Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT made as of July 17, 2002, by and between Policano & Manzo,
L.L.C., a New Jersey limited liability company, with its principal offices in
New Jersey (“Company”), and Dominic DiNapoli. whose address is set forth on
Schedule 1 (“Executive”).

 

W I T N E S S E T H:

 

WHEREAS, Company is a wholly-owned subsidiary of FTI Consulting, Inc., a
Maryland corporation (“FTI”); and

 

WHEREAS, Company is engaged in the business of providing restructuring advisory
services which, prior to its acquisition by FTI, was conducted independently by
Policano & Manzo, L.L.C.; and

 

WHEREAS, FTI, Company and PricewaterhouseCoopers LLP (“PWC”) have entered into
an Agreement for the Purchase and Sale of Assets dated July 24, 2002, pursuant
to which Company will purchase PWC’s business recovery services business (the
“BRS Business”); and

 

WHEREAS, Executive is a partner of PWC, and is the managing partner of PWC’s BRS
Business; and

 

WHEREAS, Company desires to retain the services of Executive following the
closing (“Closing”) of the transactions under the aforesaid Agreement for the
Purchase and Sale of Assets; and

 

WHEREAS, Executive has entered into an agreement with PWC pursuant to which,
concurrently with the Closing, Executive will withdraw as a partner of PWC.

 

NOW, THEREFORE, the parties agree as follows:

 

1. Employment. Company employs Executive and Executive accepts such employment
upon the terms and conditions set forth in this Agreement.

 

2. Term of Employment. Executive’s employment under this Agreement will begin
immediately following the Closing, if such Closing occurs, and will continue for
a term of four years.

 

3. Position and Duties. Executive will (a) be employed in a senior executive
capacity with duties and responsibilities that are consistent with Executive’s
current position in PWC’s BRS Business, (b) be a member of Company’s Executive
Committee (as constituted and described in Exhibit A annexed hereto), (c)
perform such other duties and responsibilities relating to Company’s BRS
Business as may from time to time be reasonably assigned to Executive by
Company’s President or Chief Executive Officer, commensurate with Executive’s
senior executive position, (d) have such authority as may be reasonably
necessary or appropriate in order to enable Executive to carry out the duties
and responsibilities of Executive’s employment hereunder, (e) have the title set
forth on Schedule 1, (f) have Executive’s principal

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office located at Company’s offices set forth on Schedule 1, and (g) be entitled
to office services and support commensurate with Executive’s position, duties
and responsibilities. Executive will devote substantially all of Executive’s
business time, attention, and energies to the performance of Executive’s duties
and responsibilities hereunder, provided that Executive may engage in personal,
charitable, professional and investment activities to the extent such activities
do not conflict or materially interfere with the ability of Executive to perform
said duties and responsibilities. Subject to and in accordance with FTI policy
and procedures, Executive may serve as a member of the board of directors or
other governing body of other entities.

 

4. Annual Salary. Executive will be entitled to a salary determined and payable
in accordance with this Section 4.

 

(a) Target Salary. A target annual rate of salary (“Target Salary Rate”) will be
established by Company and communicated in advance to Executive for each
calendar year (or portion of a calendar year) during the term of this Agreement.
Executive’s Target Salary Rate for each of the partial year ending December 31,
2002 and the calendar year ending December 31, 2003 is set forth on Schedule 1.
Executive’s Target Salary Rate for each of 2004,2005 and 2006 will be determined
before the beginning of such year by the Executive Committee, The Target Salary
Rate for any year will be divided into two portions, one equal to 80% of the
Target Salary Rate (“Fixed Salary”), and the other equal to 20% of the Target
Salary Rate (“Contingent Salary”). The Fixed Salary for each year will be
payable in accordance with (b) below, and the Contingent Salary for each year
will be payable, if at all, in accordance with (c) below. Company, acting in its
discretion, may increase Executive’s Target Salary Rate at any time and from
time to time. Company may not decrease Executive’s Target Salary Rate unless
such decrease is made for the fiscal year after December 31, 2003 and either (1)
pursuant to the last paragraph of Section 9(e) (relating to across-the-board
cuts due to adverse business conditions), or (2) due to deficiencies in
Executive’s individual performance as determined in the discretion of the
Executive Committee.

 

(b) Fixed Salary. The Company will pay Executive’s Fixed Salary for any year in
equal installments in accordance with Company’s normal payroll practices.

 

(c) Contingent Salary. Executive’s Contingent Salary for any year will be
payable to Executive by Company if, to the extent and when provided below.

 

(i) Portion Contingent on Company Performance. For each calendar year (or
partial calendar year), an amount equal to 50% of Executive’s Contingent Salary
will be payable to Executive if Company’s EBITDA Percentage (defined below) for
the year (or partial year) is at least 100%, If Company’s EBITDA Percentage for
the year (or partial year) is less than 100%, then Executive will be entitled to
a percentage of such amount determined under the following table:

 

EBITDA

Percentage

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   Executive’s
Percentage

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Less than 80%

   0 %

80% to 89%

   25 %

90% to 95%

   75 %

96% to 99%

   90 %

 

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For any calendar year (or partial calendar year), the EBITDA Percentage will be
the percentage derived by dividing the Company’s “actual EBITDA” for such year
(or partial year) by the “target EBITDA” for the year. For the partial year
beginning on the Closing date and ending December 31, 2002, the EBITDA
Percentage will be deemed to be 100% if Executive is still employed by the
Company on December 31, 2002, or if Executive’s employment is terminated before
that date for any reason other than by the Company for Cause or voluntarily by
Executive (pursuant to subsection (a) or (b) of Section 9). The target EBITDA
for 2003 and each subsequent calendar year will be equal to the EBITDA projected
for the year on the Executive Committee’s operating budget. The target EBITDA
for the partial year ending on the date of the Executive’s termination of
employment will be equal to a pro rata portion of the target EBITDA for the full
year, based upon the number of days in such partial year. For the purposes
hereof, target EBITDA will be determined by the Executive Committee and approved
by senior management of FTI in accordance with FTI policy and procedures.

 

The amount, if any, payable to Executive under this subsection (i) for a year
(or partial year) will be paid by Company to Executive within 30 days after the
audited consolidated financial statements of FTI for such year become available.

 

(ii) Portion Contingent on Individual Performance. For any calendar year (or
partial calendar year), an amount equal to the remaining 50% of Executive’s
Contingent Salary will be payable if and to the extent Executive satisfies the
individual performance target set forth on Schedule 1. Any such amount will be
paid to Executive by Company within thirty days after the end of such year or
partial year.

 

5. Employee Benefit Programs and Perquisites.

 

(a) General. Executive will be entitled to participate in such qualified and
nonqualified employee pension plans, group health, long term disability and
group life insurance plans, and any other welfare and fringe benefit plans,
arrangements, programs and perquisites, including stock option and stock
purchase plans, generally maintained or provided by Company and FTI from time to
time to or for the benefit of their executive employees or employees generally
(“Benefit Plans”), at a level commensurate with Executive’s position and FTI
policy regarding other similarly situated FTI employees. Executive’s
participation in any Benefit Plans will be subject to the terms of the
applicable plan documents and Company’s or FTI’s generally applied policies. FTI
or Company in their discretion may from time to time adopt, modify, interpret,
or discontinue such plans or policies in a manner generally applicable to FTI’s
or Company’s executives. Executive will be given full credit for service with
PWC and its predecessors prior to the Closing under the Benefit Plans and for
purposes of determining Executive’s period of employment under any vacation,
sick pay or other paid time off plan of

 

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Company or FTI and for determining other entitlements and terms of employment
affected by seniority under Company’s and FTI’s employment policies. Any Benefit
Plan which provides medical, dental or life insurance benefits shall waive any
waiting periods and any pre-existing conditions and actively-at-work exclusions.
Executive will be entitled to at least four weeks of paid vacation for each
calendar year (pro-rated for partial calendar years) subject to Company’s
policies on use and retention of such vacation in effect from time to time. All
Senior Managing Directors, Managing Directors and Directors of the Company will
be eligible to participate in an incentive bonus pool which: (1) for the fiscal
year ending December 31, 2003, will pay out 10% of EBITDA in excess of 2002
achieved EBITDA (payable in stock, options and/or cash) so long as target 2003
EBITDA is achieved; (2) for the fiscal year ending December 31, 2004, will pay
out 10% of EBITDA in excess of 2003 achieved EBITDA (payable in stock, options
and/or cash) so long as target 2004 EBITDA is achieved; and (3) for the fiscal
year ending December 31, 2005, will pay out 10% of EBITDA in excess of 2004
achieved EBITDA (payable in stock, options and/or cash) so long as target 2005
EBITDA is achieved. Allocations under the incentive bonus pool shall be
determined by the Executive Committee.

 

(b) Stock Options. Promptly after the Closing date, FTI will grant Executive an
option to purchase shares of Common Stock of FTI under the FTI 1997 Stock Option
Plan, as amended. The number of shares covered by the option is set forth on
Schedule 1. The exercise price per share covered by the option will be equal to
the price per share on the date of the Closing (or, if no trades are made on
such date, the next preceding date on which such shares are traded). The option
will vest in three equal annual increments beginning on the first anniversary of
the Closing.

 

(c) Reimbursement of Business Expenses. Executive is authorized to incur
reasonable expenses in carrying out Executive’s duties and responsibilities
under this Agreement, and Company will promptly pay or reimburse Executive for
all such expenses that are so incurred upon presentation of appropriate vouchers
or receipts, subject to Company’s expense reimbursement policies in effect from
time to time with respect to executives of Company or FTI.

 

6. FTI Stock. Immediately after the Closing, a number of shares of FTI common
stock owned by Executive, as specified on Schedule 1. will become subject to the
restrictions and obligations set forth in the Restricted Share Agreement
attached as Exhibit B hereto. Executive shall become a party to the registration
rights agreement with FTI and PWC, substantially in the form annexed as Exhibit
C, with piggy back rights previously communicated to Executive by management of
FTI and PWC. Executive shall become a party to the indemnity agreement with FTI,
substantially in the form annexed as Exhibit D.

 

7. No Other Employment. Executive represents to FTI and Company that, subject to
Executive’s withdrawal from PWC pursuant to the above-referenced withdrawal
agreement, Executive is not subject to any agreement, commitment, or policy of
any third party that would prevent Executive from entering into or performing
the duties of Executive’s employment under this Agreement. Executive will not
enter into any agreement or commitment or agree to any policy that would prevent
or hinder the performance of Executive’s duties or obligations under this
Agreement.

 

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8. No Payments to Governmental Officials. Executive will not knowingly, pay or
authorize payment of any remuneration to or on behalf of any governmental
official which would constitute a violation of applicable law. Company will
neither request nor require Executive to offer to make or make a payment of any
remuneration to or on behalf of any governmental official other than those
required or expressly permitted by applicable law.

 

9. Termination of Employment.

 

(a) Resignation. Executive may voluntarily resign Executive’s employment under
this Agreement at any time upon at least 90 days’ prior written notice to
Company. The Company may waive such notice or authorize a shorter notice period.

 

(b) Termination by Company for Cause. The Company may terminate Executive’s
employment for “Cause” if (and only if) Executive:

 

(i) is convicted of or pleads nolo contendre to a felony involving moral
turpitude,

 

(ii) willfully fails or refuses to carry out the material responsibilities of
Executive’s employment with Company, or

 

(iii) engages in any other willful misconduct or a pattern of behavior which has
had or is reasonably likely to have a significant adverse effect on Company or
FTI,

 

all as determined by the Executive Committee. Executive’s termination for Cause
will be effective immediately upon Company mailing or transmitting notice of
such termination, provided such notice is given within 90 days after the
discovery by Company of the event or conduct giving rise to grounds to terminate
Executive for Cause. Before terminating Executive for Cause under (ii) or (iii)
above, the Executive Committee will specify in writing to Executive the nature
of the act, omission, refusal, or failure that it deems to constitute Cause and
if the action is curable, give Executive at least 30 days from the receipt of
such notice to correct the situation (and thus avoid termination for Cause).

 

(c) Termination by Company Without Cause. Subject to the provisions hereof,
Company may terminate Executive’s employment under this Agreement before the end
of the term, without Cause, upon 30 days’ prior written notice; provided,
however, that Executive will be entitled to at least 90 days’ notice of
termination if the termination is to be effective on or after the last day of
the term set forth in Section 2.

 

(d) Termination Due to Disability. If Executive becomes “Disabled” (as defined
below), Company may terminate Executive’s employment. For the purposes hereof,
Executive will be deemed to be Disabled if Executive is unable to substantially
perform the customary duties and responsibilities of Executive’s employment for
120 or more days during any 180 day period by reason of a physical or mental
incapacity which is expected to result in death or last indefinitely.

 

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(e) Termination by Executive for Good Reason. Executive may resign for “Good
Reason” if, without Executive’s prior written consent, Company or FTI:

 

(i) materially reduces the scope or nature of Executive’s working conditions in
a manner which is inconsistent with Executive’s position, duties and
responsibilities (as described in Section 3 above) or which has or is reasonably
likely to have a material adverse effect on Executive’s status or authority; or

 

(ii) materially diminishes Executive’s working conditions, including, without
limitation, relocation by more than 50 miles of Executive’s principal office
specified in Section 3 hereof; or

 

(iii) reduces the annual rate of Executive’s Fixed Salary by more than 15% for
any calendar year or partial calendar year, using 2002 as the base year; or

 

(iv) reduces the annual rate of Executive’s Fixed Salary to an amount which,
when added to any prior reductions, is less than 70% of the annual rate of
Executive’s Fixed Salary for 2002; or

 

(v) fails to obtain and deliver to Executive a written agreement from an
assignee or successor to Company for the assumption of the obligations of
Company and FTI under this Agreement; or

 

(vi) instructs Executive to perform an unlawful or dishonest act, or materially
breaches this Agreement.

 

Notwithstanding the foregoing, if the Company’s actual EBITDA for a fiscal year
is less than 60% of the Company’s target EBITDA, then the Company may reduce
Executive’s Fixed Salary for the next twelve month period without triggering the
right of the Executive to terminate for Good Reason if and only if: (1) the
amount of such reduction (expressed as a percentage of the rate of Executive’s
Fixed Salary) is not more than 20% of the rate of Executive’s Fixed Salary, (2)
a comparable reduction is made to the compensation of all executives, and (3)
the amount of such reduction is restored to Executive’s Fixed Salary for the
following year. Before resigning for Good Reason, Executive must specify in
writing to Company the nature of the act, omission, refusal, or failure that
Executive deems to constitute Good Reason and, if the situation can be cured,
give Company at least 30 days after receipt of such notice to correct the
situation (and thus prevent Executive’s resignation for Good Reason).

 

(f) Death. If Executive dies during the term, then the term will end as of the
date of Executive’s death.

 

10. Payments on Termination of Employment.

 

(a) Termination by Company for Cause or by Executive Without Good Reason. If
Company terminates Executive’s employment for Cause or if Executive resigns
without Good Reason, Company will promptly pay to Executive: (i) the unpaid
amount, if any, of Executive’s Fixed Salary through the date of termination,
(ii) the unpaid amount, if any, of Executive’s previously earned and unpaid
Contingent Salary or incentive bonus, (iii) the amount of any substantiated but
previously unreimbursed business expenses incurred through the date of
termination, and (iv) any additional entitlements, if any, to which Executive is
entitled under the terms of any Company benefit plan or arrangement in which
Executive was a participant (collectively, “Accrued Compensation”).

 

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(b) Termination by Company Without Cause or by Executive for Good Reason. If
Company terminates Executive’s employment without Cause or if Executive resigns
for Good Reason, Executive will be entitled to receive the following payments
and benefits:

 

(i) any Accrued Compensation;

 

(ii) pro rata Contingent Salary opportunity for the year of termination and pro
rata incentive bonus for the year of termination (based upon the bonus target
for the year or, if greater, Executive’s actual incentive bonus for the
preceding year) determined by multiplying the sum of such amounts by a fraction,
the numerator of which is the number of days from the beginning of the calendar
year through the date of termination, and the denominator of which is 365, which
amount shall be paid in a lump sum within ten days of the date of termination;

 

(iii) continued payment of salary for the salary continuation period specified
in Schedule 1, based upon the greater of (1) Executive’s Target Salary Rate for
the year in which Executive’s employment is terminated, or (2) Executive’s
average Target Salary Rate for the three years preceding the year in which such
termination occurs (or all of the preceding years if less than three);

 

(iv) full and immediate vesting of any outstanding restricted stock and of any
outstanding stock options or other equity-based awards and, in the case of stock
options (or other similar awards) the continued right to exercise the options
(or other awards) for at least three months following the date of termination,
but in no event beyond the expiration of the stated term of such option (or
other award); and

 

(v) continuing group health and group life insurance coverage for Executive and,
where applicable, Executive’s spouse and eligible dependents (“Benefit
Continuation Coverage”) during the salary continuation period at the same
benefit and contribution levels in effect from time to time with respect to
active senior executives of Company or FTI. If and to the extent such Benefit
Continuation Coverage is not permitted by the applicable plan or by applicable
law, Executive will instead be entitled to cash payments sufficient to reimburse
Executive and/or Executive’s spouse and eligible dependents, on an after tax
basis, for the reasonable cost of comparable individual or other replacement
coverage through the end of the salary continuation period. The group health
part of Benefit Continuation Coverage will be in addition to and not in lieu of
COBRA continuation coverage.

 

(c) Termination Due to Death or Disability. In the event of the termination of
Executive’s employment due to death or Disability, Executive (or Executive’s
estate or other beneficiary) will be entitled to receive the following payments
and benefits:

 

(i) any Accrued Compensation;

 

(ii) pro rata Contingent Salary opportunity for the year of termination and pro
rata incentive bonus for the year of termination (based upon the bonus target
for the year

 

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or, if greater, Executive’s actual incentive bonus for the preceding year)
determined by multiplying the sum of such amounts by a fraction, the numerator
of which is the number of days from the beginning of the calendar year through
the date of termination, and the denominator of which is 365, which amount shall
be paid in a lump sum within ten days of the date of termination;

 

(iii) full and immediate vesting of any outstanding restricted stock and of any
outstanding stock options or other equity-based awards and, in the case of stock
options (or other similar awards) the continued right to exercise the options
(or other awards) for at least twelve months following the date of termination,
but in no event beyond the expiration of the stated term of such option (or
other award); and

 

(iv) Benefit Continuation Coverage, where applicable, for Executive, Executive’s
spouse and Executive’s eligible dependents for the one year period following the
date of termination or, if longer for the then remaining balance of the term.

 

11. Change in Control. In the event of a Change of Control (as defined below),
any outstanding restricted stock and any outstanding stock options or other
equity-based awards shall become fully vested. For purposes hereof, a “Change of
Control” means (a) the occurrence of (i) any consolidation or merger of FTI or
Company in which such entity is not the continuing or surviving entity or
pursuant to which FTI’s or Company’s capital stock would be converted into cash,
securities or other property, other than a consolidation or merger of FTI or
Company in which the holders of the common stock immediately prior to the
consolidation or merger own not less than 50% of the total voting power of the
surviving entity immediately after the consolidation or merger, or (ii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all FTI’s or Company’s assets, or
(b) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than
FTI, Company, any trustee or other fiduciary holding securities under any
employee benefit plan of Company, or any company owned, directly or indirectly,
by the shareholders of FTI in substantially the same proportions as their
ownership of the FTI common stock, becomes the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or
more of the FTI’s or Company’s common stock.

 

12. Non-Competition Covenants. Recognizing that Executive was a partner in the
business entity acquired by the Company, and further acknowledging that the
Company obtained title to the business and acquired its goodwill from the
business entity acquired by the Company for which Executive received
consideration, and that the Company is continuing to carry on a like business,
Executive acknowledges that during the Restricted Period (defined below),
Executive will not, directly or indirectly, be employed by, lend money to,
Invest in, or engage in a Competing Business (defined below) in any Market Area
(defined below). That prohibition includes, but is not limited to, acting,
either singly or jointly or as agent for, or as an employee of or consultant or
independent contractor to, any one or more persons, firms, entities, or
corporations directly or indirectly (as a director, independent contractor,
representative, consultant, member, or otherwise) in such Competing Business.
Notwithstanding the foregoing, (a) Executive may own up to 5% of the outstanding
capital stock of any corporation or other entity that is publicly traded, and
(b) following the termination of Executive’s employment

 

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hereunder, Executive may provide services as an officer, consultant, employee,
director, partner or otherwise to an entity engaged in multiple business lines
(including a business line that is a Competing Business) provided that the
business line(s) for whom Executive provides services is not a Competing
Business.

 

13. Non-Solicitation Covenants. During the Restricted Period (defined below),
Executive will not, directly or indirectly, whether for Executive or for any
other individual or entity (other than Company), intentionally:

 

(i) solicit business regarding any case or matter upon which Executive worked on
behalf of Company during the term of this Agreement;

 

(ii) solicit any person or entity who is a client of Company’s financial
consulting business in which Executive was engaged at the time of the
termination of Executive’s employment with Company; or

 

(iii) solicit, induce or otherwise attempt to influence any person whom Company
employs or otherwise engages to perform services (including, but not limited to,
any independent consultants, engineers or sales representatives) or any
contractor, subcontractor, supplier, or vendor of Company, to leave the employ
of or discontinue providing services to Company, provided, however, that this
restriction will not apply in the case of any clerical employee of Company or in
the case of any other employee whose employment with Company has been terminated
for at least one year.

 

14. Confidential Information of Company. Executive’s prior association with PWC
and Executive’s association with Company under this Agreement has given and will
give Executive access to Confidential Information (defined below) not generally
known outside of Company that may be of value to Company or that have been given
to Company in confidence by third parties. Executive acknowledges and agrees
that using, disclosing, or publishing any Confidential Information in an
unauthorized or improper manner could cause Company substantial loss and damages
that could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, Executive will not at any time, except in performing the
duties of Executive’s employment under this Agreement (or with the prior written
consent of the FTI Board), directly or indirectly, use, disclose, or publish any
Confidential Information that Executive may learn or become aware of, or may
have learned or become aware of because of Executive’s association with Company
or PWC, or use any such information in a manner that is or may reasonably be
likely to be detrimental to the business of Company. For the purposes hereof,
the term “Confidential Information” includes, without limitation, information
not previously disclosed to the public or to the trade by Company or PWC with
respect to its or their present or future business, operations, services,
products, research, inventions, discoveries, drawings, designs, plans,
processes, models, technical information, facilities, methods, trade secrets,
copyrights, software, source code, systems, patents, procedures, manuals,
specifications, any other intellectual property, confidential reports, price
lists, pricing formulas, customer lists, financial information, business plans,
lease structure, projections, prospects, or opportunities or strategies,
acquisitions or mergers, advertising or promotions, personnel matters, legal
matters, any other confidential and proprietary information, and any other
information not generally known outside Company that may be of value to Company,
but excludes any information already

 

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properly in the public domain. Confidential Information also includes
confidential and proprietary information and trade secrets that third parties
entrust to FTI or Company in confidence. Executive understands and agrees that
the rights and obligations set forth in this Section will continue indefinitely
and will survive termination of this Agreement and of Executive’s employment
with Company.

 

15. Confidential Information of Others. Executive will not use in working for
Company and will not disclose to Company any trade secrets or other information
Executive does not have the right to use or disclose and that Company is not
free to use without liability of any kind. Executive will promptly inform
Company in writing of any patents, copyrights, trademarks, or other proprietary
rights known to Executive that Company will violate because of information
provided to it by Executive.

 

16. Property Rights. Executive confirms that all Confidential Information is and
must remain the exclusive property of Company. All business records, business
papers, and business documents kept or created by Executive in the course of
Executive’s employment by Company relating to the business of Company must be
and remain the property of Company. Notwithstanding the foregoing, Executive may
retain Executive’s rolodex, palm pilot or similar device to the extent such
device does not contain Confidential Information. Upon the termination of this
Agreement or upon Company’s reasonable request at any time, Executive must
promptly deliver to Company any Confidential Information or other property
belonging to Company (written or otherwise) not otherwise in the public domain.
Executive will not, without Company’s consent, retain copies, excerpts,
summaries, or compilations of the foregoing information and materials. The
rights and obligations set forth in this Section will continue indefinitely and
will survive the termination of this Agreement and Executive’s employment with
Company.

 

17. Intellectual Property.

 

(a) All records, in whatever media, documents, papers, inventions and notebooks,
drawings, designs, technical information, source code, object code, processes,
methods or other copyrightable or otherwise protected works Executive conceives,
creates, makes, invents, or discovers or that otherwise relate to or result from
any work Executive performs or performed for Company or that arise from the use
of assistance of Company’s facilities, materials, personnel or Confidential
Information in the course of Executive’s employment (whether or not during usual
working hours), whether conceived, created, discovered, made, or invented
individually or jointly with others, will, together with all the worldwide
patent, copyright, trade secret, or other intellectual property rights in all
such works, be and remain the absolute property of Company. Executive
irrevocably and unconditionally waives all rights that may otherwise vest in
Executive (whether before, on, or after the date of this Agreement) in
connection with Executive’s authorship of any such copyrightable works in the
course of Executive’s employment with Company, wherever in the world
enforceable. Without limitation, Executive waives the right to be identified as
the author of any such works and the right not to have any such works subjected
to derogatory treatment. Executive recognizes any such works are “works for
hire” of which Company is the author.

 

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(b) Executive will promptly disclose, grant and assign ownership to Company for
its sole use and benefit any and all ideas, processes, inventions, discoveries,
improvements, technical information, and copyrightable works (whether patentable
or not) that Executive develops, acquires, conceives or reduces to practice
(whether or not during usual working hours) while employed by Company. Executive
will promptly disclose and hereby grant and assign ownership to Company of all
patent applications, letter patent, utility and design patents, copyrights and
reissues thereof, or any foreign equivalents thereof, that may at any time be
filed or granted for or upon any such invention, improvement, or information. In
connection therewith:

 

(i) Executive will, without charge but at Company’s expense, promptly execute
and deliver such applications, assignments, descriptions and other instruments
as Company may consider reasonable necessary or proper to vest title to any such
inventions, discoveries, improvements, technical information, patent
applications, patents, copyrightable work or reissues thereof in Company and to
enable it to obtain and maintain the entire worldwide right and title thereto;
and

 

(ii) Executive will provide to Company at its expense all such assistance as
Company may reasonably require in the prosecution of applications for such
patents, copyrights or reissues thereof, in the prosecution or defense of
interferences that may be declared involving any such applications, patents or
copyrights and in any litigation in which Company may be involved relating to
any such patents, inventions, discoveries, improvements, technical information
or copyrightable works or reissues thereof. Company will reimburse Executive for
reasonable out-of-pocket expenses incurred and pay Executive reasonable
compensation for Executive’s time if Company no longer employs Executive.

 

(c) To the extent, if any, that Executive owns rights to works, inventions,
discoveries, proprietary information, and copyrighted or copyrightable works, or
other forms of intellectual property that are incorporated in the work product
Executive creates for Company, Executive agrees that Company will have an
unrestricted, nonexclusive, royalty- free, perpetual, transferable license to
make, use, sell, offer for sale, and sublicense such works and property in
whatever form, and Executive hereby grants such license to Company.

 

(d) This section (relating to Copyright, Discoveries, Inventions and Patents)
does not apply to an invention for which no equipment, supplies, facility or
trade secret information of Company (including any of its predecessors) was used
and that was developed entirely on Executive’s own time, unless (a) the
invention relates (i) directly to the business of Company, or (ii) Company’s
actual or anticipated research or development, or (b) the invention results from
any work Executive performed as an employee of Company.

 

18. Definitions. For purposes of Sections 12 through 17, the following terms
shall have the meaning set forth below:

 

(a) Restricted Period. For the purposes hereof, the term “Restricted Period”
means the period beginning on the date of the Closing and ending on whichever of
the following dates is applicable: (1) if Executive’s employment is terminated
by Executive for Good Reason or by Company without Cause during the term of this
Agreement, the expiration of the

 

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applicable salary continuation period under Section 10(b), (2) if Executive’s
employment terminates for any other reason during the term of this Agreement,
the expiration of the period set forth on Schedule 1, (3) the expiration of the
period set forth on Schedule 1, after the expiration of the term of this
Agreement, if upon 90 days’ notice, Company, in its sole discretion, agrees in
writing to continue to pay Executive his Target Salary and benefits during such
period in accordance with Company’s normal payroll and benefits practices or (4)
unless clause (1), (2) or (3) applies, upon the expiration of the term of this
Agreement. Notwithstanding the foregoing, the expiration of the Restricted
Period will be accelerated if and when Company breaches this Agreement on or
after the date the Restricted Period begins, and the duration of the Restricted
Period will be extended by the amount of any and all periods that Executive
violates the covenants of any of Sections 12 and 13.

 

(b) Competing Business. For the purposes hereof, the term “Competing Business”
means any financial restructuring advisory services line of business actively
conducted by Company or previously conducted by PWC in which Executive is
substantially engaged during the period of Executive’s employment with Company
and at the time Executive’s employment ends. A Competing Business shall not
include any aspect of the financial restructuring advisory services business
which is not a material revenue source of Company, the furnishing of services to
lenders, and the furnishing of services to other potential clients who or with
respect to matters that would not be likely to be served by or referred to
Company.

 

(c) Market Area. For purposes hereof, the term “Market Area” means within a 25
mile radius of any location in which Company has an office and in which Company
offers or provides financial consulting services to clients in the ordinary
course of its business.

 

19. Enforceability. If any of the provisions of Sections 12 through 18 are ever
deemed to exceed the time, geographic area, or activity limitations the law
permits, the limitations will be reduced to the maximum permissible limitation,
and Executive and Company authorize a court or arbitrator having jurisdiction to
reform the provisions to the maximum time, geographic area, and activity
limitations the law permits; provided, however, that such reductions apply only
with respect to the operation of such provision in the particular jurisdiction
in which such adjudication is made.

 

20. Remedies. Without limiting the remedies available to the parties, each party
acknowledges that a breach of any of the covenants in Sections 12 through 18 may
result in material irreparable injury to Company for which there is no adequate
remedy at law, and that it will not be possible to measure damages for such
injuries precisely. The parties agree that, if there is a breach or threatened
breach of such covenants, Company will be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
Executive from engaging in prohibited activities or such other relief as may be
required to specifically enforce any of said covenants. Each party agrees that
all remedies expressly provided for in this Agreement are cumulative of any and
all other remedies now existing at law or in equity. In addition to the remedies
provided in this Agreement, the parties will be entitled to avail themselves of
all such other remedies as may now or hereafter exist at law or in equity for
compensation, and for the specific enforcement of the covenants contained in
Sections 12 through 18. Resort to any remedy provided for in this Section or
provided for by law will not

 

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prevent the concurrent or subsequent employment of any other appropriate remedy
or remedies, or preclude a recovery of monetary damages and compensation. Each
party agrees that no party hereto must post a bond or other security to seek an
injunction.

 

21. Assignment The Company may assign or otherwise transfer this Agreement and
any and all of its rights, duties, obligations, or interests under it to:

 

(a) FIT or any of FTI’s other affiliates or subsidiaries; or

 

(b) any successor to all or a material part of the business of Company (directly
or indirectly) as a result of a Change of Control.

 

Upon such assignment or transfer, any such business entity shall be deemed to be
substituted for Company for all purposes. Notwithstanding any such assignment or
transfer, Company shall remain jointly and severally liable, with such assignee
or transferee, for the performance of its obligations hereunder. Except as
herein provided, this Agreement may not otherwise be assigned or transferred by
Company. Without Company’s prior written consent, Executive may not assign or
delegate the obligations of Executive under this Agreement.

 

22. Severability. If the final determination of an arbitrator or a court of
competent jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected, that any
term or provision of this Agreement is invalid or unenforceable, the remaining
terms and provisions will be unimpaired, and the invalid or unenforceable term
or provision will be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision. Any prohibition or finding of unenforceability
as to any provision of this Agreement in any one jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

 

23. Amendment; Waiver. Neither Executive nor Company may modify, amend, or waive
the terms of this Agreement other than by a written instrument signed by
Executive and Company (and, if applicable, authorized by the FTI Board). Either
party’s waiver of the other party’s compliance with any provision of this
Agreement is not a waiver of any other provision of this Agreement or of any
subsequent breach by such party of a provision of this Agreement. No delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.

 

24. Withholding. The Company will reduce its compensatory payments to Executive
hereunder for withholding and FICA and Medicare taxes and any other withholdings
and contributions required by law.

 

25. Governing Law. The laws of the State of New York (other than its conflict of
laws provisions) govern this Agreement.

 

26. Notices. Notices may be given in writing by personal delivery, by certified
mail, return receipt requested, by telecopy, or by overnight delivery. Executive
should send or deliver notices to the office of the Secretary of FTI at 909
Commerce Road, Annapolis, Maryland 21401, fax number: (410) 224-2809, with a
copy to Company at its corporate offices. The

 

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Company will send or deliver any notice given to Executive at Executive’s
address as reflected on Company’s personnel records. Executive, FTI, and Company
may change the address for notice by like notice to the others. Executive, FTI.
and Company agree that notice is deemed received on the date it is personally
delivered, the date it is received by certified mail, the date of guaranteed
delivery by overnight service, or the date the fax machine confirms receipt.

 

27. Superseding Effect. This agreement supersedes all prior or contemporaneous
negotiations, commitments, agreements, and writings between Executive and
Company with respect to the subject matter. All such other negotiations,
commitments, agreements, and writings will have no further force or effect, and
the parties to any such other negotiation, commitment, agreement, or writing
will have no further rights or obligations thereunder.

 

28, Arbitration.

 

(a) Any dispute or controversy arising under or in connection with this
Agreement or Executive’s employment relationship with Company will be settled
exclusively by binding arbitration to be held in the metropolitan area in which
Executive is employed and conducted in accordance with the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association
(“AAA”) then in effect.

 

(b) After either party submits a request for arbitration, AAA will be requested
to appoint a single, neutral arbitrator, within five business days after such
request, to preside over the arbitration and resolve the dispute. The parties
agree to raise any objections to such appointment within five business days
after it is made and to limit those objections to the arbitrator’s actual
conflict of interest. AAA, in its sole discretion, will determine within five
business days the validity of any objection to the appointment of the arbitrator
based on the arbitrator’s actual conflict of interest. The arbitrator will be
directed to render a decision within 60 days after being appointed to serve as
arbitrator, unless the parties otherwise agree in writing or the arbitrator
makes a finding that a party has carried the burden of showing good cause for a
longer period.

 

(c) The parties will use their best efforts to cooperate with each other in
causing the arbitration to be held in as efficient and expeditious a manner as
practicable, including but not limited to, providing such documents and making
available such of their personnel and agents as the arbitrator may request. The
parties direct the arbitrator to take into account their stated goal of
expedited proceedings in determining whether to authorize discovery and, if so,
the scope of permissible discovery and other hearing and pre-hearing procedures.

 

(d) The arbitrator will not have the authority to add to, detract from, or
modify any provision of this Agreement nor to award punitive damages. Judgment
may be entered on the arbitrator’s award in any court having jurisdiction. The
Company or FTI will bear the direct expenses of any such arbitration proceeding.
The arbitrator shall have the authority to require one party to pay some or all
of the other party’s reasonable legal fees based upon an equitable determination
regarding the relative fault of each party.

 

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(e) Notwithstanding the foregoing, each party is entitled to seek injunctive or
other equitable relief, as contemplated by Section 20 above, from any court of
competent jurisdiction, without the need to resort to arbitration.

 

29. Indemnification and Liability Insurance. The Company shall indemnify
Executive to the fullest extent permitted by applicable law with regard to
Executive’s actions (or inactions) on behalf of Company, with advancement of
legal fees on a current basis as permitted by law. The Company shall cover
Executive under professional and other appropriate liability insurance policies
both during and, while any potential liability exists, after the term in the
same amount and to the same extent, if any, as Company covers its other senior
executives.

 

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IN WITNESS WHEREOF, the undersigned have signed this Agreement on the date first
above written.

 

Policano & Manzo, L.L.C.

By:

 

/s/ Theodore I. Pincus

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

Name:  

Theodore I. Pincus

Title:

 

Executive Vice President

Chief Financial Officer

FTI Consulting, Inc.

By:  

/s/ Theodore I. Pincus

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

Name:  

Theodore I. Pincus

Title:  

Executive Vice President

Chief Financial Officer

/s/ Dominic DiNapoli

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

Executive

   

 

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SCHEDULE 1

 

  1. Name and Address of Executive.

 

Dominic DiNapoli

1177 Avenue of the Americas

New York, NY 10036

 

  2. Title and Principal Office Location of Executive.

 

Title: Senior Managing Director - Member of Executive Committee

Office Location: New York

 

  3. Target Salary Rate for 2002 and 2003.

 

(a) 2002; $2,246,161

(b) 2003: $2,246,161

 

  4. Contingent Salary Based on Individual Performance Targets.

 

Fully contingent upon the completion of at least 1,000 billable hours during the
applicable calendar year (to be prorated for partial calendar years based upon
the number of days in the partial year); provided, however, with regard to the
calendar year ending December 31, 2002, the pro rata billable hour requirement
shall not apply and the contingent salary for such period shall be payable if
employment with the Company is continuous through the end of such period

 

  5. Number of Shares Covered by Option Grant.

 

45,000

 

  6. Number of Shares Covered by Restricted Share Agreement.

 

40% of shares received from Seller

 

  7. Salary Continuation Period.

 

The remainder of the term.

 

  8. Restricted Period.

 

(a) With regard to Section 18(a)(2) - greater of the remainder of the term of
this Agreement or two years from the date of such termination.

 

(b) With regard to Section 18(a)(3) - one year.