PMA CAPITAL CORP
EXHIBIT 10.2
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<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10-2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
Exhibit 10.2


                           FIRST AMENDMENT OF OFFICE LEASE


                THIS FIRST AMENDMENT OF OFFICE LEASE (this "Amendment") is made
as of the 30th day of October, 1996, by and between NINE PENN CENTER ASSOCIATES,
a Pennsylvania limited partnership (herein called "Landlord") and LORJO CORP., a
Pennsylvania corporation (herein called "Tenant").

                                   BACKGROUND


                A. Pursuant to that certain Office Lease dated as of May 26,
1994 (herein called the "Lease"), Landlord leased to Tenant, which rented from
Landlord, approximately 57,914 Rentable Square Feet of office space located on
the 28th, 29th and 30th floors of Mellon Bank Center, 1735 Market Street,
Philadelphia, Pennsylvania.

                B. The parties now desire to amend the Lease as hereinafter
provided.

                                    AGREEMENT

                NOW, THEREFORE, in consideration of the Background, the mutual
covenants and agreements herein set forth, and other good, valuable and
aufficient consideration received, and intending to be legally bound hereby, the
parties hereto agree as follows:

                1. Definitions. Unless otherwise herein defined, all terms
defined in the Lease shall have the meanings ascribed to them in the Lease when
used in this Amendment.

                2. Expansion. Landlord hereby demises and leases unto Tenant,
and Tenant hereby takes, leases and hires from Landlord, (a) all that certain
portion of the 27th floor of the Building comprising 16,284 Rentable Square Feet
of space, as shown on the floor plan attached hereto and marked Exhibit "A" (the
"27th Floor Space"), and (b) that certain portion of the P-2 level of the
Building comprising 3,362 Rentable Square Feet of space, being shown on the
floor plan attached hereto and marked Exhibit "B" (the "P-2 Space"), on the
terms and conditions hereinafter set forth. The 27th Floor Space and the P-2
Space are sometimes herein jointly referred to as the "Expansion Space".

                3. Term. Except as otherwise provided in this Amendment,
effective on the date of this Amendment the Expansion Space shall form a part of
the Premises for all purposes under the Lease.

                4. Rent.

                              4.1 Rent Commencement Date. Tenant shall commence
to pay Rent with respect to the Expansion Space on January 1, 1997. Prior to
January 1, 1997, Tenant shall not be obligated to pay Rent with respect to its
use or occupancy of the Expansion Space, excepting only that (a) commencing on


<PAGE>


the date on which Landlord tenders possession of the Expansion Space, or any
portion thereof, to Tenant, and continuing until completion of the Tenant Work,
Tenant shall pay to Landlord the Additional Rent provided for in Section 7.11
below, and (b) upon Tenant's occupancy of any portion of the Expansion Space for
purposes of conducting the Permitted Use therein following completion of the
Tenant Work, through December 31, 1996, Tenant shall be obligated to pay all
Rent on account of such space, excepting only Minimum Rent, payments on account
of Tenant's Tax Share, and payments on account of Tenant's Expense Share.

                              4.2 Minimum Rent. Minimum Rent for the P-2 space
shall be Two Dollars ($2.00) per Rentable Square Foot ($6,724 per annum, $560.34
per month). Minimum Rent for the 27th Floor Space shall be as follows:


January 1, 1997 through December 31, 1998       $13.00 per Rentable Square Foot
                                                ($211,692 per annum, $17,641
                                                per month)

January 1, 1999 through December 31, 2000       $13.50 per Rentable Square Foot
                                                ($219,834 per annum, $18,319.50
                                                per month)

January 1, 2001 through December 31, 2002       $14.50 per Rentable Square Foot
                                                ($236,118 per annum, $19,676.50
                                                per month)

January 1, 2003 through December 31, 2004       $15.00 per Rentable Square Foot
                                                ($244,260 per annum, $20,355
                                                per month)

Minimum Rent shall be payable in equal monthly installments commencing on
January 1, 1997 and thereafter due on the first day of each month during the
Term without demand, deduction or set-off, at the offfice of Agent.

                              4.3 Real Estate Taxes. Effective January 1, 1997,
and thereafter during the Term until the Expansion Area Termination Date, the
Rentable Area of the Expansion Space shall be included in the Rentable Area of
the Premises for purposes of computing Tenant's Tax Share. As of January 1,
1997, Tenant's Tax Share shall be 5.725%.

                              4.4 Operating Expenses. Effective January 1, 1997,
and thereafter during the Term until the Expansion Area Termination Date, the
Rentable Area of the Expansion Space shall be included in the Rentable Area of
the Premises for purposes of computing Tenant's Expense Share. As of January 1,
1997, Tenant's Expense Share shall be 6.298%.

                5. Permitted Use. The 27th Floor Space shall be used by Tenant
solely for the Permitted Use. The P-2 Space shall be utilized by Tenant solely
for storage purposes, mail handling and other administrative functions.


                                       2

<PAGE>


                6. Expansion Construction Allowance. Landlord agrees to pay to
Tenant, in accordance with the terms and conditions set forth in Section 7.8
below, the sum of $162,840 (the "Expansion Construction Allowance") in order to
assist Tenant in defraying the cost of constructing the Tenant Work (hereinafter
defined) within the Expansion Space. The Expansion Construction Allowance shall
be Landlord's sole contribution to Tenant's cost of constructing such Tenant
Work.

                7. Improvement of Expansion Space. Except as otherwise herein
specifically provided, the terms of this Section 7, and not the terms of Section
7 of the Lease, shall apply in connection with Tenant's initial improvement of
the Expansion Space.

                              7.1 Base Building Plans. Landlord shall make
available to Tenant for use by Tenant or its architect or engineer, such
structural, electrical and mechanical drawings, specifications, and other
information with respect to the Building ("Base Building Plans") reflecting
Landlord's construction of the Core and Shell. Landlord shall also make
available for Tenant's inspection all shop drawings and submittals respecting
the construction of the Core and Shell. Tenant acknowledges that the Core and
Shell were constructed to construction industry standard tolerances permitting
limited deviations from the requirements of the Base Building Plans.
Accordingly, promptly following the execution of this Amendment, and prior to
commencement of preparation of the plans and documents which Tenant is obligated
to produce under Section 7.3 below, Tenant will cause its architect or engineer
to conduct a field survey of the Expansion Space to verify critical dimensions
and ascertain any deviation from the Base Building Plans.

                              7.2 Tenant's Construction Representative. Tenant
hereby designates Fred Harle as the "Tenant's Construction Representative," who
Tenant agrees shall be available to meet and consult with Landlord on a
continuing basis at the Expansion Space as Tenant's representative concerning
the matters which are the subject of this Section 7 and who, as between Landlord
and Tenant, shall have the power legally to bind Tenant in giving direction to
Landlord respecting the Construction Documents and the Tenant Work, in giving
approvals of design documents and work, and in making requests and approval for
changes. Tenant may from time to time change the designation of Tenant's
Construction Representative by written notice to Landlord, so long as there is
at all times at least one individual designated to serve in such capacity.

                              7.3 Preparation, Review and Approval of Tenant's
Schematic Design Documents, Design Development Documents and Construction
Documents. Tenant shall, at its expense, consult with its architect, engineer,
designer and such other consultants as it shall deem necessary for development
and timely completion of certain documents as described in this Section 7, which
documents shall conform to the Base Building Plans.


                                       3

<PAGE>


                                  7.3.1 Schematic Design. Tenant shall prepare
at its expense "Schematic Design Documents" reasonably satisfactory to Landlord
which generally indicate functional and organizational relationships, the
location and size of the Expansion Space, all demising and interior walls, and
the locations and configurations of all offices and conference rooms, libraries,
file rooms and other office areas and improvements to be contained in the
Expansion Space.

                                  7.3.2 Design Development. Subject to the
procedural requirements set forth in Subsection 7.3.4 below, Tenant, at its
expense, shall cause to be prepared and delivered to Landlord for its review and
approval, which approval shall not be unreasonably withheld or delayed: one (l)
complete reproducible set and two (2) blue-line print sets of "Design
Development Documents" consisting of: architectural, mechanical, electrical,
plumbing and structural drawings and other documents to fix and describe the
size and character of the space, all commonly called "Space Plans", prepared by
an architect or space planner approved by Landlord. Tenant shall deliver to
Landlord in a timely manner the Schematic Design Documents and the Design
Development Documents for approval, so that the Construction Documents are
timely delivered and approved as set forth below. Tenant shall cause the Design
Development Documents to be prepared in conformity with and consistent with the
Schematic Design Documents.

                                  7.3.3 Construction Documents. Tenant, at its
expense, shall cause to be prepared and delivered to Landlord one (l) complete
reproducible set and two (2) blue-line print sets of complete and final
"Construction Documents" consisting of (a) working drawings; (b) two (2) copies
of specifications, as approved by Landlord for the construction of the Expansion
Space for Tenant's occupancy; and (c) a permit set. Tenant shall deliver the
Construction Documents to Landlord not later than October 1, 1996. Tenant shall
cause the Construction Documents to be prepared in conformity with and
consistent with the Design Development Documents.

                                      7.3.3.l Tenant's Construction Documents
shall be signed and sealed by an architect or professional engineer (where
applicable) licensed and registered in the Commonwealth of Pennsylvania. In
addition to conforming to Landlord's Base Building Plans, Tenant's Construction
Documents shall also conform to all applicable laws, ordinances, building codes
and requirements of public authorities and insurance underwriters. Tenant's
Construction Documents shall contain, at a minimum, floor plans, reflected
ceiling plans, power and telephone plans, mechanical plans, electrical plans,
fire protection plans and all other details and schedules which designate the
locations and specifications for all mechanical, electrical, fire protection and
life safety equipment to be installed in the Expansion Space, and all
partitions, doors, lighting fixtures, electric receptacles and switches,
telephone outlets, special air conditioning, and other improvements to be
installed within the Expansion Space.

                                  7.3.4 Landlord Approval. Tenant shall submit
for Landlord's approval, Schematic Design Documents, Design Development
Documents and Construction Documents, in accordance with the guidelines and time
frames described above. The approval by Landlord of


                                       4

<PAGE>


Tenant's Schematic Design Documents, Design Development Documents and
Construction Documents shall be subject to the following procedural
requirements:


                                      7.3.4.1 Landlord shall promptly review the
applicable documents or any additional requested information, and either approve
the same or return the same to Tenant with requested modifications.

                                      7.3.4.2 If Landlord shall return the
modified documents to Tenant with requested modifications, Landlord shall
specify a reasonable period of time, not to exceed three (3) Business Days,
within which such modifications shall be made and within which such modified
plans shall be re-submitted to Landlord by Tenant, until the modified documents
are finally approved by Landlord.

                                      7.3.4.3 To the extent the Tenant's
Schematic Design Documents, Design Development Documents or Construction
Documents, as the case may be, in Landlord's sole judgment, involve any
modification of, or impact upon, the Building's structural, mechanical,
electrical or plumbing systems or components, then such approval may be withheld
by Landlord in its absolute and sole discretion.

                                      7.3.4.4 Tenant's Construction Documents,
as approved by Landlord and as modified by Tenant to take account of any changes
reasonably requested by Landlord, are hereinafter considered to be "Approved for
Construction."

                              7.4 [INTENTIONALLY OMITTED].

                              7.5 Tenant Work Defined. Tenant shall, in a good
and workmanlike manner, cause the Expansion Space to be improved and completed
at Tenant's expense (subject to the Expansion Construction Allowance hereinafter
provided) and in accordance with Tenant's Construction Documents, which work
(including materials, supplies, components, labor and services therefor) is
herein referred to as the "Tenant Work".

                              7.6 Tenant's Contractor.

                                  7.6.1 The Tenant Work is to be performed by
Tenant's contractor, selected by Tenant subject to Landlord's written approval.
Landlord will not unreasonably withhold or delay its approval of any contractor
submitted by Tenant, and Landlord's disapproval shall not be considered
unreasonable if the disapproved contractor may, in Landlord's sole opinion,
prejudice Landlord's relationship with Landlord's contractors or subcontractors
or the relationship between such contractors and their subcontractors or
employees, or otherwise disturb harmonious labor relations in or about the
Building.

                                  7.6.2 Upon Landlord's approval of the Tenant's
contractor, Tenant shall enter into a construction contract or construction
management agreement for the Tenant Work


                                       5

<PAGE>


(the "Tenant Work Contract"). The Tenant Work Contract shall require that both
Landlord and Tenant must approve the selection of each subcontractor and
supplier furnishing goods or services costing over Fifty Thousand Dollars
($50,000.00) within three (3) Business days of written request for approval,
such approval not to be unreasonably withheld, and shall require Tenant's
contractor to comply with all requirements of Section 7.9 below.

                                  7.6.3 Prior to commencement of that portion of
the Tenant Work which requires a building permit, Tenant will provide Landlord
with a copy of the building permit respecting the Tenant Work. Additionally,
upon completion of the Tenant Work and prior to occupancy of the Expansion Space
by Tenant, Tenant will deliver to Landlord a copy of the temporary or permanent
Certificate of Occupancy respecting the Expansion Space; provided that if Tenant
delivers a temporary Certificate of Occupancy, Tenant shall diligently and
continuously pursue issuance of a permanent Certificate of Occupancy and shall
deliver a copy of same to Landlord upon receipt. Should Tenant so request,
Landlord agrees to provide reasonable assistance to Tenant, at no expense to
Landlord, in Tenant's efforts to obtain a permanent Certificate of Occupancy for
the Expansion Space.

                              7.7 [INTENTIONALLY OMITTED.]

                              7.8 Payment of Expansion Construction Allowance.

                                  7.8.1 Tenant may draw upon the Expansion
Construction Allowance to pay for labor and materials provided for the Tenant
Work (and to pay Tenant's architect's and engineer's fees and other professional
fees incurred in connection with the design and construction of the Tenant Work)
(herein called "Tenant's Costs") in accordance with the terms of this Section
7.8. At the time Tenant's Construction Documents are finalized, Tenant will
deliver to Landlord an estimated budget reasonably detailing the anticipated
Tenant's Costs. Tenant shall submit to Landlord on or before the twenty-eighth
(28th) day of each month, a voucher for Tenant's Costs executed by Tenant's
Construction Representative and by a partner or officer of Tenant, setting forth
in reasonable detail the amount of such Tenant's Costs and identifying in
reasonable detail the material, labor, fees, and costs to which they relate.
Landlord shall pay to Tenant the amount of each Tenant voucher within thirty
(30) days after receipt of such voucher from Tenant. Notwithstanding anything
set forth in this Section 7.8.1, any amounts held back as retainage under
contracts for the Tenant Work shall not constitute a part of Tenant's Costs
unless and until paid to the contractor under the terms of the subject contract.

                                  7.8.2 Each voucher submitted to Landlord by
Tenant (as set forth in Section 7.8.1) shall be accompanied by a certificate
duly executed and shown to by Tenant's Construction Representative stating that:
(i) based on site inspections and the data comprising the invoice submitted by
Tenant for payment by Landlord, the Tenant Work has progressed to the point
indicated and the quality and condition of the Tenant Work theretofore completed
or in the process of completion as of the date of such certificate is in
accordance with the Construction Documents; and (ii) that Tenant's contractor is
entitled to the amount so certified.


                                       6

<PAGE>


                              7.9 Tenant's Contractors. In performing The Tenant
Work or in performing alterations within any Expansion Area prior to to Tenant's
beneficial occupancy thereof, the conditions set forth in Section 7.9 of the
Lease shall be fulfilled, and Tenant, by undertaking to have such work performed
by its contractor or contractors, shall be deemed to have agreed to cause such
conditions to be fulfilled.

                              7.10 Condition of Expansion Space. Tenant accepts
the Expansion Space in its "AS-IS" condition on the date of this Amendment.

                              7.11 Site Logistics and Procedures. Tenant's
occupancy of the Expansion Space during performance of the Tenant Work shall be
subject to all of the terms and conditions of the Lease, excepting only that no
Rent shall be payable during such period except to the extent specifically
required under this Section 7.11, and except that Landlord shall not be
obligated to provide janitorial services pursuant to Section 8.4 of the Lease.
During such period, Tenant shall comply with the Site Logistics and Procedures
set forth on Exhibit "K" of the Lease. Any Tenant Work to be performed by
Tenant in the elevator lobby and common corridors of the 27th floor of the
Building shall be at Tenant's expense, shall be subject to Tenant's obtaining
the prior approval of the other tenants of the 27th floor as to the nature and
scope of such work, and shall be undertaken at such times and in such a manner
as will not unreasonably disturb other tenants of such floor or unreasonably
interfere with the conduct of their respective businesses, as reasonably
determined by Landlord. Landlord shall bear the cost of electricity consumed by
Tenant's contractors and subcontractors in the performance of the Tenant Work,
as well as the cost of electricity consumed in the provision of HVAC service to
the Expansion Space during such period.


                8. P-2 Services. Landlord will furnish the P-2 Space with
janitorial service and with heat, ventilation and electric lighting (the cost of
which services and utilities shall be billed to Tenant as Additional Rent as
provided in Section 8 of the Lease), but will not furnish any other utilities or
services to the P-2 Space, notwithstanding anything to the contrary set forth in
the Lease.

                9. Brokers. Each of Landlord and Tenant represents and warrants
to the other that it has not dealt with any broker, agent, finder or other
person in the negotiation for or the obtaining of this Amendment other than
Agent, and each agrees to indemnify and hold the other harmless from any and all
costs (including reasonable attorneys' fees) and liability for commissions or
other compensation claimed by any such broker, agent, finder or other person
other than Agent, employed by the indemnifying party or claiming to have been
engaged by the indemnifying party in connection with this Amendment. Tenant
acknowledges that Agent has acted only as an agent with respect to the
procurement and negotiation of this Amendment and agrees that Agent shall not be
responsible or liable for any term, provision or condition of this Amendment.
Landlord agrees to pay any fee or commission owing to Agent on account of this
Amendment.


                                       7

<PAGE>


                10. Effect of Amendment. As amended hereby, the Lease continues
in full force and effect. In the event of any inconsistency between the terms of
this Amendment and the terms of the Lease, the terms of this Amendment shall
govern and control. Without limiting the generality of the foregoing, Tenant
hereby ratifies and confirms the warrant of attorney set forth in Section 17.2
of the Lease to the same extent as if such warrant were fully set forth herein.
Time remains of the essence of the Lease.

         IN WITNESS WHEREOF, this Amendment has been duly executed by the
parties hereto as of the date first above written.

                                              TENANT

                                              LORJO CORP.

                                              By: /s/ John W. Smithson
                                                 -------------------------------
                                                 Name: John W. Smithson
                                                 Title: Vice President

                                              LANDLORD

                                              NINE PENN CENTER ASSOCIATES,
                                              a Pennsylvania limited partnership

                                              By Transporatation Associates, a
                                              Pennsylvania limited partnership,
                                              general partner

                                              By: /s/ Ronald Rubin
                                                 -------------------------------
                                                 Name: Ronald Rubin
                                                 Title: General Partner

                                              By The Equitable Life Assurance
                                              Society of the United States,
                                              general partner

                                              By: /s/ Dana J. Harrell
                                                 -------------------------------
                                                 Name: Dana J. Harrell
                                                 Title: Investment Officer


                                       8

<PAGE>


                               First Amendment to Sublease

                THIS FIRST AMENDMENT TO SUBLEASE (this "Amendment") is made as
of the 30th day of October 1996, by and between Lorjo Corp., a Pennsylvania
corporation (the "Sublandlord") and PMA Reinsurance Corporation, a Pennsylvania
corporation (the "Subtenant").

                                    Recitals

A. Pursuant to that certain Sublease dated as of May 26, 1994 (herein called the
"Sublease"), Sublandlord leased to Subtenant 57,914 Rentable Square Feet of
space in the building (the "Building") known as Mellon Bank Center situated at
1735 Market Street, Philadelphia, Pennsylvania.

B. Subtenant desires to sublease additional space in the Building from
Sublandlord.

C. Unless otherwise defined herein, all defined terms shall have the meanings
ascribed to them in the Master Lease (as "Master Lease" is defined in the
Sublease).

D. The parties now desire to amend the Sublease as hereinafter provided.

                                   Agreements

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
set forth, and other good, valuable and sufficient consideration received, and
intending to be legally bound hereby, the parties hereto agree as follows:

1. Expansion. Sublandlord hereby demises and subleases unto Subtenant, and
Subtenant hereby takes, subleases and hires from Sublandlord, (a) all that
certain portion of the 27th floor of the Building comprising 16,284 Rentable
Square Feet of space and (b) that certain portion of the P-2 level of the
Building comprising 3,362 Rentable Square Feet of space (herein called the
"Expansion Space").

2. Premises. Pursuant to this Amendment, the Premises shall consist of a total
of 77,560 Rentable Square Feet.

3. Term. Effective on the date of this Amendment, the Expansion Space shall form
a part of the Premises for all purposes under the Sublease; provided, however,
that the term of this Sublease shall terminate one (1) day prior to the
Termination Date under


                                       1

<PAGE>


the Master Lease or on such earlier date upon which this Sublease may expire or
be terminated pursuant to any of the conditions of limitation or other
provisions of the Sublease, the Master Lease, or pursuant to law.

4. Rent. Subtenant shall commence to pay Rent with respect to the Expansion
Space on January 1, 1997 at the rates set forth in the Master Lease and the
First Amendment thereto dated simultaneously herewith.

5. Incorporation by Reference. All of the terms, covenants and conditions of the
Sublease are incorporated herein by reference so that, except to the extent that
they are inapplicable or modified by the provisions of this First Amendment to
Sublease, each and every term, covenant and condition of the Sublease shall be
binding upon Sublandlord and Subtenant in relation to Subtenant's lease of the
Expansion Space.

IN WITNESS WHEREOF the parties hereto have duly executed this First Amendment to
Sublease as of the date written above.


                                         SUBLANDLORD:

                                         LORJO CORP., a Pennsylvania corporation

                                         By: /s/ John W. Smithson
                                             -----------------------------------

                                         SUBTENANT:

                                         PMA REINSURANCE CORPORATION, a
                                         Pennsylvania corporation

                                         By: /s/ Stephen Tirney
                                             -----------------------------------



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