A FALCON 50 CAPT RPTED THAT AFTER BEING CLRED FOR THE ILS RWY 10R AT MRY; THE GPWS ACTIVATED.

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DURING DSCNT TO MONTEREY; CA; WE RECEIVED ATIS INDICATING THE FIELD WAS 700 FT SCATTERED WITH GOOD VISIBILITY AND THE ILS RWY 10R APCH WAS IN USE. WE BRIEFED AS SUCH FOR THE ILS RWY 10R ALONG WITH PROGRAMMING THE FMS TO FLY THE APCH. BOTH NAV'S WERE SET TO THE LOC FREQ; 110.7 WHICH SERVES BOTH THE ILS RWY 10R AND LOC RWY 28L. SECOND NAV NEEDLES WERE SET FOR THE LOC ONLY. AFTER RECEIVING OUR FIRST VECTOR TO FLY L DOWNWIND TO SET UP FOR THE ILS RWY 10R APCH WE WERE TURNED L QUICKLY TO 180 DEGS AND TOLD TO EXPECT THE LOC RWY 28L APCH. ACFT WAS BY NOW DSNDING TO 5000 FT. PF SIC AND PNF PIC QUICKLY SELECTED IN THE FMS TO FLY THE LOC RWY 28L APCH AND THE PNF GRABBED THE CHART WHICH WAS IN THE CHART BINDER BY MY SEAT. AFTER ANOTHER VECTOR TO THE R WE WERE GIVEN 4000 FT AND TOLD TO INTERCEPT THE LOC INBOUND. THIS INTERCEPT OCCURRED BTWN CRYLE AND RODNE. INTERCEPT WAS NORMAL AND WE WERE CLRED FOR THE APCH WITH MAINTAIN 4000 FT UNTIL RODNE. BTWN RODNE AND THE 9.0 DME FIX WE RECEIVED A GPWS TERRAIN ADVISORY AND PULL-UP/PULL-UP; WHICH WE DID. ACFT WAS MOSTLY VFR WITH SOME SCATTERED CLOUDS. DURING THIS TRANSITION; PNF WAS CALLING OUT THE STEPDOWN FIXES TO THE PF; HOWEVER THE PF WAS FLYING THE FMS APCH GS. THE PUBLISHED APCH STATES VNAV DECISION HT IS ONLY AUTH FOR APPROVED USERS. I NOTICED THE MAIN DEV WAS; I WAS CALLING THE STEPDOWNS VIA THE IMTB LOC AND THE PF WAS DSNDING BOTH ON THE FMS GS AND MORE IMPORTANTLY; HE WAS USING THE FMS DISTANCES ON THE MFD TO RWY 28L AND NOT DISTANCES AS I WAS CALLING THEM VIA THE IMTB LOC/DME. THIS ALLOWED FOR THE FMS 3 DEG GS VERSUS THE 3.62 DEG PUBLISHED GS. PF WAS WATCHING ONLY MFD DISTANCE FROM RWY 28 AND NOT THE IMTB DME DISTANCE FROM THE LOC ANTENNA. I BELIEVE THE ACFT WAS ON AN APCH SHALLOWER THAN IT SHOULD HAVE BEEN. THIS ALLOWED FOR THE GPWS WARNING. THE ACFT WAS NEVER IN DANGER AS THE CONDITIONS WERE VFR; BUT HAD WE GONE IN THE CLOUDS WITHOUT GPWS; I'M NOT SURE THE FLT WOULD HAVE CLRED THE HILLS ON THE APCH. LAST MIN APCH CHANGES ARE NEVER A GOOD IDEA. HAD IT NOT BEEN VFR; I'M SURE ATC WOULDN'T HAVE ISSUED A LATE CHANGE LIKE THAT. ALSO; ALTHOUGH WE WERE VFR AT THE TIME; WE DID NOT HAVE THE ARPT IN SIGHT. WE WERE FAR ENOUGH OUT THAT WE NEEDED THE STEPDOWN FIXES TO INSURE A STABLE APCH. WE WERE CONFIGURED FOR THE APCH AND THE AIRPLANE WAS STABLE DURING THE ENTIRE EVENT.