Document:

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                                                                      ITEM 4(O)

               CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

                                       OF

               7% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES H

                                       OF

                         GENERAL GROWTH PROPERTIES, INC.

 PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

         General Growth Properties, Inc., a Delaware corporation (the
"Company"), hereby certifies that the following resolution creating a series of
its preferred stock, par value $100 per share, liquidation preference $1,000 per
share, designated as the 7% Cumulative Convertible Preferred Stock, Series H,
has been adopted by the Board of Directors of the Company (the "Board") pursuant
to the authority contained in Article IV of its Second Amended and Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
and in accordance with Section 151 of the General Corporation Law of the State
of Delaware (the "DGCL") and by the Preferred Stock Pricing Committee of the
Board (the "Pricing Committee") pursuant to the authority conferred on the
Pricing Committee by the Board in accordance with Section 141(c) of the DGCL.

         WHEREAS, the Board of Directors of the Company is authorized, within
the limitations and restrictions stated in its Certificate of Incorporation, to
provide for the issuance of preferred stock in series and to establish the
number of shares to be included in such series and to fix the designation,
powers, preferences and rights of the shares of such series and the
qualifications, limitations and restrictions thereof; and

         WHEREAS, it is the desire of the Board of Directors and the Pricing
Committee, pursuant to its authority as aforesaid, to authorize and fix the
terms of the preferred stock to be designated the "7% Cumulative Convertible
Preferred Stock, Series H" and the number of shares constituting such preferred
stock.

         NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized the 7%
Cumulative Convertible Preferred Stock, Series H on the terms and with the
provisions herein set forth:

I.       Certain Definitions

         As used herein, the following terms shall have the following meanings
(with terms defined in the singular having comparable meanings when used in the
plural and vice versa), unless the context otherwise requires:

         "Capital Stock" shall mean Common Stock or Preferred Stock. The term
"Capital Stock" shall not include convertible debt securities.

         "Common Stock" shall mean the common stock, par value $.10 per share,
of the Company.

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         "Dividend Payment Date" shall mean, with respect to any Dividend
Period, the payment date for the dividend declared by the Company on its shares
of Common Stock for such Dividend Period or, if no such payment date is
established, the last business day of the first full month following such
Dividend Period.

         "Dividend Period" shall mean the quarterly period that is then the
dividend period with respect to the Common Stock or, if no such dividend period
is established, the calendar quarter shall be the Dividend Period; provided that
(a) the initial Dividend Period with respect to any share of Series H Preferred
Stock shall commence on the date of issuance thereof and end on and include the
last day of the then current quarterly period that is then the dividend period
with respect to the Common Stock and (b) the Dividend Period in which the final
liquidation payment is made shall commence on the first day following the
immediately preceding Dividend Period and end on the date of such final
liquidation payment.

         "Fair Market Value" shall mean the average of the daily Closing Price
during the ten consecutive Trading Days ending on the earlier of (i) the
business day immediately preceding the day in question with respect to the
issuance or distribution requiring such computation and (ii) the day before the
"ex" date with respect to the issuance or distribution requiring such
computation. The term "`ex' date," when used with respect to any issuance or
distribution, means the first day on which shares of Common Stock trade regular
way, without the right to receive such issuance or distribution, on the exchange
or in the market, as the case may be, used to determine that day's Closing
Price.

         "Ownership Limitations" shall mean the restrictions on transferability
and ownership described in Article IV of the Certificate of Incorporation,
specifically, that ownership of more than 7.5% of the value of the outstanding
shares of Capital Stock of the Company, including the Series H Preferred Stock,
is restricted.

         "Preferred Stock" shall mean the preferred stock, par value $100 per
share, of the Company.

         "Relevant Dividend Periods" shall mean (a) each of the three (3)
consecutive Dividend Periods the last of which ends during the 90-day period
referred to in the last paragraph of Section VII(b) and (b) the next immediately
following Dividend Period after the third Dividend Period described in clause
(a) above.

         "Series A Preferred Stock" shall mean the Preferred Stock designated as
7.25% Preferred Income Equity Redeemable Stock, Series A.

         "Series B Preferred Stock" shall mean the Preferred Stock designated as
8.95% Cumulative Redeemable Preferred Stock, Series B.

         "Series C Preferred Stock" shall mean the Preferred Stock designated as
8.5% Cumulative Convertible Preferred Stock, Series C.

         "Series D Preferred Stock" shall mean the Preferred Stock designated as
8.75% Cumulative Redeemable Preferred Stock, Series D.

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         "Series E Preferred Stock" shall mean the Preferred Stock designated as
8.95% Cumulative Redeemable Preferred Stock, Series E.

         "Series F Preferred Stock" shall mean the Preferred Stock designated as
8.75% Cumulative Redeemable Preferred Stock, Series F.

         "Series G Preferred Stock" shall mean the Preferred Stock designated as
8.95% Cumulative Redeemable Preferred Stock, Series G.

         "Series C Preferred Units" shall mean the 7% Series C Cumulative
Convertible Preferred Units of limited partnership in GGP Limited Partnership, a
Delaware limited partnership.

         "Twelfth Anniversary Date" shall mean the twelfth anniversary of the
date hereof.

         Capitalized terms used herein without definition shall have the
meanings set forth in the Certificate of Incorporation.

II.      Designation and Number of Shares

         A series of Preferred Stock, designated the "7% Cumulative Convertible
Preferred Stock, Series H" (the "Series H Preferred Stock"), is hereby
established. The par value of the Series H Preferred Stock is $100 per share,
which is not a change in the par value of the shares of Preferred Stock as set
forth in the Certificate of Incorporation. The authorized number of shares of
Series H Preferred Stock shall be 41,131.

III.     Rank

         The Series H Preferred Stock, with respect to payment of dividends and
amounts upon voluntary or involuntary liquidation, dissolution or winding-up of
the Company, shall be deemed to rank:

         (a) senior to all classes or series of Common Stock and to all Capital
Stock the terms of which provide that such Capital Stock shall rank junior to
the Series H Preferred Stock;

         (b) on a parity with the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the
Series E Preferred Stock, the Series F Preferred Stock, the Series G Preferred
Stock and each other series of Preferred Stock issued by the Company which does
not provide by its express terms that it ranks junior or senior in right of
payment to the Series H Preferred Stock with respect to payment of dividends or
amounts upon liquidation, dissolution or winding-up; and

         (c) junior to any class or series of Capital Stock issued by the
Company that ranks senior to the Series H Preferred Stock and has been approved
in accordance with Section IV(b).

IV.      Voting

         (a) Holders of shares of the Series H Preferred Stock shall not have
any voting rights, except as required by applicable law and as described below
in this Section IV.

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         (b) So long as any shares of Series H Preferred Stock remain
outstanding, the Company shall not, without the affirmative vote or consent of
the holders of at least a majority of the shares of Series H Preferred Stock
outstanding at the time, given in person or by proxy, either in writing or at a
meeting (such series voting separately as a class), (i) authorize, create or
issue, or increase the authorized or issued amount of, any class or series of
shares of Capital Stock ranking senior to the Series H Preferred Stock with
respect to the payment of dividends or the distribution of assets upon voluntary
or involuntary liquidation, dissolution or winding-up of the Company or
reclassify any authorized shares of Capital Stock of the Company into such
Capital Stock, or create, authorize or issue any obligation or security
convertible or exchangeable into or evidencing the right to purchase any such
Capital Stock; or (ii) amend, alter or repeal the provisions of the Certificate
of Incorporation or this Certificate of Designations, whether by merger or
consolidation or otherwise (an "Event"), so as to negate the provisions of
clause (i) or (ii) of this paragraph or so as to materially and adversely affect
any special right, preference, privilege or voting power of the Series H
Preferred Stock or the holders thereof. Notwithstanding anything to the contrary
contained herein, each of the following shall be deemed not to (i) materially
and adversely affect any special right, preference, privilege or voting power of
the Series H Preferred Stock or (ii) otherwise require the vote or consent of
the holders of shares of Series H Preferred Stock: (X) the occurrence of any
merger, consolidation, entity conversion, share exchange, recapitalization of
the Capital Stock or other business combination or reorganization so long as
either (1) the Company is the surviving entity and the Series H Preferred Stock
remains outstanding with the terms thereof materially unchanged or (2) if the
Company is not the surviving entity in such transaction, interests in an entity
having substantially the same rights and terms with respect to rights to
dividends, voting, redemption and conversion as the Series H Preferred Stock are
exchanged or substituted for the Series H Preferred Stock without any income,
gain, or loss expected to be recognized by the holder upon the exchange or
substitution for federal income tax purposes (and with the terms of the Common
Stock or such other securities for which the Series H Preferred Stock (or the
substitute or exchanged security therefor) is convertible or redeemable
materially the same with respect to rights to dividends, voting, and
redemption), (Y) any increase in the amount of the authorized Preferred Stock or
Common Stock or the creation or issuance of any other series of Preferred Stock
or Common Stock or any increase in the amount of authorized or issued Common
Stock, Series H Preferred Stock or any other series of Preferred Stock, in each
case so long as such Capital Stock ranks on a parity with or junior to the
Series H Preferred Stock with respect to payment of dividends and the
distribution of assets upon voluntary or involuntary liquidation, dissolution or
winding-up of the Company, and (Z) the dissolution, liquidation and/or winding
up of the Company.

         (c) The foregoing voting provisions shall not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding shares of Series H Preferred Stock
shall have been converted or redeemed.

         (d) For purposes of the foregoing provisions of this Section IV, each
share of Series H Preferred Stock shall have one (1) vote per share. Except as
otherwise required by applicable law or as set forth herein, the shares of
Series H Preferred Stock shall not have any voting rights or powers and the
consent of the holders thereof shall not be required for the taking of any
corporate action.

V.       Dividends

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         (a) With respect to each Dividend Period and subject to the rights of
the holders of shares of Preferred Stock ranking senior to or on parity with the
Series H Preferred Stock, the holders of shares of Series H Preferred Stock
shall be entitled to receive, when, as and if declared by the Board, out of
assets of the Company legally available for the payment of dividends, quarterly
cumulative cash dividends in an amount per share of Series H Preferred Stock
equal to the greater of (i) $17.50 (the "Base Quarterly Dividend") and (ii) the
amount of the regular quarterly cash dividends for such Dividend Period upon the
number of shares of Common Stock (or portion thereof) into which such share of
Series H Preferred Stock is then convertible in accordance with Section VII
hereof. Notwithstanding anything to the contrary contained herein, the amount of
dividends described under each of clause (i) and (ii) of this paragraph for the
initial Dividend Period, or any other period shorter than a full Dividend
Period, shall be prorated and computed on the basis of twelve 30-day months and
a 360-day year. Such dividends shall, with respect to each share of Series H
Preferred Stock, accrue from its issue date, whether or not in, or with respect
to, any Dividend Period or Periods (A) the dividends described above are
declared, (B) the Company is contractually prohibited from paying such dividends
or (C) there shall be assets of the Company legally available for the payment of
such dividends. The dividends on the Series H Preferred Stock for each Dividend
Period shall, if and to the extent declared or authorized by the Board, be paid
in arrears (without interest or other amount) on the Dividend Payment Date with
respect thereto, and, if not paid on such date, shall accumulate, whether or not
in, or with respect to, any Dividend Period or Periods (X) the dividends are
declared, (Y) the Company is contractually prohibited from paying such dividends
or (Z) there shall be assets of the Company legally available for the payment of
such dividends. The record date for dividends to the holders of shares of Series
H Preferred Stock for any Dividend Period shall be the same as the record date
for the dividends to the holders of shares of Common Stock for such Dividend
Period (or, if no such record date is set for the Common Stock, the fifteenth
day of the calendar month in which the applicable Dividend Payment Date falls if
prior to such Dividend Payment Date; otherwise, the fifteenth day of the
immediately preceding calendar month). Accumulated and unpaid dividends for any
past Dividend Periods may be declared and paid at any time, without reference to
any Dividend Payment Date, to holders of record on such date, not exceeding 45
days preceding the payment date thereof, as may be fixed by the Board. Any
dividend payment made upon shares of Series H Preferred Stock shall first be
credited against the earliest accrued but unpaid dividends due with respect to
such shares of Series H Preferred Stock which remains payable. No interest, or
sum of money in lieu of interest, shall be owing or payable in respect of any
dividend payment or payments on the Series H Preferred Stock, whether or not in
arrears.

         (b) No dividend on the Series H Preferred Stock shall be declared by
the Board or paid or set apart for payment by the Company at such time as the
terms and provisions of any bona fide agreement of the Company, including any
agreement relating to its bona fide indebtedness, prohibits such declaration,
payment or setting apart for payment or provides that such declaration, payment
or setting apart for payment would constitute a breach thereof, or a default
thereunder, or if such declaration or payment shall be restricted or prohibited
by law (and such failure to pay dividends on the Series H Preferred Stock shall
prohibit other dividends by the Company as described in Sections V(c) or (d)
hereof). Notwithstanding the foregoing, dividends on the Series H Preferred
Stock shall accumulate whether or not any of the foregoing restrictions exist.

         (c) Except as provided in subsection V(d) herein, so long as any shares
of Series H Preferred Stock are outstanding, (i) no dividends (other than in
Common Stock or other Capital

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Stock of the Company ranking junior to the Series H Preferred Stock as to
payment of dividends and amounts upon liquidation, dissolution or winding-up of
the Company) shall be declared or paid or set apart for payment upon the Common
Stock or any other class or series of Capital Stock of the Company ranking, as
to payment of dividends or amounts distributable upon liquidation, dissolution
or winding-up of the Company, on a parity with or junior to the Series H
Preferred Stock, for any period and (ii) no Common Stock or other Capital Stock
of the Company ranking junior to or on a parity with the Series H Preferred
Stock as to payment of dividends or amounts upon liquidation, dissolution or
winding-up of the Company, shall be redeemed, purchased or otherwise acquired
for any consideration (or any monies be paid to or made available for a sinking
fund for the redemption of any such Capital Stock) by the Company (except by
conversion into or exchange for other Capital Stock of the Company ranking
junior to the Series H Preferred Stock as to payment of dividends and amounts
upon liquidation, dissolution or winding-up of the Company or by redemptions for
the purpose of maintaining the Company's qualification as a real estate
investment trust ("REIT") for U.S. federal income tax purposes) unless, in the
case of either clause (i) or (ii), full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Series H Preferred Stock for
all Dividend Periods ending on or prior to the dividend payment date for the
Common Stock or such other class or series of Capital Stock or the date of such
redemption, purchase or other acquisition.

         (d) When dividends are not paid in full (or a sum sufficient for such
full payment is not set apart for such payment) upon the Series H Preferred
Stock and any other Capital Stock ranking on a parity as to payment of dividends
with the Series H Preferred Stock, all dividends declared upon the Series H
Preferred Stock and any other Capital Stock ranking on a parity as to payment of
dividends with the Series H Preferred Stock shall be declared pro rata so that
the amount of dividends declared per share of Series H Preferred Stock and such
other Capital Stock shall in all cases bear to each other the same ratio that
accrued and unpaid dividends per share on the Series H Preferred Stock and such
other Capital Stock (which shall not include any accumulation in respect of
unpaid dividends for prior dividend periods if such Capital Stock does not have
a cumulative dividend) bear to each other.

         (e) The holders of the shares of Series H Preferred Stock shall not be
entitled to any dividends in excess of full cumulative dividends as described in
V(a) above.

VI.      Liquidation Preference

         (a) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, before any payment or distribution of
the assets of the Company (whether capital or surplus) shall be made to or set
apart for the holders of Common Stock or any other Capital Stock ranking junior
to the Series H Preferred Stock as to the distribution of assets upon the
liquidation, dissolution or winding-up of the Company, the holders of shares of
the Series H Preferred Stock shall, with respect to each such share, be entitled
to receive, out of the assets of the Company available for distribution to
stockholders after payment or provision for payment of all debts and other
liabilities of the Company and subject to the rights of the holders of any
shares of Preferred Stock ranking senior to or on parity with the Series H
Preferred Stock with respect to payment of amounts upon liquidation, dissolution
or winding-up of the Company, an amount equal to the greater of (i) $1,000.00,
plus an amount equal to all dividends (whether or not earned or declared)

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accrued and unpaid thereon to the date of final distribution (including all
accumulated and unpaid distributions) and (ii) the amount that a holder of such
share of Series H Preferred Stock would have received upon final distribution in
respect of the number of shares of Common Stock into which such share of Series
H Preferred Stock (including all accumulated and unpaid dividends (whether or
not earned or declared) with respect thereto) was convertible immediately prior
to such date of final distribution. If, upon any such voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the assets of the
Company, or proceeds thereof, distributable among the holders of the shares of
Series H Preferred Stock, are insufficient to pay in full the preferential
amount aforesaid on the shares of Series H Preferred Stock and liquidating
payments on any other shares of any class or series of Capital Stock ranking, as
to payment of dividends and amounts upon the liquidation, dissolution or
winding-up of the Company, on a parity with the Series H Preferred Stock, then
such assets, or the proceeds thereof, shall be distributed among the holders of
shares of Series H Preferred Stock and any such other parity stock ratably in
accordance with the respective amounts that would be payable on such shares of
Series H Preferred Stock and such other stock if all amounts payable thereon
were paid in full. For the purposes of this Section VI, none of (i) a
consolidation or merger of the Company with or into another entity, (ii) a
merger of another entity with or into the Company, (iii) a statutory share
exchange by the Company or (iv) a sale, lease or conveyance of all or
substantially all of the Company's assets, properties or business shall be
deemed to be a liquidation, dissolution or winding-up of the Company.

         (b) Written notice of such liquidation, dissolution or winding-up of
the Company, stating the payment date or dates when, and the place or places
where, the amounts distributable in such circumstances shall be payable, shall
be given by first class mail, postage pre-paid, not less than 30 nor more than
60 days prior to the payment date stated therein, to each record holder of the
Series H Preferred Stock at the respective addresses of such holders as the same
shall appear on the stock transfer records of the Company.

         (c) After payment of the full amount of liquidating distributions to
which they are entitled as provided in Section VI(a) above, the holders of
shares of Series H Preferred Stock shall have no right or claim to any of the
remaining assets of the Company.

VII. Conversion. Holders of shares of Series H Preferred Stock shall have the
right to convert all or a portion of such shares into shares of Common Stock, as
follows:

         (a) A holder of shares of Series H Preferred Stock shall have the
right, at such holder's option, at any time, to convert any whole number of
shares of Series H Preferred Stock, into fully paid and non-assessable shares of
Common Stock; provided, however, that the conversion right may not be exercised
at any one time by a holder of shares of Series H Preferred Stock with respect
to less than 50 shares of Series H Preferred Stock (or all the shares of Series
H Preferred Stock then owned by such holder if such holder owns less than 50
shares of Series H Preferred Stock). Each share of Series H Preferred Stock
shall be convertible into the number of shares of Common Stock determined by
dividing (i) the $1,000 base liquidation preference per each share of Series H
Preferred Stock, plus an amount equal to all accumulated and unpaid dividends
(whether or not earned or declared) with respect thereto by (ii) a conversion
price of $61.6575 per share of Common Stock (equivalent to an initial
anticipated conversion rate of 16.2186 shares of Common Stock for each share of
Series H Preferred Stock), subject to adjustment as described in Section VII(c)
hereof (the "Conversion Price"). No fractional shares of Common Stock will be
issued upon

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any conversion of shares of Series H Preferred Stock. Instead, the number of
shares of Common Stock to be issued upon each conversion shall be rounded down
to the nearest whole number of shares of Common Stock, and the Company shall pay
cash for the fractional share based on the Fair Market Value.

         (b) To exercise the conversion right, the holder of each share of
Preferred Stock to be converted shall surrender the certificate representing
such share, duly endorsed or assigned to the Company or in blank, at the
principal office of the Company accompanied by a written notice to the Company
(the "Conversion Notice") indicating that the holder thereof elects to convert
such share of Series H Preferred Stock and containing representations and
warranties of such holder that (i) such holder has good and marketable title to
such share of Series H Preferred Stock, free and clear of all liens, claims and
encumbrances, (ii) such holder has such knowledge and experience in financial
and business matters such that such holder is capable of evaluating the merits
and risks of receiving and owning the shares of Common Stock that may be issued
to it in exchange for such share of Series H Preferred Stock, (iii) such holder
is able to bear the economic risk of such ownership and (iv) such shares of
Common Stock to be acquired by such holder pursuant to this Section VII would be
acquired by such holder for its own account, for investment purposes only and
not with a view to, and with no present intention of, selling or distributing
the same in violation of federal or state securities laws. Unless the shares
issuable on conversion are to be issued in the same name as the name in which
such share of Series H Preferred Stock is registered, each share of Series H
Preferred Stock surrendered for conversion shall be accompanied by instruments
of transfer, in form reasonably satisfactory to the Company, duly executed by
the holder or such holder's duly authorized attorney and an amount sufficient to
pay any transfer or similar tax (or evidence reasonably satisfactory to the
Company demonstrating that such taxes have been paid).

         As promptly as practicable after the surrender of certificates for
shares of Series H Preferred Stock and delivery of the Conversion Notice as
aforesaid, the Company shall issue and shall deliver at such office to such
holder, or on the holder's written order, a certificate or certificates for the
number of shares of Common Stock issuable upon the conversion of such shares of
Series H Preferred Stock in accordance with the provisions of this Section VII.
In addition, the Company shall issue and deliver to such holder a certificate or
certificates evidencing any shares of Series H Preferred Stock that were
evidenced by the certificate or certificates delivered to the Company in
connection with such conversion but that were not converted.

         A holder of shares of Series H Preferred Stock at the close of business
on the record date for any Dividend Period shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares of Series H Preferred Stock
following such record date and prior to such Dividend Payment Date and shall
have no right to receive any dividend for such Dividend Period in respect of the
shares of Common Stock into which such shares of Series H Preferred Stock were
converted. Except as provided herein, the Company shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
of Series H Preferred Stock or for dividends on the shares of Common Stock that
are issued upon such conversion.

         Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for shares of
Series H Preferred Stock shall have been surrendered and the Conversion Notice
is received by the Company as aforesaid, and the person or

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persons in whose name or names any shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of such shares at such time on such date, and such conversion shall be at the
Conversion Price in effect at such time and on such date unless the transfer
books of the Company shall be closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record at the
close of business on the next succeeding day on which such transfer books are
open, but such conversion shall be at the Conversion Price in effect on the date
on which such shares have been surrendered and such notice received by the
Company.

         Notwithstanding anything to the contrary contained herein, all holders
of shares of Series H Preferred Stock shall be deemed to have delivered a
Conversion Notice (and therefore exercised their conversion rights effective as
of the time specified in the next sentence) as to all shares of Series H
Preferred Stock if (a) with respect to any period of 90 consecutive calendar
days following the Twelfth Anniversary Date, the trading price of a share of
Common Stock (calculated based on the average of the intra-day high and low)
exceeds on each trading day during such 90-day period the Conversion Price then
in effect and (b) the amount of the dividend (as calculated in accordance with
Section V(a)(ii) hereof) for each of the four (4) Relevant Dividend Periods upon
the number of shares of Common Stock (or portion thereof) into which a share of
Series H Preferred Stock is then convertible in accordance with this Section VII
exceeds the Base Quarterly Dividend. The forced conversion referred to in this
paragraph shall be effective at the close of business on the Dividend Payment
Date for the last Relevant Dividend Period.

         (c) The Conversion Price shall be adjusted from time to time as
follows:

                  (i) If the Company shall, after the date on which any shares
of Series H Preferred Stock are first issued (the "Issue Date"), (A) pay or make
a dividend to holders of its Common Stock in Common Stock, (B) subdivide its
outstanding Common Stock into a greater number of shares of Common Stock, (C)
combine its outstanding Common Stock into a smaller number of shares of Common
Stock or (D) issue any shares of Capital Stock by reclassification of its Common
Stock, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of holders entitled to receive
such dividend or at the opening of business on the day next following the day on
which such subdivision, combination or reclassification becomes effective, as
the case may be, shall be adjusted so that the holder of any share of Series H
Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock that such holder would have owned
or have been entitled to receive after the happening of any of the events
described above had such share of Series H Preferred Stock been converted
immediately prior to close of business on the record date in the case of a
dividend or the effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this subsection (i) shall
become effective immediately after the opening of business on the day next
following the record date (except as provided in subsection (g) below) in the
case of a dividend and shall become effective immediately after the opening of
business on the day next following the effective date in the case of a
subdivision, combination or reclassification.

                  (ii) If the Company shall issue after the Issue Date rights,
options or warrants to all holders of shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible into
or exchangeable for shares of Common Stock) at a

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price per share less than the Fair Market Value per share of Common Stock on the
record date for the determination of holders of shares of Common Stock entitled
to receive such rights, options or warrants, then the Conversion Price in effect
at the opening of business on the day next following such record date shall be
adjusted to equal the price determined by multiplying (I) the Conversion Price
in effect immediately prior to the opening of business on the day following the
date fixed for such determination by (II) a fraction, the numerator of which
shall be the sum of (A) the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination and (B) the number of
shares of Common Stock that the aggregate proceeds to the Company from the
exercise of such rights, options or warrants for shares of Common Stock would
purchase at such Fair Market Value, and the denominator of which shall be the
sum of (A) the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and (B) the number of
additional shares of Common Stock offered for subscription or purchase pursuant
to such rights, options or warrants. Such adjustment shall become effective
immediately after the opening of business on the day next following such record
date (except as provided in subsection (g) below). In determining whether any
rights, options or warrants entitle the holders of shares of Common Stock to
subscribe for or purchase shares of Common Stock at less than the Fair Market
Value, there shall be taken into account any consideration received by the
Company upon issuance and upon exercise of such rights, options or warrants, the
value of such consideration, if other than cash, to be determined in good faith
by the Board of the Company.

                  (iii) If the Company shall distribute after the Issue Date to
all holders of shares of Common Stock any other securities or evidences of its
indebtedness or assets (excluding those rights, options and warrants referred to
in and treated under subsection (ii) above, and excluding dividends paid
exclusively in cash) (any of the foregoing being hereinafter in this subsection
(iii) called the "Securities"), then in each case the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying (I) the
Conversion Price in effect immediately prior to the close of business on the
date fixed for the determination of holders of shares of Common Stock entitled
to receive such dividend by (II) a fraction, the numerator of which shall be the
Fair Market Value per share of Common Stock on the record date mentioned below
less the then fair market value (as determined in good faith by the Board of the
Company) of the portion of the Securities so distributed applicable to one share
of Common Stock, and the denominator of which shall be the Fair Market Value per
share of Common Stock on the record date mentioned below. Such adjustment shall
become effective immediately at the opening of business on the business day next
following (except as provided in subsection (g) below) the record date for the
determination of holders of shares of Common Stock entitled to receive such
distribution. For the purposes of this subsection (iii), a dividend in the form
of a Security, which is distributed not only to the holders of the shares of
Common Stock on the date fixed for the determination of holders of shares of
Common Stock entitled to such distribution of such Security, but also is
distributed with each share of Common Stock delivered to a person converting a
share of Series H Preferred Stock after such determination date (together with
dividends thereon paid to holders of shares of Common Stock prior thereto),
shall not require an adjustment of the Conversion Price pursuant to this
subsection (iii); provided that on the date, if any, on which a person
converting a share of Series H Preferred Stock would no longer be entitled to
receive such Security with a share of Common Stock, a distribution of such
Securities shall be deemed to have occurred, and the Conversion Price shall be
adjusted as provided in this subsection (iii) (and such day shall be deemed to
be "the date fixed for the determination of the holders of shares of Common
Stock entitled to receive such dividend" and "the record date" within the
meaning of the two preceding sentences).

                                       10

<PAGE>

                  (iv) Notwithstanding the foregoing, no adjustment shall be
made pursuant to the preceding clauses (ii) and (iii) that would result in an
increase in the Conversion Price. No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any adjustments that by
reason of this subsection (iv) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in accordance
with the provisions of this Section VII (other than this subsection (iv)) not
later than such time as may be required in order to preserve the tax-free nature
of a dividend to the holders of shares of Common Stock. Notwithstanding any
other provisions of this Section VII, the Company shall not be required to make
any adjustment to the Conversion Price for the issuance of any (i) shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in Common Stock under such plan or (ii) any options, rights or
shares of Common Stock pursuant to any stock option, stock purchase or any
stock-based compensation plan maintained by the Corporation. All calculations
under this Section VII shall be made to the nearest cent (with $.005 being
rounded upward) or to the nearest one-tenth of a share (with .05 of a share
being rounded upward), as the case may be.

         (d) If the Company shall be a party to any transaction (including,
without limitation, a merger, consolidation, entity conversion, share exchange,
statutory share exchange, self tender offer for all or substantially all of the
shares of Common Stock, sale of all or substantially all of the Company's assets
or recapitalization of the Common Stock or other business combination or
reorganization and excluding any transaction as to which subsection (c)(i) of
this Section VII applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Common Stock shall
be exchanged for or converted into the right, or the holders of such shares
shall otherwise be entitled, to receive shares, stock, securities or other
property (including cash or any combination thereof), each share of Series H
Preferred Stock which is not converted into the right to receive shares, stock,
securities or other property in connection with such Transaction (and thus
remains outstanding) shall thereafter be convertible into the kind and amount of
shares, stock, securities and other property (including cash or any combination
thereof) receivable upon the consummation of such Transaction by a holder of
that number of shares of Common Stock into which one share of Series H Preferred
Stock (including all dividends (whether or not earned or declared) accumulated
and unpaid thereon) was convertible immediately prior to such Transaction,
assuming such holder of Common Stock is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an affiliate of a Constituent Person. In the event that holders of
shares of Common Stock have the opportunity to elect the form or type of
consideration to be received upon consummation of the Transaction, prior to such
transaction the Company shall give prompt written notice to each holder of
shares of Series H Preferred Stock of such election, and each holder of shares
of Series H Preferred Stock shall also have the right to elect, by written
notice to the Company, the form or type of consideration to be received upon
conversion of each share of Series H Preferred Stock held by such holder
following consummation of such Transaction. If a holder of shares of Series H
Preferred Stock fails to make such an election, such holder (and any of its
transferees) shall receive upon conversion of each share of Series H Preferred
Stock held by such holder (or by any of its transferees) the same consideration
that a holder of that number of shares of Common Stock into which one share of
Series H Preferred Stock was convertible immediately prior to such Transaction

                                       11

<PAGE>

would receive if such holder failed to make such an election. The Company shall
not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this subsection (d), and it shall not consent
or agree to the occurrence of any Transaction until the Company has entered into
an agreement with the successor or purchasing entity, as the case may be, for
the benefit of the holders of the shares of Series H Preferred Stock that will
contain provisions enabling the holders of shares of Series H Preferred Stock
that remain outstanding after such Transaction to convert into the consideration
received by holders of shares of Common Stock at the Conversion Price in effect
immediately prior to such Transaction (with the holder having the option to
elect the type of consideration if a choice is offered in the Transaction as
specified above). The provisions of this subsection (d) shall similarly apply to
successive Transactions.

         (e) If:

                  (i) the Company shall declare a dividend on the shares of
Common Stock (other than a cash dividend) or there shall be a reclassification,
subdivision or combination of Common Stock; or

                  (ii) the Company shall authorize the granting to the holders
of the shares of Common Stock of rights, options or warrants to subscribe for or
purchase any Capital Stock of any class or any other rights, options or
warrants; or

                  (iii) there shall be any reclassification of the shares of
Common Stock or any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or a
statutory share exchange involving the conversion or exchange of shares of
Common Stock into securities or other property, or a share exchange involving
the conversion or exchange of shares of Common Stock into securities or other
property, a self tender offer by the Company for all or substantially all of the
shares of Common Stock, or the sale or transfer of all or substantially all of
the assets of the Company as an entirety; or

                  (iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding-up of the Company,

then the Company shall cause to be mailed to the holders of the shares of Series
H Preferred Stock at their addresses as shown on the records of the Company, as
promptly as possible a notice stating (A) the date on which a record is to be
taken for the purpose of such distribution of rights, options or warrants, or,
if a record is not to be taken, the date as of which the holders of shares of
Common Stock of record to be entitled to such distribution of rights, options or
warrants are to be determined or (B) the date on which such reclassification,
subdivision, combination, consolidation, merger, sale, transfer, liquidation,
dissolution or winding-up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding-up. Failure to give or
receive such notice or any defect therein shall not affect the legality or
validity of the proceedings described in this Section VII.

         (f) Whenever the Conversion Price is adjusted as herein provided, the
Company shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion

                                       12

<PAGE>

Price and the effective date such adjustment becomes effective and shall mail
such notice of such adjustment of the Conversion Price to the holder of each
share of Series H Preferred Stock at such holder's last address as shown on the
records of the Company.

         (g) In any case in which subsection (c) of this Section VII provides
that an adjustment shall become effective on the date next following the record
date for an event, the Company may defer until the occurrence of such event (i)
issuing to the holder of any share of Series H Preferred Stock converted after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of Common Stock issuable upon
such conversion before giving effect to such adjustment and (ii) paying to such
holder any amount of cash in lieu of fractions pursuant to subsection (a) of
this Section VII.

         (h) For purposes of this Section VII, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock then
owned or held by or for the account of the Company. The Company shall not make
any distribution on shares of Common Stock held in the treasury of the Company.

         (i) If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one subsection of this Section VII, only
one adjustment shall be made, and such adjustment shall be the amount of
adjustment that has the highest absolute value.

         (j) If the Company shall take any action affecting the Common Stock,
other than action described in this Section VII, that in the reasonable judgment
of the Company would materially affect the conversion rights of the holders of
the shares of Series H Preferred Stock, the Conversion Price for the Series H
Preferred Stock may be adjusted, to the extent permitted by law, in such manner,
if any, and at such time, as the Company, determines to be equitable in the
circumstances.

         (k) The Company covenants that shares of Common Stock issued upon
conversion of the shares of Series H Preferred Stock shall be validly issued,
fully paid and non-assessable and the holder thereof shall be entitled to rights
of a holder of shares of Common Stock specified in the Certificate of
Incorporation. Prior to the delivery of any securities that the Company shall be
obligated to deliver upon conversion of the Series H Preferred Stock, the
Company shall endeavor to comply with all federal and state laws and regulations
in respect thereof.

         (l) The Company will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of the shares of
Series H Preferred Stock pursuant hereto; provided, however, that the Company
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock or other
securities or property in a name other than that of the holder of the Series H
Preferred Stock to be converted, and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Company the amount of any such tax or established, to the reasonable
satisfaction of the Company, that such tax has been paid.

         (m) Notwithstanding anything to the contrary contained herein (but
subject to the provisions of Section VII(n) hereof), the Company agrees that it
will apply the adjustment

                                       13

<PAGE>

provisions of this Section VII and any related provisions as if the Series H
Preferred Stock were issued and outstanding as of November 27, 2002. Thus, for
example, if an event were to occur on December 31, 2002 that would adjust the
number of shares of Common Stock into which the shares of Series H Preferred
Stock would have been convertible had such shares of Series H Preferred Stock
been outstanding as of such date, but the Series H Preferred Stock were not
actually issued until December 31, 2003, then such adjustment would be applied
so that, upon such issuance (but subject to further adjustment for subsequent
events), the Series H Preferred Stock would be immediately convertible into the
number of shares of Common Stock into which the Series H Preferred Stock would
have been convertible had such shares of Series H Preferred Stock been
outstanding on December 31, 2002.

         (n) Notwithstanding anything to the contrary contained herein, the
adjustment provisions contained in this Section VII shall be applied so that
there is no duplication of adjustments made pursuant to any other document.

VIII.    Ownership Limitations

         The shares of Series H Preferred Stock are subject to the restrictions
on transferability and ownership provisions described in Article IV of the
Certificate of Incorporation. The ownership limit as described in Article IV of
the Certificate of Incorporation (the "Ownership Limit") shall mean that
ownership of more than 7.5% of the value of the outstanding shares of Capital
Stock of the Company, including the Series H Preferred Stock, is restricted in
order to preserve the Company's status as a REIT for U.S. federal income tax
purposes. Subject to certain limitations described in Article IV of the
Certificate of Incorporation, the Board may modify the Ownership Limit, though
the Ownership Limit may not be increased by the Board to more than 9.8%. In
addition, Article IV of the Certificate of Incorporation limits the ownership of
"Existing Holders" (the "Existing Holder Limit") and also limits transfers that
would cause the Company to become "closely held" within the meaning of Section
856(h) of the Code.

                                       14

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be executed in its name and on its behalf by its Executive Vice
President and attested to by its Secretary on this 11th day of November, 2002.

                           GENERAL GROWTH PROPERTIES, INC., a
                           Delaware corporation

                           By:      /s/      Bernard Freibaum
                                    --------------------------------------------
                                    Bernard Freibaum, Executive Vice President

ATTEST:

By:      /s/ Marshall E. Eisenberg
         ---------------------------
         Marshall E. Eisenberg, Secretary

                                       15<PAGE>
                                                                      ITEM 10(B)

                                FIRST AMENDMENT

                                     TO THE

                           SECOND AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                             GGP LIMITED PARTNERSHIP

         THIS FIRST AMENDMENT is made and entered into as of the 10th day of
June, 1998, by and among the undersigned parties.

                              W I T N E S S E T H:

         WHEREAS, a Delaware limited partnership known as GGP Limited
Partnership (the "Partnership") exists pursuant to that certain Second Amended
and Restated Agreement of Limited Partnership of GGP Limited Partnership dated
as of April 1, 1998 (the "Second Restated Partnership Agreement") and the
Delaware Revised Uniform Limited Partnership Act; and

         WHEREAS, General Growth Properties, Inc., a Delaware corporation which
is the general partner of the Partnership (the "General Partner"), has issued
and sold 12,000,000 Depositary Shares (with a liquidation preference equal to
$25.00 per Depositary Share) through its depository agent, each representing
1/40th of a share of 7.25% Preferred Income Equity Redeemable Stock, Series A, a
series of preferred stock, par value $100.00 per share, of the General Partner
(the "PIERS Offering"), and

         WHEREAS, concurrently with the execution and delivery of this First
Amendment, the General Partner is contributing to the capital of the Partnership
the net proceeds of the PIERS Offering in exchange for the Series A Preferred
Units (as defined below); and

         WHEREAS, the parties hereto, being the sole general partner and a
majority-in-interest of the limited partners of the Partnership, desire to amend
the Second Restated Partnership Agreement as set forth herein.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby amend the Second Restated Partnership Agreement as
follows:

                  1. CAPITALIZED TERMS. Terms which are capitalized and not
         defined herein shall have the definitions assigned to such terms in the
         Second Restated Partnership Agreement.

                  2. ADDITIONAL DEFINITIONS. Article I of the Second Restated
         Partnership Agreement is hereby amended by the addition of the
         following new definitions:

<PAGE>

                           "Common Units" shall mean all Units other than the
                  Series A Preferred Units.

                           "Series A Preferred Shares" shall mean shares of the
                  7.25% Preferred Income Equity Redeemable Stock, Series A of
                  the General Partner, par value $100.00 per share, commonly
                  referred to as "PIERS".

                           "Series A Preferred Units" shall mean the series of
                  preferred units of the Partnership designated as the 7.25%
                  Series A Cumulative Redeemable Preferred Units having the
                  designations, preferences and other rights described herein.

                           "Series A Preferred Units Distribution Payment Dates"
                  shall mean the 15th day of January, April, July and October of
                  each year, commencing October 15, 1998.

                  3. AMENDED DEFINITIONS. Article I of the Second Restated
         Partnership Agreement is hereby amended as follows:

                           (i) The third sentence of the definition of
                  Conversion Factor set forth in Section 1.1 hereof is hereby
                  deleted and the following sentence is hereby inserted in its
                  place and stead:

                           The Conversion Factor shall be adjusted by
                           multiplying the Conversion Factor (as in effect
                           immediately prior to such adjustment) by a fraction,
                           the numerator of which shall be the actual number of
                           shares of Common Stock issued and outstanding on the
                           record date for such dividend, distribution,
                           subdivision or combination (determined without the
                           below assumption), and the denominator of which shall
                           be the number of shares of Common Stock issued and
                           outstanding on the record date for such dividend,
                           distribution, subdivision or combination (assuming
                           for such purposes that such dividend, distribution,
                           subdivision or combination has occurred as of such
                           time).

                           (ii) Subsection (a) of the definition of Gross Asset
                  Value set forth in Section 1.1 thereof is hereby deleted and
                  the following new Subsection (a) is hereby inserted in its
                  place and stead:

                                    (a) the initial Gross Asset Value of (i) the
                           assets contributed by each Partner to the Partnership
                           prior to the date hereof is the gross fair market
                           value of such contributed assets as indicated in the
                           books and records of the Partnership as of the date
                           hereof, and (ii) any asset hereafter contributed by a
                           Partner, other than money, is the gross fair market
                           value thereof as reasonably determined by the General
                           Partner using such reasonable method of valuation as
                           the General Partner may adopt; provided that the
                           gross fair market value of any such assets hereafter
                           contributed by the General Partner shall be the
                           Acquisition Cost thereof (without reduction for any
                           borrowings incurred by the General Partner in
                           connection with the acquisition of such assets and
                           assumed by the

                                      -2-

<PAGE>

                           Partnership or, if such assumption was not possible,
                           with respect to which borrowings the Partnership
                           obligates itself to make payments to the General
                           Partner in a like amount and on like terms);

                           (iii) The definition of Majority-In-Interest of the
                  Limited Partners set forth in Section 1.1 thereof is hereby
                  amended by the deletion of the words "existing Limited
                  Partners," and by the substitution of the words "Limited
                  Partners as at April 1, 1998," in their place and stead.

                           (iv) The definition of Percentage Interest set forth
                  in Section 1.1 thereof is hereby amended by the deletion of
                  such definition in its entirety and by the substitution of the
                  following new definition in its place and stead:

                                    "Percentage Interest" shall mean, with
                           respect to any Partner at any time, the percentage
                           ownership interest of such Partner in the Partnership
                           at such time, which percentage ownership interest
                           shall be equal to the quotient of the number of
                           Common Units owned by such Partner at such time
                           divided by the aggregate number of issued and
                           outstanding Common Units at such time, and any Series
                           A Preferred Units owned by such Partner at such time
                           shall be disregarded for such purpose. The Percentage
                           Interest of each Partner on the date hereof is set
                           forth opposite its name on Exhibit A.

                           (v) The definition of Units set forth in Section 1.1
                  thereof is hereby amended by the deletion of such definition
                  in its entirety and by the substitution of the following new
                  definition in its place and stead:

                                    "Units" shall mean the partnership units in
                           the Partnership established and issued from time to
                           time in accordance with the terms hereof, including
                           without limitation Common Units and Series A
                           Preferred Units. The number and designation of all
                           Units held by each Partner is set forth opposite such
                           Partner's name on Exhibit A.

                  4. LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. Article II of
         the Second Restated Partnership Agreement is hereby amended by the
         deletion of Section 2.4 thereof in its entirety and by the substitution
         of the following new Section 2.4 in its place and stead:

                           2.4 LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. The
                  location of the principal place of business of the Partnership
                  shall be at 110 North Wacker Drive, Chicago, Illinois 60606,
                  or at such other location as shall be selected by the General
                  Partner from time to time in its sole discretion.

                  5. GENERAL PARTNER CONTRIBUTION. Article IV of the Second
         Restated Partnership Agreement is hereby amended by the deletion of the
         first sentence of Section 4.1 thereof and by the substitution of the
         following new sentence in its place and stead:

                                      -3-

<PAGE>

                  The General Partner has contributed to the Partnership as its
                  Capital Contribution the cash and property reflected in the
                  Partnership's books and records as having been contributed by
                  it, including without limitation the cash being contributed by
                  the General Partner to the Partnership contemporaneously with
                  the execution hereof in connection with the PIERS Offering.

                  6. ADDITIONAL FUNDS. Article IV of the Second Restated
         Partnership Agreement is hereby amended by the deletion of Subsection
         4.3(b) thereof in its entirety and by the substitution of the following
         new Subsection 4.3(b) in its place and stead:

                           (b) Effective on each Adjustment Date, the
                  Partnership shall issue to the General Partner (i) with
                  respect to Contributed Funds relating to an issuance by the
                  General Partner of Common Stock, the number of additional
                  Common Units equal to the product of (x) the number of shares
                  of Common Stock issued by the General Partner in connection
                  with obtaining such Contributed Funds, and (y) the Conversion
                  Factor, and (ii) with respect to Contributed Funds relating to
                  an issuance by the General Partner of Series A Preferred
                  Shares, an equal number of Series A Preferred Units. The
                  General Partner promptly shall provide the Limited Partners
                  with notice of the issuance of any such Units.

                  7. STOCK INCENTIVE PLAN. Article IV of the Second Restated
         Partnership Agreement is hereby amended by the deletion of Subsection
         4.4(b) thereof in its entirety and by the substitution of the following
         new Subsection 4.4(b) in its place and stead:

                           (b) the Partnership shall issue to the General
                  Partner, with respect to any exercise of Incentive Options,
                  the number of additional Common Units equal to the product of
                  (i) the number of shares of Common Stock issued by the General
                  Partner in connection with such exercise of Incentive Options,
                  multiplied by (ii) the Conversion Factor.

                  8. ESTABLISHMENT OF SERIES A PREFERRED UNITS. Article IV of
         the Second Restated Partnership Agreement is hereby amended by the
         insertion of the following new Sections 4.7, 4.8, 4.9 and 4.10:

                           4.7. ESTABLISHMENT OF SERIES A PREFERRED UNITS. A
                  series of preferred units of the Partnership designated as
                  Series A Preferred Units is hereby established and shall have
                  such preferences and other rights as are described herein. The
                  maximum number of Series A Preferred Units which may be issued
                  by the Partnership from time to time shall be 345,000, and the
                  number of Series A Preferred Units set forth on Schedule A
                  hereto opposite the name of the General Partner are hereby
                  issued to the General Partner in exchange for the capital
                  contribution being made by the General Partner concurrently
                  herewith. Any Series A Preferred Units which may be issued and
                  are thereafter cancelled or converted into Common Units in
                  accordance with the terms hereof shall be retired, and the
                  Partnership shall not reissue any such Series A Preferred
                  Units.

                                      -4-

<PAGE>

                           4.8. RANK OF THE SERIES A PREFERRED UNITS. The Series
                  A Preferred Units shall, with respect to distribution rights
                  and rights upon liquidation, dissolution or winding up of the
                  Partnership, rank senior to the Common Units.

                           4.9. MANDATORY REDEMPTION OF SERIES A PREFERRED
                  UNITS. On July 15, 2008, (a) the Partnership shall redeem each
                  Series A Preferred Unit then outstanding for a purchase price
                  equal to the entire liquidation preference then payable with
                  respect to such Series A Preferred Unit as provided in Section
                  7.8 below (including without limitation any and all accrued
                  and unpaid distributions with respect thereto), and (b) each
                  Series A Preferred Unit shall thereupon be deemed cancelled,
                  and all rights hereunder with respect to such cancelled Series
                  A Preferred Units, including without limitation all rights to
                  distributions and liquidation preferences, shall cease.

                           4.10. CONVERSION OF SERIES A PREFERRED UNITS. Series
                  A Preferred Units shall be converted into Common Units in
                  accordance with the following:

                                    (a) If any Series A Preferred Shares shall
                           be converted into shares of Common Stock pursuant to
                           the exercise of any such right by either the General
                           Partner or the holder of such Series A Preferred
                           Shares, then that number of Series A Preferred Units
                           which is equal to the number of Series A Preferred
                           Shares so converted shall simultaneously and without
                           further action or notice be converted into that
                           number of Common Units which is equal to the product
                           of (i) the number of shares of Common Stock into
                           which such Series A Preferred Shares were converted,
                           multiplied by (ii) the Conversion Factor.

                                    (b) If the General Partner shall redeem any
                           Series A Preferred Shares for cash in a transaction
                           in which the redemption price thereof (other than the
                           portion thereof equal to the then accumulated and
                           unpaid dividends thereon) is payable directly out of
                           the sale proceeds of then newly issued shares of
                           Common Stock (and to the extent that such sale
                           proceeds are so used, the General Partner shall be
                           relieved of the obligation to contribute such sale
                           proceeds to the capital of the Partnership pursuant
                           to Section 4.3(a)(2) hereof), then that number of
                           Series A Preferred Units which is equal to the number
                           of Series A Preferred Shares so redeemed shall
                           simultaneously and without further action or notice
                           be converted into that number of Common Units which
                           is equal to the product of (i) the number of shares
                           of Common Stock issued and sold by the General
                           Partner to generate the sale proceeds used to redeem
                           such Series A Preferred Shares, multiplied by (ii)
                           the Conversion Factor.

                  9. DISTRIBUTIONS WITH RESPECT TO COMMON UNITS. Article V of
         the Second Restated Partnership Agreement is hereby amended by (a)
         deleting the caption of Section 5.2 thereof and substituting the
         caption "DISTRIBUTIONS WITH RESPECT TO COMMON UNITS" in its place and
         stead, and (b) deleting the word "The" from the beginning of Subsection

                                      -5-

<PAGE>

         5.2(a) thereof, and by substituting the words "Except as otherwise
         expressly provided in Section 5.9 below, the" in its place and stead.

                  10. DISTRIBUTIONS WITH RESPECT TO SERIES A PREFERRED UNITS.
         Article V of the Second Restated Partnership Agreement is hereby
         further amended by the insertion of the following new Section 5.9:

                           5.9. DISTRIBUTIONS WITH RESPECT TO SERIES A PREFERRED
                  UNITS. Holders of Series A Preferred Units shall have the
                  following preferences and rights with respect to
                  distributions:

                                    (a) With respect to each quarterly
                           distribution period commencing on (and including) the
                           fifteenth day of each January, April, July and
                           October and ending on (and including) the fourteenth
                           day of the next succeeding such month (other than the
                           initial distribution period, which shall commence on
                           June 10, 1998 and end on and include October 14,
                           1998), the holders of Series A Preferred Units of
                           record as of the first day of the month in which the
                           applicable Series A Preferred Units Distribution
                           Payment Date falls, or as of such other date as the
                           General Partner shall designate which is not more
                           than 30 days nor less than 10 days prior to such
                           Series A Preferred Units Distribution Payment Date,
                           shall be entitled to receive cumulative preferential
                           distributions of Net Operating Cash Flow, when, as
                           and if declared by the General Partner on behalf of
                           the Partnership, in an amount per Series A Preferred
                           Unit equal to the greater of (i) 7.25% of the
                           $1,000.00 liquidation preference for such Series A
                           Preferred Unit divided by four (equivalent to a fixed
                           quarterly amount of $18.125 per Series A Preferred
                           Unit), and (ii) the amount of the quarterly cash
                           distribution paid or payable as of the Series A
                           Preferred Units Distribution Payment Dates with
                           respect to that number of Common Units into which
                           such Series A Preferred Unit is then convertible as
                           provided herein. Notwithstanding the foregoing, the
                           amount of the distribution payable with respect to
                           the initial distribution period, which shall commence
                           on June 10, 1998 and end on and include October 14,
                           1998, and with respect to any other distribution
                           period which is shorter or longer than a full
                           quarterly distribution period as described above,
                           shall be prorated and computed on the basis of twelve
                           30-day months and a 360-day year. Such distributions
                           shall accumulate and be cumulative from June 10,
                           1998, and shall be payable quarterly in arrears on or
                           before each Series A Preferred Units Distribution
                           Payment Date. Accrued but unpaid distributions on the
                           Series A Preferred Units shall accumulate as of the
                           Series A Preferred Units Distribution Payment Date on
                           which they first become payable. No interest, or sum
                           or money in lieu of interest, shall be payable in
                           respect of any distribution payment or payments on
                           Series A Preferred Units which may be in arrears. To
                           the extent of any such accrued and unpaid
                           distributions on the Series A Preferred Units, a
                           distribution with respect to the Series A Preferred
                           Units may be declared and paid at any time, without
                           reference to any Series A Preferred Units

                                      -6-

<PAGE>

                           Distribution Payment Date, to holders on such date,
                           not exceeding 45 days preceding the payment date
                           thereof, as may be fixed by the General Partner.

                                    (b) In no event shall any distributions with
                           respect to Series A Preferred Units be authorized,
                           paid or set apart for payment at any time if (i) the
                           terms and provisions of any agreement to which the
                           Partnership is a party or by which it is bound,
                           including any agreement relating to its indebtedness,
                           prohibits such authorization, payment or setting
                           apart for payment, or provides that such
                           authorization, payment or setting apart for payment
                           would constitute a breach thereof or a default
                           thereunder, or (ii) such authorization, payment or
                           setting apart for payment is restricted or prohibited
                           by law. In any such event, distributions with respect
                           to the Series A Preferred Units shall accrue in
                           accordance with the terms hereof whether or not there
                           is sufficient Net Operating Cash Flow for such
                           distributions and whether or not such distributions
                           are authorized.

                                    (c) If the Partnership has not authorized
                           and paid full cumulative distributions with respect
                           to the Series A Preferred Units for all past
                           distribution periods and the then current
                           distribution period, or has not authorized and set
                           apart a sum sufficient for the payment thereof, then
                           the Partnership shall not authorize, pay or set aside
                           for payment any distributions with respect to the
                           Common Units (other than distributions made in the
                           form of Common Units), nor shall the Partnership
                           redeem, purchase or otherwise acquire any Common
                           Units (or set apart any monies as a sinking fund for
                           such purpose) for any consideration other than Common
                           Stock (including without limitation in connection
                           with the exercise of Rights).

                                    (d) Holders of the Series A Preferred Units
                           shall not be entitled to any distribution, whether
                           payable in cash, property or Units, in excess of the
                           full cumulative distribution with respect to the
                           Series A Preferred Units as described herein. Any
                           distribution made with respect to the Series A
                           Preferred Units shall first be credited against the
                           earliest accrued but unpaid distribution with respect
                           to such Series A Preferred Units.

                  11. ALLOCATIONS. Exhibit C of the Second Restated Partnership
         Agreement, describing the allocations of the Net Income, Net Loss
         and/or other Partnership items, is hereby amended by the deletion of
         such Exhibit C in its entirety, and the document identified as Exhibit
         C attached hereto is hereby substituted in its place and stead.

                  12. DISTRIBUTIONS ON DISSOLUTION. Article VII of the Second
         Restated Partnership Agreement is hereby amended by the deletion of
         Subsection 7.2(d) thereof in its entirety and by the substitution of
         the following new subsections in its place and stead:

                           (d) Payment to the holders of Series A Preferred
                  Units in accordance with the terms of Section 7.8 below (and
                  to each holder thereof pro rata based on the

                                      -7-

<PAGE>

                  proportion of the total number of outstanding Series A
                  Preferred Units represented by such holder's Series A
                  Preferred Units); and

                           (e) To the Partners holding Common Units in
                  accordance with their respective Percentage Interests.

                  13. LIQUIDATION PREFERENCE OF SERIES A PREFERRED UNITS.
         Article VII of the Second Restated Partnership Agreement is hereby
         amended by the insertion of the following new Section 7.8:

                           7.8. LIQUIDATION PREFERENCE OF SERIES A PREFERRED
                  UNITS. The holders of Series A Preferred Units shall have the
                  following rights and preferences with respect to liquidation
                  of the Partnership:

                                    (a) Upon any voluntary or involuntary
                           liquidation, dissolution or winding up of the affairs
                           of the Partnership, the holders of Series A Preferred
                           Units then outstanding shall be entitled to be paid,
                           out of the assets of the Partnership available for
                           distribution to the Partners pursuant to Section 7.2
                           hereof, a liquidation preference of $1,000.00 per
                           Series A Preferred Unit, plus an amount equal to any
                           accrued and unpaid distribution with respect to such
                           Series A Preferred Unit through the date of payment,
                           before any distribution of assets shall be made to
                           holders of Common Units.

                                    (b) If, upon any such voluntary or
                           involuntary liquidation, dissolution or winding up of
                           the affairs of the Partnership, the available assets
                           of the Partnership are insufficient to pay the amount
                           of the liquidating distribution preference on all
                           outstanding Series A Preferred Units, then such
                           assets shall be allocated among the holders of Series
                           A Preferred Units in proportion to the full
                           liquidating distribution preferences to which they
                           would otherwise be respectively entitled.

                                    (c) After payment of the full amount of the
                           liquidating distribution preferences to which they
                           are entitled, the holders of Series A Preferred Units
                           shall not have any right or claim to any of the
                           remaining assets of the Partnership with respect to
                           their Series A Preferred Units. Neither the
                           consolidation or merger of the Partnership with or
                           into any other partnership, corporation, trust or
                           other entity, or the sale, lease or conveyance of all
                           or substantially all of the Partnership's property or
                           business, shall be deemed to constitute a
                           liquidation, dissolution or winding up of the
                           Partnership for purposes of this Section 7.8.

                  14. ISSUANCE OF ADDITIONAL COMMON UNITS. Article VIII of the
         Second Restated Partnership Agreement is hereby amended by the deletion
         of Section 8.3 thereof in its entirety and by the substitution of the
         following new Section 8.3 in its place and stead:

                                      -8-

<PAGE>

                           8.3 ISSUANCE OF ADDITIONAL COMMON UNITS. At any time
                  without the consent of any Partner, but subject to the
                  provisions of Section 8.4 hereof, the General Partner may,
                  upon its determination that the issuance of additional Common
                  Units ("Additional Units") is in the best interests of the
                  Partnership, cause the Partnership to issue Additional Units
                  to and admit as a limited partner in the Partnership, any
                  Person (the "Additional Partner") in exchange for the
                  contribution by such Person of cash and/or property desirable
                  to further the purposes of the Partnership under Section 2.3
                  hereof. The number of Additional Units issued to any
                  Additional Partner shall be equal to the product of the (a)
                  Conversion Factor multiplied by (b) the quotient of (i) the
                  Gross Asset Value of the property contributed by the
                  Additional Partner (net of liabilities assumed by the
                  Partnership in connection with the contribution of such
                  property to the Partnership or to which such property is
                  subject) as of the date of contribution (the "Contribution
                  Date") divided by (ii) Current Per Share Market Price in
                  respect of such transaction, and the General Partner may admit
                  an Additional Partner to the Partnership upon such other terms
                  as it deems appropriate. The General Partner shall be
                  authorized on behalf of each of the Partners to amend this
                  Agreement to reflect the admission of any Additional Partner
                  in accordance with the provisions of this Section 8.3 in the
                  event that the General Partner deems such amendment to be
                  desirable, and the General Partner promptly shall deliver a
                  copy of such amendment to each Limited Partner.
                  Notwithstanding anything contained herein to the contrary, an
                  Additional Partner that acquires Additional Units pursuant to
                  this Section 8.3 shall not acquire any interest in, and may
                  not exercise or otherwise participate in, any Rights pursuant
                  to the Rights Agreements unless they are expressly granted
                  such rights.

                  15. NEW EXHIBIT A. Exhibit A to the Second Restated
         Partnership Agreement, identifying the Partners and their respective
         interests, is hereby amended by deleting such Exhibit A in its entirety
         and by substituting Exhibit A attached hereto in its place and stead.

                  16. OTHER PROVISIONS UNAFFECTED. Except as expressly amended
         hereby, the Second Restated Partnership Agreement shall remain in full
         force and effect in accordance with its terms.

         IN WITNESS WHEREOF, the undersigned have executed this First Amendment
as of the day and year first above written.

GENERAL PARTNER:

GENERAL GROWTH PROPERTIES, INC.,
 a Delaware corporation

By:  /s/ Bernard Freibaum
   ----------------------------
   Its:  Executive Vice President/CFO

                                      -9-

<PAGE>

LIMITED PARTNERS:

M.B. CAPITAL PARTNERS III, a South
Dakota general partnership

By:      GENERAL TRUST COMPANY, not
         individually but solely as Trustee
         of Martin Investment Trust G, a partner

         By: /s/ Marshall E. Eisenberg
            -----------------------------
               Its:  President

                                      -10-

<PAGE>

                                    EXHIBIT A

<TABLE>
<CAPTION>
                                                 NUMBER OF            PERCENTAGE         NUMBER OF SERIES A
                                               COMMON UNITS            INTEREST           PREFERRED UNITS
                                               ------------            --------           ---------------

<S>                                          <C>                       <C>                 <C>
GENERAL PARTNER:
----------------

General Growth Properties, Inc.              35,542,256.5822           65.0032             300,000.00

LIMITED PARTNERS:
-----------------

M.B. Capital Partners III                    15,555,864.0240           28.4501                      0
Stanley Richards Revocable Trust                149,706.3938            0.2738                      0
Joe W. Lowrance                                  57,620.0000            0.1054                      0
LWLDA Limited Partnership                        45,223.0000            0.0827                      0
Brent M. Milgrom                                 57,620.0000            0.1054                      0
GDC/A&B Limited Partnership                      45,223.0000            0.0827                      0
Edward S. Brown                                  25,000.0000            0.0457                      0
Lawrence A. Brown                                17,647.0000            0.0323                      0
Merrill H.J. Roth                                29,024.0000            0.0531                      0
The Roth Family
  Limited Partnership                            22,308.0000            0.0408                      0
Arthur B. Morgenstern                            54,625.0000            0.0999                      0
Joseph Straus, Jr.                               78,017.0000            0.1427                      0
Warren Weiner and Penny
  Weiner, Husband and Wife,
  as Tenants-by-the-Entirety                     15,855.5000            0.0290                      0
Joint Revocable Trust of
  Marvin Rounick and Judy
  Rounick                                        15,855.5000            0.0290                      0
Arthur Bruce Associates                          31,711.0000            0.0580                      0
Marvin Rounick and
  Judy Rounick, Husband
  and Wife, as Tenants-by-
  the-Entirety                                   55,670.0000            0.1018                      0
Joint Revocable Trust of
  Warren and Penny Weiner                        18,557.0000            0.0339                      0
Irrevocable Trust of
  Warren Weiner dated
  January 24, 1978 F/B/O
  Robyn Weiner                                   18,557.0000            0.0339                      0
Irrevocable Trust of
  Warren Weiner dated
  January 24, 1978 F/B/O
  Kimberly Weiner                                18,557.0000            0.0339                      0
Forbes/Cohen Properties                         801,842.0000            1.4665                      0
Jackson Properties                              346,795.0000            0.6343                      0
Lakeview Square Properties                      296,363.0000            0.5420                      0
CA Southlake Investors, Ltd.                    353,537.0000            0.6466                      0
Peter D. Leibowits                              518,833.0000            0.9489                      0
Southwest Properties Venture                    505,420.0000            0.9244                      0
                                                ------------            ------                     --

Total Units:                                 54,677,687.0000          100.0000             300,000.00
                                             ===============          ========             ==========
</TABLE>

                                      -11-

<PAGE>

                                    EXHIBIT C

                                   ALLOCATIONS

1.       Allocation of Net Income and Net Loss.

         (a) Net Income. Except as otherwise provided herein, Net Income for any
fiscal year or other applicable period shall be allocated in the following order
and priority:

                  (1) First, to the holders of the Series A Preferred Units
         until the cumulative amount of Net Income allocated to them pursuant to
         this subparagraph (a)(1) for such period and all prior periods equals
         the cumulative amount of the Net Losses allocated to them pursuant to
         subparagraph (b)(2) below for all prior periods;

                  (2) Second, to the holders of the Series A Preferred Units
         until the cumulative amount of Net Income allocated to them pursuant to
         this subparagraph (a)(2) equals the cumulative amount of accrued
         distributions in respect of the Series A Preferred Stock for such
         period and all prior periods (whether or not declared or paid);

                  (3) Third, to the General Partner until the cumulative amount
         of Net Income allocated to it pursuant to this subparagraph (3) for
         such period and all prior periods equals the cumulative amount of Net
         Losses allocated to the General Partner pursuant to subparagraph (b)(3)
         below for all prior periods; and

                  (4) Fourth, to the Partners holding Common Units, until the
         cumulative Net Income allocated to them pursuant to this subparagraph
         (a)(4) for such period and all prior periods equals the cumulative Net
         Losses allocated to them pursuant to subparagraph (b)(1) hereof for all
         prior periods (such allocation to be among the Partners holding Common
         Units in the reverse order that such Net Losses were allocated to
         them); and

                  (5) Thereafter, the balance of the Net Income, if any, shall
         be allocated to the Partners holding Common Units in accordance with
         their respective Percentage Interests.

         (b) Net Loss. Except as otherwise provided herein, Net Loss of the
Partnership for each fiscal year or other applicable period shall be allocated
as follows:

                  (1) First, to the Partners holding Common Units in accordance
         with their respective Percentage Interests (provided, however, that to
         the extent any Net Loss allocated to a Partner holding Common Units
         under this subparagraph (b)(1) would cause such Partner (hereinafter, a
         "Restricted Partner") to have an Adjusted Capital Account Deficit as of
         the end of the fiscal year to which such Net Loss relates, such Net
         Loss shall not be allocated to such Restricted Partner but shall
         instead, to the extent possible, be allocated to the other Partner(s)
         (hereinafter, the "Permitted Partners") pro rata in accordance with
         their relative Percentage Interests (for this purpose, a Partner's
         Adjusted Capital Account Deficit shall be determined by disregarding
         any capital contributed by

                                      -12-

<PAGE>

         the Partner to the Partnership that is attributable to the Partner's
         Series A Preferred Units));

                  (2) Second, to the holders of the Series A Preferred Units,
         pro-rata, in accordance with the number of Units held by them, until
         the cumulative amount of Net Loss allocated to them under this
         subparagraph (b)(2) for such period and all prior periods equals the
         capital contributed by such holders to the Partnership with respect to
         their Series A Preferred Units; and

                  (3) Third, to the General Partner.

2.       Special Allocations.

         Notwithstanding any provisions of paragraph 1 of this Exhibit C, the
following special allocations shall be made in the following order:

         (a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a
net decrease in Partnership Minimum Gain for any Partnership fiscal year (except
as a result of conversion or refinancing of Partnership indebtedness, certain
capital contributions or revaluation of the Partnership property as further
outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-2(f). This
paragraph (a) is intended to comply with the minimum gain chargeback requirement
in said section of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this paragraph (a) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.

         (b) Minimum Gain Attributable to Partner Nonrecourse Debt . If there is
a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during
any fiscal year (other than due to the conversion, refinancing or other change
in the debt instrument causing it to become partially or wholly nonrecourse,
certain capital contributions, or certain revaluations of Partnership property
as further outlined in Regulation Section 1.704-2(i)(4)), each Partner shall be
specially allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to that Partner's share of the
net decrease in the Minimum Gain Attributable to Partner Nonrecourse Debt. The
items to be so allocated shall be determined in accordance with Regulation
Section 1.704-2(i)(4) and (j)(2). This paragraph (b) is intended to comply with
the minimum gain chargeback requirement with respect to Partner Nonrecourse Debt
contained in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this paragraph (b) shall be made
in proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.

         (c) Qualified Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Limited
Partner has an Adjusted Capital Account Deficit, items of Partnership income and
gain shall be specially allocated to such Partner in an

                                      -13-

<PAGE>

amount and manner sufficient to eliminate the Adjusted Capital Account Deficit
as quickly as possible. This paragraph (c) is intended to constitute a
"qualified income offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.

         (d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year
or other applicable period shall be allocated to the Partners in accordance with
their respective Percentage Interests.

         (e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for
any fiscal year or other applicable period shall be specially allocated to the
Partner that bears the economic risk of loss for the debt (i.e., the Partner
Nonrecourse Debt) in respect of which such Partner Nonrecourse Deductions are
attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1).

         (f) Precontribution Gain. In the event that, during any fiscal year or
other applicable period, any Property Partnership allocates to the Partnership
Precontribution Gain, each Partner (or its successors in interest) who
heretofore contributed to the capital of the Partnership an interest in such
Property Partnership shall be allocated that Precontribution Gain in accordance
with its respective interest in such Precontribution Gain. For purposes hereof,
"Precontribution Gain" shall mean, with respect to each Shopping Center Project
owned by an existing Property Partnership, that unrealized gain attributable to
the excess of (a) the fair market value of such Shopping Center Project on April
15, 1993, over (b) the adjusted tax basis of such Shopping Center Project on
such date; provided, however, that the amount of any Precontribution Gain
associated with a Shopping Center Project shall be adjusted to account for
allocations made in accordance with the provisions of Section 3(c) of this
Exhibit C and shall not, in any event, exceed that amount of gain actually
allocated to the Partnership by the Property Partnership as a result of the sale
or other disposition of such Shopping Center Project.

         (g) Curative Allocations. The Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss, and deduction
among the Partners so that, to the extent possible, the cumulative net amount of
allocations of Partnership items under paragraphs 1 and 2 of this Exhibit C
shall be equal to the net amount that would have been allocated to each Partner
if the Regulatory Allocations had not occurred. This subparagraph (g) is
intended to minimize to the extent possible and to the extent necessary any
economic distortions which may result from application of the Regulatory
Allocations and shall be interpreted in a manner consistent therewith. For
purposes hereof, "Regulatory Allocations" shall mean the allocations provided
under this paragraph 2.

3.       Tax Allocations.

         (a) Generally. Subject to paragraphs (b) and (c) hereof, items of
income, gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
basis as their respective book items.

         (b) Sections 1245/1250 Recapture. If any portion of gain from the sale
of property is treated as gain which is ordinary income by virtue of the
application of Code Sections 1245 or

                                      -14-

<PAGE>

1250 ("Affected Gain"), then (A) such Affected Gain shall be allocated among the
Partners in the same proportion that the depreciation and amortization
deductions giving rise to the Affected Gain were allocated and (B) other Tax
Items of gain of the same character that would have been recognized, but for the
application of Code Sections 1245 and/or 1250, shall be allocated away from
those Partners who are allocated Affected Gain pursuant to Clause (A) so that,
to the extent possible, the other Partners are allocated the same amount, and
type, of capital gain that would have been allocated to them had Code Sections
1245 and/or 1250 not applied. For purposes hereof, in order to determine the
proportionate allocations of depreciation and amortization deductions for each
fiscal year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income and Net Loss for such respective
period.

         (c) Allocations Respecting Section 704(c) and Revaluations; Curative
Allocations Resulting from the Ceiling Rule. Notwithstanding paragraph (b)
hereof, Tax Items with respect to Partnership property that is subject to Code
Section 704(c) and/or Regulation Section 1.704-1(b)(2)(iv)(f) (collectively
"Section 704(c) Tax Items") shall be allocated in accordance with said Code
section and/or Regulation Section 1.704-1(b)(4)(i), as the case may be. The
allocation of Tax Items shall be in accordance with the "traditional method" set
forth in Treas. Reg. Section 1.704-3(b)(1), unless otherwise determined by the
General Partner, and shall be subject to the ceiling rule stated in Regulation
Section 1.704-3(b)(1). The General Partner is authorized to specially allocate
Tax Items (other than the Section 704(c) Tax Items) to cure for the effect of
the ceiling rule. The intent of this Section 3(c) and Section 2(f) above is that
each Partner who contributed to the capital of the Partnership a partnership
interest in an existing Property Partnership will bear, through reduced
allocations of depreciation and increased allocations of gain or other items,
the tax detriments associated with any Precontribution Gain and this Section
3(c) and Section 2(f) are to be interpreted consistently with such intent.

                                      -15-

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