THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR

UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE AND MAY

BE OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO THE

PROVISIONS OF SUCH ACT OR SUCH LAWS OR IF AN EXEMPTION FROM

REGISTRATION IS AVAILABLE.

OPTION AGREEMENT

THIS OPTION AGREEMENT (this “Agreement”) is entered into as of _________,200_ by and between ________________( “Optionee”) and DGSE Companies, INC., a Nevada Corporation (the “Company”) with reference to the following facts:

A. In consideration for Optionee providing certain services between Optionee and the Company the Company, the Company has previously granted the Optionee an option to purchase certain shares of its common stock (the “Common Stock”). The option agreement governing such option grant has been lost, stolen, or destroyed and accordingly the Optionee and Company desire to enter into this replacement Agreement pursuant to the Company’s 2004 Stock Option Plan (the “Plan”).

NOW THEREFORE IN CONSIDERATION OF the foregoing and the mutual covenants and conditions contained herein the parties agree as follows:

1. Grant of Option. The Company hereby confirms that it has previously granted to Optionee an option (the “Option”) to purchase in whole or in part at any time or from time to time from the Company ------___________ shares of Common Stock (the “Shares”) at an exercise price of $______ per Share. The Option is a non-qualified stock option.

2. Term of Option. The Option shall expire upon the earlier to occur of (i)  5:00 p.m. Dallas, Texas time on that date that is 180 days from termination of employment for any reason; and (ii) the termination of the Plan pursuant to Section 5(f) thereof (such earlier date, the “Expiration Date”).

3. Exercise of Option. The Option may be exercised, in whole or in part, at any time or from time to time, on or after the date hereof, by giving written notice to the Company no less than five days before the Exercise Date (as defined below). Such notice (the “Exercise Notice”) shall state: (a) the number of Shares with respect to which the Option is being exercised; (b) the aggregate purchase price to be paid for such Shares; (c) the number of Shares which shall remain subject to the Option after the Exercise Date; and (d) the date on which certificates evidencing the Shares to be acquired shall be delivered to Optionee (the “Exercise Date”). On the Exercise Date, the Company shall deliver to Optionee a certificate representing the Shares being purchased by Optionee and Optionee shall deliver to the Company payment for such Shares which shall be by wire transfer or certified or cashier’s check.

4. Adjustments for Stock Split, Etc.. The number of shares and the purchase price per Share set forth in Section l above shall be adjusted in the event of any stock split, stock dividend, combination or exchange of shares, reclassification, merger, consolidation, recapitalization or other similar event involving the capital stock of the Company as set forth in Section 3 and Section 4(b) of the Plan.

1 of 5

5. Representations and Warranties by the Company. The Company represents and warrants to Optionee that as of the date hereof and on the Exercise Date:

5.1 Organization and Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada with all requisite corporate power and authority to enter into this Agreement to own and to lease its property and to carry on its business as now conducted.

5.2 Authorization. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all required corporate action.

5.3 Enforceability. This Agreement constitutes the legal valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally.

5.4 Status of the Shares. The Shares when issued and paid for by Optionee as provided herein shall be validly issued, fully paid and non-assessable.

6. Reservation of the Shares. The Company agrees to reserve at all times during the term of the Option a sufficient number of shares of Common Stock for the exercise of the Option.

7. Regulatory Compliance. The issuance and sale of the Shares pursuant to the exercise of the Option shall be subject to full compliance with all applicable requirements of law and all certificates representing the Shares shall bear any legend required by applicable securities laws. The Company shall not be obligated to issue the Shares unless they have been registered and qualified under applicable federal and state securities laws or an exemption from such registration and qualification is available and the Company at its option receives an opinion of Optionee’s counsel as to the availability of such exemption. Optionee acknowledges that upon request to exercise this option, the Company may be required to file appropriate applications to regulatory body for the exchange upon which the Company’s shares are listed and, if so, such application must be approved prior to the physical issuance of such shares.

8. Transferability. This Agreement and the Option may not be assigned, transferred or sold by Optionee.

9. Further Assurances. The Company and Optionee will upon the request of the other execute and deliver such documents and take such action reasonably necessary or desirable to more effectively complete and evidence the sale and transfer of the Shares.

10.Survival of Representations. All representations and warranties made herein and remedies for failure to perform any obligation required to be performed shall survive the execution and delivery of this Agreement.

11. Miscellaneous.

11.1 Entire Agreement. This Agreement and the Plan constitute the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements, and understandings with respect thereto. No representation, promise, inducement or statement of intention has been made by any party hereto that is not embodied herein and no party shall be bound by or liable for any alleged representation, promise, inducement or statement not so set forth herein. The Optionee has reviewed Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel before executing this Agreement and fully understands all provisions of this Agreement and the Plan.

2 of 5

11.2 Waiver. No failure on the part of either party hereto to exercise, and no delay in exercising any right, power or remedy hereunder shall operate as a waiver thereof or as a waiver of any other right, power or remedy hereunder or the performance of any obligation of the other party hereto; and no single or partial exercise by either party hereto of any right, power or remedy hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or remedy by such party.

11.3 Notice. All notices, requests, and other communications required or permitted to be given hereunder shall be in writing and shall be deemed given (a) upon receipt, if given by personal delivery, (b) upon confirmation of delivery, if given by electronic facsimile or e-mail, or (c) upon the third business day following mailing, if deposited in the United States Mail, certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Company:   DGSE Companies, Inc.

2817 Forest Lane

Dallas, Texas 75234

Attn: Chief Executive Officer

Fax: (972) 772-3093

If to Optionee, at the address specified on the signature page hereto.

Either party may change its or his address or fax number by providing notice of such change to the other party in accordance herewith.

11.4 Controlling Law. This Agreement shall be interpreted and enforced under the internal laws of the State of Nevada.

11.5 Construction. In construing this Agreement, none of the parties hereto shall have any tern or provision construed against such party solely by reason of such party having drafted the same. The Optionee hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Board upon any questions relating to this Agreement and the Plan.

11.6 Severability. If any sentence, paragraph, clause or combination of the same in this Agreement is held by a court or arbitration panel of competent jurisdiction, to be unenforceable in any jurisdiction such sentence, paragraph, clause or combination shall be unenforceable in the jurisdiction where it is invalid and the remainder of this Agreement shall remain binding on the parties in such jurisdiction as if such unenforceable provision had not been contained herein. The enforceability of such sentence, paragraph, clause or combination of the same in this Agreement shall be otherwise unaffected and shall remain enforceable in all other jurisdictions.

11.7 Modification. This Agreement may be modified, amended, superseded or canceled and any part of the terms, covenants, representations, warranties or conditions of the Agreement may be waived only by a written document executed by the party or parties to be bound by any such modification, amendment, cancellation or waiver.

3 of 5

11.8 Counterparts. This Agreement may be signed simultaneously in any number of counterparts each of which shall be deemed an original but all of which together shall constitute one and the same document.

11.9 Effect of Headings. The headings used in this Agreement are included for convenience only and are not to be used in construing or interpreting this Agreement.

11.10 Electronic Delivery. The Optionee agrees that the Company may deliver all documents relating to the Plan or this Option (including prospectuses required by the Securities and Exchange Commission), and all other documents that the Company is required to deliver to its security holders or the Optionee (including annual reports, proxy statements and financial statements), either by e-mail or by e-mail notice of a Web site location where those documents have been posted. The Optionee may at any time (i) revoke this consent to e-mail delivery of those documents; (ii) update the e-mail address for delivery of those documents; (iii) obtain at no charge a paper copy of those documents, in each case by writing the Company at its address for notices pursuant to Section 11.3 above. The Optionee may request an electronic copy of any of those documents by requesting a copy from the Chief Financial Officer. The Optionee understands that an e-mail account and appropriate hardware and software, including a computer or compatible cell phone and an internet connection, will be required to access documents delivered by e-mail.

11.11 Affidavit of Loss. The Optionee certifies, represents and warrants to the Company that the following is true and correct with respect to any and all agreements that may have been previously entered into relating to the Option:

a.Such agreement(s) ha(s)(ve) been stolen or, despite a diligent search that Optionee has conducted to locate such agreement(s), it or they remain lost or missing.

b.Neither the Option evidenced by such agreement(s), nor any interest therein, has been directly or indirectly sold, assigned, devised, pledged or otherwise transferred, whether or not for consideration.

c.In the event Optionee locates any such agreement, the Optionee agrees to surrender them promptly to the Company.

[ THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK ]

4 of 5

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

DGSE COMPANIES, INC.

_________________________________

OPTIONEE:

_________________________________

Name:

Address for Notices:

_________________________________

_________________________________

_________________________________

Fax No.:___________________________

Email: _____________________________

5 of 5