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Exhibit (a)(1)(T)
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
SECURITIES DIVISION
IN THE MATTER OF: CAUSE NO. 00-0226 CD
GREGORY M. SHEPARD and
AMERICAN UNION FINANCIAL CORPORATION
ADMINISTRATIVE COMPLAINT
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Comes now, the Securities Division (hereinafter "Division") and for its
Administrative Complaint against Gregory M. Shepard and American Union Financial
Corporation alleges and states the following:
1. At all times material to this matter, Gregory M. Shepard (hereinafter
"Shepard") was President and 50% owner of American Union Financial
Corporation.
2. At all times material to this matter, American Union Financial
Corporation (hereinafter "American Union") was organized in the State
of Illinois and a privately held Illinois corporation with a principal
place of in Bloomington, Illinois.
3. Meridian Insurance Group, Inc. (hereinafter "Meridian") is an Indiana
corporation with its principal place of business at 3955 North
Meridian Street, Indianapolis, Indiana 46202-1908.
4. Meridian has substantial assets in the State of Indiana.
5. Meridian has in excess of seventy-five (75) shareholders of its common
stock. Said common stock is listed on the New York Stock Exchange
under the symbol MIGI.
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6. In March 1999, Shepard issued a press release announcing that American
Union had made a partial tender offer to purchase up to 4.82% or 350,000
shares of Common Stock of Meridian.
7. The partial tender offer commenced on April 2, 1999, and was to remain open
until April 30, 1999.
8. During the time the tender offer was pending, Shepard, though American
Union, purchased shares at various times on the open market of the Common
Stock of Meridian for a total of 128,000 shares.
9. On or about September 20, 2000, the Securities and Exchange Commission
entered a cease and desist order, by consent, against Shepard for
purchasing shares of Meridian on the open market while his company,
American Union, had an outstanding partial tender offer for Meridian
shares.
10. Shepard and American Union failed to file the required takeover statement
with the Division
11. Shepard and American Union are offerors pursuant to Ind. Code (S) 23-2-3.1-
1 that defines offeror as "a person who makes or in any way participates in
making a takeover offer....."
12. Meridian is a target company pursuant to Ind. Code (S) 23-2-3.1-1, which
defines a target company as "an issuer of securities which is organized
under the laws of this state, has its principal place of business in this
state, and has substantial assets in this state....."
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13. Pursuant to Ind. Code (S) 23-2-3.1-2, "[a] person shall not make a takeover
offer unless the offer is in compliance with sections 3, 4, 5.5, 6.5, 7,
and 8 of this chapter."
14. Shepard and American Union are in violation of Ind. Code (S) 23-2-3.1-2.
15. Shepard and American Union are in violation of Ind. Code (S) 23-2-3.1-3.
16. Shepard and American Union are in violation of Ind. Code (S) 23-2-3.1-4.
17. Shepard and American Union are in violation of Ind. Code (S) 23-2-3.1-5.
18. Ind. Code (S) 23-2-3.1-9(a) provides "[t]his chapter shall be administered
by the secretary of state of Indiana by and through the commissioner, who
may exercise all powers granted to him under IC 23-2-1 [Securities
Regulation]."
19. Ind. Code (S) 23-2-3.1-10(a) provides [w]henever it appears to the
commissioner that any person has engaged or is about to engage in any act
or practice constituting a violation of any provision of this chapter or
any regulation or order adopted under this chapter, the commissioner may
investigate and issue orders and notices, including ex parte cease and
desist orders without notice........
20. Ind. Code (S) 23-2-3.1-0.5(a) and (b) provides that
(a) The general assembly find that it is often difficult for
corporate shareholders to obtain sufficient information to make
an informed and timely decision when faced with the questions of
accepting or rejecting a takeover offer. Moreover, there have
emerged a number of practices which have resulted in shareholders
of Indiana corporations losing the benefits of takeover offers
because they lacked the sophistication and ability to secure
those benefits. These practices have included multiple proration
pools, two-step transactions a similar practices, and have
resulted in relatively small shareholders losing both the
advantages of the takeover offer and their equity positions in
the corporation.
(b) By enacting this chapter, it is the intent and purpose of the
general assembly to provide for full and fair disclosure of all
material information concerning takeover offers to shareholders
of Indiana corporations, so that the opportunity of each
shareholder to make an informed and well-reasoned investment
decision may be secured. It is
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also the purpose of the general assembly to protect shareholders of
Indiana corporations from being disadvantaged by those practices
described in subsection (a). Finally, it is the purpose of the general
assembly to provide for adequate disclosure and that protection in a
manner consistent with the Constitutions of the United States and of
Indiana.
21. The actions and conduct by Shepard and American Union are contrary to and
incongruent with the findings and intent of the General Assembly as
outlined in the Indiana Business Take-Over Act.
22. That pursuant to Ind. Code (S) 23-2-1-17.1, the Commissioner may issue an
cease and desist order and assess costs of investigation against any person
who is engaged in or is about to engage in any act constituting a violation
of the Indiana Securities Act, Ind. Code (S) 23-2-1.
23. That it is in the public interest Respondents be ordered to cease and
desist from further violations of Ind. Code (S) 23-2-3.1.
24. That pursuant to Ind. Code (S) 23-2-1-19.5, the Commissioner may assess a
civil penalty in the amount of Ten Thousand Dollars ($10,000) for each
violation of the Act.
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WHEREFORE, the Division requests the Commissioner issue an order:
A. Directing all Respondents, including their officers, employees and agents
to immediately CEASE and DESIST from further violations of Ind. Code (S)
23-2-3.1;
B. Directing all Respondents including their officers, employees and agents to
comply with Ind. Code (S) 23-2-3.1 before proceeding with a takeover offer
of shares of Meridian;
C. Imposing a civil penalty of Ten Thousand Dollars ($10,000) for each
violation of Indiana Business Takeover Act; and,
D. Granting all other just and proper relief.
Respectfully submitted,
/s/ Kathleen Guymon Blackham
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Kathleen Guymon Blackham
Chief Deputy Commissioner
Securities Division
302 West Washington Street
Room E-111
Indianapolis, IN 46204
(317) 232-6681
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