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 (Agreement) is entered into as of ____________,
      200__ between Dr. L.S. Smith( “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 desires to grant Optionee an option to purchase certain
      shares of its common stock (Common Stock) on the terms and conditions contained
      herein.

     

    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 grants 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.

     

    2.
      Term
      of Option.
      The
      Option shall expire at 5:00 p.m. Dallas, Texas time on
      that
      date that is 180 days from termination of employment for any reason (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 or a number of shares of the common
      stock of the Company (cashless exercise pursuant to Section 3(a)(9)) derived
      by
      dividing the net exercise price by the average bid price of the Company’s common
      stock in the ten day period prior to exercise.

     

    4.
      Equitable
      Adjustment.
      The
      number of shares and the purchase price per Share
      set
      forth in Section l above shall be equitably adjusted as necessary in the event
      of any stock split reverse stock split recapitalization or other similar event
      involving the capital stock of the Company.

     

    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 will be required to file appropriate applications to regulatory body
      for
      the exchange upon which the company’s shares are listed and 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 constitutes 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. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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 (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 Financial Officer

                Fax:
                  (972) 241-0646

              


      


      
        	 	
                If
                  to Optionee:

              	 
	 	 	 
	 	 	
                Dr.
                  L.S. Smith

                [omitted]

              


      

    

     

    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 Delaware.

     

    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.

     

    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.

     

    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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


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

    


    
      	 	 	 	 	 
	DGSE
              Companies, Inc. 	 	 	 
	 	 	 	 	 
	By	   	 	 	 
	 	 	 	 	 
	Its 	
            	 	 	 
	 	 	 	 	 
	Optionee 	 	 	 
	 	 	 	 	 
	 	 	 	 
	
              
By:	 	 	
            
	Its: