AGREEMENT
 
THIS AGREEMENT ("Agreement") is entered into and is effective as of October 24,
2007, by and between Gulf Resources, Inc, a Delaware corporation ("GUFR") and
Richard Khaleel, an individual resident in the State of New York ("Khaleel").

Preliminary Statement
 
GUFR desires to retain Khaleel, and Khaleel 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 Khaleel hereby agree as follows:

1.  Appointment.  The Board of Directors of GUFR has elected Khaleel, and
Khaleel 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 Khaleel, and Khaleel agrees to accept, the
compensation described below in this Section 2.

a. Directors’ Fees.  GUFR will pay Khaleel a director's fee of $32,500 per
annum, payable in equal monthly installments. This fee represents a retainer for
services rendered as a member of its Board of Directors, and is in addition to
any fees to which Khaleel may be entitled under guidelines and rules established
by GUFR from time to time for compensating non-employee directors for serving
on, and attending meetings of, committees of its Board of Directors and the
boards of directors of its subsidiaries.

b. Equity Component. In addition to the cash fee(s) described in subsection (a),
on the date of this Agreement, GUFR will grant Khaleel options to purchase
25,000 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 OTC Bulletin Board on the date of this Agreement.  On October 24,
2008, GUFR will grant Khaleel options to purchase 25,000 shares, which may be
exercised immediately thereafter, with an exercise price of the closing sale
price of GUFR common stock on the OTC Bulletin Board on such date of grant,
provided Khaleel is still a director of or otherwise engaged by GUFR.  On
October 24, 2009, GUFR will grant options to purchase 25,000 shares, which may
be exercised immediately thereafter, with an exercise price of the closing sale
price of GUFR common stock on the OTC Bulletin Board on the date if such grant,
provided Khaleel 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.
 

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

 
c. Audit Committee.   The Board of Directors has appointed Khaleel, and Khaleel
has agreed to serve as, a member of the Audit Committee.

3. Expenses. GUFR will reimburse Khaleel 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 Khaleel a director of GUFR and will remain in
effect as long as Khaleel continues to serve as a non-employee director of GUFR.
GUFR has no obligation to cause the nomination or recommend the election of
Khaleel to the Board for any period of time in the future. Upon the termination
of  Khaleel's tenure as a member of the Board, GUFR will promptly pay
to  Khaleel, 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  Khaleel, 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  Khaleel 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 Khaleel 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 Khaleel 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  Khaleel, the
terms of such articles, bylaws or agreement shall govern.

6. Liability Insurance. In furtherance of its agreement to indemnify Khaleel as
provided in section 5 hereof, GUFR will maintain in effect at all times while
Khaleel 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  Khaleel (1) from
serving as an employee, officer or director of any other company, provided that
such performance is consistent with  Khaleel'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.   Khaleel 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.
 
2

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

8.  Conflicts.  Khaleel 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.  Khaleel 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.  Khaleel 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  Khaleel'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 January 1, 2007 (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.
 
3

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

 
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 or first class certified or registered mail, return receipt
requested and postage prepaid, addressed as follows:

             If to Khaleel, to:                   110 Riverside Drive
New York, N.Y.  10024

If to GUFR, to:                       1330 Avenue of Americas Suite# 2109
New York, NY 10019
Attention: Ethan Chuang

With a copy to:                     Eaton & Van Winkle
3 Park Avenue
New York, New York 10016
Attn: Vincent J. McGill, Esq.

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, including any
and all prior agreements between  Khaleel and GUFR, with respect to the subject
matter hereof.

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.

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.
 
4

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

 
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]

5

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

 
[Signature page to Agreement of October 24, 2007 by and between Gulf Resources,
Inc. and Richard Khaleel]
 
      The parties, by signing below, agree to the terms and conditions set forth
in this Agreement.
 
 

  GULF RESOURCES, INC.          
 
By:
/s/ Ming Yang       Name:  Ming Yang       Title: Chairman and Chief Executive
Officer                               /s/ Richard Khaleel       Richard Khaleel
         

 
6

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