EXECUTION COPY

TERMINATION AND RESTRUCTURING AGREEMENT, dated as of November 30, 2010, among
the registered shareholders of INNER MONGOLIA TEHONG COAL AND POWER GROUP CO.,
LTD set forth on the signature pages hereto (the “Coal Group Shareholders”), the
registered shareholders of INNER MONGOLIA ZHUNGER HEAT POWER CO., LTD set forth
on the signature pages hereto (the “Heat Power Shareholders”, and together with
the Coal Group Shareholders, the “PRC Shareholders”), CHINA ENERGY CORPORATION,
a Nevada corporation (“CEC”), BEIJING TEHONG ENERGY TECHNOLOGY CONSULTING CO.,
LTD, a corporation organized under the laws of the People’s Republic of China
(“PRC”) and an indirect, wholly-owned subsidiary of CEC (“CEC China”),  INNER
MONGOLIA TEHONG COAL AND POWER GROUP CO., LTD., a corporation organized under
the laws of the People’s Republic of China (“Coal Group”), and INNER MONGOLIA
HEAT POWER CO., LTD, a corporation organized under the laws of the People’s
Republic of China (“Heat Power”, and together with Coal Group, the “PRC
Operating Companies”).

WITNESSETH:

WHEREAS, the Coal Group Shareholders, the Heat Power Shareholders, and Pacific
Projects Inc. (“PPI”), a Nevada corporation and a direct, wholly-owned
subsidiary of CEC,  entered into a Trust Agreement dated as of December 31, 2007
(the “Share Trust Agreement”) pursuant to which the PRC Shareholders agreed to
hold their equity interests in Coal Group and Heat Power in trust for PPI in
connection with a plan (the “FIE Plan”) to convert Coal Group and Heat Power
from domestic enterprises to Foreign Invested Enterprises under the laws of the
People’s Republic of China (the “PRC”);

WHEREAS,  PPI has merged with and into CEC with CEC as the surviving and
continuing corporation;

WHEREAS, the parties hereto have decided to terminate the Share Trust Agreement
and the related FIE Plan set forth therein;

WHEREAS, CEC has determined that it is in its best interests to cause  CEC China
to enter into the Management and Control Agreements (as defined below) with the
PRC Shareholders; and

WHEREAS, the PRC Shareholders have determined that it is in their best interests
to enter into the Management and Control Agreements with CEC China.

NOW, THEREFORE, in consideration of the premises and mutual agreements and
covenants hereinafter set forth, the parties hereto agree as follows:

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ARTICLE I

MERGER; TERMINATION OF SHARE TRUST AGREMENT; RESTRUCTURING

SECTION 1.01  Merger.  CEC and PPI have taken all necessary steps to effect, as
of November 29, 2010, the merger of PPI with and into CEC pursuant to which CEC
is the surviving and continuing corporation.

SECTION 1.02.  Termination.  The parties hereto agree that, effective as of
November 30, 2010, the Share Trust Agreement and all the covenants and
agreements set forth therein will be deemed terminated, null and void, and of no
further force and effect.

SECTION 1.03. Restructuring.  Following the termination set forth in Section
1.02 hereof, for good and valuable consideration the receipt of which is hereby
acknowledged, each Coal Group Shareholder and each Heat Power Shareholder agree
to enter into a variable interest entity (“VIE”) arrangement with CEC China
pursuant to which control and the economic benefits of ownership of Coal Group
and Heat Power will accrue solely and fully to CEC China.  The VIE arrangement
will be made effective through various contracts, including business cooperation
agreements, powers of attorney, exclusive share option agreements, and equity
interest pledge agreements entered into by the Coal Group Shareholders, the Heat
Power Shareholders, and CEC China (collectively, the “Management and Control
Agreements”) to be valid and effective as of the date hereof in accordance with
applicable PRC law.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF
PRC OPERATING COMPANIES AND PRC SHAREHOLDERS

The PRC Operating Companies and the PRC Shareholders hereby represent and
warrant, jointly and severally, to CEC as follows:

SECTION 2.01.  Authority.  Each of the PRC Shareholders has all the necessary
power and authority to enter into this Agreement and the Management and Control
Agreements.  Each of the PRC Shareholders that is a corporation, partnership or
similar entity is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized.

SECTION 2.02. Ownership of Shares.  The equity interests in the registered
capital of Coal Group and Heat Power (the “Shares”) as set forth in detail on
Schedule 2.02 are owned under PRC law of record and beneficially solely by the
PRC Shareholders free and clear of all encumbrances.  The Shares are validly
issued, fully paid and non-assessable, and constitute all the issued and
outstanding capital stock of the PRC Operating Companies.   None of the Shares
was issued in violation of any pre-
emptive rights.  Other than the Management and Control Agreements entered into
in connection herewith, there are no options, warrants, convertible securities
or other rights, agreements or commitments of any character relating to the
equity interests of the PRC Operating Companies or obligating any PRC Operating
Company or any PRC Shareholder to issue or sell any shares of capital stock of,
or any other interest in, any of the PRC Operating Companies.  Other than the
Share Trust Agreement (which is terminated by this Agreement) and the Management
and Control Agreements, there are no voting trusts, stockholder agreements,
proxies or other agreements or understandings in effect with respect to the
voting or transfer of any of the Shares.

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SECTION 2.03.  No Conflicts.  The execution, delivery and performance of this
Agreement and the Management and Control Agreements do not and will not (a)
conflict with or violate any law, regulation or governmental or judicial order
applicable to any of the PRC Operating Companies and PRC Shareholders, or (b)
other than as contemplated by the Management and Control Agreements, create any
encumbrance on any of the Shares, or (c) conflict with, result in any breach of,
constitute a default (or event with the giving of notice or lapse of time, or
both, would become a default under), require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which Coal Group or Heat Power is bound or affected.

SECTION 2.04.  Governmental Consents and Approvals.  Except as set forth on
Schedule 2.04, the execution, delivery and performance of this Agreement and the
Management and Control Agreements by the PRC Operating Companies and the PRC
Shareholders do not and will not require any consent, approval, authorization or
other order of, action by, filing with or notification to any governmental or
judicial authority.

SECTION 2.05.  Litigation.  There are no claims, actions, suits, arbitrations,
inquiries, proceedings or investigation by or before any government or judicial
authority affecting the Shares.

SECTION 2.06.  Full Disclosure.  The PRC Operating Companies and the PRC
Shareholders are not aware of any facts which affect adversely, or which are
likely to affect adversely, CEC, the PRC Operating Companies, the Shares or the
transactions contemplated by this Agreement and the Management and Control
Agreements which have not been disclosed in this Agreement, the audited
financial statements of the Company, or otherwise disclosed to CEC by one or
more of the PRC Shareholders in writing.  No representation or warranty of the
PRC Operating Companies and the PRC Shareholders in this Agreement or in the
Management and Control Agreements contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF CEC

CEC hereby represents and warrants to the PRC Shareholders as follows:

SECTION 3.01.  Authority.  CEC has all the necessary power and authority to
enter into this Agreement.  CEC China has all the necessary power and authority
to enter into the Management and Control Agreements.  Each of CEC and CEC China
is duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.

SECTION 3.02.  No Conflicts.  The execution, delivery and performance of this
Agreement and the Management and Control Agreements do not and will not conflict
with or violate any law, regulation or governmental or judicial order applicable
to CEC or CEC China.

SECTION 3.03.  Governmental Consents and Approvals.  Except as set forth on
Schedule 3.03, the execution, delivery and performance of this Agreement and the
Management and Control Agreements by CEC China do not and will not require any
consent, approval, authorization or other order of, action by, filing with or
notification to any governmental or judicial authority.

SECTION 3.04.  Litigation.  There are no claims, actions, suits, arbitrations,
inquiries, proceedings or investigation by or before any government or judicial
authority affecting the Shares.

SECTION 3.05.  Full Disclosure.  No representation or warranty of CEC or CEC
China in this Agreement or in the Management and Control Agreements contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.

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ARTICLE IV

GENERAL PROVISIONS

SECTION 4.01.  Entire Agreement.  This Agreement and the Management and Control
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, among the parties hereto with respect to
the subject matter hereof and thereof.

SECTION 4.02.  No Third Party Beneficiaries.  This Agreement shall be binding
and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other person or entity any legal or equitable right, benefit or remedy
of any nature whatsoever.

SECTION 4.03.  Headings.  The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.

SECTION 4.04. Amendment or Waiver; Assignment.   This Agreement may not be
amended or modified, nor more any provision thereof be waived, except by an
instrument in writing signed by CEC and all of the PRC Shareholders.  This
Agreement may not be assigned by operation of law or otherwise without the
written consent of all the parties hereto.

SECTION 4.05. Governing Law.  This Agreement shall be governed by the laws of
Nevada.  All actions or proceedings arising out of or relating to this Agreement
shall be heard and determined in any federal court sitting in the city of Las
Vegas, Nevada.

SECTION 4.06.  Specific Performance.  The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and the parties shall be entitled
to specific performance of the terms hereof, in addition to any other remedy at
law or equity.

SECTION 4.07.  Counterparts.  This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

SECTION 4.08.  Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law, regulation or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party.  Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
 
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SECTION 4.09.  Costs and Expenses.  Each party shall bear their own costs and
expenses with respect to this Agreement.

*        *        *
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
   
CHINA ENERGY CORPORATION
 
       
By: /s/ Wenxiang Ding
 
       Name: Wenxiang Ding
 
       Title: President and Chief Executive Officer
  
   
INNER MONGOLIA TEHONG COAL
INNER MONGOLIA HEAT
AND POWER GROUP CO., LTD
POWER CO., LTD
       
By: /s/ Wenxiang Ding
By: /s/ Wenxiang Ding
       Name: Wenxiang Ding
       Name: Wenxiang Ding
       Title: Legal Representative
       Title: Legal Representative
   
BEIJING TEHONG ENERGY
 
TECHNOLOGY CONSULTING CO., LTD
         
By: /s/ Wenxiang Ding
 
       Name: Wenxiang Ding
 
       Title: Legal Representative
     
INNER MONGOLIA TEHONG COAL AND POWER GROUP CO., LTD SHAREHOLDERS:
           
/s/ Wenxiang Ding
/s/ Yanhua Li
Wenxiang Ding
Yanhua Li
           
/s/ Yi Ding
/s/ Biao Ding
Yi Ding
Biao Ding
   

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INNER MONGOLIA HEAT POWER CO., LTD SHAREHOLDERS:
   
HANGZHOU DAYUAN GROUP
ORDOS CITY YIYUAN.
CO. LTD
INVESTMENT CO. LTD
   
By: /s/ Lu Jin
By: /s/ Zhiyong Guo
       Name: Lu Jin
       Name: Zhiyong Guo
       Title: Legal Representative
       Title: Legal Representative
   
INNER MONGOLIA DUOYIDA
 
MINING CO., LTD.
     
By: /s/ Liguo Zhang
 
       Name: Liguo Zhang
 
       Title: Legal Representative
 

 
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SCHEDULE 2.02

INNER MONGOLIA AND TEHONG COAL AND POWER GROUP CO. LTD

Registered Shareholders and Capital Contributions as of November 30, 2010

 
Shareholders
Total Paid-Up Capital (RMB)
% Issued and Outstanding Shares
Wenxiang Ding
16,670,000
16.67
Yanhua Li
16,670,000
16.67
Yi Ding
33,330,000
33.33
Biao Ding
33,330,000
33.33
TOTAL
100,000,000 (RMB)
100.00%

INNER MONGOLIA HEAT POWER CO. LTD

Registered Shareholders and Capital Contributions as of November 30, 2010

 
Shareholders
Total Paid-Up Capital (RMB)
% Issued and Outstanding Shares
Hangzhou DaYuan Group Co. Ltd
11,500,000
23.00
Ordos City YiYuan Investment Co. Ltd
7,000,000
14.00
XIngHeHaiFu Transportation & Sales Co. Ltd
6,000,000
12.00
Inner Mongolia and Tehong Coal and Power Group Co Ltd
25,500,000
51.00
TOTAL
50,000,000 (RMB)
100.00%

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SCHEDULE 2.04

Consents, approvals, authorizations or other orders of, actions by, filings with
or notification to any governmental or judicial authority required by
PRC Operating Companies and/or PRC Shareholders
for this Agreement and Management and Control
Agreements

1.  
Registration with relevant PRC authorities of share pledge for the equity
interests pledged under the share pledge agreements of the Management and
Control Agreements.

2.  
Registration with relevant PRC authorities of change of shareholders of Heat
Power and Coal Group if WFOE elects to exercise the option granted under the
share options agreements of the Management and Control Agreements (with other
applicable approvals/registrations with relevant PRC authorities if WFOE
appoints an overseas entity/individual to exercise the option).

 
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SCHEDULE 3.03

Consents, approvals, authorizations or other orders of, actions by, filings with
or notification to any governmental or judicial authority required by CEC and
 CEC China for this Agreement and Management and Control
Agreements

1.  
Registration with relevant PRC authorities of share pledge for the equity
interests pledged under the share pledge agreements of the Management and
Control Agreements.

2.  
Registration with relevant PRC authorities of change of shareholders of Heat
Power and Coal Group if WFOE elects to exercise the option granted under the
share options agreements of the Management and Control Agreements (with other
applicable approvals/registrations with relevant PRC authorities if WFOE
appoints an overseas entity/individual to exercise the option).

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