AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is dated to be effective as of February 26, 2008, by and among MAINSOURCE FINANCIAL GROUP, INC . (“MainSource”), 1st INDEPENDENCE FINANCIAL GROUP, INC. (“1st Independence”) and 1st INDEPENDENCE BANK, INC. (“1st Bank”).

W I T N E S S E T H:

WHEREAS, MainSource is an Indiana corporation registered as a financial holding company under the federal Bank Holding Company Act of 1956, as amended (the “BHC Act”), with its principal office located in Greensburg, Decatur County, Indiana; and

WHEREAS, 1st Independence is a Delaware corporation registered as a bank holding company under the BHC Act, with its principal office located in Louisville, Jefferson County, Kentucky; and

WHEREAS, 1st Bank is a Kentucky chartered commercial bank with its principal office located in Louisville, Jefferson County, Kentucky, and is a wholly-owned subsidiary of 1st Independence; and

WHEREAS, MainSource and 1st Independence seek to affiliate through a corporate reorganization whereby 1st Independence will merge with and into MainSource, as a result of which merger 1st Bank will become a wholly-owned subsidiary of MainSource; and

WHEREAS, the Boards of Directors of each of the parties hereto have determined that it is in the best interests of their respective corporations or banks and their respective shareholders to consummate the merger provided for herein and have approved this Agreement, authorized its execution and designated this Agreement a plan of reorganization and a plan of merger; and

WHEREAS, the members of the Board of Directors of 1st Independence have each agreed to execute and deliver to MainSource a voting agreement substantially in the form attached hereto as Exhibit A .

NOW, THEREFORE, in consideration of the foregoing premises, the representations, warranties, covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby make this Agreement and prescribe the terms and conditions of the merger of 1st Independence with and into MainSource, and the mode of carrying such merger into effect as follows:

ARTICLE I

THE MERGER

1.01.        The Merger .

(a)           General Description .  Upon the terms and subject to the conditions of this Agreement, at the Effective Time (as defined in Article X hereof), 1st Independence shall merge with and into and under the Articles of Incorporation of MainSource (the “Merger”).  MainSource shall survive the Merger (sometimes hereinafter referred to as the “Surviving Corporation”) and shall continue its corporate existence under the laws of the State of Indiana pursuant to the provisions of and with the effect provided in the Indiana Business Corporation Law, as amended (“IBCL”).

(b)           Name, Officers and Directors .   The name of the Surviving Corporation shall be “MainSource Financial Group, Inc.” Its principal office shall be located at 2105 North State Road 3 Bypass, Greensburg, Decatur County, Indiana. The officers of MainSource serving at the Effective Time shall continue to serve as the officers of the Surviving Corporation, until such time as their successors shall have been duly elected and have qualified or until their earlier resignation, death or removal from office. The directors of the Surviving Corporation following the Effective Time shall be those individuals serving as directors of MainSource at the Effective Time until such time as their successors have been duly elected and have qualified or until their earlier resignation, death, or removal as a director.

(c)           Articles of Incorporation and By-Laws .   The Articles of Incorporation and By-Laws of MainSource in existence at the Effective Time shall remain the Articles of Incorporation and By-Laws of the Surviving Corporation following the Effective Time, until such Articles of Incorporation and By-Laws shall be further amended as provided by applicable law.

(d)           Effect of the Merger .   At the Effective Time, the title to all assets, real estate and other property owned by 1st Independence shall vest in Surviving Corporation as set forth in Indiana Code Section 23-1-40-6, as amended, without reversion or impairment. At the Effective Time, all liabilities of 1st Independence shall be assumed by Surviving Corporation as set forth in Indiana Code Section 23-1-40-6, as amended.

(e)           Integration .   At the Effective Time and subject to the terms and conditions of this Agreement, the parties hereto currently intend to effectuate, or cause to be effectuated, the Merger, pursuant to Articles of Merger, substantially in the form attached hereto as Exhibit  1.01(e)(i) , and a Plan of Merger, substantially in the form attached hereto as  Exhibit 1.01(e)(ii) . The parties agree to cooperate and to take all reasonable actions prior to or following the Effective Time, including executing all requisite documentation, as may be reasonably necessary to effect the Merger.

1.02.        Reservation of Right to Revise Structure .   At MainSource’s election, the Merger may alternatively be structured so that (a) 1st Independence is merged with and into any other direct or indirect wholly-owned subsidiary of MainSource or (b) any direct or indirect wholly-

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owned subsidiary of MainSource is merged with and into 1st Independence; provided, however, that no such change shall (x) alter or change the amount or kind of the Merger Consideration (as hereinafter defined) or the treatment of the holders of common stock, $0.10 par value, of 1st Independence (“1st Independence Common Stock”) or options for 1st Independence Common Stock (“1st Independence Stock Options”), (y) prevent the parties from obtaining the opinion of Krieg DeVault LLP referred to in Sections 7.01 and 7.02 or otherwise cause the transaction to fail to qualify for the tax treatment described in Section 1.03, or (z) materially impede or delay consummation of the transactions contemplated by this Agreement. In the event of such an election, the parties agree to execute an appropriate amendment to this Agreement in order to reflect such election.

1.03.        Tax Free Reorganization .  MainSource, 1st Independence and 1st Bank intend for the Merger to qualify as a reorganization within the meaning of Section 368(a) and related sections of the Internal Revenue Code of 1986, as amended (the “Code”), and agree to cooperate and to take such actions as may be reasonably necessary to assure such result.

ARTICLE II

MANNER AND BASIS OF EXCHANGE OF STOCK

2.01.        Consideration .

(a)           Subject to the terms and conditions of this Agreement, at the Effective Time, each share of 1st Independence Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) shares held as treasury stock of 1st Independence, (ii) shares held directly or indirectly by MainSource, except shares held in a fiduciary capacity or in satisfaction of a debt previously contracted, if any, and (iii) Dissenting Shares (as defined below)) shall become and be converted into the right to receive in accordance with this Article:

(i)                     $5.475 (the “Cash Consideration”); and

(ii)                  0.881036 shares of common stock (the “Exchange Ratio”), without par value, of MainSource (“MainSource Common Stock”) (the “Stock Consideration”).

The Cash Consideration and the Stock Consideration are sometimes referred to herein collectively as the “Merger Consideration.”

(b)           Subject to any consents required by law and the provisions of Section 5.15 hereof, at the Effective Time: (i) each outstanding 1st Independence Stock Option without any action on the part of any holder thereof, shall be converted into the right to receive from MainSource, at the Effective Time, an amount in cash equal to the product of (A) the sum of (i) (x) the Cash Consideration plus (y) the product of the Average Share Price of MainSource Common Stock (as defined below) multiplied by the Exchange Ratio, less (ii) the per share exercise price for each share of 1st Independence Common Stock subject to such 1st Independence Stock Option, multiplied by (B) the number of shares of 1st Independence Common Stock subject to such 1st Independence Stock Option; provided, however, that the payer shall withhold from such cash

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payment those taxes required to be withheld by applicable law, if any, and (ii) each 1st Independence Stock Option to which this paragraph applies (regardless of whether such calculation results in a positive or negative number) will be cancelled and shall cease to exist by virtue of such payment.  No cash payment will be made to any holder of a 1st Independence Stock Option if the calculation pursuant to this Section 2.01(b) results in a negative number.  The Average Share Price of MainSource Common Stock shall be equal to the average per share closing prices of a share of MainSource Common Stock as quoted on the Nasdaq Stock Market during the ten trading days preceding the fifth (5th) calendar day preceding the Effective Time.

(c)           Each share of 1st Independence Common Stock that, immediately prior to the Effective Time, is held as treasury stock of 1st Independence or held directly or indirectly by MainSource (other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted) shall by virtue of the Merger be canceled and retired and shall cease to exist, and no exchange or payment shall be made therefor.

2.02.        Adjustment to Purchase Price Based Upon 1st Independence’s Consolidated Shareholders’ Equity .

(a)           If as of the last day of the month preceding the month in which the Effective Time occurs (the “Computation Date”) the 1st Independence Consolidated Tangible Shareholders’ Equity, as determined in accordance with Section 2.02(b), is less than $26,700,000, the Cash Consideration shall be reduced on a dollar-for-dollar basis by an amount equal to the difference between $26,700,000 and the actual 1st Independence Consolidated Tangible Shareholders’ Equity as of the Computation Date determined in accordance with Section 2.02(b), divided by the total number of shares of 1st Independence Common Stock outstanding on the Closing Date.  Similarly, if as of the Computation Date the 1st Independence Consolidated Tangible Shareholders’ Equity, as calculated in accordance with Section 2.02(b) less (i) any extraordinary or non-recurring items of income, (ii) gains whether realized or unrealized related to 1st Independent’s investment portfolio and (iii) the difference, if any, between the total quarterly loan loss reserve provision expense set forth in the budget presented to MainSource and the actual total quarterly loan loss reserve provision expense taken by 1st Independence between the date of this Agreement and the Closing Date, in each case pro rated as necessary, is greater than $27,200,000, the Cash Consideration shall be increased on a dollar-for-dollar basis by an amount equal to the difference between the actual 1st Independence Consolidated Tangible Shareholders’ Equity as of the Computation Date determined in accordance with Section 2.02(b) and $27,200,000, divided by the total number of shares of 1st Independence Common Stock outstanding on the Closing Date.

(b)           The 1st Independence Consolidated Tangible Shareholders’ Equity (i.e., consolidated shareholders’ equity less the amount of goodwill and core deposit intangibles but excluding the impact of any changes in any unrealized gains or losses on available for sale securities) shall be determined based upon the balance sheet of 1st Independence as of the Computation Date, prepared in accordance with generally accepted accounting principles consistently applied, after adjustment for the following amounts (which amounts shall also be calculated in accordance with generally accepted accounting principles consistently applied and tax effecting those adjustments, using a 35% tax rate, where appropriate):

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(i)            the accrual or payment of any payments or other financial effect of any of the payments, actions or transactions contemplated by Sections 5.18 and 5.19; and

(ii)           the accrual or payments of an amount to terminate 1st Bank’s data processing contracts with Computer Services, Inc. and Digital Insights.

Notwithstanding the foregoing, 1st Independence Consolidated Tangible Shareholders’ Equity as of the Computation Date will not be increased due to increases in 1st Independence’s capital stock and surplus as a result of the exercise of options under the 2004 Option Plan between the date of this Agreement and the Effective Time.

2.03.        Fractional Shares .   Notwithstanding any other provision in this Agreement, no fractional shares of MainSource Common Stock and no certificates or scrip therefor, or other evidence of ownership thereof, will be issued in the Merger; instead, MainSource shall pay to each holder of 1st Independence Common Stock who otherwise would be entitled to a fractional share of MainSource Common Stock an amount in cash (without interest) determined by multiplying such fraction by the Average Share Price of MainSource Common Stock.

2.04.        Exchange Procedures .

(a)           Distributions by MainSource of the Merger Consideration shall be made in accordance with Section 2.01. At and after the Effective Time, each certificate representing shares of 1st Independence Common Stock shall represent only the right to receive the Merger Consideration in accordance with the terms of this Agreement.

(b)           At or prior to the Effective Time, MainSource shall (i) reserve a sufficient number of shares of MainSource Common Stock to be issued as part of the Merger Consideration, (ii) deposit with MainSource Bank an estimated amount of cash to be issued as part of the Merger Consideration and (iii) mail to each holder of 1st Independence Common Stock a letter of transmittal providing instructions as to the transmittal to MainSource of certificates representing shares of 1st Independence Common Stock and the issuance of cash and shares of MainSource Common Stock in exchange therefore pursuant to the terms of this Agreement.

(c)           MainSource shall cause a certificate representing that number of whole shares of MainSource Common Stock that each holder of 1st Independence Common Stock has the right to receive pursuant to Section 2.01, and a check in the amount of any cash that such holder has the right to receive pursuant to Section 2.01, including any cash in lieu of fractional shares, or dividends or distributions which such person shall be entitled to receive, to be delivered to such shareholder upon delivery (if not previously delivered) to MainSource of certificates representing such shares of 1st Independence Common Stock (“Old Certificates”) (or bond or other indemnity satisfactory to MainSource if any of such certificates are lost, stolen or destroyed) owned by such shareholder accompanied by a properly completed and executed letter of transmittal, as in the form and substance reasonably satisfactory to MainSource.  No interest will be paid on any Merger Consideration that any such person shall be entitled to receive pursuant to this Article II upon such delivery.

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(d)           No dividends or other distributions on MainSource Common Stock with a record date occurring after the Effective Time shall be paid to the holder of any unsurrendered Old Certificate representing shares of 1st Independence Common Stock converted in the Merger into the right to receive shares of such MainSource Common Stock until the holder thereof surrenders such Old Certificates in accordance with this Section 2.04. After becoming so entitled in accordance with this Section 2.04, the record holder thereof also shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to shares of MainSource Common Stock such holder had the right to receive upon surrender of the Old Certificate.

(e)           The stock transfer books of 1st Independence shall be closed immediately upon the Effective Time and from and after the Effective Time there shall be no transfers on the stock transfer records of 1st Independence of any shares of 1st Independence Common Stock. If, after the Effective Time, Old Certificates are presented to MainSource, they shall be canceled and exchanged for the Merger Consideration deliverable in respect thereof pursuant to this Agreement in accordance with the procedures set forth in this Section 2.04.

(f)            MainSource shall be entitled to rely upon 1st Independence’s stock transfer books to establish the identity of those persons entitled to receive the Merger Consideration, which books shall be conclusive with respect thereto. In the event of a dispute with respect to ownership of stock represented by any Old Certificate, MainSource shall be entitled to deposit any Merger Consideration represented thereby in escrow with an independent third party and thereafter be relieved with respect to any claims thereto.

(g)           If any Old Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming such Old Certificate to be lost, stolen, or destroyed and, if required by MainSource, the posting by such person of a bond or other indemnity satisfactory to MainSource as MainSource may reasonably direct as indemnity against any claim that may be made against it with respect to such Old Certificate, MainSource will issue in exchange for such lost, stolen, or destroyed Old Certificate the Merger Consideration deliverable in respect thereof pursuant to Section 2.01 hereof.

(h)           Notwithstanding the foregoing, neither the Exchange Agent (as defined in Section 2.06 below) nor any party hereto shall be liable to any former holder of 1st Independence Common Stock for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

(i)            In the event that the Merger is not completed for any reason, MainSource shall cause the Exchange Agent to promptly return any Old Certificates and/or any indemnity instruments received from 1st Independence shareholders to such shareholders.

2.05.        Anti-Dilution Adjustments .   Should MainSource change (or establish a record date for changing) the number of shares of MainSource Common Stock issued and outstanding prior to the Effective Time by way of a stock split, stock dividend, recapitalization or similar transaction with respect to the outstanding MainSource Common Stock, and the record date

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therefor shall be prior to the Effective Time, the Stock Consideration shall be adjusted so the shareholders shall receive, in the aggregate, such number of shares of MainSource Common Stock representing the same percentage of outstanding shares of MainSource Common Stock at the Effective Time as would have been represented by the number of shares of MainSource Common Stock the shareholders of 1st Independence would have received if any of the foregoing actions had not occurred.

2.06.        Exchange Agent .   1st Independence and MainSource agree that MainSource Bank or its designee shall be appointed to act as agent (the “Exchange Agent”) for purposes of distributing the Merger Consideration pursuant to the terms and conditions of this Agreement.

                2.07.        Dissenting Shares .  Shares of 1st Independence Common Stock which are issued and outstanding immediately prior to the Effective Time and which are held by persons who have properly exercised, and not withdrawn or waived, appraisal rights with respect thereto (the “Dissenting Shares”) in accordance with the General Corporation Law of the State of Delaware (the “GCL”), will not be converted into the right to receive the Merger Consideration, and holders of such shares of 1st Independence Common Stock will be entitled, in lieu thereof, to receive payment of the appraised value of such shares of 1st Independence Common Stock in accordance with the provisions of the GCL unless and until such holders fail to perfect or effectively withdraw or lose their rights to appraisal and payment under the GCL.  If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses such right, such shares of 1st Independence Common Stock will thereupon be treated as if they had been converted at the Effective Time into the right to receive the Merger Consideration, without any interest thereon.  1st Independence will give MainSource prompt notice of any demands received by 1st Independence for appraisal of shares of 1st Independence Common Stock.  Prior to the Effective Time, 1st Independence will not, except with the prior written consent of MainSource, make any payment with respect to, or settle or offer to settle, any such demands.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF
1st INDEPENDENCE AND 1st BANK

On or prior to the date hereof, 1st Independence has delivered to MainSource a schedule (the “Disclosure Schedule”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in this Article III or to one or more of its covenants contained in Article V.

For the purpose of this Agreement, and in relation to 1st Independence, a “Material Adverse Effect” means any effect that (i) is material and adverse to the financial position, results of operations or business of 1st Independence and its subsidiaries taken as a whole, or (ii) would materially impair the ability of 1st Independence to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement; provided, however, that Material Adverse Effect shall not be deemed to include the impact of (a) changes in banking and similar laws of

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general applicability to banks or their holding companies or interpretations thereof by courts or governmental authorities, (b) changes in generally accepted accounting principles or regulatory accounting requirements applicable to banks or their holding companies generally, (c) any modifications or changes to valuation policies and practices in connection with the Merger or restructuring charges taken in connection with the Merger, in each case in accordance with generally accepted accounting principles, (d) effects of any action taken with the prior written consent of MainSource, (e) changes in the general level of interest rates (including the impact on 1st Independence’s or 1st Bank’s securities portfolios) or conditions or circumstances relating to or that affect the United States economy, financial or securities markets or the banking industry, generally, (f)  changes resulting from expenses (such as legal, accounting and investment bankers’ fees) incurred in connection with this Agreement or the transactions contemplated herein, including without limitation those provided in Sections 5.18 and 5.19 of this Agreement and any benefit or retirement plan disclosed on the 1st Independence Disclosure Schedule, (g)  the impact of the announcement of this Agreement and the transactions contemplated hereby, and compliance with this Agreement on the business, financial condition or results of operations of 1st Independence and its subsidiaries, and (h) the occurrence of any military or terrorist attack within the United States or any of its possessions or offices;   provided   that in no event shall a change in the trading price of the 1st Independence Common Stock, by itself, be considered to constitute a Material Adverse Effect on 1st Independence and its subsidiaries taken as a whole (it being understood that the foregoing proviso shall not prevent or otherwise affect a determination that any effect underlying such decline has resulted in a Material Adverse Effect).

For the purpose of this Agreement, and in relation to 1st Independence and 1st Bank, “knowledge” means the actual knowledge of N. William White, R. Michael Wilbourn, Kathy L. Beach, James P. Wheatley, John Barron and Terry L. Batson.

Accordingly, 1st Independence and 1st Bank hereby represent and warrant to MainSource as follows, except as set forth in its Disclosure Schedule:

3.01.        Organization and Authority .   (a) 1st Independence is a corporation duly organized and validly existing under the laws of the state of Delaware and is a registered bank holding company under the BHC Act.  1st Independence has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof. 1st Bank is 1st Independence’s only direct or indirect subsidiary and except as set forth on the Disclosure Schedule, 1st Independence owns no voting stock or equity securities of any corporation, partnership, association or other entity.

(b)           1st Bank is a commercial bank chartered and existing under the law of the state of Kentucky.  1st Bank has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof. Except as set forth on the Disclosure Schedule, 1st Bank has no subsidiaries and owns no voting stock or equity securities of any corporation, partnership, association or other entity.

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3.02.        Authorization .   (a) 1st Independence has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder, subject to the fulfillment of the conditions precedent set forth in Sections 7.02(e) and (f) hereof. As of the date hereof, 1st Independence is not aware of any reason why the approvals set forth in Section 7.02(e) will not be received in a timely manner and without the imposition of a condition, restriction or requirement of the type described in Section 7.02(e). This Agreement and its execution and delivery by 1st Independence have been duly authorized and approved by the Board of Directors of 1st Independence and, assuming due execution and delivery by MainSource, constitutes a valid and binding obligation of 1st Independence, subject to the fulfillment of the conditions precedent set forth in Section 7.02 hereof, and is enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium, readjustment of debt or other laws of general application relating to or affecting the enforcement of creditors’ rights.

(b)           Neither the execution of this Agreement nor consummation of the Merger contemplated hereby: (i) conflicts with or violates the Articles of Incorporation or By-Laws of 1st Independence or the Articles of Incorporation or Bylaws of 1st Bank; (ii) conflicts with or violates any local, state, federal or foreign law, statute, ordinance, rule or regulation (provided that the approvals of or filings with applicable government regulatory agencies or authorities required for consummation of the Merger are obtained) or any court or administrative judgment, order, injunction, writ or decree; (iii) conflicts with, results in a breach of or constitutes a default under any note, bond, indenture, mortgage, deed of trust, license, lease, contract, agreement, arrangement, commitment or other instrument to which 1st Independence or 1st Bank is a party or by which 1st Independence or 1st Bank is subject or bound; (iv) results in the creation of or gives any person, corporation or entity the right to create any lien, charge, claim, encumbrance or security interest, or results in the creation of any other rights or claims of any other party (other than MainSource) or any other adverse interest, upon any right, property or asset of 1st Independence or 1st Bank which would be material to 1st Independence; or (v) terminates or gives any person, corporation or entity the right to terminate, accelerate, amend, modify or refuse to perform under any note, bond, indenture, mortgage, agreement, contract, lease, license, arrangement, deed of trust, commitment or other instrument to which 1st Independence or 1st Bank is bound or with respect to which 1st Independence or 1st Bank is to perform any duties or obligations or receive any rights or benefits, except, in the case of clauses (ii) through (v) which would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect.

(c)           Other than in connection or in compliance with the provisions of the applicable federal and state banking, securities, antitrust and corporation statutes, all as amended, and the rules and regulations promulgated thereunder, no notice to, filing with, exemption by or consent, authorization or approval of any governmental agency or body is necessary for consummation of the Merger by 1st Independence.

3.03.        Capitalization .   (a) The authorized capital stock of 1st Independence as of the date hereof consists, and at the Effective Time will consist, of 5,000,000 shares of 1st Independence Common Stock, 1,995,774 shares of which shares are issued and outstanding as of

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the date hereof.  Additionally, options to purchase 64,300 shares of 1st Independence Common Stock are outstanding under the 2004 Omnibus Stock Option Plan of 1st Independence (“2004 Option Plan”) and no options to purchase shares of 1st Independence Common Stock are outstanding under the 1996 Stock Option Plan of 1st Independence (“1996 Option Plan”).  500,000 shares of preferred stock, $0.10 par value, are authorized, none of which preferred shares are issued and outstanding. Such issued and outstanding shares of 1st Independence Common Stock have been duly and validly authorized by all necessary corporate action of 1st Independence, are validly issued, fully paid and nonassessable and have not been issued in violation of any pre-emptive rights of any present or former 1st Independence shareholder. Except as set forth in the Disclosure Schedule, 1st Independence has no capital stock authorized, issued or outstanding other than as described in this Section 3.03(a) and has no intention or obligation to authorize or issue any other capital stock or any additional shares of 1st Independence Common Stock. Each share of 1st Independence Common Stock is entitled to one vote per share. A description of the 1st Independence Common Stock is contained in the Articles of Incorporation of 1st Independence, as set forth in the Disclosure Schedule pursuant to Section 3.04 hereof.

(b)                                  The authorized capital stock of 1st Bank as of the date hereof consists, and at the Effective Time will consist, of 1,000 shares of common stock, no par value per share, 1,000 of which shares are validly issued and outstanding (such issued and outstanding shares are referred to herein as “1st Bank Common Stock”). Such validly issued and outstanding shares of 1st Bank Common Stock have been duly and validly authorized by all necessary corporate action of 1st Bank, are validly issued, fully paid and nonassessable, and have not been issued in violation of any pre-emptive rights of any present or former 1st Bank stockholder. All of the issued and outstanding shares of 1st Bank Common Stock are owned by 1st Independence free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options and pre-emptive rights and of all other rights or claims of any other person, corporation or entity with respect thereto. 1st Bank has no capital stock authorized, issued or outstanding other than as described in this Section 3.03(b) and has no intention or obligation to authorize or issue any other capital stock or any additional shares of 1st Bank Common Stock.

(c)                                   Except as set forth in the Disclosure Schedule, there are no options, warrants, commitments, calls, puts, agreements, understandings, arrangements or subscription rights relating to any shares of 1st Independence Common Stock or 1st Bank Common Stock, or any securities convertible into or representing the right to purchase or otherwise acquire any common stock or debt securities of 1st Independence or 1st Bank, by which 1st Independence is or may become bound. 1st Independence does not have any outstanding contractual or other obligation to repurchase, redeem or otherwise acquire any of the issued and outstanding shares of 1st Independence Common Stock. To the knowledge of 1st Independence and 1st Bank, there are no voting trusts, voting arrangements, buy-sell agreements or similar arrangements affecting the capital stock of either of them.

(d)                                  Except as set forth in the Disclosure Schedule, 1st Independence has no knowledge of any person or entity which beneficially owns (as defined in Rule 13d-3 under the 1934 Act) 5% or more of its outstanding shares of common stock.

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3.04.        Organizational Documents .   The Articles of Incorporation and By-Laws of 1st Independence and the Articles of Incorporation and By-Laws of 1st Bank, representing true, accurate and complete copies of such corporate documents in effect as of the date of this Agreement, have been delivered to MainSource and are included in the Disclosure Schedule.

3.05.        Compliance with Law .   (a) Neither 1st Independence nor 1st Bank is currently in violation of, and since January 1, 2002, neither has been in violation of, of any local, state, federal or foreign law, statute, regulation, rule, ordinance, order, restriction or requirement, and neither is in violation of any order, injunction, judgment, writ or decree of any court or government agency or body, except where such violation would not have a Material Adverse Effect. 1st Independence and 1st Bank possess and hold all licenses, franchises, permits, certificates and other authorizations necessary for the continued conduct of their business without interference or interruption, except where the failure to possess and hold the same would not have a Material Adverse Effect, and to the knowledge of 1st Independence, such licenses, franchises, permits, certificates and authorizations are transferable (to the extent required) to MainSource at the Effective Time without any restrictions or limitations thereon or the need to obtain any consents of government agencies or other third parties other than as set forth in this Agreement.

(b)           Set forth on the Disclosure Schedule is a list of all agreements, understandings and commitments with, and all orders and directives of, all government regulatory agencies or authorities with respect to the financial condition, results of operations, business, assets or capital of 1st Independence or 1st Bank which presently are binding upon or require action by, or at any time during the last five (5) years have been binding upon or have required action by, 1st Independence or 1st Bank, and all documents relating thereto have been made available to MainSource, including, without limitation, all correspondence, written communications and written commitments related thereto. There are no refunds or restitutions required to be paid as a result of any criticism of any regulatory agency or body cited in any examination report of 1st Independence or 1st Bank as a result of an examination by any regulatory agency or body, or set forth in any accountant’s or auditor’s report to 1st Independence or 1st Bank.

(c)           Since the enactment of the Sarbanes-Oxley Act, 1st Independence has been and is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act. The Disclosure Schedule sets forth, as of the date hereof, a schedule of all officers and directors of 1st Independence who have outstanding loans from 1st Independence or 1st Bank, or any other subsidiary of either, and there has been no default on, or forgiveness or waiver of, in whole or in part, any such loan during the two (2) years immediately preceding the date hereof.

(d)           All of the existing offices and branches of 1st Bank have been legally authorized and established in accordance with all applicable federal, state and local laws, statutes, regulations, rules, ordinances, orders, restrictions and requirements, except such as would not have a Material Adverse Effect. 1st Bank has no approved but unopened offices or branches.

3.06.        Accuracy of Statements Made and Materials Provided to MainSource .   No representation, warranty or other statement made, or any information provided, by 1st Independence or 1st Bank in this Agreement or the Disclosure Schedule (and any update thereto)

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and no written information which has been or shall be supplied by 1st Independence or 1st Bank with respect to its financial condition, results of operations, business, assets, capital or directors and officers for inclusion in the proxy statement-prospectus relating to the Merger, contains or shall contain (in the case of information relating to the proxy statement-prospectus at the time it is first mailed to 1st Independence’s shareholders) any untrue statement of material fact or omits or shall omit to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they are made, not false or misleading, except that no representation or warranty has been made by 1st Independence or 1st Bank with respect to statements made or incorporated by reference in the Form S-4 or the proxy statement-prospectus therein based on information supplied by MainSource specifically for inclusion or incorporation by reference in the Form S-4 or the proxy statement-prospectus therein.

3.07.        Litigation and Pending Proceedings .   Except as set forth in the Disclosure Schedule:

(a)           Except for lawsuits involving collection of delinquent accounts, there are no claims, actions, suits, proceedings, mediations, arbitrations or investigations pending and served against 1st Independence or 1st Bank or, to the knowledge of 1st Independence or 1st Bank, threatened in any court or before any government agency or authority, arbitration panel or otherwise against 1st Independence or 1st Bank.  1st Independence does not have knowledge of a basis for any claim, action, suit, proceeding, litigation, arbitration or investigation against 1st Independence or 1st Bank.

(b)           Neither 1st Independence nor 1st Bank is: (i) subject to any outstanding judgment, order, writ, injunction or decree of any court, arbitration panel or governmental agency or authority; (ii) presently charged with or, to the knowledge of 1st Independence or 1st Bank, under governmental investigation with respect to, any actual or alleged violations of any law, statute, rule, regulation or ordinance; or (iii) the subject of any pending or, to the knowledge of 1st Independence or 1st Bank, threatened proceeding by any government regulatory agency or authority having jurisdiction over their respective business, assets, capital, properties or operations.

3.08.        Financial Statements and Reports .   (a) 1st Independence has delivered to MainSource copies of the following financial statements and reports of 1st Independence and 1st Bank, including the notes thereto (collectively, the “1st Independence Financial Statements”):

(i)         Consolidated Balance Sheets and the related Consolidated Statements of Income and Consolidated Statements of Changes in Shareholders’ Equity of 1st Independence as of and for the fiscal years ended December 31, 2006 and 2005 and as of and for the nine months ended September 30, 2007;

(ii)       Consolidated Statements of Cash Flows of 1st Independence for the fiscal years ended December 31, 2006 and 2005 and for the nine months ended September, 2007;

(iii)      Call Reports (“Call Reports”) for 1st Bank as of the close of business on December 31, 2006 and 2005 and for the twelve months ended December 31, 2007;

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(b)           The 1st Independence Financial Statements present fairly the consolidated financial position of 1st Independence as of and at the dates shown and the consolidated results of operations for the periods covered thereby and are complete, correct, represent bona fide transactions, and have been prepared from the books and records of 1st Independence and its subsidiaries. The 1st Independence Financial Statements described in clauses (i) and (ii) above for completed fiscal years are audited financial statements and have been prepared in conformance with generally accepted accounting principles applied on a consistent basis, except as may otherwise be indicated in any accountants’ notes or reports with respect to such financial statements.

(c)           Since September 30, 2007 on a consolidated basis 1st Independence and its subsidiaries have not incurred any material liability other than in the ordinary course of business consistent with past practice.

3.09.        Properties, Contracts, Employees and Other Agreements .   (a) Set forth in the Disclosure Schedule are true, accurate and complete copies of the following:

(i)         A brief description and the location of all real property owned by 1st Independence or 1st Bank (other than Other Real Estate Owned (“OREO”)), together with a legal description of such real property and, within sixty (60) days of the date of this Agreement, 1st Independence will make available to MainSource a title insurance policy insuring the same, a survey drawing of any parcel of real property owned by 1st Independence or 1st Bank and an appraisal of such property, the fees for which shall be paid by MainSource prior to the Closing Date;

(ii)       All conditional sales contracts or other title retention agreements relating to 1st Independence or 1st Bank and agreements for the purchase of federal funds;

(iii)      All agreements, contracts, leases, licenses, lines of credit, understandings, commitments or obligations of 1st Independence or 1st Bank which individually or in the aggregate:

(A)               involve payment or receipt by 1st Independence or 1st Bank (other than as disbursements of loan proceeds to customers, loan payments by customers or customer deposits and other customer loan and deposit transactions) of more than $50,000;

(B)                 involve payments based on profits of 1st Independence or 1st Bank;

(C)                 relate to the purchase of goods, products, supplies or services in excess of $25,000;

(D)                were not made in the ordinary course of business and involve payment or receipt by 1st Independence or 1st Bank of more than $25,000;

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(E)                  may not be terminated without penalty at-will or upon notice of ninety (90) days or less; or

(F)                  involve the employment of, or payment to, any present or former directors, officers, employees or consultants relating to their services as such with 1st Independence; and

(iv)       The name and current annual salary of each director, officer and employee of 1st Independence or 1st Bank whose current annual salary is in excess of $50,000, and the profit sharing, bonus or other form of compensation (other than salary) paid or payable by 1st Independence or 1st Bank to or for the benefit of each such person for the fiscal year ended December 31, 2007, and any employment, severance or deferred compensation agreement or arrangement with respect to each such person.

(b)           1st Independence has, prior to the date of this Agreement, provided or given access to MainSource to the files and documentation in its possession relating to all borrowers of 1st Bank, or persons or entities that are or may become obligated to 1st Bank under an existing letter of credit, line of credit, loan transaction, loan agreement, promissory note or other commitment of 1st Bank, in excess of $25,000 individually or in the aggregate with respect to such borrower, whether in principal, interest or otherwise, and including all guarantors of such indebtedness.

(c)           Each of the agreements, contracts, commitments, leases, instruments and documents set forth in the Disclosure Schedule relating to this Section 3.09 is valid and enforceable against 1st Independence or 1st Bank, as the case may be, in accordance with its terms, except to the extent limited by general principles of equity and public policy or by bankruptcy, insolvency, fraudulent transfer, readjustment of debt or other laws of general application relative to or affecting the enforcement of creditor’s rights. 1st Independence and 1st Bank is, and to its knowledge, all other parties thereto are, in material compliance with the provisions thereof, and neither 1st Independence nor 1st Bank is, and to its knowledge, no other party thereto is, in default in the performance, observance or fulfillment of any material obligation, covenant or provision contained therein. Except as set forth in the Disclosure Schedule, none of the foregoing requires the consent of any party to its assignment in connection with the Merger contemplated by this Agreement.

(d)           Neither 1st Independence nor 1st Bank is in default under or in breach of or, to the knowledge of 1st Independence or 1st Bank, alleged to be in default under or in breach of, any material loan or credit agreement, conditional sales contract or other title retention agreement, security agreement, bond, indenture, mortgage, license, contract, lease, commitment or any other instrument or obligation.

(e)           The Disclosure Schedule sets forth a good faith estimate by 1st Bank of the expected costs to terminate 1st Bank’s data processing contracts with Computer Services, Inc. and Digital Insights assuming such contracts are terminated as of October 31, 2008.

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3.10.        Absence of Undisclosed Liabilities .   Except as provided in the 1st Independence Financial Statements or in the Disclosure Schedule, except for unfunded loan commitments and obligations on letters of credit to customers of 1st Bank made in the ordinary course of business, except for trade payables incurred in the ordinary course of 1st Bank’s business, and except for the transactions contemplated by this Agreement and obligations for services rendered pursuant thereto, or any other transactions which would not result in a material liability, neither 1st Independence nor 1st Bank has, nor will have at the Effective Time, any obligation, agreement, contract, commitment, liability, lease or license which exceeds $50,000 individually, or any obligation, agreement, contract, commitment, liability, lease or license made outside of the ordinary course of business, nor does there exist any circumstances resulting from transactions effected or events occurring on or prior to the date of this Agreement or from any action omitted to be taken during such period which could reasonably be expected to result in any such obligation, agreement, contract, commitment, liability, lease or license. Neither 1st Independence nor 1st Bank is delinquent in the payment of any amount due pursuant to any trade payable, and each has properly accrued for such payables in accordance with generally accepted accounting principles.

3.11.    Title to Assets .  Except as described in this Section 3.11 or the Disclosure Schedule:

(a)           1st Independence or 1st Bank, as the case may be, has good and marketable title in fee simple absolute to all real property (including, without limitation, all real property used as bank premises and all other real estate owned) which is reflected in the 1st Independence Financial Statements as of September 30, 2007; good and marketable title to all personal property reflected in the 1st Independence Financial Statements as of September 30, 2007, other than personal property disposed of in the ordinary course of business since September 30, 2007; good and marketable title to or right to use by valid and enforceable lease or contract all other properties and assets (whether real or personal, tangible or intangible) which 1st Independence or 1st Bank purports to own or which 1st Independence or 1st Bank uses in its respective business and which are in either case material to its respective business; good and marketable title to, or right to use by terms of a valid and enforceable lease or contract, all other property used in its respective business to the extent material thereto; and good and marketable title to all material property and assets acquired and not disposed of or leased since September 30, 2007. All of such properties and assets are owned by 1st Independence or 1st Bank free and clear of all land or conditional sales contracts, mortgages, liens, pledges, restrictions, options, security, interests, charges, claims, rights of third parties or encumbrances of any nature except: (i) as set forth in the Disclosure Schedule; (ii) as specifically noted in reasonable detail in the 1st Independence Financial Statements; (iii) statutory liens for taxes not yet delinquent or being contested in good faith by appropriate proceedings; (iv) pledges or liens required to be granted in connection with the acceptance of government deposits or granted in connection with repurchase or reverse repurchase agreements; and (v) easements, encumbrances and liens of record, imperfections of title and other limitations which are not material in amounts to 1st Independence on a consolidated basis and which do not detract from the value or materially interfere with the present or contemplated use of any of the properties subject thereto or otherwise materially impair the use thereof for the purposes for which they are held or used. All real property owned or, to 1st Independence’s knowledge, leased by 1st Independence or 1st Bank is in compliance in

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all material respects with all applicable zoning and land use laws.  All real property, machinery, equipment, furniture and fixtures owned or leased by 1st Independence or 1st Bank that is material to their respective businesses is structurally sound, in good operating condition (ordinary wear and tear excepted) and has been and is being maintained and repaired in the ordinary condition of business.

(b)           With respect to all real property presently or formerly owned, leased or used by 1st Independence or 1st Bank, 1st Independence and 1st Bank and to 1st Independence’s knowledge each of the prior owners, have conducted their respective business in compliance with all federal, state, county and municipal laws, statutes, regulations, rules, ordinances, orders, directives, restrictions and requirements relating to, without limitation, responsible property transfer, underground storage tanks, petroleum products, air pollutants, water pollutants or storm water or process waste water or otherwise relating to the environment, air, water, soil or toxic or hazardous substances or to the manufacturing, recycling, handling, processing, distribution, use, generation, treatment, storage, disposal or transport of any hazardous or toxic substances or petroleum products (including polychlorinated biphenyls, whether contained or uncontained, and asbestos-containing materials, whether friable or not), including, without limitation, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the Occupational Health and Safety Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and the Superfund Amendments and Reauthorization Act of 1986, all as amended, and regulations of the Environmental Protection Agency, the Nuclear Regulatory Agency, the Army Corp of Engineers, the Department of Interior, the United States Fish and Wildlife Service and any state department of natural resources or state environmental protection agency now or at any time thereafter in effect (collectively, “Environmental Laws”). There are no pending or, to the knowledge of 1st Independence or 1st Bank, threatened, claims, actions or proceedings by any local municipality, sewage district or other governmental entity against 1st Independence or 1st Bank with respect to the Environmental Laws, and to 1st Independence’s knowledge there is no reasonable basis or grounds for any such claim, action or proceeding. No environmental clearances are required for the conduct of the business of 1st Independence or 1st Bank as currently conducted or the consummation of the Merger contemplated hereby. To 1st Independence’s knowledge, neither 1st Independence nor 1st Bank is the owner, or has been in the chain of title or the operator or lessee, of any property on which any substances have been used, stored, deposited, treated, recycled or disposed of, which substances if known to be present on, at or under such property would require clean-up, removal, treatment, abatement, response costs, or any other remedial action under any Environmental Law. To 1st Independence’s knowledge, neither 1st Independence nor 1st Bank has any liability for any clean-up or remediation under any of the Environmental Laws with respect to any real property.

3.12.        Loans and Investments .

(a)           Except as set forth in the Disclosure Schedule, there is no loan by 1st Bank in excess of $25,000 that has been classified by regulatory examiners or management as “Other Loans Specially Mentioned,” “Substandard,” “Doubtful” or “Loss” or in excess of $25,000 that has been identified by accountants or auditors (internal or external) as having a significant risk of

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uncollectability. The most recent loan watch list of 1st Bank and a list of all loans in excess of $25,000 which 1st Bank has determined to be thirty (30) days or more past due with respect to principal or interest payments or has placed on nonaccrual status are set forth in the Disclosure Schedule.

(b)           All loans reflected in the 1st Independence Financial Statements as of September 30, 2007, and which have been made, extended, renewed, restructured, approved, amended or acquired since September 30, 2007: (i) have been made for good, valuable and adequate consideration in the ordinary course of business; (ii) constitute the legal, valid and binding obligation of the obligor and any guarantor named therein, except to the extent limited by general principles of equity and public policy or by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium, readjustment of debt or other laws of general application relative to or affecting the enforcement of creditors’ rights; (iii) are evidenced by notes, instruments or other evidences of indebtedness which are true, genuine and what they purport to be; and (iv) are secured, to the extent that 1st Bank has a security interest in collateral or a mortgage securing such loans, by perfected security interests or recorded mortgages naming 1st Bank as the secured party or mortgagee (unless by written agreement to the contrary).

(c)           The reserves, the allowance for possible loan and lease losses and the carrying value for real estate owned which are shown on the 1st Independence Financial Statements are, in the judgment of management of 1st Independence and 1st Bank, adequate in all material respects under the requirements of generally accepted accounting principles applied on a consistent basis to provide for possible losses on items for which reserves were made, on loans and leases outstanding and real estate owned as of the respective dates.

(d)           Except as set forth in the Disclosure Schedule, none of the investments reflected in the 1st Independence Financial Statements as of and for the period ended September 30, 2007, and none of the investments made by 1st Bank since September 30, 2007 are subject to any restriction, whether contractual or statutory, which materially impairs the ability of 1st Bank to dispose freely of such investment at any time. 1st Bank is not a party to any repurchase agreements with respect to securities.

(e)           Set forth in the Disclosure Schedule is a true, accurate and complete list of all loans in which 1st Bank has any participation interest in excess of $125,000 or which have been made with or through another financial institution on a recourse basis against 1st Bank.

(f)            Except as set forth in the Disclosure Schedule, and except for customer deposits and ordinary trade payables, 1st Bank has not, nor will it have at the Effective Time, any indebtedness for borrowed money.

3.13.        Shareholder Rights Plan and Anti-takeover Mechanisms .   1st Independence has taken all actions required to exempt MainSource, the Agreement and the Merger from any provisions of an anti-takeover nature contained in its organizational documents, any shareholder rights plan or similar plan, and the provisions of any “anti-takeover,” “fair price,” “moratorium,” “control share acquisition” or similar laws or regulations to which 1st Independence is subject.

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3.14.        Employee Benefit Plans .

(a)           With respect to the employee benefit plans, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), sponsored or otherwise maintained by 1st Independence or 1st Bank, whether written or oral, in which 1st Independence or 1st Bank participates as a participating employer, or to which 1st Independence or 1st Bank contributes, or any nonqualified employee benefit plans or deferred compensation, bonus, stock or incentive plans, or other employee benefit or fringe benefit programs for the benefit of former or current employees or directors (or their beneficiaries or dependents) of 1st Independence or 1st Bank, and including any such plans, to 1st Independence’s knowledge, which have been terminated, merged into another plan, frozen or discontinued since January 1, 2001 (collectively, “1st Independence Plans”), except as set forth in the Disclosure Schedule:

(i)         all such 1st Independence Plans have, on a continuous basis since their adoption, been, in all material respects, maintained in compliance with the requirements prescribed by all applicable statutes, orders and governmental rules or regulations, including, without limitation, ERISA and the Department of Labor (“Department”) Regulations promulgated thereunder and the Code and Treasury Regulations promulgated thereunder;

(ii)       all 1st Independence Plans intended to constitute tax-qualified plans under Section 401(a) of the Code have complied since their adoption or have been timely amended to comply in all material respects with all applicable requirements of the Code and the Treasury Regulations promulgated thereunder;

(iii)       except for the 1st Independence Employee Stock Ownership and 401(k) Plan (the “1 ^st Independence KSOP”), no 1st Independence Plan (or its related trust) holds any stock or other securities of 1st Independence;

(iv)       neither 1st Independence nor 1st Bank nor, to the knowledge of 1st Independence, any other fiduciary of any 1 ^st Independence Plan has engaged in any transaction that may subject 1st Independence or 1st Bank, or any 1st Independence Plan, to a civil penalty imposed by Section 502 or any other provision of ERISA or excise taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of the Code with respect to any 1st Independence Plan;

(v)        all obligations required to be performed by 1st Independence or 1st Bank under any provision of any 1st Independence Plan have been performed by it in all material respects and it is not in default under or in violation of any provision of any 1st Independence Plan;

(vi)      to the knowledge of 1st Independence, no event has occurred which would constitute grounds for an enforcement action by any party under Part 5 of Title I of ERISA with respect to any 1st Independence Plan;

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(vii)   there are no examinations, audits, enforcement actions or proceedings, or any other investigations, pending, threatened or currently in process by any governmental agency involving any 1 ^st Independence Plan;

(viii)  there are no actions, suits, proceedings or claims pending (other than routine claims for benefits) or, to the knowledge of 1st Independence or 1st Bank, threatened, against 1st Independence or 1st Bank in connection with  any 1st Independence Plan or the assets of any 1st Independence Plan;

(ix)     any 1st Independence Plan may be terminated at any time and this right has always been maintained by 1st Independence or 1st Bank.

(b)      1st Independence has provided or made available to MainSource true, accurate and complete copies and, in the case of any plan or program which has not been reduced to writing, a materially complete summary, of all of the following, as applicable:

(i)       pension, retirement, profit-sharing, savings, stock purchase, stock bonus, stock ownership, stock option and stock appreciation right plans, all amendments thereto, and, if required under the reporting and disclosure requirements of ERISA, all amendments thereto and all summary plan descriptions thereof (including any modifications thereto);

(ii)      all employment, deferred compensation (whether funded or unfunded), salary continuation, consulting, bonus, severance and collective bargaining, agreements, arrangements or understandings;

(iii)     all executive and other incentive compensation plans, programs and agreements;

(iv)    all group insurance and health insurance contracts, policies or plans;

(v)     all other incentive, welfare or employee benefits plans, understandings, arrangements or agreements, maintained or sponsored, participated in, or contributed to by 1st Independence for its current or former directors, officers or employees;

(vi)    all reports filed with the Internal Revenue Service (“Service”) or the Department within the preceding three years by 1st Independence or 1st Bank with respect to any 1st Independence Plan;

(vii)   descriptions of all current participants in such plans and programs and all participants with benefit entitlements under such plans and programs; and

(viii)  valuations or allocation reports for any defined contribution plan, including the 1st Independence KSOP, as of the most recent date.

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(c)           Except as set forth on the Disclosure Schedule, no current or former director, officer or employee of 1st Independence or 1st Bank (i) is entitled to or may become entitled to any benefit under any welfare benefit plans (as defined in Section 3(1) of ERISA) after termination of employment with 1st Independence or 1st Bank, except to the extent that such individuals may be entitled to continue their group health care coverage pursuant to Section 4980B of the Code, or (ii) is currently receiving, or entitled to receive, a disability benefit under a long-term or short-term disability plan maintained by 1st Independence or 1st Bank.

(d)           The Financial Institutions Retirement Fund (“Benefit Plan”) is the only defined benefit pension plan maintained by 1st Independence or 1st Bank or their predecessor which is subject to Title IV of ERISA. Other than the Benefit Plan, no 1st Independence Plan is, and neither 1st Independence nor 1st Bank has any liability with respect to any plan that is, (i) a defined benefit pension plan subject to Title IV of ERISA, (ii) a pension plan subject to Section 302 of ERISA or Section 412 of the Code, or (iii) a multi-employer pension plan (as that term is defined in Sections 4001(a)(3) and 3(37) of ERISA).

(e)           With respect to any group health plan (as defined in Section 607(1) of ERISA) sponsored or maintained by 1st Independence or 1st Bank, no director, officer, employee or agent of 1st Independence or 1st Bank has engaged in any action or failed to act in such a manner that, as a result of such action or failure to act, would cause a tax to be imposed on 1st Independence or 1st Bank under Code Section 4980B(a). With respect to all such plans, all applicable provisions of Section 4980B of the Code and Sections 601-606 of ERISA have been complied with in all material respects by 1st Independence or 1st Bank.

(f)            Except as otherwise provided in the Disclosure Schedule, there are no collective bargaining, employment, management, consulting, deferred compensation, reimbursement, indemnity, retirement, early retirement, severance or similar plans or agreements, commitments or understandings, or any employee benefit or retirement plan or agreement, binding upon 1st Independence or 1st Bank and no such agreement, commitment, understanding or plan is under discussion or negotiation by management with any employee or group of employees, any member of management or any other person.

(g)           Except as otherwise provided in the Disclosure Schedule, no Voluntary Employees’ Beneficiary Association (“VEBA”) as defined in Code Section 501(c)(9) is sponsored or maintained by 1st Independence or 1st Bank.

(h)           Except as otherwise provided in the Disclosure Schedule or as contemplated in this Agreement, there are no benefits or liabilities under any employee benefit plan or program that will be accelerated as a result of the transactions contemplated by the terms of this Agreement.

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(i)            Except as may be disclosed in the Disclosure Schedule, 1st Independence and 1st Bank are and have been in material compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, including, without limitation, any such laws respecting employment discrimination and occupational safety and health requirements.

(k)           All liabilities of the Benefit Plan have been funded on the basis of consistent methods in accordance with sound actuarial assumptions and practices, and at the end of any plan year, the Benefit Plan does not and has not previously had an accumulated funding deficiency. No actuarial assumptions have been changed since the last written report of actuaries on the Benefit Plan. All insurance premiums (including premiums to the Pension Benefit Guaranty Corporation) have been paid in full, subject only to normal retrospective adjustments in the ordinary course. 1st Independence and 1st Bank have no contingent or actual liabilities under Title IV of ERISA. No accumulated funding deficiency (within the meaning of Section 302 of ERISA or Section 412 of the Code) has been incurred with respect to any of the 1st Independence Plans, whether or not waived, nor does 1st Independence have any liability or potential liability as a result of the under funding of, or termination of any plan by 1st Independence or by any person which may be aggregated with 1st Independence for purposes of Section 412 of the Code. No reportable event (as defined in Section 4043 of ERISA) has occurred with respect to the Benefit Plan as to which a notice would be required to be filed with the Pension Benefit Guaranty Corporation.

(l)            As a result, directly or indirectly, of the transactions contemplated by this Agreement (including, without limitation, any termination of employment relating thereto and occurring prior to, at or following the Effective Time), 1st Independence, 1st Bank, and their respective successors will not be obligated to make a payment that would be characterized as an “excess parachute payment” to an individual who is a “disqualified individual” (as such terms are defined in Section 280G of the Code). Among the nonexclusive list of payments to be considered are those payments referred to under Sections 2.01(b), 5.14, 5.15, 5.16, 5.18, 5.19, 6.03(b), and 6.05 of the Agreement, as well as any other payments made under the 1st Independence Plans because of the transactions contemplated herein.

3.15.        Obligations to Employees .  All accrued obligations and liabilities of and all payments by 1st Independence or 1st Bank and all 1st Independence Plans, whether arising by operation of law, by contract or by past custom, for payments to trusts or other funds, to any government agency or authority or to any present or former director, officer, employee or agent (or his or her heirs, legatees or legal representatives) have been and are being paid to the extent required by applicable law or by the plan, trust, contract or past custom or practice, and adequate actuarial accruals and reserves for such payments have been and are being made by 1st Independence or 1st Bank in accordance with generally accepted accounting principles and applicable law applied on a consistent basis and actuarial methods with respect to the following: (a) withholding taxes, unemployment compensation or social security benefits; (b) all pension, profit-sharing, savings, stock purchase, stock bonus, stock ownership, stock option and stock appreciation rights plans and agreements; (c) all employment, deferred compensation (whether funded or unfunded), salary continuation, consulting, retirement, early retirement, severance, reimbursement, bonus or collective bargaining plans and agreements; (d) all executive and other

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incentive compensation plans, programs, or agreements; (e) all group insurance and health contracts, policies and plans; and (f) all other incentive, welfare (including, without limitation, vacation and sick pay), retirement or employee benefit plans or agreements maintained or sponsored, participated in, or contributed to by 1st Independence or 1st Bank for its current or former directors, officers, employees and agents, including, without limitation, all liabilities and obligations to the 1st Independence Plans (as defined in Section 3.14(a) hereof). All obligations and liabilities of 1st Independence or 1st Bank, whether arising by operation of law, by contract or by past custom or practice, for all other forms of compensation which are or may be payable to its current or former directors, officers, employees or agents or to any 1st Independence Plan have been and are being paid to the extent required by applicable law or by the plan or contract, and adequate actuarial accruals and reserves for payment therefore have been and are being made by 1st Independence or 1st Bank in accordance with generally accepted accounting and actuarial principles applied on a consistent basis. All accruals and reserves referred to in this Section 3.15 are correctly and accurately reflected and accounted for in all material respects in the 1st Independence Financial Statements and the books, statements and records of 1st Independence.

3.16.        Taxes, Returns and Reports .   Except as set forth in the Disclosure Schedule, each of 1st Independence and 1st Bank has since January 1, 2003 (a) duly and timely filed all federal, state, local and foreign tax returns of every type and kind required to be filed, and each such return is true, accurate and complete in all material respects; (b) paid or otherwise adequately reserved in accordance with generally accepted accounting principles for all taxes, assessments and other governmental charges due or claimed to be due upon it or any of its income, properties or assets; and (c) not requested an extension of time for any such payments (which extension is still in force). 1st Independence has established, and shall establish in the Subsequent 1st Independence Financial Statements (as hereinafter defined), in accordance with generally accepted accounting principles, a reserve for taxes in the 1st Independence Financial Statements adequate to cover all of 1st Independence’s and 1st Bank’s tax liabilities (including, without limitation, income taxes, payroll taxes and withholding, and franchise fees) for the periods then ending.  Neither 1st Independence nor 1st Bank has, nor will either have, any liability for material taxes of any nature for or with respect to the operation of its business, from the date hereof up to and including the Effective Time, except to the extent set forth in the Subsequent 1st Independence Financial Statements (as hereinafter defined) or as accrued or reserved for on the books and records of 1st Independence or 1st Bank. To the knowledge of 1st Independence, neither 1st Independence nor 1st Bank is currently under audit by any state or federal taxing authority.  No federal, state or local tax returns of 1st Independence or 1st Bank have been audited by any taxing authority during the past five (5) years.

3.17.        Deposit Insurance .   The deposits of 1st Bank are insured by the Federal Deposit Insurance Corporation in accordance with the Federal Deposit Insurance Act, as amended, to the fullest extent provided by applicable law and 1st Independence or 1st Bank has paid or properly reserved or accrued for all current premiums and assessments with respect to such deposit insurance.

3.18.        Insurance .   Set forth in the Disclosure Schedule is a list and brief description of all policies of insurance (including, without limitation, bankers’ blanket bond, directors’ and officers’ liability insurance, property and casualty insurance, group health or hospitalization

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insurance and insurance providing benefits for employees) owned or held by 1st Independence or 1st Bank on the date hereof or with respect to which 1st Independence or 1st Bank pays any premiums. Each such policy is in full force and effect and all premiums due thereon have been paid when due, and a true, accurate and complete copy thereof has been made available to MainSource prior to the date hereof.

3.19.        Books and Records .   The books and records of 1st Independence are, in all material respects,  complete, correct and accurately reflect the basis for the financial condition, results of operations, business, assets and capital of 1st Independence on a consolidated basis set forth in the 1st Independence Financial Statements.

3.20.        Broker’s, Finder’s or Other Fees .   Except for reasonable fees and expenses of 1st Independence’ attorneys, accountants and investment bankers, all of which shall be paid by 1st Independence at or prior to the Effective Time, except as set forth in the Disclosure Schedule, no agent, broker or other person acting on behalf of 1st Independence or 1st Bank or under any authority of 1st Independence or 1st Bank is or shall be entitled to any commission, broker’s or finder’s fee or any other form of compensation or payment from any of the parties hereto relating to this Agreement and the Merger contemplated hereby.

3.21.        Disclosure Schedule and Documents .  All written data, documents, materials and information referred to in this Agreement and delivered by 1st Independence or 1st Bank pursuant to the Disclosure Schedule which were prepared by 1st Independence or 1st Bank, and with respect to any such data, documents, materials and information that have been prepared by third parties, to the knowledge of 1st Independence and 1st Bank such written data, documents, materials and information, are true, accurate and complete in all material respects as of the date hereof and with respect to such items prepared by 1st Independence or 1st Bank and delivered subsequent to the date hereof with any updates to the Disclosure Schedule, will be true, accurate and complete in all material respects on the date of delivery thereof.

3.22.        Interim Events .   Except as otherwise permitted hereunder, since September 30, 2007, or as set forth in the Disclosure Schedule, neither 1st Independence nor 1st Bank has:

(a)        Suffered any changes having a Material Adverse Effect;

(b)        Suffered any damage, destruction or loss to any of its properties, not fully paid by insurance proceeds, in excess of $10,000 individually or in the aggregate;

(c)        Declared, distributed or paid any dividend or other distribution to its shareholders, except for payment of dividends as permitted by Section 5.03(a)(iii) hereof;

(d)        Repurchased, redeemed or otherwise acquired shares of its common stock, issued any shares of its common stock or stock appreciation rights or sold or agreed to issue or sell any shares of its common stock or any right to purchase or acquire any such stock or any security convertible into such stock or taken any action to reclassify, recapitalize or split its stock;

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(e)        Granted or agreed to grant any increase in benefits payable or to become payable under any pension, retirement, profit sharing, health, bonus, insurance or other welfare benefit plan or agreement to employees, officers or directors of 1st Independence or 1st Bank except pursuant to the express terms thereof or otherwise in the ordinary course of business;

(f)         Increased the salary of any director, officer or employee, except for normal increases in the ordinary course of business and in accordance with past practices, or entered into any employment contract, indemnity agreement or understanding with any officer or employee or installed any employee welfare, pension, retirement, stock option, stock appreciation, stock dividend, profit sharing or other similar plan or arrangement;

(g)        Leased, sold or otherwise disposed of any of its assets except in the ordinary course of business or leased, purchased or otherwise acquired from third parties any assets except in the ordinary course of business;

(h)        Except for the Merger contemplated by this Agreement, merged, consolidated or sold shares of its common stock, agreed to merge or consolidate with or into any third party, agreed to sell any shares of its common stock or acquired or agreed to acquire any stock, equity interest, assets or business of any third party;

(i)         Incurred, assumed or guaranteed any obligation or liability (fixed or contingent) other than obligations and liabilities incurred in the ordinary course of business;

(j)         Mortgaged, pledged or subjected to a lien, security interest, option or other encumbrance any of its assets except for tax and other liens which arise by operation of law and with respect to which payment is not past due and except for pledges or liens: (i) required to be granted in connection with acceptance by 1st Bank of government deposits; or (ii) granted in connection with repurchase or reverse repurchase agreements;

(k)        Except as set forth in the Disclosure Schedule, canceled, released or compromised any loan, debt, obligation, claim or receivable other than in the ordinary course of business;

(l)         Entered into any transaction, contract or commitment other than in the ordinary course of business;

(m)      Agreed to enter into any transaction for the borrowing or loaning of monies, other than in the ordinary course of its lending business; or

(n)        Conducted its business in any manner other than substantially as it was being conducted through September 30, 2007.

3.23.        1st Independence Securities and Exchange Commission Filings .   1st Independence has filed all reports and other documents required to be filed by it under the Securities Exchange Act of 1934 and the Securities Act of 1933, including 1st Independence’s Annual Report on Form 10-K for the year ended December 31, 2006 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2007. All such Securities and Exchange

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Commission filings were true, accurate and complete in all material respects as of the dates of the filings, and no such filings contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements, at the time and in the light of the circumstances under which they were made, not false or misleading.

3.24.        Insider Transactions .  Except as set forth on the Disclosure Schedule, since December 31, 2004, no officer or director of 1st Independence or 1st Bank or member of the “immediate family” or “related interests” (as such terms are defined in Regulation O) of any such officer or director (collectively, “1st Independence Insiders”), has currently, or has had during such time period, any direct or indirect interest in any property, assets, business or right which is owned, leased, held or used by 1st Independence and 1st Bank or in any liability, obligation or indebtedness of 1st Independence or 1st Bank.

3.25.        Indemnification Agreements .

(a)           Other than as set forth in the Disclosure Schedule, neither 1st Independence nor 1st Bank is a party to any indemnification, indemnity or reimbursement agreement, contract, commitment or understanding to indemnify any present or former director, officer, employee, shareholder or agent against liability or hold the same harmless from liability other than as expressly provided in the Articles of Incorporation or By-Laws of 1st Independence or the Articles of Incorporation or Bylaws of 1st Bank.

(b)           Since January 1, 2002, no claims have been made against or filed with 1st Independence or 1st Bank nor have, to the knowledge of 1st Independence, any claims been threatened against 1st Independence or 1st Bank, for indemnification against liability or for reimbursement of any costs or expenses incurred in connection with any legal or regulatory proceeding by any present or former director, officer, shareholder, employee or agent of 1st Independence or 1st Bank.

3.26.        Shareholder Approval .   The affirmative vote of the holders of a majority of the 1st Independence Common Stock (which are issued and outstanding on the record date relating to the meeting of shareholders) is required for shareholder approval of this Agreement and the Merger.

3.27.        Opinion of Financial Advisor .   The Board of Directors of 1st Independence, at a duly constituted and held meeting at which a quorum was present throughout, has been informed orally by Sandler O’Neil + Partners, L.P. that the terms of the Merger are fair to the shareholders of 1st Independence from a financial point of view.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF MAINSOURCE

On or prior to the date hereof, MainSource has delivered to 1st Independence a schedule (the “Disclosure Schedule”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a

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provision hereof or as an exception to one or more representations or warranties contained in this Article IV or to one or more of its covenants contained in Article VI.

For the purpose of this Agreement, and in relation to MainSource and its subsidiaries, a “Material Adverse Effect on MainSource” means any effect that (i) is material and adverse to the financial position, results of operations or business of MainSource and its subsidiaries taken as a whole, or (ii) would materially impair the ability of MainSource to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement; provided, however, that Material Adverse Effect on MainSource shall not be deemed to include the impact of (a) changes in banking and similar laws of general applicability to banks or savings associations or their holding companies or interpretations thereof by courts or governmental authorities, (b) changes in generally accepted accounting principles or regulatory accounting requirements applicable to banks, savings associations, or their holding companies generally, (c) any modifications or changes to valuation policies and practices in connection with the Merger or restructuring charges taken in connection with the Merger, in each case in accordance with generally accepted accounting principles, (d) changes in general level of interest rate (including the impact on the securities portfolios of MainSource or its subsidiaries) or conditions or circumstances that affect the banking industry generally, (e) the impact of the announcement of this Agreement and the transactions contemplated hereby, and compliance with this Agreement on the business, financial condition or results of operations of MainSource and its subsidiaries, (f) changes resulting from expenses (such as legal, accounting and investment bankers’ fees) incurred in connection with this Agreement or the transactions contemplated herein, and (g) the occurrence of any military or terrorist attack within the United States or any of its possessions or offices; provided that in no event shall a change in the trading price of the MainSource Common Stock, by itself, be considered to constitute a Material Adverse Effect on MainSource and its subsidiaries taken as a whole (it being understood that the foregoing proviso shall not prevent or otherwise affect a determination that any effect underlying such decline has resulted in a Material Adverse Effect).

For the purpose of this Agreement, and in relation to MainSource, “knowledge” means the actual knowledge of Robert Hoptry, James Anderson, Jeffrey Smith, Jack Parker, Daryl Tressler, Brent Hoptry and David Dippold.

Accordingly, MainSource represents and warrants to 1st Independence as follows, except as set forth in its Disclosure Schedule:

4.01.        Organization and Authority .   Each of MainSource and its subsidiaries is an entity duly organized and validly existing under the laws of its applicable state or country. MainSource and its subsidiaries have full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof. Each of MainSource and its subsidiaries is duly qualified to do business in each jurisdiction in which the nature of the business conducted or the properties or assets owned or leased by it make such qualification necessary except where the failure to so qualify would not have a Material Adverse Effect on MainSource.

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4.02.        Authorization .

(a)           MainSource has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder, subject to the fulfillment of the conditions precedent set forth in Section 7.01(e) and (f) hereof. As of the date hereof, MainSource is not aware of any reason why the approvals set forth in Section 7.01(e) will not be received in a timely manner and without the imposition of a condition, restriction or requirement of the type described in Section 7.02(e). This Agreement and its execution and delivery by MainSource has been duly authorized by the Board of Directors of MainSource. Assuming due execution and delivery by 1st Independence and 1st Bank, this Agreement constitutes a valid and binding obligation of MainSource, subject to the conditions precedent set forth in Section 7.01 hereof, and is enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, reorganization, liquidation, moratorium, readjustment of debt or other laws of general application relating to or affecting the enforcement of creditors’ rights.

(b)           Neither the execution of this Agreement nor consummation of the Merger contemplated hereby: (i) conflicts with or violates the Articles of Incorporation or By-Laws of MainSource or any of its subsidiaries; (ii) conflicts with or violates in any material respect any local, state, federal or foreign law, statute, ordinance, rule or regulation (provided that the approvals of or filings with applicable government regulatory agencies or authorities required for consummation of the Merger are obtained) or any court or administrative judgment, order, injunction, writ or decree; or (iii) conflicts with, results in a breach of or constitutes a material default under any note, bond, indenture, mortgage, deed of trust, license, contract, lease, agreement, arrangement, commitment or other instrument to which MainSource is subject or bound and which is material to MainSource on a consolidated basis.

(c)           Other than in connection or in compliance with applicable federal and state banking, securities, antitrust and corporation statutes, all as amended, and the rules and regulations promulgated thereunder, no notice to, filing with, exemption by or consent, authorization or approval of any governmental agency or body is necessary for the consummation by MainSource of the Merger contemplated by this Agreement.

4.03.        Capitalization .   (a) The authorized capital stock of MainSource as of the date hereof consists, and at the Effective Time will consist, of 25,000,000 shares of MainSource Common Stock, 18,570,139 of which shares are outstanding as of the date hereof, plus options to purchase a total of 275,837 shares of MainSource Common Stock as of December 31, 2007, and 400,000 shares of preferred stock, none of which are outstanding. Such issued and outstanding shares of MainSource Common Stock have been duly and validly authorized by all necessary corporate action of MainSource, are validly issued, fully paid and nonassessable and have not been issued in violation of any pre-emptive rights of any present or former MainSource shareholder. MainSource has no capital stock authorized, issued or outstanding other than as described in this Section 4.03(a) and has no intention or obligation to authorize or issue any other capital stock or any additional shares of MainSource Common Stock other than in connection with employee and director stock options under its existing stock option plans or as described in the Disclosure Schedule. Each share of MainSource Common Stock is entitled to one vote per

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share.  MainSource wholly owns the subsidiaries listed in the Disclosure Schedule which includes their names and jurisdictions of organization.

(b)           Except as set forth on the Disclosure Schedule, there are no options, warrants, commitments, calls, puts, agreements, understandings, arrangements or subscription rights relating to any shares of MainSource Common Stock, or any securities convertible into or representing the right to purchase or otherwise acquire any common stock or debt securities of MainSource, by which MainSource is or may become bound. MainSource does not have any outstanding contractual or other obligation to repurchase, redeem or otherwise acquire any of the issued and outstanding shares of MainSource Common Stock.

(c)           The shares of MainSource Common Stock issued as part of the Merger Consideration shall be when issued duly and validly authorized, validly issued, fully paid and non-assessable shares of MainSource Common Stock and will not be issued in violation of any pre-emptive rights of any present or former MainSource shareholder.

4.04.        Litigation and Pending Proceedings .   Except as set forth in the Disclosure Schedule:

(a)           Except for lawsuits involving collec