exv10w5



 





Exhibit 10.5, Annual Report on Form 10-K
for the year ended December 31, 2003
Commission File Number 1-3671




GENERAL DYNAMICS CORPORATION




EQUITY COMPENSATION PLAN




      



      



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GENERAL DYNAMICS CORPORATION




EQUITY COMPENSATION PLAN





	1.	 	Purpose of the Plan.




The purpose of the Plan is to provide the Company with an effective means of
attracting, retaining, and motivating directors, officers and key employees,
and to provide them with incentives to enhance the growth and profitability of
the Company.





	2.	 	Effective Date and Duration of the Plan.




The Plan was adopted by the Board on March 3, 2004, subject to approval by the
stockholders of the Parent. If the Plan is not approved by the stockholders
before the first anniversary of its adoption by the Board, then the Plan will
automatically terminate and be of no force or effect. Awards may be made
pursuant to the Plan through and including the 10 year anniversary of the date
of the latest stockholder approval of the Plan, including without limitation
any stockholder approval of any amendment to the Plan to increase the share
award capacity hereunder.



3. Definitions; Rules of Construction.





	(a)	 	Defined terms. The terms defined in this Section shall have
the following meanings for purposes of this Plan:





	 	 	 
	(i)

	 	Act shall mean the Securities Exchange Act of 1934, as
amended from time to time, including any regulations promulgated
thereunder.
	 
	 	 
	(ii)

	 	Award shall mean a grant under the Plan in any form
permitted hereunder.
	 
	 	 
	(iii)

	 	 Beneficial Owner shall have the meaning used in Rule
13d-3 promulgated under the Act.
	 
	 	 
	(iv)

	 	Beneficiary shall mean (A) the person designated by
the Participant, in the manner provided by the Committee, to receive
benefits upon the death of the Participant, or (B) the estate of the
Participant in the event no such designation shall have been made or
the person so designated shall have died prior to or coincident with
the Participant.
	 
	 	 
	(v)

	 	Board shall mean the Board of Directors of the Parent.
	 
	 	 
	(vi)

	 	Change in Control shall have the meaning set forth in
Section 15 of the Plan.
	 
	 	 
	(vii)

	 	 Code shall mean the Internal Revenue Code of 1986, as
amended from time to time, including any regulations promulgated
thereunder.







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	(viii)

	 	Committee shall mean the Compensation Committee of the
Board and any successor committee thereto; provided that for these
purposes, references herein to the Committee shall be deemed to
include the Subcommittee, as applicable.
	 
	 	 
	(ix)

	 	Common Stock shall mean the common stock of the
Parent.
	 
	 	 
	(x)

	 	Company shall mean collectively the Parent and its
Subsidiaries.
	 
	 	 
	(xi)

	 	Fair Market Value shall mean, as of the date of
determination, (A) the average of the highest and lowest quoted
selling price per share of Common Stock on the national securities
exchange or such other market on which such stock is principally
traded, as determined by the Committee, or (B) if the shares of
Common Stock are not listed or admitted to trading on any such
exchange or market, the average of the highest and lowest selling
price as reported by an over-the-counter market; provided that if no
sales occur as of the date of determination, then the date of
determination shall be the last day on which a sale was reported;
further provided that if the shares of Common Stock are not then
listed on a national securities exchange or market or traded in an
over-the-counter market, such value shall be determined by the
Committee in good faith. In no event shall the Fair Market Value of
any share of Common Stock be less than the par value per share of
Common Stock.
	 
	 	 
	(xii)

	 	Grant Date shall mean the date an Award is made to a
Participant.
	 
	 	 
	(xiii)

	 	Incumbent Board shall have the meaning set forth in Section
15 of the Plan.
	 
	 	 
	(xiv)

	 	ISO shall mean any Option, or portion thereof,
awarded pursuant to the Plan which is designated by the Committee as
an incentive stock option and also meets the applicable requirements
of an incentive stock option pursuant to Code Section 422.
	 
	 	 
	(xv)

	 	Non-Employee Director shall mean a member of the Board
who is not an employee of the Company.
	 
	 	 
	(xvi)

	 	Non-Statutory Stock Option shall mean any Option
awarded under the Plan which does not qualify as an ISO or is
designated as a Non-Statutory Stock Option notwithstanding that it
may otherwise qualify as an ISO.
	 
	 	 
	(xvii)

	 	Non-Control Transaction shall have the meaning set forth in
Section 15 of the Plan.
	 
	 	 
	(xviii)

	 	Option shall mean an option to purchase Common Stock
pursuant to the Plan.
	 
	 	 
	(xix)

	 	Parent shall mean General Dynamics Corporation (and
any successor thereto).
	 
	 	 
	(xx)

	 	Participant shall mean any individual who has an
outstanding Award pursuant to the Plan.
	 
	 	 
	(xxi)

	 	Participation Unit shall mean an Award of an unfunded
obligation of the Company that has a value derived from or related
to the value of Common Stock,







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	 	including but not limited to a stock appreciation right, phantom
stock unit or restricted stock unit, that is payable in cash or
Common Stock, or any combination thereof, as may be specified
pursuant to the Award.
	 
	 	 
	(xxii)

	 	Person for purposes of Section 15 only shall have the
meaning used in Sections 13(d) or 14(d) of the Act, and will include
any “group” as such term is used in such sections.
	 
	 	 
	(xxiii)

	 	Plan shall mean the General Dynamics Corporation Equity
Compensation Plan as set forth herein and as may be amended from
time to time.
	 
	 	 
	(xxiv)

	 	Purchase Price shall mean the price for which a share of
Common Stock may be purchased pursuant to an Option as determined by
the Committee, provided that such amount will not be less than one
hundred percent (100%) of the Fair Market Value of the Common Stock
on the Grant Date of the Option.
	 
	 	 
	(xxv)

	 	Repriced shall have the meaning set forth in Section
10 of the Plan.
	 
	 	 
	(xxvi)

	 	Restricted Stock shall mean shares of Common Stock subject
to such restrictions determined pursuant to the Plan.
	 
	 	 
	(xxvii)

	 	Subcommittee shall mean a subcommittee of the Committee
that may be created to comply with the performance-based
compensation provisions of Code Section 162(m) and as set forth in
Section 13 of the Plan.
	 
	 	 
	(xxviii)

	 	Subject Person shall have the meaning set forth in
Section 15 of the Plan.
	 
	 	 
	(xxix)

	 	Subsidiary shall mean any corporation, partnership, joint
venture, limited liability company or other entity during any period
in which at least a fifty percent (50%) voting or profits interest
is owned, directly or indirectly, by the Parent, and any other
business venture designated by the Committee in which the Parent has
a significant interest; provided, that, for purposes of Section 15
regarding Change in Control, “subsidiary” shall have the meaning as
set forth in Section 15 of the Plan.
	 
	 	 
	(xxx)

	 	Surviving Corporation shall have the meaning set
forth in Section 15 of the Plan.
	 
	 	 
	(xxxi)

	 	Transaction shall have the meaning set forth in Section 14
of the Plan.
	 
	 	 
	(xxxii)

	 	13G Filer shall have the meaning set forth in Section 15
of the Plan.








	(b)	 	Construction. Unless otherwise expressly provided or the
context otherwise requires, the terms defined in this Plan include the
plural and the singular, and pronouns of either gender or neuter shall
include, as appropriate, the other pronoun forms.






	4.	 	Eligibility.




Any officer or employee of the Company is eligible for selection by the
Committee for an Award under this Plan. Awards to Non-Employee Directors may
be granted pursuant to Section 12 of the Plan.




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	5.	 	Awards.




The Committee shall determine the amounts and types of the Awards and the terms
and conditions of such Awards, consistent with the terms of this Plan. Awards
may be made in Common Stock, Options, Restricted Stock, Participation Units, or
in any combination thereof. If any Award is settled in cash that is to be paid
on a deferred basis, the Participant may be entitled, on terms and conditions
as the Committee may determine, to be paid interest on the unpaid amount.



Except as otherwise provided by the Committee, and to the extent permitted
pursuant to applicable rules of the national securities exchange or such other
market on which Common Stock is principally traded and the Committee charter,
the chairperson of the Committee may make Awards on behalf of the Committee to
any Participant, other than a Participant subject to Section 16 of the Act or a
Participant who is a “covered employee” under Code Section 162(m)(3) (or any
successor provision thereto).





	6.	 	Common Stock Available for Awards Pursuant to the Plan.




Subject to adjustment pursuant to Section 14 of the Plan, the maximum number of
shares of Common Stock available for grant of Awards (including the shares
underlying Options, Restricted Stock and Participation Units) pursuant to the
Plan is 18,000,000. The maximum number of shares available for grants of
Restricted Stock and Participation Units pursuant to the Plan is 5,000,000.
The shares of Common Stock issued pursuant to the Plan may come from authorized
and unissued shares, treasury shares or shares purchased by the Company in the
open market. Shares of Common Stock subject to an Award that expire
unexercised, or that are forfeited, terminated or canceled (in whole or in
part), shall thereafter again be available for grant pursuant to the Plan,
except as otherwise provided by the Committee. To the extent any shares of
Common Stock covered by an Award are not issued to a Participant or Beneficiary
because instead such shares are used to satisfy the applicable tax withholding
obligation or to pay the purchase price of any Option or other Award or to the
extent unrestricted shares of Common Stock (provided that any such shares must
have been held by the Participant or Beneficiary for at least six months at the
time of exercise or such other period as determined by the Committee if
acquired from the Company) are delivered by a Participant or Beneficiary to
satisfy such obligations, then any such withheld or delivered shares shall be
available for grant pursuant to the Plan, except as otherwise provided by the
Committee.





	7.	 	Performance Goals.




Awards may be based on the attainment by the Participant, Company or any
Company business unit over a specified period of time, of performance goals
pre-established by the Committee (or Subcommittee, as applicable), based on one
or more of the following criteria (as determined in accordance with generally
accepted accounting principles, as applicable): (a) market price of Common
Stock, (b) earnings per share of Common Stock, (c) net income or profit (before
or after taxes), (d) return on total stockholder equity, (e) return of
stockholders’ equity, (f) cash flow, (g) cumulative return on net assets
employed, (h) earnings before interest, taxes, depreciation and amortization,
(i) sales or revenues, (j) return on assets, capital or investment, (k) market
share, (l) cost reduction goals, (m) budget comparisons, (n) implementation or
completion of specified projects or processes, (o) the formation of joint
ventures, research or




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development collaborations, or the completion of other transactions, or (p) any
combination of any of the foregoing. To the extent permitted under Code
Section 162(m) (including, without limitation, compliance with any of the
requirements for stockholder approval) and prior to an Award being granted, the
Subcommittee may designate additional business criteria on which the
performance goals may be based or adjust, modify or amend the aforementioned
business criteria.



Notwithstanding any other provision of the Plan, no one Participant, in any
calendar year, shall be granted an Award with respect to more than:





	x.	 	500,000 shares of Common Stock pursuant to an award of unrestricted
shares of Common Stock or pursuant to an Option; and
	 
	y.	 	100,000 shares of Restricted Stock or Participation Units with a
value greater than 100,000 shares of Common Stock.




The limitations set forth in this section shall be subject to adjustment as
provided in Section 14, but only to the extent such adjustment would not affect
the status of compensation attributable to Awards hereunder as qualifying under
the performance-based compensation provisions of Code Section 162(m) and the
regulations promulgated thereunder.





	8.	 	Common Stock Awards. The Committee may grant unrestricted shares
of Common Stock on such terms and conditions, not inconsistent with this
Plan, as the Committee may determine. 
	 
	9.	 	Restricted Stock Awards.






	(a)	 	General. The Committee may grant Restricted Stock, on such
terms and conditions, not inconsistent with this Plan, as the Committee
may determine. Restricted Stock represents an Award made in Common
Stock in which the shares granted may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated except upon
passage of time, or upon satisfaction of performance goals or other
conditions, or a combination thereof, in every case pursuant to such
terms and conditions as may be provided by the Committee.
	 
	(b)	 	Terms and Conditions. Restricted Stock Awards may not vest
sooner than three years from the original Grant Date (other than shares
of Common Stock granted as an adjustment pursuant to a
performance-based formula), provided that Restricted Stock may vest
earlier upon a Change in Control and the Committee may impose a shorter
period (a) in connection with any corporate divestiture or acquisition
affecting a Participant’s employment with the Company, (b) in the case
of any special agreement, award, or situation with respect to any
individual Participant, or (c) in connection with such other events or
circumstances as the Committee may determine from time to time.
Subject to the restrictions set forth in this Section 9, each
Participant who receives Restricted Stock shall have all rights as a
stockholder with respect to such shares, including the right to vote
the shares and receive dividends or dividend equivalents and other
distributions thereon. Restricted Stock shares may be held by the
Company until all restrictions lapse and shall be subject to a legend
describing applicable restrictions as provided by the Committee from
time to time. The rights of Restricted Stock as set forth





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	 	 	in this Section 9 are contingent upon such shares having not been
forfeited. Unless otherwise provided by the Committee, any Award of
Restricted Stock of a Participant who terminates employment with the
Company for any reason (prior to the time the related shares cease to be
Restricted Stock) shall be forfeited without further action by the
Committee. The treatment of Awards of Restricted Stock of a Participant
whose employment is terminated as a result of retirement, death,
disability, divestiture or discontinued operations or layoff will be
governed by the policies established by the Committee with respect to
these various termination categories.






	10.	 	Option Awards.






	(a)	 	Type of Options. The Committee may grant Options in the
form of ISOs, Non-Statutory Stock Options, or any combination thereof,
on such terms and conditions, not inconsistent with this Plan, as the
Committee may determine. Each Award of Options shall identify whether
the Options are intended to be ISOs or Non-Statutory Stock Options. If
an Award is not designated as either ISOs or Non-Statutory Stock
Options, then such Award shall be deemed to be Non-Statutory Stock
Options.
	 
	(b)	 	ISO Limitations. For ISOs granted under the Plan, the
aggregate Fair Market Value (determined as of the Grant Date) of the
number of shares with respect to which ISOs are exercisable for the
first time by any Participant during any calendar year under all plans
of the Company shall not exceed $100,000, or such other maximum amount
then applicable under Code Section 422. Any Option or a portion
thereof that is designated as an ISO that for any reason fails to meet
the requirements of an ISO shall be treated hereunder as a
Non-Statutory Stock Option. No ISO may be granted to an individual if,
at the time of the proposed grant, such individual owns (or is deemed
to own under the Code) stock possessing more than 10 percent of the
total combined voting power of all classes of Common Stock of the
Company unless (i) the exercise price of such ISO is at least 110
percent of the Fair Market Value of a share of Common Stock at the time
such ISO is granted and (ii) such ISO is not exercisable after the
expiration of five years from the date it is granted.
	 
	(c)	 	Terms and Conditions. The Committee shall determine all
terms and conditions of the Options, provided that the following terms
and conditions shall apply to all Options:





	 	 	 
	(i)

	 	Options may not be exercised after five years have elapsed
from the Grant Date;
	 
	 	 
	(ii)

	 	Unless otherwise provided by the Committee, any Option held
by a Participant who terminates employment (or service as a
Non-Employee Director) with the Company shall be immediately
forfeited without further action by the Committee. The treatment of
Options of a Participant whose employment terminates as a result of
retirement, death, disability, divestiture or discontinued
operations or layoff will be governed by the policies established by
the Committee with respect to these various termination categories.
	 
	 	 
	(iii)

	 	Except as provided by the Committee, Options shall not be
transferable other than (A) by the Participant’s last will and
testament or (B) by the applicable laws of







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	 	descent and distribution. During the lifetime of the Participant,
an Option may be exercisable only by the Participant or his or her
personal representative.
	 
	 	 
	(iv)

	 	Options shall not contain any provision entitling a
Participant to the automatic grant of additional Options in
connection with any exercise of the original Option.
	 
	 	 
	(v)

	 	Options shall not be repriced subsequent to their Grant Date
without the approval of the Company’s stockholders. For these
purposes, “repriced” shall mean any of the following or any other
action that has the same effect as (A) lowering the Purchase Price
of an Option after it has been granted, (B) any other action that is
treated as a repricing under generally accepted accounting
principles, or (C) canceling an Option at a time when the Purchase
Price exceeds the Fair Market Value of Common Stock, in exchange for
another Option, Restricted Stock, or other equity, unless the
cancellation and exchange occurs in connection with a Transaction;
provided, however, that any adjustments undertaken pursuant to
Section 14 or any other applicable section of the Plan shall not be
deemed to give rise to any such repricing.








	(d)	 	Option Exercises. The Purchase Price of shares purchased
upon the exercise of any Option shall be paid (i) in full in cash
(including check or wire transfer), (ii) in whole or in part (in
combination with cash) in full shares of unrestricted Common Stock
owned by the Participant (for at least six months or such other period
as determined by the Committee if acquired from the Company) and valued
at their Fair Market Value on the date of exercise, (iii) by cashless
exercise in any manner as may be permitted by the Committee from time
to time, or (iv) such other method as may be permitted by the Committee
from time to time.






	11.	 	Participation Units. The Committee may grant Participation Units,
on such terms and conditions, not inconsistent with the Plan, as the
Committee may determine.
	 
	12.	 	Awards to Non-Employee Directors.






	(a)	 	Awards. Awards to Non-Employee Directors may be made at the
recommendation of the Committee, subject to final approval of the Board
and Section 7, in such amounts as it shall determine in Common Stock,
Options, Restricted Stock, Participation Units, or any combination
thereof.
	 
	(b)	 	Retainers and Fees. Upon terms and conditions as may be
established by the Committee, each Non-Employee Director may elect to
have all or part of his or her annual retainer paid in Common Stock
under the Plan.






	13.	 	Plan Administration.






	(a)	 	Committee. The Plan shall be administered by the Committee.
The Committee shall have the authority in its sole discretion, subject
to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or as it deems
necessary or advisable in administration of the Plan, including without
limitation, (i) the authority to





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	 	 	grant Awards; (ii) to determine the individuals to whom and the time or
times at which Awards shall be granted; (iii) to determine the type and
number of Awards to be granted, the number of shares of Common Stock to
which an Award may relate and the terms, conditions, restrictions and
performance criteria relating to any Award; (iv) to determine whether, to
what extent, and under what circumstances and the manner in which an
Award may be settled, cancelled, forfeited, exchanged or surrendered; (v)
to construe and interpret the Plan and any Award; (vi) to prescribe,
amend, and rescind rules and regulations relating to the Plan, including
but not limited to, rules and regulations relating to leaves of absence
and changes from an employee to a service provider or consultant; and
(vii) to make all other determinations deemed necessary or advisable for
the administration and implementation of the Plan. The determination of
the Committee on these matters shall be final and conclusive and binding
on the Company and all Participants and Beneficiaries. Any authority,
power or right of the Committee pursuant to the Plan may also be
exercised by the Board.
	 
	(b)	 	Delegation. Except to the extent prohibited by applicable
law, the applicable rules of the national securities exchange or such
other market on which the Common Stock is principally traded or Code
Section 162(m) with respect to Awards intended to comply with the
performance-based compensation rules thereof, the Committee has the
authority to delegate any of its powers under the Plan (including,
without limitation, its power to administer claims and appeals) to any
other individual(s). Any delegation shall include the same sole
discretionary and final authority that the Committee has hereunder, and
any decisions, actions or interpretations made by any delegate shall
have the same ultimate binding effect as if made by the Committee. Any
such allocation or delegation may be limited or revoked by the
Committee at any time.
	 
	(c)	 	Code Section 162(m) Subcommittee. Notwithstanding the
foregoing paragraph, the Committee has the authority to designate, if
necessary, a Subcommittee to administer the Plan with respect to
persons subject to the deduction limitation of Code Section 162(m). If
a Subcommittee is designated, the Subcommittee shall be composed of two
or more members of the Committee appointed by the Board, all of whom
shall be “outside directors” as that term is used in Code Section
162(m). With respect to such persons subject to Code Section 162(m),
the Subcommittee shall have all of the powers, rights, and duties
granted to the Committee under this Plan.






	14.	 	Adjustments and Reorganizations.






	(a)	 	Adjustment for Change in Capitalization. In the event that
the Committee determines that any dividend or other distribution
(whether in the form of cash, Common Stock, or other property),
re-capitalization, Common Stock split, reverse Common Stock split,
reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction
or event, makes an adjustment appropriate in order to prevent dilution
or enlargement of the rights of Participants under the Plan, then the
Committee may make such equitable changes or adjustments as it deems
necessary or appropriate to any or all of (i) the number and kind of
            shares of Common Stock which may thereafter be issued in connection
with Awards; (ii) the number and kind of shares of Common Stock issued,
issuable or referenced in respect of outstanding Awards; (iii) the
exercise price, grant price or purchase price relating to any





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	 	 	Award; and (iv) the maximum number of shares of Common Stock subject to
Awards which may be awarded to any Participant during any tax year of the
Company; provided, that, with respect to ISOs, any such adjustment shall
be made in accordance with Code Section 424.
	 
	(b)	 	Adjustment for Change or Exchange of Shares for Other
Consideration. In the event the outstanding shares of Common Stock
shall be changed into or exchanged for any other class or series of
capital stock or cash, securities or other property pursuant to a
re-capitalization, reclassification, merger, consolidation, combination
or similar transaction (a “Transaction”), then, unless otherwise
determined by the Committee, (i) each Option shall thereafter become
exercisable for the number and/or kind of capital stock, and/or the
amount of cash, securities or other property so distributed, into which
the shares of Common Stock subject to the Option would have been
changed or exchanged had the Option been exercised in full prior to
such Transaction, provided that, if the kind or amount of capital stock
or cash, securities or other property received in such Transaction is
not the same for each outstanding share, including as a result of an
election given to stockholders, then the kind or amount of capital
stock or cash, securities or other property for which the Option shall
thereafter become exercisable shall be the kind and amount so
receivable per share as determined by the Committee, and provided
further that, if necessary, the provisions of the Option shall be
appropriately adjusted so as to be applicable, as nearly as may
reasonably be practicable, to any shares of capital stock, cash,
securities or other property thereafter issuable or deliverable upon
exercise of the Option, (ii) Restricted Stock shall be changed or
exchanged into such other class of shares of capital stock or cash,
securities or other property as Common Stock was changed or exchanged,
subject to equivalent terms and conditions, provided that such Award
shall continue to be subject to applicable restrictions, vesting
provisions and other terms and conditions of the Award, unless
otherwise determined by the Committee, and (iii) each Award of
Participation Units shall reference or represent, as the case may be,
the number and/or kind of shares of capital stock, and/or the amount of
cash, securities or other property, into which the number of shares of
Common Stock covered by the Award would have been changed or exchanged,
provided that such Award shall continue to be subject to applicable
restrictions, vesting provisions and other terms and conditions of the
Award, unless otherwise determined by the Committee.






	15.	 	Change in Control.




Unless the applicable Award provides otherwise, in the event of a Change in
Control, (a) any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully vested and
exercisable, and (b) the restrictions, deferral limitations, payment
conditions and forfeiture conditions applicable to any other Award shall
lapse and such Awards shall be deemed fully vested, and any performance
goals imposed with respect to such Awards shall be deemed to be fully
achieved. The Committee may also accord to any Participant a right to
refuse to have any of the actions that the Committee may take otherwise as
described in (a) and (b) above, whether pursuant to the Award or
otherwise, in such circumstances as the Committee may approve.




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“Change in Control” means any of the following events:





	(a)	 	An acquisition (other than directly from the Parent) of any voting
securities of the Parent by any Person (as hereinafter defined)
immediately after such acquisition is the Beneficial Owner (as
hereinafter defined) of forty percent (40%) or more of the combined
voting power of the Parent’s then outstanding voting securities;
provided that in determining whether a Change in Control has occurred,
voting securities which are acquired by (i) an employee benefit plan
(or a trust forming a part thereof) maintained by the Parent or any
subsidiary of the Parent, (ii) the Parent or any subsidiary of the
Parent, (iii) any Person that, pursuant to Rule 13d-1 promulgated under
the Act, is permitted to, and actually does, report its Beneficial
Ownership of voting securities of the Parent on Schedule 13G (or any
successor schedule) (a “13G Filer”) (provided that, if any 13G Filer
subsequently becomes required to or does report its Beneficial
Ownership of voting securities of the Parent on Schedule 13D (or any
successor schedule) then such Person shall be deemed to have first
acquired, on the first date on which such Person becomes required to or
does so file, Beneficial Ownership of all voting securities of the
Parent Beneficially Owned by it on such date), (iv) any Person in
connection with a Non-Control Transaction (as hereinafter defined), or
(v) any acquisition by an underwriter temporarily holding securities of
the Parent pursuant to an offering of such securities, will not
constitute an acquisition which results in a Change in Control;
	 
	(b)	 	Consummation of:






	(i)	 	a merger, consolidation or reorganization involving the
Parent, or any direct or indirect subsidiary of the Parent, unless:






	(A)	 	the stockholders of the Parent immediately before
such merger, consolidation or reorganization will own,
directly or indirectly, immediately following such merger,
consolidation or reorganization, at least fifty percent (50%)
of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger,
consolidation or reorganization (the “Surviving Corporation”)
or any parent thereof in substantially the same proportion as
their ownership of the voting securities of the Parent
immediately before such merger, consolidation or
reorganization;
	 
	(B)	 	the individuals who were members of the Board
immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute a
majority of the members of the board of directors of the
Surviving Corporation (or parent thereof); and
	 
	(C)	 	no Person (other than the Parent, any subsidiary
of the Parent, any employee benefit plan (or any trust forming
a part thereof) maintained by the Parent, any Schedule 13G
Filer, the Surviving Corporation, any subsidiary or parent of
the Surviving Corporation, or any Person who, immediately
prior to such merger, consolidation or reorganization, was the
Beneficial Owner of forty percent (40%) or more of the then
outstanding voting securities of the Company) is the
Beneficial Owner of forty percent





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	 	 	(40%) or more of the combined voting power of the Surviving
Corporation’s then outstanding voting securities.






	 	 	A transaction described in clauses (A) through (C) above is referred to
herein as a “Non-Control Transaction.”






	(ii)	 	the complete liquidation or dissolution of the Parent; or
	 
	(iii)	 	a sale or other disposition of all or substantially all of
the assets of the Parent to an entity (other than to an entity (A)
of which at least fifty percent (50%) of the combined voting power
of the outstanding voting securities are owned, directly or
indirectly, by stockholders of the Parent in substantially the same
proportion as their ownership of the voting securities of the
Parent, (B) a majority of the board of directors of which consists
of the individuals who were members of the Board immediately prior
to the execution of the agreement providing for such sale or
disposition, and (C) of which no Person (other than the Parent, any
subsidiary of the Parent, any employee benefit plan (or any trust
forming a part thereof) maintained by the Parent or any of its
subsidiaries, any Schedule 13G Filer, the Surviving Corporation, any
subsidiary or parent of the Surviving Corporation, or any Person
who, immediately prior to such merger, consolidation or
reorganization, was the Beneficial Owner of forty percent (40%) or
more of the then outstanding voting securities of the Parent) has
Beneficial Ownership of forty percent (40%) or more of the combined
voting power of the entity’s outstanding voting securities.






	(c)	 	Individuals who, as of the date of adoption of the Plan, constitute
the Board (the “Incumbent Board”), cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the adoption of the Plan
whose election, or nomination for election by Parent stockholders, was
approved by a vote of two-thirds (2/3) of the directors then comprising
the Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, unless any such individual’s initial
assumption of office occurs as a result of either an actual or
threatened election contest (including, but not limited to, a consent
solicitation).
	 
	(d)	 	Notwithstanding the foregoing, a Change in Control will not be
deemed to occur solely because any Person (a “Subject Person”) acquires
Beneficial Ownership of more than the permitted amount of the
outstanding voting securities of the Parent as a result of the
acquisition of voting securities by the Parent which, by reducing the
number of voting securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided
that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of voting securities by the
Company, then a Change in Control shall be deemed to occur on the date
the Subject Person becomes the Beneficial Owner of any additional
voting securities which increases the percentage of the then
outstanding voting securities Beneficially Owned by the Subject Person.




For purposes of the definition of Change in Control in this Section 15,
“subsidiary” means any corporation with respect to which another specified
corporation has the power under ordinary




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circumstances to vote or direct the voting of sufficient securities to elect a
majority of the directors.





	16.	 	Tax Withholding.




Whenever the Parent issues Common Stock under the Plan (including without
limitation Restricted Stock to the extent taxable), the Parent may require the
recipient to remit to the Company an amount sufficient to satisfy any Federal,
state or local (including foreign jurisdictions) tax withholding requirements
prior to the delivery of such Common Stock, or, in the discretion of the
Committee, the Parent may withhold from the shares to be delivered shares
sufficient to satisfy all or a portion of the minimum statutorily required tax
withholding requirements. The Committee may determine the manner in which such
tax withholding may be satisfied, and may permit a Participant to deliver
unrestricted shares of Common Stock (owned by the Participant for at least six
months or such other period as determined by the Committee if acquired from the
Company) to be used to satisfy minimum statutorily required tax withholding
based on the Fair Market Value of any such shares of Common Stock on the date
the amount of tax to be withheld is determined. Any cash paid pursuant to the
Plan is subject to all applicable tax withholding.





	17.	 	Expenses.




The expenses of administering the Plan shall be borne by the Company.





	18.	 	Termination, Amendment and Changes to Outstanding Awards.




The Committee may at any time suspend the operation of, terminate or amend the
Plan or any Award thereunder, provided that no termination, modification,
suspension, or amendment shall adversely impair the rights of any Participant
pursuant to an outstanding Award without the consent of the Participant.
Notwithstanding the foregoing, the Committee may take such actions as it deems
appropriate to ensure that the Plan and any Awards may comply with any tax,
securities or other applicable law. Nothing herein shall restrict the
Committee’s ability to exercise its discretionary authority as provided in the
Plan.





	19.	 	Other Actions.




Nothing contained in the Plan shall be deemed to preclude other compensation
plans which may be in effect from time to time or be construed to limit the
authority of the Company to exercise its corporate rights and powers,
including, but not by way of limitation, the right of the Parent (a) to award
options to acquire shares of Common Stock otherwise than under the Plan to an
employee or other person, firm, corporation, or association, or (b) to award
options to acquire shares of Common Stock, or assume the option of, any person
in connection with the acquisition, by purchase, lease, merger, consolidation,
or otherwise, of the business and assets (in whole or in part) of any person,
firm, corporation, or association.





	20.	 	Foreign Jurisdictions.




The Committee may adopt, amend, and terminate such arrangements, not
inconsistent with the intent of the Plan, as it may deem necessary or desirable
to make available tax or other benefits




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of the laws of any foreign jurisdiction, to Participants who are subject to
such laws and who receive Awards under the Plan.





	21.	 	Applicable Law.




The validity, construction, interpretation, administration and effect of the
Plan, and its rules and regulations, and rights relating to the Plan and to
Awards granted pursuant to the Plan, shall be governed by the substantive laws
of the State of Delaware, without giving effect to any law that would cause the
laws of any other jurisdiction other than the State of Delaware to be applied.





	22.	 	Miscellaneous.






	(a)	 	Limitation of Participant rights. No Participant or
Beneficiary shall have any right to an Award or a benefit under the
Plan except in accordance with the terms of the Plan and any related
documents. Establishment of the Plan and/or receipt of an Award shall
not be construed to give any Participant the right to be retained in
the service of the Company. No holder of an Option will have any
rights to dividends or other rights of a stockholder with respect to
the shares subject thereto prior to the purchase of such shares upon
exercise of the Option pursuant to the terms thereof. Participation
Unit Award holders shall have no rights to dividends or any other
rights of a stockholder.
	 
	(b)	 	Limitation of liability. Notwithstanding any of the
preceding provisions of the Plan, none of the Company, the Board, the
Committee or any individual acting as an employee or agent of the
Company shall be liable to any Participant, former Participant,
Beneficiary or any other person for any claim, loss, liability or
expense incurred in connection with the Plan and any Award hereunder.
	 
	(c)	 	Treatment for other compensation purposes. Payments and
other benefits received by a Participant pursuant to an Award shall not
be deemed part of a Participant’s regular, recurring compensation for
purposes of any termination, indemnity or severance pay laws and shall
not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan, contract or similar
arrangement provided by the Company, unless expressly so provided by
such other plan, contract or arrangement.
	 
	(d)	 	Distribution only in compliance with applicable law.
Notwithstanding any other provision of the Plan, the Company shall have
no liability to deliver any shares of Common Stock under the Plan or
make any other distribution of benefits under the Plan unless such
delivery or distribution would comply with all applicable laws
(including, without limitation, the requirements of the Securities Act
of 1933, as amended, and the regulations promulgated thereunder), and
the applicable requirements of any securities exchange or similar
entity.
	 
	(e)	 	Share issuance on a non-certificate basis. To the extent
that the Committee provides for the issuance of shares of Common Stock
or Restricted Stock, the issuance may be affected on a non-certificated
basis, subject to applicable law or the applicable rules of any stock
exchange.





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	(f)	 	Fractional shares. Any fractional shares underlying an Award
shall be rounded to the nearest whole number (without any payment in
respect of any rounding down).
	 
	(g)	 	Grants to employees of acquired entities. Notwithstanding
any other provision to the contrary, if the Company acquires an entity
which has issued and outstanding stock options or other rights, the
Committee may substitute an appropriate number of Awards under this
Plan for options or rights of such entity, including options to acquire
stock at less than 100% of the fair market price of the stock at the
time of grant, as determined by the Committee.






	23.	 	Notices.




All notices to the Parent regarding the Plan shall be in writing, effective as
of actual receipt by the Parent, and shall be sent to:




General Dynamics Corporation

3190 Fairview Park Drive

Falls Church, Virginia 22042

Attention: Corporate Secretary


The Committee may change the address to which notices under the Plan are sent
provided such address is communicated to Participants and Beneficiaries.




 




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