Rate  Loan is made on a day which
               is  not the last day of the Interest  Period  therefor,  the
               Company  shall  pay  to  the  Agent  for  the account of and
               disbursement  to such Bank such amounts as may  be  required
               pursuant to Section 2.15.

               Section 2.14  Requirements of Law.

                    (a) In the  event  that  by  reason of any change in any
               Requirement of Law (including, without limitation, the lapse
               or  termination  of  any  treaty) or in  the  interpretation
               thereof,  or the adoption of  any  new  law,  regulation  or
               requirement by any Governmental Authority, or the imposition
               of any requirement of any central bank whether or not having
               the force of  law,  (i)  the  Agent  or any Bank shall, with
               respect to this Agreement, the Loans,  the Letters of Credit
               (or   risk   participations   therein),   the  Reimbursement
               Obligations (or risk participations therein),  the Revolving
               Notes  or  its obligation to make Loans or issue and/or  own
               risk  participations   in   Letters  of  Credit  under  this
               Agreement, be subjected to any  withholding  or  other  tax,
               levy,  impost,  charge,  fee,  duty or deduction of any kind
               whatsoever  (other  than  franchise  taxes  imposed  by  the
               jurisdiction in which the Agent  or  such  Bank is domiciled
               and other than any tax generally imposed or  based  upon the
               net  income  or  branch  profits  of the Agent or such Bank)
               (collectively, "Taxes") or (ii) any  change  shall  occur in
               the  taxation of the Agent or such Bank with respect to  any
               Loan,    any   Reimbursement   Obligation   (or   any   risk
               participation  therein), the interest payable thereon or any
               fees payable hereunder  or  referred  to  herein (other than
               franchise  taxes imposed by the jurisdiction  in  which  the
               Agent or such  Bank  is  domiciled and other than any change
               which  affects,  and to the  extent  that  it  affects,  the
               taxation of the net income or branch profits of the Agent or
               such Bank), and if  any  such  measures or any other similar
               measure shall result in an increase in the cost to the Agent
               or such Bank of making or maintaining any Loan or any Letter
               of  Credit  or  a  reduction  in the  amount  of  principal,
               interest or fees receivable by  the  Agent  or  such Bank in
               respect  thereof,  the  Agent  or  such Bank promptly  after
               learning of the imposition of such cost  or reduction in any
               amount   shall   notify  the  Company  and  the  Agent   (if
               applicable) stating the reasons therefor.  The Company shall
               thereafter pay to  the  Agent or such Bank, upon demand from
               time to time, as additional  consideration  hereunder,  such
               additional  amounts  as  will  fully compensate the Agent or
               such Bank for such increased costs  or  reduced  amounts and
               shall promptly provide the Agent or such Banks, as  the case
               may be, with official tax receipts or other evidence  of the
               payment of any taxes paid by the Company.  A certificate  as
               to  the increased costs or reduced amounts setting forth the
               calculations  therefor,  shall  be submitted promptly by the
               Agent  or  such  Bank  to  the Company  and  the  Agent  (if
               applicable) and, in the absence  of manifest error, shall be
               conclusive  and binding as to the amount  thereof.   If  the
               Agent or Bank  receives  any  additional  amounts  from  the
               Company  pursuant  to  this subsection (a) the Agent or such
               Bank  shall  use  its  best  efforts  to  obtain  a  refund,
               reduction, deduction or credit for any Taxes with respect to
               the additional amounts paid  under  this subsection (a).  If
               the  Agent  or  such Bank actually receives  or  enjoys  the
               benefit of any such  refund,  reduction, deduction or credit
               for any such Taxes, the Agent or  such  Bank shall reimburse
               the Company if and to the extent, but only  the extent, that
               the  Agent  or  such  Bank  determines that it has  actually
               received (i) a refund of taxes  or  other  amounts (together
               with  any  interest  actually  received  thereon   from  the
               respective   Governmental   Authority)   which   refund   is
               attributable  to  the  Taxes  with  respect  to  which  such
               additional  amounts  were  paid;  or  (ii)  an effective net
               reduction   (through  a  reduction,  deduction,  credit   or
               otherwise) in  any  taxes or other amounts otherwise payable
               by the Agent or such Bank (including any taxes imposed on or
               measured by the net income of the Agent or such Bank), which
               reduction is attributable  to the Taxes with respect to such
               additional amounts were paid.   If,  at  any  time after the
               Agent  or such Bank makes a payment to the Company  pursuant
               to the preceding sentence, the Agent or such Bank determines
               that it  was  not  entitled to the full amount of any refund
               (together  with  the interest  thereon)  reimbursed  to  the
               Company as aforesaid  or that its taxes are not reduced by a
               credit or deduction for  the full amount of Taxes reimbursed
               to the Company as aforesaid,  the Company upon the demand of
               the Agent or such Bank will promptly  pay  to  the  Agent or
               such Bank the amounts so refunded to which the Agent or such
               Bank  was not so entitled, or the amount by which the  taxes
               of the  Agent  or such Bank were not so reduced, as the case
               may be.

                    (b) In the event  that  any  Bank (including any Bank in
               its capacity as LC Issuer) shall have  determined  that  any
               Requirement of Law regarding capital adequacy, or any change
               therein  or  in the interpretation or application thereof or
               compliance by  such Bank or any parent of such Bank with any
               request or directive  regarding capital adequacy (whether or
               not having the force of law, so long as such Bank reasonably
               believes that compliance  therewith  is  necessary) from any
               central bank or Governmental Authority, does  or  shall have
               the  effect  of  reducing  the rate of return on such Bank's
               capital or the capital of its parent as a consequence of its
               obligations hereunder to a level  below that which such Bank
               or any parent of such Bank could have  achieved but for such
               law or change or compliance (taking into  consideration such
               Bank's policies or the policies of any parent  of such Bank,
               as the case may be, with respect to capital adequacy)  by an
               amount deemed by such Bank or any parent of such Bank to  be
               material,  then  from  time to time, upon submission by such
               Bank  to the Agent and the  Company  of  a  written  request
               therefor, the Company shall pay to such Bank such additional
               amount or amounts as will compensate such Bank or any parent
               of such Bank for such reduction.

                    (c)  To  the  extent  any reserve and/or special deposit
               requirement imposed by the  adoption  of any new law, treaty
               or regulation or any change therein or  in any existing law,
               treaty   or   regulation  (including,  without   limitation,
               Regulation D of  the  F.R.S.  Board)  or  the interpretation
               thereof  by  any  Governmental  Authority charged  with  the
               administration  thereof, or by any  central  bank  or  other
               fiscal, monetary  or other authority against assets held by,
               or deposited in or for the amount of any Loans by, any Bank,
               imposes a cost (whether  by  incurring a cost or adding to a
               cost)  on  a  Bank  in  making or maintaining  hereunder  an
               Offshore Rate Loan or reduces  the  amount  of  principal or
               interest  received by such Bank with respect to such  Loans,
               then upon demand  by  such Bank to the Company, which demand
               shall  be  made  promptly  after  the  Bank  learns  of  the
               imposition of such  cost or reduction in amount, the Company
               shall  (to the extent  compensation  is  not  made  therefor
               pursuant to the calculation of the Offshore Rate) pay to the
               Bank from  time  to  time at the end of each Interest Period
               with  respect to such Offshore  Rate  Loans,  as  additional
               consideration  hereunder,  additional  amounts sufficient to
               fully  compensate  such  Bank  for  such increased  cost  or
               reduced amount.  A certificate as to  the  increased cost or
               reduced amount setting forth the calculations therefor shall
               be  promptly submitted by such Bank to the Company  and  the
               Agent  and,  in  the  absence  of  manifest  error, shall be
               conclusive and binding as to the amount thereof.

                    (d)  In  the  event  that  a  Bank  makes  a demand  for
               additional compensation pursuant to this Section  2.14, such
               Bank agrees to designate a different lending office  of said
               Bank  if such designation will avoid the need for, or reduce
               the amount  of,  such additional consideration and will not,
               (i) in the judgment of the Agent and such Bank, be otherwise
               disadvantageous to  the Agent and the Banks or such Bank, as
               the case may be, and (ii) in the judgment of the Company, be
               otherwise disadvantageous to the Company.

               Section 2.15  Funding Losses.  In the event any Bank shall incur
               any loss or expense (including  any loss or expense incurred
               by reason of the liquidation or reemployment  of deposits or
               other  funds  acquired  by  such  Bank to make, continue  or
               maintain any portion of the principal amount of any Loan as,
               or  to convert any portion of the principal  amount  of  any
               Loan into, an Offshore Rate Loan) as a result of:

                    (a)  repayment  or prepayment of the principal amount of
               any Offshore Rate Loans  on  a date other than the scheduled
               last   day  of  the  Interest  Period   applicable   thereto
               (including without limitation mandatory prepayments pursuant
               to Section  2.3  hereof,  as  well  as voluntary prepayments
               pursuant to Section 2.5 hereof);

                    (b)   any  conversion  of  all  or any  portion  of  the
          outstanding principal amount of any Offshore  Rate  Loans to Base
          Rate Loans pursuant to Section 2.7 prior to the expiration of the
          Interest Period applicable thereto;

                    (c)   any Loans not being made as Offshore Rate Loans in
          accordance with a request therefor;

                    (d)   any  Loans  not  being  continued as, or converted
          into, Offshore Rate Loans in accordance  with a notice applicable
          thereto; or

                    (e)  any  Offshore  Rate  Loans  not  being  prepaid  in
               accordance with any notice given pursuant to Section 2.5,

               then, upon the request of such Bank to the  Company  (with a
               copy  to the Agent), the Company shall pay directly to  such
               Bank such amount as will (in the reasonable determination of
               such Bank)  reimburse such Bank for such loss or expense.  A
               statement  as   to  any  such  loss  or  expense  (including
               calculations  thereof   in   reasonable   detail)  shall  be
               submitted  by  such  Bank to the Agent and the  Company  and
               shall, in the absence  of  manifest error, be binding on the
               Company as to the matters set forth therein.

               Section 2.16  Use of Proceeds.   The  Company   shall  apply 
               the proceeds  of each  Loan  to general  corporate  purposes
               including,  without   limitation,   payment  of  any  unpaid
               Reimbursement Obligations.

               Section 2.17  Certain  Pricing  Terms.   From and  after the  
               Effective  Date, the  Applicable  Margin, Commitment Fee and
               Letter of Credit  Commission applicable at any time shall be
               the respective number  of Basis Points specified in Schedule
               III attached hereto in the  column identified by the Pricing
               Level corresponding to the Reference  Ratio  as  of the last
               day   of  the  fiscal  quarter  most  recently  ended.   The
               Applicable  Margin,  Commitment  Fee  and  Letter  of Credit
               Commission  shall  be  calculated  in  reliance  on the most
               recent  financial  reports  delivered  pursuant  to Sections
               6.1(a)  and  6.1(b) hereof; except that for the period  from
               the Effective  Date  to  the  time  of delivery of financial
               reports for the quarter in which the  Effective Date occurs,
               said  calculation  shall be made based on  the  most  recent
               financial reports delivered  pursuant to Sections 6.1(a) and
               6.1(b) of the Existing Credit Agreement.  Each adjustment of
               the Applicable Margin, Commitment  Fee  and Letter of Credit
               Commission shall be made by the Agent as  of  the  first day
               following  the  date of delivery of the financial statements
               pursuant to Sections  6.1(a)  and  6.1(b)  (the  "Adjustment
               Date").  Such adjusted Applicable Margin, Commitment Fee and
               Letter  of  Credit Commission shall be effective as  of  the
               Adjustment Date.   Notwithstanding  the  foregoing,  in  the
               event  the  Company shall fail for any reason to deliver any
               of the requisite  financial  statements within five (5) days
               of  the  applicable  date specified  in  Section  6.1(a)  or
               6.1(b), the Applicable  Margin, Commitment Fee and Letter of
               Credit Commission shall be  determined,  from  the first day
               after  the  date such financial statements were required  to
               have been delivered  pursuant  to  Section  6.1(a) or 6.1(b)
               (without  regard  to  any  grace  or  cure period applicable
               thereto  pursuant  to  Article  VIII)  until  the  same  are
               delivered  in accordance therewith, on the  assumption  that
               the Reference  Ratio is an amount classified in Schedule III
               as "Level III."

               Section 2.18  Certain   Provisions  Regarding   Release  and
               Re-Pledge of Certain Collateral.

                    (a)  At  any  time  after  the  refinancing  of  all  or
               substantially all of  the  LPD-17 Expenditures in accordance
               with Section 6.12 and the other  provisions  hereof  and the
               mandatory   reduction   of   the   Commitments  and  related
               prepayments  (if  any)  required  pursuant  to  Section  2.3
               hereof,  and without any further consent  of the Banks (such
               consent  to be deemed to be hereby given), the  Company  may
               request that  the  Agent,  and the Agent shall (upon written
               request made by the Company  and  at  the Company's expense,
               within  30  days  of  the  Agent's receipt of  such  request
               accompanied by all necessary documents in form and substance
               acceptable  to  the  Agent), release  the  liens  and  other
               security (but not the  Subsidiary  Guarantees)  securing the
               Obligations,  other than the liens created by the  900  Foot
               Floating Drydock  Mortgage, provided that at the time of the
               requested release no  Default or Event of Default shall have
               occurred and be continuing.    Upon the release of the Liens
               and  other  security  securing the  Obligations  under  this
               subsection 2.18(a), unless  and  until  such Liens and other
               security interests are required to be re-granted pursuant to
               subsection 2.18(b) hereof, the Company shall  no  longer  be
               required  to  comply with Section 6.4 (but only with respect
               to the second sentence  thereof), Section 6.9, Section 6.10,
               Section 6.11,  Section 7.15  or  any  other  provisions  the
               Agent,  the  Required  Banks  and  the  Company agree are no
               longer  applicable due to the release of Liens  contemplated
               by this subsection 2.18(a).

                    (b)  In   the  event  liens  are  released  pursuant  to
                    subsection  (a)  of  this  Section 2.18, if at any time
                    thereafter a Default or an Event of Default shall occur
                    and be continuing (regardless  of  whether such Default
                    or Event of Default is subsequently cured), the Company
                    and each Subsidiary shall, at the Company's expense and
                    promptly upon request made by the Required Banks or the
                    Agent,  grant  liens  and  security  interests  in  all
                    Collateral of the type which was released  pursuant  to
                    subsection  (a)  above, as well as all capital stock of
                    all then Subsidiaries.   In  such event the Company and
                    each  Subsidiary, promptly upon  request  made  by  the
                    Agent,  at  the Company's expense shall (i) execute and
                    deliver Security  Agreements (substantially in the form
                    of the Security Agreement  (Company) and the Subsidiary
                    Security  Agreement  with  such  revisions  as  may  be
                    requested by the Agent or the  Required  Banks),  Stock
                    Pledge  Agreement(s) to cover stock of all Subsidiaries
                    (substantially   in   the  form  of  the  Stock  Pledge
                    Agreement  (Company) and  the  Stock  Pledge  Agreement
                    (Subsidiary),  with such changes as may be requested by
                    the Agent or the  Banks),  financing  statements, stock
                    powers,  Assignment of Claims Notices with  respect  to
                    Navy Contracts  of  the  Company  and  each  Subsidiary
                    properly  executed  by  the  appropriate administrative
                    contracting  officer  and  disbursing  officer  and  if
                    applicable any surety on any  bond  applicable  to  the
                    Navy   Contracts,   Cash  Management  Letters  properly
                    executed  by  the  depository   institution(s)  holding
                    deposit accounts into which proceeds  of collateral are
                    deposited, and such Collateral Access Agreements as may
                    be  required by the Agent or the Required  Banks,  (ii)
                    deliver stock certificates and executed stock powers in
                    connection  with  stock  being pledged, (iii) establish
                    and  maintain  cash collateral  accounts  of  the  type
                    described  in  the  Security  Agreement  (Company)  and
                    Subsidiary Security  Agreements,  (iv)   deliver  legal
                    opinions  covering  such  matters as the Required Banks
                    shall reasonably request, and  (v) execute, deliver and
                    obtain such other agreements and documents as the Agent
                    or the Required Banks shall request  in order to create
                    and  perfect  the  security  interests  and  liens  and
                    otherwise  effectuate  the terms of this Section.   Any
                    request  made  by  the  Agent  or  the  Required  Banks
                    pursuant to this Section 2.18(b), shall not be deemed a
                    waiver of any Default or  Event  of  Default,  and  the
                    Agent  and  the  Banks shall retain all of their rights
                    and remedies pursuant  hereto and pursuant to the other
                    Loan Documents and applicable law.

                    (c) In the event the Company  and  its Subsidiaries are
                    required to grant liens pursuant to  Subsection  (b) of
                    this   Section   2.18,  neither  the  Company  nor  any
                    Subsidiary shall thereafter  be  entitled  to request a
                    release  of  such liens pursuant to subsection  (a)  of
                    this Section 2.18.

               Section 2.19  Extensions of Expiration Date.  The Company may,
                    by giving the Agent an  Extension  Notice not more than
                    90 days, but not less than 60 days,  prior  to the then
                    current Extension Date, request that the Banks  consent
                    to an extension of the then current Expiration Date for
                    a period of one year.  Each Bank may, by an irrevocable
                    notice  (a  "Consent  Notice")  to  the Company and the
                    Agent  given  within  30  days  after receipt  of  such
                    request by the Agent, consent to  such  request  of the
                    Company, which consent may be given or withheld by each
                    Bank  in its absolute and sole discretion.  Failure  by
                    any Bank  to give its consent in writing within such 30
                    day period  shall  be  deemed a refusal by such Bank of
                    such request.  If less than all of the Banks consent to
                    the request for extension,  the Company's request shall
                    be  denied  and  the  Expiration   Date   shall  remain
                    unchanged.    However,   if   a   Consent   Notice   is
                    subsequently  obtained  from  all of the Banks party to
                    this Agreement prior to the then current Extension Date
                    (even if not within the time period  specified  above),
                    the  Expiration  Date  shall  be  so  extended  and all
                    references  in  the Loan Documents to "Expiration Date"
                    shall refer to the Expiration Date, as so extended.

               Section 2.20 Additional  Banks;  Optional  Increase of Total
               Commitments.

               (a) The Company shall have the right, at any  one time prior
               to  March 31,  1997,  with  the consent of the Agent  (which
               consent shall not be unreasonably withheld), but without the
               need  for  the  consent  of any Bank,  to  add  one  or  two
               additional banks or other financial institutions selected by
               the  Company  and  acceptable   to   the   Agent  (each,  an
               "Additional Bank") as parties to this Credit  Agreement  and
               as  "Banks" hereunder, and, correspondingly, to increase the
               aggregate  amount  of the Commitments up to an amount not to
               exceed the lesser of  (i)  $85,000,000  or  (ii)  the amount
               equal  to  (A)  the  aggregate  amount  of  the  Commitments
               immediately  prior  to  such  increase plus (B) $10,000,000.
               The  Commitment of each such Additional  Bank  shall  be  an
               amount   not   less  than  $10,000,000,  and  the  aggregate
               Commitments of all  Additional  Banks shall be an amount not
               to exceed $20,000,000.

               (b) As a condition to the addition of any Additional Bank as
               a  party  hereto and to any corresponding  increase  in  the
               aggregate amount  of  the  Commitments, the Company and each
               Additional Bank shall execute  and deliver to the Agent, for
               its  acceptance  and recording in  the  Register,  a  letter
               agreement ("Commitment Agreement") in substantially the form
               of Exhibit Q attached  hereto together with a processing and
               recordation fee of $3,000.   Upon  the  acceptance  of  such
               agreement by the Agent, from and after the date specified as
               the  "Commitment  Date"  in  such agreement (the "Commitment
               Date"):

               (i)  the Additional Bank party  thereto  shall  be  and
                    become  a  party  hereto and shall have the rights
                    and obligations of a "Bank" hereunder;

               (ii) the "Commitments" of  BAI  and of Whitney National
                    Bank  shall  be  reduced automatically,  in  equal
                    dollar  amounts,  respectively,  in  an  aggregate
                    amount equal to the  amount,  if any, by which the
                    aggregate  Commitments  of  the  Additional  Banks
                    exceed  $10,000,000, provided, however,  that,  if
                    said Commitments  exceed  $10,000,000 by more than
                    $8,000,000,  the  amount  of  such   excess   over
                    $8,000,000 shall be applied wholly in reduction of
                    the Commitment of BAI, such that the reduction  in
                    the  Commitment  of Whitney National Bank pursuant
                    hereto shall not exceed $4,000,000;

               (iii)  the  "Percentage"  of  each  Bank  shall  adjust
               automatically   to  the  amount  equal  to  the  result
               obtained by dividing  (A) the then effective Commitment
               of such Bank (after giving  effect to any adjustment of
               the  individual  Commitment  of   such   Bank  effected
               pursuant  hereto) by (B) the total Commitments  of  all
               Banks (after  giving  effect  to  the  increase  in the
               aggregate  Commitments  and  adjustments  of individual
               Commitments effected pursuant hereto);

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

               (v) the "Line of Credit" correspondingly shall increase
               by  the  amount  of  such  increase  in  the  aggregate
               Commitments.

          The Agent shall promptly notify  each  Bank  of the amount of any
          such adjustment to its "Commitment" and/or "Percentage"  pursuant
          hereto.

               (c)  In  the  event that there are any Loans outstanding  at
          the time of the addition of an Additional Bank as a party hereto,
          said  Additional  Bank   shall   fund  a  portion  of  the  Loans
          outstanding on the Effective Date  by  wire transfer to the Agent
          of  immediately  available  funds  in  an  amount  equal  to  its
          Percentage  (after  giving  effect  to  the  adjustment   of  the
          Percentages  in  accordance  with  clause (b) above) of the Loans
          outstanding.  Upon receipt of such funds,  the  Agent shall remit
          to  each  of  the  Banks  (other  than the Additional Banks)  the
          portion thereof equal to the excess  of  (i)  the amount equal to
          such Bank's Percentage (before giving effect to the adjustment of
          the Percentages in accordance with clause (b) above) of the Loans
          outstanding  over  (ii)  the  amount  equal  to such  Bank's  new
          Percentage  (after  giving  effect  to  the  adjustment   of  the
          Percentages  in  accordance  with  clause (b) above) of the Loans
          outstanding, in reduction of the principal  balance  of the Loans
          of   each   such  Bank  then  outstanding.   Notwithstanding  the
          foregoing, such  Banks  shall remain entitled to all interest and
          fees accrued with respect  to  the portion of the Loans funded by
          any Additional Bank up to, but not including, the Effective Date,
          and, conversely, the Additional  Banks  shall  be entitled to all
          interest and fees that shall accrue with respect  to  the portion
          of  the  Loans  funded  by  any Additional Bank on and after  the
          Effective Date.

               (d)  By executing and delivering  a Commitment Agreement, an
          Additional  Bank  confirms  and  agrees  as  follows:   (i)  such
          Additional Bank appoints and authorizes the Agent  to  take  such
          action  as  agent on its behalf and to exercise such powers under
          this Agreement as are delegated to the Agent by the terms hereof,
          together with  such  powers as are reasonably incidental thereto,
          and (ii) such Additional  Bank  agrees  that  it  will perform in
          accordance with their terms all of the obligations  which  by the
          terms  of this Agreement are required to be performed by it as  a
          Bank.

               (e)  Upon its receipt of a Commitment Letter executed by the
          Company  and  an  Additional  Bank,  the  Agent  shall,  if  such
          Commitment  Letter has been completed and is in the form required
          hereby, (i) accept such agreement and (ii) record the information
          contained therein in the Register.  Within five (5) Business Days
          after its receipt  of  such  Commitment Letter, the Company shall
          execute and deliver to the Agent  (x) a new Revolving Note to the
          order of the Additional Bank in an amount equal to the Commitment
          of such Additional Bank, and (y) in  exchange  for  the Revolving
          Note  of  any Bank whose Commitment is reduced pursuant  to  this
          Section 2.20  (which shall be delivered to the Agent by such Bank
          in exchange for  such  replacement Note), a new Revolving Note to
          the  order  of such Bank in  an  amount  equal  to  the  adjusted
          Commitment of  such  Bank.   Any  such  Revolving Notes so issued
          shall  re-evidence  the Indebtedness outstanding  under  the  old
          Revolving Notes.


                                         SECTION III

                                    LETTERS OF CREDIT

               Section 3.1  Requests.

                    (a) By delivering  to  the  Agent  and  the LC Issuer an
               Issuance  Request on a Business Day prior to the  Expiration
               Date and not  less  than  three  Business  Days prior to the
               requested date of issuance, the Company may request that the
               LC Issuer issue an irrevocable standby letter of credit or a
               documentary   letter  of  credit  to  support  non-financial
               performance obligations  of  the  Company  or  a  Subsidiary
               incurred  by  the Company or such Subsidiary in the ordinary
               course of business  and  which are described in the Issuance
               Request  (a  "Non-Financial   Letter   of   Credit")  or  an
               irrevocable standby letter of credit or a documentary letter
               of credit to support payment obligations of the Company or a
               Subsidiary incurred by the Company or such Subsidiary in the
               ordinary course of business and which are described  in  the
               Issuance  Request  (a "Financial Letter of Credit"), each in
               such form as may be  approved by the LC Issuer and the Agent
               (each, a "Letter of Credit").  Upon receipt of each Issuance
               Request, the Agent shall  promptly notify the Banks thereof.
               The stated amount of any Letter  of  Credit  requested to be
               issued pursuant to an Issuance Request shall be  denominated
               in Dollars.

                    (b)  Each Letter of Credit shall by its terms:   (i)  be
               issued in  a  stated  amount which (A) is at least $100,000,
               and (B) does not exceed  (or  would  not  exceed)  the  then
               Letter  of  Credit Availability; (ii) initially be stated to
               expire on a date  (its  "Stated  Expiry Date") no later than
               the earlier of 12 months from its  date  of  issuance or the
               Expiration Date, whichever occurs first; and (iii)  prior to
               its Stated Expiry Date (A) terminate immediately upon notice
               to  the  LC  Issuer  thereof from the beneficiary thereunder
               that all obligations covered  thereby  have been terminated,
               paid,  or otherwise satisfied in full and  delivery  of  the
               original  Letter of Credit to the LC Issuer or (B) reduce in
               part  immediately   and   to   the  extent  the  beneficiary
               thereunder  has  notified  the LC Issuer  thereof  that  the
               obligations covered thereby  have  been  paid  or  otherwise
               satisfied in part.

               Section 3.2  Issuance.  Subject to the terms and conditions
               of  this  Agreement,  the  LC Issuer shall issue Letters of
               Credit in accordance with the Issuance Requests made therefor.
               Prior to the issuance of any Letter of Credit,  the  Company
               shall  have  properly  completed  all  of  the  LC  Issuer's
               required  standard letter of credit documentation.   The  LC
               Issuer will  make  available  the original of each Letter of
               Credit  which  it  issues in accordance  with  the  Issuance
               Request  therefor  to  the  beneficiary  thereof  (and  will
               promptly provide the  Agent  with  a  copy of such Letter of
               Credit and the Agent shall promptly provide  a  copy thereof
               to each of the Banks).

               Section 3.3  Fees and Expenses.

                    (a) Letter of Credit Fee.  The Company agrees  to pay to
               the Agent for the account of the Banks, with respect to each
               Letter  of  Credit  a  per  annum fee (the "Letter of Credit
               Fee") equal to the product of  (i) the average daily undrawn
               amount  of the Letters of Credit  and  (ii)  the  Letter  of
               Credit Commission.   Such  Letter  of  Credit  Fee  shall be
               payable in arrears with respect to each Letter of Credit  on
               each   Quarterly  Payment  Date  during  the  term  of  each
               respective  Letter  of Credit and on the termination thereof
               (whether at its Stated Expiry Date or earlier).  The Company
               further agrees to pay to the Agent for the account of the LC
               Issuer all reasonable  administrative  expenses  of  the  LC
               Issuer   in   connection  with  the  issuance,  maintenance,
               modification (if  any)  and administration of each Letter of
               Credit and standard negotiation  charges  upon  demand  from
               time  to  time.  After the occurrence of an Event of Default
               until such  time  as  such Event of Default shall be waived,
               the Letter of Credit Fee described in this Section 3.3 shall
               be calculated by increasing  the Letter of Credit Commission
               by two percent (2%).

                    (b) Issuance Fee.  The Company  agrees  to  pay  to  the
               Agent  for the account of the LC Issuer with respect to each
               Letter of  Credit  a  per  annum "Issuance Fee" equal to the
               product  of  (i) the average daily  undrawn  amount  of  the
               Letters  of  Credit  and  (ii)  one-eighth  of  one  percent
               (0.125%).  Such  Issuance  Fee  shall  be due and payable in
               arrears  with  respect  to  each  Letter of Credit  on  each
               Quarterly Payment Date during the term  of  each  respective
               Letter of Credit and on the termination thereof (whether  at
               its Stated Expiry Date or earlier).

               Section 3.4 Existing Letters of Credit; Banks' Participation.

                    (a)  (i)  On  and after the Effective Date, the Existing
               Letters  of  Credit  shall   be  deemed  for  all  purposes,
               including for purposes of the  fees to be collected pursuant
               to Section 3.3(a) of this Agreement,  and  reimbursement  of
               costs and expenses to the extent provided herein, Letters of
               Credit  outstanding under this Agreement and entitled to the
               benefits  of  this  Agreement  and the other Loan Documents.
               Each  Bank  shall be deemed to and  hereby  irrevocably  and
               unconditionally agrees to purchase from the LC Issuer on the
               Effective Date  a  participation  in each Existing Letter of
               Credit and shall make available to the LC Issuer, regardless
               of  whether  any  Default  or Event of  Default  shall  have
               occurred  and  is  continuing,   an   amount  equal  to  its
               respective  Percentage  of  each  drawing on  each  Existing
               Letter of Credit in same day or immediately  available funds
               not  later  than  the times specified in Section  3.4(a)(ii)
               hereof.

                         (ii) To the  extent  of  its Percentage, each Bank
               agrees to and shall be deemed to have  irrevocably purchased
               a  participation in each Letter of Credit  on  the  date  of
               issuance  thereof  and shall be entitled to receive from the
               Agent  a  ratable portion  of  the  Letter  of  Credit  Fees
               received by  the  Agent  pursuant  to Section 3.3(a) hereof.
               Each Bank shall make available to the  LC Issuer, regardless
               of  whether  any  Default  or  Event of Default  shall  have
               occurred  and  is  continuing,  an  amount   equal   to  its
               respective  Percentage  of  each  drawing  on each Letter of
               Credit in same day or immediately available  funds not later
               than 11:00 a.m. San Francisco time on each Disbursement Date
               (as hereinafter defined) for each such drawing.

                         (iii)  In  the event that any Bank fails  to  make
                         available to  the  LC  Issuer  the  amount of such
                         Bank's  Percentage of any drawing on a  Letter  of
                         Credit as  provided herein, the LC Issuer shall be
                         entitled to  recover  such  amount  on demand from
                         such  Bank  together  with  interest at the  daily
                         average Federal Funds Effective Rate for the first
                         three  Business Days after the  Disbursement  Date
                         (together  with  such  other compensatory amounts,
                         including,  but  not  limited  to,  administrative
                         fees, as may be required  to  be paid by such Bank
                         to the Agent pursuant to the Rules  for  Interbank
                         Compensation   of  the  Council  on  International
                         Banking  or  of  the   New   York  Clearing  House
                         Compensation Committee, as the  case may be, as in
                         effect  from time to time) and thereafter  at  the
                         Base Rate.

                    (b)  The Agent  shall  distribute to each Bank that has
                         paid  all  amounts payable  by  it  under  Section
                         3.4(a) with respect to any Letter of Credit issued
                         by the LC Issuer  such  Bank's  Percentage  of all
                         payments received by the Agent from the Company in
                         reimbursement of drawings honored by the LC Issuer
                         under such Letter of Credit when such payments are
                         received.

               Section 3.5 Disbursements.  The  LC Issuer  will  notify the
                         Company  and the Agent promptly of the presentment
                         for payment  of  any Letter of Credit (on the date
                         of presentment, if  possible, and otherwise on the
                         next  Business  Day, it  being  agreed  that  such
                         notice may be made by phone), together with notice
                         of the date (the "Disbursement Date") such payment
                         shall be made, and  the Agent promptly will notify
                         the Banks of such matters.   Subject  to the terms
                         and  provisions of such Letter of Credit,  the  LC
                         Issuer  shall make such payment to the beneficiary
                         (or its designee) of such Letter of Credit.  Prior
                         to  11:00   a.m.   San   Francisco   time  on  the
                         Disbursement Date the Company shall (by payment to
                         the Payment Office for distribution by  the Agent)
                         reimburse  the  LC  Issuer  and the Banks for  all
                         amounts  which  have  been  disbursed  under  such
                         Letter of Credit.  To the extent the LC Issuer and
                         the Banks are not reimbursed in full in accordance
                         with   this   Section   3.5,   the   Reimbursement
                         Obligation shall accrue interest at the  Alternate
                         Base  Rate  plus a margin of 2% per annum, payable
                         on demand.

               Section 3.6  Reimbursement.  The   Company's   obligation (a 
                         "Reimbursement Obligation") under  Section 3.5  to
                         reimburse the LC Issuer and the Banks with respect
                         to  each  drawing  under  each  Letter  of  Credit
                         (including  interest  thereon),  and  each  Bank's
                         obligation  to fund each drawing shall be absolute
                         and unconditional  under any and all circumstances
                         and irrespective of  any set off, counterclaim, or
                         defense to payment which  the  Company or any Bank
                         may  have  or have had against any  Bank,  the  LC
                         Issuer, the Company or any beneficiary of a Letter
                         of  Credit,  including,  without  limitation,  any
                         defense based  upon  the occurrence of any Default
                         or  Event  of  Default,  any   draft,   demand  or
                         certificate  or  other document presented under  a
                         Letter of Credit proving to be forged, fraudulent,
                         invalid or insufficient,  or  any failure to apply
                         or  misapplication  by  the  beneficiary   of  the
                         proceeds  of  any  disbursement,  or the legality,
                         validity,  form, regularity, or enforceability  of
                         such Letter of Credit.

               Section 3.7  Deemed  Disbursements;  Other  Cash  Collateral  
                         Requirements.

                    (a)   Upon the occurrence and during the continuation of
                         an Event of Default, then:

                         (i) automatically in the case of any Event  of
               Default  described  in  Section  VIII(h),  and  at  the
               election of the Required Banks in the case of any other
               Event  of  Default,  an amount equal to that portion of
               the Letter of Credit Outstandings  attributable  to the
               then  aggregate  amount  which is undrawn and available
               under all outstanding Letters  of Credit shall, without
               demand upon or notice to the Company, be deemed to have
               been    paid   or   disbursed   by   the   LC    Issuer
               (notwithstanding  that such amount may not in fact have
               been so paid or disbursed); and

                         (ii)   upon  notification  by  the Agent to the
          Company of its obligations under this Section,  the  Company
          shall  be  immediately  obligated to reimburse the LC Issuer
          for the amount deemed to  have  been so paid or disbursed by
          the LC Issuer; provided, that to the extent the LC Issuer is
          not reimbursed for the amounts deemed  to  have been paid or
          disbursed  by  the  LC Issuer under this Section  3.7,  such
          Reimbursement Obligation  shall  not  accrue  interest until
          such  time  as  the  LC Issuer makes actual payment  to  the
          beneficiary (or its designee)  of  the  Letter of Credit and
          until  the  Letter  of  Credit is actually drawn,  the  fees
          payable  under  Section  3.3   with  respect  thereto  shall
          continue to accrue.

                    (b)  Any amounts so payable  by the Company pursuant to
          this Section shall be deposited in cash  with the Agent (or, upon
          the  direction  of  the Agent, with the LC Issuer)  and  held  as
          collateral security for  the  Obligations  in connection with any
          Letter  of  Credit  and shall be invested by the  Agent  (or,  if
          applicable, the LC Issuer)  in  Cash  Equivalent  Investments the
          interest on which shall be held as collateral security  for  such
          Obligations  and  applied  to  pay  such Obligations then due and
          unpaid.  At such time when all Events  of Default shall have been
          waived, the Agent (or, if applicable, the LC Issuer) shall return
          to the Company all amounts then on deposit with the Agent (or, if
          applicable,  the LC Issuer) pursuant to this  Section  (including
          any income from  Cash Equivalent Investments), net of any amounts
          applied to the payment  any  of  such  Obligations and net of any
          account set-up expenses.

               Section 3.8  Nature of Reimbursement Obligations.  The Company
          shall assume all risks of the acts, omissions, or misuse  of  any
          Letter  of  Credit  by  the  beneficiary  thereof.  Except to the
          extent of its own gross negligence or willful  misconduct, the LC
          Issuer shall not be responsible for:

                    (a)   the   form,   validity,   sufficiency,   accuracy,
          genuineness,  or  legal effect of any Letter  of  Credit  or  any
          document  submitted   by   any   party  in  connection  with  the
          application for and issuance of a  Letter  of  Credit, even if it
          should  in  fact  prove  to  be  in any or all respects  invalid,
          insufficient, inaccurate, fraudulent, or forged;

                    (b)   the   form,   validity,   sufficiency,   accuracy,
          genuineness, or legal effect of  any  instrument  transferring or
          assigning or purporting to transfer or assign a Letter  of Credit
          or the rights or benefits thereunder or proceeds thereof in whole
          or in part;

                    (c)   failure  of  the beneficiary to comply fully  with
          conditions required in order  to demand payment under a Letter of
          Credit;

                    (d)   errors, omissions,  interruptions,  or  delays  in
          transmission or delivery of any information or messages, by mail,
          cable, facsimile, telegraph, telex, or otherwise;

                    (e)   any loss or delay in the transmission or otherwise
          of any document or draft required in order to make a disbursement
          under a Letter of Credit or of the proceeds thereof;

                    (f)   errors in interpretation of technical terms;

                    (g)  any misapplication by a beneficiary of the proceeds
                    of any disbursement under any Letter of Credit; or

                    (h) any  consequences  arising  from  causes  beyond the
                    control of the LC Issuer including, without limitation,
                    acts of any Governmental Agency.

               None  of the foregoing shall affect, impair, or prevent  the
                    vesting  of  any of the rights or powers granted to the
                    LC Issuer hereunder.

               Section 3.9  Indemnity.   In  addition to amounts payable as
                    elsewhere  provided  in  this  Section III, the Company
                    hereby agrees to protect, indemnify,  pay  and  save LC
                    Issuer  harmless  from  and against any and all claims,
                    demands, liabilities, damages,  losses,  costs, charges
                    and  expenses   (including reasonable attorneys'  fees)
                    which  LC Issuer may  incur  or  be  subject  to  as  a
                    consequence, direct or indirect, of the issuance of the
                    Letters  of Credit, other than as a result of the gross
                    negligence  or  willful  misconduct of the LC Issuer as
                    determined by a court of proper jurisdiction.

                                            SECTION IV

                                REPRESENTATIONS AND WARRANTIES

               To  induce  the  Agent  and the Banks  to  enter  into  this
                    Agreement and to make  each  Loan  and the LC Issuer to
                    issue  the Letters of Credit herein provided  for,  the
                    Company  hereby  represents  and warrants to the Agent,
                    the Banks and the LC Issuer that:

               Section  4.1  Financial Condition.  The consolidated balance
                    sheet of  the Company and its consolidated Subsidiaries
                    as of December  31,  1995, and the related consolidated
                    statements of operations  and  the related consolidated
                    statement of shareholders' equity  for  the fiscal year
                    ended  on such date (certified by Deloitte  &  Touche),
                    and the  unaudited  consolidated  balance  sheet of the
                    Company   and  its  consolidated  Subsidiaries  as   of
                    September  30,   1996,  and  the  related  consolidated
                    statements of operations and statement of stockholders'
                    equity for the period  ended  on  such  date, copies of
                    which  have  heretofore  been  furnished to the  Agent,
                    present fairly the consolidated  financial condition of
                    the Company  and its consolidated  Subsidiaries  as  at
                    such  dates,  and  the  consolidated  results  of their
                    operations  for  the fiscal year and the interim period
                    then  ended.  All such  audited  financial  statements,
                    including the related schedules and notes thereto, have
                    been  prepared   in   accordance   with   GAAP  applied
                    consistently throughout the periods involved (except as
                    approved by such accountants and as disclosed therein).
                    All  unaudited  financial  statements,  including   the
                    related schedules and notes thereto, have been prepared
                    on  a  basis consistent with those financial statements
                    prepared  as of December 31, 1995.  Neither the Company
                    nor any of  its  consolidated  Subsidiaries had, at the
                    date  of  the  balance  sheet  for  the   period  ended
                    September  30,  1996,  referred to above, any  material
                    Contingent   Obligation,   contingent    liability   or
                    liability  for  taxes,  long  term  leases  or  unusual
                    forward or long term commitment, which is not reflected
                    in the foregoing statements or in the notes thereto.

               Section  4.2  No  Change.  Since December 31, 1995, there has
                    been  no  material  adverse  change  in  the  business,
                    operations, business  prospects,  property or financial
                    or other condition of the Company and its Subsidiaries,
                    taken  as  a  whole,  as  such  business,   operations,
                    property,  or  financial  or  other  condition  of  the
                    Company and its Subsidiaries existed on such date.

               Section 4.3  Corporate Existence: Compliance with Law.  Each of
                    the Company and its Subsidiaries (a) is duly organized,
                    validly existing and in good standing under the laws of
                    the  jurisdiction  of  its  incorporation,  (b) has the
                    corporate  power  and authority to own and operate  its
                    property, to lease  the  property it operates as lessee
                    and to conduct the business  in  which  it is currently
                    engaged, (c) is duly qualified as a foreign corporation
                    and  is  in  good  standing  under  the  laws  of  each
                    jurisdiction where its ownership, lease or operation of
                    property  or the conduct of its business requires  such
                    qualification, except to the extent that the failure to
                    so qualify  could  not reasonably be expected to have a
                    Material  Adverse  Effect,   and  (d)  is  in  material
                    compliance with all Requirements  of Law, except to the
                    extent  that  the  failure  to  so  qualify  could  not
                    reasonably  be  expected  to  have  a Material  Adverse
                    Effect.

               Section 4.4  Corporate  Power:  Authorization:   Enforceable
                    Obligations.   The  Company has the corporate power and
                    authority to make, deliver  and  perform this Agreement
                    and the other Loan Documents, to borrow  and  cause the
                    issuance  of  Letters of Credit hereunder and to  grant
                    the  Liens  or  make   the   pledges  provided  in  the
                    Collateral  documents  and  has  taken   all  necessary
                    corporate  action  to authorize the borrowings  on  the
                    terms and conditions  of  this  Agreement and the other
                    Loan Documents and to authorize the execution, delivery
                    and performance of this Agreement  and  the  other Loan
                    Documents  and  to authorize the grant of the Liens  or
                    the  pledge  of  stock   provided   in  the  Collateral
                    Documents.    No  shareholder  vote  is  necessary   to
                    authorize the execution,  delivery  and  performance of
                    this  Agreement  and  the  other  Loan  Documents.   No
                    consent or authorization of, filing with  or  other act
                    by  or  in  respect  of  any Governmental Authority  is
                    required in connection with the borrowings hereunder or
                    with the execution, delivery,  performance, validity or
                    enforceability of this Agreement  and  the  other  Loan
                    Documents or to authorize the grant of the Liens or the
                    pledge  of  stock provided in the Collateral Documents,
                    except  for  (i)   the  filing  of  the  UCC  financing
                    statements,  (ii)  notices  or  filings  required  with
                    respect to the Government Contracts (including, without
                    limitation,  the  Navy  Contracts)  and  (iii)  certain
                    consents, notices or filings in connection with the 900
                    Foot  Floating  Drydock   Mortgage   and  the  Mortgage
                    Amendment, all of which filings, notices  and  consents
                    referred  to  in  the foregoing clauses have been made,
                    obtained or given, as appropriate, and all of which are
                    in full force and   effect.  Each of the Loan Documents
                    has been duly executed  and  delivered on behalf of the
                    Company.  This Agreement constitutes,  and  each of the
                    other  Loan  Documents constitutes, a legal, valid  and
                    binding obligation  of  the Company enforceable against
                    the Company in accordance  with  its  terms,  except as
                    enforceability may be limited by applicable bankruptcy,
                    insolvency, reorganization, moratorium or similar  laws
                    affecting   the   enforcement   of   creditors'  rights
                    generally and by general equitable principles  (whether
                    enforcement  is  sought by proceedings in equity or  at
                    law).

               Section 4.5 No Bar.  The execution, delivery and performance
                    of  this Agreement and the other  Loan  Documents,  the
                    borrowings and issuance of Letters of  Credit hereunder
                    and the  use  of the proceeds thereof, will not violate
                    any Requirement of Law or any Contractual Obligation of
                    the Company or of any of its Subsidiaries, and will not
                    result in, or require,  the  creation  or imposition of
                    any  Lien on any of its or their respective  properties
                    or  assets  pursuant  to  any  Requirement  of  Law  or
                    Contractual  Obligation  except  for  the Liens granted
                    pursuant to the Collateral Documents.

               Section 4.6 No Material Litigation.  Except as set forth  on
                    Schedule   4.6,   no   litigation,   investigation,  or
                    proceeding of or before any arbitrator  or Governmental
                    Authority  is  pending  or,  to  the knowledge  of  the
                    Company, threatened by or against the Company or any of
                    its  Subsidiaries  or  against  any  of  its  or  their
                    respective properties or revenues (a)  with  respect to
                    this  Agreement or the other Loan Documents or  any  of
                    the transactions  contemplated  hereby,  or  (b)  which
                    could reasonably be expected to have a Material Adverse
                    Effect.

               Section  4.7  No Default.  Neither the Company nor any of it
                    Subsidiaries is in default under or with respect to any
                    Contractual  Obligation  in  any  respect  which  could
                    reasonably be  expected  to  have  a  Material  Adverse
                    Effect.

               Section  4.8  Ownership of Property:   Liens.   Each  of the
                    Company  and  its  Subsidiaries has good recordable and
                    marketable title in  fee  simple  to or valid leasehold
                    interests in all its real property,  and  good title to
                    or valid leasehold interests in all its other  property
                    (other  than  property  held  under  Financing  Leases)
                    material to its business, and none of such property  is
                    subject to any Lien, except as permitted in Section 7.2
                    of this Agreement.

               Section  4.9  No  Burdensome  Restrictions.   No Contractual
                    Obligation  of  the  Company or any of its Subsidiaries
                    and no Requirement of  Law  to which the Company or any
                    of  its  Subsidiaries is subject  could  reasonably  be
                    expected to have a Material Adverse Effect.

               Section 4.10 Taxes.  Each of the Company and its Subsidiaries
                    has filed or caused to  be  filed all tax returns which
                    to  the knowledge of the Company  are  required  to  be
                    filed  and  has  paid  all  taxes  shown  to be due and
                    payable  on  said  returns  or on any assessments  made
                    against it or any of its property  and all other taxes,
                    fees  or other charges imposed on it  and  any  of  its
                    property  by  any  Governmental  Authority  (other than
                    those  the  amount  or  validity  of which is currently
                    being   contested   in   good   faith   by  appropriate
                    proceedings and, if applicable, with respect  to  which
                    reserves in conformity with GAAP have been provided  on
                    the  books  of  the Company or its Subsidiaries, as the
                    case may be); and  no tax Liens have been filed and, to
                    the  knowledge of the  Company,  no  claims  are  being
                    asserted  with respect to any such taxes, fees or other
                    charges other  than with respect to Customary Permitted
                    Liens.

               Section 4.11 Regulations G, T, U and X.  Neither the Company
                    nor any of its Subsidiaries  is engaged principally, or
                    as one of its important activities,  in the business of
                    extending  credit  for  the  purpose  of purchasing  or
                    carrying margin stock, and less than 25%  of the assets
                    of  the  Company,  individually  and  on a consolidated
                    basis with its Subsidiaries, consists of  margin stock.
                    The  proceeds of any Loans made hereunder will  not  be
                    used  for   a  purpose  which  violates,  or  would  be
                    inconsistent  with, F.R.S. Board Regulations G, T, U or
                    X.  Terms for which  meanings  are  provided  in F.R.S.
                    Board Regulations G, T, U and X have such meanings when
                    such terms are used in this Section 4.11.

               Section 4.12 ERISA.

                    (a)  Prohibited  Transactions.  Neither the Company  nor
               any Subsidiary has engaged  in  a  transaction in connection
               with which the Company or any Subsidiary could be subject to
               a  material  liability for either a civil  penalty  assessed
               pursuant to Section  502(i)  of  ERISA  or  a tax imposed by
               Section 4975 of the Code.

                    (b) Plan Termination; Material Liabilities.   There  has
               been  no  termination  of  a Plan or trust created under any
               Plan that would give rise to  a  material  liability  to the
               PBGC  on the part of the Company or an ERISA Affiliate.   No
               material liability to the PBGC has been or is expected to be
               incurred with respect to any Plan by the Company or an ERISA
               Affiliate.   The  PBGC  has  not  instituted  proceedings to
               terminate  any  Plan  which  is  maintained  or  is  to   be
               maintained  by  the  Company  or  an ERISA Affiliate.  There
               exists no condition or set of circumstances which presents a
               material risk of termination or partial  termination  of any
               Plan by the PBGC.  The Company and each Code Affiliate  have
               paid all premiums to the PBGC when due.

                    (c)  Accumulated Funding  Deficiency.  Full payment has
               been made of all amounts which are  required under the terms
               of each Plan to have been paid as contributions to such Plan
               as of the last day of the most recent  fiscal  year  of such
               Plan  ended on or before the date of this Agreement, and  no
               accumulated funding deficiency (as defined in Section 302 of
               ERISA and  Section  412 of the Code), whether or not waived,
               exists with respect to  any  Plan  or  any  employee pension
               benefit  plan  (as defined in ERISA) maintained  by  a  Code
               Affiliate.  The aggregate contributions the Company must pay
               to the Plans under  the minimum funding rules of Section 412
               of  the  Code  will  not   exceed  $5,000,000  in  1996  and
               $10,000,000  in 1997.  Neither  the  Company  nor  any  Code
               Affiliate has  failed  to  make a required installment under
               Section 412(m) of the Code or  any  other  payment  required
               under Section 412 of the Code on or before the due date.

                    (d) Relationship of Benefits to Pension Plan Assets. As
               of  January  1,  1996,  the  current  value  of  the benefit
               liabilities of each Single Employer Plan does not exceed the
               fair  market  value  of  the  assets  of such Plan based  on
               valuing  the  liabilities  using  a  7.25%  discount   rate.
               Neither  the  Company  nor  a  Code Affiliate is required to
               provide security to a Plan or an  employee  pension  benefit
               plan  (as  defined  in ERISA) maintained by a Code Affiliate
               under Section 401(a)(29) of the Code.

                    (e) Withdrawal Liability.   Neither the Company nor any
               ERISA  Affiliate  has  incurred  withdrawal  liability  with
               respect to any Multiemployer Plan.  To the best knowledge of
               the  Company,  the  liability to which the Company  and  any
               ERISA Affiliate would  become  subject  under  ERISA  if the
               Company  and any ERISA Affiliate were to withdraw completely
               from all Plans  which are Multiemployer Plans as of the most
               recent valuation date, together with any secondary liability
               for withdrawal liability the Company and any ERISA Affiliate
               may  have  as  of  the  date  hereof  with  respect  to  any
               Multiemployer Plan, could not reasonably be expected to have
               a Material Adverse Effect.   To  the  best  knowledge of the
               Company, no such Multiemployer Plan is in reorganization (as
               such  term  is  defined  in  Section  4241 of ERISA)  or  is
               insolvent  (as  such  term  is  defined in Section  4245  of
               ERISA).   Neither  the  Company  nor   any  ERISA  Affiliate
               contributes  to  or has any liability with  respect  to  any
               Multiemployer Plan.

                    (f) Retiree Welfare Benefits.  The excess of the present
               value  of  the  projected  liability  in  respect  of  post-
               retirement health,  medical  and  other welfare benefits for
               retired  employees  of  the  Company  and  its  Subsidiaries
               determined  using assumptions which are  reasonable  in  the
               aggregate over the fair market value of any fund, reserve or
               other asset segregated  for  the  purpose of satisfying such
               liability, does not exceed $2,500,000  as  of  December  31,
               1996 based on the valuation performed as of January 1, 1996.

                    (g) ESOP.  The stock of the Company held in the Avondale
               Industries,  Inc. Employee Stock Ownership Plan (the "ESOP")
               is "readily tradeable  on  an established market" within the
               meaning   of  Section  409(h)  of   the   Code;   therefore,
               participants  in  the  ESOP do not have the right to require
               that the Company repurchase  such  shares  when  distributed
               from the ESOP.

               Section  4.13 Subsidiaries.  At the date of this Agreement the
               Company has no Subsidiaries  except those listed on Schedule
               4.13, and the  Company  owns  the  percentage of outstanding
               voting  shares  of each such Subsidiary  indicated  on  such
               Schedule.

               Section 4.14 Government Regulation.  Neither the Company nor
               any  of  its Subsidiaries is an "investment company"  within
               the meaning  of  the  Investment  Company  Act  of  1940, as
               amended,  or  a "holding company", or a "subsidiary company"
               of a "holding company",  or  an  "affiliate"  of  a "holding
               company",  or  of  a  "subsidiary  company"  of  a  "holding
               company"  within  the  meaning of the Public Utility Holding
               Company Act of 1935, as amended.

               Section 4.15 Environmental  Matters.   Except  as  set forth in
               Schedule 4.15:

                    (a)  all  facilities  and property (including underlying
               groundwater) owned or leased  by  the  Company or any of its
               Subsidiaries   are   in   material   compliance   with   all
               Environmental  Laws  the  non-compliance  with  which  could
               reasonably be expected to have a Material Adverse Effect;

                    (b) there have been no  Releases  of Hazardous Materials
               at,  on  or  under any property now or previously  owned  or
               leased by the  Company  or  any  of  its  Subsidiaries that,
               singly  or  in the aggregate, have, or could  reasonably  be
               expected to have, a Material Adverse Effect;

                    (c) there  are  no  underground storage tanks, active or
               abandoned, including petroleum  storage  tanks,  on or under
               any  property  now  or  previously  owned  or leased by  the
               Company or any of its Subsidiaries that, singly  or  in  the
               aggregate, have, or could reasonably be expected to have,  a
               Material Adverse Effect;

                    (d)  there  are  no polychlorinated biphenyls or friable
               asbestos present at any  property now owned or leased by the
               Company or any of its Subsidiaries  that,  singly  or in the
               aggregate, have, or could reasonably be expected to  have, a
               Material Adverse Effect; and

                    (e)  as  of the date of this Agreement, to the knowledge
               of the Company,  no  conditions  exist  at,  on or under any
               property now or previously owned or leased by the Company or
               any of its Subsidiaries which, with the passage  of  time or
               the  giving  of notice or both, would give rise to liability
               under  any  Environmental  Law  which  could  reasonably  be
               expected to have a Material Adverse Effect.

               Section 4.16 Judgments or Litigation.  Except as set forth on
               Schedule 4.6, no judgments,  orders,  writs  or  decrees are
               outstanding  against  the Company or any of the Subsidiaries
               nor is there now pending  or,  to  the best of the Company's
               knowledge,  threatened any litigation,  protest,  challenge,
               action,  contested  claim,  investigation,  arbitration,  or
               governmental proceeding (i) by or against the Company or any
               of  the  Subsidiaries   in   which  there  is  a  reasonable
               possibility  of  an  adverse  decision  which  (taking  into
               account insurance coverage) could  reasonably be expected to
               have a Material Adverse Effect or (ii)  whether  or  not the
               Company  or  any Subsidiary is a party thereto, seeking  any
               determination   or   ruling  that  might  materially  affect
               adversely  the  rights  of  the  Company  under  the  LPD-17
               Contract.

               Section 4.17 Government Contracts.  Neither the Company  nor
               any Subsidiary has ever been  debarred   or  suspended  from
               contracting  (as  a  first  tier  or  any  other   level  of
               subcontractor) for or bidding on any Government Contract (as
               such  term  is  defined  below) or had a Government Contract
               cancelled or terminated for  default  by  the  Company  or a
               Subsidiary, as the case may be.  Neither the Company nor any
               of  its Subsidiaries is currently debarred or suspended from
               (or has  received notice that it is under investigation with
               respect to  a possible debarment or suspension from) bidding
               on  or  entering   into   any   contract  with  or  for  any
               Governmental Authority (together  with each Navy Contract, a
               "Government Contract").  Neither the  Company nor any of its
               Subsidiaries has been given notice (i)  that  any Government
               Contract may be or will be terminated for the convenience of
               a  Governmental Authority or by virtue of a default  by  the
               Company or any of its Subsidiaries, as the case may be, (ii)
               other  than  the  contracting  officer's  order  to  suspend
               performance under the LPD-17 Contract referenced in Schedule
               4.6, that a major program or Contract of the Company or  any
               Subsidiary  will  be  eliminated or substantially reduced or
               suspended, (iii) requiring  or  resulting in, loss of use or
               substantial impairment or interference of use by the Company
               or  any of its Subsidiaries, as the  case  may  be,  of  any
               facilities  owned  by a Governmental Authority, or (iv) that
               any relevant budget authority or contract authority has been
               exceeded with respect  to  any  Government Contract which in
               any  such  case  could  reasonably be  expected  to  have  a
               Material Adverse Effect.  Neither the Company nor any of its
               subsidiaries anticipates  incurring  cost  overruns  on  any
               Government  Contracts  which could reasonably be expected to
               have a Material Adverse Effect.

               Section 4.18 Modular Construction.  The Company has full right
               to use the modular construction technology  used  (or needed
               to  be  used)  in the completion of its Government Contracts
               subject to no patent,  technology  or other license from any
               Person.   No  Person has made a written  claim  against  the
               Company that such  use  is in violation of any patent rights
               or proprietary information  and  there  is no pending or, to
               the best knowledge of the Company, threatened litigation, or
               arbitration in which it is alleged that the Company's use of
               such technology violates any patent or proprietary right.

               Section 4.19 Licenses, Permits.  The Company and each of its
               Subsidiaries   have   all  permits,  certificates,  licenses
               (including  patent and copyright  licenses),  approvals  and
               other  authorizations   required   in  connection  with  the
               operation of their businesses, except  those which could not
               reasonably be expected to have a Material Adverse Effect.

               Section 4.20 Navy Contracts.  Except as set forth on Schedule
               4.20, the Company has the right under the Navy Contracts  to
               assign  the  Company's  right,  title  and  interest  to the
               proceeds  thereof to the Agent for the benefit of the Banks,
               in each case, free of any contractual right of set-off.  The
               Company has not released any Governmental Authority from any
               liability or  claim  of  entitlement under any Navy Contract
               except in the ordinary course  of  business  in  respect  of
               change  orders.   There  are  no  offsets, and there are not
               currently  threatened  or  pending  any  claims  of  offsets
               against  the  Company  or  any  of its Subsidiaries  by  any
               Governmental Authority which claims  of  offsets may be used
               to reduce amounts owing by any Governmental  Authority under
               the Navy Contracts, which claims of offsets could reasonably
               be expected to have a Material Adverse Effect.

               Section  4.21  Loan Documents, etc. All of the representations
               and warranties  made  by  the  Company  in  the  other  Loan
               Documents are true and correct.

               Section  4.22  No  Federal Tax or ERISA Liens.  No notice of
               or any other document or instrument  creating any federal tax
               Lien or Lien under Section 412 of the  Code  or Section 4068
               of ERISA has been issued, recorded or filed with  respect to
               the assets of the Company or any of its Subsidiaries.

               Section 4.23  No  Bonds.   There are no payment or performance
               bonds applicable to the Navy Contracts.

               Section 4.24  Labor Controversies.

                    (a) Except as disclosed  on  Schedule 4.24, there are no
               controversies  pending  or,  to the best  of  the  Company's
               knowledge  after diligent inquiry,  threatened  between  the
               Company  or  any  of  the  Subsidiaries  and  any  of  their
               respective employees  which  could reasonably be expected to
               have a Material Adverse Effect.

                    (b) Neither the Company nor  any  of the Subsidiaries is
               engaged in any unfair labor practice.   Except  as set forth
               on  Schedule  4.24,  there  is  (i) no unfair labor practice
               complaint  pending  against  the  Company   or  any  of  the
               Subsidiaries  or,  to  the  best  knowledge of the  Company,
               threatened against any of them, before  the  National  Labor
               Relations Board, and no grievance or significant arbitration
               proceeding  arising  out  of  or under collective bargaining
               agreements is so pending against  the  Company or any of the
               Subsidiaries  or,  to  the  best knowledge of  the  Company,
               threatened  against  any  of them,  (ii)  no  strike,  labor
               dispute, slowdown or stoppage  pending against either of the
               Company or any of the Subsidiaries or, to the best knowledge
               of the Company, threatened against any of them, and (iii) no
               union representation question with  respect to the employees
               of the Company or any Subsidiaries and  no  union organizing
               activities.

               Section 4.25 Capitalization; Existing Indebtedness.  Schedule
               4.25 ("Ownership of the Company") sets forth, as of the date
               of this Agreement,  each record and, to the knowledge of the
               Company, beneficial owner  of  5% or more of the outstanding
               shares of each class of outstanding equity securities of the
               Company.  As of the date of this  Agreement,  Schedule  7.13
               sets  forth  all outstanding Indebtedness of the Company and
               its Subsidiaries.

               Section 4.26 Patents, Trademarks, etc.  Each of the  Company
               and each of its Subsidiaries  owns  and possesses  all  such
               patents, patent  rights, trademarks, trademark rights, trade
               names, trade name rights, service marks, service mark rights
               and copyrights required  in  connection  with the conduct of
               their business as now conducted without, to  the best of its
               knowledge,  any material infringement upon rights  of  other
               Persons.

               Section  4.27 Collateral  Documents.   The   provisions   of 
               the Collateral Documents executed or to  be  executed by the
               Company and its Subsidiaries in favor of the Agent  will be,
               on  and  after  the  due  execution  and delivery thereof in
               accordance herewith (and after giving  effect to the Initial
               Credit Event), effective to create, in favor  of  the  Agent
               for the benefit of the Agent and the Banks, legal, valid and
               enforceable  Liens  in  all right, title and interest of the
               Company  and  its  Subsidiaries   in  any  and  all  of  the
               Collateral described therein, securing  the Revolving Notes,
               Reimbursement  Obligations  and  all other Obligations  from
               time  to  time  outstanding,  and  upon   all   filings  and
               recordings being duly made in the locations referred  to  in
               the   applicable  Collateral  Documents  or  the  taking  of
               possession of the Collateral by the Agent in accordance with
               the provisions of such Collateral Documents or the taking of
               such other  action  by  the  Agent as is contemplated by the
               Collateral  Documents,  each of  such  Collateral  Documents
               shall constitute, as of and  after  the  Effective Date (and
               after giving effect to the Initial Credit  Event),  a  fully
               perfected  first  priority  Lien  in  all  right,  title and
               interest  of  the  Company  and  its  Subsidiaries  in  such
               Collateral  superior  in  right  to  any  Liens, existing or
               future,  which  the  Company  or  any creditors  thereof  or
               purchasers therefrom, or any other  Person, may have against
               such Collateral or interest therein, other than interests of
               Persons with respect to Customary Permitted Liens.

               Section 4.28 Accuracy of Information.  All factual information
               heretofore or contemporaneously furnished by or on behalf of
               the Company in writing to the Agent or any Bank for purposes
               of or in connection with this Agreement or  any  transaction
               contemplated   hereby   is,   and  all  other  such  factual
               information hereafter furnished  by  or  on  behalf  of  the
               Company  to  the  Agent  or any Bank in connection with this
               Agreement or any transaction  contemplated  hereby  will be,
               true  and accurate in every material respect on the date  as
               of which  such  information  is  dated or certified and such
               information is not or shall not be,  as  the  case  may  be,
               incomplete  by omitting to state any material fact necessary
               to make such  information  not  misleading; provided that in
               the case of any projections hereafter  so furnished by or on
               behalf of the Company, such projections  shall represent the
               reasonable expectations of the management  of the Company of
               future   performance,   based   upon   historical  financial
               information and reasonable assumptions.

               Section 4.29 Solvency.    Each   of  the  Company  and  each
               Subsidiary is Solvent.

               Section 4.30 The LPD-17 Contract.  Schedule  4.30   contains
               a true and correct  description of the material terms of the
               LPD-17 Contract.

               Section 4.31 Qualification for MARAD Refinancing  of  LPD-17
               Expenditures.    (i) The Company is fully qualified to apply
               for,  and  is  eligible   for,  MARAD  Title  XI  guaranteed
               financing for the Design Center  under 46 CFR Part 298 in an
               amount not less than $35,000,000,  (ii)  the  Company  is  a
               qualified  General Shipyard Facility as defined therein, and
               (iii)  the  Design   Center  and  related  improvements  are
               eligible  Advanced  or  Modern  Shipbuilding  Technology  as
               defined therein.

                                         SECTION V

                          CONDITIONS PRECEDENT TO EFFECTIVE DATE
                               AND EACH EXTENSION OF CREDIT

               THIS  AMENDED AND RESTATED  REVOLVING  CREDIT  AGREEMENT  IS
               BEING  EXECUTED   AND   DELIVERED   BY  THE  PARTIES  HERETO
               CONDITIONALLY, AND THE OBLIGATION OF  THE  BANKS  TO  EXTEND
               CREDIT  ACCORDING TO THE TERMS HEREOF IS TO BECOME EFFECTIVE
               ONLY UPON  AND  SUBJECT  TO  THE OCCURRENCE BY THE SPECIFIED
               DATE OF THE CONDITIONS TO EFFECTIVENESS SET FORTH IN SECTION
               5.1 HEREOF.  SATISFACTION OF THE CONDITIONS TO EFFECTIVENESS
               SET FORTH IN SECTION 5.1 HEREOF  SHALL BE SUBJECT TO WRITTEN
               CONFIRMATION  BY  THE  AGENT,  AND, UNLESS  AND  UNTIL  SUCH
               CONFIRMATION SHALL HAVE BEEN ISSUED  BY THE AGENT, THE BANKS
               SHALL HAVE NO OBLIGATION TO EXTEND CREDIT  HEREUNDER AND THE
               EXISTING  CREDIT  AGREEMENT SHALL REMAIN IN FULL  FORCE  AND
               EFFECT IN ACCORDANCE  WITH  ITS TERMS.  THE COMPANY CONFIRMS
               THAT (1) ALL COLLATERAL DOCUMENTS  EXECUTED AND DELIVERED IN
               CONNECTION WITH THE EXISTING CREDIT AGREEMENT ARE AND REMAIN
               IN  FULL FORCE AND EFFECT, AND, UPON  THE  EFFECTIVENESS  OF
               THIS  AGREEMENT,  SHALL  REMAIN  IN FULL FORCE AND EFFECT AS
               SECURITY FOR, AMONG OTHER THINGS,  THE  OBLIGATIONS, AND (2)
               THE PROMISSORY NOTES ISSUED PURSUANT HERETO ARE AND SHALL BE
               GIVEN  IN RENEWAL, INCREASE AND REARRANGEMENT,  AND  NOT  IN
               NOVATION  OR  DISCHARGE,  OF THE PROMISSORY NOTES ISSUED AND
               OUTSTANDING PURSUANT TO THE EXISTING CREDIT AGREEMENT.

               Section  5.1  Effective Date; Initial   Credit   Extensions.
               Notwithstanding  any other provision of this Agreement,  the
               effectiveness of this  Agreement  and,  correspondingly, the
               obligations  of  the  Banks  to  make  the  initial   Credit
               Extension  hereunder  shall  be  subject  to  the  prior  or
               concurrent  satisfaction on or before April 30, 1997 of each
               of the following  conditions  precedent  set  forth  in this
               Section 5.1:

                    (a) Documents.

                         (i)  Each of the Banks shall have executed and
               delivered a counterpart  of this Agreement to the Agent
               and the Agent shall have received a counterpart of this
               Agreement  conforming to the  requirements  hereof  and
               executed by a Responsible Officer of the Company.

                         (ii)  The  Agent  shall  have received the Loan
               Documents  to  be  executed  by  the Company  (and  all
               documents   related   thereto)  duly  executed   by   a
               Responsible Officer of  the Company except as otherwise
               specifically provided herein.

                         (iii) Each of the  Banks  shall  have received
               a Revolving Note and  a  counterpart of this  Agreement
               conforming to the requirements hereof and executed by a
               Responsible Officer of the Company.

                         (iv)   The  Agent shall  have   received   an
               Assignment  of  Claims   Notice   acknowledged  by  the
               appropriate    administrative   contracting    officer,
               disbursing officer  and,  if  applicable, any surety or
               bonding company applicable to the  Government Contracts
               providing for aggregate payments to the Company and the
               Subsidiary Guarantors of $1,000,000 or more (other than
               the contracts specified in the last sentence of Section
               6.11),  including,  without limitation,  the  Contracts
               listed on Schedule II hereto.

                         (v)   The  Agent    shall    have    received
               confirmations,  in  the form attached hereto as Exhibit
               M, of the Subsidiary Guarantees and Subsidiary Security
               Agreements  executed  by   the   respective  Subsidiary
               Guarantors, executed by a Responsible  Officer  of each
               Subsidiary party thereto.

                         (vi) The Agent shall have received confirmation
               satisfactory  to the Agent and the Required Banks  that
               proper financing statements (Form UCC-1) have been duly
               filed   under   Uniform    Commercial   Code   of   all
               jurisdictions as may be necessary or, in the opinion of
               the Agent and the Required Banks,  desirable to perfect
               the  Liens  and  security  interests  created   by  the
               Collateral Documents.

                         (vii)  The Agent shall have received certified
               copies of Requests for Information or Copies (Form UCC-
               11) or equivalent reports,  which  certified  copies or
               reports  shall  list all effective financing statements
               which name each grantor  under the Collateral Documents
               as  debtor  and which are filed  in  the  jurisdictions
               referred to in  clause (vi) above, together with copies
               of such financing statements (none of which shall cover
               the Collateral purported  to  be  covered by any of the
               Collateral Documents, except with respect to Liens with
               respect to which the Company shall  have  delivered  to
               the  Agent  a  duly  executed  Uniform  Commercial Code
               termination statement).

                         (viii)  The Agent shall have received evidence
               that all other actions that,  in  the  opinion  of  the
               Agent  and the Required Banks, are advisable to perfect
               and protect  the  Liens  in  the  Collateral created or
               purported  to  be  created by the Collateral  Documents
               have been taken.

                         (ix) The Agent shall have  received  evidence
               that  all  insurance  policies,  coverages  and  riders
               (including loss payable endorsements in favor of and in
               form  and  substance  satisfactory to the Agent and the
               Required Banks) required  pursuant  to the requirements
               of this Agreement and the other Loan  Documents  are in
               full force and effect.

                    (b)   Fees and Expenses.  The  Agent  and  each  of the
          Banks  shall  have  received payment in full of  those  fees  and
          expenses referred to  in the Fee Letter which are due on or prior
          to the Effective Date (or  an  irrevocable  authorization  to pay
          such fees or expenses out of the proceeds of the Loans).

                    (c)   Corporate Action of the Company.  The Agent shall
          have received (i) certified  copies of all corporate action taken
          by  the  Company  to  authorize  the   execution,   delivery  and
          performance, in accordance with their respective terms,  of  this
          Agreement  and  the  other Loan Documents and any other documents
          required  or  contemplated   hereunder   or  thereunder;  (ii)  a
          certificate of incumbency with respect to  the  officers  of  the
          Company  authorized  and  directed  to  execute  and deliver this
          Agreement  and  the  other  Loan  Documents, and other  documents
          required or contemplated thereunder;  (iii)  certified  copies of
          the Articles of Incorporation and by-laws of the Company, amended
          to the date hereof; and (iv) certificate(s) of good standing  for
          the Company from the appropriate authority in its jurisdiction of
          incorporation  and  in  each  other  jurisdiction  in which it is
          required to qualify to do business.

                    (d)   Corporate Action  of  the  Subsidiary Guarantors.
          The  Agent  shall  have  received  in  respect  of  each  of  the
          Subsidiary Guarantors party to any Loan Documents  (i)  certified
          copies of all corporate action taken by such Subsidiary Guarantor
          to   authorize   the  execution,  delivery  and  performance,  in
          accordance with their  respective terms, of the Loan Documents to
          which  it  is  a  party  and  any  other  documents  required  or
          contemplated thereunder;   (ii)  a certificate of incumbency with
          respect to the officers of such Subsidiary  Guarantor  authorized
          and  directed to execute and deliver the Loan Documents to  which
          it is  a  party,  and  other  documents  required or contemplated
          thereunder;   (iii)   certified   copies  of  the   articles   of
          incorporation and by-laws of such Subsidiary  Guarantor,  amended
          to the date hereof; and (iv) certificate(s) of good standing  for
          such  Subsidiary  Guarantor from the appropriate authority in its
          jurisdiction of incorporation  and  in each other jurisdiction in
          which it is required to qualify to do business.

                    (e)   Consents.  The Agent shall  have received  all of
          the  consents  necessary,  in  the  opinion  of the Agent and the
          Required  Banks,  to  accomplish  the  transactions  contemplated
          hereby, including without limitation the  consent of MARAD to the
          Mortgage Amendment.

                    (f)   Officer's  Certificate.   The  Agent  shall  have
          received, as an inducement to the Agent and the  Banks  to  enter
          into  this Agreement, a certificate of the Company executed by  a
          Responsible  Officer  of the Company and dated the Effective Date
          certifying that as of such date:

                         (i) no "Default"  or "Event  of  Default" (as
               such   terms   are   defined  in  the  Existing  Credit
               Agreement) has occurred and is continuing;

                         (ii)   no  Default  or  Event of Default  has
          occurred and is continuing (after giving effect to any Loans
          to  be made, and Letters of  Credit  outstanding  or  to  be
          issued, on the date thereof);

                         (iii)  the representations and  warranties of
          the Company contained in this Agreement and the  other  Loan
          Documents  and  in any certificate, document or financial or
          other  statement furnished  by  the  Company  are  true  and
          correct; and

                         (iv)  without limiting the foregoing, no event
          or events  which,  individually or in the aggregate has had,
          or could reasonably  be expected to have, a Material Adverse
          Effect  has  occurred  since   December  31,  1995,  and  no
          litigation is pending or threatened  against  the Company or
          any Subsidiary in which there is a reasonable possibility of
          an adverse decision which would result in a Material Adverse
          Effect.

                    (g)   Documentation and Proceedings.  All corporate and
          legal  proceedings  and  all instruments in connection  with  the
          transactions contemplated by this Agreement shall be satisfactory
          in  form and substance to the  Agent  and  its  counsel  and  the
          Required  Banks,  and  the Agent and each of the Banks shall have
          received all information  and  copies of all documents, including
          records  of  corporate proceedings,  governmental  approvals  and
          incumbency certificates which it may have reasonably requested in
          connection with  the  transactions contemplated by this Agreement
          such  documents  where appropriate  to  be  certified  by  proper
          officers.

                    (h)   Opinions.   Each of the Banks shall have received
          the favorable opinions of (i) Jones, Walker, Waechter, Poitevent,
          Carrere & Denegre, Louisiana counsel  to the Company, in form and
          substance  as attached hereto as Exhibit  O,  (ii)  Sonnenschein,
          Nath & Rosenthal, Government Contracts counsel to the Company, in
          form and substance  as  attached  hereto  as Exhibit P, and (iii)
          Butler & Binion, L.L.P., special counsel to  the  Agent,  in each
          case,  addressed  to the Agent, the LC Issuer and the Banks,  and
          such other opinions of counsel as the Agent or the Required Banks
          may reasonably request,  in  each  case  in  form  and  substance
          satisfactory to the Agent and its counsel and the Required Banks.

                    (i)   Solvency.   The Agent shall have received for the
          benefit of each Bank and the  LC  Issuer  a  certificate  of  the
          Company  executed on its behalf by the chief financial officer of
          the Company,  in form and substance satisfactory to the Agent and
          the Required Banks,  relying  upon such projections and financial
          information as may be referred  to  therein  and  containing such
          other  information  as may be required by, and be acceptable  to,
          the Agent and the Required  Banks, to the effect that the Company
          is and will be Solvent after  giving  effect  to the transactions
          contemplated hereby.

                    (j)   LPD-17 Contract.  The Agent shall  have  received
          the following, in form and  substance  satisfactory  to the Agent
          and  the  Required  Banks:   (i)  a  certificate  of  the Company
          executed  by  a Responsible Officer of the Company and dated  the
          Effective Date  certifying  that  as  of such date (A) the LPD-17
          Contract has been duly executed by the Company, the United States
          Navy, and the other parties thereto, (B)  the award of the LPD-17
          Contract  to  the  Company  is  not the subject  of  any  pending
          protest, challenge, action or proceeding  before any Governmental
          Authority, the time period for the filing of  any  such  protest,
          challenge,  action  or  proceeding with the Government Accounting
          Office,  the  United  States   Navy  or  any  other  Governmental
          Authority  exercising administrative  (as  opposed  to  judicial)
          authority has expired pursuant to applicable law and regulations,
          and there is no currently effective order to suspend performance,
          automatic stay  of  performance,  injunction or restraining order
          relating  to  the  LPD-17 Contract, (C)  Schedule  4.30  of  this
          Agreement contains a true and correct description of the material
          terms of the LPD-17  Contract,  and  (D)  the representations and
          warranties  contained herein and in the Security  Agreement  with
          respect to Navy  Contracts  are  true and correct with respect to
          the LPD-17 Contract, along with (ii)  certified copies of (X) the
          GAO's written determination denying or  dismissing the protest of
          the award of the LPD-17 Contract referenced  in  Schedule 4.6 and
          (Y)  the  Navy's  letter  notifying Avondale of the corresponding
          termination  of  the  related   suspension   of  performance  and
          automatic  stay  and  authorizing  performance under  the  LPD-17
          Contract.

                    (k)   Repayment of Indebtedness  Under Existing  Credit
          Agreement.  The Company shall have repaid all amounts owing under
          the  Existing Credit Agreement, including without limitation  (i)
          the principal  of and accrued interest on all Loans, (ii) funding
          losses owed by reason of repayment of such Loans on the Effective
          Date hereunder (if  the Effective Date is on a day which is other
          than the last day of  an  "Interest  Period"  under  the Existing
          Credit  Agreement),  and (iii) commitment fees, letter of  credit
          fees and other fees pursuant  to  Sections  2.9  and  3.3  of the
          Existing Credit Agreement accrued through the Effective Date.

                    (l)   Additional Matters. The Agent shall have received
          such  other  documents  as  may  reasonably  be  required  by the
          Required  Banks and all documents and legal matters in connection
          with the transactions  contemplated  by  this  Agreement shall be
          reasonably satisfactory in form and substance to  the  Agent  and
          the Required Banks.

               Section 5.2 Conditions to Initial Letter of Credit Issuance.
          In  the  event  that  the  first Loan  has  not  been  made,  the
          obligation of the LC Issuer to issue the initial Letter of Credit
          shall be subject to its receipt  of  an  Issuance  Request (other
          than  in  the  case  of the Existing Letters of Credit)  and  the
          satisfaction of the conditions  precedent  set  forth  in Section
          5.1.

               Section 5.3  Conditions to Each Extension  of  Credit.   The
          obligation of the Banks to make any Loan and of the LC  Issuer to
          issue any Letter of Credit is subject to the satisfaction  of the
          following conditions precedent on the relevant Borrowing Date:

                    (a)   Representations     and      Warranties.      The
          representations  and  warranties  made by the Company  herein  or
          which are contained in any certificate,  document or financial or
          other statement furnished by the Company at  any time under or in
          connection herewith shall be correct in all material  respects on
          and as of such Borrowing Date as if made on and as of such  date,
          except  to  the  extent  that such representations and warranties
          expressly relate solely to  an  earlier  date (in which case such
          representations and warranties shall have  been true and accurate
          on and as of such earlier date).

                    (b)   No  Default or Event of Default.   No Default  or
          Event of Default shall  have  occurred  and be continuing on such
          Borrowing Date or after giving effect to  the  Loan to be made or
          issuance of the Letter of Credit to be issued on  such  Borrowing
          Date.

                    (c)   Borrowing   Certificate.   The  Agent shall  have
          received a Borrowing Request in accordance with Section 2.4 or an
          Issuance Request in accordance  with Section 3.2, as the case may
          be.

                    (d)   Fees.  The Agent and the Banks shall have received
          all fees due and owing pursuant to Section 2.9 and Section 3.3.

                    (e)   No Federal Tax or ERISA  Liens.   No notice of or
          any other document or instrument creating any federal tax Lien or
          Lien under Section 412 of the Code or Section 4068 of ERISA shall
          have been issued, recorded or filed with respect to the assets of
          the  Company  or any of its Subsidiaries and no Bank  shall  have
          informed the Agent  or  the  Company that such Bank has processed
          any such Lien or has notice thereof.

               Each   Credit  Extension  hereunder   shall   constitute   a
          representation and warranty by the Company as of the date of such
          Credit Extension  that  the  conditions set forth in this Section
          5.3 have been satisfied.

                                       SECTION VI

                                AFFIRMATIVE COVENANTS

               The Company hereby agrees  that,  so long as the Commitments
          remain in effect, any Revolving Note remains  unpaid,  Letter  of
          Credit  Outstandings  exist,  or any other amount is owing to the
          Agent, the Banks or the LC Issuer  hereunder,  the  Company shall
          and shall cause each of its Subsidiaries to:

               Section 6.1 Financial Statements.  Furnish to the Agent with
          sufficient copies for each of the Banks:

                    (a)   as soon  as available, but in any event within 95
          days after the end of each  fiscal year of the Company, a copy of
          the audited consolidated balance  sheet  of  the  Company and its
          consolidated  Subsidiaries  as  at the end of such year  and  the
          related consolidated statement of  operations,  statement of cash
          flows  and  statement  of  stockholders'  equity reported  on  by
          Deloitte   &  Touche,  or  other  independent  certified   public
          accountants of nationally recognized standing;

                    (b)   as  soon as available, but in any event not later
          than 50 days after the end  of  each of the first three quarterly
          periods  of  each  fiscal  year  of  the  Company  the  unaudited
          consolidated balance sheet of the Company  and  its  consolidated
          Subsidiaries  as at the end of each such quarter and the  related
          unaudited consolidated  statement  of operations and statement of
          shareholders' equity and its consolidated  Subsidiaries  for such
          quarter  and  the  portion  of the fiscal year through such date,
          each certified by a Responsible  Officer as fairly presenting the
          financial  condition  of  the  Company   and   its   consolidated
          Subsidiaries as at such date;

                    (c)   as soon as available, but in any event  within 45
          days after the end of each fiscal quarter of the Company, (i) the
          information described on Schedule 6.1 with respect to the Company
          and  the  Subsidiary Guarantors, prepared in a form acceptable to
          the Required  Banks  and  the  Agent,  (ii)  a calculation of the
          Company's "Working Capital", "Long-Term Debt"  and "Net Worth" as
          defined  in  that  certain  Title  XI Reserve Fund and  Financial
          Agreement dated as of February 9, 1995  between  the  Company and
          the United States of America (relating to the Shipyard  Project),
          a comparison of such amounts to the amounts set forth in  Section
          13(b) of such Agreement, a statement as to whether the provisions
          of  Section 13(b) of such Agreement are applicable to the Company
          as a  result  of the Company's failure to meet the thresholds set
          forth in Section  13(b)(i)  of such Agreement, and a statement by
          the Company that no default or Event of Default exists under such
          Agreement, or, if such default  or Event of Default does exist, a
          description thereof and an explanation  of  the steps being taken
          by  the  Company  to  cure the same, (iii) a calculation  of  the
          Company's "Working Capital",  "Long-Term Debt" and "Net Worth" as
          defined  in  that certain Title XI  Reserve  Fund  and  Financial
          Agreement dated  as  of  October 21, 1975 between the Company and
          the United States of America  as amended by amendments numbered 1
          through  5  thereof  (relating  to   the   Avondale  Drydock),  a
          comparison of such amounts to the amounts set  forth  in  Section
          13(b) of such Agreement, a statement as to whether the provisions
          of  Section 13(b) of such agreement are applicable to the Company
          as a  result  of the Company's failure to meet the thresholds set
          forth in Section  13(b)(i)  of  such Agreement and a statement by
          the Company that no default or Event of Default exists under such
          Agreement, or, if such default or  Event of Default does exist, a
          description thereof and an explanation  of  the steps being taken
          by  the Company to cure the same; and (iv) a calculation  of  the
          Company's "Consolidated Tangible Net Worth", "Consolidated Senior
          Indebtedness   Ratio",  and  "Consolidated  Senior  Debt  Service
          Ratio", as defined  in  the Refunding Agreement dated as of April
          4, 1994 as amended by the  First  Amendment  dated as of June 28,
          1994  between the Company and the Board of Commissioners  of  the
          Port  of  New  Orleans  (relating  to  the  Jo  Ann  Drydock),  a
          comparison of such amounts (or ratios) to the amounts (or ratios)
          set forth  in the first sentence of Sections 6.13, 6.14 and 6.15,
          respectively,  of  such  agreement, a statement as to whether the
          more restrictive covenant  provisions  of Sections 6.13, 6.14 and
          6.15,  respectively,  of  such agreement are  applicable  to  the
          Company  as  a  result  of the  Company's  failure  to  meet  the
          thresholds set forth in the first sentence of Sections 6.13, 6.14
          and 6.15, respectively, of such agreement, and a statement by the
          Company that no default or  Event  of  Default  exists under such
          Agreement,  or,  if a default or Event of Default does  exist,  a
          description thereof  and  an explanation of the steps being taken
          by the Company to cure the same; and

                    (d)   as soon as available,  but in any event within 30
          days  after  the  end  of  each fiscal year of the  Company,  the
          Company's profit plan for the then current fiscal year, including
          without  limitation,  projections   of  the  Company's  financial
          performance  for  such  year  on  a  quarterly   basis,  and  the
          assumptions underlying such projections.

               All such financial statements required by this  Section  6.1
          are  to  be  prepared in reasonable detail and in accordance with
          GAAP  applied  consistently   throughout  the  periods  reflected
          therein (except as approved by  such  accountants  or Responsible
          Officer, as the case may be, and disclosed therein).

               Section 6.2 Certificates:  Other Information. Furnish to the
          Agent (with sufficient copies for the Banks):

                    (a)   concurrently  with  the delivery of the financial
          statements referred to in Section 6.1(a)  above, a certificate of
          the independent certified public accountants  reporting  on  such
          financial  statements  stating  that  in  making  the examination
          necessary  therefor no knowledge was obtained of any  Default  or
          Event of Default, except as specified in such certificate;

                    (b)   concurrently  with  the delivery of the financial
          statements referred to in Sections 6.1(a)  and  6.1  (b) above, a
          certificate  of  a  Responsible  Officer  stating   that, to  his
          knowledge,  the  representations and warranties set forth  herein
          and in the other Loan  Documents  are  true  and  correct  in all
          material  respects  on  and  as  of  the date of such certificate
          (except to the extent that the same relate  solely  to an earlier
          date), that such Officer has obtained no knowledge of any Default
          or Event of Default except as specified in such certificate,  and
          showing  in  detail the calculations supporting such statement in
          respect of Sections  7.1,  7.2,  7.3, 7.5, 7.6, 7.7, 7.8, 7.9 and
          7.13;

                    (c)   within 10 Business  Days after the same are sent,
          copies of all financial statements and reports  which the Company
          sends to its public stockholders, if any, and within  10 Business
          Days after the same are filed, copies of all financial statements
          and  reports  which  the  Company may make to, or file with,  the
          Securities and Exchange Commission  or any successor or analogous
          Governmental Authority;

                    (d)   within  10 days after the  end  of each  calendar
          year, a certificate of insurance  that evidences the existence of
          each policy of insurance required to be maintained by the Company
          and its Subsidiaries in accordance  with the requirements of this
          Agreement or any other Loan Document,  and  the  payment  of  all
          premiums therefor;

                    (e)   promptly   upon  receipt  thereof  notice of  any
          proposed suspension or debarment of the Company or any Subsidiary
          Guarantor from contracting (as a first tier or any other level of
          subcontractor) for, bidding  on,  or entering into any Government
          Contract;

                    (f)   promptly following request by  the Required Banks
          or the Agent, an updated appraisal or valuation  of  the Avondale
          Drydock in form and substance, and prepared by a firm, reasonably
          satisfactory  to the Agent or Required Banks; provided,  however,
          that the Company  shall  not  be  required  to provide an updated
          appraisal of the Avondale Drydock more frequently than once every
          twelve months;

                    (g)  promptly upon the execution thereof, copies of any
          and all LPD-17 Refinancing Documents; and

                    (h)   promptly,  such  additional  financial and  other
          information  as  the  Agent  or any Bank may from  time  to  time
          reasonably request; the Agent and the Banks severally agreeing to
          take appropriate measures to protect  any proprietary information
          of the Company and its Subsidiaries.

               Section 6.3  Payment  of  Obligations.   Pay,  discharge  or
          otherwise  satisfy  at  or,  to  the  extent  permitted  by  this
          Agreement,  before  maturity or before they become delinquent, as
          the case may be, all its material obligations of whatever nature,
          except when the amount  or  validity  thereof  is currently being
          contested in good faith and reserves in conformity with GAAP with
          respect thereto have been provided on the books of the Company or
          its Subsidiaries.

               Section 6.4  Maintenance of Property:  Insurance.   Keep all
          property useful and necessary in  its  business  in  good working
          order  and  condition and maintain insurance on all its  material
          property in at least such amounts and against at least such risks
          as are currently insured against by the Company and Subsidiaries.
          All policies  covering the Collateral are to name the Agent as an
          additional insured and the loss payee (pursuant to an endorsement
          in form and substance satisfactory to the Agent) in case of loss,
          and  are to contain  such  other  provisions  as  the  Agent  may
          reasonably  require  to fully protect the Agent's interest in the
          Collateral and to any  payments  to  be made under such policies.
          The Company will furnish to the Agent, upon written request, full
          information as to the insurance carried by it.

               Section 6.5 Conduct of Business and Maintenance of Existence.
          Continue  to  engage principally in the businesses  of  the  same
          general type now  conducted by it and preserve, renew and keep in
          full  force and effect  its  corporate  existence  and  take  all
          reasonable   action   to  maintain  all  rights,  privileges  and
          franchises necessary or  desirable  in  the normal conduct of its
          business and comply in all material respects with all Contractual
          Obligations   and   Requirements   of  Law  (including,   without
          limitation, the Federal Acquisition  Regulations (48 CFR Chapters
          1  through  63)) except where the failure  to  comply  with  this
          Section 6.5 could  not  reasonably be expected to have a Material
          Adverse Effect.

               Section 6.6  Inspection  of Property:   Books  and  Records;
          Discussions.  Keep proper books of  records  and account in which
          full,  true  and  correct entries in conformity in  all  material
          respects with GAAP  and  all Requirements of Law shall be made of
          all dealings and transactions  in  relation  to  its business and
          activities; and permit representatives of the Agent or the Banks,
          including,  without  limitation, any consulting/accounting  firm,
          auditors, appraisers or  other professionals engaged by the Agent
          or any of the Banks to visit  and  inspect  any of its properties
          and examine and make abstracts from any of its  books and records
          at any reasonable time during normal business hours  and as often
          as  may  reasonably  be  desired,  and  to  discuss the business,
          operations, properties and financial and other  condition  of the
          Company  and its Subsidiaries with officers and employees of  the
          Company and  its  Subsidiaries and with its independent certified
          public accountants; it being understood that the Company will not
          be obligated to reveal  the  details  of its final bid decisions.
          The  Agent  and  the Banks severally agree  to  take  appropriate
          measures to protect  any  proprietary  information of the Company
          and its Subsidiaries.  The Agent and the  Banks may, from time to
          time, engage a consulting/accounting firm,  auditors,  appraisers
          and/or  other professionals to conduct a review of the operations
          of the Company and Subsidiaries or to assist the Agent and/or the
          Banks in  connection  with  the  exercise  or  enforcement of any
          right, power, privilege or remedy under this Agreement,  the Loan
          Documents  and/or  applicable  law.  The reasonable costs of  any
          such reviews shall be paid by the Company upon demand.

               Section 6.7  Notices.  Promptly give notice to the Agent of:

                    (a) the occurrence of any Default or Event of Default;

                    (b) any (i) default or event of default under any other
                    Contractual Obligation of  the  Company  or  any of its
                    Subsidiaries,   (ii)   litigation,   investigation   or
                    proceeding  which  may  exist  at  any time between the
                    Company or any of its Subsidiaries and any Governmental
                    Authority (including, without limitation,  the Board of
                    Contract  Appeals  and the General Accounting  Office),
                    and (iii) any other  litigation or proceeding affecting
                    the Company or any of  its  Subsidiaries,  in which, in
                    the  case of clauses (i), (ii) or (iii), the  amount(s)
                    claimed  from  the Company or any Subsidiary exceeds or
                    is  likely  to  exceed   $1,000,000,   singularly,   or
                    $3,000,000  in  the  aggregate, or where the Company or
                    any Subsidiary is likely  to  be  debarred or suspended
                    from  bidding on or entering into Government  Contracts
                    generally,  or  any Government Contracts of the Company
                    or any Subsidiary  may  be  forfeited  or cancelled for
                    cause  or the convenience of a Governmental  Authority,
                    and in addition,  will  furnish  to  the  Agent  within
                    ninety  days  after  the end of each fiscal year of the
                    Company,   a   summary   of    all   such   litigation,
                    investigations or proceedings;

                    (c) the following events, as soon as possible and in any
                    event within thirty days after the Company knows or has
                    reason  to  know thereof:  (i) the  occurrence  of  any
                    Reportable Event  with  respect  to  any Plan; (ii) the
                    occurrence of a prohibited transaction  (as  defined in
                    Section 406 of ERISA or Section 4975 of the Code)  with
                    respect   to   any   Plan,  (iii)  the  institution  of
                    proceedings or the taking  or  expected  taking  of any
                    other  action  by  PBGC  or  the  Company  or any ERISA
                    Affiliate   to   terminate  or  withdraw  or  partially
                    withdraw  from  any   Plan   and,  with  respect  to  a
                    Multiemployer    Plan,    the    "Reorganization"    or
                    "Insolvency" of such Plan (as such terms are defined in
                    ERISA),  (iv)  the  failure of the Company  or  a  Code
                    Affiliate to make a required  installment under Section
                    412(m) of the Code or any other  payment required under
                    Section 412 of the Code on or before  the  due  date or
                    (v) the adoption of an amendment with respect to a Plan
                    so that the Company or a Code Affiliate is required  to
                    provide  security  to the Plan under Section 401(a)(29)
                    of the Code, and in  addition  to such notice, delivery
                    to the Agent of a certificate of  a Responsible Officer
                    setting forth details relating thereto,  and the action
                    that  the  Company,  ERISA Affiliate or Code  Affiliate
                    proposes to take with  respect  thereto and when known,
                    any action taken or threatened by  the Internal Revenue
                    Service or the PBGC, together with a copy of any notice
                    to the PBGC or IRS or any notice delivered  by the PBGC
                    or IRS; and

                    (d)   a  material   adverse  change  in  the  business,
                    operations, property or financial or other condition of
                    the  Company  and  Subsidiaries   as   such   business,
                    operations, property or financial or other condition of
                    the  Company  and  Subsidiaries existed on December 31,
                    1995.  Each notice pursuant  to  this  Section shall be
                    accompanied  by  a  statement of a Responsible  Officer
                    setting forth details  of  the  occurrence  referred to
                    therein  and  stating  what  action  the Company and/or
                    Subsidiary proposes to take with respect thereto.

               Section 6.8  ERISA.  Fulfill its, and cause each  Subsidiary
                    to fulfill its, obligations under  the minimum  funding
                    standards of ERISA and the Code with  respect  to  each
                    Plan,  and neither the Company nor any Subsidiary shall
                    take any action that would result in the termination of
                    a Plan by the PBGC.

               Section 6.9 Delivery; Further Assurances.  Except as otherwise
                    provided  in  Section  2.18, the Company will, and will
                    cause each of the Subsidiary  Guarantors  to,  at their
                    joint and several expense:

                    (a)   execute  and  deliver  any  and  all  instruments
                    necessary or as  the  Agent  may  request  to grant and
                    perfect  a  first priority Lien on all of its  Accounts
                    and Inventory,  subject  to  no  other Liens other than
                    Customary Permitted Liens, and, without  any request by
                    the   Agent,  immediately  delivery  or  cause  to   be
                    delivered  to the Agent, in due form for transfer (duly
                    endorsed in  blank  or,  if appropriate, accompanied by
                    duly  executed  blank  stock   or   bond  powers),  all
                    securities, chattel paper, instruments and documents of
                    title, if any, at any time representing  all  or any of
                    the Collateral;

                    (b) upon the reasonable request of  the Agent,  furnish
                    or cause to be furnished to the Agent such opinions  of
                    counsel in connection  with  the execution and document
                    delivery contemplated by this Section 6.9;

                    (c)  upon request of the Agent,  forthwith  execute and
                    deliver  or  cause  to be executed and delivered to the
                    Agent, in due form for filing or recording (and pay the
                    cost of filing or recording  the  same  in  all  public
                    offices   deemed   necessary   by   the   Agent),  such
                    assignments,  security  agreements,  pledge agreements,
                    consents, waivers, financing statements,  stock or bond
                    powers, and other documents, and do such other acts and
                    things,  all  as  the  Agent  may  from  time  to  time
                    reasonably  request,  to  establish and maintain to the
                    satisfaction of the Agent valid  perfected Liens in all
                    Collateral (free of all other Liens, claims, and rights
                    of third parties other than Customary Permitted Liens);
                    and

                    (d)  such  other agreements, instruments  and documents
                    which the Agent  may  request  from  time  to  time  in
                    connection with the foregoing.

               Section  6.10  Cash Management Letters.   On or prior to the
                    Effective Date, the Company will obtain for the benefit
                    of  the Agent Cash Management Letters with  respect  to
                    each  of  its collection accounts set forth on Schedule
                    6.10.  From  and  after such date, the Company will not
                    open any new depositary  account into which proceeds of
                    any Accounts or Inventory  are  deposited in any month,
                    unless it causes to be delivered  to  the  Agent a Cash
                    Management  Letter,  with  such  changes  as  shall  be
                    reasonably  acceptable  to  the Agent.  In the event  a
                    Cash Management Letter is not  forthcoming or given for
                    each  account,  at  the option and  discretion  of  the
                    Agent, the account shall be closed, with the balance or
                    proceeds transferred  to  an existing or new depository
                    account with respect to which  a Cash Management Letter
                    has  been  obtained.  All proceeds  of  the  Collateral
                    shall be deposited solely into accounts with respect to
                    which a Cash  Management  Letter  in favor of the Agent
                    has been obtained.

               Section 6.11 Delivery of Assignment of Claims Notices. Except
                    as provided in the next sentence of this  Section 6.11,
                    within  30 days after executing any contract  with  any
                    Governmental Authority of the United States, including,
                    without limitation  the  Department  of Navy, providing
                    for aggregate payments to the Company or any Subsidiary
                    Guarantor of $1,000,000 or more, the Company shall, and
                    shall cause each Subsidiary Guarantor party thereto, to
                    assign such contract to the Agent and  deliver a Notice
                    of Assignment with respect to such contract  which  has
                    been  sent  to the United States government pursuant to
                    the Assignment  of  Claims  Act  of 1940 as amended (31
                    U.S.C.  3727,  41  U.S.C. 15) and acknowledged  by  the
                    appropriate  administrative  contracting  officer,  and
                    disbursing officer,  and  if  applicable, any surety on
                    any bond applicable to such contract.   Within  60 days
                    after  the  execution  date of the LPD-17 Contract (and
                    within 30 days after the  execution  date  of any other
                    contract described in the preceding sentence  that  was
                    executed  less  than  30  days  prior  to the Effective
                    Date),  the  Company  shall assign the LPD-17  Contract
                    (or, as applicable, such  other  contract) to the Agent
                    and deliver a Notice of Assignment  with respect to the
                    LPD-17   Contract   (or,  as  applicable,  such   other
                    contract) which has been  sent  to  the  United  States
                    government pursuant to the Assignment of Claims Act  of
                    1940  as  amended  (31  U.S.C.  3727, 41 U.S.C. 15) and
                    acknowledged    by   the   appropriate   administrative
                    contracting officer,  and  disbursing  officer, and, if
                    applicable,  any surety on any bond applicable  to  the
                    LPD-17  Contract   (or,   as   applicable,  such  other
                    contract).

               Section 6.12 Refinancing of LPD-17 Expenditures.  On or prior
                    to the date which is two years from the Effective Date,
                    the  Company  shall have refinanced a sufficient amount
                    of the LPD-17 Expenditures  directly  funded  with  the
                    Line  of  Credit  to  reduce  the  Line of Credit to an
                    amount  not to exceed $50,000,000, with  the  terms  of
                    such financing  to  be  reasonably  satisfactory to the
                    Agent and the Required Banks.

                                            SECTION VII

                                      NEGATIVE COVENANTS

               The Company hereby agrees that, so long as  the  Commitments
                    remain   in   effect,   any  Loan,  Revolving  Note  or
                    Reimbursement Obligation  remains  unpaid, or any other
                    amount  is  owing  to the Agent, the Banks  or  the  LC
                    Issuer hereunder, the  Company  shall not, nor shall it
                    permit  any of its Subsidiaries (and  in  the  case  of
                    Section 7.11,  any  ERISA Affiliate (or with respect to
                    clauses  (c)  and  (e)  of   Section   7.11,  any  Code
                    Affiliate)) to, directly or indirectly:

               Section 7.1 Financial Condition Covenants.

                    (a)  Maintenance  of  Consolidated  Net Worth.   Permit
               Consolidated Net Worth at any time to be less  than  the sum
               of   (i)  $122,000,000  plus  (ii)  50%  of  the  cumulative
               Consolidated  Net Income of the Company and its Subsidiaries
               for all quarters  ending  after  December  31, 1995 in which
               Consolidated Net Income for such quarter was positive.

                    (b) Maintenance of Debt to Equity Ratio.  Permit at any
               time the ratio of (i) Total Funded Debt at such time to (ii)
               Total Funded Debt plus Consolidated Net Worth at  such  time
               to be greater than .45 to 1.

                    (c) Maintenance of Minimum Government Contract Backlog.
               Permit the  backlog  of  firm  Government  Contracts  of the
               Company to be less than $600 million at any time.

                    (d) Maintenance of Debt Coverage Ratio. Permit the Cash
               Flow  Coverage Ratio as of the last day of any of its fiscal
               quarters to be less than .20 to 1.

                    (e)  Maintenance of Interest  Coverage  Ratio.   Permit
               the Interest Coverage Ratio as of the last day of any of its
               fiscal quarters to be less than 3.5 to 1.

               Section 7.2 Limitation on Liens.  Create, incur,  assume  or
               suffer to exist any Lien upon any of its property, assets or
               revenues, whether now owned or hereafter acquired, except:

                    (a) Customary Permitted Liens;

                    (b) pledges  or deposits  in  connection  with worker's
                    compensation,  unemployment insurance and other  social
                    security legislation;

                    (c) deposits to secure  the  performance of bids, trade
                    contracts  (other  than  for  borrowed money),  leases,
                    statutory   obligations,  surety  and   appeal   bonds,
                    performance bonds  and  other  obligations  of  a  like
                    nature incurred in the ordinary course of business;

                    (d)  easements,  rights-of-way,  restrictions and other
                    similar encumbrances incurred in the ordinary course of
                    business  which,  in the aggregate, are not substantial
                    in amount, and which  do  not  in  any  case materially
                    detract from the value of the property subject  thereto
                    or  interfere  with the ordinary course of the business
                    of the Company or any of its Subsidiaries;

                    (e)  Liens  on  the  assets  of  Subsidiaries  securing
                    Indebtedness owing to  the  Company  so  long  as  such
                    Indebtedness  and  Liens  are assigned to the Agent for
                    the  benefit  of  the Banks pursuant  to  the  Security
                    Agreement (Company);

                    (f) Liens (other than the MARAD Financing Liens) granted
                    with  respect to real  and/or  tangible  or  intangible
                    personal property, which property is acquired after the
                    date hereof (by purchase, construction or otherwise) by
                    the Company or any Subsidiary, each of which Liens were
                    incurred  to  finance,  refinance  or  refund, the cost
                    (including the cost of construction) of  the respective
                    property; provided that no such Lien shall  (i)  extend
                    to  or  cover  any other property of the Company or any
                    such Subsidiary  other  than the respective property so
                    acquired and improvements  thereon or (ii) extend to or
                    cover  any  Collateral, or, if  any  item  or  type  of
                    property constituting  Collateral  has been released as
                    Collateral pursuant to Section 2.18  hereof,  any  such
                    item or type of property;

                    (g) customer's Liens  on work in  progress incurred  in
                    the ordinary course of business;

                    (h)   Liens  granted  pursuant  to  the  terms  of  the
                    Collateral Documents;

                    (i)  Liens  evidenced  by   the  First  Preferred  Ship
                    Mortgage;

                    (j) in addition to and without duplication of the Liens
                    permitted  under  clause  (f)  above,   Liens  securing
                    Indebtedness  and other obligations of the  Company  or
                    any of its Subsidiaries  permitted  by  this  Agreement
                    which  encumber Fixed Asset Property having a net  book
                    value (or  if  greater,  a fair market value) which, in
                    the aggregate, is less than or equal to $10,000,000;

                    (k) (i) Liens granted on the Jo  Ann  Drydock to secure
                    Indebtedness  of  the Company pursuant to  the  Jo  Ann
                    Agreements  as  in  effect  as  of  the  date  of  this
                    Agreement,  and  (ii) deposits  made  pursuant  to  the
                    requirements   of   the    documents   governing   said
                    Indebtedness as originally in  effect  to  secure  such
                    Indebtedness  in  an  aggregate  amount  not  to exceed
                    $3,625,000 at any one time;

                    (l)  to the extent not otherwise covered in clauses (a)
                    through  (k)  above, those Liens which are described on
                    Schedule 7.2 and any extension, renewal or substitution
                    thereof or therefor; provided that (i) the Indebtedness
                    or  other  obligation   or  liability  secured  by  the
                    applicable Lien shall not  exceed  the  Indebtedness or
                    other  obligation  or  liability  existing  immediately
                    prior  to  such extension, renewal or substitution  and
                    (ii)  the Lien  securing  such  Indebtedness  or  other
                    obligation   or  liability  shall  be  limited  to  the
                    property which,  immediately  prior  to such extension,
                    renewal or substitution, secured such  Indebtedness  or
                    other obligation or liability; and

                    (m)  the MARAD  Financing  Liens and LPD-17 Refinancing
                    Liens.

                    Clauses  (a)  through  (m)  of  this  Section  7.2  are
                    referred to as the "Permitted Liens."

               Section   7.3  Limitation  on  Investments and  Intercompany
                    Activity.   Other  than Contingent Obligations incurred
                    by the Company or the  transfer of the Design Center to
                    a Subsidiary or Affiliate  of the Company, in each case
                    solely in connection with the refinancing of the LPD-17
                    Expenditures as contemplated  by and in accordance with
                    this Agreement:

                    (a)  Make, incur,  assume  or  suffer   to   exist  any
                    Investment in any other Person, except: (i) Investments
                    in any Person existing on the date hereof and set forth
                    on  Schedule  7.3,  (ii)  Cash  Equivalent Investments,
                    (iii)  loans  to (w) employees of the  Company  not  in
                    excess  of  $1,500,000   in   the  aggregate,  and  (x)
                    participants in the Company's Performance Share Plan in
                    an amount not in excess of the  tax liabilities of such
                    participants  in  connection with the  distribution  of
                    shares pursuant to  such  plan, the calculation of such
                    amount to be made available  in writing to the Agent in
                    reasonable   detail   and   in   form   and   substance
                    satisfactory  to the Agent, (iv) contributions  to  the
                    Avondale Industries, Inc. Employee Stock Ownership Plan
                    in accordance with the terms thereof, (v) contributions
                    to the Avondale  Pension  Plan  in  accordance with the
                    terms  of  such  plan,  and (vi) intercompany  accounts
                    between  the  Company  and  the  Subsidiary  Guarantors
                    arising as a result of and in  connection with the cash
                    management   systems  of  such  Persons   operated   in
                    accordance with their past practice.

                    (b) Sell, lease, assign,  transfer or otherwise dispose
                    of any of its assets to any Subsidiary or Affiliate, or
                    lease  any  assets,  render  or   receive  services  or
                    purchase  assets from any Subsidiaries  or  Affiliates,
                    provided that  the  Company  may  enter  into  any such
                    transaction  with  any  Subsidiary or Affiliate in  the
                    ordinary  course  of  business   consistent  with  past
                    practices.

               Section 7.4 Limitation on Fundamental Changes. Enter into any
                    transaction of merger or consolidation or amalgamation;
                    or liquidate, wind-up or dissolve itself (or suffer any
                    liquidation or dissolution).

               Section 7.5 Limitation on Sale of Assets. Other than the sale
                    of  those assets set forth on Schedule  7.5  for  their
                    respective  fair market value and the sale of Inventory
                    in the ordinary  course  of  business, or a sale of the
                    Design Center solely in connection with the refinancing
                    of the LPD-17 Expenditures as  contemplated  by  and in
                    accordance  with  this  Agreement, sell, lease, assign,
                    transfer or otherwise dispose  of,  or  give options to
                    purchase (x) any stock or other equity interests in any
                    of  the  Subsidiaries  or  (y) any of its other  assets
                    (including,   without   limitation,   receivables   and
                    leasehold interests but excluding  obsolete or worn out
                    property) whether now owned or hereafter  acquired, and
                    whether  or not leased back in the case of this  clause
                    (y) in an  amount in excess of $1,000,000 in any fiscal
                    year of the Company.

               Section 7.6 Limitation on Dividends.   Declare any dividends
                    (other than dividends payable solely  in  stock  of the
                    Company)  on,  or  make  any payment on account of, any
                    shares of any class of stock  of  the  Company, whether
                    now  or  hereafter  outstanding,  or  make  any   other
                    distribution  in  respect  thereof,  either directly or
                    indirectly,   whether  in  cash  or  property   or   in
                    obligations of  the  Company,  or  make  any payment on
                    account  of, or purchase, redeem or otherwise  acquire,
                    any securities  of  the Company from any Person, except
                    (i)  Subsidiaries may  pay  dividends  and  make  other
                    distributions  to  the  Company  and (ii) so long as no
                    Default or Event of Default shall  have occurred and be
                    continuing, the Company may pay cash  dividends  on its
                    capital stock during any Dividend Calculation Period in
                    an  amount  not  to  exceed (A) 40% of Consolidated Net
                    Income for such Dividend  Calculation  Period minus (B)
                    the  amount of all cash dividends paid by  the  Company
                    pursuant  to  this  clause  (ii)  during  such Dividend
                    Calculation  Period.   "Dividend  Calculation   Period"
                    shall mean, as of the last day of each of the Company's
                    fiscal  quarters  ending  thereafter,  the  four fiscal
                    quarter period ending on such day.

               Section 7.7 Limitation on Capital Expenditures. Incur Capital
                    Expenditures  (excluding  up  to $40,000,000 in  LPD-17
                    Expenditures) which, in the aggregate  for  the Company
                    and its Subsidiaries taken as a whole, exceed  for  any
                    fiscal  year  the  sum  of (a) $13,000,000 plus (b) the
                    excess  of  $13,000,000  over   the  sum  of  all  such
                    expenditures of the Company and its Subsidiaries, taken
                    as a whole, for the preceding fiscal year.

               Section  7.8  Sale and  Leaseback.   Other than a  sale  and
                    leaseback  of  the Design Center solely  in  connection
                    with the refinancing  of  the  LPD-17  Expenditures  as
                    contemplated  by and in accordance with this Agreement,
                    enter into any  agreement,  directly or indirectly, for
                    the sale or transfer of any of  its property now owned,
                    or hereafter acquired, with a concurrent  or subsequent
                    acquisition by lease or rental of such property or like
                    property  if the aggregate rentals paid by the  Company
                    and its Subsidiaries,  taken  as  a whole, with respect
                    thereto in any fiscal year would exceed $3,000,000.

               Section 7.9 Acquisitions.  Other than the Acquisition of the
                    Design Center solely in connection with the refinancing
                    of  the  LPD-17 Expenditures as contemplated by and  in
                    accordance  with  this  Agreement, make any Acquisition
                    unless the following conditions  are met at or prior to
                    the time such Acquisition is made:  (i)  both  prior to
                    and after giving effect thereto (and any Loans incurred
                    in connection therewith) no Default or Event of Default
                    shall  have  occurred  and  be  continuing,  (ii) after
                    giving  effect  thereto  the  Company would be able  to
                    obtain Credit Extensions under,  and in accordance with
                    the  terms  and  conditions of, this  Agreement  in  an
                    amount  equal to at  least  $5,000,000  and  (iii)  the
                    amount  of   consideration   paid   (including  assumed
                    liabilities)  by  the  Company and its Subsidiaries  is
                    less than or equal to $5,000,000  in  the aggregate for
                    all such Acquisitions.

               Section  7.10   Environmental  Liabilities.   Violate    any
                    requirement   of  law,  rule  or  regulation  regarding
                    Hazardous   Material;   and,   without   limiting   the
                    foregoing, dispose  of (or permit any Person to dispose
                    of) any Hazardous Material  into or onto, or (except in
                    accordance with applicable law) from, any real property
                    owned  or  operated  by  the  Company  or  any  of  its
                    Subsidiaries, nor allow any Lien  imposed  pursuant  to
                    any  Requirement of Law relating to Hazardous Materials
                    or the  disposal  thereof to be imposed or to remain on
                    such  real property,  which  violation  or  Lien  could
                    reasonably  be  expected  to  have  a  Material Adverse
                    Effect.

               Section 7.11  Compliance with ERISA.

                    (a) Knowingly engage in any transaction  in  connection
               with  which the Company or a Subsidiary could be subject  to
               either a material civil penalty assessed pursuant to Section
               502(i) of ERISA or a material tax imposed by Section 4975 of
               the Code;

                    (b)  terminate any Plan maintained by the Company or an
               ERISA Affiliate in a manner, or take any other action, which
               in any case  could reasonably be expected to have a Material
               Adverse Effect;

                    (c) fail  to  make full payment when due of any amounts
               which, under the provisions  of  any  Plan  or  any employee
               pension benefit plan (as defined in ERISA) maintained  by  a
               Code Affiliate, the Company or Code Affiliate is required to
               pay  as contributions thereto under Section 302 of ERISA and
               Section  412 of the Code, or permit to exist any accumulated
               funding deficiency,  whether  or not waived, with respect to
               any  such  Plan or any such employee  pension  benefit  plan
               where such failure  to  pay  could reasonably be expected to
               have a Material Adverse Effect;

                    (d)  fail  to  make  any  payments   when  due  to  any
               Multiemployer Plan which the Company or any  ERISA Affiliate
               may be required to make under any agreement relating to such
               Multiemployer Plan or any law pertaining thereto  where such
               failure  to  pay  could  reasonably  be  expected to have  a
               Material Adverse Effect.  The Company agrees  (x)  upon  the
               request  of  the  Agent  to  obtain  a  current statement of
               withdrawal liability from each Multiemployer  Plan  to which
               the  Company  or  an ERISA Affiliate contributes or to which
               the  Company or an ERISA  Affiliate  has  an  obligation  to
               contribute  and  (y) to transmit a copy of such statement to
               the Agent with sufficient copies for the Banks; or

                    (e) amend a Plan  or  an  employee pension benefit plan
               (as defined in ERISA) maintained  by  a Code Affiliate where
               such  amendment  would  result  in  an increase  in  current
               liability for the plan year such that  either the Company or
               the Code Affiliate is required to provide  security  to such
               plan under Section 401(a)(29) of the Code.

               Section 7.12  Prepayments. Make any voluntary prepayments or
               redemption of any Indebtedness (other than the Obligations);
               provided that the Company shall be permitted to prepay prior
               to their stated  maturity  its  obligations  with respect to
               that  certain  $3,000,000 General Obligation Bond  Financing
               between Harrison County, Mississippi and the Company.

               Section 7.13 Indebtedness.   Incur or  permit to  exist  any
               Indebtedness  except (i) Indebtedness of the Company secured
               by Permitted Liens;  provided,  however,  that the aggregate
               principal  amount  of  Indebtedness  secured  by  the  Liens
               permitted pursuant to Section 7.2(j), together  with any and
               all  Indebtedness  secured  by LPD-17 Refinancing Liens  not
               otherwise permitted under clause (v) below, shall not exceed
               $10,000,000 in the aggregate, (ii) unsecured Indebtedness of
               the Company in an aggregate principal  amount  not to exceed
               $10,000,000  in the aggregate less the aggregate  amount  of
               (A) Indebtedness  secured  by  Liens  permitted  by  Section
               7.2(j)  and  (B)  Indebtedness secured by LPD-17 Refinancing
               Liens not otherwise  permitted  in  clause  (v) below, (iii)
               Indebtedness constituting an Investment which  is  permitted
               pursuant  to  Section 7.3(a)(vi), (iv) Indebtedness existing
               on the date hereof  and  listed  on  Schedule  7.13  and any
               extension, renewal or replacement of the Indebtedness listed
               on  Schedule  7.13,  and (v) LPD-17 Refinancing Indebtedness
               the terms of which are  reasonably satisfactory to the Agent
               and  the  Required  Banks  and  any  extension,  renewal  or
               replacement thereof; provided, in the case of items (iv) and
               (v)  above,  that  (A)  the aggregate  principal  amount  of
               Indebtedness issued (or, if such Indebtedness is issued at a
               price less than the principal  amount  thereof, the original
               issue price) to extend, renew or replace  such  Indebtedness
               shall  not  exceed  the  aggregate  principal amount of  the
               Indebtedness being so extended, renewed  or  replaced  (plus
               accrued  interest  thereon),  (B)  any  such Indebtedness so
               issued shall not mature prior to the stated  maturity of the
               Indebtedness being extended, renewed or replaced  and shall,
               after  giving  effect  to all of the economic terms thereof,
               not impact the cash flow  of  the Company or such Subsidiary
               any  more  unfavorably than the terms  of  the  Indebtedness
               being refinanced  and  (C) such Indebtedness being so issued
               shall  contain  terms no more  restrictive  vis  a  vis  the
               Company or such Subsidiary  than  the  Indebtedness being so
               refinanced.

               Section 7.14 No Additional Subsidiaries.   Form  or  acquire
               any new Subsidiaries after the date hereof.

               Section 7.15  Change of Location  or  Name.  Change (a)  the
               location of its principal place of business, chief executive
               office or major executive office, or its  records concerning
               the  Collateral,  or (b) its name or the name  under  or  by
               which it conducts its  business, in each case, without first
               giving the Agent not less than 30 days' prior written notice
               thereof and taking any all actions which may be necessary or
               desirable, or which the  Agent  may  reasonably  request, to
               maintain  and  preserve  all  Liens  in  favor  of the Agent
               granted pursuant to the Collateral Documents, provided that,
               notwithstanding  the  foregoing,  the Company will not,  and
               will  not  permit  any of its Subsidiaries  to,  change  the
               location  of  its  principal  place  of  business  or  chief
               executive office of  its  records  concerning the Collateral
               from the contiguous continental United  States of America to
               any place outside the contiguous continental  United  States
               of America.

               Section 7.16  Additional Negative Pledges  and Other Payment
               Restrictions  Affecting Subsidiaries.  Create  or  otherwise
               cause  or suffer  to  exist  or  become  effective  (i)  any
               prohibition  or  restriction  (including  any  agreement  to
               provide  equal  and  ratable security to any other Person in
               the event a Lien is granted  to  or  for  the benefit of the
               Agent  and  the Banks) on the creation or existence  of  any
               Lien  upon  the   assets  of  the  Company  or  any  of  its
               Subsidiaries, (ii)  any  contractual  obligation  which  may
               restrict or inhibit the Agent's rights or ability to sell or
               otherwise  dispose  of  the  Collateral  or any part thereof
               after  the occurrence of an Event of Default  or  (iii)  any
               encumbrance  or  restriction  on  the  ability of any of the
               Subsidiaries of the Company to (A) pay dividends or make any
               other distributions on such Subsidiary's  capital  stock  or
               pay  any Indebtedness owed to the Company or a Subsidiary of
               the Company,  (B) make loans or advances to the Company or a
               Subsidiary  of the  Company  or  (C)  transfer  any  of  its
               properties or  assets  to  the  Company;  provided  that the
               foregoing  shall not prohibit (i) restrictions contained  in
               any agreement  evidencing  a  Lien  permitted by Section 7.2
               which may restrict the transfer of the  property  subject to
               such Liens, (ii) customary non-assignment provisions  of any
               lease  governing a leasehold interest of the Company or  any
               of its Subsidiaries  and (iii) the restrictions contained in
               Section 6.17 of the Refunding Agreement dated as of April 1,
               1994 between the Company  and  the Board of Commissioners of
               the Port of New Orleans (relating to the financing of the Jo
               Ann Drydock) as amended by First  Amendment dated as of June
               28, 1994.

               Section 7.17 Additional Restrictions on Avondale Properties,
               Inc.  and the  Shipyard  Partnership.  (i)  Permit  Avondale
               Properties,  Inc.  to  engage in any business activity other
               than the ownership of the 1% general partnership interest in
               the  Shipyard  Partnership   or  (ii)  Permit  the  Shipyard
               Partnership to engage in any business  activity  other  than
               the ownership of the Shipyard Real Property Assets which are
               contributed  to  it  by  the  Company in connection with the
               transactions contemplated by the  MARAD  Financing Documents
               and the leasing back to the Company of such property.

               Section 7.18 Amendment to Other Financing Documents.  Alter,
          amend, modify, rescind, terminate  or  waive any provision of the
          MARAD Financing Documents, or any of its rights thereunder.

                                       SECTION VIII

                                  EVENTS OF DEFAULT

               Upon the occurrence of any of the following events:

                    (a) The Company shall fail to pay any  principal of the
               Loans or any Revolving Notes when due in accordance with the
               terms thereof or hereof, or the Company shall  fail  to make
               any  payment  to  the  Agent as required pursuant to Section
               2.5; or the Company shall  fail  to  pay any interest on any
               Loans  or  Revolving  Notes,  or  any other  amount  payable
               hereunder (including, without limitation,  any Reimbursement
               Obligations  or  any  amount  owing  under any of  the  Loan
               Documents)  and  such failure shall continue  for  five  (5)
               days; or

                    (b) Any representation  or warranty made or deemed made
               (pursuant to Section 5.3 hereof) by the Company herein or in
               any of the other Loan Documents or which is contained in any
               exhibit,  schedule, certificate, document  or  financial  or
               other statement furnished at any time under or in connection
               with this Agreement or any of the other Loan Documents shall
               prove to have  been  incorrect in any material respect on or
               as of the date made or deemed made; or

                    (c)  The Company shall default  in  the  observance  or
               performance  of any agreement contained in Section VII or an
               "Event of Default"  under  and  as defined in any other Loan
               Document shall occur; or

                    (d)  The Company shall default  in  the  observance  or
               performance  of   any  other  agreement  contained  in  this
               Agreement   (other  than   defaults   described   in   other
               subparagraphs of this Section VIII) or any of the other Loan
               Documents, and  such default shall continue unremedied for a
               period of thirty days; or

                    (e) Any Subsidiary  shall take  any action set forth in
               Section VII which action the Company has  undertaken  not to
               permit; or

                    (f)  Any  Subsidiary shall  fail to take any action set
               forth in Section VI which action the  Company has undertaken
               to cause and such failure shall not be remedied for a period
               of thirty days after notice thereof is  given to the Company
               by the Agent; or

                    (g) The Company or any Subsidiary shall (i)  default in
               any  payment of principal of or interest on any Indebtedness
               (other   than   the   Revolving   Notes   and  Reimbursement
               Obligations) or in the payment of any Contingent Obligation,
               in  either  case in the aggregate principal amount  of  more
               than $3,000,000,  in  each  instance,  beyond  the period of
               grace, if any, provided in the instrument or agreement under
               which   such  Indebtedness  or  Contingent  Obligation   was
               created; or (ii) default in the observance or performance of
               any other  agreement  or  condition  relating  to  any  such
               Indebtedness  or  Contingent  Obligation or contained in any
               instrument  or agreement evidencing,  securing  or  relating
               thereto, or any  other event shall occur or condition exist,
               the effect of which  default  or other event or condition is
               to  cause,  or  to  permit the holder  or  holders  of  such
               Indebtedness  or  beneficiary   or   beneficiaries  of  such
               Contingent Obligation (or a trustee, agent  or  other Person
               acting on behalf of such holder or holders or beneficiary or
               beneficiaries) to cause, with the giving of notice  or lapse
               of  time if required, such Indebtedness to become due  prior
               to its  stated  maturity  or  such  Contingent Obligation to
               become payable; or

                    (h) (i) The Company or any Subsidiary shall  commence a
               case,  proceeding or other action (A) under any existing  or
               future  law   of  any  jurisdiction,  domestic  or  foreign,
               relating to bankruptcy, insolvency, reorganization or relief
               of debtors, seeking to have an order for relief entered with
               respect to it,  or  seeking  to  adjudicate it a bankrupt or
               insolvent,    or   seeking   reorganization,    arrangement,
               adjustment,    winding-up,     liquidation,     dissolution,
               composition or other relief with respect to it or its debts,
               or (B) seeking appointment of a receiver, trustee, custodian
               or  other  similar  official  for  it  or  for  all  or  any
               substantial  part  of  its  assets,  or  the  Company or any
               Subsidiary shall make a general assignment for  the  benefit
               of  its  creditors; or (ii) there shall be commenced against
               the Company  or any Subsidiary any case, proceeding or other
               action of a nature referred to in clause (i) above which (A)
               results in the  entry  of  an  order  for relief or any such
               adjudication  or appointment or (B) remains  undismissed  or
               undischarged for  a  period  of  sixty  days; or (iii) there
               shall be commenced against the Company or any Subsidiary any
               case,  proceeding  or  other action seeking  issuance  of  a
               warrant  of  attachment,  execution,  distraint  or  similar
               process against all or any  substantial  part  of its assets
               which  results in the entry of an order for any such  relief
               which shall  not  have  been  vacated,  discharged or stayed
               pending appeal within sixty days from the  entry thereof; or
               (iv) the Company or any Subsidiary shall take  any action in
               furtherance  of, or indicating its consent to, approval  of,
               or acquiescence in, any of the acts set forth in clause (i),
               (ii), or (iii)  above;  or (v) the Company or any Subsidiary
               shall generally not, or shall  be  unable to, or shall admit
               in writing its inability to, pay its  debts  as  they become
               due; or

                    (i)  (i)  If any Person shall engage in any "prohibited
               transaction" (as defined  in Section 406 of ERISA or Section
               4975 of the Code) involving  any Plan, (ii) any "accumulated
               funding deficiency" (as defined  in  Section  302 of ERISA),
               whether or not waived, shall exist with respect  to any Plan
               or  any employee pension benefit plan (as defined in  ERISA)
               maintained  by  a  Code  Affiliate, (iii) a Reportable Event
               shall occur with respect to,  or  proceedings shall commence
               to  have  a  trustee  appointed,  or  a  trustee   shall  be
               appointed,   to  administer  or  to  terminate,  any  Single
               Employer Plan,  which  Reportable  Event  or  institution of
               proceedings or appointment of a trustee is likely  to result
               in  termination  of  such  Plan for purposes of Title IV  of
               ERISA,  and,  in  the  case  of  a   Reportable  Event,  the
               continuance of such Reportable Event unremedied for ten days
               after notice of such Reportable Event  pursuant  to  Section
               4043(a),   (c) or (d) of ERISA is given and, in the case  of
               the institution  of  proceedings,  the  continuance  of such
               proceedings  for  ten  days after commencement thereof, (iv)
               any Single Employer Plan  shall  terminate  for  purposes of
               Title  IV  of  ERISA,  (v) the Company or an ERISA Affiliate
               shall  partially  or  completely  withdraw  from,  or  incur
               withdrawal liability with respect to, any Multiemployer Plan
               or (vi) any other event  or  condition shall occur or exist,
               with respect to any Plan; and  in  each  case in clauses (i)
               through (vi) above, such event or condition,  together  with
               all  other  such events or conditions, if any, could subject
               the Company or  any  of the Subsidiaries to any tax, penalty
               or other liabilities in excess of $1,000,000; or

                    (j) One or more judgments, decrees, arbitration awards,
               rulings or decisions (including, without limitation, rulings
               of the Board of Contract Appeals),  shall be entered against
               the  Company  or any of the Subsidiaries  involving  in  the
               aggregate  a  liability   (not  paid  or  fully  covered  by
               insurance) of $1,000,000 or  more  and  all  such judgments,
               decrees,  awards  and  rulings shall not have been  vacated,
               paid, discharged, stayed  or bonded pending appeal within 60
               days  from  the  entry  thereof;   or  the  Company  or  any
               Subsidiary fails to timely appeal any  final  decision  of a
               contracting  officer  against the Company or any Subsidiary,
               as the case may be, involving  an  aggregate liability of at
               least  $1,000,000  or more to the Armed  Services  Board  of
               Contract Appeals (the  "ASBCA")  or  the  U.S.  Claims Court
               and/or the ASBCA or the U.S. Claims Court confirms  any such
               final report or decision; or

                    (k)   At   any  time, the  backlog  of  firm  contracts
               (excluding intercompany  contracts and excluding unexercised
               options  or  unexercised  rights  under  contracts)  of  the
               Company and the Subsidiary  Guarantors  shall  be  less than
               $600,000,000; or

                    (l)  If  (i)  the Company or any of the Subsidiaries is
               debarred or suspended from contracting (as first tier or any
               other level of subcontractor)  for,  bidding on, or entering
               into any Government Contract; or (ii)  if a material current
               or material backlogged Government Contract  is  forfeited or
               terminated for cause; or

                    (m) The Company or any Subsidiary shall default  in the
               performance of any term or condition contained or applicable
               to any Preferred Stock of such Person; or

                    (n) The Company or any Governmental Authority challenges
               the efficacy of the assignments noticed in the Assignment of
               Claims Notices or fails to comply with the terms thereof; or

                    (o)  Work  on  any Navy Contract is interrupted for the
               lesser of (i) 90 days or  (ii)  the period of time permitted
               for interruption in such contract,  unless  in  the  case of
               this  clause  (ii) such interruption is at the direction  of
               the United States Navy; or

                    (p) The Company or  any  Subsidiary  shall  contest the
               validity  or  enforceability of, or otherwise disaffirm,  or
               fail  to  honor,   any   of  its  covenants,  agreements  or
               obligations under any Loan  Document to which it is a party,
               or any Lien granted or purported  to be granted to the Agent
               pursuant  to  the  terms  of the Collateral  Documents  with
               respect  to  property, individually  or  in  the  aggregate,
               having a fair  market  value  in excess of $1,000,000, shall
               cease  to  be  or shall not be a valid  and  perfected  Lien
               having the priority  contemplated  by this Agreement and the
               Collateral Documents; or

                    (q) The occurrence of a Change of Control;

                    then, and in any such event, (A)  if  such  event is an
                    Event of Default specified in subsection (h) above with
                    respect to the Company or Subsidiary, automatically the
                    Commitments  shall immediately terminate and the  Loans
                    and  any  Reimbursement   Obligations  hereunder  (with
                    accrued  interest thereon) and  all  other  Obligations
                    owing under this Agreement, the Revolving Notes and the
                    other Loan  Documents  shall  immediately become and be
                    due and payable without the giving of any notice of any
                    kind,  and  (B) if such event is  any  other  Event  of
                    Default, either or both of the following actions may be
                    taken: (i) the  Agent  may  (with  the  consent  of the
                    Required  Banks)  and  shall  (upon  the request of the
                    Required Banks), by notice to the Company  declare  the
                    Commitments  to  be terminated forthwith, whereupon the
                    Commitments shall  immediately  terminate; and (ii) the
                    Agent may (with the consent of the  Required Banks), by
                    notice  to  the  Company,  declare  the Loans  and  any
                    Reimbursement   Obligations  hereunder  (with   accrued
                    interest thereon) and all other Obligations owing under
                    this Agreement, the  Revolving Notes and the other Loan
                    Documents to be due and  payable  forthwith,  whereupon
                    the  same  shall  immediately  become  and  be  due and
                    payable.   Except  as  expressly provided above in this
                    Section  VIII, presentment,  demand,  protest  and  all
                    other notices  of  any kind are hereby expressly waived
                    by  the Company.  If  the  maturity  of  the  loans  is
                    accelerated,   the  LC  Issuer  shall  give  notice  of
                    termination under  each  Letter of Credit which permits
                    the LC Issuer to cause its termination.

                                            SECTION IX

                                           THE AGENT

               Section 9.1 Actions.  Each Bank authorizes the Agent to  act
                    on behalf of such Bank under this Agreement, the  other
                    Loan  Documents  and any other related instruments and,
                    in the absence of  other  written instructions from the
                    Banks received from time to  time  by  the  Agent (with
                    respect to which the Agent agrees that it will, subject
                    to  the last two sentences of this Section 9.1,  comply
                    in good  faith except as otherwise advised by counsel),
                    to exercise such powers hereunder and thereunder as are
                    specifically  delegated  to or required of the Agent by
                    the terms hereof and thereof, together with such powers
                    as  may be reasonably incidental  thereto.   Each  Bank
                    agrees  (which  agreement shall survive any termination
                    of this Agreement)  to  indemnify  the  Agent, pro rata
                    according to such Bank's Percentage, from  and  against
                    any   and   all   liabilities,   obligations,  damages,
                    penalties, actions, judgments, suits,  costs,  expenses
                    or disbursements of any kind or nature whatsoever which
                    may at any time be imposed on, incurred by, or asserted
                    against the Agent in any way relating to or arising out
                    of this Agreement, the Revolving Notes, the Letters  of
                    Credit,  any  of the other Loan Documents and any other
                    related instruments, including, without limitation, the
                    reimbursement of  the  Agent for all reasonable out-of-
                    pocket   expenses   (including,   without   limitation,
                    syndication costs and  attorneys' fees) incurred by the
                    Agent  hereunder  or  in  connection   herewith  or  in
                    enforcing  the  obligations of the Company  under  this
                    Agreement, under any of the other Loan Documents or any
                    other related instruments, in all cases as to which the
                    Agent is not reimbursed  by  the Company; provided that
                    no Bank shall be liable for the  payment of any portion
                    of such liabilities, obligations,  damages,  penalties,
                    actions,   judgments,   suits,   costs,   expenses   or
                    disbursements   determined   by   a   court  of  proper
                    jurisdiction  in  a  final proceeding to have  resulted
                    solely from the Agent's  gross  negligence  or  willful
                    misconduct.   The  Agent  shall not be required to take
                    any  action  hereunder  or  under   any  other  related
                    instruments,  or  to prosecute or defend  any  suit  in
                    respect  of  this Agreement  or  any  such  instrument,
                    unless indemnified  to  its  satisfaction  by the Banks
                    against  costs,  liability,  and expense.  Each  Bank's
                    obligation to indemnify the Agent  as  set  forth above
                    shall  be unconditional under any and all circumstances
                    and  irrespective  of  any  set  off,  counterclaim  or
                    defense to payment which such Bank may have or have had
                    against  the  Agent, the Company, any Subsidiary or any
                    other Person.   If  any indemnity in favor of the Agent
                    shall  become  impaired,   the   Agent   may  call  for
                    additional   indemnity   and   cease  to  do  the  acts
                    indemnified against until such additional  indemnity is
                    given.  The Agent may delegate its duties hereunder  to
                    affiliates,  agents  or  attorneys-in-fact  selected in
                    good faith by the Agent.

               Section 9.2  Exculpation.  The Agent shall have no duties or
                    responsibilities  except  those  expressly set forth in
                    this  Agreement.  Neither  the Agent  nor  any  of  its
                    directors,    officers,    employees,     or     agents
                    (collectively,  the  "Related Parties") shall be liable
                    to any Bank for any action taken or omitted to be taken
                    by it under this Agreement, the other Loan Documents or
                    any other related instrument, or in connection herewith
                    or therewith, except for  its own willful misconduct or
                    gross negligence, nor shall  the  Agent  or any Related
                    Parties    be   responsible   for   any   recitals   or
                    representations or warranties herein or therein, or for
                    the  effectiveness,  enforceability,  validity  or  due
                    execution  of  this Agreement, the other Loan Documents
                    or any other related  instruments,  nor shall the Agent
                    or any Related Parties be obligated to make any inquiry
                    respecting  the  performance  by  the  Company  of  its
                    obligations hereunder or thereunder.  The  Agent  shall
                    be  entitled  to rely upon advice of counsel concerning
                    legal   matters   and   upon   any   notice,   consent,
                    certificate, statement  or writing which it believes to
                    be  genuine  and to have been  presented  by  a  proper
                    Person.  The Agent may at any time request instructions
                    from the Banks with respect to any actions or approvals
                    which, by the  terms  of  this  Agreement, the Agent is
                    permitted or required to take or  grant,  and the Agent
                    shall be absolutely entitled to refrain from taking any
                    action  or  to withhold any approval and shall  not  be
                    under  any  liability  whatsoever  to  any  Person  for
                    refraining from  taking  any  action or withholding any
                    approval under this Agreement or  any of the other Loan
                    Documents until it has received instructions  from  the
                    Required Banks.  No Bank shall have any right of action
                    whatsoever  against  the Agent as a result of the Agent
                    acting or refraining from acting hereunder or under any
                    of  the  other  Loan  Documents   in   accordance  with
                    instructions from the (i) Required Banks,  or  (ii) all
                    of the Banks to the extent required hereunder.

               Section 9.3  Successor.  The Agent may resign as such at any
                    time upon  at  least  ten  days'  prior  notice  to the
                    Company  and all Banks.  If the Agent at any time shall
                    resign or  be  removed,  the Required Banks may appoint
                    another Bank as a successor  Agent.   If  the  Required
                    Banks do not make such appointment within thirty  days,
                    the  resigning  or  removed  Agent  shall appoint a new
                    Agent from among the Banks or, if no  Bank accepts such
                    appointment, from among commercial banking institutions
                    or trust institutions generally.  Upon  the  acceptance
                    of any appointment as Agent by a successor Agent,  such
                    successor   Agent  shall  thereupon  become  the  Agent
                    hereunder and  shall  be  entitled  to receive from the
                    prior Agent such documents of transfer  and  assignment
                    as such successor Agent may reasonably request, and the
                    resigning or removed Agent shall (i) be discharged from
                    its duties and obligations under this Agreement and the
                    other  related  instruments  and  (ii) entitled to  the
                    continued benefit of this Section IX  with  respect  to
                    all  actions  taken  by  it  prior  to  its  removal or
                    resignation.

               Section  9.4  Credit Decisions.   Each  Bank represents  and
                    acknowledges  to  the Agent and each other Bank that is
                    has, independently  of  the  Agent and each other Bank,
                    and based on the financial information  referred  to in
                    this  Agreement  and  the other Loan Documents and such
                    other documents, information  and  investigations as it
                    has deemed appropriate, made its own credit decision to
                    enter into this Agreement.  Each Bank also acknowledges
                    that it will, independently of the Agent and each Bank,
                    and   based   on   such   documents,  information   and
                    investigations  as it shall  deem  appropriate  at  any
                    time, continue to  make  its own credit decisions as to
                    exercising or not exercising  from  time  to  time  any
                    rights  and  privileges  available  to  it  under  this
                    Agreement,  the  Loan  Documents  or  any other related
                    instruments.

               Section  9.5 Notices, etc. from Agent.  The Agent shall give
                    prompt  notice  to  each Bank of each notice or request
                    given to the Agent by the Company pursuant to the terms
                    of this Agreement.  The  Agent  will distribute to each
                    Bank each instrument received for  such  Bank's account
                    and copies of all other communications received  by the
                    Agent from the Company for distribution to the Banks by
                    the   Agent  in  accordance  with  the  terms  of  this
                    Agreement.

               Section 9.6 Collateral  Documents.   Each Bank and the Agent
                    hereby  (i)  authorizes  the  Agent  to enter into  the
                    Collateral   Documents   and   to   take   all   action
                    contemplated  thereby and (ii) confirms its appointment
                    of  Bank  of  America   National   Trust   and  Savings
                    Association as Agent under the terms and conditions  of
                    the  Collateral  Documents.   Each Bank hereby confirms
                    its agreement to be bound by the  terms  and conditions
                    of the Collateral Documents.  Each Bank and  the  Agent
                    agrees  that  no Bank shall have any right individually
                    to seek to realize  upon the collateral granted for the
                    benefit of the Banks  pursuant to any of the Collateral
                    Documents, it being understood  and  agreed  that  such
                    rights  and  remedies  may be exercised by the Agent as
                    Agent for the benefit of  the  Agent and the Banks upon
                    the terms of the Collateral Documents.

               Section 9.7 Loans by the Agent. The Agent shall have the same
                    rights and powers with respect to  the Loans made by it
                    or any of its Affiliates as any Bank  and  may exercise
                    the same as if it were not the Agent hereunder.

               Section  9.8  Other  Collateral Matters.   Each Bank  hereby
                    agrees,  and  each  holder  of  any  Obligations by the
                    acceptance  thereof  will  be  deemed  to agree,  that,
                    except as otherwise set forth herein, any  action taken
                    by  the Agent or the Required Banks in accordance  with
                    the provisions of this Agreement or the Loan Documents,
                    and the  exercise by the Agent or the Required Banks of
                    the powers  set  forth herein or therein, together with
                    such other powers as are reasonably incidental thereto,
                    shall be authorized  and binding upon all of the Banks.
                    The Agent is hereby authorized  on behalf of all of the
                    Banks,  without  the  necessity  of any  notice  to  or
                    further consent from any Bank, from  time to time prior
                    to an Event of Default, to take any action with respect
                    to  any  Collateral  or  Loan  Documents which  may  be
                    necessary  to  perfect  and  maintain   perfected   the
                    security  interest  in  and  Liens  on  the  Collateral
                    granted   pursuant  to  the  Loan  Documents.   Without
                    limiting the foregoing, the Banks irrevocably authorize
                    the Agent at  its  option  and  in  its  discretion, to
                    release any Lien granted to or held by the  Agent  upon
                    any  Collateral (i) upon termination of the Commitments
                    and payment  in  full  of all other Obligations payable
                    under  this  Agreement  and   under  any  other  Credit
                    Document; (ii) constituting property sold or to be sold
                    or  disposed of as part of or in  connection  with  any
                    disposition  permitted  hereunder;  (iii)  constituting
                    property in which the Company owned no interest  at the
                    time  the  Lien  was granted or at any time thereafter;
                    (iv) constituting  property leased to the Company under
                    a  lease which has expired  or  been  terminated  in  a
                    transaction  permitted under this Agreement or is about
                    to expire and  which  has not been, and is not intended
                    by  the  Company  to  be,  renewed   or  extended;  (v)
                    consisting of an instrument evidencing  Indebtedness if
                    the  Indebtedness  evidenced thereby has been  paid  in
                    full; (vi) in accordance with the provisions of Section
                    2.18 hereof; or (vii)  subject  to  Section 10.2(g), if
                    approved,  authorized  or  ratified in writing  by  the
                    Required Banks.  Upon request by the Agent at any time,
                    the Banks will confirm in writing the Agent's authority
                    to  release particular types  or  items  of  Collateral
                    pursuant to this Section 9.8.

               Section  9.9  Arranger.   BancAmerica Securities, Inc.  (the
                    "Arranger")    shall    not   have   any   obligations,
                    liabilities,  responsibilities  or  duties  under  this
                    Agreement or the  other  Loan  Documents.  The Arranger
                    shall  not  have  or  be deemed to have  any  fiduciary
                    relationship  with any Bank.   Each  Bank  acknowledges
                    that it has not  relied,  and  will  not  rely,  on the
                    Arranger in deciding to enter into this Agreement or in
                    taking or not taking action hereunder.

                                            SECTION X

                                         MISCELLANEOUS

               Section 10.1 Notices. All notices by the Company to the Agent
                    on behalf  of the Banks (including, but not limited to,
                    notices relating  to  borrowings),  and by the Agent on
                    behalf  of the Banks to the Company shall  be  sent  by
                    telegram, telecopier, telex or letter, or by telephone,
                    which telephoned  communication  shall  be confirmed by
                    telegram,  telecopier,  telex or letter, and  shall  be
                    effective (i) when telephoned  or,  in  the  case  of a
                    telegram,   telecopy  message,  telex  or  letter  when
                    received, if  telephoned  or  received before 9:00 a.m.
                    San  Francisco time or (ii) on the  next  Business  Day
                    following  such  telephonic  message  or  receipt  of a
                    telegram,   telecopy   message,  telex  or  letter,  if
                    telephoned or received after  9:00  a.m.  San Francisco
                    time,   and   all  other  notices,  requests,  demands,
                    directions  and   other  communications  (collectively,
                    "notices") given to or made upon any party hereto under
                    the provision of this  Agreement  shall  be  in writing
                    (including    telexed,    telecopied   or   telegraphed
                    communication)  unless  otherwise  expressly  permitted
                    hereunder and shall be delivered or sent by first class
                    mail,  certified  mail, return  receipt  requested,  or
                    overnight  mail,  or   by   telex   or   telegram  with
                    confirmation  in  writing  mailed first class,  in  all
                    cases  with  postage  or  charges   prepaid,   to   the
                    applicable  party  addressed,  if to the Agent, at such
                    address and telephone, telex and  telecopy  numbers  as
                    the Agent shall specify to the Company and the Banks in
                    accordance  with  the  provisions of this Section 10.1.
                    Notwithstanding  the  provisions   of  the  immediately
                    preceding sentence, any notice sent via certified mail,
                    return  receipt  requested, certified  fee  and  normal
                    postage prepaid, shall  be deemed to have been received
                    on the earlier of actual  receipt  thereof or the fifth
                    (5th) day after the postmarked date  indicated  on  the
                    Receipt for Certified Mail (PS Form 3800, June 1985, or
                    any  successor  form).   Notices  given  to the Company
                    shall be delivered at its offices at 5100  River  Road,
                    Avondale,  Louisiana  70094,  Attention:  Mr. Thomas M.
                    Kitchen,  Telephone:  504-436-5237,  telecopier:   504-
                    436-5304, and  if  notice  is given to any Bank, to its
                    address and telephone, telex  and  telecopy  numbers as
                    such  Bank shall specify to the Agent, the Company  and
                    the other  Banks  in  accordance with the provisions of
                    this  Section  10.1.   Except  as  otherwise  expressly
                    provided herein, any properly  given  notice  hereunder
                    shall be effective when received.

               Section 10.2 Amendments and Waivers.  No amendment or waiver
                    of any provision of this Agreement, or any of the other
                    Loan Documents, nor  consent  to  any  departure by the
                    Company  therefrom,  shall  in  any event be  effective
                    unless the same shall be in writing  and  signed by the
                    Required  Banks, and then such waiver or consent  shall
                    be effective  only in the specific instance and for the
                    specific purpose  for  which  given; provided, however,
                    that no amendment, waiver or consent, unless in writing
                    and  signed  by  all the Banks, shall  do  any  of  the
                    following:  (a) waive  any  of the conditions specified
                    in  Section V (though the Agent  alone  may  defer  the
                    fulfillment  of  such  conditions until the date of the
                    applicable  borrowing),  (b)  increase  the  amount  or
                    extend  the term of the Commitments  of  the  Banks  or
                    subject the  Banks  to  any additional obligations, (c)
                    reduce the principal of,  or  interest on, the Loans or
                    any   of   the   Revolving   Notes   or   Reimbursement
                    Obligations, or reduce any fees payable hereunder,  (d)
                    postpone  any  date fixed for any payment in respect of
                    principal  of,  or   interest   on,   the   Loans,  the
                    Reimbursement  Obligations  or  any  of  the  Revolving
                    Notes,  as  the case may be, or fees payable hereunder,
                    (e)  change  any  of  the  components  which  shall  be
                    required for the  Banks  or any Bank to take any action
                    hereunder (i.e., the percentage  of the Commitments, or
                    the aggregate unpaid principal amount  of the Loans, or
                    the  number of Banks), (f) amend this Section  10.2  or
                    (g) release  all  or  any  substantial  portion  of the
                    Collateral   (other   than   any  Collateral  which  is
                    permitted to be released or disposed of pursuant to the
                    terms of this Agreement or the  terms of the Collateral
                    Documents),  or release any Subsidiary  Guarantor  from
                    the Subsidiary  Guaranty  executed by it; and provided,
                    further, that no amendment,  waiver  or  consent shall,
                    unless  in writing and signed by the Agent  or  the  LC
                    Issuer,  as   applicable,  in  addition  to  the  Banks
                    hereinabove required  to  take  such action, affect the
                    rights  or  duties  of  the  Agent or  the  LC  Issuer,
                    respectively, under this Agreement.  Without derogating
                    from  the  foregoing, except as  set  forth  below,  no
                    amendment to  this  Agreement shall be effective unless
                    signed  by the Company.   Notwithstanding  anything  in
                    this Agreement  to  the  contrary,  the  consent of the
                    Company  shall  not  be  required  for  any  amendment,
                    modification or waiver of the provisions of Section IX.

               Notwithstanding  the foregoing, without the consent  of  any
                    Bank or the LC  Issuer,  the Agent, upon the request of
                    the Company, shall release  its  Lien,  or  enter  into
                    intercreditor   and/or  subordination  agreements  with
                    lenders to the Company's and any Subsidiary Guarantor's
                    customers subordinating  the  Agent's  Lien, on certain
                    Inventory  which  shall constitute or form  a  part  of
                    work-in-process  with   respect  to  which  both  title
                    thereto has passed to customers  of  the Company or any
                    Subsidiary  Guarantor  pursuant  to  the terms  of  the
                    applicable contract with such customers  and  for which
                    an Account has arisen (whether or not such Account  has
                    been  billed).   It  is  intended and such releases (or
                    such agreements) would only be executed by the Agent in
                    the event any such customer  is  financing its purchase
                    of a vessel with a third party lender  and  the related
                    construction  agreement  contemplates  that title  will
                    pass  from  the  Company  or the applicable  Subsidiary
                    Guarantor to such customer  with  respect  to  all or a
                    portion  of  the  vessel  so  financed.   Prior  to the
                    occurrence of an Event of Default nothing set forth  in
                    this  Agreement shall limit the right of the Company to
                    release  any  claim  or  lien  it  may  have to work in
                    process  with respect to which title thereto  has  been
                    passed to  its  customers  pursuant to the terms of the
                    applicable contract with such customers.

               Section  10.3 No Waiver; Cumulative Remedies.  No failure to
                    exercise and no delay in exercising, on the part of the
                    Agent   or  any  Bank,  any  right,  remedy,  power  or
                    privilege  hereunder shall operate as a waiver thereof,
                    nor shall any  single or partial exercise of any right,
                    remedy, power or privilege hereunder preclude any other
                    or further exercise  thereof  or  the  exercise  of any
                    other  right,  remedy, power or privilege.  The rights,
                    remedies, powers  and  privileges  herein  provided are
                    cumulative  and not exclusive of any rights,  remedies,
                    powers and privileges provided by law.

               Section 10.4 Survival of Representations and Warranties.  All
                    representations and  warranties  made  hereunder and in
                    any   document,   certificate  or  statement  delivered
                    pursuant hereto or in connection herewith shall survive
                    the execution and delivery  of  this  Agreement and the
                    other Loan Documents.

               Section  10.5  Payment of Expenses and Taxes; Indemnity  and
                    Release. (a) The Company agrees  (a) to promptly pay or
                    reimburse  the  Agent  for  all its reasonable  out-of-
                    pocket costs and expenses incurred  in  connection with
                    the  structuring, negotiation, preparation,  execution,
                    delivery, implementation and administration of, and any
                    amendment,   supplement   or  modification  (including,
                    without limitation, proposed  amendments,  supplements,
                    or  modifications  whether  or not effective) to,  this
                    Agreement, and the other Loan  Documents  and any other
                    documents  prepared  in  connection herewith,  and  the
                    consummation  of the transactions  contemplated  hereby
                    and  thereby,  including,   without   limitation,   the
                    reasonable  fees  and  disbursements  of counsel to the
                    Agent   (including  without  limitation,  but   without
                    duplication, the allocated cost of internal counsel and
                    disbursements  of internal counsel), including, without
                    limitation,  the   reasonable  fees  of  any   auditors
                    (including in-house  auditors), consultants, appraisers
                    or other professionals  retained  by  the  Agent or its
                    counsel,  (b)  to promptly pay or reimburse the  Agent,
                    the Banks and the  LC  Issuer  for  all their costs and
                    expenses incurred in connection with the monitoring and
                    inspection of the Collateral and the  collection of any
                    Obligations or the enforcement or preservation  of  any
                    rights  under this Agreement, the Letters of Credit and
                    any of the  other  Loan  Documents  and  any such other
                    documents  (whether  such  collection,  enforcement  or
                    preservation  is  undertaken  in  connection  with  any
                    proceeding   described  in  Section  VIII(h)   or   any
                    refinancing or restructuring of the credit arrangements
                    provided for in  this  Agreement  in  the  nature  of a
                    workout  or  otherwise), including, without limitation,
                    the  reasonable   fees  and  disbursements  of  counsel
                    (including without limitation, but without duplication,
                    the   allocated   cost    of   internal   counsel   and
                    disbursements of internal counsel)  to  the  Agent, the
                    Banks  and the LC Issuer including, without limitation,
                    the reasonable fees of any auditors (including in-house
                    auditors),    consultants,    appraisers    or    other
                    professionals retained by the Agent or its counsel, and
                    (c) to promptly pay, indemnify, and hold the Agent  and
                    the  Banks  harmless  from  any  and  all recording and
                    filing  fees  and  any and all liabilities  payable  in
                    connection  with the  execution  and  delivery  of,  or
                    consummation  of  any  of the transactions contemplated
                    by, or any amendment, supplement or modification of, or
                    any waiver of consent under  or  in  respect  of,  this
                    Agreement, any of the other Loan Documents and any such
                    other documents.

                    (b)  In consideration  of the execution and delivery of
                    this Agreement by the Agent  and  the  Banks,  and  the
                    Banks'  extension  of their respective Commitments, the
                    Company hereby indemnifies,  exonerates  and  holds the
                    Agent, each Bank, the LC Issuer, each Affiliate  of the
                    Agent,  each Affiliate of each Bank, each Affiliate  of
                    the LC Issuer  and  each  of their respective officers,
                    directors, employees, and agents  (herein  collectively
                    called  the  "Bank  Parties" and individually called  a
                    "Bank Party") free and  harmless  from  and against any
                    and  all  actions,  causes  of  action, suits,  losses,
                    costs, liabilities and damages, and  expenses  actually
                    incurred   in  connection  therewith  (irrespective  of
                    whether such  Bank  Party  is a party to the action for
                    which indemnification hereunder  is  sought), including
                    reasonable attorneys' fees and disbursements  including
                    allocated costs and disbursements of staff counsel  but
                    only  to  the extent not duplicative (collectively, the
                    "Indemnified   Liabilities"),   incurred  by  the  Bank
                    Parties or any of them as a result  of,  or arising out
                    of, or relating to

                         (i)  this   Agreement,  the  Existing  Credit
               Agreement,  any  Letter of  Credit,  any  Loan  or  any
               transaction financed  or  to be financed in whole or in
               part, directly or indirectly,  with the proceeds of any
               Loan;

                         (ii)   any   investigation,   litigation,  or
               proceeding related to any acquisition (or  Acquisition)
               or  proposed  acquisition (or proposed Acquisition)  by
               the Company or  any  of  its Subsidiaries of all or any
               portion of the stock or all or substantially all of the
               assets of any Person, regardless  of  whether  any Bank
               Party is a party thereto; or

                         (iii)  the presence on or under, or the escape,
               seepage,   leakage,  spillage,   discharge,   emission,
               discharging  or  releases from, any real property owned
               or operated by the  Company  or any of its Subsidiaries
               of   any   Hazardous   Material   (including,   without
               limitation, any losses, liabilities, damages, injuries,
               costs,  expenses or claims asserted  or  arising  under
               CERCLA, any  so-called  "Superfund" or "Superlien" law,
               or any other federal, state,  local  or  other statute,
               law, ordinance, code, rule, regulation, order or decree
               regulating,  relating  to  or  imposing  liability   or
               standards   on   conduct   concerning,   any  Hazardous
               Material), regardless of whether caused by,  or  within
               the control of, the Company or any of its Subsidiaries;

          except  for  any  such  Indemnified  Liabilities arising for  the
          account of a particular Bank party which  a  court  of  competent
          jurisdiction shall have determined in a final proceeding  to have
          arisen by reason of the relevant Bank Party's gross negligence or
          willful  misconduct,  and if and to the extent that the foregoing
          undertaking may be unenforceable  for  any  reason,  the  Company
          hereby agrees to make the maximum contribution to the payment and
          satisfaction  of  each  of  the  Indemnified Liabilities which is
          permissible  under  applicable  law  (the   foregoing  shall  not
          derogate from any greater requirements contained  in  any  of the
          Collateral Documents in favor of the Agent and the Banks).

               The  agreements  in this Section shall survive repayment  of
          the Revolving Notes and  the  Obligations  and  all other amounts
          payable hereunder and under the other Loan Documents.

               Section 10.6  Headings; Table of Contents.  The  Section and
          other  headings  contained in this Agreement  and  the  Table  of
          Contents which precedes this Agreement are for reference purposes
          only and shall not  control  or  affect  the construction of this
          Agreement or the interpretation hereof in any respect.

               Section 10.7 Successors and Assigns.  (a) This Agreement shall
          be binding upon and shall inure to the benefit of the  Agent, the
          Banks,  the  Company and their respective successors and assigns,
          except that the  Company may not assign or delegate its rights or
          obligations hereunder  or any interest herein without the consent
          of each Bank.

                    (b)   The Banks may grant participations in any part of
          the Loans, Revolving Notes  or  their obligations with respect to
          Letters of Credit and the other Loan  Documents  to  any of their
          affiliates  or  to any other commercial bank, insurance  company,
          savings and loan,  savings  bank  or other financial institution;
          provided, however, that (1) such selling Bank's obligations under
          this  Agreement  and  the  other  Loan  Documents   shall  remain
          unchanged, (2) such selling Bank shall remain solely  responsible
          for the performance of such obligations and (3) the Company,  the
          Agent  and  the  other  Banks  shall  continue to deal solely and
          directly with such selling Bank in connection with all rights and
          obligations  under  this Agreement.  Any  agreement  pursuant  to
          which a selling Bank  may  grant a participation may provide that
          such Bank will not agree to  any amendment or waiver expressed in
          subsections (b), (c), (d), (f)  or  (g)  of  Section 10.2 of this
          Agreement without the consent of the participant,  but  shall not
          require  any  Bank  to  take  or  omit  to  take any other action
          hereunder.

                    (c)   Each Bank may, with the consent of  the Agent and
          the  Company (which consent shall not be unreasonably  withheld),
          but without  the consent of any other Bank, assign to one or more
          banks or other  financial  institutions  all  or a portion of its
          rights  and  obligations under this Agreement and  the  Revolving
          Notes; provided  that  (i)  for each such assignment, the parties
          thereto  shall  execute  and  deliver   to  the  Agent,  for  its
          acceptance and recording in the Register  (as  defined below), an
          Assignment and Assumption Agreement, together with  any Revolving
          Note  or  Revolving  Notes  subject  to  such  assignment  and  a
          processing  and  recordation  fee  of  $3,000  and  (ii)  no such
          assignment  shall be for less than $5,000,000 of the Commitments,
          unless such assignment is to a then-current holder of a Revolving
          Note or otherwise  consented  to  by  the Agent in writing.  Upon
          such  execution  and  delivery of the Assignment  and  Assumption
          Agreement to the Agent,  from and after the date specified as the
          effective date in the Assignment  and  Assumption  Agreement (the
          "Acceptance Date"), (x) the assignee thereunder shall  be a party
          hereto,  and, to the extent that rights and obligations hereunder
          have  been  assigned  to  it  pursuant  to  such  Assignment  and
          Assumption  Agreement,  such  assignee  shall have the rights and
          obligations of a Bank hereunder and (y) the  assignor  thereunder
          shall,  to the extent that rights and obligations hereunder  have
          been assigned  by  it  pursuant to such Assignment and Assumption
          Agreement, relinquish its  rights  (other  than any rights it may
          have pursuant to Section 10.5 which will survive) and be released
          from its obligations under this Agreement (and, in the case of an
          Assignment and Assumption Agreement covering all or the remaining
          portion of an assigning Bank's rights and obligations  under this
          Agreement, such Bank shall cease to be a party hereto).

                    (d)   By  executing  and  delivering an Assignment  and
          Assumption Agreement, the assignee thereunder confirms and agrees
          as  follows:  (i) other than as provided in such  Assignment  and
          Assumption  Agreement, the assigning Bank makes no representation
          or warranty and  assumes  no  responsibility  with respect to any
          statements,  warranties  or  representations  made   in   or   in
          connection  with  this  Agreement  or  the  execution,  legality,
          validity,  enforceability,  genuineness, sufficiency or value  of
          this Agreement, the Revolving  Notes  or  any other instrument or
          document  furnished  pursuant  hereto, (ii) such  assigning  Bank
          makes no representation or warranty and assumes no responsibility
          with respect to the financial condition  of the Company or any of
          its Subsidiaries or the performance or observance  by the Company
          or any of its Subsidiaries of any of its obligations  under  this
          Agreement  or any other instrument or document furnished pursuant
          hereto, (iii)  such assignee confirms that it has received a copy
          of  this  Agreement,   together  with  copies  of  the  financial
          statements referred to in  Section  4.1  and such other documents
          and  information as it has deemed appropriate  to  make  its  own
          credit  analysis  and  decision to enter into such Assignment and
          Assumption Agreement, (iv)  such assignee will, independently and
          without reliance upon the Agent, such assigning Bank or any other
          Bank and based on such documents and information as it shall deem
          appropriate  at  the  time,  continue  to  make  its  own  credit
          decisions in taking or not taking  action  under  this Agreement,
          (v) such assignee appoints and authorizes the Agent  to take such
          action  as agent on its behalf and to exercise such powers  under
          this Agreement as are delegated to the Agent by the terms hereof,
          together  with  such  powers as are reasonably incidental thereto
          and (vi) such assignee  agrees that it will perform in accordance
          with their terms all of the  obligations  which  by  the terms of
          this Agreement are required to be performed by it as a Bank.

                    (e)   The Agent shall maintain at its address  referred
          to in Section 10.1 a  copy  of  each  Assignment  and  Assumption
          Agreement delivered to and accepted by it and a register  for the
          recordation  of  the  names  and  addresses  of the Banks and the
          Commitments of, and principal amount of the Loans  owing to, each
          Bank  from  time  to time (the "Register").  The entries  in  the
          Register shall be conclusive and binding for all purposes, absent
          manifest error, and  the  Company,  the  Agent  and the Banks may
          treat  each  Person whose name is recorded in the Register  as  a
          Bank hereunder  for all purposes of this Agreement.  The Register
          and copies of each  Assignment  and Assumption shall be available
          for inspection by the Company or  any Bank at any reasonable time
          and from time to time upon reasonable prior notice.

                    (f)   Upon its receipt of  an Assignment and Assumption
          Agreement  executed  by  an  assigning Bank,  together  with  the
          Revolving Note or Revolving Notes subject to such assignment, the
          Agent shall, if such Assignment and Assumption Agreement has been
          completed and is in substantially  the  form  of  Exhibit  A, (i)
          accept such Assignment and Assumption Agreement, (ii) record  the
          information  contained  therein  in  the  Register and (iii) give
          prompt notice thereof to the Company.  Within  five  (5) Business
          Days after its receipt of such notice, the Company shall  execute
          and  deliver  to  the  Agent  in  exchange  for  the  surrendered
          Revolving  Note  or  Revolving  Notes  a  new  Revolving Note  or
          Revolving Notes to the order of the assignee in  an  amount equal
          to the Commitment or Commitments assumed by it pursuant  to  such
          Assignment  and  Assumption  Agreement and, if the assigning Bank
          has  retained  a  Commitment  or  Commitments  hereunder,  a  new
          Revolving Note or Revolving Notes to  the  order of the assigning
          Bank in an amount equal to the Commitment or Commitments retained
          by  it  hereunder.   Such new Revolving Note or  Revolving  Notes
          shall re-evidence the  Indebtedness  outstanding  under  the  old
          Revolving  Note  or  Revolving Notes and shall be in an aggregate
          principal amount equal  to the aggregate principal amount of such
          surrendered Revolving Note or Revolving Notes, shall be dated the
          date  of the Initial Credit  Event  and  shall  otherwise  be  in
          substantially  the  form of the Revolving Note or Revolving Notes
          subject to such assignments.

               Section 10.8 Tax Forms. Each Bank which is a Non-United States
          Person agrees (to the  extent  it is permitted to do so under the
          laws and any applicable double taxation  treaties  of  the United
          States,   the   jurisdiction   of   its   incorporation  and  the
          jurisdictions  in  which  its Domestic Office  and  its  Offshore
          Lending Office are located)  to  execute and deliver to the Agent
          for delivery to the Company, before  the  first scheduled payment
          date in each taxable year of such Bank, two  copies of either (1)
          a United States Internal Revenue Service Form  1001, (2) a United
          States Internal Revenue Service Form 4224 together  with a United
          States Internal Revenue Service Form W-9, or (3) a United  States
          Internal  Revenue  Service  Form  W-8 together with a certificate
          substantially  in  the  form  of Exhibit  N  and  containing  any
          additional certifications as the  Agent  may require to establish
          such Bank's exemption from United States Federal  Taxes  pursuant
          to section 881(c) or 871(h) of the Code (or any successor  Forms,
          as  appropriate),  and  such  other  and  further Forms which the
          Company may reasonably request, in each case  properly  completed
          and  properly  claiming complete or partial, as the case may  be,
          exemption from withholding and deduction of United States Federal
          Taxes.

               Section 10.9 Setoff.   In  addition  to  any  rights now  or
          hereafter  granted  under  applicable  law  and  not  by  way  of
          limitation of any such rights, upon the occurrence and during the
          continuance of any Event of  Default, the Agent and each Bank and
          each participant of each Bank is hereby authorized by the Company
          at any time or from time to time,  without notice to the Company,
          or to any other Person, any such notice  being  hereby  expressly
          waived,  to  set off and to appropriate and to apply any and  all
          deposits (general  or  special,  including,  but  not limited to,
          Indebtedness  evidenced  by  certificates  of  deposit,   whether
          matured  or  unmatured but not including trust accounts) and  any
          other Indebtedness  at  any  time held or owing by the Bank to or
          for the credit or the account  of  the  Company  against  and  on
          account  of the Obligations and liabilities of the Company to the
          Agent or such  Bank  under  this  Agreement  and  the  other Loan
          Documents,  including,  but  not  limited  to, all claims of  any
          nature  or  description  arising  out of or connected  with  this
          Agreement or the other Loan Documents.

               Section 10.10  Sharing.

                    (a) Each of the Banks agree among  themselves that with
               respect to all amounts received by them which are applicable
               to the payment or satisfaction of all or  part  of the Loans
               or Reimbursement Obligations, interest thereon, any  fees or
               any  other amount payable hereunder or under the other  Loan
               Documents,  equitable  adjustment  will  be made so that, in
               effect, all such amounts will be shared among  the  Banks in
               proportion  to their respective Percentage, whether received
               by voluntary  payment,  by  the exercise of the right of set
               off or banker's lien, by counterclaim  or by the enforcement
               of their rights hereunder or under the other Loan Documents.

                    (b) If any Bank shall, through the exercise of any right
               of  counterclaim,  set  off,  banker's  lien  or  otherwise,
               receive  payment  or  reduction  of  a  proportion   of  the
               aggregate  amount  of the Loans or Reimbursement Obligations
               or interest thereon  due  to  such Bank, or any other amount
               payable hereunder, as the case may be, which is greater than
               the  proportion  received by any  other  Bank  or  Banks  in
               respect to the aggregate amount of any Loan or Reimbursement
               Obligation and interest  thereon  due  such  Bank,  or  with
               respect  to  any  other  amount payable hereunder, that Bank
               receiving such proportionately  greater payment shall notify
               the other Banks and the Agent of  such  receipt and purchase
               participations  (which  it  shall  be deemed  to  have  done
               simultaneously upon the receipt of such  excess  payment) in
               the  Loans  and Reimbursement Obligations held by the  other
               Bank or Banks  so  that all such recoveries of principal and
               interest  with  respect   to  the  Loans  and  Reimbursement
               Obligations shall be proportionate to each Bank's respective
               Percentage;  provided  that  if   all   or   part   of  such
               proportionately  greater payment received by such purchasing
               Bank is thereafter recovered from such Bank, those purchases
               shall be rescinded  and  the  purchase  prices paid for such
               participations shall be returned to the purchasing  Bank  to
               the  extent  of  such  recovery, but without interest.  Each
               participant of any Bank  shall  have  the same rights of set
               off against the Company set forth in Section  10.9  as if it
               were a Bank and agrees that, with respect to any setoff made
               by  such  participant,  the provisions of this Section 10.10
               shall similarly apply as if it were a Bank.

                    (c) The Company expressly consents  to  the arrangement
               described in this Section 10.10.

               Section 10.11 Counterparts. This Agreement may be executed by
               one  or more of the parties to this Agreement on any  number
               of separate counterparts, and all of said counterparts taken
               together  shall  be  deemed  to  constitute one and the same
               instrument.

               Section 10.12  Severability. Any provision of this Agreement
               which  is  prohibited  or  unenforceable in any jurisdiction
               shall, as to such jurisdiction, be ineffective to the extent
               of such prohibition or unenforceability without invalidating
               the remaining provisions hereof, and any such prohibition or
               unenforceability in any jurisdiction shall not invalidate or
               render   unenforceable   such   provision   in   any   other
               jurisdiction.

               Section 10.13  Governing Law. This Agreement and the Revolving
               Notes  and the rights and obligations of the  parties  under
               this Agreement and the Revolving Notes shall be governed by,
               and  construed  and  interpreted  in  accordance  with,  the
               internal laws (as opposed to conflict of laws provisions) of
               the State of Illinois; provided that the Agent and the Banks
               shall retain all rights arising under federal law.

               Section  10.14   Marshalling; Recapture. Neither the Agent nor
               any Bank shall be under an obligation to marshall any assets
               in favor of the Company, any  Subsidiary  of  the Company or
               any other party or against or in payment of any  or  all  of
               the  Obligations.   To  the  extent  any  Bank  receives any
               payment by or on behalf of the Company, which payment or any
               part  thereof  is subsequently invalidated, declared  to  be
               fraudulent or preferential,  set  aside  or  required  to be
               repaid  to  the  Company,  its  estate,  trustee,  receiver,
               custodian or any other party under any bankruptcy law, state
               or Federal law, common law or equitable cause, then  to  the
               extent  of such payment or repayment, the obligation or part
               thereof which  has  been  paid,  reduced or satisfied by the
               amount so repaid shall be reinstated by the amount so repaid
               and shall be included within the liabilities  of the Company
               to such Bank as of the date such initial payment,  reduction
               or satisfaction occurred.

               Section  10.15  Jurisdiction.  The Company hereby irrevocably
               submits to the jurisdiction of any Illinois State or Federal
               court  sitting in Cook County, Illinois  in  any  action  or
               proceeding  arising  out  of  or  relating to this Agreement
               and/or  the  other  Loan Documents and  the  Company  hereby
               irrevocably agrees that all claims in respect of such action
               or proceeding may be  heard  and determined in such Illinois
               State court, or to the extent  permitted  by  law,  in  such
               Federal court.  The Company hereby irrevocably waives to the
               fullest  extent  it may effectively do so, the defense of an
               inconvenient forum  to  the  maintenance  of  such action or
               proceeding.   The Company also irrevocably consents  to  the
               service of any  and  all  process  in  any  such  action  or
               proceeding  by  the mailing of copies of such process to the
               Company at its address  specified  in  Section  10.1 hereof.
               The Company agrees that a final judgment in any such  action
               or  proceeding  shall  be  conclusive and may be enforced in
               other jurisdictions by suit  on the judgment or in any other
               manner provided by law.

               Section 10.16  Waiver of Jury Trial.  EACH OF THE BANKS, THE
               AGENT AND THE COMPANY MUTUALLY WAIVES TRIAL BY JURY  IN  ANY
               ACTION  OR  PROCEEDING  (INCLUDING, ANY COUNTERCLAIM) IN ANY
               COURT ARISING ON, OUT OF  OR  IN  ANY  WAY  RELATING TO THIS
               AGREEMENT   AND   THE  OTHER  LOAN  DOCUMENTS,  THE  RELATED
               AGREEMENTS OR ANY AMENDMENT  OR SUPPLEMENT HERETO OR THERETO
               OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                 [The Remainder Of This Page Is Intentionally Left Blank]







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

                                              AVONDALE INDUSTRIES, INC.


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


                                              BANK OF AMERICA NATIONAL
                                              TRUST AND SAVINGS
                                              ASSOCIATION, as Agent


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



                                              THE BANKS:

                                              BANK OF AMERICA ILLINOIS, as
                                              a Bank and as an LC Issuer


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

                                              Domestic and Offshore Lending
                                              Office


                                              231 South LaSalle Street
                                              Chicago, IL  60697


                                              WHITNEY NATIONAL BANK


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

                                              Domestic and Offshore Lending
                                               Office

                                              P. O. Box 61260
                                              New Orleans, Louisiana  70160


                                              FIRST NATIONAL BANK OF
                                              COMMERCE


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

                                              Domestic and Offshore Lending
                                               Office

                                              201 St. Charles Ave.
                                              28th Floor
                                              New Orleans, Louisiana  70170