GULFSTREAM AEROSPACE CORP, DEF 14A, 1997-03-28

GULFSTREAM AEROSPACE CORP
DEF 14A, 1997-03-28
AIRCRAFT

Previous: COMMERCE BANCORP INC /NJ/, 10-K405, 1997-03-28

Next: GULFSTREAM AEROSPACE CORP, 10-K405, 1997-03-28

<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

<TABLE>
<S> <C>
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
240.14a-11(c) or 240.14a-12

/ / Confidential, for Use of the Commission
Only (as Permitted by Rule 14a-6(e)(2))
</TABLE>

- --------------------------------------------------------------------------------
GULFSTREAM AEROSPACE CORPORATION
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

- --------------------------------------------------------------------------------
<PAGE>
Payment of Filing Fee (Check the appropriate box):

<TABLE>
<S> <C> <C>
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11:

1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying transaction computed pursuant to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting was paid previously. Identify the previous filing
by registration statement number, or the Form of Schedule and the date of its filing:

1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
</TABLE>
<PAGE>
[LOGO]

March 28, 1997

Dear Fellow Stockholder:

You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Gulfstream Aerospace Corporation, which is Gulfstream's first annual meeting
as a public company, to be held on Wednesday, May 14, 1997, at 9:30 a.m., local
time, at the Iridium Room located on the lower lobby level of the St. Regis
Hotel, Two East 55th Street (at Fifth Avenue), New York, New York 10022.

At the meeting, we will review Gulfstream's activities over the past year,
including the first deliveries of the Gulfstream V as well as the outlook for
1997. The Secretary's formal notice of the meeting and the Proxy Statement
appear on the following pages and describe the matters to be acted upon at the
meeting.

We hope that you will be able to attend the meeting in person. However,
whether or not you plan to be present, please sign and return your proxy as soon
as possible so that your vote will be counted.

Sincerely,

[LOGO]

THEODORE J. FORSTMANN
CHAIRMAN OF THE BOARD

[LOGO]
<PAGE>
GULFSTREAM AEROSPACE CORPORATION

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

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

The 1997 Annual Meeting of Stockholders of Gulfstream Aerospace Corporation,
a Delaware corporation (the "Company"), will be held at the Iridium Room located
on the lower lobby level of the St. Regis Hotel, Two East 55th Street (at Fifth
Avenue), New York, New York 10022 on Wednesday, May 14, 1997, at 9:30 a.m.,
local time, for the following purposes:

1. To elect seven directors for terms ending at the 2000 Annual Meeting
of Stockholders;

2. To consider and vote on a proposal to approve the Gulfstream
Aerospace Corporation Amended and Restated 1990 Stock Option Plan;

3. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP, independent public accountants, as independent auditors for the
Company for the fiscal year ending December 31, 1997; and

4. To transact such other business as may properly come before the
meeting.

Stockholders of record as of the close of business on March 26, 1997 will be
entitled to vote at the meeting.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY
REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED BY DELIVERY TO THE COMPANY OF A
SUBSEQUENTLY EXECUTED PROXY OR A WRITTEN NOTICE OF REVOCATION OR BY VOTING IN
PERSON AT THE MEETING.

By order of the Board of Directors,

[LOGO]

Chris A. Davis
Secretary

March 28, 1997
<PAGE>
GULFSTREAM AEROSPACE CORPORATION
500 Gulfstream Road
Savannah, Georgia 31408

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

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1997

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

This proxy statement is furnished to stockholders of Gulfstream Aerospace
Corporation, a Delaware corporation ("Gulfstream" or the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board" or "Board of Directors") for use at the 1997 Annual Meeting
of the Stockholders to be held at 9:30 a.m., local time, on Wednesday, May 14,
1997, at the Iridium Room located on the lower lobby level of the St. Regis
Hotel, Two East 55th Street (at Fifth Avenue), New York, New York 10022, and any
adjournments thereof.

Stockholders of record as of the close of business on March 26, 1997 will be
entitled to vote at the meeting or any adjournments thereof. As of the record
date, March 26, 1997, the Company had outstanding 74,035,328 shares of Common
Stock, par value $.01 per share ("Common Stock"), each entitled to one vote on
all matters to be voted upon. Information contained in this proxy statement
pertaining to the Common Stock gives effect to a recapitalization of the
Company's common equity that became effective immediately prior to completion of
the initial public offering of Common Stock on October 16, 1996. This proxy
statement, the accompanying form of proxy and the Company's annual report to
stockholders for the fiscal year ended December 31, 1996 are being mailed on or
about April 1, 1997 to each stockholder entitled to vote at the meeting.
<PAGE>
VOTING AND REVOCATION OF PROXIES

VOTING

If the enclosed proxy is executed and returned in time and not revoked, all
shares represented by the proxy will be voted. Each proxy will be voted in
accordance with the stockholder's instructions. If no instructions are
specified, signed proxies will be voted FOR the election of each person
nominated for election as a director, FOR the approval of the Gulfstream
Aerospace Corporation Amended and Restated 1990 Stock Option Plan (the "Amended
and Restated 1990 Stock Option Plan"), and FOR the ratification of the
appointment by the Board of Directors of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending December 31, 1997.

The holders of a majority of the shares of Common Stock entitled to vote at
the meeting, present in person or by proxy, constitutes a quorum. If a quorum is
present, the affirmative vote of the holders of a plurality of the votes cast at
the meeting will be required for the election of directors; and the affirmative
vote of holders of a majority of the shares present in person or by proxy at the
meeting and entitled to vote thereon will be required to act on all other
matters to come before the meeting, including the approval of the Amended and
Restated 1990 Stock Option Plan and the ratification of the appointment by the
Board of Directors of Deloitte & Touche LLP as independent auditors for the
Company. An automated system administered by the Company's transfer agent
tabulates the votes. For purposes of determining the number of votes cast with
respect to any voting matter, only those cast "for" or "against" are included;
abstentions and broker non-votes are excluded. Accordingly, with respect to the
election of directors, abstentions and broker non-votes will have no effect on
the outcome. For purposes of determining whether the affirmative vote of a
majority of the shares present at the meeting and entitled to vote has been
obtained, abstentions will be included in, and broker non-votes will be excluded
from, the number of shares present and entitled to vote. Accordingly, with
respect to any matter other than the election of directors, abstentions will
have the effect of a vote "against" the matter and broker non-votes will have
the effect of reducing the number of affirmative votes required to achieve the
majority vote.

REVOCATION

A stockholder giving a proxy may revoke it at any time before it is voted by
delivery to the Company of a subsequently executed proxy or a written notice of
revocation. In addition, returning your completed proxy will not prevent you
from voting in person at the meeting should you be present and wish to do so.

2
<PAGE>
ELECTION OF DIRECTORS

The Board of Directors consists of three classes, with seven directors in
each class. Directors hold office for staggered terms of three years and until
their successors have been duly elected and qualified. One of the three classes
will be elected each year at the Annual Meeting of Stockholders to succeed the
directors whose terms are ending.

Seven directors in Class I are to be elected at the 1997 Annual Meeting and
proxies cannot be voted for more than seven nominees. The directors so elected
will hold office as directors until the 2000 Annual Meeting of Stockholders and
until their respective successors have been duly elected and qualified. The
directors in Class II and Class III are serving terms ending at the Annual
Meeting of Stockholders in 1998 and 1999, respectively.

Information concerning nominees for election to terms ending at the 2000
Annual Meeting of Stockholders is set forth below, followed by information
concerning directors in Class II and III. Unless otherwise directed, proxies
will be voted FOR the nominees listed below. If any one or more of the nominees
is unable to serve for any reason or withdraws from nomination, proxies will be
voted for the substitute nominee or nominees, if any, proposed by the Board of
Directors. The Board has no knowledge that any nominee will or may be unable to
serve or will or may withdraw from nomination. All of the nominees are presently
serving as directors of the Company.

NOMINEES FOR ELECTION TO TERMS ENDING AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS

CHARLOTTE L. BEERS, age 61, has been a director of the Company since July
1993. She has been Chairman of Ogilvy and Mather Worldwide, Inc. ("Ogilvy &
Mather") since April 1992 and was Chief Executive Officer of Ogilvy & Mather
from April 1992 to September 1996. Ms. Beers was Chairman/Chief Executive
Officer of Thatham RSCG from 1982 to 1992.

THOMAS D. BELL, JR., age 47, has been a director of the Company since April
1994. Mr. Bell has been President and Chief Executive Officer of
Burson-Marsteller, a division of Young & Rubicam Inc., since May 1995. Mr. Bell
was Vice Chairman of the Company from April 1994 to April 1995. From 1991 to
1994, Mr. Bell served as Vice Chairman and Chief Operating Officer of
Burson-Marsteller. Mr. Bell is also a director of Lincoln National Corporation.

CHRIS A. DAVIS, age 46, has been a director of the Company since March 1997.
She has served as Executive Vice President and Chief Financial Officer of the
Company since July 1993 and Secretary of the Company since August 1996. She is
also President and Chief Operating Officer of Gulfstream Financial Services
Corporation. Prior to joining the Company, she was Chief Financial Officer for
General Electric Co.'s Electronic Systems Division from 1990 to 1993.

NICHOLAS C. FORSTMANN, age 50, has been a director of the Company since
March 1990. He has been a general partner of FLC Partnership, L.P. since he
co-founded Forstmann, Little & Co. ("Forstmann Little") in 1978. He is also a
director of General Instrument Corporation and Department 56, Inc. Theodore J.
Forstmann and Nicholas C. Forstmann are brothers.

BRYAN T. MOSS, age 57, has served as Vice Chairman of the Company and Chief
Executive Officer of Gulfstream Aircraft Incorporated ("GAI") since March 1995.
Prior to joining the Company, he was President of Bombardier Business Aircraft
Division where he was responsible for the Challenger and Global Express business
jet programs from 1989 to March 1995.

ROGER S. PENSKE, age 60, has been a director of the Company since December
1993. Mr. Penske has been Chairman, Chief Executive Officer, President and a
director of Penske Corporation since 1969 and Chairman, Chief Executive Officer
and a director of Detroit Diesel Corporation since 1987. Mr. Penske is also a
director of Penske Motorsports, Inc., Philip Morris Companies Inc. and General
Electric Co.

DONALD H. RUMSFELD, age 64, has served as a director of the Company since
1993. Mr. Rumsfeld has been in private business since August 1993. From October
1990 to August 1993, Mr. Rumsfeld served as Chairman and CEO of General
Instrument Corporation. Previously, he had served as Chairman and CEO

3
<PAGE>
of G.D. Searle and U.S. Secretary of Defense. Mr. Rumsfeld is currently Chairman
of the Board of Directors of Gilead Sciences, Inc., and a member of the Boards
of ABB AB, Kellogg Company, Metricom, Inc., Sears Robuck and Co., and Tribune
Company.

DIRECTORS WHOSE TERMS END AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS

WILLIAM R. ACQUAVELLA, age 59, has been a director of the Company since
March 1990. He has been the owner and operator of Acquavella Galleries, Inc. and
Acquavella Contemporary Art, Inc. since 1963 and the general partner of
Acquavella Modern Art since May 1990.

W.W. BOISTURE, JR., age 52, has served as Executive Vice President since
February 1994 and as director of the Company since February 1995. He is also
President and Chief Operating Officer of GAI. Prior to joining the Company, he
was President and Chief Executive Officer of British Aerospace Corporate Jets
from October 1992 through 1993 where he was responsible for the "Hawker"
business jet product line and its worldwide marketing, sales and support
organization. From early 1990 to 1992, Mr. Boisture was Chairman, President and
Chief Executive Officer of Butler Aviation, a nationwide aviation services
company.

SANDRA J. HORBACH, age 36, has been a director of the Company since
September 1994. She has been a general partner of FLC Partnership, L.P. since
January 1993. She joined Forstmann Little in August 1987. She is also a director
of Department 56, Inc.

MICHAEL S. OVITZ, age 50, has been a director of the Company since March
1997. He is an independent businessman and investor. From October 1995 to
December 1996, Mr. Ovitz was President of The Walt Disney Company ("Disney").
Prior to joining Disney, Mr. Ovitz served as chairman of Creative Artists
Agency, which he co-founded, from 1975 until 1995.

ALLEN E. PAULSON, age 74, has been a director of the Company since March
1990. He served as Chairman, Chief Executive Officer and a director of
Gulfstream Aerospace Corporation (a Georgia corporation and wholly owned
indirect subsidiary of the Company) and its predecessors from 1978, when he
purchased the corporate jet division of Grumman Aerospace and began Gulfstream
American (a predecessor of the Company), to 1992. He has also served as Chairman
of the Company from March 1990 and Chief Executive Officer of the Company from
January 1992 to August 1992. He is also a director of CardioDynamics
International Corp. and Full House Resorts, Inc.

COLIN L. POWELL, age 59, has been a director of the Company since May 1996.
Mr. Powell served as the Chairman of the Joint Chiefs of Staff from October 1989
to September 1993. Prior to that, Mr. Powell served as the National Security
Advisor from December 1987 to January 1989. Since his retirement from military
service in September 1993, Mr. Powell has written his autobiography, MY AMERICAN
JOURNEY.

GEORGE P. SHULTZ, age 76, has been a director of the Company since November
1991. Mr. Shultz served as the United States Secretary of State from July 1982
until January 1989 and is a Distinguished Fellow of the Hoover Institute. Mr.
Shultz is also a director of AirTouch Communications, Inc. and Gilead Sciences,
Inc.

DIRECTORS WHOSE TERMS END AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS

ROBERT ANDERSON, age 76, has been a director of the Company since March
1990. He has served as Chairman Emeritus of Rockwell Corporation since February
1990. Mr. Anderson is also a director of Optical Data Systems, Inc. and the
Timken Company.

FRED A. BREIDENBACH, age 50, has served as President, Chief Operating
Officer and a director of the Company since April 1993. Prior to joining the
Company, he was Vice President and General Manager of General Electric Co.'s
Electronics Systems Division from 1991 to 1993. He is the Chairman of the
General Aviation Manufacturing Association and is also a director of the
Aerospace Industries Association of America, Inc.

4
<PAGE>
LYNN FORESTER, age 42, has been a director of the Company since March 1997.
She has been President and Chief Executive Officer of FirstMark Holdings, Inc.,
since 1984, and of NetWave, Inc., an Internet company, since 1996. From 1989 to
December 1994, she was Chairman and Chief Executive Officer of TPI
Communications International, Inc., a radio common carrier and paging company.
She is a director of General Instrument Corporation and Vice Chairman of the
Corporate Commission on Educational Technology.

THEODORE J. FORSTMANN, age 57, has served as Chairman of the Board of the
Company since November 1993. Mr. Forstmann has been a general partner of FLC
Partnership, L.P. since he co-founded Forstmann Little in 1978. He is also a
director of General Instrument Corporation.

DREW LEWIS, age 65, has been a director of the Company since March 1990. He
served as Chairman and Chief Executive Officer of Union Pacific Corporation from
October 1, 1987 through December 31, 1996. He is also a director of American
Express Company, Dal-Tile International Inc., Ford Motor Company, Lucent
Technologies, FPL Group, Inc., and Gannett Co., Inc.

GERARD R. ROCHE, age 65, has been a director of the Company since January
1993. Mr. Roche has been Chairman of Heidrick & Struggles, Inc. since 1981.

ROBERT S. STRAUSS, age 78, has been a director of the Company since April
1993. Mr. Strauss is a founder of and partner in the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P. ("Akin Gump") and served as U.S. Ambassador to the
Soviet Union, and upon its dissolution, to the Russian Federation from August
1991 to November 1992. In November 1992, Mr. Strauss returned to Akin Gump. Mr.
Strauss is also a director of Archer-Daniels-Midland Co. and Hollinger
International Inc.

5
<PAGE>
FURTHER INFORMATION CONCERNING THE BOARD
OF DIRECTORS AND COMMITTEES

The Board of Directors of the Company directs the management of the business
and affairs of the Company, as provided by Delaware law, and conducts its
business through meetings of the Board and four standing committees: Executive,
Audit, Compensation and Employee Benefit Plan. In addition, from time to time,
special committees may be established under the direction of the Board when
necessary to address specific issues. The Company has no nominating or similar
committee.

COMMITTEES OF THE BOARD -- BOARD MEETINGS

The Board of Directors of the Company held 5 meetings in 1996. Each director
attended 75% or more of the aggregate of (i) meetings of the Board held during
the period for which he or she served as a director and (ii) meetings of all
committees held during the period for which he or she served on those
committees, except for William R. Acquavella (60% attendance) and Roger S.
Penske (67% attendance).

The EXECUTIVE COMMITTEE of the Board has the authority to exercise all
powers and authority of the Board in the management of the business and affairs
of the Company that may be lawfully delegated to it under Delaware law. Since
August 8, 1996, the members of the Executive Committee have been Theodore J.
Forstmann, Fred A. Breidenbach, W.W. Boisture, Jr. and Sandra J. Horbach. The
Executive Committee held no meetings in 1996.

The AUDIT COMMITTEE's principal functions are to review the scope of the
annual audit of the Company by its independent public accountants, review the
annual financial statements of the Company and the related audit report of the
Company as prepared by the independent public accountants, review management's
selection of an independent public accounting firm each year and review audit
and any non-audit fees paid to the Company's independent public accountants. The
Company's Chief Financial Officer generally attends Audit Committee meetings and
gives reports to and answers inquiries from the Audit Committee. The Audit
Committee reports its findings and recommendations to the Board. The Audit
Committee is composed of three non-employee directors. Since August 8, 1996, the
members of the Audit Committee have been Robert Anderson, Roger S. Penske and
Donald H. Rumsfeld. From January 1, 1996 through August 7, 1996, the members of
the Audit Committee were William R. Acquavella, Robert Anderson and Nicholas C.
Forstmann. The Audit Committee held one meeting in 1996.

The COMPENSATION COMMITTEE is responsible for developing and making
recommendations to the Board of Directors with respect to the Company's
compensation policies and also determines the cash portion of the Company's
compensation program, including recommending to the Board the cash compensation
to be paid to the Company's executive officers. Since August 8, 1996, the
members of the Compensation Committee have been Sandra J. Horbach, Gerald R.
Roche and Robert S. Strauss. The Compensation Committee held 9 meetings in 1996.
From January 1, 1996 through August 7, 1996, the Company's cash and non-cash
compensation program was administered by Theodore J. Forstmann, Sandra J.
Horbach and Daniel F. Akerson (through March 1996, when Mr. Akerson resigned as
a director) and Nicholas C. Forstmann (from May 15, 1996).

The EMPLOYEE BENEFIT PLAN COMMITTEE is responsible for administering the
Company's employee benefit plans, including, if approved by the holders of
shares of Common Stock, the Amended and Restated 1990 Stock Option Plan. Since
August 8, 1996, the Employee Benefit Plan Committee has been composed of three
non-employee directors: Nicholas C. Forstmann, Gerald R. Roche and Robert S.
Strauss. The Employee Benefit Plan Committee held no meetings in 1996.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee administered the Company's 1996 cash and non-cash
compensation program from January 1, 1996 through August 7, 1996. During that
period, the Compensation Committee was comprised of Theodore J. Forstmann,
Sandra J. Horbach, Daniel F. Akerson (until his resignation from the Board in
March 1996) and Nicholas C. Forstmann (from May 15, 1996). Mr. Theodore J.

6
<PAGE>
Forstmann is the Chairman of the Company and Ms. Horbach served as Vice
President, Assistant Treasurer and Assistant Secretary of the Company until
August 8, 1996. On August 8, 1996, the Company appointed a new Compensation
Committee, comprised of Sandra J. Horbach, Gerard R. Roche and Robert S.
Strauss, to administer the cash portion of the Company's compensation program,
and a new Employee Benefit Plan Committee, comprised of Nicholas C. Forstmann,
Gerard R. Roche and Robert S. Strauss, to administer the Company's employee
benefit plans. Theodore J. Forstmann, Sandra J. Horbach and Nicholas C.
Forstmann are general partners of FLC Partnership, L.P. Daniel F. Akerson was a
general partner of FLC Partnership, L.P. until his withdrawal in March 1996.

Under a usage agreement that was terminated in August 1996, Gulfstream paid
an affiliate of FLC Partnership, L.P. for use of a Gulfstream IV in connection
with sales demonstrations, customer support and other Gulfstream business. Total
payments for 1996 were $1.6 million. In August 1996, Gulfstream entered into
agreements with Mr. Theodore J. Forstmann pursuant to which Gulfstream will
provide Mr. Forstmann with the use of a Gulfstream V for a period of ten years.
Until the Gulfstream V becomes available, Gulfstream has made and will make
available to Mr. Forstmann a Gulfstream IV, which the Company obtained by
assuming, at fair market value, a lease for a Gulfstream IV from an affiliate of
FLC Partnership, L.P. In January 1997, the Company exercised its purchase option
under the lease and purchased the aircraft from the lessor, an unaffiliated
financial institution. Mr. Forstmann has agreed to pay Gulfstream up to $1.0
million annually for non-Company use of the aircraft. If Mr. Forstmann is no
longer serving as a director or official of Gulfstream, he has agreed to
reimburse Gulfstream $1,800 per hour for all use of the aircraft, or other such
rate required so as to not exceed FAA regulatory requirements.

Gulfstream purchased approximately $1.9 million in inventory items relating
to lighting from Grimes Aerospace Corp., an affiliate of FLC Partnership, L.P.
during 1996. From time to time the Company provides maintenance and support
services, all on standard commercial terms, to FL Aviation Corp., an affiliate
of FLC Partnership, L.P. that operates Gulfstream aircraft. For providing such
services Gulfstream was paid approximately $0.6 million in 1996. In September
1996, the Company entered into an aircraft services agreement with FL Aviation
Corp. with a term of approximately ten years, pursuant to which FL Aviation
Corp. provides to Gulfstream aircraft operation, maintenance and administration
services. During 1996, Gulfstream paid FL Aviation Corp. approximately $0.7
million for services under this agreement. Moran Printing, a company owned by
relatives of Theodore J. Forstmann and Nicholas C. Forstmann, has a three-year
contract (which commenced in November 1995) to provide printing services on
standard commercial terms to the Company. In 1996, the Company received services
and paid $1.4 million therefor, under such contract. The Company believes the
terms of the transactions described in this paragraph are at least as favorable
to the Company as those which could be obtained from an unrelated third party.

Mr. Roche is a stockholder, employee, director and the Chairman of Heidrick
& Struggles, Inc. ("Heidrick & Struggles"), a corporation engaged in the
business of executive searches. In October 1996, the Company retained Heidrick &
Struggles for certain executive searches. The Company has paid Heidrick &
Struggles approximately $0.1 million for this engagement.

In May 1996, in consideration of extraordinary service to the Company,
Theodore J. Forstmann and Sandra J. Horbach received options to purchase 375,000
and 75,000 shares of Common Stock, respectively, in each case at an exercise
price of $4.10 per share.

DIRECTOR COMPENSATION

Directors who are neither executive officers of the Company nor general
partners in FLC Partnership, L.P. have been granted options to purchase Common
Stock in connection with their election to the Board. In May 1996, when Colin L.
Powell became a director of the Company, he was granted options to purchase
56,250 shares of Common Stock. In addition, in 1996 each of Theodore J.
Forstmann and Sandra J. Horbach were granted options to purchase Common Stock in
consideration of extraordinary service to the Company. See "Compensation
Committee Interlocks and Insider Participation". Directors do not receive

7
<PAGE>
any fees for serving on the Company's Board, but are reimbursed for their
out-of-pocket expenses arising from attendance at meetings of the Board and
Committees thereof.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth certain information known by the Company
regarding the beneficial ownership of the Company's Common Stock, as of March
26, 1997, by each beneficial owner of more than five percent of the outstanding
Common Stock, by each of the Company's directors, by each of the executives
named in the Summary Compensation Table and by all directors and officers of the
Company as a group. Except as otherwise indicated, the persons or entities
listed below have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them, except to the extent such power may be
shared with a spouse.

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENTAGE OF
NAME OWNED(1) CLASS(2)
- ---------------------------------------------------------------------------------- -------------------- ---------------
<S> <C> <C>
MBO-IV (3)........................................................................ 19,467,013 26.3%
Gulfstream Partners (3)........................................................... 5,071,259 6.9
Gulfstream Partners II, L.P....................................................... 6,853,399 9.3
FMR Corp. (4)..................................................................... 7,196,200 9.7
William R. Acquavella............................................................. 30,447 *
Robert Anderson................................................................... 61,335 *
Charlotte L. Beers................................................................ 30,889 *
Thomas D. Bell, Jr................................................................ 123,555 *
W.W. Boisture, Jr................................................................. 263,296 *
Fred A. Breidenbach............................................................... 514,814 *
Chris A. Davis.................................................................... 144,148 *
Lynn Forester..................................................................... -- --
Nicholas C. Forstmann (3)......................................................... 31,391,671 42.4
Theodore J. Forstmann (3)......................................................... 31,766,671 42.7
Sandra J. Horbach (3)............................................................. 6,928,399 9.3
Drew Lewis (3).................................................................... 30,447 *
Bryan T. Moss..................................................................... 201,916 *
Michael S. Ovitz.................................................................. -- --
Allen E. Paulson.................................................................. 329,481 *
Roger S. Penske................................................................... 61,778 *
Colin L. Powell................................................................... 18,750 *
Gerard Roche...................................................................... 30,889 *
Donald H. Rumsfeld(5)............................................................. 61,778 *
George P. Shultz.................................................................. 61,335 *
Robert S. Strauss................................................................. 61,335 *
All directors and executive officers
of the Company as group (21 persons)(3)(6)...................................... 33,867,864 44.3
</TABLE>

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

* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock.

(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days following March 26, 1997. For purposes
of computing the percentage of outstanding shares of Common Stock held by
each person or group of persons named above, any shares which such person or
persons has or have the right to acquire within 60 days following March 26,
1997, is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.

8
<PAGE>
(2) Based on 74,035,328 shares outstanding at March 26, 1997.

(3) MBO-IV is Forstmann Little & Co. Subordinated Debt and Equity Management
Buyout Partnership-IV. The address of MBO-IV, Gulfstream Partners and
Gulfstream Partners II, L.P., each a New York limited partnership
(collectively, the "Forstmann Little Partnerships"), is c/o Forstmann Little
& Co., 767 Fifth Avenue, New York, New York 10153. The general partner of
MBO-IV is FLC Partnership, L.P., a limited partnership of which Theodore J.
Forstmann, Nicholas C. Forstmann, Steven B. Klinsky, Sandra J. Horbach,
Winston W. Hutchins and Thomas H. Lister are general partners. The general
partner of Gulfstream Partners is FLC XXI Partnership, a general partnership
of which Wm. Brian Little, Nicholas C. Forstmann, Steven B. Klinsky, Winston
W. Hutchins, John A. Sprague, Wm. Brian Little IRA, Winston W. Hutchins IRA,
John A. Sprague IRA and TJ/JA L.P., a Delaware limited partnership ("TJ/JA
L.P."), are general partners. The general partner of TJ/JA L.P. is Theodore
J. Forstmann. The general partner of Gulfstream Partners II, L.P. is FLC
XXIV Partnership, a general partnership of which Theodore J. Forstmann,
Nicholas C. Forstmann, Wm. Brian Little, John A. Sprague, Steven B. Klinsky,
Sandra J. Horbach, Winston W. Hutchins are general partners. Accordingly,
each of such individuals and partnerships may be deemed the beneficial
owners of shares owned by MBO-IV, Gulfstream Partners and/or Gulfstream
Partners II, L.P. in which such individual or partnership is a partner. For
the purposes of this table, such beneficial ownership is included. Ms.
Horbach and Mr. Lister do not have any voting or investment power with
respect to, or any economic interest in, the shares of Common Stock held by
MBO-IV, and accordingly, Ms. Horbach and Mr. Lister are not deemed to be the
beneficial owner thereof. William R. Acquavella, Drew Lewis and Roger S.
Penske are limited partners in Gulfstream Partners and William R. Acquavella
and Roger S. Penske are limited partners in Gulfstream Partners II, L.P.
There are other limited partners in each of MBO-IV, Gulfstream Partners and
Gulfstream Partners II, L.P., none of which is otherwise affiliated with the
Company or FLC Partnership, L.P. See "Certain Transactions".

(4) Based on information contained in Schedule 13G, dated February 14, 1997,
filed with the Securities and Exchange Commission by FMR Corp., Edward C.
Johnson 3d, and Abigail P. Johnson. The address of FMR Corp. is 82
Devonshire Street, Boston, Massachusetts 02109. Includes 7,086,600 shares
beneficially owned by Fidelity Management & Research Company, a wholly owned
subsidiary of FMR Corp. and a registered investment adviser, as a result of
acting as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940 and 109,600 shares
beneficially owned by Fidelity Management Trust Company, a wholly owned
subsidiary of FMR Corp. and a bank, as a result of serving as investment
manager of certain institutional accounts. The Schedule 13G states that
Edward C. Johnson 3d, Chairman of FMR Corp., Abigail P. Johnson, a director
of FMR Corp., and members of the Johnson family may be deemed to be a
controlling group with respect to FMR Corp.

(5) Shares are beneficially owned by an irrevocable trust for the benefit of
certain members of Mr. Rumsfeld's family. Mr. Rumsfeld disclaims beneficial
ownership of such shares.

(6) Except as discussed in note 3 and except for Mr. Bell, who owns the number
of shares of Common Stock listed next to his name in the table above, no
director or executive officer currently owns shares of Common Stock; all
shares beneficially owned by directors and executive officers are
attributable to options exercisable currently or within 60 days of March 26,
1997. Not included in the table are shares of Common Stock issuable upon the
exercise of options that are not exercisable within 60 days after March 26,
1997 in the following amounts: W.W. Boisture, Jr. -- 141,185 shares; Chris
A. Davis -- 102,962 shares; Lynn Forester -- 40,000 shares; Bryan T. Moss --
168,750 shares; Michael S. Ovitz -- 40,000 shares; and Colin L. Powell --
37,500 shares.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"1934 Act"), requires the Company's directors and executive officers and holders
of more than 10% of the Company's Common Stock to file with the Securities and
Exchange Commission reports of ownership and changes in ownership

9
<PAGE>
of Common Stock and other equity securities of the Company on Forms 3, 4, and 5.
Based on written representations of reporting persons and a review of those
reports, the Company believes that during the fiscal year ended December 31,
1996, all its officers and directors and holders of more than 10% of the
Company's Common Stock complied with all applicable Section 16(a) filing
requirements.

COMPENSATION OF EXECUTIVE OFFICERS

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table sets forth the compensation
of each of the members of the Company's Management Committee, which includes the
Chairman of the Board and the four most highly paid executive officers of the
Company who were serving as executive officers at December 31, 1996 (the "named
executive officers"), for each of fiscal 1995 and fiscal 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
AWARDS
ANNUAL COMPENSATION -------------
------------------------------------- SECURITIES
OTHER UNDERLYING
NAME AND PRINCIPAL BASE ANNUAL STOCK ALL OTHER
POSITION YEAR SALARY BONUS* COMPENSATION OPTIONS (#) COMPENSATION
- -------------------------------- --------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Theodore J. Forstmann........... 1996 -- -- -- 375,000 --
Chairman of the Board 1995 -- -- -- --

Bryan T. Moss................... 1996 $ 875,361(1) $ 250,000(2) -- -- $ 3,000(3)
Vice Chairman of the Board 1995 619,432(1) 638,100(2) -- 675,000 440,375(4)

Fred A. Breidenbach............. 1996 500,011 281,250 $ 282,055(5) -- 19,224(6)
President and COO 1995 500,011 312,500 236,521(5) -- 19,304(6)

W.W. Boisture, Jr............... 1996 275,018 171,875 -- 75,000 3,000(3)
Executive Vice President 1995 274,056 171,875 -- 225,000 2,433(3)

Chris A. Davis.................. 1996 275,018 171,875 -- -- 3,000(3)
Executive Vice President and CFO 1995 274,056 171,875 -- 187,500 3,000(3)
</TABLE>

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

* Bonuses were paid in March 1997 in respect of fiscal 1996, and in January
1996 in respect of fiscal 1995, under a Management Incentive Plan.

(1) Represents base salary, plus commissions paid for sales of aircraft.

(2) Represents a management incentive plan bonus ($312,500 for 1995 and $250,000
for 1996) and, for 1995 only, a signing bonus ($325,600).

(3) Represents the Company's contribution to the 401(k) plan.

(4) Represents a nonrecurring payment in respect of the value of vested stock
options with previous employer ($437,375) and the Company's contribution to
the 401(k) plan ($3,000).

(5) Represents tax gross-up relating to vesting of annuity contract purchased by
the Company for Mr. Breidenbach in 1993.

(6) Represents the Company's contribution to an executive life insurance plan
($16,304 for 1995 and $16,224 for 1996) and the 401(k) plan ($3,000 for each
of 1995 and 1996).

10
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth the
stock option grants to each of the named executive officers for fiscal 1996.

OPTION GRANTS IN THE FISCAL YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE
------------------------------------------------------------------- AT ASSUMED ANNUAL
% OF TOTAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO EXERCISE/ MARKET APPRECIATION FOR
UNDERLYING EMPLOYEES BASE PRICE AT OPTION TERM(2)
OPTIONS IN FISCAL PRICE GRANT EXPIRATION --------------------
NAME GRANTED(#) YEAR ($/SH) ($/SH) DATE 0% 5%
- ------------------------------ ------------- ------------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Theodore J. Forstmann......... 375,000(3) 36.76% $ 4.10 $ 14.40 05/15/2006 $3,862,500 $7,258,531
Bryan T. Moss................. -- -- -- -- -- -- --
Fred A. Breidenbach........... -- -- -- -- -- -- --
W.W. Boisture, Jr............. 75,000(4) 7.35% $ 4.10 $ 14.40 05/15/2006 $ 772,500 $1,451,706
Chris A. Davis................ -- -- -- -- -- -- --

NAME 10%
- ------------------------------ ----------
<S> <C>
Theodore J. Forstmann......... $12,468,709
Bryan T. Moss................. --
Fred A. Breidenbach........... --
W.W. Boisture, Jr............. $2,493,742
Chris A. Davis................ --
</TABLE>

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

(1) All awards listed on table were in the form of option grants made pursuant
to the Company's Stock Option Plan.

(2) Sets forth potential option gains based on assumed annualized rates of stock
price appreciation from the market price at the date of grant of 5% and 10%
(compounded annually) over the full term of the grant with appreciation
determined as of the expiration date. The 0%, 5% and 10% assumed rates of
appreciation are mandated by the rules of the Securities and Exchange
Commission, and do not represent the Company's estimate or projection of
future Common Stock prices.

(3) This grant was made on May 15, 1996. All options granted became exercisable
immediately.

(4) This grant was made on May 15, 1996. One third of the total number of
options granted becomes exercisable on the first anniversary of the grant
date; an additional one third becomes exercisable on each of the second and
third anniversary dates.

AGGREGATED OPTION EXERCISES AND VALUES. The following table sets forth the
stock option exercises for the fiscal year ended December 31, 1996 and the stock
option values as of December 31, 1996, in each case, for each of the named
executive officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR

AND OPTION VALUES AS OF DECEMBER 31, 1996

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE (#) ($)(2)
EXERCISE REALIZED -------------------------- -------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------ ------------- --------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Theodore J. Forstmann..................... -- -- 375,000 -- $7,509,375 --
Bryan T. Moss............................. 304,334 $6,056,247 33,166 337,500 664,149 $ 6,758,438
Fred A. Breidenbach....................... 422,686 8,829,911 514,814 -- 10,818,816 --
W.W. Boisture, Jr......................... 270,519 5,383,328 112,176 292,305 2,246,324 5,853,408
Chris A. Davis............................ 202,890 4,154,679 144,148 102,962 3,029,270 2,061,814
</TABLE>

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

(1) Represents the positive spread between the respective exercise/base prices
of exercised stock options and the market price at exercise of $24.00 per
share. Does not take into account any underwriting fees paid in connection
with the sale of acquired shares.

(2) Represents the positive spread between the respective exercise/base prices
of outstanding stock options and the closing price of $24.125 per share at
December 31, 1996, as reported on the New York Stock Exchange Composite
Tape.

GULFSTREAM PENSION PLAN. The Gulfstream Aerospace Corporation Pension Plan
(the "Pension Plan") was amended and restated effective January 1, 1989. The
Pension Plan is defined benefit plan maintained by Gulfstream Aerospace
Corporation (a Georgia corporation and wholly owned indirect subsidiary of the
Company) ("Gulfstream Georgia"), for the benefit of the employees of Gulfstream
Georgia and certain of its affiliates that have adopted the Pension Plan (each,
a "Participating Employer"). The Pension Plan covers full time employees who
have attained age 21 and have completed at least one year of service.

11
<PAGE>
Pension costs are borne by the Participating Employer and determined from time
to time on an actuarial basis, with contributions made accordingly.

Participants' benefit accruals under the Pension Plan are based on their
gross amount of earnings, but exclude items such as overtime pay, bonuses and
commissions. Generally, a participant's accrued annual retirement benefit,
assuming retirement at or after age 65 and a minimum of five years of service,
is equal to the total of the benefit accrued for each year of benefit service,
which for each of the named executive officers will be determined for each such
year under the following benefit formula: the sum of (x) 2.65% of the first
$17,000 of the participant's wage base earnings as adjusted by the rate used to
increase the taxable wage base for old age, survivors and disability insurance
(currently at $21,000) for such year and (y) 3% of the participant's earnings in
excess of such adjusted wage base earnings. Payments made under the Pension Plan
are not subject to any deduction for Social Security or other offset amounts.
Participants who have attained age 60 with at least five years of service or age
50 with at least 20 years of service may retire early with an actuarially
reduced retirement benefit. No benefits are payable under the Pension Plan with
respect to a participant who dies prior to commencement of his or her benefits
thereunder subject to certain specified exceptions. Benefits are paid, absent a
contrary election, in the form of a single life annuity or qualified joint and
survivor annuity depending on the marital status of the participant.
Participants vest 100% in their accrued benefits after five years of service.
Each participant in the Pension Plan is subject to the maximum benefit
limitations provided for under the Internal Revenue Code of 1986, as amended,
and pursuant to the Pension Plan.

As of December 31, 1996, the estimated annual benefits payable upon
retirement for W.W. Boisture, Jr., Fred A. Breidenbach, Chris A. Davis and Bryan
T. Moss are $70,306, $84,191, $101,453 and $44,141, respectively, assuming
retirement at age 65 and the retiree's lifetime annuity payout option without
available modifications.

COMMITTEE REPORTS ON EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee is composed solely of non-employee directors. The
Committee is responsible for developing and making recommendations to the Board
of Directors with respect to the Company's compensation policies and also
determines the cash portion of the compensation to be paid to the executive
officers of the Company. The objectives of the Committee in determining the
amount and type of compensation for each executive officer are to (i) provide a
level of base compensation which would allow the Company to attract, retain and
reward superior talent, (ii) link the executive officers' interest with the
success of the Company through the payment of a bonus based on the Company's
performance and (iii) provide the executive officers with an opportunity to
build a significant ownership interest in the Company through participation in a
stock option plan and thereby align the executive officers' interests with those
of the stockholders. The Committee addresses the mix of compensation forms
(salary, bonus, stock options) to foster long-term management motivation and
stability.

The Committee believes that the Company's recent success has been
attributable in large measure to the performance and leadership of senior
management. The Company and the Committee believe that compensation that links
executive performance to the Company's success (such as bonus programs and stock
options) is the most effective means of compensating its executive officers.

The Company does not have a chief executive officer, but has a five-person
Management Committee comprised of the five named executive officers and chaired
by Mr. Theodore J. Forstmann, who receives no cash compensation for his services
to the Company. None of the named executive officers has an employment agreement
with the Company or any of its subsidiaries.

BASE SALARY. The Committee's policy as to base salaries is subjective, and
not dependent upon the application of specific formulas. The Committee
periodically reviews the base salary of the executive officers, but did not
undertake a review of the base salaries of any executive officer in 1996.
Accordingly, all base salaries for executive officers were continued at 1995
levels. The base salary for 1996 for each of

12
<PAGE>
the named executive officers was as follows: Mr. W.W. Boisture, Jr. ($275,000);
Mr. Fred A. Breidenbach ($500,000); Ms. Chris A. Davis ($275,000); and Mr. Bryan
T. Moss ($500,000).

BONUSES. The Company has adopted a Management Incentive Plan to reward
certain members of management, including the executive officers, and key
individuals by comparing Company, functional and personal performance against
annual goals and objectives. At the beginning of the year, operating and
financial goals are established for the Company and for each participant. If the
goals are attained, each executive officer participant is paid a bonus targeted
at 50% of base compensation. If the corporate goals are exceeded and
functional/personal goals are also attained, the payment can be increased to a
maximum of 62.5% at the discretion of the Committee. If the corporate goals are
not satisfied, the payment to each executive officer participant is
proportionately reduced below 50% at the discretion of the Committee. Bonuses
under the Management Incentive Plan for 1996 for the named executive officers
were as follows: Mr. W.W. Boisture, Jr. ($171,875); Mr. Fred A. Breidenbach
($281,250); Ms. Chris A. Davis ($171,875); and Mr. Bryan T. Moss ($250,000).

In addition, Mr. Bryan T. Moss participates in an annual Sales Commission
Plan under which he receives a specified commission for each Gulfstream IV-SP
and Gulfstream V sold by the Company. The target bonus amount each year is
$435,000, which can be earned each year based on the sales targets established
for that year. The aggregate amount of such commissions received by Mr. Moss for
1996 sales was $375,350.

Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that compensation in excess of $1,000,000 paid to the chief
executive officer or any of the other four most highly paid executive officers
of a company will not be deductible unless the compensation is paid pursuant to
one of the exceptions under Section 162(m). The Company believes that the
Section 162(m) limit should not apply to 1996 executive officer cash
compensation reported and discussed above or to options granted pursuant to the
Company's 1990 Stock Option Plan by reason of certain exemptions contained in
the regulations issued under Section 162(m). The Amended and Restated 1990 Stock
Option Plan, which is being submitted to stockholders at the 1997 Annual Meeting
(see "Approval of the Amended and Restated 1990 Stock Option Plan"), has been
designed so that compensation attributable to stock options granted pursuant to
the plan in the future can qualify under the performance-based compensation
exception under Section 162(m).

COMPENSATION COMMITTEE

Sandra J. Horbach, Gerard R. Roche and Robert S. Strauss

REPORT OF THE EMPLOYEE BENEFIT PLAN COMMITTEE

The Employee Benefit Plan Committee is composed solely of non-employee
directors. The Committee is responsible for administering the Company's employee
benefit plans. The Company's philosophy is that stock options are a particularly
important part of compensation that inherently correlates long-term individual
motivation and reward to Company performance. To encourage key employees to
remain in the employ of the Company, options generally vest and become
exercisable over a three or four year period.

The Committee's approach is subjective. The Committee does not use specific
criteria or formulae to calculate the aggregate number of options granted or the
grants to each individual. As part of its general discussion, the Committee
considers the past and potential contribution to the Company of its executive
officers, the amount of options awarded in prior years, the option grants
awarded by other aerospace companies as disclosed in publicly available
materials, the recent financial performance of the Company and the Company's
long-term compensation goals. In May 1996 (prior to the time an Employee Benefit
Plan Committee was appointed), the Compensation Committee (which, at that time,
consisted of Theodore J. Forstmann, Nicholas C. Forstmann and Sandra J. Horbach)
reviewed, considered and approved management's recommendation to grant options
to purchase 75,000 shares of Common Stock to Mr. W.W. Boisture, Jr. Management's
recommendation was based on a subjective assessment of the individual, the
nature of his responsibilities and his contribution to the Company. In addition,
the Board of Directors

13
<PAGE>
granted options to purchase 375,000 shares of Common Stock to Mr. Theodore J.
Forstmann in accordance with management's recommendation, which was based on a
subjective assessment of his past and prospective contribution to the Company.
In the aggregate, options to purchase 1,020,000 shares of Common Stock were
granted in 1996.

EMPLOYEE BENEFIT PLAN COMMITTEE

Nicholas C. Forstmann, Gerard R. Roche and Robert S. Strauss

PERFORMANCE GRAPH

The following graph compares the cumulative total return on $100 invested on
October 10, 1996 in each of the Common Stock of the Company, Standard & Poor's
500 Index and Standard & Poor's Aerospace/Defense Index. The returns of the
Standard & Poor's indices are calculated assuming reinvestment of dividends. The
Company has not paid any dividends. The graph covers a period commencing October
10, 1996, when the Company's Common Stock was first publicly traded, through
December 31, 1996. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
GULFSTREAM AEROSPACE CORPORATION,
S&P 500 INDEX AND S&P AEROSPACE/DEFENSE INDEX

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C> <C>
GAC = GULFSTREAM AEROSPACE CORPORATION

ADI = STANDARD & POOR'S AEROSPACE/DEFENSE INDEX

S&P 500 = STANDARD & POOR'S INDEX
</TABLE>

GAC....................................................................... 100.00 98.44 100.00 100.52

ADI....................................................................... 100.00 98.57 100.90 107.46

S&P 500................................................................... 100.00 101.53 108.98 106.64
</TABLE>

14
<PAGE>
CERTAIN TRANSACTIONS

THE ACQUISITION; SUBSEQUENT EVENTS

On February 12, 1990, the Company, through its wholly owned subsidiary GA
Acquisition Corp. ("GA"), a corporation formed by an investor group led by
Forstmann Little, entered into a stock purchase agreement to acquire (the
"Acquisition") from Chrysler Corporation the Company's predecessor business, in
the form of Gulfstream Aerospace Corporation of Delaware ("Gulfstream Delaware")
(then Gulfstream Aerospace Corporation), for a cash purchase price of $850
million (including acquisition costs of $25 million, $8.25 million of which
represented a fee payable to Forstmann Little). The Acquisition was consummated
on March 19, 1990. The purchase price was funded by the issuance of 25,000,000
shares of common stock (without giving effect to the recapitalization which
occurred on October 16, 1996), for an aggregate purchase price of $100 million,
and $300 million aggregate principal amount of debentures (the "Original
Debentures") in three series with maturity dates, respectively, of March 31,
2001, March 31, 2002 and March 31, 2003, with the balance of the purchase price
supplied by bank borrowings. Gulfstream Delaware was capitalized with $100
million of its common stock subscribed for by the Company, a $300 million
long-term note payable to the Company and bank borrowings. Upon consummation of
the Acquisition, GA was merged into Gulfstream Delaware and Gulfstream Delaware
became a wholly owned subsidiary of the Company. The Company's only asset is its
investment in Gulfstream Delaware.

On August 31, 1992, MBO-IV and Gulfstream Partners II, L.P. purchased
16,250,000 additional shares of common stock (without giving effect to the
Company's 1996 recapitalization), for an aggregate purchase price of $100
million, and MBO-IV purchased an additional $150 million aggregate principal
amount of the Company's debentures (the "Additional Debentures") at par. The
Additional Debentures were issued in three series with maturity dates,
respectively, of September 30, 2003, September 30, 2004 and September 30, 2005.
Of the proceeds of these issuances, $50 million was contributed to the capital
of Gulfstream Delaware, $50 million of the proceeds was used to repurchase the
shares of common stock of the Company held by Allen E. Paulson, and $150 million
of the proceeds was loaned by the Company to Gulfstream Delaware. This loan was
evidenced by a long-term note payable by Gulfstream Delaware to the Company.

On November 30, 1993, MBO-IV exchanged the Original Debentures and the
Additional Debentures, and all indebtedness represented thereby, including
accrued interest, for (i) series A 7% cumulative preferred stock issued by the
Company ("Series A Cumulative Preferred Stock") with a stated value of
$468,937,500 and 11,045,833 shares of Class B Common Stock. The 7% Cumulative
Preferred had a liquidation preference equal to its stated value, plus all
accrued and unpaid dividends. The Company's Certificate of Incorporation was
amended to reclassify the Company's common stock outstanding prior to November
30, 1993 as Class A Common Stock. Each share of Class A Common Stock issued on
or after August 31, 1992 was designated as a share of Series A-1 Common Stock,
and each share of Class A Common Stock which was issued prior to August 31, 1992
was designated as a share of Series A-2 Common Stock. Also on November 30, 1993,
the long-term notes payable by Gulfstream Delaware to the Company in principal
amounts of $300 million and $150 million, respectively, were contributed to the
capital of Gulfstream Delaware. After providing for the 7% Cumulative Preferred
Stock, the Class A Common Stock had a preference with respect to dividends,
other distributions and in liquidation over all other classes of common stock of
the Company in the amount of approximately $186 million. After providing for the
7% Cumulative Preferred Stock and the Class A Common Stock preferences, the
Class A Common Stock was entitled to 75% and the Class B Common Stock was
entitled to 25% of any dividends and other distributions or in liquidation. On
June 30, 1996, the Company repurchased approximately 4 shares of 7% Cumulative
Preferred Stock from MBO-IV at their stated value of $18,937,500, and paid
accumulated dividends of $96,135,587. Funds for the redemption and dividends
were provided by the Company's operations.

On October 16, 1996, (i) the Company repurchased from MBO-IV all of the
remaining outstanding 7% Cumulative Preferred Stock for $451,312,500 (including
accrued dividends), (ii) all of the Class A Series A-2 Common Stock and Class B
Common Stock was exchanged for shares of Class A Series A-1

15
<PAGE>
Common Stock on a 1.0295-for-1 and a 1.0092-for-1 basis, respectively, (iii) the
Class A Series A-1 Common Stock was redesignated as Common Stock and (iv) there
was a 1.5-for-1 split of the Common Stock.

RELATED PARTY TRANSACTIONS

Thomas D. Bell, a director and former Vice Chairman of the Company is
President and Chief Executive Officer of Burson-Marsteller, an advertising and
public relations services firm. See "Management -- Directors and Executive
Officers". Gulfstream paid to Burson-Marsteller approximately $0.6 million in
1996 for advertising and public relations services and has engaged
Burson-Marsteller to provide additional such services in 1997. The Company
believes the terms of these transactions are at least as favorable to the
Company as those which could have been obtained from an unrelated third party.

Drew Lewis, Colin L. Powell, Donald H. Rumsfeld, George P. Shultz and Robert
S. Strauss, directors of the Company, are members of an advisory committee to
FLC Partnership, L.P.

See also "Management -- Compensation Committee Interlocks and Insider
Participation".

APPROVAL OF THE AMENDED AND
RESTATED 1990 STOCK OPTION PLAN

THE AMENDED AND RESTATED 1990 STOCK OPTION PLAN

GENERAL. On September 12, 1990, the Board of Directors of the Company, and
the Company's stockholders, adopted the Gulfstream Aerospace Corporation Stock
Option Plan (the "Stock Option Plan"), which was amended and restated on August
8, 1996 and again, subject to stockholder approval, on March 5, 1997. The Stock
Option Plan provides for the granting of options to purchase shares of Common
Stock to any employee or director of, or consultant or advisor to, the Company
or its subsidiaries, which options are not intended to qualify as incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). At the 1997 Annual Meeting, stockholders are being asked to
consider and vote on a proposal to approve the Stock Option Plan as amended and
restated on March 5, 1997 (the "Amended and Restated 1990 Stock Option Plan").

AMENDMENTS TO THE STOCK OPTION PLAN. The Company's Board of Directors and
the Employee Benefit Plan Committee approved, subject to the approval of the
stockholders at the 1997 Annual Meeting, the Amended and Restated 1990 Stock
Option Plan. The principal amendment to the Stock Option Plan is that the
Amended and Restated 1990 Stock Option Plan increases by 1,469,117 the number of
shares of Common Stock which may from time to time be made the subject of
Options granted thereunder. If the Amended and Restated 1990 Stock Option Plan
is approved, the total number of shares of Common Stock which may be made the
subject of Options granted thereunder will be 9,688,550. As of March 26, 1997,
there were outstanding Options in respect of 5,729,696 shares of Common Stock.
In addition, the Amended and Restated 1990 Stock Option Plan provides that the
maximum number of shares in respect of which Options may be granted after March
5, 1997 to any that Eligible Person annually is 500,000 shares of Common Stock.

One of the Company's principal methods to attract and retain key employees
is the grant of Options pursuant to the Stock Option Plan. The Company believes
that it is in the best interests of the Company to increase the maximum number
of shares that may be made subject to Options granted under the Stock Option
Plan in order (i) to continue to attract and retain key employees and (ii) to
provide additional incentive and reward opportunities to current employees to
encourage them to enhance the profitable growth of the Company. If the Amended
and Restated 1990 Stock Option Plan is not approved, less than 585,661 shares of
Common Stock will remain available for the granting of Options under the Stock
Option Plan as of March 26, 1997.

16
<PAGE>
The Amended and Restated 1990 Stock Option Plan will become effective upon
approval by the Company's stockholders, and that approval will be a condition to
the grant of any Options in respect of the additional 1,469,117 shares of Common
Stock available pursuant to the Amended and Restated 1990 Stock Option Plan. (If
the Amended and Restated 1990 Stock Option Plan is not approved by the
stockholders, the Stock Option Plan will continue to remain in effect.) Although
approval will not necessarily result immediately in the grant of additional
Options it is expected the Employee Benefit Plan Committee will make periodic
grants of Options under the Amended and Restated 1990 Stock Option Plan in
furtherance of the goals described herein.

The principal provisions of the Amended and Restated 1990 Stock Option Plan
are summarized below. This summary, however, does not purport to be complete and
is qualified in its entirety by the terms of the Amended and Restated 1990 Stock
Option Plan, the entire text of which is attached as Annex A and incorporated by
reference. All defined terms used herein have the meaning set forth in the
Amended and Restated 1990 Stock Option Plan, unless otherwise indicated.

THE AMENDED AND RESTATED 1990 STOCK OPTION PLAN. The purpose of the Amended
and Restated 1990 Stock Option Plan is to provide financial incentives to key
employees of the Company and its subsidiaries and such consultants, advisors and
members of the Board of Directors whose entrepreneurial and management talents
and commitments are essential for the continued growth and expansion of the
Company's business. The Amended and Restated 1990 Stock Option Plan will be
administered by a committee composed of at least two directors of the Company,
each of whom is a "nonemployee director" within the meaning of Rule 16b-3 ("Rule
16b-3") promulgated under Section 16(b) of the 1934 Act and, to the extent
necessary for any Option to qualify as performance based compensation under
Section 162(m) of the Code, an "outside director" (the "Committee"). The
Committee will determine the terms and conditions of Options granted pursuant to
the Amended and Restated 1990 Stock Option Plan, including the per share
exercise price and the time or times at which the Options become exercisable.
The Committee may accelerate the exercisability of Options at any time. While
the terms of each Option under the Amended and Restated 1990 Stock Option Plan
may differ from others granted under the Stock Option Plan, in no event will the
term of any Amended and Restated 1990 Option granted under the Amended and
Restated 1990 Stock Option Plan exceed ten years and one day. Except as set
forth in the Stock Option Agreement, the Options are not transferable except by
will or the laws of descent and distribution of the state of domicile of the
Optionee if the Optionee dies intestate, and are exercisable during an
Optionee's lifetime only by the Optionee or his or her guardian or legal
representative. The terms of such Option shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and successors of the
Optionee. Except as otherwise provided in the Stock Option Agreement, the
Options are not exercisable after the termination of the Optionee's employment
or directorship. To exercise an Option, the Optionee must deliver payment in
full in cash for the shares with respect to which the Option is being exercised.
The Committee may require as a condition of an Option's exercise, that an
Optionee execute a Stockholder's Agreement (as described below). The Stock
Option Plan is, and if approved the Amended and Restated 1990 Stock Option Plan
will be, administered by the Employee Benefit Plan Committee of the Board of
Directors of the Company.

While all employees and directors (approximately 4,700 persons) are eligible
to participate under the Amended and Restated 1990 Stock Option Plan, the
Company has historically granted Options to only a portion of its employees.
Generally, the Company's current practice is to limit Option grants to members
of management, directors and advisors of the Company. As of March 26, 1997,
Options had been granted to approximately 286 employees and directors. No
Options may be granted under the Amended and Restated 1990 Stock Option Plan
after September 12, 2010. In the event that any Option granted under the Amended
and Restated 1990 Stock Option Plan is terminated and unexercised as to any
shares of Common Stock covered by the Option, such shares will thereafter be
available for the granting of future Options under the Amended and Restated 1990
Stock Option Plan.

In the event of a merger, consolidation, reorganization, recapitalization,
stock dividend, stock split-up or other substitution of securities, the
Committee will make appropriate adjustments to the maximum number and class of
shares of stock as to which Options may be granted under the Amended and
Restated

17
<PAGE>
1990 Stock Option Plan and the number and class of shares of stock with respect
to which Options have been granted under the Amended and Restated 1990 Stock
Option Plan, the Option Price for such shares and any other economic terms of
the Option. In the event that any shares of Common Stock are issued after the
date of the Amended and Restated 1990 Stock Option Plan to any of the FL & Co.
Companies for less than fair consideration, as determined conclusively by the
Committee, the Committee will make appropriate adjustments to the maximum number
of shares of stock as to which Options may be granted under the Amended and
Restated 1990 Stock Option Plan and the number of shares of stock with respect
to which Options have been granted under the Amended and Restated 1990 Stock
Option Plan and the Option Price for such shares. The Committee's adjustment
will be final and binding for all purposes of the Amended and Restated 1990
Stock Option Plan and each Stock Option Agreement entered into under the Amended
and Restated 1990 Stock Option Plan.

The Board of Directors of the Company may amend, suspend or terminate the
Amended and Restated 1990 Stock Option Plan at any time, provided that, to the
extent necessary under applicable law, an amendment will not be effective unless
approved by the Company's stockholders in accordance with applicable law. The
rights of an Optionee under any Option granted prior to an amendment, suspension
or termination of the Amended and Restated 1990 Stock Option Plan may not be
adversely affected by Board action without the Optionee's consent.

STOCK OPTION AGREEMENTS. The Options that have been granted under the Stock
Option Plan to date have been granted pursuant to stock option agreements
("Stock Option Agreements"), and each Option is exercisable into one share of
Common Stock at a price set forth in each Stock Option Agreement. The Options
generally vest and become exercisable in three equal amounts on each of the
first, second and third anniversaries of the grant date, or in four equal
amounts on the grant date and each of the first, second and third anniversaries
of the grant date. Certain of the Options were fully vested and exercisable on
the grant date. Generally, the unvested portion of an Option expires on the date
of the Optionee's termination of employment, and vested Options expire after the
termination of employment as described below.

Except as set forth in the individual Stock Option Agreements, an Option may
not be exercised after termination of the Optionee's employment. The Stock
Option Agreements generally provide for the redemption by the Company, at the
Company's Option, of the vested portion of an Option in the event of a
termination or permit the Optionee to exercise such portion following the
termination within a period of time specified in such Stock Option Agreement.
The Option expires at the end of such period of time.

The Stock Option Agreements provide that the Company will notify the
Optionee within a specified number of days prior to a "Terminating Event" or a
"Partial Sale." A Terminating Event includes (a) the merger or consolidation of
the Company into another corporation (other than a merger or consolidation in
which the Company is the surviving corporation and which does not result in a
capital reorganization, reclassification or other change of the then outstanding
shares of Common Stock), (b) liquidation of the Company, (c) sale to a third
party of all or substantially all of the Company's assets or (d) sale to a third
party of Common Stock (including through one or more public offerings); but only
if, in the case of the events described in (a), (b) and (d), the Forstmann
Little Partnerships cease to own a specified percentage (ranging from zero to
51%, depending on the particular Stock Option Agreement) of the outstanding
shares of the voting stock of the Company. A Partial Sale means a sale by the
Forstmann Little Partnerships of all or a portion of their shares of Common
Stock (including through a public offering) to a third party (other than a
Terminating Event). Upon receipt of a notice of a Partial Sale, the Optionee
may, within a specified period of time after receiving such notice, exercise his
or her Options only for purposes of participating in the Partial Sale, whether
or not such Options were otherwise exercisable, with respect to the excess, if
any, of (a) the number of shares with respect to which the Optionee would be
entitled to participate in the Partial Sale under the Stockholder's Agreement,
which permits proportional participation with the Forstmann Little Partnerships
in a public offering or sale to a third party (as described below), over (b) the
number of shares previously issued upon exercise of such Options and not
previously disposed of in a Partial Sale. Upon receipt of a notice of a
Terminating Event, the Optionee may, within a specified period of time after
receiving such notice, exercise all or part of his or her Options, whether or

18
<PAGE>
not such Options were otherwise exercisable. In connection with a Terminating
Event involving the merger, consolidation or liquidation of the Company or the
sale of Common Stock by the Forstmann Little Partnerships, the Company, in the
Committee's discretion, may redeem the unexercised portion of the Options, in
lieu of permitting the Optionee to exercise the Options, for a price equal to
the price received per share of Common Stock in the Terminating Event, less the
exercise price of the Options. Any unexercised portion of an Option will
terminate upon the consummation of a Terminating Event, unless the Company
provides for the continuation thereof. In the event a Terminating Event or
Partial Sale is not consummated, any Option which the Optionee had exercised in
connection with such Terminating Event or Partial Sale will be deemed not to
have been exercised and will be exercisable thereafter only to the extent it
would have been exercisable if notice of such Terminating Event or Partial Sale
had not been given to the Optionee. The Optionee has no independent right to
require the Company to register under the Securities Act the shares of Common
Stock subject to such Options.

STOCKHOLDER'S AGREEMENT. Upon exercise of an Option (or portion thereof)
under the Stock Option Plan, an Optionee is required to enter into a
Stockholder's Agreement with the Company. The Stockholder's Agreement governs
the Optionee's rights and obligations as a stockholder (the "Stockholder"). The
Stockholder's Agreement provides that, generally, the shares issued upon
exercise of the Options may not be sold, transferred, assigned, exchanged,
pledged, encumbered or otherwise disposed of, except as specifically provided in
the Stockholder's Agreement.

The Stockholder's Agreement provides that the Stockholder shall participate
proportionately in any sale by the Forstmann Little Partnerships of all or a
portion of their shares of Common Stock to any person who is not a partner or
affiliate thereof, and the Stockholder shall participate proportionately in a
public offering of shares of Common Stock by the Forstmann Little Partnerships,
by selling the same percentage of the Stockholder's shares that the Forstmann
Little Partnerships are selling of their shares. The sale of shares of Common
Stock in such a transaction must be for the same price and otherwise on the same
terms and conditions as the sale by the Forstmann Little Partnerships. If the
Forstmann Little Partnerships sell or exchange all of their Common Stock in a
bona fide arm's-length transaction, the Stockholder is required to sell all of
his, her or its shares for the same price and on the same terms and conditions
as the sale of Common Stock by the Forstmann Little Partnerships and, if
stockholder approval of the transaction is required, to vote his, her or its
shares in favor thereof. If, however, one or more public offerings result in the
Forstmann Little Partnerships owning, in the aggregate, less than 20% of the
then outstanding voting stock of the Company, the Stockholder will generally be
entitled to sell, transfer or hold his, her or its shares of Common Stock free
of the restrictions and rights contained in the Stockholder's Agreement. As of
March 26, 1997, the Forstmann Little Partnerships, in the aggregate, owned 42.4%
of the outstanding voting stock of the Company.

The following table sets forth the number of shares of Common Stock subject
to outstanding Options under the Stock Option Plan as of March 26, 1997 held by:
(a) each of the named executive officers; (b) all executive officers as a group;
(c) current directors who are not executive officers, as a group; and (d) all
employees, including all current officers who are not executive officers, as a
group. Options granted under the Stock Option Plan are made at the discretion of
the Committee, thus, it is not possible to predict the benefits or amounts that
will be received by or allocated to particular individuals or groups of
employees in 1997 or thereafter.

19
<PAGE>
GULFSTREAM STOCK OPTION PLAN TABLE

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION UNDERLYING OPTIONS
- ---------------------------------------------------------------------------------------------- ------------------
<S> <C>
Theodore J. Forstmann Chairman of the Board................................................... 375,000
Bryan T. Moss Vice Chairman of the Board...................................................... 370,666
Fred A. Breidenbach President and Chief Operating Officer..................................... 514,814
W.W. Boisture, Jr. Executive Vice President................................................... 404,481
Chris A. Davis Executive Vice President, Chief Financial Officer and Secretary................ 247,110
All executive officers as a group (5 persons)................................................. 1,912,071
All current directors who are not executive officers as a group (16 persons).................. 970,964
All employees, including all current officers who are not executive officers, as a group (266
persons).................................................................................... 2,353,297
</TABLE>

CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a
brief summary of the principal United States federal income tax consequences
under current federal income tax laws relating to Options awarded under the
Amended and Restated 1990 Stock Option Plan. This summary is not intended to be
exhaustive and, among other things, does not describe state, local or foreign
income and other tax consequences.

An Optionee will not recognize any taxable income upon the grant of a
nonqualified Option and the Company will not be entitled to a tax deduction with
respect to such grant. Generally, upon exercise of an Option, the excess of the
fair market value of the Common Stock on the exercise date over the exercise
price will be taxable as compensation income to the Optionee. Subject to the
Optionee including such excess amount in income or the Company satisfying the
applicable income reporting requirements, the Company should be entitled to a
tax deduction in the amount of such compensation income. The Optionee's tax
basis for the Common Stock received pursuant to the exercise of an Option will
equal the sum of the compensation income recognized and the exercise price.

In the event of a sale of Common Stock received upon the exercise of a
nonqualified Option, any appreciation or depreciation after the exercise date
generally will be taxed as capital gain or loss and will be long-term gain or
loss if the holding period for such Common Stock was more than one year.

Special rules may apply to Optionees who are subject to Section 16 of the
1934 Act.

Under certain circumstances the accelerated vesting or exercise of Options
in connection with a change of control of the Company might be deemed an "excess
parachute payment" for purposes of the golden parachute tax provisions of
Section 280G of the Code. To the extent it is so considered, the Optionee may be
subject to a 20% excise tax and the Company may be denied a tax deduction.

Section 162(m) of the Code generally disallows a federal income tax
deduction to any publicly held corporation for compensation paid in excess of
$1,000,000 in any taxable year to the chief executive officer or any of the four
other most highly compensated executive officers who are employed by the Company
on the last day of the taxable year, but does not disallow a deduction for
qualified "performance-based compensation," the material terms of which are
disclosed to and approved by stockholders. The Company has structured the
Amended and Restated 1990 Stock Option Plan with the intention that compensation
resulting from grants of Options can qualify as "performance-based
compensation." To qualify, the Company is seeking stockholder approval of the
Amended and Restated 1990 Stock Option Plan at the 1997 Annual Meeting and will
not grant Options in respect of the additional 1,469,117 shares of Common Stock
available pursuant to the amendments to the Stock Option Plan if such
stockholder approval is not obtained.

The closing price of Common Stock as reported on the New York Stock Exchange
on March 26, 1997 was $22.50 per share.

PROXIES WILL BE VOTED FOR APPROVAL OF THE AMENDED AND RESTATED 1990 STOCK
OPTION PLAN, UNLESS OTHERWISE SPECIFIED IN THE PROXY. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED AND RESTATED 1990 STOCK OPTION
PLAN.

20
<PAGE>
APPOINTMENT OF AUDITORS

Upon recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP, independent public accountants, to audit and
report on the consolidated financial statements of the Company for the fiscal
year ending December 31, 1997 and to perform such other services as may be
required of them. Deloitte & Touche LLP has served as auditors for the Company
since 1990. The Board of Directors has directed that management submit the
appointment of independent auditors for ratification by the stockholders at the
Annual Meeting. Representatives of Deloitte & Touche LLP are expected to be
present at the meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate stockholder
questions.

PROXIES WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1997, UNLESS OTHERWISE SPECIFIED IN THE PROXY. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS INDEPENDENT AUDITORS.

EXPENSES OF SOLICITATION

The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, some of the officers,
directors, and regular employees of the Company and its subsidiaries, none of
whom will receive additional compensation therefor, may solicit proxies in
person or by telephone, telegraph or other means. As is customary, the Company
will, upon request, reimburse brokerage firms, banks, trustees, nominees and
other persons for their out-of-pocket expenses in forwarding proxy materials to
their principals.

21
<PAGE>
STOCKHOLDER PROPOSALS FOR THE 1998
ANNUAL MEETING OF STOCKHOLDERS

Stockholders may present proposals which may be proper subjects for
inclusion in the proxy statement and for consideration at an Annual Meeting. To
be considered, proposals must be submitted on a timely basis. Proposals for the
1998 Annual Meeting must be received by the Company no later than December 1,
1997. Proposals, as well as any questions related thereto, should be submitted
in writing to the Secretary of the Company. Proposals may be included in the
proxy statement for the 1998 Annual Meeting if they comply with certain rules
and regulations promulgated by the Securities and Exchange Commission.

OTHER MATTERS

The Company knows of no other matter to be brought before the 1997 Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the meeting, it is the intention of the persons named in the proxy to
vote the same with respect to any such matter in accordance with their best
judgment.

The Company will furnish, without charge, to each person whose proxy is
being solicited upon written request, a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, as filed with the Securities and
Exchange Commission (excluding exhibits). Copies of any exhibits thereto also
will be furnished upon the payment of a reasonable duplicating charge. Requests
in writing for copies of any such materials should be directed to Gulfstream
Aerospace Corporation, 500 Gulfstream Road, Savannah, Georgia 31408, Attention:
Secretary.

By order of the Board of Directors,

[LOGO]

Chris A. Davis
Secretary

Savannah, Georgia
March 28, 1997

22
<PAGE>

GULFSTREAM AEROSPACE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 14, 1997
THIS PROXY IS SOLICITED ON BEHALF OF GULFSTREAM AEROSPACE
CORPORATION'S BOARD OF DIRECTORS.

The undersigned hereby appoints Fred A. Breidenbach, W.W. Boisture, Jr.,
and Sandra J. Horbach and each of them, Proxies for the undersigned, with
full power of substitution, to represent and to vote all shares of Gulfstream
Aerospace Corporation Common Stock which the undersigned may be entitled to
vote at the 1997 Annual Meeting of Stockholders of Gulfstream Aerospace
Corporation to be held in New York, New York on Wednesday, May 14, 1979 at
9:30 a.m., or at any adjournment thereof, upon the matters set forth on the
reverse side and described in the accompanying Proxy Statement and upon such
other business as may properly come before the meeting or any adjournment
thereof.

PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTOR'S
RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
IF THIS PROXY IS SIGNED BUT NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED
FOR ALL NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND FOR ITEMS 2 AND 3. IN
THEIR DISCRETION, THE APPOINTED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENTS/ADDRESS ON REVERSE SIDE

(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)

SEE REVERSE
SIDE

- -------------------------------------------------------------------------------
FOLD AND DETACH HERE

<PAGE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
<TABLE>
<S> <C> <C> <C> <C>

Please mark
your votes as / X /
indicated in
this example

ITEM 1. ELECTION OF DIRECTORS FOR ALL WITHHOLD AUTHORITY TO
Nominees: NOMINEES VOTE FOR ALL NOMINEES
Charlotte L. Beers Bryan T. Moss
Thomas D. Bell, Jr. Roger S. Penske / / / /
Chris A. Davis Donald H. Rumsfeld
Nicholas C. Forstmann
</TABLE>

To withhold authority to vote for any individual nominee(s), write
the nominee(s) on the line provided:

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

FOR AGAINST ABSTAIN
ITEM 2. APPROVAL OF AUDITORS
/ / / / / /

FOR AGAINST ABSTAIN
ITEM 3. APPROVAL OF AMENDED AND RESTATED
1990 STOCK OPTION PLAN / / / / / /

<PAGE>

I PLAN TO ATTEND MEETING / /

ADDRESS CHANGE
Please mark this box if you have address
changes on the reverse side. / /

RECEIPT IS HEREBY ACKNOWLEDGED OF THE GULFSTREAM AEROSPACE
CORPORATION NOTICE OF MEETING AND PROXY STATEMENT.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE

Dated: __________________________________, 1997

_______________________________________________
Signature

Note: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as an
attorney, executor, administrator, trustee, or
guardian, please give full title as such. Corporate
and partnership proxies should be signed by an
authorized person indicating the person's title.

- -------------------------------------------------------------------------------
FOLD AND DETACH HERE