GULFSTREAM AEROSPACE CORP, DEF 14A, 1999-03-29

GULFSTREAM AEROSPACE CORP
DEF 14A, 1999-03-29
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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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12

GULFSTREAM AEROSPACE CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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 fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

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

March 25, 1999

Dear Fellow Stockholder:

You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Gulfstream Aerospace Corporation, to be held on Wednesday, May 19, 1999, 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,
as well as the outlook for 1999. 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,

[SIGNATURE]

THEODORE J. FORSTMANN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
GULFSTREAM AEROSPACE CORPORATION

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

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

The 1999 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 19, 1999, at 9:30
a.m., local time, for the following purposes:

1. To elect seven Class III directors for terms ending at the 2002
Annual Meeting of Stockholders;

2. To consider and vote on a proposal to approve the Gulfstream
Aerospace Corporation 1999 Stock Option Plan;

3. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP, as independent auditors for the Company for the fiscal year
ending December 31, 1999; 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 19, 1999 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,

[SIGNATURE]

Chris A. Davis
Secretary

March 25, 1999
<PAGE>
GULFSTREAM AEROSPACE CORPORATION
500 GULFSTREAM ROAD
SAVANNAH, GEORGIA 31408

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

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1999

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

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 1999 Annual Meeting
of Stockholders to be held at 9:30 a.m., local time, on Wednesday, May 19, 1999,
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 19, 1999 will be
entitled to vote at the meeting or any adjournments thereof. As of the record
date, March 19, 1999, the Company had outstanding 72,176,518 shares of Common
Stock, par value $.01 per share ("Common Stock"), each entitled to one vote on
all matters to be voted upon. This proxy statement, the accompanying form of
proxy and the Company's annual report to stockholders for the fiscal year ended
December 31, 1998 are being mailed on or about March 29, 1999 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 approval of the Gulfstream Aerospace
Corporation 1999 Stock Option Plan (the "1999 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, 1999.

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 approval of the 1999 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's Secretary 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.

ELECTION OF DIRECTORS

Effective at the 1999 Annual Meeting, the Board of Directors will consist of
21 directors divided into three classes: seven Class I directors, seven Class II
directors and seven Class III directors. 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 III are to be elected at the 1999 Annual Meeting
and proxies cannot be voted for more than seven nominees. The directors so
elected will hold office as directors until the 2002 Annual Meeting of
Stockholders and until their respective successors have been duly elected and
qualified. The directors in Class I and Class II are serving terms ending at the
Annual Meeting of Stockholders in 2000 and 2001, respectively.

Information concerning nominees for election to terms ending at the 2002
Annual Meeting of Stockholders is set forth below, followed by information
concerning directors in Class I and Class II. 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

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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 2002 ANNUAL MEETING OF STOCKHOLDERS

Robert Anderson, age 78, has been a director of the Company since March
1990. He has served as Chairman Emeritus of Rockwell International Corporation
since February 1990. Mr. Anderson is also a director of Optical Data Networks,
Inc., Aftermarket Technology Corp., Motor Cargo Industries and Roller Bearing
Co. of America.

Lynn Forester, age 44, 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 Co-Chief Executive Officer of FirstMark Communications
International L.L.C. since June 1998. From 1989 to December 1994, she was
Chairman and Chief Executive Officer of TPI Communications International, Inc.
She is a director of General Instrument Corporation and Vice Chairman of the
Corporate Commission on Educational Technology.

Theodore J. Forstmann, age 59, has served as Chairman of the Board of the
Company since November 1993 and as Chief Executive Officer since December 1998,
and is Chairman of the Office of the Chief Executive. Mr. Forstmann has been a
general partner of FLC Partnership, L.P. since he co-founded Forstmann Little &
Co. in 1978. He is also a director of General Instrument Corporation. Theodore
J. Forstmann and Nicholas C. Forstmann are brothers.

Drew Lewis, age 67, has been a director of the Company since March 1990. He
served as Chairman and Chief Executive Officer of Union Pacific Corporation from
October 1987 to December 1996. He is also a director of Union Pacific Resources
Group, Inc., American Express Company, Lucent Technologies, FPL Group, Inc.,
Gannett Co., Inc., Aegis Communications, Inc. and Millennium Bank.

Mark H. McCormack, age 68, has been a director of the Company since May
1997. Mr. McCormack has served as President, Chief Executive Officer and a
director of International Management Group since 1965. He also serves as a
director of Fruit of the Loom, Inc. and Planet Hollywood International, Inc.

Gerard R. Roche, age 67, 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 80, 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.

DIRECTORS WHOSE TERMS END AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS

Charlotte L. Beers, age 63, has been a director of the Company since July
1993. Ms. Beers has been Chairman of J. Walter Thompson since March 1999. She
was Chairman Emeritus of Ogilvy & Mather Worldwide, Inc. ("Ogilvy & Mather")
from April 1997 to March 1999. She was Chairman of Ogilvy & Mather from April
1992 to April 1997 and Chief Executive Officer from April 1992 to September
1996.

Thomas D. Bell, Jr., age 49, has been a director of the Company since April
1994. Mr. Bell has been President and Chief Executive Officer of Young & Rubicam
Advertising since October 1998. He was President and Chief Executive Officer of
Burson-Marsteller, a division of Young & Rubicam Inc., from May 1995 to October
1998. 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.

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Chris A. Davis, age 48, has served as Executive Vice President and Chief
Financial Officer of the Company since July 1993, Secretary since August 1996,
Chief Administrative Officer since December 1998 and a director since March 1997
and is a member of the Office of the Chief Executive. She is also President and
Chief Operating Officer of Gulfstream Financial Services Corporation. Ms. Davis
served in increasingly senior financial management positions at General Electric
Co. from 1978 to 1993, most recently as chief financial officer of its
Electronic Systems Division. Ms. Davis is also a director of Wolverine Tube,
Inc.

Nicholas C. Forstmann, age 52, 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. in 1978. He is also a director of CommScope,
Inc. Theodore J. Forstmann and Nicholas C. Forstmann are brothers.

Bryan T. Moss, age 59, has served as Vice Chairman and a director of the
Company 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 62, has been a director of the Company since December
1993. Mr. Penske has been Chairman 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., Delphi Automotive Systems Corporation and General Electric Co.

Donald H. Rumsfeld, age 66, has served as a director of the Company since
April 1993. Mr. Rumsfeld has been in private business since August 1993 and
currently serves as Chairman of Gilead Sciences, Inc. From October 1990 to
August 1993, Mr. Rumsfeld served as Chairman and Chief Executive Officer of
General Instrument Corporation. Mr. Rumsfeld is also a director of ABB AB and
Tribune Company. From 1962 to 1977, Mr. Rumsfeld served in a variety of U.S.
Government posts, including U.S. Congressman, U.S. Ambassador to NATO, White
House Chief of Staff and Secretary of Defense.

DIRECTORS WHOSE TERMS END AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS

W.W. Boisture, Jr., age 54, has served as President and Chief Operating
Officer of the Company since December 1998 and as a director since February 1995
and is a member of the Office of the Chief Executive. Mr. Boisture served as
Executive Vice President from February 1994 to December 1998. 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 38, 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 & Co. in August 1987.

Henry A. Kissinger, age 75, has been a director of the Company since
December 1997. Dr. Kissinger is Chairman of Kissinger Associates, Inc., an
international consulting firm. He was United States Secretary of State from 1973
to 1977 and Assistant to the President for National Security Affairs from 1969
to 1975. Dr. Kissinger has been awarded the Nobel Peace Prize, the Presidential
Medal of Freedom and the Medal of Liberty. Dr. Kissinger is also a director of
Continental Grain Company, Revlon, Inc., Freeport & McMoran Copper and Gold,
Inc. and Hollinger International Inc.

Michael S. Ovitz, age 52, has been a director of the Company since March
1997. He is an independent businessman and investor. He recently co-founded
Artists Management Group, a management/production/ multi-media company. From
October 1995 to December 1996, Mr. Ovitz was President of The Walt Disney
Company. From 1975 to 1995, Mr. Ovitz served as chairman of Creative Artists
Agency, which he co-founded. Mr. Ovitz is also a director of Livent, Inc.

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Allen E. Paulson, age 76, 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), until 1992. He 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.

Colin L. Powell, age 61, has been a director of the Company since May 1996.
General Powell is Chairman of America's Promise-The Alliance for Youth. He
served as the Chairman of the U.S. Joint Chiefs of Staff from October 1989 to
September 1993, and as National Security Advisor from December 1987 to January
1989. General Powell is also a director of America Online, Inc.

George P. Shultz, age 78, has been a director of the Company since November
1991. Mr. Shultz served as United States Secretary of State from July 1982 to
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.

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 six meetings in 1998. 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 that Charlotte L. Beers, Henry A. Kissinger and Michael S.
Ovitz each attended 67% of such meetings, and Allen E. Paulson attended 33% of
such meetings.

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. The
members of the Executive Committee are Theodore J. Forstmann, W.W. Boisture,
Jr., Chris A. Davis and Sandra J. Horbach. The Executive Committee did not meet
in 1998.

The AUDIT COMMITTEE's principal functions are to review the scope of the
annual audit of the Company by its independent auditors, review the annual
financial statements of the Company and the related independent auditors' report
of the Company as prepared by the independent auditors, 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 auditors. The Company's
Chief Financial Officer and Director of Internal Audit generally attend Audit
Committee meetings and give reports to and answer 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: Robert
Anderson, Roger S. Penske and Donald H. Rumsfeld. The Audit Committee held two
meetings in 1998.

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 compensation to be paid to
the members of the Office of the Chief Executive. The members of the
Compensation Committee are Sandra J. Horbach, Gerard R. Roche and Robert S.
Strauss. The Compensation Committee held one meeting in 1998.

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The EMPLOYEE BENEFIT PLAN COMMITTEE is responsible for administering the
Company's employee benefit plans, including the Amended and Restated 1990 Stock
Option Plan and the proposed 1999 Stock Option Plan. The Employee Benefit Plan
Committee is composed of four non-employee directors: Nicholas C. Forstmann,
Lynn Forester, Gerard R. Roche and Robert S. Strauss. The Employee Benefit Plan
Committee held one meeting in 1998.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee, comprised of Sandra J. Horbach, Gerard R. Roche
and Robert S. Strauss, administers the cash portion of the Company's
compensation program. The Employee Benefit Plan Committee, comprised of Nicholas
C. Forstmann, Lynn Forester, Gerard R. Roche and Robert S. Strauss, administers
the Company's employee benefit plans. Sandra J. Horbach and Nicholas C.
Forstmann are general partners of FLC Partnership, L.P. Robert S. Strauss is a
member of an advisory committee to FLC Partnership, L.P.

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 $0.2 million in 1998. 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 1998, Gulfstream paid FL Aviation Corp. approximately $2.0 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 1998, the Company received services and paid
approximately $2.0 million under that contract and extended the term of the
contract until March 2002. 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.

In December 1998, Sandra J. Horbach received options to purchase 150,000
shares of Common Stock at an exercise price of $50.0625, the fair market value
on the date of grant. The options vest in three equal annual installments.

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. Directors do not receive
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.

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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
19, 1999, 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 executive
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).................................................................... 10,265,915 14.2%
Gulfstream Partners (3)....................................................... 2,674,325 3.7
Gulfstream Partners II, L.P. (3).............................................. 3,614,135 5.0
FMR Corp. (4)................................................................. 5,559,200 7.7
Iridian Asset Management LLC (5).............................................. 4,382,490 6.2
Robert Anderson............................................................... 32,344 *
Charlotte L. Beers............................................................ 16,289 *
Thomas D. Bell, Jr............................................................ 35,157 *
W.W. Boisture, Jr............................................................. 195,471 *
Chris A. Davis................................................................ 130,313 *
Lynn Forester................................................................. 7,761 *
Nicholas C. Forstmann (3)..................................................... 16,554,375 22.9
Theodore J. Forstmann (3)..................................................... 16,662,969 23.1
Preston A. Henne.............................................................. 32,579 *
Sandra J. Horbach (3)......................................................... 3,635,854 5.0
James T. Johnson.............................................................. 112,825 *
Henry A. Kissinger............................................................ -- --
Drew Lewis (3)................................................................ 16,056 *
Mark H. McCormack............................................................. 7,761 *
Bryan T. Moss................................................................. 195,470 *
Michael S. Ovitz.............................................................. 7,761 *
Allen E. Paulson.............................................................. -- --
Roger S. Penske (3)........................................................... 32,579 *
Colin L. Powell............................................................... 16,289 *
Gerard R. Roche............................................................... 16,289 *
Donald H. Rumsfeld (6)........................................................ 32,579 *
George P. Shultz.............................................................. 32,344 *
Robert S. Strauss............................................................. 32,344 *
All directors and executive officers of the Company
as a group (29 persons)(3)(7)............................................... 17,707,413 24.2
</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 19, 1999. 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 19,
1999 is deemed to be outstanding, but is

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not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.

(2) Based on 72,176,518 shares outstanding at March 19, 1999.

(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, is c/o
Forstmann Little & Co., 767 Fifth Avenue, New York, New York 10153. The
general partner of MBO-IV is FLC XXIX, L.P., a New York limited partnership
of which Theodore J. Forstmann, Nicholas C. Forstmann, Steven B. Klinsky,
Sandra J. Horbach, Winston W. Hutchins, Thomas H. Lister and Erskine B.
Bowles 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, 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 and 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, Mr. Lister and Mr. Bowles 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, Mr. Lister and Mr. Bowles are not deemed to be the beneficial owner
thereof. Drew Lewis and Roger S. Penske are limited partners in Gulfstream
Partners. Roger S. Penske is a limited partner 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.

(4) Based on information contained in an amendment to Schedule 13G, dated
February 12, 1999, 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 5,196,300
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. Edward C.
Johnson 3d, FMR Corp. and such investment companies each has sole power to
dispose of the 5,196,300 shares owned by the investment companies. The
investment companies' Board of Trustees have sole power to vote such shares.
Includes 362,900 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. Edward C.
Johnson 3d and FMR Corp. each has sole power to dispose of the 362,900
shares, sole power to vote 193,700 of such shares and no power to vote
169,200 of such shares. 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) Based on information contained in Schedule 13G dated February 9, 1999 and
filed with the Securities and Exchange Commission by Iridian Asset
Management LLC, LC Capital Management, LLC, CL Investors, Inc., David L.
Cohen and Harold J. Levy. The address of all such persons is 276 Post Road
West, Westport, Connecticut 06880-4704. LC Capital Management, LLC owns
72.5% of the outstanding limited liability company interest of Iridian Asset
Management LLC and may be deemed to have the power to vote and to dispose of
the shares owned by Iridian Asset Management LLC. CL Investors, Inc. owns
96% of the outstanding limited liability company interest of LC Capital
Management, LLC and may be deemed to have the power to vote and dispose of
the shares owned by Iridian Asset Management LLC. David L. Cohen and Harold
J. Levy each owns 50% of the outstanding

8
<PAGE>
common shares of CL Investors, Inc. Each is also an employee of Arnhold & S.
Bleichroeder Advisers, Inc. ("A&SB") and may be deemed to have ownership
(but disclaims beneficial ownership) of 320,000 shares held by First Eagle
Fund of America, to which A&SB acts as investment adviser. Mr. Cohen also
owns 2,000 shares and Mr. Levy 5,000 shares as to which he has sole power to
vote and dispose.

(6) 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.

(7) 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, all
shares beneficially owned by directors and executive officers are
attributable to options exercisable currently or within 60 days of March 19,
1999. 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 19,
1999 in the following amounts: W.W. Boisture, Jr., 300,000 shares; Chris A.
Davis, 300,000 shares; Lynn Forester, 13,333 shares; Theodore J. Forstmann,
450,000 shares; Preston A. Henne, 25,000 shares; Sandra J. Horbach, 150,000
shares; Henry A. Kissinger, 73,829 shares; Mark H. McCormack, 13,333 shares;
Michael S. Ovitz, 13,333 shares; and all directors and executive officers as
a group, 1,661,054 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 ten percent of the Company's outstanding Common Stock to file with
the Securities and Exchange Commission reports of ownership and changes in
ownership 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, 1998, all its officers and directors and holders of more than ten percent 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 information
required to be disclosed pursuant to Securities and Exchange Commission
regulations for each of the fiscal years ended December 31, 1998, 1997 and 1996
with respect to the Company's Chief Executive Officer, each of the next four
most highly compensated executive officers and one additional individual who
would have otherwise been included but for the fact that he no longer served as
an executive officer of the Company at December 31, 1998 (collectively, the
"Named Executive Officers").

9
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
ANNUAL COMPENSATION UNDERLYING
--------------------------------- STOCK
NAME AND PRINCIPAL BASE OPTION ALL OTHER
POSITION YEAR SALARY BONUS(1) AWARDS COMPENSATION
- ----------------------------------------------------- --------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Theodore J. Forstmann (2)............................ 1998 -- -- 450,000 --
Chairman and Chief Executive Officer 1997 -- -- -- --
1996 -- -- 375,000 --

W.W. Boisture, Jr. (3)............................... 1998 $ 399,043 $ 250,000 300,000 $3,200(4)
President & Chief Operating Officer 1997 353,848 200,000 -- 3,000(4)
1996 275,018 171,875 75,000 3,000(4)

Chris A. Davis (5)................................... 1998 $ 399,043 $ 250,000 300,000 $3,200(4)
Executive Vice President and Chief Financial & 1997 353,848 206,500 -- 3,000(4)
Administrative Officer 1996 275,018 171,875 -- 3,000(4)

Bryan T. Moss........................................ 1998 $ 473,616(6) $ 143,750 -- $3,200(4)
Vice Chairman 1997 635,543(6) 200,000 -- 3,000(4)
1996 875,361(6) 250,000 -- 3,000(4)

Preston A. Henne (7)................................. 1998 $ 217,650 $ 108,755 25,000 $3,200 (4)
Senior Vice President, Programs

James T. Johnson (8)................................. 1998 $ 500,011 $ 200,000 -- $ 1,517,500 (9)
Former President & Chief Operating Officer 1997 201,928 130,219 1,000,000
</TABLE>

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

(1) Bonuses were paid in February 1999 in respect of fiscal 1998, February 1998
in respect of fiscal 1997, and March 1997 in respect of fiscal 1996, under a
Management Incentive Plan.

(2) Mr. Forstmann served as Chairman throughout 1998 and was named Chief
Executive Officer on December 15, 1998.

(3) Mr. Boisture served as Executive Vice President until December 15, 1998,
when he was named President and Chief Operating Officer.

(4) Represents the Company's contribution to the Gulfstream Aerospace
Corporation Investment Plan.

(5) Ms. Davis served as Executive Vice President and Chief Financial Officer
throughout 1998 and was named Chief Administrative Officer on December 15,
1998.

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

(7) Mr. Henne became an executive officer in December 1998.

(8) Mr. Johnson joined the Company as President and Chief Operating Officer on
August 4, 1997 and retired on December 15, 1998. Bonus for 1998 was paid by
agreement.

(9) Represents nonrecurring payments of $600,000 in 1997 and $917,500 in 1998 to
compensate Mr. Johnson for the value of lost benefits with previous
employer.

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 1998.

OPTION GRANTS IN THE FISCAL YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------------
NAME GRANTED(#) YEAR ($/SH) DATE 5% 10%
- ------------------------------------- ------------ ------------- ---------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>

Theodore J. Forstmann................ 450,000(2) 19.3% $ 50.0625 12/09/08 $ 14,167,817 $ 35,904,029

W. W. Boisture, Jr................... 300,000(2) 12.8% 50.0625 12/09/08 9,445,211 23,936,020

Chris A. Davis....................... 300,000(2) 12.8% 50.0625 12/09/08 9,445,211 23,936,020

Bryan T. Moss........................ -- -- -- -- -- --

Preston A. Henne..................... 25,000(2) 1.1% 50.0625 12/09/08 787,101 1,994,668

James T. Johnson..................... -- -- -- -- -- --
</TABLE>

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

(1) Sets forth potential option gains based on assumed annualized rates of stock
price appreciation from the market price at the date of grant at the
percentages specified (compounded annually) over the full term of the grant
with appreciation determined as of the expiration date. The 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.

(2) All grants were effective December 9, 1998. The exercise price is equal to
the fair market value on date of grant. One third of the total number of
options granted becomes exercisable on each of the first, second and third
anniversaries of the date of grant. All options generally become exercisable
upon a "Change in Control" of the Company (as that term is defined in the
Stock Option Agreement). All options were granted pursuant to the Company's
Amended and Restated 1990 Stock Option Plan.

11
<PAGE>
AGGREGATED OPTION EXERCISES AND VALUES IN LAST FISCAL YEAR. The following
table sets forth stock option exercises for the fiscal year ended December 31,
1998 and the stock option values as of December 31, 1998 for each of the Named
Executive Officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES IN-THE-MONEY
ACQUIRED ON VALUE UNDERLYING UNEXERCISED OPTIONS AT
EXERCISE REALIZED OPTIONS AT FISCAL YEAR-END
NAME (#) (1) ($) (1) FISCAL YEAR-END (#) ($)(2)
- -------------------------------------- ----------- ------------ -------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ------------ -------------
Theodore J. Forstmann................. 266,406 $ 9,963,584 108,594 450,000 $ 5,337,395 $ 1,434,375
W. W. Boisture, Jr.................... 209,010 7,816,974 173,752 321,719 8,539,911 2,023,739
Chris A. Davis........................ 116,797 4,435,434 130,313 300,000 6,479,889 956,250
Bryan T. Moss......................... 175,196 6,552,330 195,470 -- 9,607,351 --
Preston A. Henne...................... 29,199 1,092,043 32,579 25,000 1,601,258 79,688
James T. Johnson...................... 472,650 6,882,966 263,675(3) -- 6,937,948 --
</TABLE>

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

(1) All shares were sold in an underwritten public offering in May 1998. Value
realized represents the positive spread between the exercise price and the
public offering price of $43.00 per share, less the underwriting discount of
$1.50 per share.

(2) Represents the positive spread between the exercise price of outstanding
stock options and the closing price of $53.25 per share on December 31,
1998, as reported on the New York Stock Exchange Composite Tape.

(3) In connection with his retirement, Mr. Johnson agreed to terminate options
for 263,675 shares and the remaining 263,675 shares became exercisable.

GULFSTREAM PENSION PLAN. The Gulfstream Aerospace Corporation Pension Plan
(the "Pension Plan") is a 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 attained age 21 and completed at least one year of
service prior to August 19, 1998. 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 $22,000 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.

12
<PAGE>
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, 1998, the estimated annual benefits payable upon
retirement for W.W. Boisture, Jr., Chris A. Davis, Bryan T. Moss and Preston A.
Henne are $65,487, $101,306, $38,349 and $76,534, respectively, assuming
retirement at age 65 and the retiree's lifetime annuity payout option without
available modifications. Mr. Johnson has no vested pension benefits.

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 members of the
Office of the Chief Executive. The objectives of the Committee are to (i)
provide a level of base compensation that would allow the Company to attract,
retain and reward superior talent, (ii) link the executives' interest with the
success of the Company through the payment of a bonus based on the Company's
performance and (iii) provide executives with an opportunity to build a
significant ownership interest in the Company through participation in a stock
option plan and thereby align their interests with those of the stockholders.
The Committee addresses the mix of compensation forms (I.E., salary, bonus
and/or 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.

Prior to December 1998, the Company had no chief executive officer, but had
a five-person Management Committee chaired by Mr. Theodore J. Forstmann, the
Company's Chairman. In December 1998, Mr. Forstmann was also named Chief
Executive Officer. Mr. Forstmann receives no cash compensation for his services
to the Company. Also in December 1998, the Company established the Office of the
Chief Executive, which includes Mr. Forstmann; W.W. Boisture, Jr., President and
Chief Operating Officer; and Chris A. Davis, Executive Vice President and Chief
Financial and Administrative Officer. No executive officer 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 a specific formula. The Committee
periodically reviews the base salary of members of the Office of the Chief
Executive and takes action from time to time based on a subjective assessment of
individual performance, the nature of the executive's responsibilities and the
executive's contribution to the Company, as well as competitive conditions and
the nature and extent of the executive's other forms of compensation.

BONUSES. The Company has adopted a Management Incentive Plan to reward
certain members of management 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. For 1998, the Company met its operating and
financial goals.

13
<PAGE>
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's policy is to design
and administer compensation plans that support the achievement of long-term
strategic objectives and enhance shareholder value. When consistent with this
compensation philosophy, the Committee will also attempt to structure
compensation programs that are tax-deductible by the Company. Stock options to
be granted under the proposed 1999 Stock Option Plan are intended to qualify
under the performance-based compensation exemption 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 correlate 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 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 executives,
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. Options to purchase an aggregate of 2,334,674 shares of Common Stock were
granted in 1998. Mr. Forstmann was granted an option for 450,000 shares in
December 1998 in connection with his being named Chief Executive Officer.

Employee Benefit Plan Committee

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

14
<PAGE>
PERFORMANCE GRAPH

The following graph compares the cumulative total return of $100 invested on
October 10, 1996, in each of Common Stock of the Company, Standard & Poor's 500
Index and Standard & Poor's Aerospace / Defense Index. The returns of the
Standard and 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, 1998. 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 500 INDEX
</TABLE>

RELATED PARTY TRANSACTIONS

In August 1996, the Company entered into agreements with Mr. Theodore J.
Forstmann pursuant to which the Company will provide Mr. Forstmann with the use
of a Gulfstream V for a period of ten years. Until this Gulfstream V becomes
available, the Company has made and will make available to Mr. Forstmann a
Gulfstream IV, which the Company received through an assumption of a lease from
an affiliate of FLC Partnership, L.P. In January 1997, the Company exercised its
early buy-out option under the lease and purchased the aircraft from the lessor,
an international financial institution. Mr. Forstmann has agreed to pay the
Company up to $1.0 million annually (and paid $0.8 million in 1998) for
non-Company use of the aircraft. If Mr. Forstmann ceases to serve as a director
or official of the Company, he has agreed to reimburse the Company $1,800 per
hour for all use of the aircraft, or other such rate required so as to not
exceed Federal Aviation Administration ("FAA") regulatory limitations.

15
<PAGE>
Thomas D. Bell, a director and former Vice Chairman of the Company, was
President and Chief Executive Officer of Burson-Marsteller, an advertising and
public relations services firm, during 1998. Gulfstream paid to
Burson-Marsteller approximately $0.1 million in 1998 for advertising and public
relations services and has engaged Burson-Marsteller to provide additional
services in 1999. 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.

In June 1997, the Company and Allen E. Paulson, a director and Chairman
Emeritus of the Company, entered into an agreement pursuant to which the Company
has sold to Mr. Paulson a Gulfstream V previously utilized by the Company as a
flight test aircraft, for a purchase price equal to the estimated fair market
value of the aircraft. Outfitted delivery is scheduled in May 1999. A portion of
the purchase price equal to $12 million will be paid over a period of four years
and is secured by a letter of credit. The Company believes that the purchase
price for the Gulfstream V is at least as favorable to the Company as could have
been obtained from an unrelated third party.

The Company and Mr. Paulson have also entered into a Marketing Services
Agreement under which Mr. Paulson will provide services relating to marketing
and new product development for a period of four years. Under this agreement,
Mr. Paulson will receive commissions on sales of Gulfstream Vs for which he
performs services and will receive fees in the event that certain product
development activities result in commercially viable products. The Company and
Mr. Paulson have also agreed that the Company may use the Gulfstream V purchased
by Mr. Paulson for demonstration purposes for a fee in accordance with FAA
regulations. The Company believes that the terms of these transactions are at
least as favorable to the Company as those that could have been obtained from an
unrelated third party.

In March 1998, the Company and Penske Jet, Inc., an affiliate of Roger
Penske, a director of the Company, entered into an agreement pursuant to which
the Company will sell to Penske Jet, Inc. a new Gulfstream IV-SP aircraft.
Outfitted delivery is scheduled for the first quarter of 2000. The transaction
also includes the trade-in of a Gulfstream IV-SP aircraft currently owned by
Penske Jet. The Company believes that the purchase price for the new GIV-SP and
the trade-in value for the trade-in aircraft, as well as the other terms of the
transaction, are at least as favorable to the Company as could have been
obtained from an unrelated third party.

Penske Jet, Inc. and Allen E. Paulson operate Gulfstream aircraft. As
Gulfstream operators they from time to time purchase parts, maintenance and
similar services from the Company in the ordinary course of business and on the
same terms as an unrelated third party.

Henry A. Kissinger, 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 "Further Information Concerning the Board of Directors and
Committees-Compensation Committee Interlocks and Insider Participation".

16
<PAGE>
APPROVAL OF THE GULFSTREAM AEROSPACE CORPORATION
1999 STOCK OPTION PLAN

GENERAL

On February 9, 1999, the Board of Directors of the Company approved the 1999
Stock Option Plan, subject to the approval of the stockholders at the 1999
Annual Meeting. The 1999 Stock Option Plan will become effective upon approval
by the Company's stockholders. The principal provisions of the 1999 Stock Option
Plan are summarized below. This summary, however, does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
1999 Stock Option Plan, a copy of which is attached as Appendix A. Capitalized
terms not defined herein have the meanings set forth in the 1999 Stock Option
Plan, unless otherwise indicated.

PURPOSE

The purpose of the 1999 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 the Company and its Subsidiaries whose
entrepreneurial and management talents and commitments are essential for the
continued growth and expansion of the Company's business.

TYPES OF AWARDS

The 1999 Stock Option Plan provides for the granting of options ("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 Code. No Options
may be granted under the 1999 Stock Option Plan after February 9, 2009.

ADMINISTRATION

The 1999 Stock Option Plan will be administered and interpreted 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 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's broad powers include
authority, within the limitations provided in the 1999 Stock Option Plan, to
select the eligible individuals to receive Options, to determine the type,
amount and terms and conditions of the Options and to interpret and determine
all questions arising under the 1999 Stock Option Plan. The Employee Benefit
Plan Committee of the Board has been designated as the Committee that will
administer the 1999 Stock Option Plan.

ELIGIBILITY

Employees and directors of, and consultants or advisors to, the Company and
its designated subsidiaries as determined by the Committee, are eligible to be
granted Options under the 1999 Stock Option Plan. While there are approximately
7,700 employees and directors of the Company eligible to participate, the
Company's current practice generally is to limit Option grants to members of
management, directors and advisors of the Company. As of March 19, 1999, Options
had been granted to approximately 340 employees and directors pursuant to the
Amended and Restated 1990 Stock Option Plan and non-plan option agreements. In
addition, in June 1998, the Company granted an option for 100 shares to each
then current employee, other than certain senior executives, or approximately
5,500 individuals.

SHARES AVAILABLE FOR ISSUE

The maximum number of shares that may be issued under the 1999 Stock Option
Plan is 1,950,000 shares of Common Stock. The maximum number of shares with
respect to which Options may be granted

17
<PAGE>
to any individual during any calendar year is 1,000,000. Unexercised Options
that expire, terminate or are canceled become available again for Option grants
under the 1999 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 1999 Stock Option
Plan and the number and class of shares of stock with respect to which Options
have been granted under the 1999 Stock Option Plan, the Option Price for such
shares and any other economic terms of the Option.

STOCK OPTIONS

Stock Options granted under the 1999 Stock Option Plan are not intended to
qualify as Incentive Stock Options within the meaning of Section 422 of the
Code. The exercise price of an Option may not be less than 100% of the Fair
Market Value of Common Stock at grant and its term may not exceed 10 years from
the date of grant. The Company intends that compensation attributable to Stock
Options granted under the 1999 Stock Option Plan will not be subject to the
deduction limitation of Section 162(m) of the Code. See "U.S. Federal Income Tax
Consequences."

The Committee will determine at the time the Option is granted the terms and
conditions applicable to such Option, which will be set forth in a stock option
agreement (the "Stock Option Agreement"). The Committee may provide for Options
to be exercisable immediately or in installments. The Company may accelerate the
exercisability of Options at any time. The current form of Stock Option
Agreement being utilized by the Company provides that all outstanding Options
will become fully exercisable upon a "Change in Control" (as that term is
defined in the current form Stock Option Agreement). When an Option is
exercised, the Option Price must be paid in full in cash.

Subject to the 1999 Stock Option Plan, the Committee may modify, extend,
replace or renew outstanding Options granted under the Plan, or accept the
surrender of unexercised outstanding Options provided that no modification of
any Option granted under the 1999 Stock Option Plan shall adversely alter or
impair any rights or obligations under any Option granted under the 1999 Stock
Option Plan without the affected Optionee's consent.

The current form Stock Option Agreement also provides that the Company will
notify the Optionee within a specified number of days prior to a "Terminating
Event" which is defined as: (i) any merger or consolidation of the Company with
or into another corporation (other than a merger or consolidation in which the
Company is the surviving corporation and which does not result in any capital
reorganization or reclassification or other change of the then outstanding
shares of Common Stock), or (ii) the liquidation or dissolution of the Company,
or (iii) the sale or other disposition to any person (other than a Subsidiary or
an Affiliate of the Company) of all or substantially all of the assets of the
Company pursuant to a plan of liquidation or otherwise.

Upon receipt of notice of a Terminating Event, the Optionee may, within a
specified period of time, exercise all or part of his or her Options, whether or
not such Options were otherwise exercisable. In connection with a Terminating
Event involving the merger, consolidation or liquidation of the Company, 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
is not consummated, any Option which the Optionee had exercised in connection
with such Terminating Event 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 had not been given to the Optionee. The
Optionee has no independent right to require the Company to register under the
Securities Act of 1933 the shares of Common Stock subject to such Options.

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<PAGE>
Unless set forth in the Stock Option Agreement at the time of grant or at
any time thereafter, an Option is not transferable by the Optionee except by
will or the laws of descent and distribution, and all Options shall be
exercisable, during the Optionee's lifetime, only by the Optionee or his or her
guardian or legal representative. The terms of such Options shall be final,
binding and conclusive upon beneficiaries, executors, administrator, heirs and
successors of the Optionee.

Except as provided in a Stock Option Agreement, an Option held by an
Optionee will not be exercisable after the termination of the Optionee's
employment or membership on the Board. In the event of death, any Options held
by the Optionee shall be exercisable, to the extent provided in the 1999 Stock
Option Plan or under a Stock Option Agreement, by the legatee or legatees under
the Optionee's will or by his or her personal representatives or distributees.

The following table sets forth the number of shares of Common Stock subject
to outstanding Options under all stock option plans and agreements of the
Company as of March 19, 1999 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 who are not executive
officers, as a group. Options granted under the 1999 Stock Option Plan are made
at the discretion of the Committee. 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 1999 or thereafter.

OUTSTANDING STOCK OPTIONS

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION UNDERLYING OPTIONS
- ---------------------------------------------------------------------- ------------------
<S> <C>
Theodore J. Forstmann................................................. 558,594
Chairman and Chief Executive Officer
W.W. Boisture, Jr..................................................... 495,471
President and Chief Operating Officer
Chris A. Davis........................................................ 430,313
Executive Vice President and Chief
Financial and Administrative Officer
Bryan T. Moss......................................................... 195,470
Vice Chairman
Preston A. Henne...................................................... 57,579
Senior Vice President, Programs
James T. Johnson...................................................... 112,825
Former President and Chief Operating Officer
All executive officers as a group (11 persons)........................ 2,130,167
All non-executive directors as a group (18 persons)................... 648,768
All non-executive employees as a group
(approximately 4,650 persons)......................................... 1,532,246
</TABLE>

AMENDMENT AND TERMINATION

The Board of Directors may at any time and from time to time amend, suspend
or terminate the 1999 Stock Option Plan in whole or in part, provided that, to
the extent necessary under applicable law, an amendment shall not be effective
unless approved by the stockholders of the Company in accordance with applicable
law. The rights of an Optionee under any Option granted prior to an amendment,
suspension or termination of the 1999 Stock Option Plan shall not be adversely
affected by any such action of the Board except with the consent of the Optionee
or transferee.

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U.S. FEDERAL INCOME TAX CONSEQUENCES

The following summary described the U.S. federal income tax consequences of
the 1999 Stock Option Plan. The summary is not intended to be exhaustive and,
among other things, does not describe state, local or foreign income and other
tax consequences.

No income will be recognized by the holder and the Company will not be
entitled to a deduction at the time of grant of an Option. Upon exercise of an
Option, the amount by which the Fair Market Value of the Common Stock on the
date of exercise exceeds the Option Price will be taxable to the holder as
ordinary income and, subject to satisfying applicable withholding requirements
and any deduction limitation under Section 162(m), deductible by the
Corporation. The subsequent disposition of shares acquired upon exercise of an
Option will ordinarily result in capital gain or loss.

Section 162(m) of the Code generally disallows a federal income tax
deduction to any publicly held company for compensation paid in excess of $1
million in any taxable year to the chief executive officer or any of the four
other most highly compensated executive officers who are employed 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 and intends to
implement the 1999 Stock Option Plan so that compensation resulting therefrom
would be qualified "performance-based compensation." To allow the Company to so
qualify such compensation, the Company is seeking stockholder approval of the
1999 Stock Option Plan.

Special rules may apply in the case of an Optionee who is 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 so considered, the Optionee may be
subject to a 20% excise tax and the Company may be denied a federal income tax
deduction.

EFFECT ON EARNINGS

Currently, neither the grant nor the exercise of an Option will result in
any charge to pretax earnings.

APPOINTMENT OF AUDITORS

Upon recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP, independent auditors, to audit and report on
the consolidated financial statements of the Company for the fiscal year ending
December 31, 1999 and to perform such other services as may be required of them.
Deloitte & Touche LLP has served as independent 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 1999 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, 1999, 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 or other means. As is customary, the Company will, upon
request, reimburse brokerage firms,

20
<PAGE>
banks, trustees, nominees and other persons for their out-of-pocket expenses in
forwarding proxy materials to their principals.

STOCKHOLDER PROPOSALS FOR THE 2000
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
2000 Annual Meeting must be received by the Company no later than December 1,
1999. 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 2000 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 1999 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 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, 1998, 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 25, 1999

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<PAGE>
APPENDIX A

GULFSTREAM AEROSPACE CORPORATION
1999 STOCK OPTION PLAN

1. PURPOSE. The purpose of the Gulfstream Aerospace Corporation 1999 Stock
Option Plan is to provide financial incentives to key employees of the
Corporation and its Subsidiaries and such consultants, advisors and members of
the Board of Directors of the Corporation and its Subsidiaries whose
entrepreneurial and management talents and commitments are essential for the
continued growth and expansion of the Corporation's business.

The Options granted under the Plan are not intended to qualify as Incentive
Stock Options within the meaning of Section 422 of the Code.

2. Definitions. For purposes of this Plan:

(a) "Affiliate" means any person directly or indirectly controlling,
controlled by, or under common control with the person of which it is an
Affiliate.

(b) "Board" means the Board of Directors of the Corporation.

(c) "Common Stock" means the Common Stock, par value $.01 per share, of
the Corporation and any other stock or securities into which such shares are
changed or for which such shares are exchanged as described in Section 7
hereof.

(d) "Code" means the Internal Revenue Code of 1986, as amended.

(e) "Committee" means a committee, as described in Section 3, appointed
by the Board from time to time to administer the Plan and to perform the
functions set forth herein.

(f) "Corporation" means Gulfstream Aerospace Corporation, a Delaware
corporation, and any successor to Gulfstream Aerospace Corporation by
merger, consolidation, acquisition of substantially all the assets thereof
or otherwise.

(g) "Eligible Person" means any individual employee or director of, or
consultant or advisor to, the Corporation or its Subsidiaries whom the
Committee designates as eligible to receive Options.

(h) "Fair Market Value" for purposes of this Plan, on any date means the
average of the high and low sales prices of the shares of Common Stock on
such date on the principal national securities exchange on which such shares
of Common Stock are listed or admitted to trading, or, if the shares of
Common Stock are not so listed or admitted to trading, the average of the
per share of Common Stock closing bid price and per share of Common Stock
closing asked price on such date as quoted on the National Association of
Securities Dealers Automated Quotation System or such other market in which
such prices are regularly quoted, or, if there have been no published bid or
asked quotations with respect to the Common Stock on such date, the Fair
Market value shall be the value established by the Board on the advice of an
investment advisor in good faith.

(i) "FL & Co. Companies" means individually and collectively Gulfstream
Partners, Gulfstream Partners II, L.P. and Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-IV, each a New
York limited partnership.

(j) "Nonemployee Director" means a director of the Corporation who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended.

(k) "Option" means an option granted under the Plan.

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<PAGE>
(l) "Optionee" means a person to whom an Option has been granted.

(m) "Option Price" means the price at which a share of Common Stock can
be purchased pursuant to an Option.

(n) "Outside Director" means a director of the Corporation who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

(o) "Parent" means a parent corporation within the meaning of Section
424(e) of the Code.

(p) "Plan" means the Gulfstream Aerospace Corporation 1999 Stock Option
Plan as set forth in this instrument and as it may be amended from time to
time.

(q) "Stock Option Agreement" means the written agreement between an
Optionee and the Corporation evidencing the grant of an Option and setting
forth the terms and conditions of that Option.

(r) "Subsidiary" means a subsidiary corporation of the Corporation
within the meaning of Section 424(f) of the Code, substituting "issuing" for
"employer" references therein.

(s) "Successor Corporation" means a corporation, or a Parent or
Subsidiary of such corporation, which issues or assumes a stock option in a
transaction to which Section 424(a) of the Code applies.

3. ADMINISTRATION. The Plan shall be administered by the Committee, which
shall hold meetings at least annually, and shall keep minutes of its meetings.
The Committee shall have all of the powers necessary to enable it to carry out
its duties under the Plan properly, including the power and duty to construe and
interpret the Plan and to determine all questions arising under it. The
Committee's interpretations and determinations shall be conclusive and binding
upon all persons. The Committee may also establish, from time to time, such
regulations, provisions, procedures and conditions regarding the Options and
granting of Options which in its opinion may be advisable in administering the
Plan. A quorum shall consist of not fewer than two (2) members of the Committee
and a majority of a quorum may authorize any action. Any decision or
determination reduced to writing and signed by a majority of all of the members
of the Committee shall be as fully effective as if made by a majority vote at a
meeting duly called and held. The Committee shall consist of at least two (2)
directors of the Corporation and may consist of the entire Board; provided,
however, that (A) if the Committee consists of less than the entire Board, each
member shall be a Nonemployee Director and (B) to the extent necessary for any
Option intended to qualify as performance-based compensation under Section
162(m) of the Code to so qualify, each member of the Committee, whether or not
it consists of the entire Board, shall be an Outside Director.

4. SHARES AVAILABLE FOR OPTION.

(a) The Corporation shall reserve for the purposes of the Plan, out of
its authorized but unissued Common Stock or out of shares of Common Stock
held in the Corporation's treasury, or partly out of each, as shall be
determined by the Board, a total of 1,950,000 shares of Common Stock (or the
number and kind of shares of stock or other securities into which those
1,950,000 shares are changed or for which those 1,950,000 shares are
exchanged in accordance with Section 9 hereof).

(b) In any calendar year, no Eligible Person may be granted Options in
the aggregate in respect of more than 1,000,000 shares of Common Stock.

(c) In the event that an Option granted under the Plan to any Eligible
Person expires, or is for any other reason terminated and unexercised as to
any shares of Common Stock covered by the Option, those shares of Common
Stock shall thereafter be available for the granting of future Options under
the Plan.

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<PAGE>
5. GRANTING OPTIONS.

(a) Subject to the provisions of the Plan, the Committee shall have full
and final authority to select those Eligible Persons who will receive
Options. The Committee may also grant more than one Option to a given
Eligible Person during the term of the Plan, either in addition to, or in
substitution for, one or more Options previously granted that Eligible
Person. Options shall be issued pursuant to a Stock Option Agreement
executed by the Corporation and the Optionee.

(b) The Committee, in its sole discretion, shall establish the per share
Option Price at the time an Option is granted, provided that the Option
Price is not less than 100% of the Fair Market Value of the Common Stock on
the date of grant.

(c) The terms of each Option granted under the Plan may differ from
those of other Options granted under the Plan at the same time, or at some
other time; provided that in no event shall the term of any Option granted
under the Plan exceed ten years and one day.

(d) Subject to the provisions of the Plan and the Stock Option
Agreement, an Option granted under this Plan shall be exercisable
immediately or in accordance with a schedule determined by the Committee in
its sole discretion, and the Committee may accelerate the exercisability of
any Option at any time.

(e) Unless set forth in the Stock Option Agreement evidencing the Option
at the time of grant or at any time thereafter, an Option granted hereunder
shall not be transferable by the Optionee to whom granted except by will or
the laws of descent and distribution of the state of the Optionee's domicile
at the time of his death, and an Option may be exercised during the lifetime
of such Optionee 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.

(f) Subject to the terms and conditions and within the limitations of
the Plan, the Committee may modify, extend, replace or renew outstanding
Options granted under the Plan, or accept the surrender of outstanding
Options (to the extent they have not yet been exercised) and grant new
Options in substitution for them. Notwithstanding the foregoing, however, no
modification of an Option shall adversely alter or impair any rights or
obligations under any Option granted under the Plan without the affected
Optionee's consent.

6. EXERCISE OF OPTIONS.

(a) To exercise an Option, in whole or in part, the Optionee shall
deliver to the Committee a written notice of exercise specifying the number
of shares of Common Stock in respect of which the Option is being exercised.
The Option Price shall be paid in full in cash for those shares of Common
Stock with respect to which the Option is exercised. The Stock Option
Agreement shall set forth the minimum number of shares of Common Stock, if
any, which may be purchased at any one time upon the exercise of an Option.
Each share of Common Stock purchased upon exercise of an Option shall be
issued and delivered at the principal office of the Corporation to the
person entitled to receive it. An Optionee shall not be deemed the holder of
any shares of Common Stock subject to the Option or have any rights of a
stockholder with respect thereto until such shares of Common Stock have been
issued and delivered to such Optionee. The Stock Option Agreement may
contain such other conditions to the exercise of an Option as the Committee
from time to time shall determine and may also contain provisions relating
to the ownership of the shares of Common Stock issued upon the exercise of
the Option.

(b) Except as provided in the Stock Option Agreement, any Options held
by an Optionee shall not be exercisable after the termination of the
Optionee's employment with the Corporation or its Subsidiaries or his or her
membership on the Board, as the case may be. During an Optionee's

A-3
<PAGE>
lifetime, Options granted under the Plan shall be exercisable only by the
Optionee. In the event of an Optionee's death, any Options held by the
Optionee shall be exercisable, to the extent provided in the Plan or under
the Stock Option Agreement, by the legatee or legatees under his will or by
his personal representatives or distributees.

(c) To the extent that an Option is not exercised prior to the
expiration of its term or such shorter period of time prescribed by the Plan
and the Stock Option Agreement, the Option shall lapse and all rights of the
Optionee with respect thereto shall terminate.

7. CHANGES IN COMMON STOCK. In the event that the outstanding shares of
Common Stock are changed into or exchanged for a different number or kind of
shares of stock or other securities of the Corporation, whether through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split-up
or other substitution of securities of the Corporation, the Committee shall make
appropriate adjustments to the maximum number and class of shares of stock as to
which Options may be granted under the Plan and the number and class of shares
of stock with respect to which Options have been granted under the Plan, the
Option Price for such shares and any other economic terms of the Option. The
Committee's adjustment shall be final and binding for all purposes of the Plan
and each Stock Option Agreement entered into under the Plan. No adjustment
provided for in this Section 7 shall require the Corporation to issue a
fractional share, and with respect to each Stock Option Agreement the total
adjustment as to the number of shares for which Options have been granted shall
be effected by rounding down to the nearest whole number of shares.

8. AMENDMENT OR TERMINATION OF PLAN. The Board shall have the right to
amend, suspend or terminate the Plan, provided that, to the extent necessary
under applicable law, an amendment shall not be effective unless approved by the
stockholders of the Corporation in accordance with applicable law. The rights of
an Optionee under any Option granted prior to an amendment, suspension or
termination of the Plan shall not be adversely affected by any such action of
the Board except with the consent of the Optionee.

9. INDEMNIFICATION OF STOCK OPTION COMMITTEE. The members of the Committee
shall be indemnified by the Corporation against all losses, claims, damages and
liabilities, joint or several (including all legal and other expenses reasonably
incurred in connection with the preparation for, or defense of, any claim,
action or proceeding, whether or not resulting in any liability), for any acts
or omissions which are within the scope of such member's duties as a member of
the Committee to the full extent permitted under the General Corporation Law of
the State of Delaware, as amended from time to time.

10. COMPLIANCE WITH LAW AND OTHER CONDITIONS. All Options and Stock Option
Agreements shall be governed by the laws of the State of New York to the extent
not superseded by the laws of the United States. Notwithstanding anything herein
or in any agreements pursuant to which Options are granted to the contrary, the
Corporation shall not be required to issue shares pursuant to the exercise of
any Option granted under the Plan unless the Corporation's counsel has advised
the Corporation that such exercise and issuance comply with all applicable laws
including, without limitation, all applicable federal and state securities laws.

11. MISCELLANEOUS. Nothing in the Plan or in any Stock Option Agreement
shall (a) confer on any employee any right to continue in the employ of the
Corporation, any of its Subsidiaries or any Successor Corporation; or (b) affect
the right of the Corporation, any of its Subsidiaries or any Successor
Corporation to terminate his employment at any time.

12. WITHHOLDING OF TAXES. At such times as an Optionee recognizes taxable
income in connection with the exercise of the Option and the receipt of shares
of Common Stock thereunder (a "Taxable Event"), the Optionee shall pay to the
Corporation, prior to the issuance of such shares, an amount equal to, but not
greater than, the federal, state and local income and other taxes that are
required by law to be withheld by the Corporation in connection with the Taxable
Event (the "Withholding Taxes"), plus any

A-4
<PAGE>
other amounts due to the Corporation in connection with the Taxable Event. The
Corporation shall have the right to deduct from any amounts otherwise payable to
the Optionee any taxes or other amounts required by applicable law to be
withheld. In satisfaction of the obligation to pay Withholding Taxes to the
Corporation, the Optionee may make a written election, which may be accepted or
rejected in the discretion of the Committee, to have withheld a portion of the
Common Stock then issuable to him or her in connection with the exercise of
Options hereunder having an aggregate Fair Market Value equal to, but not
greater than, the Withholding Taxes.

13. EFFECTIVE DATE AND DURATION OF PLAN. The effective date of the Plan
shall be the date of its adoption by the Board, subject only to the approval of
the stockholders of the Corporation. No options may be granted under the Plan
after February 9, 2009.

A-5
<PAGE>

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1999
THIS PROXY IS SOLICITED ON BEHALF OF GULFSTREAM AEROSPACE CORPORATION'S
BOARD OF DIRECTORS.

The undersigned hereby appoints W.W. Boisture, Jr. and Chris A. Davis 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 1999 Annual Meeting
of Stockholders of Gulfstream Aerospace Corporation to be held in New York, New
York on Wednesday, May 19, 1999 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 DIRECTORS'
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, FOR ITEM 2 AND FOR ITEM 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 IN THE SPACE BELOW
AND ADDRESS CHANGES 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.

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
Robert Anderson Mark H. McCormack
Lynn Forester Gerard R. Roche / / / /
Theodore J. Forstmann Robert S. Strauss
Drew Lewis

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

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

ITEM 2. APPROVAL OF 1999 STOCK OPTION FOR AGAINST ABSTAIN
PLAN / / / / / /

ITEM 3. APPROVAL OF AUDITORS / / / / / /

I PLAN TO ATTEND MEETING. / /

ADDRESS CHANGE
Please mark this box if you have / /
made an address change.

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:___________________________________________________________________ , 1999

________________________________________________________________________________
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 -