if u want a sharp subject with a blur background, u can try this:
-longer focal length gives shallower DOF indirectly (hence more blur bg)
-set widest aperture (e.g. F2.8)
-go as close as possible to ur subject
-try to position in a way so that, the background is as far away from ur subject as possible
however, do take note that with a pns like FZ10, it may be quite difficult to get a good blur background. a DSLR is easier to get it...
For the FZ10, a very shallow DOF can only be achieved if you use long end of the zoom at the biggest aperture possible and be very very near to the subject.
However, considering the far distance you need to be in to get the portrait or composition you require in model shooting when using the long end of the FZ10's zoom, it's impossible to get the shallow DOF you desire.