<PAGE>
 
       to give written notice expressly objecting to the terms and conditions of
       the proposed settlement or compromise within ten (10) days after receipt
       of notice shall be deemed for all purposes to be an approval of the
       proposed settlement or compromise described in the notice.  If the
       Indemnified Party reasonably objects to the proposed settlement, the
       Indemnifying Party shall continue to litigate or resist such Third Party
       Claim until a final judgment is rendered by a court of competent
       jurisdiction or until a settlement or compromise is effected pursuant to
       the provisions hereof.

               (5) In the event of a settlement or compromise pursuant to
       Section 6.3(b)(4) above, with respect to a Third Party Claim as to which
       the Indemnified Party is entitled to indemnification hereunder, the
       Indemnifying Party shall pay and otherwise satisfy in full such
       settlement or compromise and shall pay the Litigation Costs borne by it
       as provided in Section 6.3(b)(8).  If a final judgment is rendered
       against the Indemnified Party in respect of a Third Party Claim, then the
       Indemnifying Party shall promptly satisfy such judgment in full and shall
       pay the Litigation Costs borne by it as provided in Section 6.3(b)(8).
       Notwithstanding the foregoing, in no event shall the Indemnifying Party
       be obligated to pay any amount to the extent that payment would cause the
       total amounts paid or to be paid by the Indemnifying Party pursuant to
       its indemnity obligations set forth in this Agreement to exceed the
       maximum indemnity amount specified in Section 6.1 or 6.2.

               (6) If the Indemnifying Party fails or refuses to timely assume
       and prosecute the defense of a Third Party Claim, the Indemnified Party
       shall have the right to assume the defense of such claim by all
       appropriate proceedings with counsel selected by it.  The Indemnified
       Party shall have full control of such defense and proceedings; provided,
       however, that the Indemnified Party may not enter into, without the
       Indemnifying Party's consent, which shall not be unreasonably withheld,
       any compromise or settlement of such Third Party Claim.  In the event
       that the Indemnified Party assumes the defense of a Third Party Claim
       pursuant to this paragraph then, if the Indemnified Party is entitled to
       indemnification hereunder with respect to such Third Party Claim, in such
       event: (i) all Litigation Costs paid or incurred by the Indemnified Party
       in connection with defending such claim shall be paid exclusively by the
       Indemnifying Party directly as and when payment of such Litigation Costs
       is due; and (ii) all costs and expenses of a settlement or compromise of
       such Third Party Claim or upon rendition of a final judgment with respect
       thereto shall be paid exclusively by the Indemnifying Party.
       Notwithstanding the foregoing, if the Indemnifying Party has delivered a
       notice to the Indemnified Party pursuant to Section 6.3(b)(1) to the
       effect that the Indemnifying Party disputes its potential liability to
       the Indemnified Party under this Article 6 and if such dispute is
       resolved in favor of the Indemnifying Party, the Indemnifying Party shall
       not be required to bear the costs and expenses of the Indemnified Party's
       defense pursuant to this paragraph, and

                                       25