WAIVER AND NINTH AMENDMENT TO LOAN AGREEMENT AND OTHER LOAN DOCUMENTS

THIS WAIVER AND NINTH AMENDMENT TO LOAN AGREEMENT AND OTHER LOAN DOCUMENTS (this “ Amendment ”) is dated as of July [__], 2011, among DGSE COMPANIES, INC., a Nevada corporation (“ Borrower ”), and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION , a national banking association (“ Lender ”).

A.           Borrower and Lender are party to that certain Loan Agreement dated as of December 22, 2005 (as modified, amended, renewed, extended, and restated, the “ Loan Agreement ”).

B.           Borrower has failed to satisfy for the fiscal quarters ending December 31, 2010 and March 31, 2011 (the “ Subject Periods ”), (i) the minimum Tangible Net Worth required by Section 9.1 of the Loan Agreement, (ii) the maximum Leverage Ratio permitted by Section 9.2 of the Loan Agreement, and (iii) the minimum Fixed Charge Coverage Ratio required by Section 9.3 of the Loan Agreement (collectively, the “ Subject Defaults ”).  Borrower has requested that Lender waive the Subject Defaults for the Subject Periods and amend certain provisions of the Loan Documents.  Lender has agreed, subject to the terms and conditions of this Amendment, to waive such Subject Defaults solely for the Subject Periods and amend the Loan Documents.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.             Terms and References .  Unless otherwise stated in this Amendment, (a) terms defined in the Loan Agreement have the same meanings when used in this Amendment, and (b) references to “ Sections ” are to the Loan Agreement’s sections.

2.             Waiver .  Subject to the terms and conditions in this Amendment, Lender hereby waives the Subject Defaults solely for the Subject Periods.  The waiver hereby granted by Lender (a) is limited expressly as written, (b) does not impair Lender’s rights to insist upon strict compliance with the Loan Agreement and the other Loan Documents, and (c) does not extend to any other Defaults or Events of Default.

Lender hereby expressly reserves all rights and remedies available to it under any of the Loan Documents, at law, in equity, or otherwise, and expressly reserves the right at any time and from time to time to take any action available to it that it deems appropriate under the circumstances.  No past, present, or future failure by Lender to notify Borrower of any Default or Event of Default or failure or delay by Lender in exercising any rights and remedies available under the Loan Documents shall constitute a waiver of any Default or Event of Default, whether known or unknown, and whether now existing or hereafter arising.

3.           Amendments to Loan Agreement.

(a)            Section 1.1 of the Loan Agreement is hereby amended by deleting the definitions of “ Eligible Inventory ” and “ Termination Date ” therefrom, and substituting the following in lieu thereof:

Waiver and Ninth Amendment

 to Loan Agreement

 and Other Loan Documents

“ Eligible Inventory ” means, at any time, all Gross Merchandise Inventory of raw materials and finished goods then owned by (and in the possession or under the control of) Borrower and held for sale or disposition in the ordinary course of Borrower’s business, in which Lender has a perfected, first priority security interest, valued at the lower of actual cost or fair market value and determined by Lender.  Eligible Inventory shall not include (a) inventory that is work-in-process, (b) inventory that has been shipped or delivered to a customer on consignment, a sale-or-return basis, or on the basis of any similar understanding, (c) inventory with respect to which a claim exists disputing Borrower’s title to or right to possession of such inventory, (d) inventory supported by a customer deposit, (e) inventory that is not in good condition or does not comply with any applicable law, rule, or regulation or any standard imposed by any Governmental Authority with respect to its manufacture, use, or sale, (f) inventory that is damaged, obsolete or otherwise not readily saleable, (g) inventory covered by negotiable warehouse or other document of title (unless the same is in the possession of Lender); (h) inventory held for rental or lease, (i) inventory that Lender, in its sole discretion, has determined to be unmarketable, (j) inventory subject to third-party intellectual property agreements, and (k) inventory that requires consent of a third-party for manufacture or sale.  In addition, no more than ten percent (10%) of the total value of all inventory shall consist of Long Term Inventory.  For purposes of this definition, Eligible Inventory consisting of inventory obtained from a Pawn Loan shall be valued at the lower of the defaulted loan value of the underlying Pawn Loan or market value.

“ Termination Date ” means 11:00 a.m., Dallas, Texas time on June 22, 2012, or such earlier date on which the Commitment terminates as provided in this Agreement.

(b)            Section 9.1   is hereby deleted in its entirety, and the following new Section 9.1 is substituted in lieu thereof:

S ection 9.1                        Consolidated Tangible Net Worth .  Borrower shall not permit, as of any date, Tangible Net Worth of Borrower and its Subsidiaries, on a consolidated basis, to be less than Fifteen Million Dollars ($15,000,000).

(c)            Section 9.2   is hereby deleted in its entirety, and the following new Section 9.2 is substituted in lieu thereof:

S ection 9.2                        Leverage Ratio .  Borrower will at all times maintain a ratio of consolidated Liabilities minus Subordinated Debt to consolidated Tangible Net Worth that is not greater than 1.0 to 1.0.  This Section 9.2 shall be calculated based on the Liabilities, Subordinated Debt, and Tangible Net Worth of Borrower and its Subsidiaries, on a consolidated basis.

(d)            Section 9.3   is hereby deleted in its entirety, and the following new Section 9.3 is substituted in lieu thereof:

S ection 9.3                        Fixed Charge Coverage Ratio .  Borrower and its Subsidiaries, shall not, as of the last day of any fiscal quarter during the following periods, beginning with the fiscal quarter ending on June 30, 2011, permit the ratio of (a) EBITDA, minus Cash Taxes, minus Capital Expenditures not financed with Indebtedness permitted hereunder (excluding Capital Expenditures approved in writing by Lender, in its sole discretion), to (b) Debt Service, in each case for the four (4) fiscal quarters ending on the date of determination, to be less than 1.40 to 1.0.  This Section 9.3 shall be based on the rolling four (4) quarter cash flow and debt service obligations of Borrower and its Subsidiaries; provided that (i) for the fiscal quarter ending June 30, 2011, the calculation shall be annualized based on the fiscal quarters ending March 31, 2011 and June 30, 2011, and (ii) for the fiscal quarter ending September 30, 2011, the calculation shall be annualized based on the fiscal quarters ending March 31, 2011, June 30, 2011, and September 30, 2011.

(e)            Exhibit B (but not Schedule A to Exhibit B ) attached to the Loan Agreement is hereby deleted in its entirety and replaced with Exhibit B attached hereto.

4.             Amendment to Revolving Credit Note.   The Revolving Credit Note is hereby amended by deleting the definition of “ Maturity Date ” therefrom, and substituting the following in lieu thereof:

Maturity Date :   means June 22, 2012.

5.             Amendment to Term Note.   The Term Note is hereby amended by deleting the definition of “ Maturity Date ” therefrom, and substituting the following in lieu thereof:

Maturity Date :   means June 22, 2012.

6.             Amendments to Other Loan Documents .

(a)           All references in the Loan Documents to the Loan Agreement shall henceforth include references to the Loan Agreement, as modified and amended hereby, and as may, from time to time, be further amended, modified, extended, renewed, and/or increased.  All references in the Loan Documents to the Notes shall henceforth include references the Notes as amended hereby, and as may, from time to time, be further amended, modified, renewed, extended, and/or restated.

(b)           Any and all of the terms and provisions of the Loan Documents are hereby amended and modified wherever necessary, even though not specifically addressed herein, so as to conform to the amendments and modifications set forth herein.

7.             Conditions Precedent .  This Amendment shall not be effective until (a) Lender receives an executed copy of this Amendment, including the ratifications attached hereto, (b) Lender receives an amendment fee in the amount of Thirty-Five Thousand Dollars ($35,000), together with payment of the estimated reasonable fees and expenses of Lender’s counsel incurred in connection with this Amendment in immediately available funds, (c) all representations and warranties set forth in this Amendment are true and correct, (d) after giving effect to this Amendment, no Default or Event of Default, other than the Subject Defaults which are waived by Lender pursuant to this Amendment, exists, (e) Lender receives a certificate of incumbency for Borrower certified by its Secretary or an Assistant Secretary of Borrower certifying (i) the name of each of its officers who is authorized to sign this Amendment, (ii) a true and correct copy of the resolutions of the directors of Borrower which authorize its execution and delivery of this Amendment, and the performance of the Loan Documents as amended hereby, and (iii) that the charter and bylaws of Borrower have not been amended since December 22, 2005, and that the same are still in effect, and (f) Lender receives a certificate evidencing the existence and good standing of Borrower from the Secretary of State of the State of Nevada.

8.             Ratifications . Borrower (a) ratifies and confirms all provisions of the Loan Documents as amended by this Amendment, (b) ratifies and confirms that al