SEPARATION AGREEMENT AND GENERAL RELEASE

Exhibit 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL RELEASE (hereinafter “Agreement”) is made
and entered into by and between Joel Balbien, Ph.D., an individual and resident of California (hereinafter
“Balbien”) and Kreido Biofuels, Inc., a Nevada corporation (hereinafter “Kreido” or the “Company”).

RECITALS

A. Balbien has been employed as a corporate officer of Kreido under that certain employment agreement made, entered into and effective as of November 1, 2006 (the “Balbien Employment Agreement”).

B. Pursuant to the provisions of Section 1 of the Balbien Employment Agreement, Balbien and the Company mutually have elected not to renew the Balbien Employment Agreement effective July 26, 2007 (“Termination Date”).

C. The Parties mutually have agreed to waive the written 90-day notice of non-renewal that each is otherwise entitled to under Section 1 of the Balbien Employment Agreement.

D. Pursuant to Section 10 of the Balbien Employment Agreement, on the Effective Date as defined in Section 29 below, Balbien will have vested options to purchase 301,346 shares of Kreido common stock at $1.35 per option (the “Options”).

E. Although no known disputes currently exist between Balbien and Kreido, Balbien and Kreido wish permanently to resolve any and all disputes that could arise out of Balbien’s employment with the Company and the cessation of that employment.

NOW, THEREFORE, in consideration of the execution of this Agreement and the mutual covenants contained in the following paragraphs, and for other good and valuable consideration, Kreido and Balbien agree as follows:

1.  INCORPORATION OF RECITALS . The Recitals and identification of the parties to, and beneficiaries of, this Agreement are incorporated by reference as though fully set forth herein.

2.  NO ADMISSION OF LIABILITY . The parties agree that this Agreement, and the performance of the acts required by it, do not constitute an admission of liability, culpability, negligence or wrongdoing on the part of anyone, and will not be construed for any purpose as an admission of liability, culpability, negligence or wrongdoing by any party and/or by any party’s current, former or future parents, subsidiaries, related entities, predecessors, successors, officers, directors, shareholders, agents, employees and assigns.

3.  CESSATION OF EMPLOYMENT . Balbien hereby acknowledges that he resigned from his employment, all officer positions within Kreido and his position as a director on Kreido’s Board of Directors effective July 26, 2007.

4.  WAGES, EXPENSES AND VACATION TIME PAID . On or before July 31, 2007, Kreido will pay Balbien all of his wages through July 31, 2007 and his accrued and unused Paid Time Off including vacation time (PTO) through October 31, 2007. As of the Termination Date, Kreido has paid Balbien for his out of pocket expenses, with the sole exception of Balbien’s cell phone invoice for the month of July, 2007, for which Kreido will reimburse Balbien promptly after he forwards the invoice to Kreido upon his receipt of it in August, 2007. Once Kreido makes these payments, and other payments referenced in this Agreement, Balbien acknowledges and agrees that he will not be owed any wages, expenses or benefits by Kreido in connection with his employment.

5. CONSIDERATION TO BALBIEN .

(A)  SEVERANCE . Kreido agrees that on the Effective Date, it will commence paying severance to Balbien. The severance shall equal, in the aggregate, the gross sum of $150,000.00 (representing nine months’ base salary), less all applicable withholding taxes (“Severance Payments”). Severance Payments shall be made as follows: (1) On the Effective Date, Kreido will make a lump sum payment to Balbien of $50,000, less all applicable withholding taxes; (2) Commencing on the Company’s first regular payroll date following the Effective Date, the Company will begin making semi-monthly Severance Payments of $8,333.33 each, less all applicable withholding taxes (“Semimonthly Severance Payments”), and will continue making such Semi-monthly Severance Payments on the Company’s regular payroll dates until six Semi-monthly Severance Payments have been made; (3) On November 1, 2007, the Company will make a lump sum payment to Balbien of $50,000, less all applicable withholding taxes. Balbien agrees and acknowledges that the Severance Payments are made by Kreido in consideration of the general release, the knowing waiver of employment-related claims and all other covenants given by Balbien pursuant to this Agreement.

(B)  BONUS. Pursuant to Section 6(b) of the Employment Agreement, Kreido agrees to pay Balbien $49,000.00 upon the execution of this Agreement (the “Bonus”). The Bonus will be paid as follows: (1) $37,500 on the Effective Date; and (2) $11,500 on November 1, 2007.

(C)  REPURCHASE OF OPTIONS. On the Effective Date, Kreido will repurchase the Options from Balbien for $1,000.00.

(D)  REFERENCE LETTER. Kreido agrees to provide Balbien with a favorable reference letter signed by the Chair of Kreido’s Board of Directors, which Balbien may use in his future employment endeavors. A senior executive officer of Kreido will provide oral references consistent with the letter to Balbien’s prospective employers upon provision of written authorization from Balbien at the time such references are requested.

(E)  CONTINUATION OF HEALTH BENEFITS . The Company’s group health and dental insurance for Balbien and his dependents will continue through August 31, 2007. In addition, the Company agrees to continue to reimburse Balbien pursuant to its Benelect program for the out-of-pocket health and dental expenses incurred by Balbien and his dependents through August 31, 2007, upon submission by Balbien of appropriate documentation supporting such out-of-expenditures. The Company will promptly provide Balbien with written materials which describe his rights to continue his and his dependents’ participation in Kreido’s group healthcare plans pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) commencing September 1, 2007. If Balbien timely elects to continue his and his dependents’ participation in such plans pursuant to the provisions of COBRA, Kreido will issue checks to Balbien payable to the COBRA administrator to pay the cost of Balbien’s COBRA premiums on behalf of Balbien and his participating dependents for each of the months of September and October 2007 (the “Coverage”) upon the provision to Kreido by Balbien of a copy of the invoice from the COBRA administrator documenting the premium that is due for the Coverage. Continued participation after October 2007 shall be at Balbien’s expense. Nothing herein shall limit the right of Kreido to change the provider and/or the terms of its group healthcare plans for its employees at any time hereafter.

6.  COOPERATION PERIOD . Balbien agrees to make himself available on or before October 31, 2007 to a reasonable extent when requested by the Company, consistent with Balbien’s other obligations, to assist and cooperate with the Company in connection with matters related to the business and affairs of the Company.

7.  NONSOLICITATION . For two years from the Termination Date (the “Restricted Period”), Balbien shall not in any capacity, directly or indirectly, solicit or take any other action which is intended to induce any Kreido employee to terminate his or her employment with the Company. Nothing contained herein shall be construed to prevent Balbien from competing with Kreido.

8.  PRIOR AGREEMENTS SUPERSEDED . With the exception of the Non-disclosure Agreement signed by Balbien (“NDA”), the Kreido Biofuels, Inc. Indemnity Agreement dated May 3, 2007, the 2006 Equity Incentive Plan and the Kreido Biofuels, Inc. Lock-up Agreement (collectively the “Surviving Agreements”), all prior agreements or understandings between the parties, including without limitation the Balbien Employment Agreement, are superseded and are of no further force and effect. The foregoing notwithstanding, the following sections of the Balbien Employment Agreement are not superseded and do remain in full force and effect: Sections 13 and 14(b)(4). Balbien understands and agrees that all of the terms of the NDA remain in force and he agrees to maintain the confidentiality of non-public information concerning Kreido pursuant to that NDA and Section 13 of the Balbien Employment Agreement. In the event any provision of any of the Surviving Agreements shall be deemed to conflict with this Agreement, this Agreement shall be deemed the controlling document.

9.  NONDISPARAGEMENT . The Parties agree that hereafter, they will not, either directly or indirectly, make any defamatory, negative or denigrating comments of any type or nature whatsoever about each other. Balbien additionally agrees that he will not, either directly or indirectly, make any defamatory, negative or denigrating comments of any type or nature whatsoever about Kreido’s employees, officers, agents, consultants, affiliates, investors or business partners to anyone. Truthful testimony compelled by legal process or in the context of enforcing the terms of this Agreement or other rights, powers, privileges or claims not released by this Agreement shall not be considered a violation of this provision by either party. Kreido agrees to inform its executive officers, board members and board advisors promptly of Kreido’s duty of nondisparagement under this Section 9, and to direct each of them individually not to disparage Balbien to any other individual or entity, including without limitation Balbien’s prospective employers.

10.  GENERAL RELEASE . (a) Balbien for himself, his heirs, executors, administrators, assigns and successors, fully and forever releases and discharges Kreido and each of its current, former and future officers, directors, employees, agents, constituents, affiliates, parents, subsidiaries, employee benefit plans and their fiduciaries, predecessors, successors, officers, directors, agents, employees and successors and assigns (collectively, “Kreido Releasees”), with respect to any and all claims, liabilities and causes of action, of every nature, kind and description, in law, equity or otherwise, which have arisen, occurred or existed at any time prior to the signing of this Agreement, including, without limitation, any and all claims, liabilities and causes of action arising out of or relating to Balbien’s employment with Kreido and the cessation of that employment.

(b) Kreido for itself, its affiliates, assigns and successors, fully and forever releases and discharges Balbien and each of his heirs, executors, administrators, assigns and successors (collectively, “Balbien Releasees”), with respect to any and all claims, liabilities and causes of action, of every nature, kind and description, in law, equity or otherwise, which have arisen, occurred or existed at any time prior to the signing of this Agreement, including, without limitation, any and all claims, liabilities and causes of action arising out of or relating to Balbien’s employment with Kreido under the Balbien Employment Agreement and the cessation of that employment, as well as Balbien’s prior service as Interim CEO beginning in October 2005 and his service as a director of Kreido and its predecessor entities.

11.  KNOWING WAIVER OF EMPLOYMENT-RELATED CLAIMS . Balbien understands and agrees that, with the exception of potential employment-related claims specifically identified below, he is waiving any and all rights he may have had, now has, or in the future may have, to pursue against any of the Kreido Releasees any and all remedies available to him under any employment-related causes of action, including without limitation, claims of wrongful discharge, breach of contract, breach of the covenant of good faith and fair dealing, fraud, violation of public policy, defamation, discrimination, personal injury, physical injury, emotional distress, claims for severance (except as provided for in this Agreement), claims for benefits or perquisites of employment (including stock options), claims under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the Americans With Disabilities Act, the Federal Rehabilitation Act, the Family and Medical Leave Act, the California Fair Employment and Housing Act, the California Family Rights Act, the Equal Pay Act of 1963, the provisions of the California Labor Code and any other federal, state or local laws and regulations relating to employment, conditions of employment (including wage and hour laws) and/or employment discrimination. Claims not covered by the release provisions of this Agreement are (i) claims for unemployment insurance benefits, (ii) claims under the California Workers’ Compensation Act, and (iii) for indemnification of Balbien pursuant to the California Labor Code and other applicable provisions of California law.

12.  WAIVER OF CIVIL CODE SECTION 1542 . Each party expressly waives any and all rights and benefits conferred upon it by Section 1542 of the Civil Code of the State of California, which states as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at