<PAGE>


                                                              Exhibit 10.44


                                  STOCK OPTION
                         AND RESTRICTED STOCK AGREEMENT

                  STOCK OPTION AND RESTRICTED STOCK AGREEMENT (this
"Agreement"), dated as of February 2, 1999 (the "Effective Date"), by and
between Harveys Casino Resorts, a Nevada corporation (the "Company"), and
Stephen L. Cavallaro (the "Executive"), an employee of the Company or a
Subsidiary of the Company.

                  Pursuant to the Company's 1999 Omnibus Stock Incentive Plan
(the "Plan"), the Board of Directors of the Company (the "Board"), as the
Administra tor of the Plan, has determined that the Executive is to be granted
(i) an option (the "Option") to purchase shares of the Company's Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), and shares of the
Company's Class B Common Stock, par value $.01 per share (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Common Stock"), and
(ii) a Restricted Stock award consisting of additional shares of Class A Common
Stock and Class B Common Stock (the "Restricted Shares"), each on the terms and
conditions set forth herein, and hereby grants such Option and Restricted Stock
award. Such grants shall be deemed to satisfy in full the Company's obligations
under Section 7.03 of that certain Employment Agreement, of even date herewith,
between the Executive and the Company (the "Employment Agreement"). It is
intended that the Option shall constitute an "incentive stock option" within the
meaning of Section 422 of the Code (an "ISO") to the maximum extent permitted
under the Code. Additional provisions relating to the ISO status of the Option
are set forth in Section 1 below.

                  Any capitalized terms not defined herein shall have their
respective meanings set forth in the Plan.

                  1. TERMS OF OPTION GRANT. (a) The Option entitles the Execu-
tive to purchase 280 shares of the Company's Class A Common Stock at a price
equal to $20.06 per share (the "Class A Option Exercise Price"), which the
parties acknowledge is not less than the fair market value of one share of the
Class A Common Stock as of the Effective Date. The Option also entitles the
Executive to purchase 28,000 shares of the Company's Class B Common Stock at a
price equal to $20.06 per share (the "Class B Option Exercise Price" and,
collectively with the Class A Option Exercise Price, the "Option Exercise
Price"), which the parties acknowledge is not less than the fair market value of
one share of the Class B


<PAGE>

Common Stock as of the Effective Date.  The shares of Class A Common Stock
and Class B Common Stock subject to the Option are referred to herein as the
"Option Shares."

                   (b) The term of the Option (the "Option Term") shall commence
on the Effective Date (the "Date of Grant") and, unless the Option is previously
terminated pursuant to this Agreement, shall terminate upon the expiration of
ten (10) years from the Date of Grant. Upon expiration of the Option Term, all
rights of the Executive hereunder shall terminate.

                   (c) The Option shall vest as to 20% of the Option Shares on
each of the first five anniversaries of the Date of Grant, PROVIDED, that

                       i) the Option and such vesting shall be subject to the
         forfeiture provisions of Section 7(b) below (the "Special Forfeiture
         Provisions"), such that any such vested portion of the Option shall be
         exercisable from time to time only if and to the extent that such
         vested portion shall not be subject to forfeiture pursuant to the
         Special Forfeiture Provisions;

                       ii) upon the occurrence of a Change in Control (as
         defined in Section 3 below) at any time prior to the effective date (as
         determined under the Employment Agreement) of Executive's termination
         of employment with the Company for any or no reason, the Option shall
         immediately vest and become exercisable as to 100% of the Option Shares
         and the Special Forfeiture Provisions shall immediately expire;

                       iii) if Executive's employment with the Company is
         terminated (A) by the Company without Cause (as defined in the
         Employment Agreement as in effect as of the date hereof, or as the same
         may be amended from time to time, regardless of the termination of the
         Employment Agreement prior to the effective date of such termination)
         within the 12 month period immediately preceding a Change in Control
         (or such longer period, not to exceed 18 months prior to such Change in
         Control, during which significant discussions or other material action
         regarding such Change in Control occurred) at the request, directly or
         indirectly, of a third party who has taken steps reasonably calculated
         to effect a Change in Control or otherwise in connection with, or in
         anticipation of a Change in Control, or (B) by Executive for Good
         Reason (as defined in the Employment


                                       2
<PAGE>

         Agreement) if the grounds constituting Good Reason occur as the result
         of a Change in Control or within the above-referenced time frame at the
         request, directly or indirectly, of such a third party or otherwise in
         connection with, or in anticipation of a Change in Control, (i) the
         Option shall be deemed to have immediately vested and become
         exercisable as to 100% of the Option Shares as of the effective date of
         such Change in Control, (ii) the Special Forfeiture Provisions shall be
         deemed to have immediately expired as of the effective date of such
         Change in Control and (iii) the exercisability of the Option shall be
         as determined under Section 7(a); and

                       iv) if Executive's employment with the Company is
         terminated by the Company without Cause or by Executive for Good Reason
         (as defined in the Employment Agreement), the Option shall immediately
         vest and become exercisable and the Special Forfeiture Provisions shall
         immediately expire as to that number of Option Shares that would have
         vested pursuant to the first clause of this Section 1(c) had
         Executive's employment continued without interruption through the date
         that is 18 months following the effective date of such termination as
         deter mined under the Employment Agreement.

Those Option Shares which, as of any date, have vested pursuant to the first
clause of this Section 1(c) but remain subject to the Special Forfeiture
Provisions shall be referred to herein as "Vested Option Shares."

                   (d) Except as otherwise provided herein, the right of the
Executive to purchase Option Shares with respect to which the Option has become
exercisable may be exercised in whole or in part at any time or from time to
time prior to expiration of the Option Term, PROVIDED, that any exercise of the
Option shall be deemed to relate in tandem to both the Class A Common Stock and
the Class B Common Stock subject to the Option, such that the ratio of (i) the
number of shares of Class A Common Stock issuable upon such exercise to (ii) the
total number of shares of Class A Common Stock outstanding on the date hereof
shall be the same as the ratio of (iii) the number of shares of Class B Common
Stock issuable upon such exercise to (iv) the total number of shares of Class B
Common Stock outstanding on the date hereof.

                   (e) The Option may be exercised by means of written notice of
exercise to the Company specifying the number of Option Shares to be purchased,


                                       3
<PAGE>

accompanied by payment in full of the aggregate Option Exercise Price and any
applicable withholding amounts (i) in cash or by check, (ii) at any time
following the closing of the Company's Initial Public Offering (as defined in
Section 3 below) by means of a broker cashless exercise procedure, on terms
reasonably acceptable to the Company, providing proceeds sufficient to pay the
exercise price and any applicable withholding amounts, or (iii) by any other
means of exercise authorized from time to time in the Plan and/or by the Board.
In addition, with respect to any exercise of the Option that occurs following
Executive's termination of employment with the Company at any time prior to the
closing of the Company's Initial Public Offering, the Option may, at Executive's
election, be exercised through withholding of shares of Common Stock otherwise
issuable upon exercise of the Option having an aggregate Fair Market Value
equivalent to the aggregate Option Exercise Price plus applicable withholding
amounts.

                   (f) To the extent the Option is intended to constitute an
ISO, the ratio of (i) the number of shares of Class A Common Stock to which the
ISO portion of the Option relates to (ii) the total number of shares of Class A
Common Stock outstanding on the date hereof shall be the same as the ratio of
(iii) the number of shares of Class B Common Stock to which the ISO portion of
the Option relates to (iv) the total number of shares of Class B Common Stock
outstanding on the date hereof.

                  2. TERMS OF RESTRICTED STOCK AWARD. (a) The Restricted Stock
award entitles the Executive as of the Date of Grant to receive 210 shares of
Class A Common Stock and 21,000 shares of Class B Common Stock (the "Restricted
Shares"), subject to the terms and conditions of this Agreement.

                   (b) Subject to the rights and obligations of Executive
pursuant to that certain Stockholders Agreement, of even date herewith, by and
among the Company, Executive and the other parties thereto (the "Stockholders
Agreement"), and except as provided in Section 2(c) below, the Restricted Shares
may not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of in any manner or under any circumstances (the "Transfer
Restrictions").

                   (c) The Transfer Restrictions shall lapse as to 20% of the
Restricted Shares on each of the first five anniversaries of the Date of Grant,
PROVIDED, that


                                       4
<PAGE>



                       i) the Restricted Shares and such lapse shall be subject
         to the Special Forfeiture Provisions of Section 7(b), such that the
         Transfer Restrictions shall continue to apply to the Restricted Shares
         for so long and to the extent that the Restricted Shares shall be
         subject to forfeiture pursuant to the Special Forfeiture Provisions;

                       ii) upon the occurrence of a Change in Control at any
         time prior to the effective date (as determined under the Employment
         Agreement) of Executive's termination of employment with the Company
         for any or no reason, the Transfer Restrictions shall immediately lapse
         as to 100% of the Restricted Shares and the Special Forfeiture
         Provisions shall immediately expire;

                       iii) if Executive's employment with the Company is
         terminated under the circumstances set forth in Section 1(c)(iii)
         above, (i) the Transfer Restrictions shall be deemed to have
         immediately lapsed as to 100% of the Restricted Shares as of the
         effective date of such Change in Control, and (ii) the Special
         Forfeiture Provisions shall be deemed to have immediately expired as of
         the effective date of the Change in Control; and

                       iv) if Executive's employment with the Company is
         terminated by the Company without Cause or by Executive for Good Reason
         (each as defined above), the Transfer Restrictions shall immediately
         lapse and the Special Forfeiture Provisions shall immediately expire as
         to that number of Restricted Shares as to which the Transfer
         Restrictions would have lapsed pursuant to the first clause of this
         Section 2(c) had Executive's employment continued without interruption
         through the date that is 18 months following the effective date of such
         termination as determined under the Employment Agreement.

Those Restricted Shares as to which, as of any date, the Transfer Restrictions
have lapsed pursuant to the first clause of this Section 2(c) but which remain
subject to the Special Forfeiture Provisions shall be referred to herein as
"Lapsed Restricted Shares."

                   (d) From and after the Date of Grant and for so long as the
Restricted Shares are held by or for the benefit of the Executive, except as
limited by the Stockholders Agreement, the Transfer Restrictions and the Special
Forfeiture Provisions, the Executive shall have all the rights of a stockholder
of the


                                       5
<PAGE>

Company with respect to the Restricted Shares, including but not limited to the
right to receive dividends on and the right to vote such shares.

                  3. CERTAIN DEFINITIONS. (a) For purposes of this Agreement,
"Initial Public Offering" shall mean the closing of a public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering shares of the Company's Common Stock,
which shares are approved for listing or quotation on the New York Stock
Exchange, American Stock Exchange or Nasdaq National Market.

                   (b) For purposes of this Agreement, "Change in Control" means
the occurrence of one or more of the following events:

                       i) the sale, lease, transfer, conveyance or other
         disposition, in one or a series of related transactions, of all or
         substantially all of the assets of the Company and its Subsidiaries,
         taken as a whole;

                       ii) the adoption by the Company's stockholders of a plan
         of liquidation or dissolution of the Company;

                       iii) prior to the time the Company or any Parent
         Corporation completes an Initial Public Offering, the Company becomes
         aware (by way of a report or any other filing pursuant to Section 13(d)
         of the Exchange Act, proxy vote, written notice or otherwise) of the
         acquisi tion by any "Person" or related group (within the meaning of
         Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
         successor provi sion to either of the foregoing, including any "group"
         acting for the pur pose of acquiring, holding or disposing of
         securities within the meaning of Rule 13d-5(b)(1) under the Exchange
         Act), other than a group consisting of the Principals and their Related
         Parties, in a single transaction or in a related series of
         transactions, by way of merger, consolidation or other business
         combination or purchase of direct or indirect beneficial ownership
         (within the meaning of Rule 13d-3 under the Exchange Act, or any
         successor provision) of 50% or more of the total voting power entitled
         to vote in the election of the Board of Directors of the Company or
         such other Person surviving the transaction;

                       iv) subsequent to the time the Company or any Parent
         Corporation completes an Initial Public Offering, the Principals and


                                       6
<PAGE>

         their Related Parties shall directly or indirectly beneficially own
         shares of capital stock representing less than 25% of the total voting
         power entitled to vote in the election of the Board of Directors of the
         Company and either (A) any other Person directly or indirectly
         beneficially owns shares of capital stock representing voting power in
         excess of the voting power represented by shares of capital stock owned
         by the Principals and their Related Parties or (B) individuals who were
         the voting members of the Company's Board of Directors at the beginning
         of any two year period commencing subsequent to the Initial Public
         Offering (together with any new voting directors whose election or
         appointment by such board or whose nomination for election by the
         shareholders of the Company was approved by a vote of a majority of the
         directors then still in office who were either directors at the
         beginning of such period or whose election or nomination for election
         was previously so approved) cease for any reason to constitute a
         majority of the Company's Board of Directors then in office.

                   (c) For purposes of this Agreement, the following terms shall
have the meanings as set forth below:

                       i) "Exchange Act" means the Securities Exchange Act of
         1934, as amended, and the rules and regulations promulgated thereunder;

                       ii) "Principals" means Colony Investors III, L.P., Colony
         Capital, Inc. and any of their respective affiliates and any of the
         Company's officers and directors; and

                       iii) "Related Party" with respect to any Principal means
         (A) any controlling stockholder, 80% (or more) owned Subsidiary, or
         spouse or immediate family member (in the case of an individual) of
         such Principal or (B) any trust, corporation, partnership or other
         entity, the beneficiaries, stockholders, partners, owners or Persons
         beneficially holding an 80% or more controlling interest of which
         consist of such Principal and/or such other Persons referred to in the
         immediately preceding clause (A).

                   (d) For purposes of this Agreement, "Fair Market Value" (when
capitalized, unless the context clearly indicates otherwise) means, as of any
given date, (A) if the Common Stock is publicly traded, the closing sale price
of


                                       7
<PAGE>

the Common Stock on such date (or the nearest preceding date on which the Common
Stock was traded) as reported in the Western Edition of THE WALL STREET JOURNAL,
or (B) if the Common Stock is not publicly traded, the fair market value of the
Common Stock as determined in accordance with the procedures set forth below, in
each case based on the per share value of the Company as a whole as of the
relevant date, without any discount for the sale of a minority interest and
without considering lack of liquidity, including transfer and other restrictions
on the Common Stock:

                       i) The Board shall determine the fair market value of the
         Common Stock in good faith, using commercially reasonable methods and
         at the Company's sole expense, PROVIDED, that if Executive is a member
         of or non-voting observer on the Board, Executive shall recuse himself
         from all deliberations of the Board regarding such determination, and
         except as otherwise provided herein shall not be entitled to receive or
         be provided access to any minutes or other records of the Board with
         respect to such determination. The Board shall communicate the per
         share valuation as so determined in writing to Executive within 20
         business days following the date written notice is provided or the
         Board takes cognizance of the need to determine the Fair Market Value
         of the Common Stock, and upon Executive's request, the Board shall
         provide Executive appropriate supporting documentation regarding the
         methods, assumptions and other bases used in arriving at such
         valuation. If acceptable to Executive, the fair market value of the
         Common Stock shall be as so determined.

                       ii) If the fair market value as determined under (i) is
         not acceptable to Executive, Executive shall determine the fair market
         value of the Common Stock in good faith, using commercially reasonable
         methods and at Executive's sole expense, and shall communicate the per
         share valuation as so determined in writing to the Board within 20
         business days following the Board's communication to Executive of the
         per share valuation pursuant to (i) above and, upon the Board's
         request, Executive shall provide to the Board appropriate supporting
         documentation regarding the methods, assumptions and other bases used
         in arriving at such valuation. If acceptable to the Board, the fair
         market value of the Common Stock shall be as so determined.

                       iii) If the fair market value as determined under (ii) is
         not acceptable to the Board, the Board and Executive shall then


                                       8
<PAGE>

         negotiate in good faith to agree upon the fair market value of the
         Common Stock, based on the valuations under (i) and (ii) above.

                       iv) If the Board and Executive shall be unable by the
         foregoing means to agree upon the fair market value of the Common Stock
         within ten business days after the Board has been advised of
         Executive's valuation, the issue shall then be submitted to binding
         arbitration in Las Vegas, Nevada according to the rules and procedures
         of the American Arbitration Association. The Company and Executive
         shall each submit to the arbitrator their valuations under (i) and (ii)
         above, together with all supporting documentation regarding the
         methods, assumptions and other bases used in arriving at such
         valuation. The arbitrator shall then be instructed to choose which of
         the two valuations more closely reflects the fair market value of the
         Common Stock, and shall not have the right to choose a third valuation
         as the appropriate fair market value of the Common Stock. The party
         whose valuation is not so chosen by the arbitrator shall pay any and
         all costs and expenses of the arbitration (but not the initial
         valuation of the other party), including without limitation reasonable
         attorneys' fees and other fees incurred by the prevailing party in such
         arbitration. Judgment may be entered on the arbitrator's determination
         and award.

                  4. DEFERRED COMPENSATION ARRANGEMENT WITH RESPECT TO
RESTRICTED SHARES. Notwithstanding anything herein to the contrary, at any time
prior to the occurrence of a Distribution Event (as defined in the Deferred
Compensation Agreement, of even date herewith, between Executive and the Company
(the "Deferred Compensation Agreement")) that the Transfer Restrictions and
Special Forfeiture Restrictions would otherwise lapse with respect to any
portion of the Restricted Shares and result in the recognition of income by
Executive, such Restricted Shares (the "Deferred Shares") shall be cancelled and
an equivalent number of Deemed Deferred Shares (as defined in the Deferred
Compensation Agreement) shall be added to the Restricted Stock Sub-Account under
the Deferred Compensation Agreement.

                  5. ADJUSTMENTS. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or similar change
affecting the Common Stock, an equitable substitution or proportionate
adjustment shall be made in the kind and number of Restricted Shares and in the
kind, number


                                       9
<PAGE>

and option price of shares of Common Stock subject to the Option, as may be
determined by the Board in good faith.

                  6. NONTRANSFERABILITY OF OPTION AND OPTION SHARES; OPTION
SHARES AND RESTRICTED SHARES SUBJECT TO STOCKHOLDERS AGREEMENT. (a) The Option
and this Agreement shall not be transferable and, during the lifetime of
Executive, the Option may be exercised only by Executive; PROVIDED, HOWEVER,
that the Executive shall be permitted to transfer the Option and this Agreement
to a trust controlled by the Executive during the Executive's lifetime for
estate planning purposes, and PROVIDED, further, that the limited
transferability provisions set forth in the immediately preceding proviso shall
apply to any portion of the Option that constitutes an ISO only to the extent
such provisions are consistent with Section 422(b) of the Code. Without limiting
the generality of the foregoing, except as otherwise provided herein, the Option
may not be assigned, transferred, pledged or hypothecated in any way, shall not
be assignable by operation of law, and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon the
Option shall be null and void and without effect.

                   (b) The Executive, the Restricted Shares and, upon exercise
of the Option, the Option Shares, shall at all times and in all respects be
subject to the Stockholders Agreement, the provisions of which shall be deemed
to be incorporated into this Agreement.

                  7. EFFECT OF TERMINATION OF EMPLOYMENT; SPECIAL FORFEITURE
PROVISIONS. (a) Upon the termination of Executive's employment with the Company
under any circumstances and for any or no reason (including without limitation
by reason of the death or Disability of the Executive or the sale of such
Subsidiary), the Option shall immediately terminate as to all Option Shares that
shall not have vested as of the effective date (as determined under the
Employment Agreement) of such termination of employment, and the Executive shall
forfeit all Restricted Shares as to which the Transfer Restrictions have not
lapsed as of such date of termination, in each case taking into account any
additional vesting and/or lapse that shall have occurred by reason of the
provisions of Sections 1(c)(iv) and 2(c)(iv). Notwithstanding the foregoing, to
the extent the provisions of Sections 1(c)(iii) and 2(c)(iii) shall apply in
connection with a Change in Control, (i) the Option shall be deemed to have been
vested and exercisable in full as of the effective date of Executive's
termination of employment, (ii) the Transfer Restric-


                                       10
<PAGE>

tions shall be deemed to have lapsed in full and the Special Forfeiture
Provisions shall be deemed to have expired as of the effective date of such
Change in Control and (iii) the exercise provisions of Section 7(c) shall apply
as if Executive's employment had been terminated as of the date of such Change
in Control.

                   (b) In addition, in the event the Executive's employment with
the Company is terminated prior to the Forfeiture Provision Expiration Date (as
defined below) (i) at any time prior to the fifth anniversary of the Date of
Grant by the Executive other than for Good Reason or (ii) at any time by the
Company for Cause (each as defined above), Executive shall thereupon forfeit
that portion of the Vested Option Shares and Lapsed Restricted Shares equal to
the Applicable Reduction Percentage (as defined below).

                       i) The "Applicable Reduction Percentage" shall mean (A)
         at all times prior to the occurrence of an Initial Public Offering,
         two-thirds and (B) at all times following an Initial Public Offering
         but prior to the occurrence of a 50% Colony Sell-Down, one-third.

                       ii) The Special Forfeiture Provisions shall expire in
         their entirety as of the date of (x) the Company's Initial Public
         Offering, if such Initial Public Offering occurs subsequent to a 50%
         Colony Sell-Down, (y) a 50% Colony Sell-Down that occurs at any time
         subsequent to the Company's Initial Public Offering or (z) a Change in
         Control (the "Forfeiture Provision Expiration Date").

                       iii) A "50% Colony Sell-Down" shall be deemed to occur
         when the Principals and their affiliates (excluding officers and
         employees of the Company who are Principals or affiliates merely by
         reason of their being such an officer or employee) shall, directly or
         indirectly, beneficially own shares of capital stock of the Company
         representing less than 50% of the largest total number of such shares
         theretofore owned by such persons.

                   (c) Subject to the Company's call rights set forth in Section
8, any portion of the Option that, pursuant to Section 1(c) above, shall be
vested and exercisable as of the effective date of Executive's termination of
employment (the "Termination Date") shall be exercisable in whole or in part for
a period of 90 days following the Termination Date (180 days in the event of
termination by reason of disability, and one year in the event of termination by
reason of death).


                                       11
<PAGE>

All Option Shares with respect to which the Option shall be so vested and
exercis able shall be referred to herein as "Vested and Exercisable Option
Shares." Upon expiration of such period, any unexercised portion of the Option
shall terminate in full; PROVIDED, HOWEVER, that if the Company provides notice
to the Executive of its intent to exercise the Call pursuant to Section 8, any
portion of the Option subject to such exercise shall terminate as of the closing
of the Call.

                  8. CALL RIGHTS. In the event of (I) the termination of the
Executive's employment with the Company at any time, under any circumstances and
for any or no reason, (II) a Change in Control or (III) any transfer of any
Option Shares or Restricted Shares by the Executive under any circumstances
(other than to a trust controlled by Executive for estate planning purposes, the
trustee of which agrees in writing to be subject in all events and for all
purposes to the Company's Call as set forth herein), including pursuant to any
arrangement, proceeding, decree, judgement, order or application of law relating
to the division of property for domestic relations purposes, for a period
commencing on the date of such event and expiring upon the Company's Initial
Public Offering (the "Call Exercise Period"), the Company shall have the right
to purchase from the Executive, by giving written notice to the Executive
pursuant hereto and in accordance with the terms and conditions of Section 8(a)
below (the "Call") (x) any or all of such portion of the Option as shall relate
to Vested and Exercisable Option Shares as of the date such written notice is
given (the "Call Exercise Date"), (y) any or all Option Shares owned by the
Executive as of the end of business on the Call Exercise Date and/or (z) any or
all Restricted Shares as of the end of business on the Call Exercise Date as to
which the Transfer Restrictions shall have lapsed pursuant to Section 2(c) and
which shall not theretofore have been forfeited by Executive pursuant to Section
7(b).

                   (a) The following terms and conditions shall apply to the
exercise of the Call:

                       i) If exercising its rights under (x) above, the Company
         shall pay the Executive an amount in cash equal to the product of (A)
         the excess, if any, of the Fair Market Value of a share of Class A
         Common Stock or Class B Common Stock, as applicable, as of the
         Termination Date (the "Call Price") over the Class A Option Exercise
         Price or Class B Option Exercise Price, as applicable, and (B) the
         number of shares of Class A Common Stock or Class B Common Stock, as
         applicable, that


                                       12
<PAGE>

         the portion of the Option being purchased by the Company pursuant to
         the Call would otherwise entitle the Executive to purchase.

                        ii) If exercising its rights under (y) or (z) above, the
         Company shall pay the Executive an amount equal to the product of (A)
         the Call Price and (B) the number of Option Shares or Restricted
         Shares, as applicable, being purchased pursuant thereto.

                     (b) The closing with respect to the exercise of the Call
shall take place at the Company's executive offices within 30 days following the
Call Exercise Date (the "Scheduled Closing Date").

                     (c) Notwithstanding any other provision hereof, the Company
may assign, without the consent of the Executive, its rights under this Section
8; PROVIDED, that no such assignment shall release the Company from its
obligations hereunder.

                     (d) The Call shall terminate upon the closing of the
Company's Initial Public Offering.

                  9. INVESTMENT REPRESENTATION. The Executive hereby represents
and warrants to the Company that the Executive, by reason of the Executive's
business or financial experience (or the business or financial experience of the
Executive's professional advisors who are unaffiliated with and who are not
compensated by the Company or any affiliate or selling agent of the Company,
directly or indirectly), has the capacity to protect the Executive's own
interests in connection with the transactions contemplated under this Agreement.

                  10. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by first class mail, certified
or registered with return receipt requested, or by a nationally recognized
overnight delivery service to the respective parties named below:

         If to Company:        Harveys Casino Resorts
                               Highway 50 and Stateline Avenue
                               P.O. Box 128
                               Lake Tahoe, Nevada 89449
                               Attention:  Charles Scharer
                               Facsimile:  775-586-6852


                                       13
<PAGE>

         with a copy to:       Colony Capital, Inc.
                               1999 Avenue of the Stars
                               Los Angeles, California 90067
                               Attention:  Kelvin L. Davis
                               Facsimile: 310-282-8808

         and a copy to:        Skadden, Arps, Slate, Meagher & Flom LLP
                               300 South Grand Avenue
                               Los Angeles, California 90071
                               Attention:  Jonathan H. Grunzweig
                               Facsimile: 213-687-5600

         If to the Executive:  Stephen L. Cavallaro
                               8824 Montagna Drive
                               Las Vegas, Nevada 89134
                               Facsimile: 702-363-4461

         with a copy to:       Michael Forman
                               Klehr, Harrison, Harvey, Branzburg & Ellers LLP
                               1401 Walnut Street
                               Philadelphia, Pennsylvania 19102
                               Facsimile: 215/568-3206

Either party hereto may change such party's address for notices by notice duly
given pursuant hereto.

                  11. SECURITIES LAWS REQUIREMENTS. The Option shall not be
exercisable to any extent, and the Company shall not be obligated to transfer
any Option Shares to the Executive upon exercise of the Option, if such
exercise, in the opinion of counsel for the Company, would violate the
Securities Act (or any other federal or state statutes having similar
requirements as may be in effect at that time). Further, the Company may require
as a condition of transfer of any Option Shares pursuant to any exercise of the
Option that the Executive furnish a written representation that he is purchasing
or acquiring the Option Shares for investment and not with a view to resale or
distribution to the public, and the Executive hereby represents and warrants
that he is acquiring the Restricted Shares for investment and not with a view to
resale or distribution to the public. The Executive hereby represents and
warrants that he understands that the Option Shares and the Restricted Shares
are "restricted securities," as defined in Rule 144 under the


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<PAGE>

Securities Act, and that any resale of the Option Shares or the Restricted
Shares must be in compliance with the registration requirements of the
Securities Act or an exemption therefrom. Each certificate representing Option
Shares or Restricted Shares shall bear the legend set forth below:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
         SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF (A "TRANSFER")
         EXCEPT IN ACCOR DANCE WITH THE PROVISIONS OF THAT CERTAIN STOCKHOLDERS
         AGREEMENT, DATED AS OF FEBRUARY 2, 1999, BY AND AMONG HARVEYS CASINO
         RESORTS, A NEVADA CORPORATION, AND CERTAIN OF ITS STOCKHOLDERS AND THAT
         CERTAIN STOCK OPTION AND RESTRICTED AWARD AGREEMENT, OF EVEN DATE
         HEREWITH, BETWEEN THE COMPANY AND ONE OF ITS SENIOR EXECUTIVES. ANY
         TRANSFEREE OF THESE SECURITIES SHALL TAKE SUBJECT TO THE TERMS OF SUCH
         AGREEMENTS, COPIES OF WHICH ARE ON FILE WITH THE COMPANY.

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES
         LAWS, AND NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT (A)
         PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B)
         PURSUANT TO AN EXEMPTION THEREFROM WITH RESPECT TO WHICH THE COMPANY
         MAY, UPON RE QUEST, REQUIRE A SATISFACTORY OPINION OF COUNSEL FOR THE
         HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF THE ACT.

Further, if the Company determines that the listing or qualification of the
Option Shares under any securities or other applicable law is necessary in order
to avoid a violation of any securities laws, the Option shall not be
exercisable, in whole or in part, unless and until such listing or
qualification, or a consent or approval with respect thereto, shall have been
effected or obtained free of any conditions not acceptable to the Company,
PROVIDED, that the Company shall pursue such listing or qualification diligently
and in good faith.


                                       15
<PAGE>

                  12. NO OBLIGATION TO REGISTER SHARES. Except as provided in
the Stockholders Agreement, the Company shall be under no obligation to register
the Restricted Shares or the Option Shares.

                  13. PROTECTIONS AGAINST VIOLATIONS OF AGREEMENT. No purported
sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift,
transfer in trust (voting or other) or other disposition of, or creation of a
security interest in or lien on, any of the Restricted Shares or Option Shares
by any holder thereof in violation of the provisions of this Agreement, the
Stockholders Agree ment or the Certificate of Incorporation or the Bylaws of the
Company, will be valid, and the Company will not transfer any of said Restricted
Shares or Option Shares on its books nor will any of the Restricted Shares or
Option Shares be entitled to vote, nor will any dividends be paid thereon,
unless and until there has been full compliance with such provisions to the
satisfaction of the Company. The foregoing restrictions are in addition to and
not in lieu of any other remedies, legal or equitable, available to enforce such
provisions.

                  14. WITHHOLDING REQUIREMENTS. Executive shall, no later than
the date as of which the value of any award hereunder becomes includable in his
gross income (after taking into account the provisions of Section 4 hereof), pay
to the Company, or make arrangements satisfactory to the Company regarding
payment of, any federal, state, or local taxes or other amounts of any kind
required by law to be withheld with respect thereto. The obligations of the
Company hereunder shall be conditional on the making of such payments or
arrangements, and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
Executive.

                  15. FAILURE TO ENFORCE NOT A WAIVER. The failure to enforce at
any time any provision of this Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.

                  16. GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Nevada without regard to its
principles of conflict of laws.

                  17. INCORPORATION OF PLAN. The Plan is hereby incorporated by
reference and made a part hereof, and the Option, the Restricted Stock award and
this Agreement shall be subject to all terms and conditions of the Plan;
provided,


                                       16
<PAGE>

however, that in the event of a conflict between the terms of this Agreement and
the Plan, the terms of this Agreement shall govern.

                  18. AMENDMENTS. This Agreement may be amended or modified at
any time only by an instrument in writing signed by each of the parties hereto.

                  19. RIGHTS AS A STOCKHOLDER. Neither the Executive nor any of
the Executive's successors in interest shall have any rights as a stockholder of
the Company with respect to any shares of Common Stock subject to the Option
until the date of issuance of a stock certificate for such shares of Common
Stock.

                  20. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. Neither the Plan,
the granting of the Restricted Stock award and the Option, this Agreement nor
any other action taken pursuant to the Plan shall constitute or be evidence of
any agreement or understanding, express or implied, that the Executive has a
right to continue as an employee of the Company or any Subsidiary or affiliate
of the Company for any period of time or at any specific rate of compensation.

                  21. AUTHORITY OF THE BOARD. The Board shall have full
authority to interpret and construe the terms of the Plan and this Agreement,
and shall do so in good faith.

                  22. DISPUTE RESOLUTION. Any dispute arising under this Agree
ment shall be resolved in accordance with the arbitration provisions of the
Employ ment Agreement as in effect as of the date hereof, or as the same may be
amended from time to time, regardless of the expiration of the Employment
Agreement prior to the resolution of such dispute, and such arbitration
provisions shall be deemed to be incorporated herein by this reference.

                  23. MARKET STAND-OFF. In connection with any underwritten
public offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act for such period as the
Company or its underwriters may request (such period not to exceed 180 days
following the date of the applicable offering), the Executive shall not,
directly or indi rectly, sell, make any short sale of, loan, hypothecate,
pledge, offer, grant or sell any option or other contract for the purchase of,
purchase any option or other contract for the sale of, or otherwise dispose of
or transfer, or agree to engage in any of the foregoing transactions with
respect to, any Restricted Shares or Option Shares acquired under this Agreement
without the prior written consent of the


                                       17
<PAGE>

Company or its underwriters, PROVIDED, that the Executive shall not be required
to be subject to "lock-up" restrictions that are more restrictive than such
restrictions to which any other Employee Stockholder (as defined in the
Stockholders Agreement) having commensurate job duties and responsibilities in
the Company is subject, or that would prevent the Executive from effectuating a
sale pursuant to Section 2.5 of the Stockholders Agreement or Section 3.1 of the
Stockholders Agreement.

                  IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the day and year first above written.

HARVEYS CASINO RESORTS


                                            By:  /s/ Charles W. Scharer
                                                 -------------------------------
                                                 Name:  Charles W. Scharer
                                                 Title:  President and
                                                         Chief Executive Officer


                                             The undersigned hereby accepts and
                                             agrees to all the terms and
                                             provisions of the foregoing
                                             Agreement and to all the terms and
                                             provisions of the Plan and the
                                             Stockholders Agreement herein
                                             incorporated by reference.




                                             /s/ Stephen L. Cavallaro
                                             -----------------------------------
                                                     STEPHEN L. CAVALLARO

                                             Address:    8824 Montagna Drive
                                                         Las Vegas, Nevada 89134



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