<PAGE>

                                                                   EXHIBIT 10.16


                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT (the "Agreement") is made and entered into this 25th day of
July, 2000, (the "Commencement Date") by and between HARVEYS CASINO RESORTS, a
Nevada corporation, hereinafter referred to as "HARVEYS" and/or "EMPLOYER," and
EDWARD B. BARRACO, hereinafter referred to as "EMPLOYEE":

                              W I T N E S S E T H:

     WHEREAS, HARVEYS desires to continue to secure the benefits of EMPLOYEE's
background, knowledge, experience, ability, expertise and industry to promote
and maintain HARVEYS stability, growth, viability and profitability; and

     WHEREAS, HARVEYS desires to continue to engage the services of EMPLOYEE who
is desirous of being employed by HARVEYS under the terms and conditions as
herein set out; and

     NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, together with other good and valuable consideration
the receipt of which is hereby acknowledged, the parties hereto do hereby agree
as follows:

                                       I

                                  DEFINITIONS

     1.01 EMPLOYEE shall at all times mean EDWARD B. BARRACO.

     1.02 EMPLOYER shall at all times mean HARVEYS CASINO RESORTS, a Nevada
corporation, and its Successors in Interest together with its subsidiaries.

     1.03 HARVEYS shall at all times mean HARVEYS CASINO RESORTS, a Nevada
corporation, and its Successors-in-Interest together with its subsidiaries.


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     1.04 Successor in Interest shall mean any entity which is the successor or
assign of HARVEYS, at law or at equity, and shall include without limitation,
any entity into which HARVEYS is merged or consolidated, and any entity to which
all or substantially all of the assets or businesses of HARVEYS are transferred.

                                       II

                   NATURE OF EMPLOYMENT AND DUTIES OF EMPLOYEE

     2.01 Effective upon the Commencement Date of this Agreement, EMPLOYEE shall
remain Senior Vice-President and General Manager of HARVEYS WAGON WHEEL HOTEL
CASINO in Central City, Colorado, or assume such other position as determined by
the President/Chief Executive Officer of HARVEYS. EMPLOYEE shall do and perform
all services, acts, or things necessary or advisable to assist in the management
and conduct of the business of EMPLOYER, subject always to the policies as set
forth by the Board of Directors.

     2.02 EMPLOYEE shall be responsible for the overall direction of the Central
City facility and shall direct all operating departments for successful
implementation of business policies and plans for the property. EMPLOYEE shall
provide support in the conceptual, strategic and policy formulation functions of
the business and shall direct and coordinate property activities to obtain
optimum efficiency and economy of operations so as to maximize profits, and such
other responsibilities or duties that HARVEYS may assign from time to time.

     2.03 EMPLOYEE has reviewed and concurs with his responsibilities and duties
as set forth in Section 2.02 above.


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<PAGE>


     2.04 EMPLOYEE shall devote his entire productive time, ability and
attention to the business of EMPLOYER during the term of this Agreement.
EMPLOYEE shall not directly or indirectly render any service of a business,
commercial or professional nature, to any other person or organization, whether
for compensation or otherwise, without the prior written consent of the
President/Chief Executive Officer of HARVEYS, except that EMPLOYEE shall not be
precluded from involvement in charitable or civic activities or his personal
financial investments provided the same do not interfere with EMPLOYEE's time or
attention to the business of EMPLOYER.

     2.05 EMPLOYEE agrees, to the best of his ability and experience, to at all
times conscientiously perform all of the duties and obligations expressly
required of EMPLOYEE.

                                       III

                               TERM OF EMPLOYMENT

     3.01 EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE hereby agrees to be
employed by EMPLOYER for a period of at least one (1) year commencing on the 1st
day of July, 2000, and terminating on the 30th day of June, 2001. This Agreement
may be terminated earlier as herein provided or may be extended or modified only
by written document signed by both parties specifically referencing this
instrument.

                                       IV

                     TERMINATION OF EMPLOYMENT WITHOUT CAUSE

     4.01 EMPLOYEE may be terminated at any time, without cause, or as
referenced in Paragraph 5 herein, by EMPLOYER on thirty (30) days' prior written
notice to EMPLOYEE. In the event of such


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<PAGE>


termination without cause, EMPLOYEE shall continue to be paid EMPLOYEE's annual
salary as set forth in Paragraph 6.01, as such salary may be modified from time
to time, and continue to receive medical, vision and dental benefits as set
forth in Paragraph 7.06 for the balance of the contract term, or twelve (12)
months, whichever is lesser.

     4.02 EMPLOYEE may, at EMPLOYEE's option and right, terminate this Agreement
at any time by giving HARVEYS thirty (30) days prior written notice. Upon any
such termination of this Agreement by EMPLOYEE, EMPLOYER shall be under no
obligation to EMPLOYEE except to pay EMPLOYEE's then annual salary and
perquisites for services performed up to the effective date of termination.

     4.03 If during the term hereof EMPLOYEE shall die or become disabled,
EMPLOYEE shall be entitled to such death and/or disability benefits that may be
due EMPLOYEE under any benefit plans of EMPLOYER in effect from time to time in
which EMPLOYEE is eligible to participate.

                                        V

                       TERMINATION OF EMPLOYMENT FOR CAUSE

     5.01 EMPLOYER may at any time, at its election, by providing written notice
to EMPLOYEE stating with specificity the reason for the termination, immediately
terminate this Agreement and the employment term should EMPLOYEE:

          (a) be negligent or willfully malfeasant in the performance of
EMPLOYEE's duties to EMPLOYER set forth in Article II hereof;

          (b) be convicted of any felony or a crime involving moral turpitude;


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<PAGE>

          (c) be dishonest with respect to EMPLOYER (including without
limitation, fraud);

          (d) use or impart any confidential or proprietary information of
EMPLOYER or any of its subsidiaries or affiliates in violation of EMPLOYER's
policy regarding confidentiality or any confidentiality or proprietary agreement
to which EMPLOYER is a party, which act or actions have a material adverse
affect on EMPLOYER; or

          (e) fail to obtain or retain any permits, licenses, or approvals which
may be required by any state or local authorities in order to permit EMPLOYEE to
continue employment as contemplated by this Agreement.

     Upon the occurrence of any of the above, at EMPLOYER's sole option,
EMPLOYEE's employment shall immediately terminate and EMPLOYER shall be under no
further obligation to EMPLOYEE except to pay EMPLOYEE his annual salary for such
services as may have been performed up to the date of such termination.

                                       VI

                            COMPENSATION OF EMPLOYEE

     6.01 ANNUAL SALARY - EMPLOYEE shall receive an annual salary of TWO HUNDRED
TWENTY-FIVE THOUSAND DOLLARS ($225,000.00), payable in at least monthly
installments, less all applicable Federal, State and Local Taxes, Social
Security and any other government mandated deductions. EMPLOYEE's annual salary
shall be subject to an annual review, as determined by EMPLOYEE's direct
supervisor, and the President/Chief Executive Officer of HARVEYS within the
parameters set forth by HARVEYS' Board of Directors.


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<PAGE>


                                       VII

                                OTHER PERQUISITES

     7.01 HARVEYS 401(k) PLAN - During the employment term, EMPLOYEE shall be
allowed to participate in HARVEYS 401(k) Plan as such plan may be in effect and
amended from time to time.

     7.02 VACATION - EMPLOYEE shall be entitled to vacation and holiday pay in
accordance with EMPLOYER's policy for EMPLOYEE's position as may be in place
from time to time, with credit being given as of EMPLOYEE's original hire date.

     7.03 COMPLIMENTARY PRIVILEGES - EMPLOYEE shall be entitled to Level I
complimentary privileges as are afforded all other corporate employees of equal
job code.

     7.05 MANAGEMENT INCENTIVE PLAN (MIP) - EMPLOYEE shall be eligible to
participate in EMPLOYER's Management Incentive Plan as such plan may be in
effect or amended from time to time.

     7.06 MEDICAL, VISION AND DENTAL INSURANCE - EMPLOYER shall provide medical,
vision and dental benefits to EMPLOYEE and EMPLOYEE's spouse and dependents in
accordance with EMPLOYER's Class I coverage under EMPLOYER's Executive Medical
Plan, as such plan may be in effect or amended from time to time.

     7.07 DEFERRED COMPENSATION PROGRAM - EMPLOYEE shall be allowed to
participate in EMPLOYER's Deferred Compensation Program as said program may be
in effect or amended from time to time.

     7.08 GROUP LIFE INSURANCE - During the term of this Agreement, EMPLOYER
shall furnish EMPLOYEE with Group Term Life Insurance and Accidental
Death/Dismemberment Insurance with the


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<PAGE>

maximum benefit being equal to two (2) times EMPLOYEE's annual salary, up to a
maximum of $500,000.00.

     7.09 GROUP LONG TERM DISABILITY - During the term of this Agreement,
EMPLOYER shall furnish EMPLOYEE with Group Term Disability insurance in
accordance with EMPLOYER's then existing policy. The maximum insurance benefit
to be paid EMPLOYEE shall be sixty percent (60%) of EMPLOYEE's annual salary to
be paid for the duration of EMPLOYEE's permanent disability.

     7.10 STOCK OPTIONS AND STOCK GRANTS - EMPLOYEE's rights to stock options
and/or stock grants, are those set forth in the Management Stock Option and
Restricted Stock Agreement, dated as of February 2, 1999, as may be amended from
time to time and as supplemented by action of the Board of Directors in
Resolution 1999-5.

     7.11 SERP - During the employment term, EMPLOYEE shall continue to
participate in the Supplemental Executive Retirement. Plan as such Plan may be
in effect and amended from time.

                                      VIII

                                   ARBITRATION

     8.01 Except as necessary for EMPLOYER and its subsidiaries, affiliates,
successors or assigns or EMPLOYEE to specifically enforce or enjoin a breach of
this Agreement (to the extent such remedies are otherwise available), the
parties agree that any and all disputes that may arise in connection with or out
of or relating to this Agreement, or any dispute that relates in any way, in
whole or in part, to EMPLOYEE's employment with EMPLOYER or any subsidiary, the
termination of that employment or any other dispute


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<PAGE>


by and between the parties or their subsidiaries, affiliates, successors or
assigns, shall be submitted to binding arbitration in Douglas County, Nevada
according to the National Employment Dispute Resolution Rules and procedures of
the American Arbitration Association. The parties agree that the prevailing
party in any such dispute shall be entitled to reasonable attorneys' fees, costs
and necessary disbursements in addition to any other relief to which he or it
may be entitled. This arbitration obligation extends to any and all claims that
may arise by and between the parties or their subsidiaries, affiliates,
successors or assigns and expressly extends to, without limitation, claims or
causes of action for wrongful termination, impairment of ability to compete in
the open labor market, breach of an express or implied contract, breach of the
covenant of good faith and fair dealing, breach of fiduciary duty, fraud,
misrepresentation, defamation, slander, infliction of emotional distress,
disability, loss of future earnings and claims under the Nevada Constitution,
the United States Constitution, and applicable state and federal fair employment
laws, federal and state equal employment opportunity laws, and federal and state
labor statutes and regulations, including, but not limited to, the Civil Rights
Act of 1964, as amended, the Fair Labor Standards Act, as amended, the Americans
With Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as
amended, the Employee Retirement Income Security Act of 1974, as amended, the
Age Discrimination in Employment Act of 1967, as amended, and other state or
federal law.


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<PAGE>


                                       IX

                                  MISCELLANEOUS

     9.01 This Agreement shall be construed and governed by the laws of the
State of Nevada.

     9.02 This Agreement, shall bind and inure to the benefit of the EMPLOYER,
its successors and assigns and EMPLOYEE, his heirs, executors and
administrators. No transfer or assignment of this Agreement shall release
EMPLOYER from any obligation to EMPLOYEE hereunder.

     9.03 Notices to or for the respective parties shall be given in writing and
delivered in person or mailed by certified or registered mail, addressed to the
respective party at the address as set out below, or at such other address as
either party may elect to provide in advance in writing, to the other party:

                  EMPLOYEE:

                     Edward B. Barraco
                     756 Silverberry Lane
                     Golden, CO  80401


                  EMPLOYER:

                      HARVEYS CASINO RESORTS
                      Attn: CHARLES W. SCHARER,
                      President/Chief Executive Officer
                      Highway 50 and Stateline Avenue
                      Post Office Box 128
                      Stateline, NV  89449

                  WITH A COPY TO:

                      Ronald D. Alling, Esq.
                      SCARPELLO & ALLING, LTD.
                      276 Kingsbury Grade, Suite 2000
                      Post Office Box 3390
                      Stateline, NV  89449


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<PAGE>


     9.04 Should any provision of this Agreement be held to be invalid, illegal,
or unenforceable by reason of any rule of law or public policy, all other
provisions of this Agreement shall remain in effect. No provision of this
Agreement shall be deemed dependent on any other provision unless so expressed
herein.

     9.05 Nothing contained in this Agreement shall be construed to require the
commencement of any act contrary to law. Should any conflict between any
provision of this Agreement and any statute, law, ordinance, or regulation,
contrary to which the parties have no legal right to contract arise or exist,
then the latter shall prevail; but in such event, the provisions of this
Agreement so affected shall be curtailed and limited only to the extent
necessary to bring it within the legal requirements.

     9.06 The several rights and remedies provided for in this Agreement shall
be construed as being cumulative, and no one of them shall be deemed to be
exclusive of the others or of any right or remedy allowed by law. No waiver by
EMPLOYER or EMPLOYEE of any failure by EMPLOYEE or EMPLOYER, respectively, to
keep or perform any provision of this Agreement shall be deemed to be a waiver
of any preceding or succeeding breach of the same or other provision.

     9.07 This Agreement supersedes any and all other agreements, either oral or
in writing, between the parties hereto with respect to the employment of
EMPLOYEE by EMPLOYER along with the other instruments executed concurrently
herewith, contain all of the covenants, conditions and agreements between the
parties with respect to such employment. Each party to this Agreement


                                       10


<PAGE>

acknowledges that no representations, inducements, promises or other agreements
excepting those specifically set forth herein, oral or otherwise, have been made
by any party, or anyone acting on behalf of any party, which are not embodied
herein, and that no other agreement, statement or promise not contained in this
Agreement shall be valid or binding. Any addendum to or modification of this
Agreement shall be effective only if it is in writing and signed by the parties
to be charged.

                                       EMPLOYEE:



                                       /s/ EDWARD B. BARRACO
                                       -----------------------------------
                                       EDWARD B. BARRACO



                                       EMPLOYER:


                                       HARVEYS CASINO RESORTS,
                                       a Nevada Corporation




                                       By: /s/ CHARLES W. SCHARER
                                           --------------------------------
                                           CHARLES W. SCHARER
                                           President/Chief Executive Officer


                                       11

<PAGE>


                    AGREEMENT AND COVENANT NOT TO COMPETE OR
                          USE OR DISCLOSE TRADE SECRETS

     THIS AGREEMENT AND COVENANT NOT TO COMPETE OR USE OR DISCLOSE TRADE SECRETS
(the "Agreement") is made and entered into this 25th day of July, 2000, by and
between EDWARD B. BARRACO ("EMPLOYEE") and HARVEYS CASINO RESORTS, a Nevada
corporation, ("EMPLOYER"):

                                    RECITALS

     WHEREAS, EMPLOYER is one of the limited entities engaged in the hotel and
gaming establishment business (the "Business") in Central City, Colorado holding
a "Non-restricted License" as defined in Nevada Revised Statutes Section
463.0177; and

     WHEREAS, EMPLOYEE and EMPLOYER simultaneously herewith have executed an
agreement whereby EMPLOYEE is employed by EMPLOYER as the Senior Vice President
and General Manager of HARVEYS WAGON WHEEL CASINO HOTEL in Central City,
Colorado, (as may be amended or extended, the "Employment Agreement"); and

     WHEREAS, EMPLOYEE acknowledges and agrees that EMPLOYER was induced into
executing the Employment Agreement with EMPLOYEE in material reliance upon
EMPLOYEE's executing and being bound by this Agreement.

     NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein and in the Employment Agreement, and
for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto intending to be legally bound hereby,
agree as follows:


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<PAGE>

     1.01 NON-COMPETITION During the term of EMPLOYEE's employment with
EMPLOYER, and for any period of time thereafter during which EMPLOYEE receives
any compensation, including severance compensation, under the Employment
Agreement (the "Restricted Period"), EMPLOYEE warrants, represents and agrees
that he shall not, in any city, town, county, parish or other municipality
located within a seventy-five (75) mile radius of Harveys Wagon Wheel Hotel
Casino in Central City, Colorado, where the EMPLOYER or any of its subsidiaries,
affiliates, successors or assigns engages in the Business directly or
indirectly, do any of the following: (a) engage in the Business for EMPLOYEE's
own account; (b) enter the employ of, or render any services to or for any
entity that is engaged in the Business; and/or (c) become interested in any such
entity in any capacity, including as an employee, partner, stockholder, officer,
principal, agent, trustee or consultant; provided, however, EMPLOYEE may own,
solely as a passive investment, securities of any entity traded on any national
securities exchange or automated quotation system if the EMPLOYEE is not a
controlling person of such entity and does not beneficially own three percent
(3%) or more of any class of securities of such entity. The duration of the
covenant not to compete provided for in this Paragraph 1.01 shall be extended
for an additional period of three hundred sixty-five (365) days if EMPLOYEE
terminates the Employment Agreement pursuant to Paragraph 4.02 thereof or
EMPLOYER terminates EMPLOYEE pursuant to Paragraph 5.01 of the Employment
Agreement.


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<PAGE>


     1.02 NON-INTERFERENCE During the Restricted Period, EMPLOYEE shall not,
directly or indirectly, (a) solicit, induce or attempt to solicit or induce any
person known to EMPLOYEE to be an employee of EMPLOYER or any of its
subsidiaries, affiliates, successors or assigns, and that is involved in the
Business, to terminate his or her employment or other relationship with
EMPLOYER, or any of its subsidiaries, affiliates, successors or assigns, for the
purpose of associating with (i) any entity of which EMPLOYEE is or becomes an
employee, officer, director, partner, stockholder, agent, trustee or consultant
or (ii) any competitor of EMPLOYER or any of its subsidiaries, affiliates,
successors or assigns in the Business; or (b) otherwise encourage any person to
terminate his or her employment or other relationship with EMPLOYER or any of
its subsidiaries, affiliates, successors or assigns for any other purpose or no
purpose.

     1.03 NON-SOLICITATION During the Restricted Period, EMPLOYEE shall not,
directly or indirectly, solicit, induce or attempt to solicit or induce any
customers, clients, vendors, suppliers or consultants in the Business then under
contract to EMPLOYER or any of its subsidiaries, affiliates, successors or
assigns (a "Customer or Supplier") to terminate his, her, or its relationship
with EMPLOYER or any of its subsidiaries, affiliates, successors or assigns for
any purpose, including the purpose of associating with or becoming a Customer or
Supplier of or consultant to (whether or not exclusive) of EMPLOYEE or any
entity of which EMPLOYEE is or becomes an employee, partner, stockholder,
officer, director,


                                       3

<PAGE>

principal, agent, trustee or consultant, or otherwise solicit, induce or attempt
to solicit or induce any such Customer or Supplier to terminate his, her or its
relationship with EMPLOYER or any of its subsidiaries, affiliates, successors or
assigns for any other purpose or no purpose.

     1.04 CONFIDENTIAL INFORMATION EMPLOYEE acknowledges that he will have
access to proprietary information, trade secrets and confidential material
(including, but not limited to, accounting information, business plans, lists of
key personnel, customers, clients, vendors, suppliers, distributors and
consultants) of the EMPLOYER (the "Confidential Information"), EMPLOYEE agrees
that upon termination of his employment with EMPLOYER, EMPLOYEE shall not be
entitled to keep or preserve any of EMPLOYER's records, documents or other
materials evidencing Confidential Information. EMPLOYEE further agrees, without
limitation in time or until such information shall become public other than by
the EMPLOYEE's unauthorized disclosure, to maintain the confidentiality of and
refrain from disclosure or otherwise using in any respect the Confidential
Information to the detriment of EMPLOYER.

     1.05 REMEDIES UPON BREACH If EMPLOYEE breaches or threatens to breach any
term, covenant, or provision of this Agreement, EMPLOYEE agrees that EMPLOYER
shall be entitled to injunctive relief, both PENDENTE LITE and permanently
without the requirement of the posting of a bond since the remedy at law would
be inadequate or insufficient. In addition, EMPLOYER shall be entitled to
require EMPLOYEE to account for and pay to EMPLOYER all compensation,


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profits, monies, accruals, increments or other benefits derived or received by
EMPLOYEE by reason of such breach.

     1.06 SEVERABILITY OF COVENANTS If any provision of this Agreement, as
applied to any part or to any circumstances, shall be adjudged by a court to be
invalid or unenforceable, the same shall in no way affect any other provision of
this Agreement, the application of such provision in any other circumstances, or
the validity or enforceability of this Agreement. If any provision, or any part
hereof, is held to be unenforceable because of the duration of such provision or
the area covered hereby, the parties hereto agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provisions, and/or to delete specific words or phrases ("blue-penciling"), and
in its reduced or blue-penciled form, such provision shall then be enforceable
and shall be enforced.

     1.07 ENFORCEABILITY IN ALL JURISDICTIONS The parties hereto intend to and
hereby confer jurisdiction to enforce the terms, covenants and provisions
contained herein upon the courts of any State of the United States and any other
governmental jurisdiction within the geographical scope of such covenants. If
the courts of any one or more such States or jurisdictions shall hold such
covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination
shall not bar or in any way affect EMPLOYER's right to the relief provided above
in the courts of any other State or jurisdiction within the geographical scope
of such covenants, as


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<PAGE>


to breaches of such covenants and such respective States or jurisdictions, the
above covenants as they relate to each State or jurisdiction being, for this
purpose, severable into diverse and independent covenants.

     1.08 ATTORNEYS' FEES In the event that action, either legal or equitable,
is instituted by EMPLOYER to enforce and/or interpret this Agreement, the
prevailing party shall be entitled to reimbursement from the other party hereto
of court costs, reasonable attorneys' fees and accountants' fees incurred in
connection therewith.

     1.09 ASSIGNMENT Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned in whole or in part, by the
EMPLOYEE without the prior written consent of EMPLOYER. EMPLOYER and any of its
subsidiaries, affiliates, and successors may sell, assign, or otherwise transfer
any or all of its or their right and interest in the Business, whether by
operation of law or otherwise, and in this Agreement, in which case this
Agreement shall remain in full force after such sale, assignment or other
transfer.

     1.10 GOVERNING LAW This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Nevada, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.

     1.11 ENTIRE AGREEMENT This Agreement and the Employment Agreement by and
between the EMPLOYEE and the EMPLOYER, dated as of the date hereof, represent
the entire agreement of the parties with


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<PAGE>

respect to said subject matter hereof and shall supersede any and all
previous contracts, arrangements or understandings between the parties hereto
and with respect to said subject matter. This Agreement may not be modified
or amended except by an instrument in writing signed by each of the parties
hereto.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and date first set forth above.

                                       EMPLOYEE:



                                           /s/ EDWARD B. BARRACO
                                           -------------------------------
                                           EDWARD B. BARRACO



                                        EMPLOYER:


                                        HARVEYS CASINO RESORTS,
                                        a Nevada corporation




                                            By:  /s/ CHARLES W. SCHARER
                                                 -------------------------------
                                                 CHARLES W. SCHARER,
                                                 President and Chief  Executive
                                                 Officer



                                       7