TABLE OF CONTENTS

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OPERATING AGREEMENT
OF
STRATOSPHERE DEVELOPMENT LLC
a Delaware limited-liability company

This Operating Agreement (“ Agreement ”) is made and entered into as of the        day of             , 2000, by and among the undersigned, Stratosphere Corporation, which constitutes the Stratosphere member (“ Stratosphere Member ”), Arizona Charlie’s, Inc. which constitutes the Arizona Member (“ Arizona Member ”) and Fresca, LLC, which constitutes the Fresca, LLC Member (“ Fresca Member ”) of Stratosphere Development LLC, a Delaware limited-liability company (the “ Company ”), and the Company, with reference to the recitals set forth below.

R E C I T A L S

A.            The undersigned Members have caused the Company to be organized pursuant to the provisions of the Act (as defined below); and

B.            The Members and the Company desire by this Agreement to set forth their agreement as to the relationship between them and as to the conduct of the business and the affairs of the Company and its separate Series.

THEREFORE, in consideration of the mutual covenants, agreements and promises made herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Act .  “Act” shall mean the Delaware Limited Liability Company Act.

Affiliate .  “Affiliate” means with respect to a specified Person, any other Person who or which is (a) a principal of the specified Person, (b) directly or indirectly controlling, controlled by or under common control with the specified Person, or (c) any member, director, officer, manager, relative or spouse of the specified Person.  For purposes of this definition, “control”, “controlling”, “controlled” mean the right to exercise, directly or indirectly, more than fifty percent of the voting power of the stockholders, members or owners and, with respect to any individual, partnership, trust or other entity or association, or the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.

Agreement .  “Agreement” means this Operating Agreement, as amended from time to time.

Certificate .  “Certificate” means the Certification of Formation of the Company as filed with the Secretary of the State of Delaware, as amended from time to time.

Capital Accounts .  “Capital Accounts” means the respective capital account maintained for each of the Stratosphere Member, Arizona Member and Fresca Member in accordance with this Agreement and the applicable provisions of the Code.

Capital Contribution .  “Capital Contribution” means the total amount of cash and the agreed fair market value (net of liabilities) of any property contributed at any time to the capital of a Series of the Company by the Member who is the Member associated with such Series.

Cash Available for Distribution .  “Cash Available for Distribution” in respect of a Series means an amount equal to the total cash revenues generated by or received from the operations of that Series (including proceeds from the sale of assets for the refinancing of any loan attributable to that Series) which is available in the accounts of the Series less (i) payments on indebtedness applicable to that Series (including, without limitation, principal and accrued but unpaid interest, and including loans or advances by the Member associated with that Series), (ii) payments for operating expenses, capital improvements, replacements and all other cash expenditures incurred incident to the normal operation of the business applicable to that Series, and for legal, accounting, brokerage or similar service fees relating to that Series and (iii) reasonable reserves in respect of that Series established by the Member associated with that Series, based on an assessment of the needs of the business and operations relating to set aside or allocated for working capital, the payment of debt service, taxes, insurance and other anticipated costs and expenses incident to the ownership and operation of the business relating to that Series.

Code .  “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding United States federal tax statute enacted after the date of this Agreement.  A reference to a specific section of the Code refers not only to such specific section but also to any corresponding provision of any United States federal tax statute enacted after the date of this Agreement, as such specific section or corresponding provision is in effect on the date of application of the provisions of this Agreement containing such reference.

Covered Person .  “Covered Person” of a Series means (a) the Member or any Affiliate of the Member associated with that Series, (b) any officers, directors, stockholders, members, partners, employees, representatives or agents of the Member, (c) any office, employee, representative or agent of the Company acting in furtherance of the business of that Series or its Affiliates, or (d) any Person who was, at the time of the act or omission in question, a Person described in any of the preceding clauses (a) through (c).

Fiscal Year .  “Fiscal Year” means that calendar year.

Interest .  “Interest” means, the entire ownership interest with respect to each Series of the Member related to such Series, including the right of the Member to any and all benefits to which a member may be entitled as provided under the Act and this Agreement.

Person .  “Person” means a natural person, any form of business or social organization and any other non-governmental legal entity including, but not limited to, a corporation, partnership, association, trust, unincorporated organization, estate or limited liability company.

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Records Office .  “Records Office” means an office of the Company in Nevada, which may but need not be a place of its business, at which it shall keep all records identified in NRS Section 86.241, except that none of the lists required to be maintained pursuant to NRS Section 86.241 need be maintained in alphabetical order, nor shall the Company be required to maintain at its Records Office copies of powers of attorney except those relating to the execution of the Articles and this Agreement.

Secretary of State .  “Secretary of State” means the office of the Delaware Secretary of State.

Series .  “Series” means one of three Series of interests: the Stratosphere Series to which the Stratosphere Member is associated, the Arizona Series to which the Arizona Member is associated and the Fresca Series to which the Fresca Member is associated.

ARTICLE II

INTRODUCTORY MATTERS

2.1                                  Registered Office .  The registered office of the Company in the State of Delaware is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.

2.2                                  Other Offices .  The Company may establish and maintain other offices at any time and at any place or places as the Members may designate or as the business of the Company may require.

2.3                                  Registered Agent .  The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware are Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.

2.4                                  Purpose .  The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed and engaging in any and all activities necessary or incidental to the foregoing.  Each Series may have a similar or separate business purpose from each other Series.

2.5                                  Powers of the Company .  A Member associated with a Series, shall have the power and authority to take any and all actions necessary, appropriate, advisable, convenient or incidental to or for the furtherance of the purpose set forth in Section 2.4, including, but not limited to, the power and authority to:

(a)           borrow money and issue evidence of indebtedness, and to secure the same by a mortgage, pledge or other lien on any or all of the assets of such Series;

(b)           conduct its business and operations in any state, territory, district or possession of the United States or in any foreign country that may be necessary or convenient to the accomplishment of the purpose of the Company and/or the Series;

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(c)           acquire, by purchase, lease, contribution of property or otherwise, and own, hold, maintain, finance, improve, lease, sell, convey, mortgage, transfer, demolish or dispose of any real or personal property that may be necessary, convenient or incidental to the accomplishment of the purpose of the Company and that Series;

(d)           enter into, perform and carry out contracts of any kind, including without limitation, contracts with any Member or any Affiliate that are necessary to, in connection with, convenient to, or incidental to the accomplishment of the purpose of the Company and/or such Series;

(e)           purchase, take, receive, subscribe for or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge or otherwise dispose of, and otherwise use and deal in and with, s