N.J. Stat. § 59:10-2
Refusal to defend--indemnification. If the Attorney General refuses to provide for the defense of a State employee as required by the provisions of P.L. 1972, c. 48 (C. 59:10A-1 et seq.), the employee or former employee of the State shall be entitled to indemnification from the State if he establishes that the act or omission upon which the claim or judgment was based occurred within the scope of his employment as an employee of the State and the State fails to establish that he acted or failed to act because of actual fraud, actual malice or willful misconduct.
If the State employee establishes that he was entitled to a defense under the provisions of this chapter, the State shall pay or reimburse him for any bona fide settlement agreements entered into by the employee, and shall pay or reimburse him for any judgments entered against the employee, and shall pay or reimburse him for all costs of defending the action, including reasonable counsel fees and expenses, together with costs of appeal, if any.
Nothing in this section requires the State to pay for punitive or exemplary damages or damages resulting from the commission of a crime. The State may indemnify a State employee for exemplary or punitive damages resulting from the employee's civil violation of State or federal law if, in the opinion of the Attorney General, the acts committed by the State employee upon which the damages are based did not constitute actual fraud, actual malice, willful misconduct, or an intentional wrong.
N.J.S. § 59:10-2