Exhibit
10.1


 


FORM
OF EXCHANGE AGREEMENT


 


THIS
EXCHANGE AGREEMENT (the “Agreement”) is made as of the [ ]th day of October 2020, by and between
Taronis Fuels, Inc., a Delaware corporation (the “Company”), and the signatory hereto (the “Holder”).


 


WHEREAS,
in connection with a private placement offering that closed on August 7, 2020, the Company sold to Holder a 12.5% Original Issue
Discount Senior Subordinated Secured Convertible Debenture (the “Debentures”).


 


WHEREAS,
the Company intends to consummate a private placement offering (the “Subsequent Financing”) pursuant to which
it will sell shares of the Company’s restricted common stock, par value $0.000001 (“Common Stock”), at
a price per shares of $0.10 (the “Share Price”);


 


WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and in reliance on Section 3(a)(9) of the Securities Act, the Company desires
to exchange with the Holder, and the Holder desires to exchange with the Company, the sum of Holder’s Principal Amount (defined
below) of Debentures plus accrued interest multiplied by 1.20 (the “Exchange Value”), for the number of shares
of Common Stock equal to the Exchange Value divided by the Share Price in the Subsequent Financing.


 


NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration
of the premises and the mutual agreements, representations and warranties, provisions and covenants contained herein, the parties
hereto, intending to be legally bound hereby, agree as follows:


 


1.
Exchange. On the Closing Date, subject to the terms and conditions of this Agreement, the Holder shall, and the Company
shall, pursuant to Section 3(a)(9) of the Securities Act, exchange the sum of Holder’s principal amount (inclusive of the
12.5% original issue discount)(“Principal Amount”) of Debentures plus accrued interest multiplied by 1.20, for that
number of shares of Common Stock equal to the Exchange Value divided by the Share Price in the Subsequent Financing (“Exchange
Securities”). Subject to the conditions set forth below, the Exchange shall take place electronically by the remote
exchange of documents simultaneous with the closing of the Subsequent Financing (the “Closing” and the “Closing
Date”). At the Closing, the following transactions shall occur (such transactions in this Section 1, the “Exchange”):


 


1.1
On the Closing Date, in exchange for the Exchange Value of the Debentures, the Company shall deliver the Exchange Securities to
the Holder or its designee in accordance with the Holder’s delivery instructions set forth on the Holder’s signature
page hereto. Upon receipt of the Exchange Securities in accordance with this Section 1.1, all of the Investor’s rights under
the Debentures shall be extinguished and the Debenture shall be terminated in all respects, with neither the Company nor Holder
having any further rights or obligations thereunder.


 


1.2
On the Closing Date, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Exchange
Securities, irrespective of the date such Exchange Securities are delivered to the Holder in accordance herewith.


 




    	 	 	 



     


    

 


1.3
On the Closing Date, the Holder shall execute and/or deliver all documents as are required and entered into by the other investors
in the Subsequent Financing, including, but not limited to, the Common Stock Purchase Agreement, Registration Rights Agreement,
and Accredited Investor Questionnaire.


 


1.4
The Company and the Holder shall execute and/or deliver such other documents and agreements as are customary and reasonably necessary
to effectuate the Exchange.


 


2.
Closing Conditions.


 


2.1
Conditions to Holder’s Obligations. The obligation of the Holder to consummate the Exchange is subject to the fulfillment,
to the Holder’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions:


 


(a)
Representations and Warranties. The representations and warranties of the Company contained in this Agreement shall be
true and correct in all material respects on the date hereof and on and as of the Closing Date as if made on and as of such date.


 


(b)
No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit or obtain substantial damages
in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.


 


(c)
Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and
instruments incident to such transaction shall be satisfactory in substance and form to the Holder, and the Holder shall have
received all such counterpart originals or certified or other copies of such documents as they may reasonably request.


 


2.2
Conditions to the Company’s Obligations. The obligation of the Company to consummate the Exchange is subject to the
fulfillment, to the Company’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions:


 


(a)
Representations and Warranties. The representations and warranties of the Holder contained in this Agreement shall be true
and correct in all material respects on the date hereof and on and as of the Closing Date as if made on and as of such date.


 


(b)
No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages
in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.


 


(c)
Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in substance and form to the Company and the Company shall have
received all such counterpart originals or certified or other copies of such documents as the Company may reasonably request.


 




    	 	 	 



     


    

 


3.
Representations and Warranties of the Company. The Company hereby represents and warrants to Holder that:


 


3.1
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.


 


3.2
Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for
the authorization, execution and delivery of this Agreement and the performance of all obligations of the Company hereunder, and
the authorization, the Exchange, and the issuance of the Exchange Securities have been taken on or prior to the date hereof.


 


3.3
Valid Issuance of the Securities. The Exchange Securities, when issued and delivered in accordance with the terms of this
Agreement, for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable.


 


3.4
Offering. Subject to the truth and accuracy of the Holder’s representations set forth in Section 4 of this Agreement,
the offer and issuance of the Securities as contemplated by this Agreement are exempt from the registration requirements of the
Securities Act. Neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause
the loss of such exemptions.


 


3.5
Compliance With Laws. The Company has not violated any law or any governmental regulation or requirement which violation
has had or would reasonably be expected to have a material adverse effect on its business, and the Company has not received written
notice of any such violation.


 


3.6
Consents; Waivers. No consent, waiver, approval or authority of any nature, or other formal action, by any Person, not
already obtained, is required in connection with the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions provided for herein and therein.


 


3.7
Acknowledgment Regarding Holder’s Purchase of Securities. The Company acknowledges and agrees that the Holder is
acting solely in the capacity of arm’s length Holder with respect to this Agreement and the other documents entered into
in connection herewith (collectively, the “Transaction Documents”) and the transactions contemplated hereby
and thereby and that the Holder is not (i) an officer or director of the Company, (ii) an “affiliate” of the Company
(as defined in Rule 144 promulgated under the Securities Act), or (iii) to the knowledge of the Company, a “beneficial owner”
of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended). The Company further acknowledges that the Holder is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and
any advice given by the Holder or any of its representatives or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Holder’s acceptance of the Exchange Securities. The Company
further represents to the Holder that the Company’s decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives.


 




    	 	 	 



     


    

 


3.8
Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting
the Company, the Exchange Securities or any of the Company’s officers or directors in their capacities as such.


 


3.9
No Group. The Company acknowledges that, to the Company’s knowledge, the Holder is acting independently in connection
with this Agreement and the transactions contemplated hereby, and is not acting as part of a “group” as such term
is defined under Section 13(d) of the Securities Act and the rules and regulations promulgated thereunder.


 


3.10
Validity; Enforcement; No Conflicts. This Agreement and each Transaction Document to which the Company is a party have
been duly and validly authorized, executed and delivered on behalf of the Company and shall constitute the legal, valid and binding
obligations of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
The execution, delivery and performance by the Company of this Agreement and each Transaction Document to which the Company is
a party and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of the Company or (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company is a party or by which it is bound, or (iii) result in a violation
of any law, rule, regulation, order, judgment or decree (including federal and state securities or “blue sky” laws)
applicable to the Company, except in the case of clause (ii) above, for such conflicts, defaults or rights which would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations
hereunder.


 


3.11
Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided the Holder or its
agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information.
The Company understands and confirms that the Investor will rely on the foregoing representations in effecting transactions in
the Exchange Securities.


 




    	 	 	 



     


    

 


4.
Representations and Warranties of the Holder. The Holder hereby represents, warrants and covenants that:


 


4.1
Authorization. The Holder has full power and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby and has taken all action necessary to authorize the execution and delivery
of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby.


 


4.2
Accredited Investor Status; Investment Experience. The Holder is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D. The Holder can bear the economic risk of its investment in the Exchange Securities,
and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks
of an investment in the Securities.


 


4.3
Reliance on Exemptions. The Holder understands that the Exchange Securities are being offered and issued to it in reliance
on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company
is relying in part upon the truth and accuracy of, and the Holder’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Holder set forth herein in order to determine the availability of such exemptions and
the eligibility of the Holder to acquire the Exchange Securities.


 


4.4
Information. The Holder and its advisors, if any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and issuance of the Exchange Securities which have been requested
by the Holder. The Holder has had the opportunity to review the Company’s filings with the Securities and Exchange Commission.
The Holder and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by the Holder or its advisors, if any, or its representatives shall modify,
amend or affect the Holder’s right to rely on the Company’s representations and warranties contained herein. The Holder
understands that its investment in the Exchange Securities involves a high degree of risk. The Holder has sought such accounting,
legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of
the Exchange Securities. The Holder is relying solely on its own accounting, legal and tax advisors, and not on any statements
of the Company or any of its agents or representatives, for such accounting, legal and tax advice with respect to its acquisition
of the Exchange Securities and the transactions contemplated by this Agreement.


 


4.5
No Governmental Review. The Holder understands that no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of the Exchange Securities or the fairness or suitability
of the investment in the Exchange Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Exchange Securities.


 




    	 	 	 



     


    

 


4.6
Validity; Enforcement; No Conflicts. This Agreement and each Transaction Document to which the Holder is a party have been
duly and validly authorized, executed and delivered on behalf of the Holder and shall constitute the legal, valid and binding
obligations of the Holder enforceable against the Holder in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
The execution, delivery and performance by the Holder of this Agreement and each Transaction Document to which the Holder is a
party and the consummation by the Holder of the transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of the Holder or (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Holder is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities or “blue sky” laws) applicable to the Investor,
except in the case of clause (ii) above, for such conflicts, defaults or rights which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the Holder to perform its obligations hereunder.


 


4.7
Ownership of Debentures. The Holder owns and holds, beneficially and of record, the entire right, title, and interest in
and to the Debentures in the Principal Amount. The Holder has full power and authority to transfer and dispose of the Debentures
to the Company free and clear of any right or Lien. Other than the transactions contemplated by this Agreement, there is no outstanding
vote, plan, pending proposal, or other right, of any Person to acquire all or any part of the Debentures. As used herein, “Liens”
shall mean any security or other property interest or right, claim, lien, pledge, option, charge, security interest, contingent
or conditional sale, or other title claim or retention agreement, interest or other right or claim of third parties, whether perfected
or not perfected, voluntarily incurred or arising by operation of law, and including any agreement (other than this Agreement)
to grant or submit to any of the foregoing in the future.


 


4.8
No Consideration Paid. No commission or other remuneration has been paid by the Holder (or any of its agents or affiliates)
to the Company related to the Exchange.


 


5.
Additional Covenants.


 


5.1
Tacking. Subject to the truth and accuracy of the Holder’s representations set forth in Section 4 of this Agreement,
the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Exchange Securities issued
in exchange for Held Stock will tack back to the original issue date of such Held Stock for purposes of Rule 144 and the Company
agrees not to take a position to the contrary.


 


5.2
Blue Sky. The Company shall make all filings and reports relating to the Exchange Securities required under applicable
securities or “Blue Sky” laws of the states of the United States following the date hereof, if any.


 


5.3
Fees and Expenses. Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance
of this Agreement.


 




    	 	 	 



     


    

 


6.
Miscellaneous.


 


6.1
Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the parties hereto and the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.


 


6.2
Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state or federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 


6.3
Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.


 




    	 	 	 



     


    

 


6.4
Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on
file by the sending party) or by electronic mail; or (iii) one business day after deposit with an overnight courier service, in
each case properly addressed to the party to receive the same. The addresses, facsimile numbers and email addresses for such communications
shall be:


 


If
to the Company:


 


Taronis
Fuels, Inc.


24980
N. 83rd Avenue, Unit 100


Phoenix,
Arizona 85383


Attn:
Tyler B. Wilson, Esq.


Email:
notices@taronisfuels.com


 


If
to the Holder, to its address, facsimile number and email address set forth on its signature page hereto,


 


or
to such other address, facsimile number and/or email address and/or to the attention of such other Person as the recipient party
has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine or email containing the time, date, recipient facsimile number and an image
of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.


 


6.5
Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent
of the Company and the Holder. Any amendment or waiver effected in accordance with this paragraph shall be binding upon Holder
and the Company, provided that no such amendment shall be binding on a holder that does not consent thereto to the extent such
amendment treats such party differently than any party that does consent thereto.


 


6.6
Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded
and shall be enforceable in accordance with its terms.


 


6.7
Entire Agreement. This Agreement represents the entire agreement and understanding between the parties concerning the Exchange
and the other matters described herein and therein and supersedes and replaces any and all prior agreements and understandings
solely with respect to the subject matter hereof and thereof.


 


6.8
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.


 


6.9
Interpretation. Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the
singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) “including”
has the inclusive meaning frequently identified with the phrase “but not limited to” and (d) references to “hereunder”
or “herein” relate to this Agreement.


 




    	 	 	 



     


    

 


6.10
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.


 


6.11
Survival. The representations, warranties and covenants of the Company and the Holder contained herein shall survive the
Closing and delivery of the Securities.


 


6.12
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.


 


6.13
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.


 


[SIGNATURES
ON THE FOLLOWING PAGES]


 




    	 	 	 



     


    

 


IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date provided above.


 


	 	THE
    COMPANY:
	 	 	 
	 	TARONIS
    FUELS, INC.
	 	 	 
	 	By:	 
	 	Name:	Scott
    Mahoney
	 	Title:	Chief
    Executive Officer


 




    	 	 	 



     


    

 


IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date provided above.


 


INVESTOR:


 


	Name
    of Investor: ________________________________________________________
	 
	Signature
    of Authorized Signatory of Investor: __________________________________
	 
	Name
    of Authorized Signatory: ______________________________________________
	 
	Title
    of Authorized Signatory: _______________________________________________
	 
	Email
    Address of Authorized Signatory: _______________________________________
	 
	Principal
    Amount of Debentures Held by Investor: _______________________________
	 
	Investor
    Address: _______________________________________________
	 
	                             _______________________________________________
	 
	Purchaser’s
    Tax I.D. or Social Security Number: _________________________________