Financial and Business

Indemnification of Employees and Agents Who Are Not Trustees or Officers

Section:	Financial & Business Policies
Policy Name:	Indemnification of Employees and Agents Who Are Not Trustees or Officers
Policy Owner:	Executive Vice President
Responsible University Office:	Office of the Vice President For Finance and Deputy Treasurer
Origination Date:	November 14, 2005
Revisions:	December 8, 2009
Legacy Policy Number:	4-108

1. SCOPE OF POLICY
   1. This Policy sets forth the conditions and circumstances under which the University of Delaware will defend or indemnify present and former employees and others who are not trustees or officers. Indemnification for trustees and officers is subject to separate standards prescribed in Chapter 3 of the Bylaws of the Board of Trustees.
   2. As used in this Policy, the following terms shall have the meanings specified:
      1. The term “University” shall mean the University of Delaware.
      2. The term “employee” shall mean any present or former faculty member or present or former staff member (other than an officer of the University) who, at the time of the events giving rise to a claim for indemnification, was employed in the service of the University and whose compensation was paid by the University through its payroll system.
      3. The term “indemnification” shall mean a contractual obligation arising under this Policy to assume responsibility for the legal obligation of an indemnified party to make payment to a third party. Except in instances where the context implies otherwise, the term as used in this Policy shall encompass both indemnification and the advancement of an indemnified party’s costs of defense.
      4. The term “applicant” shall mean any employee who applies for indemnification under this Policy.
      5. The term “Action” means a threatened, pending, or completed action, suit or proceeding before any court, tribunal, administrative body, or other adversarial or adjudicatory forum external to the University.
      6. The term “General Counsel” means the University’s Vice President and General Counsel or designee.
2. POLICY STATEMENT
   1. General Policy
      1. Except as prohibited by law or under this Policy, the University shall furnish any employee, upon written request and the University’s approval of that request in accordance with the procedure set forth in Section II.D of this policy, with indemnification for all fees, penalties, fines, expenses, judgments, damages, settlements or other monies actually and reasonably incurred by the employee in connection with any Action brought by a party other than the University against such employee by reason of being or having been an employee.
      2. In the event of an indemnified party’s death, all rights under this Policy shall inure to the benefit of the deceased’s estate.
   2.  Eligibility for Indemnification
      1. Indemnification under this Policy shall be available, subject to the limitations in this Policy, if after appropriate investigation pursuant to Section II.D of this Policy all the following conditions are met:
         1. The applicant’s alleged acts or omissions occurred within the scope of his or her University employment;
         2. The applicant’s alleged acts or omissions were undertaken in good faith (meaning that the applicant is determined to have acted in accordance with his or her professional duties and obligations and without intent to defraud, intent to realize personal gain, or intent to achieve unconscionable advantage);
         3. The applicant’s alleged acts or omissions are determined not to have been malicious, negligent, grossly negligent, criminal, or reckless; and
         4. The applicant’s alleged acts or omissions are determined not to involve a breach of duty of loyalty to the University; intentional misconduct; a knowing violation of an obligation imposed by law, by contract, or by University policy; or a transaction from which the applicant derived an improper personal benefit.
      2. An applicant shall not be eligible for indemnification under this Policy if the applicant files or has filed a claim of any kind against the University in which the applicant seeks money damages or a money judgment. As used in the preceding sentence, the term “claim” includes but is not limited to any kind of civil action, suit, proceeding, administrative charge, or demand letter.
      3. Matters Excluded from this Policy
         The indemnification provided in this Policy shall not extend to:
         1. Any claim for indemnification that does not satisfy any of the preconditions for indemnification contained in Section II.B of this Policy;
         2. Any claim arising from an applicant’s consulting or other external professional or business activities if (a) such activities are performed for a third party and unrelated to the applicant’s duties to or assignments from the University, or (b) the applicant or an entity with which the applicant is affiliated is entitled to receive compensation for such activities in excess of reasonable expenses;
         3. Alleged acts or omissions that occurred while the applicant was on an unpaid leave of absence from the University;
         4. Small claims, parking, and moving vehicle violations, and other de minimis actions, including fees, fines or penalties associated with such actions;
         5. Actions initiated or proposed to be initiated by the applicant;
         6. Disciplinary, adversarial or adjudicative proceedings internal to the University; and
         7. Actions against the applicant in respect of which the applicant qualifies for, and with good faith effort could obtain, indemnification from some other source.
      4. Determining Eligibility for Indemnification
         1. As a condition for obtaining and remaining eligible for indemnification under this Policy, the applicant must:
            1. provide written notification to the General Counsel of the Action within five work days of having learned of the Action; and
            2. request indemnification in writing by completing a standard-form Request for Indemnification and submitting it within fifteen work days of having learned of the action to the General Counsel.
         2. Upon receipt of the written application for indemnification, the General Counsel shall conduct an investigation to determine whether the preconditions for indemnification are satisfied. Based on the investigation’s findings, which shall be committed to writing as expeditiously as possible, the General Counsel shall either grant or refuse to grant the application in whole or in part.
         3. If the General Counsel refuses to approve indemnification in whole or in part, the applicant may appeal the decision to either the Executive Vice President (if the applicant is anyone other than a faculty member) or the Provost (if the applicant is employed solely as a faculty member). The Executive Vice President or Provost, as the case may be, shall exercise sole discretion in considering what information is relevant to the question whether to provide indemnification. His or her decision shall be final and non-appealable in any forum.
         4. Upon obtaining new factual information as an Action proceeds, the General Counsel (or, in context, the Executive Vice President or Provost) may change his or her prior decision on the application for indemnification.
         5. The University may decline to decide whether a particular applicant is entitled to indemnification, choosing to postpone such determination until the conclusion of the Action in order to gain the benefit of facts found by the forum in which the Action is pending or threatened.
         6. In all cases, the burden to demonstrate eligibility for indemnification shall remain with the applicant.
      5. Rights and Obligations of an Indemnified Party
         1. The indemnified party, as a condition for obtaining and remaining eligible for indemnification, shall be required to sign a written indemnification agreement with the University. The indemnification agreement shall recite, at a minimum, that:
            1. University shall be entitled to select counsel for the indemnified party;
            2. The indemnified party shall be under an obligation to cooperate with the University, the University’s attorneys, and attorneys selected to represent the indemnified party by being available for consultation; providing documents when requested to do so; appearing at proceedings as directed by counsel; and in every other manner materially assisting in the defense of the Action;
            3. The University may exercise the right to withdraw indemnification at any time in the event of (i) discovery of facts that would limit or exclude the indemnified party from eligibility for indemnification; (ii) non-cooperation by the indemnified party; or (iii) a conflict between the University and the indemnified party with respect to any issue of fact or law in the Action.
            4. The indemnified party waives all rights to indemnification other than those that may be provided by this Policy, including all rights under any previous University indemnification policy.
         2. The University’s decision to provide indemnification entitles the indemnified party to have defense costs, including reasonable attorneys’ fees, paid by the University. The University reserves the right at its sole discretion to impose upon the indemnified party the responsibility (a) to pay his or her own costs of defense until the conclusion of the Action, and (b) to petition at that point for reimbursement of fees upon a showing that all preconditions for indemnification are satisfied.
         3. If, at any time, the indemnified party (a) fails to cooperate with the University and attorneys or other agents retained to assist in providing defense and arranging for indemnification, or (b) is determined under Section II.D.4 of this Policy to be ineligible for indemnification, then the University reserves the right to withdraw its indemnification under this Policy and seek reimbursement of any and all fees, expenses and other costs expended on the indemnified party’s behalf. The indemnification agreement required by Section II.E.1 of this Policy shall include an undertaking by the indemnified party to make such reimbursement.
         4. If indemnification is granted, the General Counsel shall review all Action-related fees and costs to determine, in his or her sole judgment, whether they were reasonably incurred. The University shall not under any circumstances be responsible for costs or attorneys’ fees incurred prior to the execution of the written indemnification agreement.
         5. The University, through its Office of General Counsel, retains the exclusive right to manage, direct, settle, compromise and otherwise defend the Action, including providing representation, asserting claims and defenses, and selecting and directing or managing outside counsel, as it deems desirable and appropriate.
      6. Effective Date
         This Policy shall become effective when approved by the Board of Trustees of the University of Delaware, and, once effective, shall apply to any application for indemnification made after the effective date regardless of when the underlying cause of action prompting the application may have occurred.