UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

_________________

FORM 8K
_________________

Pursuant to Section 12 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  September 7, 2011

TWO RIVERS WATER COMPANY
(Exact name of registrant as specified in its charter)

 
 
Colorado
 
000-51139
 
13-4228144
(State of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)


2000 South Colorado Blvd., Annex Suite 420, Denver, Colorado 80222
_______________________________________________
(Address of principal executive offices)

303-222-1000
__________________________
(Registrant's Telephone number)


(Former Name or Address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

[_] Written communications pursuant to Rule 425 under the Securities Act
    (17 CFR240.14d-2(b))

[_] Soliciting material pursuant to Rule 14a-12 under Exchange Act
    (17 CFR240.14a-12)

[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
    Act (17 CFR240.14d-2(b))

[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR240.13e-4(c))

 
 
 

SECTION 1 – MATERIAL AND DEFINITIVE AGREEMENT

ITEM 1.01  ENTERANCE INTO A DEFINITIVE, MATERIAL AGREEMENT

 
Two Rivers Water Company (“Two Rivers”) on September 7, 2011 completed its purchase of the balance of the membership interest in the Orlando Reservoir No. 2 Company (“Orlando”) as first described in our 10Q filing for the period ended June 30, 2011 under “Subsequent Events.”  Total consideration paid for this transaction, including amounts and shares issued on July 29, 2011, a cash payment of $1,412,500 (including an initial payment of $100,000); issuance of 650,000 shares of Two Rivers common shares (valued, based on the closing price of the shares) at $1,557,000, and the issuance of a promissory note to the sellers for $187,500.
 
The definitive purchase agreement is attached herewith as Exhibit 99.1.  The promissory note is attached as Exhibit 99.2.
 

 
SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS
 
Item 9.01 Financial Statements and Exhibits
 
(d)  Exhibits.   The following is a complete list of exhibits filed as part of this Report.  Exhibit numbers correspond to the numbers in the exhibit table of Item 601 of Regulation S-K.
 

 
Exhibit No.
Description
 
99.1
Purchase agreement dated September 7, 2011*
99.2
$187,500 promissory note*
____________________
*Filed herewith
 



SIGNATURE


     Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
TWO RIVERS WATER COMPANY
(Registrant)
Dated: September 12, 2011
 
 
By:    /s/ Wayne Harding_____________
Wayne Harding,  Chief Financial Officer




 
Exhibit 99.1
Purchase agreement dated September 7, 2011

SECOND AMENDMENT
TO
MASTER AGREEMENT


This is a Second Amendment (the “Second Amendment”) to that certain Master Agreement (the “Agreement”), dated the 9th day of May, 2011 (the "Effective Date"), by and between the ORLANDO RESERVOIR NO. 2 COMPANY, LLC ,   a Colorado limited liability company ("Orlando"), and FAMILY RANCH HOLDINGS, LLC , a Colorado limited liability company (referred to hereinafter as "Seller"), on the one hand, and TRWC, INC., a Colorado corporation, a wholly owned entity of TWO RIVERS WATER COMPANY, a Colorado corporation (“TWO RIVERS”), TRW ORLANDO WATER ASSETS, LLC, a Colorado limited liability company ("TRW") , and TWO RIVERS FARMS F-2, LLC , a Colorado limited liability company (“F-2”) (collectively referred to hereinafter as "Buyer"), on the other hand.  Seller and Buyer are individually referred to hereinafter as a “Party” and collectively as the “Parties.”  The Master Agreement was previously amended by that certain First Amendment to Master Agreement executed on July 28, 2011 (the "First Amendment").  The Master Agreement, as modified by the First Amendment, is hereafter referred to as the "Agreement."  Capitalized terms used herein if not separately defined in this Second Amendment shall have the meanings set forth in the Agreement.  To the extent of any inconsistencies between the terms of this Second Amendment and the Agreement, the terms of this Second Amendment shall control.
Recitals
A.           On May 9, 2011 the Parties entered into the Agreement with an anticipated Closing for the end of June, 2011.
B.           Buyer previously extended the Closing once, and completed an initial, first phase  partial Closing, and extended the final Closing to provide Buyer additional time to complete its fund raising.
 
 
 
C.           Buyer has now been successful in raising approximately 87.5% of the funds needed to complete the transaction and has confidence that it will be successful in raising the remainder of the funds needed to complete all of the purchase contemplated by the Agreement.
D.           Buyer desires to complete the Closing by executing a promissory note for the remaining balance of the funds needed to complete the Closing, and Seller is willing to accept that promissory note on the terms and conditions of this Second Amendment.
E.           The Parties are entering into this Second Amendment to specify the terms and conditions by which the second phase of the Closing will be accomplished and to make certain adjustments to the Agreement to accommodate the second phase of the Closing.
Agreement
In consideration of the foregoing Recitals which are incorporated herein by this reference, the covenants contained herein and other good and valuable consideration, the adequacy of which is acknowledge, the Parties agree as follows:
I.            Purchase and Funding of Orlando
Second Closing
1.1.            Funding of Orlando . To complete the second phase of the two-phase Closing, at the second closing (the “Second Closing”), Seller will transfer to Orlando the approximately 1,399 acres of real property described on Exhibit A to this Second Amendment and incorporated herein by this reference (the “Remaining Irrigable Land”).  The Parties have agreed that there is no need to transfer the Remaining Irrigable Land to Farm Land, LLC, but instead, all lands to be purchased will be merely transferred into Orlando.
 
 
 
1.2.            Purchase Price .  At the Second Closing, Seller shall sell and Buyer shall purchase the remaining one half (1/2) of the membership interest in Orlando for the balance remaining on the original Purchase Price of One Million Five Hundred Thousand ($1,500,000.00), which remaining balance is Seven Hundred Thousand Dollars ($700,000.00) (the “Second Closing Purchase Price”), Buyer having previously paid to Seller the sum of Eight Hundred Thousand Dollars ($800,000.00).  The Second Closing Purchase Price shall be payable as follows:
           1.2.1           Five Hundred Twelve Thousand Five Hundred Dollars U.S. ($512,500.00) cash or other good funds payable at the Closing.  The total payment by Buyer to Seller in cash of One Million Three Hundred Twelve Thousand Five Hundred Dollars ($1,312,500.00) being 87.5% of the cash portion of the Purchase Price.
1.2.2           Execution and delivery to Seller of Buyer's Promissory Note in the original principal amount of One Hundred Eighty-Seven Thousand Five Hundred Dollars ($187,500.00) (the "Note") in the form attached hereto as Exhibit B and incorporated herein by this reference.  The execution of the Note will result in the cancelation and payment in full of the $3,000,000.00 promissory note dated January 28, 2011.
1.2.3           Execution and delivery of the Deed of Trust attached hereto as Exhibit C which Deed of Trust shall secure the Note and encumbers the approximately 188 acres of real property as described in the Deed of Trust.
1.2.4           Delivery to Seller of Two Hundred Fifty Thousand (250,000) shares of the common stock of Two Rivers Water Company, par value $.001 per share (the "Remaining Shares") as payment against the balance of the Purchase Price for Orlando.  The  Remaining Shares are traded on the Over-the-Counter market on the OTC QB Board under the symbol “TURV.”  The Remaining Shares shall be subject to the terms and conditions of the Metering Agreement attached as Exhibit E   to the Agreement, which Metering Agreement shall be executed at the Second Closing as a condition to delivery of the Remaining Shares.    
1.2.5           Delivery to Seller of Seventy-Five Thousand (75,000) shares of the common stock of Two Rivers Water Company, par value $.001 per share (the "Remaining Additional Shares").  The Remaining Additional Shares shall be subject to the same restrictions as the Shares under Section 1.2.4 above.
 
 
 

II.      Second Closing
2.1.            Time and Place .  The Second Closing shall be at the offices of Mulliken Weiner Berg & Jolivet, P.C., 102 South Tejon Street, Suite 900, Colorado Springs, Colorado on September 7, 2011, or on an earlier date mutually agreed to by the Parties hereto (the “Closing Date”).
2.2.            Procedure - Second Closing . At the Second Closing, the following shall occur:
(a)           Seller shall assign to Two Rivers Water Company the remaining one-half (1/2) of its Membership Interests in Orlando;
(b)           Buyer shall make a wire transfer of good funds or deliver a certified or cashier’s check or other good funds in the amount of $512,500.00 payable to Family Ranch Holdings, LLC;
(c)           Buyer shall execute and deliver to Seller the Promissory Note attached as Exhibit B and the Deed of Trust attached as Exhibit C;
(d)           Buyer shall cause to be delivered to Family Ranch Holdings, LLC within two weeks from the Closing Date the Remaining Shares and the Remaining Additional Shares;
(e)           Buyer and Seller shall execute and deliver any other agreements necessary or helpful to close this transaction; and
 
 
 
(f)           Buyer and Seller shall execute the First Amendment to the Service Agreement in the form of Exhibit D   attached hereto, including the Memorandum thereof (the "First Amendment").
Seller has determined that it does not require execution and recording of the Project Covenants as was contemplated by Article II of the Master Agreement.
           2.3.            Closing Costs .  Any closing fees charged by the closing agent shall be divided equally between the Parties.
2.4            Post-Closing Adjustment and Easement for Farm Land and Ponds .  In order to timely complete the Second Closing, Seller will convey to Buyer approximately 1,399 acres of land, which is approximately 49 acres of ground more than that required to complete the Second Closing and convey a total of 1,500 acres of irrigable land required by the Agreement (the Parties acknowledging that Seller conveyed approximately 150 acres of irrigable and 100 acres of Farm Land at the First Closing).  The Parties also acknowledge that, in addition to obtaining fee title to the 1,500 acres of Irrigable Land, Buyer will need an easement of some ground around or adjacent to the Irrigable Land to accommodate the farming operations, including sites for roads and a few ponds (the “Farming Easement”).  The area attached hereto as Exhibit E identifies the boundary of the area in which the Farming Easement will be granted.  Buyer shall be entitled to access and use the area shown on Exhibit E on a non-exclusive basis from and after the date of the Second Closing through January 28, 2014 (the “Initial Farming Area”).  From after the date of the Second Closing, the Parties agree to cooperate in good faith to more particularly identify that additional land reasonably needed to support the farming of the Irrigable Land (the “Farm Land”), and which of the deeded acres are to constitute the Irrigable Land to accommodate the practical application of irrigation water to the land, both of which shall be within, but not necessarily include all of, the Initial Farming Area.  The Parties shall also cooperate in good faith the finalize the terms and conditions of the easement of that Farm Land.  Buyer acknowledges that Seller will also need to utilize and retain some rights within the Farm Land although granted to Buyer through an easement.  Accordingly, from and after the Closing, the Parties agree to negotiate in good faith to more accurately identify the Irrigable Land and execute and record a deed or deeds as necessary to provide Buyer with 1,500 acres of Irrigable Land plus the ponds, but not in excess of 1,549 acres total, which cooperation shall include deeding back to Seller any acres in excess of the 1,500 acres of Irrigable Land as required.  The Parties shall also cooperate in good faith to specify the description of the Farm Land and shall execute a formal easement for same, all on terms and conditions mutually agreeable to the Parties.  The Parties agree to complete this process on or before January 28, 2014.
 
 
 
2.5            Obligations of Orlando .  The Parties acknowledge that there may be outstanding obligations of Orlando, but to the best knowledge of Seller none exist at the time of Closing.  The Parties agree that Seller, while representing that no obligations exist, shall remain responsible for any and all existing obligations of Orlando as of the date of the Second Closing, and for any obligations of Orlando that are attributable to the actions of Seller or Seller’s agents.  Buyer shall be responsible for any and all obligations of Orlando from and after the date of the Second Closing, and for any obligations of Orlando that are attributable to the actions of Buyer or Buyer’s agents.
2.6.            Future Assurances .  From and after the Second Closing, the Parties agree to execute and deliver such other and further documents and agreements as may be requested by a Party to more fully implement and document the intent of the Parties as set forth in the Agreement, as modified by this Second Amendment.
2.7.            Survival .  Except as modified by this Second Amendment, all of the terms and conditions of the Agreement remain in full force and effect as currently stated therein and shall survive the Second Closing.
           This Second Amendment is executed to be effective as of the 7th day of September, 2011.

SELLER:
           

ORLANDO RESERVIOR NO. 2 COMPANY, LLC, a Colorado limited liability company


By:                                                                
       Manager


FAMILY RANCH HOLDINGS , LLC,
                                                                a Colorado limited liability company


                                                                By:                                                                
                                                                        Manager


                                                                BUYER:


TWO RIVERS WATER COMPANY
A Colorado corporation


By:                                                                
       Wayne Harding


Its:  Chief Financial Officer and Secretary

                                                                TRWC, INC. , a Colorado corporation d/b/a
                                                                TWO RIVERS WATER COMPANY



                                                                By:                                                                
                                                                           Wayne Harding
Its:  Chief Financial Officer and Secretary



TRW ORLANDO WATER ASSETS, LLC

By:                                                                
       By: Wayne Harding
Its:  Chief Financial Officer and Secretary

 
TWO RIVERS FARMS F-2, LLC

By:                                                                
       By: Wayne Harding
Its:  Chief Financial Officer and Secretary
 
 
 
Exhibit 99.2
$187,500 Promissory Note

 
PROMISSORY NOTE
 

U.S. $187,500.00 Colorado Springs, Colorado
 September 7, 2011

1.           FOR VALUE RECEIVED, Orlando Reservoir No. 2 Company, LLC , a Colorado limited liability company, and TRW Orlando Water Assets, LLC, a Colorado limited liability company (collectively, “Borrower”), promises to pay to the order of Family Ranch Holdings, LLC , a Colorado limited liability company (“Note Holder”) , the principal sum of One Hundred Eighty-Seven Thousand Five Hundred and 00/100 U.S. Dollars ($187,500.00), at the rate of seven percent (7%) per annum.  Principal and interest shall be payable at 102 East Pikes Peak Avenue, Suite 200, Colorado Springs, CO  80903, or such other place as the Note Holder may designate, in one payment of all principal and accrued interest due on January 28, 2014.  If not sooner paid or accelerated in accordance with paragraph 7 below, the entire principal amount outstanding and accrued and unpaid interest thereon shall be due and payable on January 28, 2014.

2.           Payments received for application to this Note shall be applied first to the payment of late charges, if any, second to the payment of accrued interest at the default rate specified below, if any, third, to accrued interest at the contract rate first specified above, and the balance applied in reduction of the principal amount hereof.

3.           Borrower shall pay to the Note Holder a late charge of ten percent (10%) of any payment not received by the Note Holder within ten (10) business days after the date that the payment under this Note is due.

4.           The payments received for application to this Note (other than prepayments of principal in accordance with Paragraph 8 of this Note) shall be applied first to the payment of late charges, if any, second to the payment of accrued Interest at the default rate specified below, if any, third to accrued Interest at the contract rate first specified above, and the balance applied in reduction of the principal amount hereof.

5.           This Note is secured by (a) a deed of trust (the “Deed of Trust”) on certain real property located in Huerfano County, Colorado, which property is more particularly described on Exhibit A attached hereto (the “Collateral”).

6.           At the option of the Note Holder, the payment of all principal and Interest due in accordance with the terms of this Note will be accelerated and such principal and Interest shall be immediately due and payable without notice or demand upon any of the following events of default (each an “Event of Default”):

 
 
 
(a)           default in the timely payment of any amount due hereunder, or any part thereof (unless cured within ten (10) business days after the date that the payment is due);

                      (b)           breach or violation by Borrower of any term or covenant contained in this Note (unless cured within any applicable period provided for herein);

(c)           breach or violation by Borrower or Two Rivers Water Company of any term or covenant contained in the Service Agreement dated January 28, 2011 (unless cured within any applicable period provided for in such document) executed by TRW Orlando Water Asset, LLC, Two Rivers Water Company and Marksheffel-Woodmen Investments, LLC;

                      (d)           Borrower, Two Rivers Water Company or Two Rivers Water, LLC making an assignment for the benefit of creditors, or admitting in writing its inability to pay its debts as they become due, or filing a voluntary petition in bankruptcy, or being adjudicated a bankrupt or insolvent, or filing any petition or answer seeking for itself any arrangement, composition, adjustment, liquidation, dissolution, or similar relief to which it may be entitled, or filing any answer admitting the material allegations of any petition filed against it in any such proceedings, or seeking or consenting to or acquiescing in the appointment of any trustee, receiver, custodian, or liquidator of all or a substantial part of its properties or assets;

(e)           the commencement of a bankruptcy or insolvency proceeding against Borrower, Two Rivers Water Company or Two Rivers Water, LLC (unless stayed or dismissed within sixty (60) days); or

           (f)           the sale, conveyance, assignment or other transfer of fifty percent (50%) or more of the stock, membership interests or assets of Borrower.

Note Holder shall give Borrower ten (10) business days written notice of any Event of Default of the Note, other than a Monetary Default ("Non Monetary Default").  If the Borrower fails to cure the Non Monetary Default by the end of the ten (10) business day period, the entire amount due under the Note, including principal and accrued Interest, shall be accelerated and shall be immediately due and payable to Note Holder.  If Borrower cures the Non Monetary Default within such ten (10) business day period, Borrower shall be restored to all rights under the Note.
 
 
7.           If Note Holder elects to accelerate in accordance with paragraph 6, the entire principal amount outstanding and accrued Interest thereon shall at once and without notice become due and payable and the indebtedness shall bear interest at the rate of twelve percent (12%) per annum from the date of default.  The Note Holder shall be entitled to collect all costs and expense of collection and/or suit, including, but not limited to reasonable attorneys' fees.
 

8.           Borrower may prepay the principal amount outstanding under this Note, in whole or in part, at any time without penalty (provided that Borrower is not in default hereunder after expiration of any applicable notice and cure period).  Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent annual payment or change the amount of such annual payments (other than the amount of principal due at the last annual payment).

 
 
 
9.           This Note shall be the joint and several obligation of each Borrower.  Every maker, endorser, or cosigner of this Note expressly grants to Note Holder the right to release or to agree not to sue any other person, or to suspend the right to enforce this Note against such other person or to otherwise discharge such person; and each such maker, endorser, or cosigner agrees that the exercise of such rights by Note Holder will have no affect on the liability of any other person, primarily or secondarily liable hereunder.  Each maker, endorser, or cosigner waives presentment, protest, or notice of dishonor, and all duty or obligation of Note Holder to effect, protect, perfect, retain, or enforce any security for the payment of this Note or to proceed against any collateral before otherwise enforcing this Note.

10.           No delay or omission on the part of Note Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note.  No acceptance of late payments by Note Holder under this Note, whether or not accompanied by late charges, shall operate as a waiver of any default under this Note, nor shall it operate as a waiver or modification of Note Holder's right to declare a default under proper circumstances in the future.  A waiver on one occasion shall not be construed as a bar to or waiver of any such right and/or remedy on any future occasion.

11.           Borrower certifies that the loan is obtained for business or commercial purposes and that the proceeds thereof will not be used primarily for personal, family or household purposes.

12.           If any provision hereof or of the Deed of Trust, Escrow Agreement, Service Agreement or any other loan document is for any reason and to any extent invalid or unenforceable, then neither the remainder of the document in which such provision is contained nor the application of the provisions to other entities, persons, or circumstances, nor any other loan document shall be affected thereby but instead shall be enforceable to the maximum extent permitted by law.

13.           This Note shall be non-recourse and shall not be the personal obligation of Borrower or any other makers, sureties, guarantors and endorsers, and their successors and assigns and Note Holder’s sole remedy for a default shall be to realize on the Collateral.

 
 
 
14.           Any notice to Borrower provided for in this Note shall be in writing and shall be given and be effective upon (a) delivery to Borrower or (b) three (3) days following the date of mailing of such notice by registered or certified mail, return receipt requested, postage prepaid, addressed to Borrower at the Borrower's address stated below, or to such other address as Borrower may designate by notice to the Note Holder.  Any notice to the Note Holder shall be in writing and shall be given and be effective upon (a) delivery to Note Holder or (b) three (3) days following the date of mailing of such notice by first-class U.S. mail, to the Note Holder at the address stated in the first paragraph of this Note, or to such other address as Note Holder may designate by notice to Borrower.
 

BORROWER:

ORLANDO RESERVOIR NO. 2 COMPANY,
a Colorado limited liability company


By: _____________________________
Wayne Harding
Its:  Chief Financial Officer and Secretary


TRW ORLANDO WATER ASSETS, LLC
a Colorado limited liability company

   By:           TWO RIVERS WATER, LLC
a Colorado limited liability company
Its sole member

By: Two Rivers Water Company
a Colorado corporation
Its sole member

  By:_________________________
Wayne Harding
 Chief Financial Officer and Secretary


Borrower’s Address:
2000 South Colorado Boulevard, Annex Ste 420
Denver, CO  80222