a local public entity based on an injury allegedly arising out of an act or omission occurring within the scope of his employment as such employee, the entity may elect to do any one or more of the following: (a) appear and defend against the claim or action; (b) indemnify the employee or former employee for his court costs or reasonable attorney's fees, or both, incurred in the defense of such claim or action; (c) pay, or indemnify the employee or former employee for a judgment based on such claim or action; or (d) pay, or indemnify the employee or former employee for, a compromise or settlement of such a claim or action. It is hereby declared to be the public policy of this State, however, that no local public entity may elect to indemnify an employee for any portion of a judgment representing an award of punitive or exemplary damages. If an employee of a local public entity is a defendant in any criminal action arising out of or incidental to the performance of his or her duties, the local public entity shall not provide representation for the employee in that criminal action. However, the local public entity may reimburse the employee for reasonable defense costs only if the criminal action was instituted against the employee based upon an act or omission of that employee arising out of and directly related to the lawful exercise of his or her official duty or under color of his or her authority and that action is dismissed or results in a final disposition in favor of that employee. The provisions of indemnification, as set forth above, shall be justifiably refused by the local public entity if it is determined that there exists a current insurance policy or a contract, by virtue of which the employee is entitled to a defense of the action in question. Nothing in this Act shall be construed to prohibit a local public entity from providing representation to an employee who is a witness in a criminal matter arising out of that employee's employment with the local government entity. court costs or reasonable attorney's fees, or both, incurred in the defense of such claim or action; for a judgment based on such claim or action; or for, a compromise or settlement of such a claim or action. (745 ILCS 10/Art. III heading) ARTICLE III--IMMUNITY FROM LIABILITY FOR INJURY OCCURRING IN THE USE OF PUBLIC PROPERTY
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