The Corporation for National and Community Service will reimburse sponsors for the reasonable expenses incidental to the defense of part-time volunteers in Federal, state, and local civil judicial and administrative proceedings where:

(a) The proceeding arises directly out of the volunteer's performance of activities pursuant to the Act;

(b) The volunteer receives or is eligible to receive compensation, including allowances, stipend, or reimbursement for out-of-pocket expenses under the Corporation for National and Community Service grant; and

(c) The conditions specified in § 1220.3-1(b) and (c) are met.