<PAGE>   1
                                                                     EXHIBIT 4.3



                                                               EXECUTION DRAFT



                         REGISTRATION RIGHTS AGREEMENT

                 REGISTRATION RIGHTS AGREEMENT (the "Agreement") entered into
and effective as of July 1, 1997 among FirstCity Financial Corporation, a
Delaware corporation (the "Company"), and Richard J. Gillen, Bernice J. Gillen,
Harbor Financial Mortgage Company Employees Pension Plan, Lindsey Capital
Corporation, Ed Smith and Thomas E. Smith (collectively, the "Stockholder
Parties").


                              W I T N E S S E T H:

                 WHEREAS, the Company, HFGI Acquisition Corp. ("Acquisition
Corp.") and Harbor Financial Group, Inc.  ("HFGI") have entered into an
Agreement and Plan of Merger dated as of March 26, 1997 (the "Merger
Agreement"), pursuant to which Acquisition Corp. is being merged with and into
HFGI (the "Merger");

                 WHEREAS, as a result of the consummation of the Merger, the
Stockholder Parties are receiving shares of Common Stock, par value $.01 per
share (the "Common Stock"), of the Company; and

                 WHEREAS, in connection with and as a condition to the
consummation of the Merger, the parties hereto have entered into this Agreement
in order to define certain rights, duties and obligations of such parties.

                 NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:

                 1.  Definitions.  Except as otherwise set forth below, terms
defined in the Stockholders Agreement (as defined below) are used herein as
therein defined.

                 "Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in the City of Houston, Texas are
authorized by law to close.
<PAGE>   2





                 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                 "Holder" means any Person who holds Registrable Securities.

                 "Indemnified Party" has the meaning set forth in Section 6(c)
below.

                 "Indemnifying Party" has the meaning set forth in Section 6(c)
below.

                 "Material Adverse Effect" has the meaning set forth in Section
2(d) below.

                 "Registrable Securities" means the Common Stock issued to the
Stockholder Parties pursuant to the Merger Agreement, and any other securities
issuable with respect to such Common Stock by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or reorganization; provided that

                 (1)      any Registrable Security will cease to be a
                 Registrable Security when (a) a registration statement
                 covering such Registrable Security has been declared effective
                 by the SEC and it has been disposed of pursuant to such
                 effective registration statement, (b) it is sold under
                 circumstances in which all of the applicable conditions of
                 Rule 144 or Rule 145 under the Securities Act (or any similar
                 provisions then in force) under the Securities Act are met or
                 (c) (i) it has been otherwise transferred and (ii) the Company
                 has delivered a new certificate or other evidence of ownership
                 for it not bearing the legend pertaining to the Securities Act
                 and (iii) it may be resold without subsequent registration
                 under the Securities Act;





                                       2


<PAGE>   3
                 (2)      with respect to any Registrable Securities shall only
                 include such Registrable Securities which any Requesting
                 Holder could not otherwise sell pursuant to Rule 144 or Rule
                 145, without restriction as a result of volume limitations,
                 whether under subsection (k) of Rule 144 or otherwise.

                 "Registration Expenses" has the meaning set forth in Section 5
below.

                 "Registration Period" has the meaning set forth in Section 2
below.

                 "Registration Statement" has the meaning set forth in Section
2 below.

                 "Securities Act" means the Securities Act of 1933, as amended.

                 "Selling Holder" means any Stockholder Party who is selling
Registrable Securities pursuant to the Registration Statement.

                 "SEC" means the Securities and Exchange Commission.

                 2.  Registration. (a)  As soon as practicable after the
consummation of the Merger (the "Closing"), the Company shall file with the SEC
a registration statement (the "Registration Statement") on any form for which
the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the Registrable
Securities to be registered thereunder (including, without limitation, by way
of a post- effective amendment to the Registration Statement on Form S-4,
Registration Number 333-24347), to permit the Stockholder Parties to offer and
sell their Registrable Securities on a delayed or continuous basis under Rule
415 under the Securities Act, and shall use its reasonable efforts to cause the
Registration Statement to become effective under the Securities Act.  After the
Registration Statement has been declared effective, the Company shall use all
reasonable efforts to keep the Registration Statement effective for a period of
two years from the Closing (the "Registration Period").

                 (b)  If at the time the Company or any of its subsidiaries
become engaged in confidential negotiations or other confidential business
activities or developments, disclosure of which may, in the good faith judgment
of the Board of Directors





                                       3


<PAGE>   4
of the Company, materially and adversely affect the Company or the Company's
ability to pursue any such negotiations or business activities, or the Board of
Directors commences consideration of making a registered or unregistered
offering of the Company's securities for the Company's account (such
negotiations, activities, developments or prospective offering referred to
herein as "Pending Matters"), the Company may notify the Stockholder Parties
that they are required to cease using the Registration Statement (and the
prospectus forming a part thereof) in connection with the offer and sale of
Registrable Securities (such notice a "Stoppage Notice"), and the Stockholder
Parties shall immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement.  If the Pending Matters are publicly
disclosed or terminated or abandoned, the Company shall promptly so notify the
Stockholder Parties who then may offer and sell Registrable Securities pursuant
to the Registration Statement


                 3.  Restrictions on Public Sale by Holder of Registrable
Securities; Piggyback Registration Rights.  (a) Upon the request of the
Company, each Holder of Registrable Securities agrees not to effect any public
sale or distribution of Registrable Securities, including a sale pursuant to
Rule 144 or Rule 145, during the 7 days prior to, and during such period as the
Company specifies (not to exceed 180 days) in such request (as shall be
required by the managing underwriter of the offering contemplated by the
registration statement referred to in this Section 3(a)) beginning on the
effective date of a registration statement with respect to any securities of
the Company if and to the extent requested by the Company.

                 (b)  Subject to the provisions of this Agreement, if the
Company proposes to file a registration statement under the Securities Act with
respect to an offering of its Common Stock by the Company for its own account,
then the Company shall give prompt written notice of such proposed filing to
holders of the Registrable Securities.  Upon the written request of any such
holder made within 20 days after the receipt of any such notice, except as set
forth below, the Company shall include in each such registration (a "Piggyback
Registration") all Registrable Securities requested to be included in the
registration for such offering.  The Company shall use its reasonable efforts
to cause the managing underwriter of any such proposed underwritten offering to
permit the Registrable Securities requested by the holder thereof to be
included in the registration statement for such offering ("Piggyback
Securities") on the same terms and conditions as the Company's Common Stock
included therein.





                                       4


<PAGE>   5
Notwithstanding the foregoing, the Company shall not be required to include
such holder's Piggyback Securities in such offering if the managing underwriter
of such proposed underwritten offering advises the Company that in its opinion
the total amount of securities, including Piggyback Securities, exceeds the
number which can be sold in such offering without causing a material adverse
effect on the price or success of such offering.  If the managing underwriter
so advises the Company, the Company will include in such registration, to the
extent of the number which the Company is so advised can be sold in such
offering without causing such a material adverse effect, first the securities
being sold by the Company, and next any other securities pro rata among the
Stockholder Parties on the basis of the number of Registrable Securities
requested to be included in such registration by each such Stockholder Party.

                 4.  Registration Procedures.  The Company will:

                 (a)  prepare and promptly file with the SEC such amendments
and supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the Registration Period (except as provided in the last paragraph
of this Section 4) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the Selling Holders thereof set forth in the Registration
Statement;

                 (b)  furnish to each such Stockholder Party such number of
copies of the Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in the
Registration Statement and such other documents as such Selling Holder may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Selling Holder;

                 (c)  notify the Selling Holders promptly, and (if requested by
any such person) confirm such notice in writing, (i) when the Registration
Statement or any post-effective amendment has become effective under the
Securities Act and applicable state law, (ii) of any request by the SEC or any
other Federal or state governmental authority for amendments or supplements to
the Registration Statement or related prospectus or for additional information,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with respect to
the





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<PAGE>   6
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and (v) of the happening of any
event which makes any statement made in the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such registration statement, prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;

                 (d)  use its reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of the Registration Statement, or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment;

                 (e)  use its reasonable efforts to cooperate with the Selling
Holders to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall not
bear any restrictive legends and shall be in a form eligible for deposit with
The Depositary Trust Company; and enable such Registrable Securities to be
registered in such names as the Selling Holders may request at least two
business days prior to any sale of Registrable Securities;

                 (f)  use its reasonable efforts to register or qualify such
Registrable Securities as promptly as practicable under such other securities
or blue sky laws of such jurisdictions as any Selling Holder reasonably (in
light of the intended plan of distribution) requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Selling Holder; provided that the Company
will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (g), (ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction;





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<PAGE>   7
                 (g) use its reasonable efforts to cause such Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company to enable the Selling Holder thereof to consummate
the disposition of such Registrable Securities;

                 (h)  make available to its security holders, as soon as
reasonably practicable, an earnings statement covering a period of twelve
months, beginning within three months after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act;

                 (i)  use its reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar securities
issued by the Company are then listed or quoted on any inter-dealer quotation
system on which similar securities issued by the Company are then quoted; and

                 (j)  if any event contemplated by Section 4(c)(v) above shall
occur (subject to Section 2(b) above), as promptly as practicable prepare a
supplement or amendment or post-effective amendment to the Registration
Statement or the related prospectus or any document incorporated therein by
reference or promptly file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.

                 The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the distribution
of the Registrable Securities as it may from time to time reasonably request
and such other information as may be legally required in connection with such
registration.  Notwithstanding anything herein to the contrary, the Company
shall have the right to exclude from the Registration Statement the Registrable
Securities of any Selling Holder who does not comply with the provisions of the
immediately preceding sentence.

                 Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4(c)(v) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement until such
Selling Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 4(c)(v) hereof, and, if so





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<PAGE>   8
directed by the Company, such Selling Holder will deliver to the Company all
copies, other than permanent file copies, then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice.

                 5.  Registration Expenses.  In connection with the
Registration Statement the Company shall pay the following registration
expenses (the "Registration Expenses"): (i) all registration and filing fees
(including, without limitation, with respect to filings to be made with the
National Association of Securities Dealers, Inc.), (ii) fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) word processing, duplicating and printing
expenses, (iv) internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) transfer agents', trustees', depositories', registrars' and fiscal
agents' fees, (vi) the fees and expenses incurred in connection with the
listing on an exchange or quoted on an inter-dealer quotation system of the
Registrable Securities, (vii) reasonable fees and disbursements of counsel for
the Company and customary fees and expenses for independent certified public
accountants retained by the Company and (viii) the reasonable fees and expenses
of any special experts retained by the Company in connection with such
registration.  The Company shall not be responsible for underwriting fees,
discounts and commissions and transfer taxes, if any, in respect of the
Registrable Securities or the fees and expenses of counsel or other
professionals retained by any of the Stockholder Parties in connection with the
preparation of the Registration Statement or the disposition of Registrable
Securities thereunder.

                 6.  Indemnification; Contribution.  (a)  Indemnification by
the Company.  The Company agrees to indemnify and hold harmless each Selling
Holder, each Person, if any, who controls such Selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and the officers, directors, agents, general and limited partners, and
employees of each Selling Holder and each such controlling person from and
against any and all losses, claims, damages, liabilities, and reasonable
expenses (including reasonable costs of investigation) directly or indirectly
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or prospectus
relating to the Registrable Securities or in any





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<PAGE>   9
amendment or supplement thereto or in any preliminary prospectus, or arising
out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or reasonable expenses arise out of, or are based upon, any such
untrue statement or omission or allegation thereof based upon information
furnished to the Company by such Selling Holder or on such Selling Holder's
behalf expressly for use therein; and the Company will reimburse such
Indemnified Party for any legal or other expenses reasonably incurred by them
in connection with enforcing its rights hereunder, provided, however, that with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus, the indemnity agreement contained
in this paragraph shall not apply to the extent that any such loss, claim,
damage, liability or expense results from the fact that a current copy of the
prospectus was not sent or given to the persons asserting any such loss, claim,
damage, liability or expense at or prior to the written confirmation of the
sale of the Registrable Securities concerned to such person if it is determined
that (i)(A) it was the responsibility of such Selling Holder to provide such
person with a current copy of the prospectus, (B) such Selling Holder was
provided with a current copy of the prospectus prior to the written
confirmation of sale and (C) such current copy of the prospectus would have
cured the defect giving rise to such loss, claim, damage, liability or expense
or (ii) the Selling Holder provided a prospectus to any person in violation of
Section 4 hereof.

                 (b)  Indemnification by Holder of Registrable Securities.
Each Selling Holder agrees to indemnify and hold harmless the Company, and each
Person, if any, who controls the Company within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act and the officers,
directors, agents and employees of the Company and each such controlling Person
to the same extent as the foregoing indemnity from the Company to such Selling
Holder, but only with respect to written information furnished by such Selling
Holder or on such Selling Holder's behalf expressly for use in the Registration
Statement or prospectus relating to the Registrable Securities.  The liability
of any Selling Holder under this Section 8(b) shall be limited to the net
amount of proceeds received by such Selling Holder pursuant to the sale of
Registrable Securities covered by the Registration Statement or prospectus.

                 (c)  Conduct of Indemnification Proceedings.  If any action or
proceeding (including any governmental investigation)





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shall be brought or asserted against any Person entitled to indemnification
under Section 8(a) or 8(b) above (an "Indemnified Party") in respect of which
indemnity may be sought from any party who has agreed to provide such
indemnification under Section 8(a) or 8(b) above (an "Indemnifying Party"), the
Indemnified Party shall give prompt notice to the Indemnifying Party, provided
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
8, except to the extent that such Indemnifying Party is materially prejudiced
by such failure to give notice.  The Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party, and shall assume the payment of all reasonable expenses
of such defense.  Such Indemnified Party shall have the right to employ
separate counsel in any such action or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the Indemnifying Party has agreed
to pay such fees and expenses or (ii) the Indemnifying Party fails promptly to
assume the defense of such action or proceeding or fails to employ counsel
reasonably satisfactory to such Indemnified Party or (iii) the named parties to
any such action or proceeding (including any impleaded parties) include both
such Indemnified Party and Indemnifying Party (or an Affiliate of the
Indemnifying Party), and such Indemnified Party shall have been advised by
counsel that there is a conflict of interest on the part of counsel employed by
the Indemnifying Party to represent such Indemnified Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such
action or proceeding on behalf of such Indemnified Party).  Notwithstanding the
foregoing, the Indemnifying Party shall not, in connection with any one such
action or proceeding or separate but substantially similar related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable at any time for the fees and expenses
of more than one separate firm of attorneys (together in each case with
appropriate local counsel).  The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without its written
consent (which consent will not be unreasonably withheld), but if settled with
its written consent, or if there be a final judgment for the plaintiff in any
such action or proceeding, the Indemnifying Party shall indemnify and hold
harmless such Indemnified Party from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment.  The





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<PAGE>   11
Indemnifying Party shall not consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release, in form and
substance satisfactory to the Indemnified Party, from all liability in respect
of such action or proceeding for which such Indemnified Party would be entitled
to indemnification hereunder.

                 (d)  Contribution.  If the indemnification provided for in
this Section 8 is unavailable to the Indemnified Parties in respect of any
losses, claims, damages, liabilities or judgments referred to herein, then each
such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities and judgments as between the
Company on the one hand and each Selling Holder on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and
of each Selling Holder in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations.  The relative fault of the Company
on the one hand and of each Selling Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

                 The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph.  The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim.  Notwithstanding the provisions of this
Section 8(d), no Selling Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public exceeds the amount
of any damages which such Selling Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.  No Person guilty of fraudulent misrepresentation





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<PAGE>   12
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

                 7.  Miscellaneous. (a)  Rule 144 etc.  The Company will file
the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission
thereunder, and will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended from time to time, or
(ii) any successor rule or regulation hereafter adopted by the Commission.
Upon the request of any holder of Registrable Securities, the Company will
deliver to such holder a written statement as to whether it has complied with
such requirements.

                 (b)  Amendment.  Any provision of this Agreement may be
altered, supplemented, amended, or waived only by the written consent of each
of the parties hereto.

                 (c)  Specific Performance.  The parties hereto recognize that
the obligations imposed on them in this Agreement are special, unique, and of
extraordinary character, and that in the event of breach by any party, damages
will be an insufficient remedy; consequently, it is agreed that the parties may
have specific performance and injunctive relief (in addition to damages) as a
remedy for the enforcement hereof, without proving damages.

                 (d)  Assignment.  Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
hereto.  In addition, and provided that an express assignment shall have been
made, a copy of which shall have been delivered to the Company, the provisions
of this Agreement which are for the benefit of a holder of Registrable
Securities shall be for the benefit of and enforceable by any subsequent holder
of any Registrable Securities.  Any purported assignment made in violation of
this Section 10(d) shall be void and of no force and effect.

                 (e)  Notices.  Any and all notices, designations, consents,
offers, acceptances, or other communications provided for herein (each a
"Notice") shall be given in writing by overnight courier, telegram, or telecopy
(with receipt confirmed)





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<PAGE>   13
which shall be addressed, or sent, to the respective addresses as follows (or
such other address as any party may specify to the Company and all other
parties by Notice):

The Company:

                 FirstCity Financial Corporation
                 6400 Imperial Drive
                 Waco, Texas 76712
                 Attn:
                 Telecopy Number: (817) 751-7648

         Copy to:

                 Weil, Gotshal & Manges LLP
                 700 Louisiana, Suite 1600
                 Houston, Texas 77002
                 Attention: Steven D. Rubin
                 Telecopy Number: (713) 224-9511

If to the Stockholder Parties, to:


                 Richard J. Gillen
                 Harbor Financial Group, Inc.
                 340 North Sam Houston Parkway East
                 Suite 100
                 Houston, Texas 77060


                 with a copy to:


                 Bracewell & Patterson, L.L.P.
                 South Tower Pennzoil Place
                 711 Louisiana Street, Suite 2900
                 Houston, Texas 77002-2781
                 Attention:  Rick L. Wittenbraker


All Notices shall be deemed effective and received (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified above and
receipt thereof is confirmed; (b) if given by overnight courier, on the
business day immediately following the day on which such Notice is delivered to
a reputable overnight courier service; or (c) if given by telegram, when such
Notice is delivered at the address specified above.  No





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<PAGE>   14
party shall be entitled to receive a Notice hereunder (or a copy of a Notice
delivered to the Company) if, at the time such Notice is to be sent, such party
(including its Affiliates and the employees of such party and its Affiliates)
no longer owns any Registrable Securities.

                 (f)  Counterparts.  This Agreement may be executed in two or
more counterparts and each counterpart shall be deemed to be an original and
which counterparts together shall constitute one and the same agreement of the
parties hereto.

                 (g)  Section Headings.  Headings contained in this Agreement
are inserted only as a matter of convenience and in no way define, limit, or
extend the scope or intent of this Agreement or any provisions hereof.

                 (h) No Punitive Damages; Waiver of Jury Trial; Prevailing
Party's Fees and Expenses.  The parties hereto agree to waive any and all
rights to request or receive punitive damages in connection with any action or
proceeding related to the subject matter of this Agreement.  The parties hereto
waive all right to trial by jury in any action or proceeding to enforce or
defend any rights under this Registration Rights Agreement.  The substantially
prevailing party in any action or proceeding relating to this Agreement shall
be entitled to receive an award of, and to recover from any non-prevailing
party, any fees or expenses incurred by him or it (including, without
limitation, fees and disbursements of such prevailing party's counsel) in
connection with any such action or proceeding.

                 (i)  Choice of Law. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of Texas
(without regard to the principles of conflicts of law) applicable to a contract
executed and to be performed in such state.  Each of the parties hereto (a)
agrees to submit to personal jurisdiction and to waive any objection as to
venue in the State or federal courts located in McLennan County, Texas, (b)
agrees that any action or proceeding shall be brought exclusively in such
courts, unless subject matter jurisdiction or personal jurisdiction cannot be
obtained, and (c) agrees that service of process on any party in any such
action shall be effective if made by registered or certified mail addressed to
such party at the address specified herein, or to any party hereto at such
other addresses as it or he may from time to time specify to the other parties
in writing for such purpose.  The exclusive choice of forum set forth in this
Section 7(i) shall not be deemed to preclude the enforcement of any judgment
obtained in such forum or the taking of any action under this





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<PAGE>   15
Agreement to enforce such judgment in any appropriate jurisdiction.

                 (j)  Entire Agreement.  This Agreement contains the entire
understanding of the parties hereto respecting the subject matter hereof and
supersedes all prior agreements, discussions and understandings with respect
thereto.

                 (k)  Severability.  If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.

                 (l)  Termination.  This Agreement shall terminate on the
second anniversary of the Closing.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





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                 IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Registration Rights Agreement as of the date first above
written.



                                           FirstCity Financial Corporation


                                           By: /s/ MATT LANDRY, JR. 
                                              ---------------------------------
                                           Name: Matt Landry, Jr. 
                                                -------------------------------
                                           Title:  Executive Vice President 
                                                 ------------------------------
  

                                           STOCKHOLDERS:


                                            /s/ RICHARD J. GILLEN 
                                           ------------------------------------
                                           RICHARD J. GILLEN

                                            /s/ BERNICE J. GILLEN 
                                           ------------------------------------
                                           BERNICE J. GILLEN


                                            /s/ ED SMITH 
                                           ------------------------------------
                                           ED SMITH


                                            /s/ THOMAS S. SMITH 
                                           ------------------------------------
                                           THOMAS S. SMITH


                                           HARBOR FINANCIAL MORTGAGE COMPANY
                                           EMPLOYEES PENSION PLAN


                                           By: /s/ RICHARD J. GILLEN 
                                              ---------------------------------
                                           Name: Richard J. Gillen  
                                                -------------------------------
                                           Title:                            
                                                 ------------------------------


                                           LINDSEY CAPITAL CORPORATION


                                           By: /s/ ED SMITH  
                                              ---------------------------------
                                           Name: Ed Smith              
                                                -------------------------------
                                           Title: Chairman          
                                                 ------------------------------






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