FIXED PRICE STANDBY EQUITY DISTRIBUTION AGREEMENT

FIXED PRICE STANDBY EQUITY DISTRIBUTION AGREEMENT

THIS AGREEMENT dated as of the ___ day of May, 2007 (the "Agreement")
between GULF RESOURCES, INC., a corporation organized and existing under the
laws of the state of Delaware (the "Company"), and each of the investors whose
names are set forth on the signature page hereto (individually, an "Investor,"
collectively, the "Investors").

WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
from time to time as provided herein, and the Investors shall purchase from the
Company up to Sixty Million U.S. Dollars ($60,000,000) of the Company's common
stock, par value $.001 per share (the "Common Stock"); and

WHEREAS, such investments will be made in reliance upon the provisions of
Regulation D ("Regulation D") and Regulation S ("Regulation S") of the
Securities Act of 1933, as amended, and the regulations promulgated thereunder
(the "Securities Act"), and or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to any or
all of the investments to be made hereunder.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I.
Certain Definitions

Section 1.1. "Advance" shall mean the portion of the Commitment Amount
requested by the Company in the Advance Notice.

Section 1.2. "Advance Date" shall mean the date the Eaton & Van Winkle LLP
(the "Escrow Agent") Trust Account is in receipt of the funds from the Investors
and the Escrow Agent is in possession of certificates representing the shares to
be issued to the Investors in consideration of such advance and therefore an
Advance by the Investors to the Company can be made and the Escrow Agent can
release the certificates representing the shares to the Investors. The Advance
Date in respect of each Advance shall be the fifth business day in the State of
New York ("Business Day") after delivery of the Advance Notice to the Investors.
For purposes hereof a Business Day shall mean any day that banks in the State of
New York are not required or permitted to be closed.

Section 1.3. "Advance Notice" shall mean a written notice to the Investors
delivered in accordance with Section 2.1 setting forth the Advance amount that
the Company requests from the Investors and the Advance Date.

Section 1.4. "Advance Notice Date" shall mean each date the Company
delivers to the Investors an Advance Notice requiring the Investors to advance
funds to the Company, subject to the terms of this Agreement. No Advance Notice
Date shall be less than fifteen (15) days after the prior Advance Notice Date.

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Section 1.5. "Closing" shall mean one of the closings of a purchase and
sale of Common Stock pursuant to Section 2.3.

Section 1.6. "Commitment Amount" shall mean the aggregate amount of up to
Sixty Million U.S. Dollars ($60,000,000) which the Investors have agreed to
provide to the Company in order to purchase the Company's Common Stock pursuant
to the terms and conditions of this Agreement. The Commitment Amount of each
Investor is the amount set forth opposite the name of the Investor on Schedule 1
hereto.

Section 1.7. "Commitment Period" shall mean the period commencing on the
earlier to occur of (i) the Effective Date, or (ii) such earlier date as the
Company and the Investors may mutually agree in writing, and expiring on the
earliest to occur of (x) the date on which the Investors shall have made payment
of Advances pursuant to this Agreement in the aggregate amount of Sixty Million
U.S. Dollars ($60,000,000), (y) the date this Agreement is terminated pursuant
to Section 2.4, or (z) the date occurring eighteen (18) months after the
Effective Date.

Section 1.8. "Common Stock" shall mean the Company's common stock, par
value $.001 per share.

Section 1.9. "Condition Satisfaction Date" shall have the meaning set
forth in Section 7.2.

Section 1.10. "Damages" shall mean any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

Section 1.11. "Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in Section 7.2(a).

Section 1.12. "Escrow Agreement" shall mean the escrow agreement among the
Company, the Investors, and the Escrow Agent, dated the date hereof.

Section 1.13. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

Section 1.14. "Material Adverse Effect" shall mean any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this Agreement or the Registration Rights Agreement in any material
respect.

Section 1.15. "Maximum Advance Amount" shall be Ten Million U.S. Dollars
(US$10,000,000) per Advance Notice.

Section 1.16. "NASD" shall mean the National Association of Securities
Dealers, Inc.


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Section 1.17. "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.

Section 1.18. "Purchase Price" shall be set at $2.00 per share of Common
Stock.

Section 1.19. "Registrable Securities" shall mean the shares of Common
Stock to be issued hereunder (i) in respect of which a Registration Statement
has not been declared effective by the SEC, (ii) which have not been sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule 144") or (iii)
which have not been otherwise transferred to a holder who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

Section 1.20. "Registration Rights Agreement" shall mean the Registration
Rights Agreement dated the date hereof, regarding the filing of the Registration
Statement for the resale of the Registrable Securities, entered into between the
Company and the Investor.

Section 1.21. "Registration Statement" shall mean a registration statement
on Form S-1 or SB-2 (if use of such form is then available to the Company
pursuant to the rules of the SEC and, if not, on such other form promulgated by
the SEC for which the Company then qualifies and which counsel for the Company
shall deem appropriate, and which form shall be available for the resale of the
Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement and the Registration Rights Agreement, and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable Securities under
the Securities Act.

Section 1.22. "SEC" shall mean the Securities and Exchange Commission.

Section 1.23. "SEC Documents" shall mean Annual Reports on Form 10-KSB or
Form 20-F, Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K or 6-K
and Proxy Statements of the Company as supplemented to the date hereof, filed by
the Company for a period of at least twelve (12) months immediately preceding
the date hereof or the Advance Date, as the case may be, until such time as the
Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights Agreement.

Section 1.24. "Trading Day" shall mean any day during which the New York
Stock Exchange shall be open for business

ARTICLE II.
Advances

Section 2.1. Investments.

(a) Advances. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII hereof), on any
Advance Notice Date the Company may request an Advance by the Investors by the
delivery of an Advance Notice. The number of shares of Common Stock that the
Investors shall receive for each Advance shall be determined by dividing the
amount of the Advance by the Purchase Price. No fractional shares shall be


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issued. Fractional shares shall be rounded to the next higher whole number of
shares. The aggregate maximum amount of all Advances that the Investors shall be
obligated to make under this Agreement shall not exceed the Commitment Amount.
Each Investor shall be required to purchase such portion of the number of shares
of Common Stock to be sold in connection with any Advance (the "Advance Amount")
as is equal to the product the Advance Amount multiplied by a fraction, the
numerator of which is the total amount of the Advances committed to by the
Investor and the denominator of which is Sixty Million ($60,000,000).

Section 2.2. Mechanics.

(a) Advance Notice. At any time during the Commitment Period, the
Company may deliver an Advance Notice to the Investors, subject to the
conditions set forth in Section 7.2; provided, however, the amount for each
Advance as designated by the Company in the applicable Advance Notice, shall not
be more than the Maximum Advance Amount. The aggregate amount of the Advances
pursuant to this Agreement shall not exceed the Commitment Amount. The Company
acknowledges that the Investors may sell shares of the Company's Common Stock
corresponding with a particular Advance Notice on the day the Advance Notice is
received by the Investors.

(b) Date of Delivery of Advance Notice. An Advance Notice shall be
deemed delivered on (i) the day after it is received by facsimile or otherwise
by the Investors if such notice is received prior to 12:00 noon Eastern United
States Time, or (ii) the immediately succeeding day if it is received by
facsimile or otherwise after 12:00 noon Eastern United States Time on a day or
at any time on a day which is not Business Day. No Advance Notice may be deemed
delivered on a day that is not a Business Day.

(c) Pre-Closing Share Credit. Within three (3) business days after
the Advance Notice Date, the Company shall credit shares of the Company's Common
Stock to the Escrow Agent's balance account with The Depository Trust Company
through its Deposit Withdrawal At Custodian system, in an amount equal to the
amount of the requested Advance divided by the Purchase Price. In no event shall
the number of shares issuable to any Investor pursuant to an Advance exceed nine
and 9/10 percent (9.9%) of the then outstanding Common Stock of the Company.

(d) Hardship. In the event any Investor sells the Company's Common
Stock to be delivered pursuant to subsection (c) above and the Company fails to
perform its obligations as mandated in Section 2.5 and 2.2 (c), and specifically
fails to provide the Investor with the shares of Common Stock for the applicable
Advance, the Company acknowledges that the Investor shall suffer financial
hardship and therefore shall be liable for any and all losses, commissions,
fees, or financial hardship caused to the Investor.

Section 2.3. Closings. On each Advance Date, which shall be the fifth
Business Day after the applicable Advance Notice Date (i) the Company shall
instruct the Company's transfer agent to deliver to the Escrow Agent, shares of
the Company's Common Stock, representing the amount of the Advance by each
Investor pursuant to Section 2.1 herein, registered in the names of the
Investors which shall be delivered to the Investors, or otherwise in accordance


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with the Escrow Agreement and (ii) each Investor shall deliver to Escrow Agent
its proportionate share of the amount of the Advance specified in the Advance
Notice by wire transfer of immediately available funds which shall be delivered
to the Company, or otherwise in accordance with the Escrow Agreement. In
addition, on or prior to the Advance Date, each of the Company and the Investors
shall deliver to the other through the Escrow Agent counsel, all documents,
instruments and writings required to be delivered by either of them pursuant to
this Agreement in order to implement and effect the transactions contemplated
herein. Payment of funds to the Company and delivery of the Company's Common
Stock to the Investors shall occur in accordance with the conditions set forth
above and those contained in the Escrow Agreement.

Section 2.4. Termination of Investment. The obligation of the Investor to
make an Advance to the Company pursuant to this Agreement shall terminate
permanently (including with respect to an Advance Date that has not yet
occurred) in the event that (i) there shall occur any stop order or suspension
of the effectiveness of the Registration Statement for an aggregate of sixty
(60) Trading Days, other than due to the acts of the Investors, during the
Commitment Period, and (ii) the Company shall at any time fail materially to
comply with the requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written notice from the Investors, provided,
however, that this termination provision shall not apply to any period
commencing upon the filing of a post-effective amendment to such Registration
Statement and ending upon the date on which such post effective amendment is
declared effective by the SEC.

Section 2.5. Agreement to Advance Funds.

(a) Each Investor agrees to advance its proportionate shares of the
amount specified in the Advance Notice to the Company after the completion of
each of the following conditions and the other conditions set forth in this
Agreement:

(i) the execution and delivery by the Company, and the
Investors, of this Agreement and the Exhibits hereto;

(ii) the Escrow Agent shall have received the shares of Common
Stock applicable to the Advance in accordance with Section 2.2(c) hereof;

(iii) the Company's Registration Statement with respect to the
resale of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement shall have been declared effective by the SEC;

(iv) the Company shall have obtained all material permits and
qualifications required by any applicable state for the offer and sale of the
Registrable Securities, or shall have the availability of exemptions therefrom.
The sale and issuance of the Registrable Securities shall be legally permitted
by all laws and regulations to which the Company is subject;

(v) the Company shall have filed with the Commission in a
timely manner all reports, notices and other documents required of a "reporting
company" under the Exchange Act and applicable Commission regulations; and

(vi) the conditions set forth in Section 7.2 shall have been
satisfied.


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(vii) the Company shall have provided to the Investors an
acknowledgement, from the Company's independent auditors as to its ability to
provide all consents required in order to file a registration statement in
connection with this transaction;

(viii) The Company's transfer agent shall be DWAC eligible.

ARTICLE III.
Representations and Warranties of Investors

Each Investor hereby severally represents and warrants to the Company with
respect to itself, and agrees with the Company that the following are true and
as of the date hereof and as of each Advance Date:

Section 3.1. Organization and Authorization. The Investor is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite power and authority to
purchase and hold the securities issuable hereunder. The decision to invest and
the execution and delivery of this Agreement by such Investor, the performance
by such Investor of its obligations hereunder and the consummation by such
Investor of the transactions contemplated hereby have been duly authorized and
requires no other proceedings on the part of the Investor. The undersigned has
the right, power and authority to execute and deliver this Agreement and all
other instruments (including, without limitations, the Registration Rights
Agreement), on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and, assuming the execution and delivery hereof and
acceptance thereof by the Company, will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

Section 3.2. Evaluation of Risks. The Investor has such knowledge and
experience in financial tax and business matters as to be capable of evaluating
the merits and risks of, and bearing the economic risks entailed by, an
investment in the Company and of protecting its interests in connection with
this transaction. It recognizes that its investment in the Company involves a
high degree of risk.

Section 3.3. No Legal Advice From the Company. The Investor acknowledges
that it had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and investment
and tax advisors. The Investor is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.

Section 3.4. Investment Purpose. The securities are being purchased by the
Investor for its own account, for investment and without any view to the
distribution, assignment or resale to others or fractionalization in whole or in
part. The Investor agrees not to assign or in any way transfer the Investor's
rights to the securities or any interest therein and acknowledges that the
Company will not recognize any purported assignment or transfer except in
accordance with applicable Federal and state securities laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor agrees not to sell, hypothecate or otherwise transfer the Investor's


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securities unless the securities are registered under Federal and applicable
state securities laws or unless, in the opinion of counsel satisfactory to the
Company, an exemption from such laws is available.

Section 3.5. Accredited Investor. (a) The Investor is an "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D of the
Securities Act. The Investor is not a "US Person" as that term is defined in
Rule 902(k) of Regulation S promulgated under the Securities Act. The Investor
resides outside of the United States and does not maintain a place of business
within the United States.

(b) Dealer; Distributor. Investor represents that it is not a distributor
or dealer as such term is defined in Section 2(a)(12) of the Securities Act, or
a person receiving a selling concession, fee or other remuneration in connection
with the Securities.

(c) Hedging Transactions. Investor agrees not to engage in hedging
transactions with regard to the securities issuable pursuant hereto prior to the
expiration of one-year after the purchase of any such securities.

Section 3.6. Information. The Investor and its advisors (and its counsel),
if any, have been furnished with all materials relating to the business,
finances and operations of the Company and information it deemed material to
making an informed investment decision. The Investor and its advisors, if any,
have been afforded the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence investigations
conducted by such Investor or its advisors, if any, or its representatives shall
modify, amend or affect the Investor's right to rely on the Company's
representations and warranties contained in this Agreement. The Investor
understands that its investment involves a high degree of risk. The Investor is
in a position regarding the Company, which, based upon employment, family
relationship or economic bargaining power, enabled and enables such Investor to
obtain information from the Company in order to evaluate the merits and risks of
this investment. The Investor has sought such accounting, legal and tax advice,
as it has considered necessary to make an informed investment decision with
respect to this transaction.

Section 3.7. Receipt of Documents. The Investor and its counsel have
received and read in their entirety: (i) this Agreement and the Exhibits annexed
hereto; (ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and covenants;
(iii) the Company's Form 10-KSB for the year ended December 31, 2007; and (iv)
answers to all questions the Investor submitted to the Company regarding an
investment in the Company; and the Investor has relied on the information
contained therein and has not been furnished any other documents, literature,
memorandum or prospectus.

Section 3.8. Registration Rights Agreement and Escrow Agreement. The
parties have entered into the Registration Rights Agreement and the Escrow
Agreement, each dated the date hereof.

Section 3.9. No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the shares of Common Stock offered hereby.


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Section 3.10. Not an Affiliate. The Investor is not an officer, director
or a person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with the Company or any
"Affiliate" of the Company (as that term is defined in Rule 405 of the
Securities Act). Neither the Investor nor its Affiliates has an open short
position in the Common Stock of the Company, and the Investor agrees that it
will not, and that it will cause its Affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common Stock, provided that
the Company acknowledges and agrees that upon receipt of an Advance Notice the
Investor will sell the Shares to be issued to the Investor pursuant to the
Advance Notice, even if the Shares have not been delivered to the Investor.

Section 3.11. Trading Activities. The Investor's trading activities with
respect to the Company's Common Stock shall be in compliance with all applicable
federal and state securities laws, rules and regulations and the rules and
regulations of the Principal Market on which the Company's Common Stock is
listed or traded. Neither the Investor nor its affiliates has an open short
position in the Common Stock of the Company and, except as set forth below, the
Investor shall not and will cause its affiliates not to engage in any short sale
as defined in any applicable SEC or National Association of Securities Dealers
rules on any hedging transactions with respect to the Common Stock. Without
limiting the foregoing, the Investor agrees not to engage in any naked short
transactions in excess of the amount of shares owned (or an offsetting long
position) during the Commitment Period. The Investor shall be entitled to sell
Common Stock during the applicable Pricing Period.

ARTICLE IV.
Representations and Warranties of the Company

Except as stated below, on the disclosure schedules attached hereto or in
the SEC Documents (as defined herein), the Company hereby represents and
warrants to, and covenants with, the Investor that the following are true and
correct as of the date hereof:

Section 4.1. Organization and Qualification. The Company is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite power and authority
corporate power to own its properties and to carry on its business as now being
conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole.

Section 4.2. Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement, the
Escrow Agreement, and any related agreements, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the
Registration Rights Agreement, the Escrow Agreement and any related agreements
by the Company and the consummation by it of the transactions contemplated
hereby and thereby, have been duly authorized by the Company's Board of


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Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, (iii) this Agreement, the
Registration Rights Agreement, the Escrow Agreement and any related agreements
have been duly executed and delivered by the Company, (iv) this Agreement, the
Registration Rights Agreement, the Escrow Agreement and assuming the execution
and delivery thereof and acceptance by the Investor and any related agreements
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.

Section 4.3. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 70,000,000 shares of Common Stock, no par value
and 1,000,000 shares of Preferred Stock of which 48,195,340 shares of Common
Stock and no shares of Preferred Stock were issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in the SEC Documents, no shares of Common
Stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company. Except as disclosed in the
SEC Documents, as of the date hereof, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities (iii) there are no outstanding registration statements other than on
Form S-8 and (iv) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the Securities Act (except pursuant to the Registration
Rights Agreement). There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by this Agreement or
any related agreement or the consummation of the transactions described herein
or therein. The Company has furnished to the Investor true and correct copies of
the Company's Certificate of Incorporation, as amended and as in effect on the
date hereof (the "Certificate of Incorporation"), and the Company's By-laws, as
in effect on the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

Section 4.4. No Conflict. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Certificate of
Incorporation, any certificate of designations of any outstanding series of
preferred stock of the Company or By-laws or (ii) conflict with or constitute a
default (or an eve