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                                                                     EXHIBIT 4.2

                                     BYLAWS
                                       OF
                               SAFECO CORPORATION

                  (As last amended effective November 6, 2002)

                                   ARTICLE I

                             STOCKHOLDERS' MEETINGS

1.    ANNUAL MEETING. (a) The annual meeting of the stockholders of the
corporation for the election of Directors to succeed those whose terms expire,
and for the transaction of such other business as may properly come before the
meeting, shall be held at 11:00 o'clock in the morning on the first Wednesday in
May or, if such day is a legal holiday, then on the following business day or on
such other day as may be designated by the Chairman of the Board of Directors,
the President, or the Board of Directors ("Board of Directors"). The meeting
shall be held at the principal executive office of the corporation or at such
other place as may be designated in the notice of the meeting.

      (b) For business to be properly brought before the annual meeting in
accordance with these Bylaws, business must be (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors or (iii) otherwise properly brought before
the meeting by a stockholder. In addition to any other applicable requirements,
for business to be properly brought before the annual meeting by a stockholder,
the stockholder must file a written notice of intention to bring such business
("Business Notice") with the Secretary of the corporation not less than 90 days
before the date specified in Section 1(a) of this Article I, or if the meeting
is not held within 14 days of the date specified in Section 1(a) of this Article
I, then 90 days before the date of the meeting. The Business Notice shall state
the name, address, telephone number and class and number of shares of capital
stock owned by the stockholder who intends to bring such business before the
meeting; and, as to each matter the stockholder proposes to bring before the
annual meeting, a brief description of the business desired to be brought before
the annual meeting, the reasons for conducting such business at the annual
meeting and any material interest of the stockholder in such business.

      (c) No business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section 1; provided, however,
that nothing in this Section 1 shall be deemed to preclude discussion by any
stockholder of any business properly brought before the annual meeting. The
presiding officer of an annual meeting shall, if the facts warrant, determine
that business was not properly brought before the meeting in accordance with the
foregoing procedure and, if the presiding officer should so determine, the
presiding officer shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
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SAFECO Corporation Bylaws
November 6, 2002
Page 2

2.    SPECIAL MEETINGS. Special meetings of the stockholders may be called only
by the Board of Directors. Such special meetings may be for any purpose or
purposes, which shall be described in the notice of such special meeting, and
shall be at the date, time and place prescribed in the notice of the meeting.

3.    NOTICE OF MEETING. (a) Written notice of each annual and special
stockholders' meeting shall be given to all stockholders of record entitled to
notice of such meeting no fewer than 10 nor more than 60 days before the meeting
date, except that notice of a stockholders' meeting to act on an amendment to
the articles of incorporation, a plan of merger or share exchange, a proposed
sale of assets other than in the regular course of business or the dissolution
of the corporation shall be given no fewer than 20 nor more than 60 days before
the meeting date. If such written notice is placed in the United States mail,
postage prepaid, and correctly addressed to the stockholder's address shown in
the corporation's current record of stockholders, then the notice is effective
when mailed.

      (b) Notice of any stockholders' meeting may be waived in writing by any
stockholder at any time, either before or after the meeting. In addition, notice
of the date, time, place and purpose of the meeting shall be deemed waived by
any stockholder who attends a stockholders' meeting in person or by proxy,
unless the stockholder at the beginning of the meeting objects to holding the
meeting or transacting business at the meeting.

4.    ORGANIZATION OF MEETING - QUORUM. A stockholders' meeting, duly called,
can be organized for the transaction of business whenever a quorum is present.
The presence, in person or by proxy, of the holders of a majority of the votes
entitled to be cast at the meeting shall constitute a quorum. Once a share is
represented for any purpose at a meeting, other than solely to object to holding
the meeting or transacting business at the meeting, it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.

5.    ADJOURNED MEETINGS. Unless a new record date is or must be set for an
adjourned meeting, an adjournment or adjournments of any stockholders' meeting
may be taken to the date, time and place announced by the presiding officer at
the meeting, without new notice being given; but any meeting at which directors
are to be elected shall be adjourned only from day to day until such directors
are elected.

6.    VOTING AT MEETINGS. Each holder of common stock shall be entitled to one
vote for each share of common stock then of record in the holder's name on the
books of the corporation. Each holder of a share of capital stock other than
common stock shall have the right to vote on those matters prescribed by the
Board of Directors in establishing the preferences, limitations and relative
rights for that class of capital stock. Every stockholder shall have the right
to vote either in person or by proxy. All voting at stockholders' meetings shall
be viva voce, unless any qualified voter shall demand a vote by ballot. In the
case of voting by ballot, each ballot shall state the name of the stockholder
voting, the number of shares owned by the
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November 6, 2002
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stockholder, and, in addition, if such vote be cast by proxy it shall also state
the name of the proxy.

                                   ARTICLE II

                               BOARD OF DIRECTORS

1.    NUMBER AND QUALIFICATIONS. The business and affairs of the corporation
shall be managed under the direction of a Board of Directors of from 10 to 18
directors, as set from time to time by resolution of the Nominating/Governance
Committee, which directors need not be stockholders of the corporation.

2.    ELECTION - TERM OF OFFICE. The directors shall be divided into three
classes, designated Class 1, Class 2, and Class 3. Each class shall consist, as
nearly as may be possible, of one-third of the total number of Directors
constituting the entire Board of Directors. At each annual meeting of
stockholders successors to the class of Directors whose term expires at that
annual meeting shall be elected for a three-year term. If the number of
Directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of Directors in each class as nearly equal
as possible, but in no case will a decrease in the number of Directors shorten
the term of any incumbent director. A director shall hold office until the
annual meeting for the year in which the director's term expires and until the
director's successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from office.
In the event of a failure to hold an election of Directors at any annual
stockholders' meeting, election of Directors may be held at a special meeting of
the stockholders called for that purpose; provided, that notice thereof be given
all stockholders entitled to vote at such meeting at least 30 days prior to the
date set for such special meeting.

3.    VACANCIES. Any vacancy on the Board of Directors shall be filled by the
Board of Directors or, if the directors in office constitute fewer than a quorum
of the Board of Directors, then by the affirmative vote of the majority of all
directors in office.

4.    NOMINATIONS OF DIRECTORS. (a) The Board of Directors or at its direction a
committee of the Board of Directors shall nominate individuals for election as
directors at the annual meeting of stockholders and at any special meeting of
stockholders called for the purpose of electing directors. Nominations may also
be made by any stockholder entitled to vote for the election of Directors at
such meeting who complies with the notice procedures set forth in this Section
4.

      (b) A nomination for election as director, other than nominations made by
or at the direction of the Board of Directors, may be made only if a written
notice of intention to nominate ("Nomination Notice") has been received by the
secretary to the Board of Directors not less than 90 days before the date
specified in Section 1(a) of Article I above, or if the meeting is not held
within 14 days of the date specified in Section 1(a) of Article I above, then 90
days before the
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November 6, 2002
Page 4

date of the meeting. The Nomination Notice shall state the name, address,
telephone number and class and number of shares of capital stock owned by the
stockholder who intends to make a nomination; the name, age, address and
telephone number of each nominee; a description of each nominee's business
experience for the past five years; a statement whether the nominee has ever
been prosecuted for any crime or been a party to any proceeding in which it was
alleged the nominee or any affiliate of the nominee violated any law or
regulation and, if so, a complete description of such prosecution or proceeding;
and any other information relating to each nominee that is required to be
disclosed in solicitations for proxies for election of Directors pursuant to
Section 14(a) of the Securities Exchange Act of 1934, as amended. The
corporation may require any proposed nominee to furnish such additional
information as may reasonably be required to determine the eligibility of such
proposed nominee. In order to be considered valid the Nomination Notice must be
accompanied by the written consent of each nominee to be nominated and a
statement of each nominee's intention to serve as a director if elected.

      (c) No person shall be eligible for election as a director unless
nominated in accordance with the procedures set forth in this Section 4. The
presiding officer at the stockholders' meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure and, if the presiding officer should so
determine, the presiding officer shall so declare to the meeting and the
defective nomination shall be disregarded.

5.    ANNUAL MEETING. The first meeting of each newly elected Board of Directors
shall be known as the annual meeting thereof.

6.    REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held
quarterly, on the first Wednesday in February, May, August and November of each
year, at such time and place as designated in the notice of the meeting.

7.    SPECIAL MEETINGS. Special meetings of the Board of Directors may be held
at any place at any time when called by the Chairman of the Board of Directors
or the President, or when called by the Secretary or an Assistant Secretary on
request of three directors, or when called by any director during a national
emergency of the kind that would make emergency bylaws operative for domestic
insurers under the provisions of Sections 48.07.160 through 48.07.200 of the
Revised Code of Washington.

8.    NOTICE OF MEETINGS. (a) Notice of the time and place of meetings of the
Board of Directors and of meetings of committees of the Board of Directors shall
be given by the secretary to the Board of Directors, or by the person calling
the meeting, in writing or orally at least two days prior to the day upon which
the meeting is to be held. Notice may be given by mail, private carrier,
personal delivery, telegraph or teletype, telephone, electronic transmission or
by wire or wireless equipment which transmits a facsimile of the notice.
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November 6, 2002
Page 5

      (b) A director may waive notice of any meeting of the Board of Directors
or any committee of the Board of Directors in writing before or after the date
and time of the meeting and such waiver shall be deemed the equivalent of giving
notice of the meeting. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors or any committee of
the Board of Directors need be specified in the waiver of notice of such
meeting.

      (c) A director's attendance at or participation in a Board of Directors or
committee meeting shall constitute a waiver of notice of such meeting, unless
the director at the beginning of the meeting, or promptly upon the director's
arrival at the meeting, objects to holding the meeting or transacting business
at the meeting and does not thereafter vote for or assent to action taken at the
meeting.

9.    QUORUM. A majority of the total number of Directors fixed by or in the
manner provided in these Bylaws or, if vacancies exist on the Board of
Directors, a majority of the total number of Directors then serving on the Board
of Directors shall constitute a quorum for the transaction of business at any
Board of Directors' meeting; provided, however, that a quorum may not be less
than one-third of the total number of Directors fixed by or in the manner
provided by these Bylaws. When a quorum is present, a majority of the directors
in attendance at a meeting shall be sufficient to transact business and to
adjourn the meeting from time-to-time without further notice.

10.   CHAIRMAN OF THE BOARD OF DIRECTORS. The Directors shall appoint one member
of the Board of Directors to serve as Chairman of the Board of Directors. The
Chairman of the Board of Directors shall preside at all meetings of the
stockholders and Directors and shall have such other duties and responsibilities
as the Board of Directors may assign from time-to-time.

                                   ARTICLE III

                               EXECUTIVE COMMITTEE

1.    MEMBERSHIP. The Executive Committee shall consist of no fewer than three
members and shall include (i) the lead director of the Board of Directors, (ii)
the chairs of each of the Audit, Compensation, Finance and Nominating/Governance
Committees, and (iii) any other director of the corporation appointed by the
Board of Directors. The lead director shall be the chair of the Executive
Committee, unless the Board of Directors designates some other member of the
Executive Committee as chair.

2.    POWERS AND DUTIES. Other than those powers specifically denied to a
committee of a Board of Directors under Washington law, the Executive Committee
may exercise all the powers of the Board of Directors in the management of the
business of the corporation when the
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Page 6

Board of Directors is not in session. All such actions of the Executive
Committee shall be reported to the Board of Directors at its meeting next
succeeding such action and shall be subject to revision or alteration by the
Board of Directors; provided, that no rights of third parties shall be affected
by any such revision or alteration.

3.    RULES OF PROCEDURE. The Executive Committee shall fix its own rules of
procedure and shall meet where and as provided by such rules or by resolution of
the Board of Directors. Special meetings of the Executive Committee may be
called at any time by the chair of the Executive Committee or any two members.
At all meetings of the Executive Committee, the presence of a majority of the
members shall be necessary to constitute a quorum, and the affirmative vote of a
majority of the quorum shall be necessary and sufficient to transact business.

                                   ARTICLE IV

                                FINANCE COMMITTEE

1.    MEMBERSHIP. The Finance Committee shall consist of no fewer than five
members appointed by the Board of Directors, one of whom shall be designated as
its chair by the Board of Directors. Each member of the Finance Committee shall
continue as a member at the pleasure of the Board of Directors.

2.    CHARTER. The Finance Committee shall be governed under a Finance Committee
Charter, which shall be adopted by the Board of Directors.

3.    RULES OF PROCEDURE. The Finance Committee shall, consistent with its
Charter, fix its own rules of procedure and shall meet where and as provided by
its Charter, its rules or the Board of Directors. Special meetings of the
Committee may be called at any time by the chair of the Finance Committee or by
any two members. At all meetings, the presence of a majority of the members
shall be necessary to constitute a quorum, and the affirmative vote of a
majority of the quorum shall be necessary and sufficient to transact business.

                                   ARTICLE V

                                AUDIT COMMITTEE

1.    MEMBERSHIP. The Audit Committee shall consist of no fewer than three
members who meet the qualifications described in the Audit Committee Charter and
who are appointed by the Board of Directors. The Board of Directors shall
designate one member of the Audit Committee as its chair. Each member of the
Audit Committee shall continue as a member at the pleasure of the Board of
Directors.

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November 6, 2002
Page 7

2.    CHARTER. The Audit Committee shall be governed under an Audit Committee
Charter which shall be adopted by the Board of Directors.

3.    RULES OF PROCEDURE. The Audit Committee shall, consistent with its
Charter, fix its own rules of procedure and meet where and as provided by its
Charter, its rules of procedure or the Board of Directors. Special meetings of
the Audit Committee may be called at any time by the chair of the Audit
Committee or by any two members. At all meetings the presence of a majority of
the members shall be necessary to constitute a quorum, and the affirmative vote
of a majority of the quorum shall be necessary and sufficient to transact
business.

                                   ARTICLE VI

                         NOMINATING/GOVERNANCE COMMITTEE

1.    MEMBERSHIP. The Nominating Committee shall consist of no fewer than three
members who meet the qualifications described in the Nominating/Governance
Committee Charter and who are appointed by the Board of Directors. The Board of
Directors shall designate one member of the Nominating/Governance Committee as
its chair. Each member of the Nominating/Governance Committee shall continue as
a member at the pleasure of the Board of Directors.

2.    CHARTER. The Nominating/Governance Committee shall be governed under a
Nominating/Governance Committee Charter which shall be adopted by the Board of
Directors.

3.    RULES OF PROCEDURE. The Nominating/Governance Committee shall, consistent
with its Charter, fix its own rules of procedure and shall meet where and as
provided by its Charter, its rules or by resolution of the Board of Directors.
Special meetings of the Nominating/Governance Committee may be called at any
time by the chair of the Nominating/Governance Committee or by any two members.
At all meetings, the presence of a majority of the members shall be necessary to
constitute a quorum, and the affirmative vote of a majority of the quorum shall
be necessary and sufficient to transact business.

                                  ARTICLE VII

                             COMPENSATION COMMITTEE

1.    MEMBERSHIP. The Compensation Committee shall consist of no fewer than
three members who meet the qualifications described in the Compensation
Committee Charter and who are appointed by the Board of Directors. The Board of
Directors shall designate one member of the Compensation Committee as its chair.
Each member of the Compensation Committee shall continue as a member at the
pleasure of the Board of Directors.
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November 6, 2002
Page 8

2.    CHARTER. The Compensation Committee shall be governed under a Compensation
Committee Charter which shall be adopted by the Board of Directors.

3.    RULES OF PROCEDURE. The Compensation Committee shall,consistent with its
charter, fix its own rules of procedure and shall meet where and as provided by
its Charter, its rules or by resolution of the Board of Directors. Special
meetings of the Compensation Committee may be called at any time by the chair of
the Compensation Committee or by any two members. At all meetings, the presence
of a majority of the members shall be necessary to constitute a quorum, and the
affirmative vote of a majority of the quorum shall be necessary and sufficient
to transact business.

                                  ARTICLE VIII

                                OTHER COMMITTEES

The Board of Directors shall have authority to establish by resolution such
other committees as the Board of Directors may from time to time deem necessary
or advisable. The membership, duties and authority of such committees shall be
as the Board of Directors may from time to time establish.

                                   ARTICLE IX

                                    OFFICERS

1.    OFFICERS ENUMERATED - APPOINTMENT. The officers of the corporation shall
be a President, one or more Vice Presidents, one or more Assistant Vice
Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, and one
or more Assistant Treasurers, all of whom shall be appointed by the Board of
Directors at the annual meeting thereof, to hold office for the term of one year
and until their successors are appointed and qualified.

2.    QUALIFICATIONS. None of the officers of the corporation need be a
director. Any two or more corporate offices may be combined in one person.

3.    PRESIDENT. The President shall be the chief executive officer of the
corporation and shall have general charge, supervision and control over the
business and affairs of the corporation and of its subsidiaries, subject to the
ultimate authority of the Board of Directors. In the absence of the Chairman of
the Board of Directors the President shall act in the place of the Chairman of
the Board of Directors with the authority to exercise all of the Chairman's
powers and perform the Chairman's duties.

4.    VICE PRESIDENTS. In the absence or disability of the President, one of the
Vice Presidents, in the order determined by seniority of responsibility and then
order of their appointment, shall act as President until such time as the Board
of Directors acts to appoint an
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November 6, 2002
Page 9

individual to the office of President. One or more of the vice presidents may be
designated by the Board of Directors as executive vice president, senior vice
president or such other title as the Board of Directors deems appropriate for
the position and duties.

6.    SECRETARY. The Secretary shall be the custodian of the records, books of
account, and seal of the corporation, and, in general, shall perform all duties
usually incident to the office of Secretary, and make such reports and perform
such other duties as may from time to time be requested of or assigned by the
Board of Directors, the Executive Committee or the chief executive officer of
the corporation.

7.    ASSISTANT SECRETARIES. The Assistant Secretaries shall perform such duties
as may be assigned to them by the Secretary of the corporation, the Board of
Directors, the Executive Committee, or the chief executive officer of the
corporation.

8.    TREASURER. The Treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation. The Treasurer shall
deposit all such funds in the name of the corporation in such depositories or
invest them in such investments as may be designated or approved by the Finance
Committee or the Board of Directors, and shall authorize disbursement of the
funds of the corporation in payment of just demands against the corporation, or
as may be ordered by the Board of Directors, the Executive Committee, or the
Finance Committee on securing proper vouchers for such disbursements. The
Treasurer shall render to the Board of Directors from time to time as may be
required an account of all transactions as Treasurer, and shall perform such
other duties as may from time to time be assigned by the Board of Directors, the
Executive Committee, the Finance Committee, or the chief executive officer of
the corporation.

9.    ASSISTANT TREASURERS. The Assistant Treasurers shall perform such duties
as may be assigned to them by the Treasurer, the Board of Directors, the
Executive Committee, or the chief executive officer of the corporation.

10.   OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such other
officers and agents as it shall deem necessary to exercise such powers and
perform such duties as shall be determined from time to time by the Board of
Directors.

11.   REMOVAL. Any officer of the corporation may be removed by the affirmative
vote of a majority of the whole Board of Directors; such removal, however, shall
be without prejudice to the contract rights of the person so removed.
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November 6, 2002
Page 10

                                   ARTICLE X

                              CORPORATION PROXIES

Unless otherwise ordered by the Board of Directors, any and all shares of stock
owned or held by the corporation in any other corporation shall be represented
and voted at any meeting of the stockholders of such other corporation by any
one of the following officers of the corporation in the following order who may
attend such meeting; i.e., the President, a Vice President, or the Treasurer,
and such representation by any one of the officers above named shall be deemed
and considered a representation in person by the corporation at such meeting.
Any one of the officers above named may execute a proxy appointing any other
person as attorney and proxy to represent the corporation at such stockholders'
meeting and to vote all stock of such corporation owned or held by the
corporation with all power and authority in the premises that any of the
officers above named would possess if personally present. The Board of Directors
by resolution may from time to time confer like powers upon any other person or
persons.

                                   ARTICLE XI

                                     STOCK

1.    CERTIFICATES OF STOCK. Certificates of stock of the corporation shall be
issued in such form in accordance with the corporation law of the State of
Washington as may be approved by the Board of Directors, and may be signed by
the chief executive officer or any Vice President, and by the Secretary or any
Assistant Secretary.

2.    TRANSFERS. Shares of stock may be transferred by delivery of the
certificates therefor accompanied either by an assignment in writing on the back
of the certificate or by a written power of attorney to sell, assign and
transfer the same by the record holder of the certificate. No transfer shall be
valid except as between the parties thereto until such transfer shall have been
made on the books of the corporation. Except as specifically provided in these
Bylaws, no shares of stock shall be transferred on the books of the corporation
until the outstanding certificate therefor has been surrendered to the
corporation.

3.    STOCKHOLDERS OF RECORD. The corporation shall be entitled to treat the
holder of record on the books of the corporation of any share or shares of stock
as the holder in fact thereof for all purposes, including the payment of
dividends on such stock and the right to vote such stock.

4.    LOSS OR DESTRUCTION OF CERTIFICATES. In the case of loss or destruction of
any certificate of stock, another may be issued in its place upon proof of such
loss or destruction, and upon the giving of a satisfactory bond or indemnity to
the corporation. A new certificate may be issued without requiring any bond when
in the judgment of the Treasurer it is proper to do so.
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November 6, 2002
Page 11

5.    The Board of Directors shall have the power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer,
conversion and registration of certificates for shares of the stock of the
corporation not inconsistent with these Bylaws, the Articles of Incorporation,
or the laws of the State of Washington.

                                  ARTICLE XII

                                INDEMNIFICATION

1.    DIRECTORS. (a) Each person who was or is a party to any proceeding
(whether brought by or in the right of the corporation or otherwise) by reason
of the fact that he or she is or was a director of the corporation, or, while a
director of the corporation, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust, other enterprise, or
employee benefit plan (an "Indemnitee"), whether the basis of a proceeding is an
alleged action in an official capacity as such a director, officer, partner,
trustee, employee, or agent or in any other capacity while serving as such a
director, officer, partner, trustee, employee, or agent, shall be indemnified
and held harmless by the corporation against all judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the Indemnitee in
connection with such proceeding. Except as provided in paragraph (d) of this
Section 1 with respect to proceedings seeking to enforce rights to
indemnification, the corporation shall indemnify any Indemnitee only if the
proceeding (or part thereof) was authorized or ratified by the Board of
Directors.

      (b) No indemnification shall be provided to any Indemnitee for acts or
omissions of the Indemnitee finally adjudged to be intentional misconduct or a
knowing violation of law, for conduct of the Indemnitee finally adjudged to be
in violation of Section 23B.08.310 of the Washington Business Corporation Act,
for any transaction with respect to which it was finally adjudged that such
Indemnitee personally received a benefit in money, property or services to which
the Indemnitee was not legally entitled or if the corporation is otherwise
prohibited by applicable law from paying such indemnification, except that if
Section 23B.08.560 or any successor provision is hereafter amended, the
restrictions on indemnification set forth in this paragraph (b) shall be as set
forth in such amended statutory provision.

      (c) The right to indemnification conferred under this Article XII shall
include the right to be paid by the corporation the expenses incurred in
defending any proceeding in advance of its final disposition. An advancement of
expenses shall be made upon delivery to the corporation of an undertaking, by or
on behalf of an Indemnitee, to repay all amounts so advanced if it is ultimately
determined by final judicial decision from which there is no right to appeal
that such Indemnitee is not entitled to be indemnified for such expenses under
this Article XII.

      (d) If a claim under this Section 1 is not paid in full by the corporation
within 60 days after a written claim has been received by the corporation,
except in the case of a claim for an
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Page 12

advancement of expenses, in which case the applicable period shall be 20 days,
the Indemnitee may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the Indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. An
Indemnitee shall be presumed to be entitled to indemnification under this
Article XII upon submission of a written claim (and, in an action brought to
enforce a claim for an advancement of expenses, where the required undertaking
has been tendered to the corporation), and the corporation shall have the burden
of proof to overcome the presumption that the Indemnitee is so entitled.

2.    OFFICERS. The corporation shall extend rights to indemnification and
advancement of expenses in the same manner and to the same extent provided to
directors under Section 1 of this Article to any person, not a director of the
corporation, who is or was an officer of the corporation or is or was serving at
the request of the corporation as a director, officer, partner, trustee, or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, other enterprise, or employee benefit plan.

3.    OTHER EMPLOYEES AND AGENTS. The corporation may, by action of the Board of
Directors, grant rights to indemnification and advancement of expenses to
employees and agents or any class or group of employees and agents of the
corporation (i) with the same scope and effect as the provisions of this Article
with respect to the indemnification and advancement of expenses of directors;
(ii) pursuant to rights provided by the Washington Business Corporation Act; or
(iii) as are otherwise consistent with law.

4.    DEFINITIONS. For purposes of this Article XII, the terms "director,"
"corporation," "expenses," "party" and "proceeding" have those meanings assigned
to them in Section 23B.08.500 of the Washington Business Corporation Act.

5.    SERVICE AT THE REQUEST OF THE CORPORATION. Any person who, while a
director, officer or employee of the corporation, is or was serving (a) as a
director or officer of another corporation of which a majority of the shares
entitled to vote is held by the corporation or (b) as a partner, trustee or
otherwise in a management capacity in a partnership, joint venture, trust or
other enterprise of which the corporation or a wholly-owned subsidiary of the
corporation is a general partner or has a majority ownership shall be deemed to
be so serving at the request of the corporation.

6.    PROCEDURES EXCLUSIVE. Pursuant to Section 23B.08.560(2) or any successor
provision of the Washington Business Corporation Act, the procedures for
indemnification and advancement of expenses set forth in this Article are in
lieu of the procedures required by Section 23B.08.550 or any successor provision
of the Washington Business Corporation Act.
<PAGE>
SAFECO Corporation Bylaws
November 6, 2002
Page 13

7.    NOT EXCLUSIVE -- CONTINUING. The indemnification provided by this Article
shall not be deemed exclusive of other rights to which the director, officer,
employee or agent may be entitled as a matter of law or by contract, and shall
continue as to a person who has ceased to be a director, officer, partner,
trustee, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

8.    INSURANCE. The corporation may maintain insurance at its expense to
protect itself and any director, officer, partner, trustee, employee or agent of
the corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the Washington Business Corporation Act.

                                  ARTICLE XIII

                                      SEAL

The seal of this corporation shall consist of a flat-faced, circular die which
shall include: "SAFECO CORPORATION," "Corporate Seal, 1929" and the
corporation's logo design.

                                  ARTICLE XIV

                             COPIES OF RESOLUTIONS

Any person dealing with the corporation may rely upon a copy of any of the
records of the proceedings, resolutions, or votes of the stockholders, the Board
of Directors, and any committees of or established by the Board of Directors,
when certified by the chief executive officer, a Vice President, Secretary, or
an Assistant Secretary.

                                   ARTICLE XV

                              AMENDMENT OF BYLAWS

1.    BY THE STOCKHOLDERS. These Bylaws may be amended, altered or repealed at
any meeting of the stockholders, if notice of the proposed alteration or
amendment is contained in the notice of the meeting.

2.    BY THE BOARD OF DIRECTORS. These Bylaws may be amended, altered or
repealed by the affirmative vote of a majority of the Board of Directors at any
regular meeting of the Board of Directors, or at any special meeting if notice
of the proposed alteration or amendment is contained in the notice of such
special meeting; provided, however, that the Board of Directors shall not amend,
alter or repeal any Bylaw in such a manner as to affect in any way the
qualification, classification, or term of office of the directors. Any action of
the Board of
<PAGE>
SAFECO Corporation Bylaws
November 6, 2002
Page 14

Directors with respect to the amendment, alteration or repeal of these Bylaws is
hereby made expressly subject to change or repeal by the stockholders.<PAGE>
                                                                    Exhibit 10.1

                               PURCHASE AGREEMENT

         This Purchase Agreement (this "Agreement"), dated as of December 30,
2002, is by and among Kramont Realty Trust, a Maryland real estate investment
trust (the "Seller") and Teachers Insurance and Annuity Association of America
("TIAA"), TIAA-CREF Real Estate Securities Fund and TIAA Life Real Estate
Securities Fund, which funds are acting through their investment manager,
Teachers Advisors, Inc., (each a "Purchaser" and collectively the "Purchasers"),
and Teachers Advisors, Inc. and Kensington Investment Group, Inc. (each an
"Investment Advisor") entering into this Agreement on behalf of themselves (as
to paragraph 4 of this Agreement) and each of the funds listed under their
respective names on SCHEDULE A.

         WHEREAS, the Purchasers desire to purchase from the Seller, and the
Seller desires to issue and sell to the Purchasers, in the aggregate 2,090,000
common shares of the Seller, par value $0.01 per share (the "Shares"), with the
number of Shares acquired by each Purchaser set forth on Schedule A.

         NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:

         1. Purchase and Sale. Subject to the terms and conditions hereof, the
Purchasers hereby agree to purchase from the Seller, and the Seller agrees to
issue and sell to the Purchasers, the Shares at a price per share of $14.35 for
an aggregate purchase amount of $29,991,500 (the "Purchase Price").

         2. Representations and Warranties of Purchaser. Each Purchaser
represents and warrants with respect to itself that:

            (a) Due Authorization. Such Purchaser is duly authorized to purchase
      the Shares. This Agreement has been duly authorized, executed and
      delivered by such Purchaser and constitutes a legal, valid and binding
      agreement of such Purchaser, enforceable against such Purchaser in
      accordance with its terms except as may be limited by (i) the effect of
      bankruptcy, insolvency, reorganization, moratorium or other similar laws
      relating to or affecting the rights or remedies of creditors or (ii) the
      effect of general principles of equity, whether enforcement is considered
      in a proceeding in equity or at law and the discretion of the court before
      which any proceeding therefor may be brought.

            (b) Prospectus and Prospectus Supplement. Such Purchaser has
      received a copy of the Seller's Basic Prospectus dated April 3, 2002, and
      Prospectus Supplement dated December 30, 2002 (each as defined below).

<PAGE>

            (c) Ownership of Shares of Beneficial Interest. As of the date
      hereof, none of the Purchasers, together with its respective subsidiaries
      and affiliates, owns 5% or more of the issued and outstanding shares of
      beneficial interest of the Company.

      3. Representations and Warranties of Seller. The Seller represents and
warrants that:

            (a) The Seller meets the requirements for use of Form S-3 under the
      Securities Act of 1933, as amended (the "Act"). The Seller's Registration
      Statement (as defined below) was declared effective by the by the SEC (as
      defined below) and the Seller has filed such post-effective amendments
      thereto as may be required prior to the execution of this Agreement and
      each such post-effective amendment became effective. The SEC has not
      issued, and to the Seller's knowledge, the SEC does not intend nor has it
      threatened to issue, a stop order with respect to the Registration
      Statement, nor has it otherwise suspended or withdrawn the effectiveness
      of the Registration Statement, either temporarily or permanently, nor, to
      the Seller's knowledge, does it intend or has it threatened to do so. On
      the effective date, (i) the Registration Statement complied in all
      material respects with the requirements of the Act and the rules and
      regulations promulgated under the Act (the "Regulations"); at the
      effective date the Basic Prospectus (as defined below) complied, and at
      the Closing the Prospectus (as defined below) will comply, in all material
      respects with the requirements of the Act and the Regulations; and (ii)
      the Registration Statement at the effective date and as amended or
      supplemented on the date hereof and at the Closing did not, does not and
      will not contain an untrue statement of a material fact or omit to state a
      material fact required to be stated therein or necessary to make the
      statements therein not misleading; and the Prospectus as of any such time,
      did not, does not and will not include an untrue statement of a material
      fact or omit to state a material fact necessary in order to make the
      statements therein, in the light of the circumstances under which they
      were made, not misleading; provided, however, that the representations and
      warranties in this subsection shall not apply to statements in or
      omissions from the Prospectus made in reliance upon and in conformity with
      information furnished to the Seller in writing by any of the Purchasers,
      Cohen & Steers Capital Advisors, LLC, in its capacity as placement agent,
      and the Seller, and their respective affiliates, expressly for use in the
      Prospectus. As used in this Agreement, the term "Registration Statement"
      means the "shelf" registration statement on Form S-3 (File No. 333-85424)
      as declared effective by the Securities and Exchange Commission (the
      "SEC"), including exhibits, financial statements, schedules and documents
      incorporated by reference therein. The term "Basic Prospectus" means the
      prospectus included in the Registration Statement. The term "Prospectus
      Supplement" means the prospectus supplement specifically relating to the
      Securities as shall be filed with the SEC pursuant to Rule 424 under the
      Act in connection with the sale of the Shares hereunder. The term
      "Prospectus" means the

                                      -2-
<PAGE>

      Basic Prospectus and the Prospectus Supplement. Any reference in this
      Agreement to the Registration Statement or the Prospectus shall be deemed
      to refer to and include the documents incorporated by reference therein as
      of the date hereof or the date of the Prospectus, as the case may be, and
      any reference herein to any amendment or supplement to the Registration
      Statement or the Prospectus shall be deemed to refer to and include any
      documents filed after such date and through the date of such amendment or
      supplement under the Securities Exchange Act of 1934, as amended (the
      "Exchange Act") and so incorporated by reference.

            (b) Since the date as of which information is given in the
      Registration Statement and the Prospectus, except as otherwise stated
      therein, (A) there has been no material adverse change or any development
      involving a prospective material adverse change in or affecting the
      condition, financial or otherwise, or in the earnings, business affairs or
      business prospects of the Seller and the subsidiaries of the Seller, if
      any (the "Subsidiaries") considered as one enterprise, whether or not
      arising in the ordinary course of business, (B) there have been no
      transactions entered into by the Seller or any of its Subsidiaries, other
      than those in the ordinary course of business, which are material with
      respect to the Seller and its Subsidiaries considered as one enterprise,
      and (C) other than regular quarterly dividends, there has been no dividend
      or distribution of any kind declared, paid or made by the Seller on any
      class of its shares of beneficial interest.

            (c) The Seller has been duly organized as a real estate investment
      trust and is validly existing in good standing under the laws of the State
      of Maryland. Each of the Subsidiaries of the Seller has been duly
      organized and is validly existing in good standing under the laws of its
      jurisdiction of organization. Each of the Seller and its Subsidiaries has
      the required power and authority to own and lease its properties and to
      conduct its business as described in the Prospectus; and each of the
      Seller and its Subsidiaries is duly qualified to transact business in each
      jurisdiction in which such qualification is required, whether by reason of
      the ownership or leasing of property or the conduct of business, except
      where the failure to so qualify would not have a material adverse effect
      on the condition, financial or otherwise, or the earnings, business
      affairs or business prospects of the Seller and its Subsidiaries
      considered as one enterprise.

            (d) As of the date hereof, the authorized capital stock of the
      Company consisted of 96,683,845 common shares and 3,316,155 preferred
      shares of beneficial interest, par value $.01 per share, of which
      21,265,985 common shares, 1,183,240 9.75% Series B-1 Cumulative
      Convertible Preferred Shares and 1,653,200 Series D Cumulative Redeemable
      Preferred Shares ("Series D Preferred Shares"), are issued and
      outstanding, and 146,800 Series D Preferred Shares are held in treasury,
      as of such date.

                                      -3-
<PAGE>

      The issued and outstanding shares of beneficial interest of Seller have
      been duly authorized and validly issued and are fully paid and
      non-assessable; the Shares have been duly authorized, and when issued and
      delivered as contemplated hereby, will be validly issued, fully paid and
      non-assessable and will be listed, subject to notice of issuance, on the
      New York Stock Exchange, effective as of the Closing; the Shares and the
      shares of beneficial interest of the Seller conform to all statements
      relating thereto contained in the Prospectus; and the issuance of the
      Shares is not subject to preemptive or other similar rights.

            (e) Neither the Seller nor any of its Subsidiaries is in violation
      of its organizational documents or in default in the performance or
      observance of any material obligation, agreement, covenant or condition
      contained in any contract, indenture, mortgage, loan agreement, note,
      lease or other instrument or agreement to which the Seller or any of its
      Subsidiaries is a party or by which it or any of them may be bound, or to
      which any of the property or assets of the Seller or any of its
      Subsidiaries is subject where such violation or default would have a
      material adverse effect on the condition, financial or otherwise, or the
      earnings, business affairs or business prospects of the Seller and its
      Subsidiaries considered as one enterprise; and, the execution, delivery
      and performance of this Agreement, and the issuance and delivery of the
      Shares and the consummation of the transactions contemplated herein have
      been duly authorized by all necessary action and will not conflict with or
      constitute a material breach of, or default under, or result in the
      creation or imposition of any lien, charge or encumbrance upon any
      property or assets of the Seller or any of its Subsidiaries pursuant to,
      any contract, indenture, mortgage, loan agreement, note, lease or other
      instrument or agreement to which the Seller or any of its Subsidiaries is
      a party or by which it or any of them may be bound, or to which any of the
      property or assets of the Seller or any of its Subsidiaries is subject,
      nor will any such action result in any violation of the provisions of the
      Amended and Restated Declaration of Trust, by-laws or other organizational
      documents of the Seller or any of its Subsidiaries or any applicable law,
      administrative regulation or administrative or court decree.

            (f) The Seller is organized in conformity with the requirements for
      qualification and, as of the date hereof and as of the Closing, operates
      in a manner that qualifies it as a "real estate investment trust" under
      the Internal Revenue Code of 1986, as amended, and the rules and
      regulations thereunder and will be so qualified after giving effect to the
      sale of the Shares.

            (g) The Seller is not required to be registered under the Investment
      Company Act of 1940, as amended.

                                      -4-
<PAGE>

            (h) There is no action, suit or proceeding before or by any court or
      governmental agency or body, domestic or foreign, now pending, or, to the
      knowledge of the Seller, threatened or contemplated, against or affecting
      the Seller or any of its Subsidiaries, which is required to be disclosed
      in the Prospectus (other than as disclosed therein), or which might result
      in any material adverse change in the condition, financial or otherwise,
      or in the earnings, business affairs or business prospects of the Seller
      and its Subsidiaries considered as one enterprise, or which might
      materially and adversely affect their respective property or assets or
      which might materially and adversely affect the consummation of this
      Agreement; all pending legal or governmental proceedings to which the
      Seller or any of its Subsidiaries is a party or of which any of their
      respective property or assets is the subject which are not described in
      the Prospectus, including ordinary routine litigation incidental to its
      business, are, considered in the aggregate, not material to the business
      of the Seller and its Subsidiaries considered as one enterprise.

            (i) No authorization, approval or consent of any court or United
      States federal or state governmental authority or agency is necessary in
      connection with the sale of the Shares hereunder, except such as may be
      required under the Act or the Regulations or state securities laws or real
      estate syndication laws.

            (j) The Seller and its Subsidiaries possess such material
      certificates, authorities or permits issued by the appropriate state,
      federal or foreign regulatory agencies or bodies necessary to conduct the
      business now conducted by them, and neither the Seller nor any of its
      Subsidiaries has received any notice of proceedings relating to the
      revocation or modification of any such certificate, authority or permit
      which, singly or in the aggregate, if the subject of an unfavorable
      decision, ruling or finding, would materially and adversely affect the
      condition, financial or otherwise, or the earnings, business affairs or
      business prospects of the Seller and its subsidiaries considered as one
      enterprise, nor, to the knowledge of the Seller, are any such proceedings
      threatened or contemplated.

            (k) The Seller has full power and authority to enter into this
      Agreement, and this Agreement has been duly authorized, executed and
      delivered by the Seller and constitutes a legal, valid and binding
      agreement of Seller, enforceable against Seller in accordance with its
      terms except as may be limited by (i) the effect of bankruptcy,
      insolvency, reorganization, moratorium or other similar laws relating to
      or affecting the rights or remedies of creditors or (ii) the effect of
      general principles of equity, whether enforcement is considered in a
      proceeding in equity or at law and the discretion of the court before
      which any proceeding therefor may be brought.

                                      -5-
<PAGE>

            (l) The Seller has good and marketable title to all of the
      properties and assets reflected in the audited financial statements
      contained in the Prospectus, subject to no lien, mortgage, pledge or
      encumbrance of any kind except those reflected in such financial
      statements (or as otherwise described in the Prospectus) or which are not
      material or which constitute customary provisions of mortgage loans
      secured by the Seller's properties creating obligations of the Seller with
      respect to proceeds of the properties, environmental liabilities and other
      customary protections for the mortgagees.

      4. Representation and Warranty of the Investment Advisors. To induce
Seller to enter into this Agreement, each of the Investment Advisors hereby
represents and warrants that:

            (a) It is an investment adviser duly registered with the Securities
      and Exchange Commission under the Investment Advisers Act of 1940.

            (b) It has been duly authorized to act as investment advisor on
      behalf of each of the funds listed as Purchaser under its name on Schedule
      A hereto.

            (c) It has the power and authority to enter into and execute this
      Agreement on behalf of each of the funds listed as Purchaser under its
      name on Schedule A hereto.

            (d) This Agreement has been duly executed and delivered by it and
      constitutes a legal, valid and binding agreement of such Investment
      Advisor, enforceable against it in accordance with its terms except as may
      be limited by (i) the effect of bankruptcy, insolvency, reorganization,
      moratorium or other similar laws relating to or affecting the rights or
      remedies of creditors or (ii) the effect of general principles of equity,
      whether enforcement is considered in a proceeding in equity or at law and
      the discretion of the court before which any proceeding therefor may be
      brought.

      5. Conditions to Obligations of the Parties. As a condition to Closing,
(i) each of the representations and warranties of the parties hereto shall be
true and correct in all respects, (ii) the New York Stock Exchange shall have
approved the Shares for listing upon notice of issuance, (iii) the Purchasers
shall have received an opinion from Ballard Spahr Andrews & Ingersoll, LLP,
dated as of December 31, 2002, substantially in the form attached hereto as
Exhibit A, (iv) the Purchasers shall have received an opinion from Proskauer
Rose LLP, dated as of December 31, 2002, substantially in the form attached
hereto as Exhibit B, (v) the Purchasers shall have received an opinion from the
general counsel of Seller, dated as of  December 31, 2002, substantially in the
form attached hereto as Exhibit C, and (vi) the Purchasers shall have received a
comfort letter from BDO Seidman, LLP, dated as of December 31, 2002,
substantially in the form attached hereto as Exhibit D.

                                      -6-
<PAGE>

      6. Closing. Provided that the conditions set forth in Section 5 hereto
have been met or waived at such time, the transactions contemplated hereby shall
be consummated in two parts on December 31, 2002 and on January 2, 2003, or at
such other time and date as the parties hereto shall agree (each such time and
date of payment and delivery being herein called the "Closing"). At the Closing,
settlement shall occur through Jeffries & Company, or an affiliate thereof, on a
delivery versus payment basis through the DTC ID System.

      7. Governing Law. This Agreement shall be construed in accordance with and
governed by the substantive laws of the State of New York, without regard to
conflict of laws principles.

      8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only in a writing that is executed by each of the parties hereto.

      9. Counterparts. This Agreement may be executed in separate counterparts,
each of which shall be deemed an original, and all of which together shall be
deemed to constitute one and the same instrument.

                                      -7-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.

                               KRAMONT REALTY TRUST

                               By: /s/ Louis P. Meshon, Sr.
                                   --------------------------------------------
                                   Name: Louis P. Meshon, Sr.
                                   Title: President, Chief Executive Officer and
                                   Trustee

                               TEACHERS INSURANCE AND ANNUITY
                                 ASSOCIATION OF AMERICA

                               By: /s/ Andrew J. Duffy
                                   -------------------------------------------
                                   Name: Andrew J. Duffy
                                   Title: Managing Director

                               KENSINGTON INVESTMENT GROUP, INC., on behalf of
                               itself (solely with respect to paragraph 4) and
                               each Purchaser set forth under its name on
                               Schedule A

                               By: /s/ Paul Gray
                                   ---------------------------------------------
                                   Name: Paul Gray
                                   Title: Portfolio Manager, Executive Vice
                                   President

                               TEACHERS ADVISORS, INC., on behalf of itself
                               (solely with respect to paragraph 4) and each
                               Purchaser set forth under its name on Schedule A

                               By: /s/ Andrew J. Duffy
                                   ---------------------------------------------
                                   Name: Andrew J. Duffy
                                   Title: Managing Director

                                      -8-
<PAGE>

                                   SCHEDULE A
NAME OF PURCHASER:                                           NUMBER OF SHARES

KENSINGTON INVESTMENT GROUP, INC.

     Kensington Strategic Realty Fund                                500,000
     Archon Partners LP                                               20,000
     Condor Partners LP                                               30,000
                                                                  ----------
             Total                                                   550,000

TIAA-CREF

Traunche A - 12/31/02 Closing

           Teachers Insurance and Annuity
           Association of America                                  1,115,000
           TIAA-CREF Real Estate Securities Fund                     105,000
           TIAA Life Real Estate Securities Fund                      40,000
                                                                   ---------
                     Total                                         1,260,000

Traunche B -  1/02/03 Closing

           Teachers Insurance and Annuity
           Association of America                                    280,000

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