Exhibit 10.1

AGREEMENT

THIS AGREEMENT (“Agreement”) is entered into and is effective as of June 30,
2011, by and between Gulf Resources, Inc, a Delaware corporation (“GUFR”) and
Mr. Tengfei Zhang, an individual resident in Beijing, P.R. China. (“Mr. Zhang”).

Preliminary Statement

GUFR desires to retain Mr. Zhang, and Mr. Zhang is willing to serve, as a member
of the Board of Directors of GUFR on the terms and subject to the conditions set
forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth
below, GUFR and Mr. Zhang hereby agree as follows:

1.      Appointment.  The Board of Directors of GUFR has elected Mr. Zhang, and
Mr. Zhang has agreed to serve, as a member of the Board of Directors of GUFR,
effective as of the date of this Agreement.

2.      Compensation.  For the duties and services to be performed by him under
this Agreement, GUFR will pay to Mr. Zhang, and Mr. Zhang agrees to accept, the
compensation described below in this Section 2.

a.      Equity Component.  On the date of this Agreement, GUFR will grant Mr.
Zhang options to purchase 12,500 shares of GUFR common stock, which may be
exercised immediately. The exercise price of these options will be the closing
sale price of GUFR common stock on the Nasdaq stock exchange on the date prior
to the date of this Agreement. On June 30, 2012, GUFR will grant Mr. Zhang
options to purchase 12,500 shares, which may be exercised immediately
thereafter, with an exercise price of the closing sale price of GUFR common
stock on the Nasdaq stock market on such date prior to the date of the grant,
provided Mr. Zhang is still a director of or otherwise engaged by GUFR.  On June
30, 2013, GUFR will grant options to purchase 12,500 shares, which may be
exercised immediately thereafter, with an exercise price of the closing sale
price of GUFR common stock on the Nasdaq stock market on the date prior to the
date of such grant, provided Mr. Zhang is still a director of or otherwise
engaged by GUFR. The options will be granted under GUFR’s stock option plan, and
will be subject to the terms and conditions of that plan. Subject to the
foregoing provisions and the terms and conditions set forth in the plan, the
options may be exercised until three years from the date of the grant of such
options, except as otherwise provided in the plan.

b.      Committees.  The Board of Directors has appointed Mr. Zhang, and Mr.
Zhang has agreed to serve as, Chairman of the Compensation Committee and a
member of the Nominating and Corporate Governance Committee.
 
 
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3.      Expenses.  GUFR will reimburse Mr. Zhang for reasonable expenses
incurred by him in furtherance of his performance of duties hereunder, provided
that such expenses are substantiated in accordance with GUFR policies applicable
to members of its Board of Directors.

4.      Term and Termination.

a.      General. The term of this Agreement will commence as of the date the
Board of Directors appoints Mr. Zhang a director of GUFR and will remain in
effect as long as Mr. Zhang continues to serve as a non-employee director of
GUFR. GUFR has no obligation to cause the nomination or recommend the election
of Mr. Zhang to the Board for any period of time in the future. Upon the
termination of Mr. Zhang’s tenure as a member of the Board, GUFR will promptly
pay to Mr. Zhang, or to his estate if his service is terminated upon his death,
all fees accrued for services rendered as a member of the Board and committees
thereof and expense reimbursements due as of the date of termination.

5.      Indemnification. GUFR Shall indemnify Mr. Zhang, as a director of GUFR,
to the maximum extent permitted under applicable law against all liabilities and
expenses, including amounts paid in satisfaction of judgments, in compromise, or
as fines and penalties, and counsel fees, reasonably incurred by Mr. Zhang in
connection with the defense or disposition of any civil, criminal,
administrative or investigative action, suit or other proceeding, whether civil
or criminal, in which he may be involved or with which he may be threatened,
while an officer or director of GUFR. Expenses (including attorney’s fees)
incurred by Mr. Zhang in defending any such action, suit or other proceeding
shall be paid by GUFR in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of him to repay
such amount if it shall be ultimately determined that he is not entitled to be
indemnified by GUFR. The right of indemnification provided herein shall not be
exclusive of or affect any other rights to which Mr. Zhang may be entitled. The
provisions hereof shall survive expiration or termination of this Agreement for
any reason whatsoever. In the event of any conflict between the provisions
hereof and the indemnification provisions contained in GUFR’s articles of
incorporation or bylaws, or in any agreement between GUFR and Mr. Zhang, the
terms of such articles, bylaws or agreement shall govern.

6.      Liability Insurance. In furtherance of its agreement to indemnify Mr.
Zhang as provided in section 5 hereof, GUFR will maintain in effect at all times
while Mr. Zhang continues to serve as a member of the Board liability insurance
provided by a recognized carrier covering members of its Board.

7.      Non-Exclusive. Nothing in this Agreement will prevent Mr. Zhang (1) from
serving as an employee, officer or director of any other company, provided that
such performance is consistent with Mr. Zhang’s duty of loyalty to GUFR, (2)
from serving on voluntary, community service committees and boards, and (3) from
owning shares representing less than 5% of the outstanding equity securities of
a company that is a competitor of GUFR. Mr. Zhang will comply with and be bound
by GUFR’s policies, procedures and practices applicable to members of its Board
of Directors from time to time in effect during the term of this Agreement.
 
 
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8.      Conflicts. Mr. Zhang represents that his performance of this Agreement
will not conflict with or breach any other agreement to which he is a party or
may be bound. Mr. Zhang has not, and will not during the term of this Agreement,
enter into any oral or written agreement in conflict with any of the provisions
of this Agreement. Mr. Zhang represents and warrants that he is not bound by any
agreements which prohibit or restrict him from: (a) competing with, or in any
way participating in a business that competes with, any former employer or
business of any former employer to the extent that Mr. Zhang’s performance of
his duties under this Agreement would be deemed to constitute such competition;
(b) soliciting personnel of a former employer or business to leave such former
employer’s employment or to leave such business; or (c) soliciting customers,
suppliers, financing sources or other entities having a substantial relationship
with a former employer or business.

9.      Representations and Warranties of GUFR. GUFR has filed all reports
required to be filed by it under the Securities Act and the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), including pursuant to Section
13(a) or 15(d) thereof, since July 24, 2009 (the foregoing materials being
collectively referred to herein as the “SEC Reports”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
Securities and Exchange Commission (the “Commission”) promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of GUFR included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of GUFR and its consolidated subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, year-end audit
adjustments.

There is no claim, action, suit, proceeding, arbitration, reparation,
investigation or hearing, pending or threatened, before any court or
governmental, administrative or other competent authority or private arbitration
tribunal, which could have an adverse effect on the business of GUFR; nor are
there any facts known to GUFR which could reasonably be expected to give rise to
a claim, action, suit, proceeding, arbitration, investigation or hearing, which
could have an adverse effect upon the business of GUFR.
 
 
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10.      Governing Law; Mediation & Arbitration. This Agreement will be governed
by, and construed in accordance with the laws of the State of New York, without
regard to choice-of-law principles, as if made and to be performed solely in New
York.

11.      Notices. All notices or other communications which are required or
permitted hereunder will be in writing and sufficient if delivered personally or
sent by air courier of first class certified or registered mail, return receipt
requested and postage prepaid, addressed as follows:
 
If to Mr. Zhang, to:   
8th Floor, Building A, Furong Tower
 
2027 Jiabin Road, Luohu District, Shenzhen
 
People’s Republic of China
   
If to GUFR, to:
Xiaobin Liu
 
99 Wenchang Road, Chenming Industrial Park,
 
Shouguang City, Shandong,
 
People’s Republic of China 262714
   
with a copy to:
Mitch Nussbaum
 
345 Park Avenue
 
New York, New York 10154
 
USA

 
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of delivery if
personally delivered; on the business day after the date when sent if sent by
air courier; and on the third business day after the date when sent if sent by
mail, in each case addressed to such party as provided in this Section or in
accordance with the latest written direction from such party.
 
12.      Entire Agreement. This Agreement constitutes the sole agreement of the
parties and supersedes all oral negotiations and prior writings.

13.      Advice of Counsel. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT, IN
EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE
OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND
PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY
PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

14.      Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
 
 
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15.      Amendments. No modification, waiver, amendment, discharge or change of
this Agreement shall be valid unless the same is in writing and signed by the
party against which the enforcement of said modification, waiver, amendment,
discharge or change is sought.

16.      Severability. If any portion of any provision of this Agreement, or the
application of such provision or any portion thereof to any person or
circumstance shall be held invalid or unenforceable, the remaining portions of
such provision or portion of such provisions of this Agreement or the
application of such provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those to which it is held
invalid or unenforceable, shall not be effected thereby.

[signature page appears on the following page]
 
 
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[signature page to Agreement of June 30, 2011 by and between Gulf Resources,
Inc. and Tengfei Zhang]

The parties, by signing below, agree to the terms and conditions set forth in
this Agreement.
 
 

 
GULF RESOURCES, INC.
         
 
By:
/s/ Xiaobin Liu      
Name: Xiaobin Liu
     
Title: Chief Executive Officer
                     
/s/ Tengfei Zhang
     
Tengfei Zhang