DGSE COMPANIES, INC.
OPTION GRANT AGREEMENT

This Option Grant Agreement (this “Option Agreement”) is entered into as of
October __, 2011 (the “Date of Grant”), by and between NTR Metals, LLC a Texas
limited liability company (the “Optionee”) and DGSE Companies, Inc., a Nevada
corporation (the “Company”), in exchange for the forgiveness of an aggregate of
$2.5 million in inter-company debt currently owed to the Optionee by the
Company, which, upon the execution and delivery of this Option Agreement, shall
be fully satisfied (the “Option Consideration”).
 
In consideration of the foregoing premises, the mutual covenants and agreements
contained herein, the Option Consideration, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
 
1.           Grant of Option.  In return for the Option Consideration, the
Company hereby grants to Optionee an option (the “Option”) to purchase the
number of shares of the Company’s common stock, par value $0.01 per share (the
“Common Stock”) set forth below (the “Option Shares”), at the exercise price set
forth below, subject to the terms and conditions of this Option Agreement as
follows:
 

 
Exercise Price Per Share
Total Number of Option Shares Granted
Total Exercise Price
Type of Option:
Term/Expiration Date:
$15
5,000,000
$75,000,000
Nonqualified Stock Option
5 years from Date of Grant

 
2.           Vesting.  Optionee’s Option to purchase the Option Shares shall
vest immediately upon the date of grant (the “Vesting Date”).
 
3.           Exercise of Option.
 
(a)           Right to Exercise; Term of Option.  This Option shall be
exercisable by Optionee with respect to all vested Option Shares from the time
such Option Shares vest (in accordance with the terms of Section 2) until the
fifth anniversary of the Date of Grant (the “Term”), subject to the terms and
conditions set forth in this Option Agreement.  This Option may only be
exercised in whole and may not be exercised in part.
 
(b)           Method of Exercise.  This Option shall be exercisable by written
notice (in substantially the form attached hereto as Exhibit A) which shall
state the election to exercise the Option, the number of Option Shares in
respect of which the Option is being exercised, and such other representations
and agreements as to the Optionee’s investment intent with respect to the Option
Shares.  Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company.  The
written notice shall be accompanied by payment of the aggregate exercise price
for the Option Shares in respect of which the Option is being exercised, payable
in the manner set forth in Section 4.
 
(c)           Date of Exercise, Transfer.  This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
aggregate exercise price of the Option Shares in respect of which the Option is
being exercised.  Assuming compliance with all other provisions of this Option
Agreement, for income tax purposes the Option Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised.
 
 
 

--------------------------------------------------------------------------------

 
 
4.           Payment of Aggregate Exercise Price.
 
(a)           Method of Payment.  Payment of the aggregate exercise price for
the Option Shares in respect of which the Option is being exercised shall become
immediately due upon exercise of this Option and shall be payable in cash or
check made payable to the Company.
 
(b)           Taxes.  The Optionee shall, upon notification of the amount due
(if any) as a result of the exercise of the Option and prior to or concurrent
with delivery of the certificate representing the Option Shares, pay to the
Company the amounts necessary to satisfy applicable federal, state and local tax
withholding requirements.
 
5.           Restrictions on Exercise.  This Option may not be exercised if the
issuance of such Option Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other laws or regulations, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations as promulgated by
the Federal Reserve Board.  In addition, the Board shall have the sole
discretion to impose such conditions, restrictions and limitations (including
suspending exercise of the Option and the tolling of any applicable exercise
period during such suspension) on the issuance of Common Stock with respect to
the Option unless and until the Board determines that such issuance complies
with (a) any applicable registration requirements under the Securities Act (or
the Board has determined that an exemption therefrom is available), (b) any
applicable listing requirement of any Stock Exchange on which the Common Stock
is listed, (c) any written, generally applicable Company policy or
administrative rules, and (d) any other applicable provision of state or federal
law.
 
6.           Limited Transferability of Option.  This Option shall be
exercisable only by the Optionee and shall not be assignable or transferable.
 
7.           Changes in Capital Structure.  The Optionee agrees and acknowledges
that the Company shall have the right at any time and from time to time after
the date of this Option Agreement to authorize additional classes or series of
capital stock, some of which may entitle the holders thereof to greater rights
than the holders of the Common Stock for which this Option is exercisable, and
to issue such shares, subject only to the limits imposed by applicable laws.  In
the event of any corporate event or transaction (including, but not limited to,
a change in the Common Stock or the capitalization of the Company) such as a
reorganization, recapitalization, separation, stock dividend, stock split,
reverse stock split, split up, spin-off, or other distribution of stock or
property of the Company, a combination or exchange of Common Stock, dividend in
kind, or other like change in capital structure, number of outstanding shares of
Common Stock, distribution (other than normal cash dividends) to stockholders of
the Company, or any similar corporate event or transaction, the Board, in order
to prevent dilution or enlargement of the Optionee’s rights under this Option
Agreement, shall make equitable and appropriate adjustments and substitutions,
as applicable, to or of the number and kind of shares subject to the Option, the
exercise price for such shares, and other determinations applicable to the
Option.  In addition, in the event of a merger, reorganization, consolidation,
exchange, transfer of assets or other transaction having similar effect
involving the Company in which the Company is not the surviving corporation, the
Option shall be subject to the agreement governing the transaction, which may
provide, without limitation, for the assumption of the Option by the surviving
corporation or its parent or subsidiary, for the substitution by the surviving
corporation or its parent or subsidiary of its own awards for such Option, for
accelerated vesting and accelerated expiration, or for settlement in cash or
cash equivalents.
 
8.           Exchange Listing.  Upon the exercise of the Option, the Company
will use its commercially reasonable efforts to list the Option Shares on the
NYSE Amex Equities stock exchange (the “NYSE Amex Exchange”) such that, upon (i)
the expiration of the holding period set forth in Rule 144 of the Securities Act
applicable to the Option Shares or (ii) an effective resale registration
statement in compliance with the requirements of the Securities Act, the Option
Shares may be traded on the NYSE Amex Exchange.
 
 
2

--------------------------------------------------------------------------------

 
 
9.           Tax Consequences.  The grant and/or exercise of the Option will
have federal and state income tax consequences.  THE OPTIONEE SHOULD CONSULT A
TAX ADVISOR UPON THE GRANT OF THE OPTION AND BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES ACQUIRED UPON EXERCISE.
 
10.           Entire Agreement; Governing Law.  This Option Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and this Option Agreement may not be amended except by means of a
writing signed by the Company and Optionee.  This Option Agreement is governed
by Nevada law except for that body of law pertaining to conflict of laws.
 
11.           Warranties, Representations and Covenants.  The undersigned
Optionee warrants and represents that he: (a) has received, read and understood
this Option Agreement and agrees to abide by and be bound by its terms and
conditions, (b) is acquiring such shares of Common Stock for his own account for
investment and not for resale or with a view to distribution thereof in
violation of the Securities Act; and (c) is an “accredited investor” as defined
in Rule 501 of Regulation D promulgated under the Securities Act.  The
undersigned’s financial condition is such that he is able to bear the risk of
holding such securities for an indefinite period of time and the risk of loss of
its entire investment.  The undersigned has sufficient knowledge and experience
in investing in companies similar to the Company so as to be able to evaluate
the risks and merits of its investment in the Company.  Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Board upon any questions relating to this Option Agreement.  Optionee
further agrees to notify the Company upon any change in the address indicated
below.
 
12.           Certain Definitions.  For purposes of this Option Agreement, the
following terms shall have the following meanings:
 
(a)           “Board” shall mean the Company’s Board of Directors.
 
(b)           “Code” shall mean the Internal Revenue Code of 1986, as amended.
 
(c)           “Common Stock” shall mean the Company’s common stock, par value
$0.01 per share.
 
(d)           “Fair Market Value” per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
 
(i)           If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing sales price per share of Common
Stock on the date in question on the Stock Exchange determined by the Board to
be the primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange.  If there is no closing
sales price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing sales price on the last preceding date for which such
quotation exists.
 
(ii)           If the Common Stock is at the time neither listed on any Stock
Exchange nor traded on the NASDAQ Global Market or the NASDAQ Capital Market,
then the Fair Market Value shall be determined by the Board of Directors of the
Company after taking into account such factors as the Board shall deem
appropriate.
 
 
3

--------------------------------------------------------------------------------

 
 
(e)           “Parent” shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations (other than the Company) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
 
(f)           “Securities Act” shall mean the Securities Act of 1933, as
amended.
 
(g)           “Stock Exchange” shall mean the New York Stock Exchange or the
NYSE Amex.
 
(h)           “Subsidiary” shall mean any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company, if each of such
corporations other than the last corporation in the such chain owns, at the time
of the determination, stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
 
13.            Further Assurances.  As a condition to receipt of the Option and
any exercise hereunder, the Optionee agrees, upon demand of the Company, to do
all acts and execute, deliver and perform all additional documents, instruments
and agreements which may be reasonably required by the Company, to implement the
provisions and purposes of this Option Agreement.
 
14.            Recovery of Compensation in Connection with Financial
Restatement.  Notwithstanding any other provision of this Option Agreement to
the contrary, if the Board in good faith determines that the Company is required
to restate its financial statements due to material noncompliance with any
financial reporting requirement under the law, and such restatement is not the
result of misconduct by the Board or the management of the Company, the Optionee
shall be required to reimburse the Company for any amounts earned or payable
with respect to the Option to the extent required by and otherwise in accordance
with applicable law.
 
15.            Notices.  Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and (i) hand
delivered, or (ii) sent by certified mail, return receipt requested, postage
prepaid, addressed as shown below, or to such other address as the party
concerned may substitute by written notice to the other. All notices hand
delivered shall be deemed received on the date of delivery. All notices
forwarded by mail shall be deemed received on a date three (3) days immediately
following date of deposit in the U.S. Mail; provided, however, the return
receipt indicating the date upon which all notices were received shall be prima
facie evidence that such notices were received on the date on the return
receipt.
 

 
If to the Company:
 
 
 
 
DGSE Companies, Inc.
11311 Reeder Road
Dallas, Texas 75229-3408
Attn: William H. Oyster
 
 
With a copy (which shall not constitute notice) to:
K&L Gates LLP
1717 Main St., Suite 2800
Dallas, Texas 75201
Attn: I. Bobby Majumder, Esq.

 
 
4

--------------------------------------------------------------------------------

 
 

 
If to the Optionee:
 
 
 
 
NTR Metals, LLC
10720 Composite Drive
Dallas, Texas 75220-1208
Attn:  Carl D. Gum, III, General Counsel
 
With a copy (which shall not constitute notice) to:
Jones Day
2727 N. Harwood Street
Dallas, Texas  75201
Attn:  Emil Bova, Esq.

 
The addresses and addressees may be changed by giving notice of such change in
the manner provided herein for giving notice.  Unless and until such written
notice is received, the last address and addressee given shall be deemed to
continue in effect.  No notice to either Optionee or the Company shall be deemed
given or received unless the entity noted “With a copy to” is simultaneously
delivered notice in the same manner as any notice given to another party.

 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
 
 
5

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Company and Optionee have each caused this Option
Agreement to be executed as of the date first set forth above.
 

 
THE COMPANY:
 
DGSE COMPANIES, INC.,
a Nevada corporation
         
 
By:
        Name: William H. Oyster       Title: President          

 

 
OPTIONEE:

NTR METALS, LLC,
a Texas limited liability company
         
 
By:
        Name: John R. Loftus       Title: President          

 
 
6

--------------------------------------------------------------------------------

 
 
Exhibit A to Option Grant Agreement

DGSE COMPANIES, INC.
 
EXERCISE NOTICE
 
DGSE Companies, Inc.
11311 Reeder Road
Dallas, TX 75229-3408

Attention: Secretary
 
1.      Exercise of Option.  Effective as of today, ________________, 20___, the
undersigned (“Purchaser”) hereby elects to purchase __________ shares (the
“Option Shares”) of the Common Stock, par value $0.01 per share (the “Common
Stock”), of DGSE Companies, Inc. (the “Company”) under and pursuant to the
Option Grant Agreement dated October 21, 2011(the “Option Agreement”).  The
exercise price for the Option Shares shall be $15 per share, as specified in the
Option Agreement.
 
2.      Delivery of Payment.  The undersigned Purchaser herewith encloses the
cash or a certified or cashier’s check (drawn in favor of the Company) in the
amount of $__________ in payment of the aggregate exercise price.
 
3.      Representations of Purchaser.  Purchaser hereby represents and warrants
as follows:
 
(a)           Purchaser acknowledges that he has received, read and understood
the Option Agreement and agrees to abide by and be bound by its terms and
conditions.
 
(b)           Purchaser is acquiring such shares of Common Stock for its own
account for investment and not for resale or with a view to distribution thereof
in violation of the Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the “Securities Act”); and

(c)           Purchaser is an “accredited investor” as defined in Rule 501 of
Regulation D promulgated under the Securities Act.  The undersigned’s financial
condition is such that he is able to bear the risk of holding such securities
for an indefinite period of time and the risk of loss of its entire
investment.  The undersigned has sufficient knowledge and experience in
investing in companies similar to the Company so as to be able to evaluate the
risks and merits of its investment in the Company.
 
4.      Rights as Shareholder.  The Purchaser shall not be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any Option
Shares for which such Option is exercised, including, but not limited to, rights
to vote or to receive dividends, unless and until the Purchaser has satisfied
all requirements for exercise of the Option pursuant to its terms and the
certificates evidencing such Option Shares have been issued or the Purchaser has
been determined to be a record holder of such Option Shares by the transfer
agent of the Company.  A share certificate for the number of Option Shares so
acquired shall be issued to the Purchaser as soon as practicable after exercise
of the Option.  No adjustment will be made for a dividend or other right for
which the record date is prior to the date on which all the conditions set forth
above are satisfied, except adjustments in accordance with Section 7 of the
Option Agreement.
 
5.      Tax Provisions.  The Board shall determine the amount of any withholding
or other tax required by law to be withheld or paid by the Company with respect
to any income recognized by the Purchaser with respect to the exercise of the
Option, and the Optionee shall be required to meet any applicable tax
withholding obligation in accordance with Section 4(b) of the Option
Agreement.  Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Option
Shares.  Purchaser represents that Purchaser has consulted with any tax
consultant or consultants Purchaser deems advisable in connection with the
purchase or disposition of the Option Shares and that Purchaser is not relying
on the Company for any tax advice.
 
 
7

--------------------------------------------------------------------------------

 
 
6.      Entire Agreement; Governing Law.  The Option Agreement is incorporated
herein by reference.  This Exercise Notice and the Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the
Company and Purchaser with respect to the subject matter hereof, and this
Exercise Notice may not be amended except by means of a writing signed by the
Company and Purchaser.  This Exercise Notice is governed by Nevada law except
for that body of law pertaining to conflict of laws.
 

Submitted by:      Accepted by:           PURCHASER:    THE COMPANY:            
 
DGSE COMPANIES, INC.
              By:  
Signature
          Its:  
Print Name
              Address:    Address: