CHICAGO (AP) - The director of the Police Training Institute at the University of Illinois has resigned amid scrutiny for his simultaneous work with a military contractor best known for providing security forces in Iraq and Afghanistan.

Tom Dempsey, 58, worked for Blackwater USA in July and August, two months after he signed an agreement allowing the institute and the contractor to conduct research together, share facilities and exchange students and staff.

U of I officials last month canceled the five-year deal, which didn't mention money, saying Dempsey never told them he was negotiating personal contracting work while helping orchestrate the partnership with the North Carolina company.

The potential conflicts of interest were first reported by the Chicago Tribune in July.

Dempsey, a former Marine, used his accrued paid-vacation time from the university to work as an independent consultant training police in Afghanistan.

He returned in August and resigned "in light of the controversy surrounding his affiliation with Blackwater," university spokeswoman Robin Kaler said.

Under the resignation agreement, finalized Thursday, Dempsey will receive a $75,000 lump sum and $12,000 for health insurance costs, according to documents obtained by the Tribune.

Dempsey did not return a call for comment from the Tribune. The resignation deal says Dempsey and the university will not comment on the matter.

According to an e-mail written to Dempsey from Peg Rawles, an associate chancellor, and obtained by the Tribune, Dempsey was negotiating employment with both the university and Blackwater "at the same time and no one above you was informed of both these relationships ...The chronology raises more questions than answers."

U of I employees have to sign a conflict of commitment agreements saying they don't participate in outside activities that conflict with their university responsibilities, Kaler has said.

She told the Tribune that the university is looking at ways to avoid possible conflicts of interest in the future.

Blackwater is known for providing paramilitary personnel for U.S. war efforts in Iraq and Afghanistan. The company also opened an 80-acre police training center, Blackwater North, in April in Mount Carroll, Ill., about 60 miles west of Rockford.