Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [  ]

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

CALCULATION OF REGISTRATION FEE

          The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus and joint proxy statement is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus and joint proxy statement is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

          The boards of directors of Chemical Financial Corporation and Shoreline Financial Corporation are furnishing this prospectus and joint proxy statement to you as a shareholder of either Chemical or Shoreline to solicit your proxy to vote at a special meeting of Chemical or Shoreline shareholders to be held on _________, 2000 and ________, 2000, respectively, and at any adjournment or postponement of these meetings. At the Chemical special meeting, Chemical shareholders will vote upon (1) a proposed amendment to Article 3 of Chemical's Restated Articles of Incorporation and (2) approval of the Agreement and Plan of Merger with Shoreline. At the Shoreline special meeting, Shoreline shareholders will vote upon the approval of the Agreement and Plan of Merger with Chemical.

          If the merger is completed as proposed, Shoreline will merge with Chemical. Chemical will issue 0.64 shares of Chemical common stock in exchange for each share of Shoreline's common stock and pay cash for any fractional shares of Shoreline common stock.

          Keefe, Bruyette & Woods, Inc., Shoreline's financial advisor, has furnished the board of directors of Shoreline with its written opinion that the financial terms of the merger are fair from a financial point of view.

          After careful consideration, Chemical's board of directors and Shoreline's board of directors have each determined the merger to be in the best interest of its shareholders. The board of directors of Chemical unanimously recommends that its shareholders vote FOR the proposed amendment to Article 3 of Chemical 's Restated Articles of Incorporation and FOR approval of the Merger Agreement. The board of directors of Shoreline recommends that its shareholders vote FOR approval of the Merger Agreement.

          The merger cannot be completed unless, among other conditions, Chemical's shareholders approve the amendment to Article 3 of Chemical's Restated Articles of Incorporation, both Chemical's and Shoreline's shareholders approve the Merger Agreement, and Chemical obtains regulatory approval of the merger.

          This prospectus and joint proxy statement and the accompanying form of proxy are being mailed on or about _______, 2000. Your vote is important. Even if you expect to attend the special meeting in person, please sign and date the enclosed proxy card and mail it promptly in the enclosed envelope. Returning a proxy will not prevent you from later voting in person at the special meeting.

          Chemical common stock is traded on The Nasdaq Stock Market under the symbol "CHFC." Chemical common stock is not a savings account, deposit, or other obligation of any bank or nonbank subsidiary of Chemical and is not insured by the Federal Deposit Insurance Corporation or any other governmental agency. Chemical common stock is subject to investment risks, including possible loss of value.

Summary

          This summary highlights selected information from this prospectus and joint proxy statement and may not contain all of the information that is important to you. To best understand the proposed amendment to Chemical's Restated Articles of Incorporation and for a more complete description of the legal terms of the merger of Chemical and Shoreline, you should read carefully this entire document and the documents that are incorporated by reference in this document. In this document, "you" and "your" refer to each holder of Chemical common stock and Shoreline common stock. Only holders of Chemical common stock are being asked to vote on the amendment to Chemical's Restated Articles of Incorporation.

The Companies

Chemical Financial Corporation
333 East Main Street
Midland, Michigan 48640
(517) 839-5350

Chemical Financial Corporation is a financial services organization that operates as a financial holding company headquartered in Midland, Michigan. Chemical has ten banking subsidiaries (which are currently being consolidated into three banking subsidiaries) and one non-banking subsidiary. The banking subsidiaries all operate under the "Chemical Bank" name. Chemical's principal markets for financial services presently are the Michigan communities in which Chemical's subsidiaries are located and the areas immediately surrounding those communities. Most of Chemical's subsidiaries are located in the mid-section of Michigan's lower peninsula. As of September 30, 2000, Chemical had, on a consolidated basis, assets of $1.98 billion, deposits of $1.62 billion, a total loan portfolio of $1.07 billion, and shareholders' equity of $260.5 million.

The services offered by Chemical's subsidiaries cover a wide range of banking, fiduciary and other financial services. These include commercial, mortgage, and retail loans, business and personal checking accounts, savings and retirement accounts, time deposit instruments, ATMs, debit cards, money transfer services, safe deposit facilities, cash management, real estate financing, corporate pension and personal trust services and access to insurance products.

Shoreline Financial Corporation
823 Riverview Drive
Benton Harbor, Michigan 49022
(616) 927-2251

Shoreline Financial Corporation is a bank holding company headquartered in Benton Harbor, Michigan. Shoreline has one subsidiary bank, Shoreline Bank, which operates general commercial banking businesses from 31 offices in southwestern Michigan and one loan production office in Indiana. Shoreline's principal markets for financial services presently are the communities in which Shoreline Bank has offices and the areas immediately surrounding those communities. As of September 30, 2000, Shoreline had, on a consolidated basis, assets of $1.08 billion, deposits of $845.0 million, a total loan portfolio of $759.9 million, and shareholders' equity of $85.5 million.

Through Shoreline Bank, Shoreline offers a broad range of lending, depository and related services to individual, commercial, industrial, financial, and governmental customers. The range of services offered includes time, savings and demand deposits, commercial, consumer, and real estate financing, letters of credit, money transfers, trust services, cash management services, investment services, safe deposit services, automated transaction machine services, and electronic and telephone banking services.

The Merger

What Shoreline Shareholders Will Receive in the Merger
(See Page __)

If the merger is completed as planned, you will receive 0.64 (the "Exchange Ratio") shares of Chemical common stock for each share of Shoreline common stock that you own. This number will be adjusted if either Shoreline or Chemical declares a stock split or stock dividend before the completion of the merger. This number may also be adjusted if any upset condition exists under the merger agreement. No certificates representing fractional shares will be issued. Instead, you will receive a check in payment for any fractional shares, based on the market value of Chemical common stock.

Example: If you own 10 shares of Shoreline common stock, you will receive 6 shares of Chemical common stock. In addition, you will receive a check equal to 0.4 (your fractional share) multiplied by the average of the closing prices per share of Chemical common stock reported on The Nasdaq Stock Market for the 20 consecutive full trading days ending on the sixth business day before the date of the closing of the merger.

You should not send in your stock certificates until Chemical instructs you to do so after the merger is completed.

Proposed Amendment to Chemical's Restated
Articles of Incorporation (See Page __)

Currently, Article 3 of Chemical's Restated Articles of Incorporation authorizes Chemical to issue up to 18 million shares of common stock. To complete the merger of Chemical and Shoreline and maintain a reserve of authorized shares consistent with past practice, Chemical will need to increase the amount of shares it is authorized to issue. Therefore, Chemical's board of directors recommends to Chemical's shareholders a proposed amendment to Article 3 of Chemical's Restated Articles of Incorporation that would permit Chemical to issue up to 30 million shares of common stock.

Recommendation to Shareholders to Approve the Merger (See Page _____)

Chemical Shareholders. After careful consideration, Chemical's board of directors has determined the merger to be in the best interests of Chemical's shareholders. Chemical's board of directors unanimously recommends that you vote FOR the proposal to approve the amendment to Chemical's Restated Articles of Incorporation and FOR the proposal to approve the merger agreement.

Shoreline Shareholders. After careful consideration, Shoreline's board of directors has determined the merger to be in the best interests of Shoreline's shareholders. Shoreline's board of directors recommends that you vote FOR the proposal to approve the merger agreement.

Shoreline's Financial Advisor's Opinion that the Exchange Ratio is Fair (See Page __)

In deciding to approve the merger, Shoreline's board of directors considered the written opinion of its financial advisor, Keefe, Bruyette and Woods, Inc., that the financial terms of the proposed merger are fair to Shoreline shareholders from a financial point of view. That written opinion is attached as Appendix C to this document.

Chemical's Financial Advisor's Opinion that the Exchange Ratio is Fair (See Page ____)

In deciding to approve the merger, Chemical's board of directors considered the written opinion of its financial advisor, W.Y. Campbell & Company, that the financial terms of the proposed merger are fair to Chemical shareholders from a financial point of view. That written opinion is attached as Exhibit D to this document.

Time and Location of the Chemical Shareholder Meeting (See Page ____)

Chemical will hold a special meeting of its shareholders to vote on (1) the proposed amendment to its Restated Articles of Incorporation, and (2) the approval of the merger agreement. The special meeting will be held:

          [date and time]
          [address]

Time and Location of the Shoreline Shareholder Meeting (See Page ____)

Shoreline will hold a special meeting of its shareholders to vote on the approval of the merger agreement. This special meeting will be held:

          [date and time]
          [address]

Vote Required to Approve the Amendment and Merger

Chemical Shareholders. (See Page ___) Only holders of record of Chemical common stock on _________, 2000 have the right to vote on the proposed amendment to Chemical's Restated Articles of Incorporation and the merger agreement.

To approve of the proposed amendment, the holders of at least a majority of the shares of Chemical common stock issued and outstanding as of the record date must vote FOR approval of the proposed amendment.

To approve the merger agreement, the holders of at least a majority of the shares of Chemical common stock that are present and voted at the special meeting must vote FOR approval of the merger agreement.

As of the record date, Chemical's directors, executive officers, and their affiliates beneficially owned 973,519 shares (excluding shares subject to options), or approximately 6.95% of the shares of Chemical common stock entitled to vote on the proposed amendment to Chemical's Restated Articles of Incorporation and the merger agreement. Chemical's directors, executive officers and their affiliates are expected to vote these shares in favor of approval of the proposed amendment and approval of the merger agreement.

As of the record date, Chemical's directors, executive officers, and their affiliates did not own any Shoreline common stock.

Shoreline Shareholders. (See Page ___) Only holders of record of Shoreline common stock on ________, 2000 have the right to vote on approval of the merger agreement.

To approve the merger agreement, the holders of at least a majority of the shares of Shoreline common stock issued and outstanding as of the record date must vote FOR approval of the merger agreement.

As of the record date, Shoreline's directors, executive officers, and their affiliates beneficially owned _____________ shares (excluding shares subject to options), or approximately ___________% of the shares of Shoreline common stock entitled to vote on the merger agreement. Shoreline's directors, executive officers and their affiliates are expected to vote these shares in favor of approval of the merger agreement.

As of the record date, Shoreline's directors, executive officers, and their affiliates did not own any Chemical common stock.

How to Cast Your Vote By Proxy

Chemical Shareholders. (See Page ___) Please mail your signed proxy card in the enclosed return envelope as soon as possible so that your shares of Chemical common stock may be represented at Chemical's special meeting. If you properly sign and return a proxy card but do not include instructions on how to vote your shares, they will be voted FOR approval of the proposed amendment to Chemical's Restated Articles of Incorporation and FOR approval of the merger agreement.

Shoreline Shareholders. (See Page ___) Please mail your signed proxy card in the enclosed return envelope as soon as possible so that your shares of Shoreline common stock may be represented at Shoreline's special meeting. If you properly sign and return a proxy card but do not include instructions on how to vote your shares, they will be voted FOR approval of the merger agreement.

How to Cast Your Vote If Your Shares Are Held By a Broker or Other Nominee in Street Name

If your shares are held by your broker or other nominee in street name, your broker may not have authority to vote your shares unless you provide your broker instructions on how you want to vote. Your broker should send such instructions to you or you may request them from your broker.

Chemical Shareholders. With respect to the proposed amendment to Chemical's Restated Articles of Incorporation, your broker will vote your shares as instructed unless the broker does not receive your instructions within a specified period of time before Chemical's special meeting. If your broker does not receive your instructions by that time, your broker will still have authority to vote your shares for you and may vote your shares in any manner the broker considers appropriate. If your broker does not vote your shares using its discretionary authority in the absence of instructions from you, the failure to vote will have the same effect as voting against the proposed amendment.

With respect to the proposal to approve the merger agreement, your shares will not be voted if you do not provide your broker with voting instructions. Failure to vote your shares on the proposal to approve the merger agreement will not necessarily have the same effect as voting against the merger agreement.

Shoreline Shareholders. If you do not provide your broker with voting instructions, your shares will not be voted at the special meeting. Failure to vote Shoreline shares will have the same effect as voting against approval of the merger agreement.

How to Change Your Vote

If you want to change your vote, just send the Secretary of Chemical or Shoreline, as appropriate, a later-dated, signed proxy card before the special meeting or attend and vote at your company's special meeting. You may also revoke your proxy by sending written notice of revocation to the Secretary of Chemical or Shoreline, as appropriate, before your company's special meeting.

Chemical Shareholders. (See Page ___) Chemical's shareholders should send any later-dated proxy or notice of revocation to:

Shoreline Shareholders. (See Page ___) Shoreline's shareholders should send any later-dated proxy or notice of revocation to:

Bank Regulators Must Approve the Merger (See Page __)

The Board of Governors of the Federal Reserve System, referred to as the Federal Reserve Board, must approve the merger. Chemical filed its application for approval with the Federal Reserve Board on ___________, 2000.

Certain Conditions Must Be Met Before the Completion of the Merger (See Page __)

There are a number of conditions that must be met before Chemical and Shoreline will be required to complete the merger. These conditions include the following, among others:

Certain conditions to the merger may be waived by the party for whose benefit they are provided. In addition, Chemical and Shoreline have certain termination rights discussed below.

Shoreline's Right To Terminate or to Request Repricing of the Merger Upon a Decline in Chemical's Stock Price (See page ____)

Shoreline has the right, but not a duty, to terminate the merger agreement and abandon the merger if, after Chemical and Shoreline have scheduled a closing, the price of Chemical common stock:

If the circumstances above exist, Shoreline will also, in the alternative, have the right to request Chemical to adjust the Exchange Ratio. This adjustment will be accomplished by multiplying the Exchange Ratio by $19.55 and then dividing the resulting number by the price of Chemical common stock. Chemical may either accept or reject Shoreline's request for adjustment. The effect of an adjustment would be to increase the number of shares of Chemical common stock to be received by Shoreline shareholders. If Chemical accepts Shoreline's request, the merger agreement will remain in effect in accordance with its terms except that the Exchange Ratio will be adjusted as described above. If Chemical rejects Shoreline's request, the merger agreement will terminate unless Shoreline elects to proceed with the proposed merger without any adjustment to the Exchange Ratio.

The price of Chemical common stock is determined by taking the average of per share closing prices on the 20 consecutive trading days ending on the sixth business day before the date of the scheduled closing.

If Chemical's and Shoreline's shareholders have approved the merger agreement and all regulatory approvals have been received, the closing will take place at a time and date agreed to by Chemical and Shoreline. In the absence of agreement, the closing will take place on the earliest date specified by either Chemical or Shoreline upon five business days' written notice to the other. The party scheduling the closing will therefore know the price of Chemical common stock at the time that it gives such notice.

Chemical's Right to Terminate the Merger Upon a Decrease in Shoreline's Adjusted Shareholders' Equity (See Page ____)

Chemical has the right to terminate the merger agreement and abandon the merger if Shoreline's adjusted shareholders' equity is less than $86,500,000 as of a mutually agreed upon month-end or as of the month-end immediately before the month in which the merger has received shareholder and regulatory approval. Shoreline's adjusted shareholders' equity for this purpose will be Shoreline's total shareholders' equity as of the month-end, adjusted so that there is no deduction for certain t ransaction-related expenses, special provisions for loan losses, special transaction-related severance or bonus payments, or comprehensive income/loss.

Chemical and Shoreline Have Entered into a Stock Option Agreement (See Page __)

Chemical entered into a stock option agreement with Shoreline that grants Chemical the option to buy up to 2,301,146 shares of Shoreline common stock. The exercise price of the option is $12.75 per share.

To increase the likelihood that the merger will be completed, Chemical required Shoreline to grant the option as a prerequisite to entering into the merger agreement. The option may discourage third parties who are interested in acquiring a significant stake in Shoreline from doing so.

The option is not currently exercisable. Chemical may exercise the option only if an initial triggering event and a subsequent triggering event occur. Initial triggering events include, among others:

A subsequent triggering event occurs if Shoreline enters into an extraordinary transaction with a third party, such as a merger, a sale of substantially all of Shoreline's assets, a sale of at least 25% of Shoreline's then outstanding common stock, or if any third party acquires more than 25% of Shoreline's then outstanding common stock.

The stock option agreement is attached as Appendix B to this document. You are encouraged to read it carefully.

Federal Income Tax Consequences of the Merger (See Page __)

The merger is structured so that Shoreline's shareholders are not expected to recognize any gain or loss for federal income tax purposes from the merger, except to the extent that they receive cash in lieu of fractional shares. However, due to the complexities of federal, state, and local income tax laws, Shoreline shareholders are strongly recommended to consult their own tax advisors concerning the tax consequences to them of the merger.

No Dissenters' Rights (See Page __)

Chemical Shareholders. Under Michigan law, you are not entitled to dissenters' rights with respect to approval of the proposed amendment to Chemical's Restated Articles of Incorporation or the proposed merger.

Shoreline Shareholders. Under Michigan law, you are not entitled to dissenters' rights with respect to approval of the proposed merger.

Interests of Shoreline Officers and Directors
in the Merger (See Page __)

Certain directors and officers of Shoreline and Shoreline Bank may be considered to have interests in the merger in addition to their interests generally as shareholders of Shoreline. Such interests include the right of certain directors and officers to receive severance payments and extended insurance benefits pursuant to the terms of existing employment agreements. Under the terms of Shoreline's stock incentive plans, certain previously awarded but unvested stock options and restricted stock will vest upon the completion of the merger. Upon the completion of the merger, Chemical will assume all the rights, duties, and obligations under Shoreline's stock option plans. Each unexercised option outstanding will become an option to purchase a number of shares of Chemical common stock equal to the number of shares of Shoreline common stock subject to each option multiplied by the Exchange Ratio under the merger agreement. The exercise price per share for Chemical common stock under these options will be equal to the exercise price per share under Shoreline common stock divided by the Exchange Ratio. As of October 20, 2000, executive officers and directors of Shoreline as a group held options to purchase a total of 62,313 shares of Shoreline common stock.

In addition, three members of Shoreline's board of directors will be added to Chemical's board of directors. These three members of Shoreline's board of directors will include Dan L. Smith and two others to be selected by Shoreline and approved by Chemical's board of directors.

Accounting Treatment of the Merger
(See Page __)

Chemical and Shoreline expect the merger to qualify as a "pooling-of-interests" for accounting and financial reporting purposes.

Comparative Market Prices of Chemical and Shoreline Stock

Chemical common stock is traded on The Nasdaq Stock Market under the symbol "CHFC." Shoreline common stock is traded on The Nasdaq Stock Market under the symbol "SLFC."

The following table sets forth the closing prices per share of Chemical common stock and Shoreline common stock (1) on August 21, 2000, the business day preceding the public announcement that Chemical and Shoreline had entered into the merger agreement, and (2) on ______, 2000, the last full trading day for which closing prices were available at the time of the printing of this document.

The following table also sets forth the equivalent price per share of Shoreline common stock on the dates indicated. The equivalent price per share is equal to the closing price of a share of Chemical common stock on that date multiplied by 0.64, the number of shares of Chemical common stock to be issued in exchange for each share of Shoreline common stock.

This equivalent per share price reflects the dollar value of the Chemical common stock that Shoreline shareholders would receive for each share of their Shoreline common stock, based on the prices stated.

Historical Selected Financial Data (Unaudited)

          The following financial information is provided to aid you in your analysis of the financial aspects of the merger. This information is derived from Chemical's and Shoreline's audited financial statements for 1995 through 1999 and their unaudited financial statements for the nine months ended September 30, 2000. This information is only a summary. You should read it in conjunction with the historical financial statements (and related notes) contained or incorporated by reference in Chemical's and Shoreline's annual reports on Form 10-K, quarterly reports on Form 10-Q, and other information filed with the Securities and Exchange Commission. See "Where You Can Find More Information" below.

Unaudited Pro Forma Combined Condensed Financial Information

          Chemical and Shoreline expect that the merger will be accounted for as a pooling-of-interests. The pro forma combined condensed financial information attempts to estimate the effect of the merger on Chemical's and Shoreline's historical financial positions as of the dates listed below. The pro forma combined condensed financial information has been derived from, and should be read in conjunction with, the historical consolidated financial statements, and the notes to those financial statements, both of which are included in or as exhibits to Chemical's and Shoreline's Form 10-K and 10-Q filings and are incorporated by reference. The pro forma combined condensed financial information may not be indicative of the results that actually would have occurred if the merger had been in effect on the dates indicated or that may be attained in the future. In addition, Chemical will incur restructuring and merger related expenses as a result of the transaction. These restructuring and merger related expenses are not reflected in the historical financial information. In preparing the pro forma combined condensed financial information, the fact that the merger will be accounted for under the pooling-of-interests method of accounting has been given effect.

          Under the "risk-based" capital guidelines presently in effect for banks and bank holding companies, minimum capital levels are based on the perceived risk in the various asset categories. Certain off-balance-sheet instruments, such as loan commitments and letters of credit, require capital allocations. Bank holding companies such as Chemical and Shoreline are required to maintain minimum risk-based capital ratios. Chemical's and Shoreline's ratios are above the regulatory minimum guidelines and each of Chemical's and Shoreline's subsidiary banks met the regulatory criteria to be categorized as "well-capitalized" institutions at September 30, 2000. The "well-capitalized" classification may permit institutions to minimize the cost of Federal Deposit Insurance Corporation insurance assessments by being charged a lesser rate than those that do not meet this definition. Designation as a "well-capitalized" institution does not constitute a recommendation by federal bank regulators. The following table shows capital ratios and requirements as of September 30, 2000:

Comparative Per Share Information

          The following summarizes the per share information for Chemical and Shoreline on a historical, unaudited pro forma combined, and equivalent basis. The Shoreline "equivalent pro forma" amounts are calculated by multiplying the

          The pro forma data does not show the results of future operations or the actual results that would have occurred had the merger occurred at the beginning of the period presented. In addition, Chemical will incur restructuring and merger related expenses as a result of the transaction. These restructuring and merger related expenses are not reflected in the historical financial information. The pro forma per share data have been included in accordance with the rules of the Securities and Exchange Commission and are provided for comparative purposes only.

NOTE: The merger agreement requires Chemical to pay its first quarterly dividend after the effective date of the merger at the increased rate of $.24 per share, subject to safety and soundness and financial considerations. The "equivalent pro forma" amounts in this table do not reflect the increase in Chemical's dividend rate.

As of October 20, 2000, there were 13,998,491 shares of Chemical common stock issued and outstanding held by approximately 4,300 holders of record. As of October 20, 2000, there were 11,535,178 shares of Shoreline common stock issued and outstanding held by approximately 1,500 holders of record.

Special Meeting of Chemical Shareholders

Date, Time, and Place of the Special Meeting

          The special meeting of shareholders of Chemical is scheduled to be held as follows:

[Date, time, and address of
meeting to be completed]

Purpose of the Special Meeting

          The Chemical special meeting is being held so that shareholders of Chemical may consider and vote upon (1) a proposal to amend Article 3 of Chemical's Restated Articles of Incorporation to increase the number of authorized shares of Chemical common stock from 18 million to 30 million shares, (2) a proposal to approve the merger agreement, and (3) any other business that properly comes before the special meeting or any adjournment or postponement of that meeting. Approval of the merger agreement will also constitute approval of the merger and the other transactions contemplated by the merger agreement.

          If the holders of a majority of Chemical's issued and outstanding common shares approve the proposed amendment to Article 3 of Chemical's Restated Articles of Incorporation and approve the merger agreement, and other requirements are met, Shoreline will merge with and into Chemical.

Shareholder Special Meeting Record Date

          Chemical has fixed the close of business on ____, 2000 as the record date for determination of its common shareholders entitled to receive notice of and to vote at the special meeting. On the record date, there were ________ shares of Chemical common stock outstanding, held by approximately 4,300 holders of record.

Vote Required for the Approval of the Proposed Amendment and Merger Agreement

          A majority of the outstanding shares of Chemical common stock entitled to vote at the special meeting must be represented, either in person or by proxy, to constitute a quorum at the special meeting. Under the Michigan Business Corporation Act ("MBCA"), the affirmative vote of the holders of at least a majority of the shares of Chemical common stock outstanding and entitled to vote at the special meeting is required to approve the proposed amendment. The MBCA does not require that Chemical's shareholders approve the merger. However, the rules of the National Association of Securities Dealers, Inc., which govern companies traded on The Nasdaq Stock Market, require that Chemical's shareholders approve the merger. Under those rules, the affirmative vote of a majority of the shares of Chemical common stock present and voting at the special meeting is sufficient to approve the merger. You are entitled to one vote for each share of Chemical common stock held by you on the record date on each proposed shareholder action.

          As of the record date for the special meeting, directors and executive officers of Chemical and their affiliates beneficially owned 973,519 shares of Chemical common stock, which represents approximately 6.95% of all outstanding shares of Chemical common stock entitled to vote at the special meeting.

Proxies and Effect on Vote

          All shares of Chemical common stock represented by properly completed proxies received before or at the special meeting and not revoked will be voted according to the instructions indicated on the proxy card. If a properly completed proxy is returned and no instructions are indicated, the Chemical common stock represented by the proxy will be (1) considered present at the special meeting for purposes of determining a quorum and for purposes of calculating the vote, (2) will be voted FOR approval of the proposed amendment to Article 3 of Chemical's Restated Articles of Incorporation, and (3) voted FOR approval of the merger agreement. You are urged to mark the boxes on the proxy to indicate how to vote your shares.

          If a properly completed proxy is returned and the shareholder has specifically abstained from voting on either the proposal to approve the proposed amendment or the proposal to approve the merger agreement, the Chemical common stock represented by the proxy will be considered present and entitled to vote at the special meeting for purposes of determining the existence of a quorum but will not be considered to have been voted in favor of the proposal. If a broker or other nominee holding shares of Chemical common stock in street name signs and returns a proxy but indicates on the proxy that it does not have discretionary authority to vote certain shares on either proposal, those shares will be considered present and entitled to vote at the special meeting. They will therefore be counted for purposes of determining the presence of a quorum but will not be considered to have been voted for approval of the applicable proposal.

          Because approval of the proposed amendment requires the affirmative vote of at least a majority of all shares of Chemical common stock outstanding and entitled to vote as of the record date, abstentions, failures to vote, and broker non-votes will have the same effect as a vote against the approval of the proposed amendment. Because approval of the merger agreement requires the affirmative vote of a majority of the shares of Chemical common stock present and voting at the special meeting, abstentions, failures to vote, and broker non-votes will not be counted as shares voted, and the number of shares of which a majority is required will be reduced by the number of shares not voted.

          Chemical does not expect that any matter other than the approval of the proposed amendment to Article 3 of Chemical's Restated Articles of Incorporation and the approval of the merger agreement will be brought before the special meeting. If, however, other matters are properly presented, the persons named as proxies will (subject to applicable law) vote in accordance with their judgment with respect to those matters.

Revocation of Proxies

          You may revoke your proxy at any time before it is voted at the special meeting by:

          Attendance at the special meeting will not in and of itself constitute revocation of a proxy. You should send any later-dated proxy or notice of revocation of a proxy to:

Solicitation of Proxies

          For Chemical shareholders, the proxy that accompanies this document is being solicited by the board of directors of Chemical. In addition to solicitations by mail, directors, officers, and regular employees of Chemical and its subsidiaries may solicit proxies from shareholders personally or by telephone or other electronic means. Such individuals will not receive any additional compensation for doing so. Chemical will bear its own costs of soliciting proxies. Chemical also will make arrangements with brokers and other custodians, nominees and fiduciaries to send this document to beneficial owners of Chemical common stock and, upon request, will reimburse those brokers and other custodians for their reasonable expenses in forwarding these materials. Chemical has engaged Corporation Investor Communications, Inc. at an estimated cost of $800.00, plus expenses and disbursements, to assist in distribution of proxies.

Special Meeting of Shoreline Shareholders

Date, Time, and Place of the Special Meeting

The special meeting of shareholders of Shoreline is scheduled to be held as follows:

[Date, time and address of
meeting to be completed]

Purpose of the Special Meeting

          The Shoreline special meeting is being held so that shareholders of Shoreline may consider and vote upon (1) a proposal to approve the merger agreement and (2) any other business that properly becomes before the special meeting or any adjournment or postponement of that meeting. Approval of the merger agreement will also constitute approval of the merger and the other transactions contemplated by the merger agreement.

          If the holders of a majority of Shoreline's outstanding common shares approve the merger agreement, and other requirements are met, Shoreline will merge with and into Chemical. You will receive 0.64 of a share of Chemical common stock for each share of Shoreline common stock that you hold plus cash (without interest) in lieu of any fraction of a share of Chemical common stock that you would be entitled to receive.

Shareholder Special Meeting Record Date

          Shoreline has fixed the close of business on __________, 2000 as the record date for the determination of Shoreline's common shareholders entitled to receive notice of and to vote at the special meeting. On the record date, there were ______ shares of Shoreline common stock outstanding, held by approximately _____holders of record.

Vote Required for the Approval of the Merger Agreement

          A majority of the outstanding shares of Shoreline common stock entitled to vote at the special meeting must be represented, either in person or by proxy, to constitute a quorum at the special meeting. Under the MBCA, the affirmative vote of the holders of at least a majority of the shares of Shoreline common stock outstanding and entitled to vote at the special meeting is required to approve the merger agreement. You are entitled to one vote for each share of Shoreline common stock held by you on the record date.

          As of the record date for the special meeting, directors and executive officers of Shoreline and their affiliates beneficially owned approximately _________ shares of Shoreline common stock, which represents approximately _______% of all outstanding shares of Shoreline common stock entitled to vote at the special meeting.

Proxies and Effect on Vote

          All shares of Shoreline common stock represented by properly completed proxies received before or at the special meeting and not revoked will be voted in accordance with the instructions indicated on the proxy card. If a properly completed proxy is returned and no instructions are indicated, the Shoreline common stock represented by the proxy will be (1) considered present at the special meeting for purposes of determining a quorum and for purposes of calculating the vote, and (2) will be voted FOR approval of the merger agreement. You are urged to mark the boxes on the proxy to indicate how to vote your shares.

          If a properly completed proxy is returned and the shareholder has specifically abstained from voting on the proposal to approve the merger agreement, the common stock represented by the proxy will be considered present and entitled to vote at the special meeting for purposes of determining the presence of a quorum and will not be considered to have been voted for approval of the merger agreement. If a broker or other nominee holding shares of Shoreline common stock in street name signs and returns a proxy but indicates on the proxy that it does not have discretionary authority to vote certain shares on the approval of the merger agreement, those shares will be considered present for purposes of determining the presence of a quorum but will not be considered to have voted for approval of the merger agreement.

          Because approval of the merger agreement requires the affirmative vote of at least a majority of all shares of Shoreline common stock outstanding and entitled to vote as of the record date, abstentions, failures to vote, and broker non-votes will have the same effect as a vote against the approval of the merger agreement.

          Shoreline does not expect that any matter other than the approval of the merger agreement will be brought before the special meeting. If, however, other matters are properly presented, the persons named as proxies will (subject to applicable law) vote in accordance with their judgment with respect to those matters.

Revocation of Proxies

          You may revoke your proxy at any time before it is voted at the special meeting by:

          Attendance at the special meeting will not in and of itself constitute revocation of a proxy. You should send any later-dated proxy or notice of revocation of a proxy to:

Solicitation of Proxies

          For Shoreline shareholders, the proxy that accompanies this document is being solicited by the board of directors of Shoreline. In addition to solicitations by mail, directors, officers, and regular employees of Shoreline and its subsidiary may solicit proxies from shareholders personally or by telephone or other electronic means. Such individuals will not receive any additional compensation for doing so. Shoreline will bear its own costs of soliciting proxies. Shoreline also will make arrangements with brokers and other custodians, nominees and fiduciaries to send this document to beneficial owners of Shoreline common stock and, upon request, will reimburse those brokers and other custodians for their reasonable expenses in forwarding these materials. Shoreline has engaged Corporate Investor Communications, Inc. at an estimated cost of $6,000.00, plus expenses and disbursements, to assist in soliciation and distribution of proxies.

          You should not send in any stock certificates with your proxies. A transmittal form with instructions for the exchange of your Shoreline stock certificates will be mailed to you as soon as practicable after completion of the merger.

The Merger and Merger Agreement

          The Agreement and Plan of Merger, attached as Appendix A (the "merger agreement"), and the stock option agreement, attached as Appendix B, are incorporated in this prospectus and joint proxy statement by reference and should be carefully considered. Various provisions of the merger agreement and the stock option agreement have been summarized in this document for your information. However, the merger agreement and the stock option agreement, not this summary, are the definitive statements of the terms of the merger.

What Shoreline Shareholders Will Receive in the Merger

          If Chemical's and Shoreline's shareholders approve the merger agreement and the merger is completed, Shoreline will merge with and into Chemical and, as a result, Chemical will own all the assets of Shoreline and Shoreline Bank. In exchange, Shoreline shareholders will receive 0.64 shares of Chemical common stock for each of their shares of Shoreline common stock (referred to as the "Exchange Ratio"). Chemical will not issue fractional shares of Chemical common stock in the merger. Instead, if a Shoreline shareholder would otherwise be entitled to receive a fraction of a share of Chemical common stock, the shareholder instead will receive an amount of cash determined by multiplying the amount of the fractional share by the average closing price per share of Chemical common stock on The Nasdaq Stock Market for the 20 trading day period ending on the sixth business day before the date of the closing of the merger.

          The Exchange Ratio is subject to certain upward or downward adjustments based upon the occurrence of certain events between the date of this prospectus and joint proxy statement and the completion of the merger that would result in changes in the number of shares of Chemical or Shoreline common stock outstanding. The purpose of any such adjustment is to prevent dilution of the respective interests of the shareholders of Chemical and Shoreline. If Chemical declares a stock dividend or stock split and the record date occurs before the completion of the merger, the parties will adjust the Exchange Ratio by multiplying it by (1) the total number of shares of Chemical common stock that are outstanding as of the record date for the stock dividend or split plus the additional number of shares to be issued as part of the stock dividend or split,

          The Merger Agreement also provides that the Exchange Ratio may be adjusted for other transactions, such as a reclassification, consolidation, or merger that would substantially change the number and value of outstanding shares of Chemical common stock. If one of these types of transactions occurs, Shoreline shareholders will be entitled to an adjustment in the Exchange Ratio that is equitable under the circumstances. Chemical and Shoreline do not expect that any events necessitating such an adjustment to the Exchange Ratio will occur.

          At the effective time of the merger, Chemical will assume all outstanding options to purchase shares of Shoreline common stock. As a result, such options will then represent the right to purchase a number of shares of Chemical common stock equal to the number of shares of Shoreline common stock that were subject to such option multiplied by the Exchange Ratio and rounded to the nearest whole share. The exercise price per share of Chemical common stock under each such option shall be equal to the exercise price per share of the Shoreline common stock that could have been purchased under that option divided by the Exchange Ratio (rounded to the nearest whole cent). This right to purchase the amount stated above only applies to those options that are outstanding at the effective time of the merger and that remain unexercised at and after the completion of the merger.

Structure of the Merger

          Shoreline will be merged with and into Chemical with Chemical being the surviving corporation in accordance with the merger agreement and the Michigan Business Corporation Act.

Background of the Merger

          In December 1899, Shoreline Bank's original charter was granted to its predecessor, Benton Harbor State Bank, which opened for business with total assets of $100,000. Now - over 100 years later - Shoreline is a diversified financial institution providing banking, lending, and investment services through over thirty offices in southwest Michigan and northern Indiana, with assets totaling over $1 billion.

          Shoreline's board of directors and executive management have regularly reviewed Shoreline's strategic alternatives for enhancing profitability and maximizing shareholder value, particularly in view of the changes and ongoing consolidation of the financial services industry. In recent years, Shoreline has been successful in enhancing shareholder value through implementation of its strategic plan of selected acquisitions (such as its recent acquisitions of The State Bank of Coloma and SJS Corporation), internal growth, and increased efficiency.

          In June 1999, the board of directors selected James R. Milroy to become President and Chief Operating Officer, with Dan L. Smith retaining the titles of Chairman of the Board and Chief Executive Officer. A task force of executive management, chaired by Mr. Milroy, was directed to study Shoreline's ability to compete in the increasingly competitive environment of the financial services industry and to develop recommendations for the future strategic direction of Shoreline. This review would include the feasibility of remaining independent or pursuing a business combination with another equally sized or larger financial institution.

          At a March 21, 2000 meeting of the strategic issues committee of Shoreline's board of directors, Mr. Milroy presented executive management's findings. Management concluded that Shoreline faced many significant challenges to continue to compete successfully in the financial services industry. These challenges included the long-term challenges faced by the financial services industry, such as the difficulty of gathering low-cost funds, the commoditization of retail lending products and its impact on net interest margin, and increased competition without geographical constraints (e.g., internet banking), as well as long-term challenges specific to Shoreline, such as the characteristics of Shoreline's marketplace (i.e., its demographics, level of competition, and geographic constrictions), Shoreline's dependence on net interest income, the lack of opportunities to significantly increase non-interest income in the short-term, and its existing cost structure. As a result of this study, it was recommended that the Shoreline board of directors consider a business combination with another financial institution. Based on its own review, as well as management's findings, the strategic issues committee resolved to explore Shoreline's strategic alternatives, including a possible business combination with another financial institution.

          The strategic issues committee met again on May 3, 2000 to formalize its recommendation to the board of directors. At that time, the strategic issues committee also reviewed an informal proposal for a strategic merger received by Shoreline from another Midwestern financial institution that had historically expressed an interest in a strategic merger. Based on the information available at the time, the committee decided to recommend that Shoreline fully explore tha t

          The next day, May 4, 2000, Shoreline's full board of directors met to review the recommendations of the strategic issues committee. The board of directors engaged in discussions to determine whether it would be advisable for Shoreline to continue implementing its strategic plan, or whether it might be the appropriate time to pursue a combination with another financial institution. At that meeting, Shoreline's counsel gave a detailed review of the fiduciary and legal obligations of the board of directors when considering strategic alternatives, including the obligations imposed upon the board of directors under Article IX of Shoreline's Restated Articles of Incorporation. Following a lengthy discussion, and consistent with the recommendations of the strategic issues committee, Shoreline's board of directors authorized the executive officers of Shoreline, and Shoreline's legal and financial advisors, to (1) explore the feasibility and means for maximizing shareholder value through strategies other than remaining an independent bank holding company; (2) engage a financial advisor to the board of directors for this purpose; and (3) engage in discussions with the identified prospective strategic merger partner to explore the feasibility and desirability of that strategic merger. The board of directors asked that the strategic issues committee report to the full board of directors in June, 2000, and at that time to seek the board of director's direction and authorization for further proceedings.

          Acting on the direction of the board of directors, executive management of Shoreline met with Keefe, Bruyette, & Woods, Inc. ("KBW") in early May. KBW described its extensive experience and expertise in advising companies such as Shoreline in reviewing their strategic alternatives, as well as providing advice in response to business combination proposals such as the strategic merger proposal received by Shoreline. On May 12, 2000, Shoreline engaged KBW to assist in its evaluation of the strategic merger then under consideration and to advise the board of directors in connection with its consideration of a strategic merger with this particular prospective partner.

          During the remaining part of May 2000 and into June 2000, executive management of Shoreline, with the assistance of KBW and legal counsel, held a series of discussions with the potential merger partner, focusing mainly on the pricing and structure of the proposed transaction. On June 19, 2000, the strategic issues committee, along with KBW and legal counsel, met again to review the resulting proposal. At this meeting, KBW gave a detailed review of the proposal under consideration and business combinations in the financial institutions industry in general. The committee decided to recommend to the board of directors that it not pursue the proposed strategic merger without first seeking a broader indication of interest in a business combination with Shoreline from a variety of financial institutions.

          On June 28, 2000, the board of directors met to hear the recommendation of the strategic issues committee and further explore strategic alternatives. Both KBW and legal counsel addressed the board of directors on the issues of strategic alliances for Shoreline, stock-for-stock mergers and sales of control, and contrasted these options with the alternative of Shoreline remaining independent. Shoreline's stock price and financial performance were reviewed by KBW, as was its strategic plan, and these were compared to the performance of various peer groups. An analysis of other recent financial institution merger transactions was made, with a specific focus on bank transactions both nationally and in the Midwest. The financial multiples in these transactions were applied to a hypothetical transaction involving Shoreline and its likely partners in a combination. KBW also discussed a number of specific potential acquirors, including Chemical, that it believed would have strategic interest and financial capacity to offer favorable terms to acquire or merge with Shoreline. At that time, the board of directors determined that it would be advisable to fully engage KBW to contact institutions on a confidential basis to explore their interest in a combination with Shoreline. Following this meeting, Shoreline retained KBW to act as its financial advisor in this enhanced role.

          KBW, in collaboration with Shoreline's management and counsel, identified a comparatively large universe of financial holding companies with a presence in the Midwest and of a size that could permit them to acquire or merge with Shoreline. Because the companies most likely to be interested in a transaction with Shoreline are also competitors, and because of concerns for confidentiality, the board of directors directed that Shoreline's potential interest in an acquisition or strategic merger was to be communicated only to financial institutions that were believed to be reasonably likely to be interested and able to complete a transaction on terms that would be advantageous to Shoreline's shareholders. The financial institutions in the identified universe were then individually analyzed to estimate the perceived likelihood that each institution would be interested in and able to acquire or merge with Shoreline in an economically advantageous transaction. Factors considered in this analysis included consideration of perceived and publicly announced acquisition strategies, a pro forma dilution analysis that estimated acceptable exchange ratios in an economically rational transaction, proximity of Shoreline's market area to the company's market area, and antitrust considerations. KBW contacted a total of eleven financial institutions selected through this process to inquire about their interest in a possible transaction. Six bank holding companies expressed meaningful interest, signed a confidentiality agreement, and received detailed information concerning Shoreline. Of these, three bank holding companies submitted written expressions of interest. Two of these three institutions proposed a stock-for-stock exchange, while the third proposed a part-stock, part-debt transaction.

          The three expressions of interest were presented to the board of directors on August 2, 2000. KBW presented a detailed analysis of each of the proposals that included an economic evaluation, business and financial information concerning the proponent, the business and financial characteristics of the combined organizations, and an evaluation of the prospective future value of the separate and combined organizations. While there was relatively little difference in the current financial value of the proposals based on proposed exchange ratios and market values of the offered securities, the proposals had significant differences in structure and in the nature of the proposing entity. Legal counsel again reviewed for the board of directors its fiduciary duties when considering such proposals and the obligations imposed upon the board of directors under Article IX of Shoreline's Restated Articles of Incorporation. The board of directors discussed and compared each of the proposals extensively. These three financial institutions were invited to give presentations to the board of directors on the following day, August 3, 2000.

          Following these presentations and a lengthy discussion of the parties' proposals, the board of directors decided to proceed with negotiations with Chemical and one other potential partner. During the period of August 4 through August 21, 2000, with the assistance of legal counsel and KBW, Shoreline entered into simultaneous negotiations with the two selected financial institutions and their respective representatives with respect to a business combination transaction and allowed each of them to conduct a full prepurchase investigation. Each was then asked to submit a best and final proposal.

          Shoreline's board of directors met again with legal counsel and KBW on Thursday, August 17, 2000 to discuss the status of the ongoing negotiations, and to direct its advisors as to how they should proceed. The board of directors again received a detailed written and oral presentation by KBW updating the analysis presented on August 2. Legal counsel again reviewed the legal and fiduciary obligations of the board of directors and provided a detailed presentation on the then-current drafts of the acquisition agreements and related agreements. The board then extensively discussed and compared the business and financial merits of each of the proposals. Each of the two remaining financial institutions were given an opportunity to improve their proposal. The board of directors then authorized Shoreline's executive officers and legal and financial advisors to continue the negotiating process exclusively with Chemical.

          Further information was exchanged by the parties and the negotiating process continued over the weekend, resulting in a slight increase in Chemical's proposal and substantial completion of negotiation of definitive agreements. Shoreline's board of directors met again on Sunday, August 20, 2000 to evaluate the terms of the proposed merger and the proposed merger agreement with Chemical.

          At this meeting, KBW provided the board of directors with a comprehensive analysis of the proposed merger with Chemical. The proposed combination with Chemical was contrasted with Shoreline's likely future prospects on a stand-alone basis. KBW concluded its presentation by rendering its opinion that the financial terms of the proposed merger were fair to Shoreline's shareholders from a financial point of view. (See "--Opinion of Shoreline's Financial Advisor" for a more complete description of the basis for this opinion.) Shoreline's legal counsel then presented a detailed review and analysis of the proposed merger agreement with Chemical, including the stock option agreement that Chemical required to be included as part of the terms of the proposed transaction. Shoreline's board of directors then voted to authorize the merger, adopt the merger agreement, approve the stock option agreement and authorize all incidental actions.

          Throughout the day Monday, August 21, 2000, final details were negotiated and finalized. Chemical's board of directors met during the afternoon of August 21, 2000, reviewed the merger agreement, authorized the merger, and adopted the merger agreement with Shoreline. The merger agreement was executed that evening. A joint press release regarding the merger was issued prior to the opening of the stock market on Tuesday, August 22, 2000.

          The decision of the board of directors of Shoreline to select the Chemical proposal over other proposals under consideration, to approve the merger, and to adopt the merger agreement and related agreements was the result of extensive discussion and lengthy deliberation continued over four meetings of the board of directors, held August 2, 3, 17 and 20. As required by Article IX of Shoreline's Restated Articles of Incorporation, the board of directors evaluated the proposed offer and determined, in its judgment that the proposed offer would be in compliance with all applicable laws. In reaching that judgment, the board of directors sought and relied upon the advice of legal counsel. The board of directors also considered each factor required to be considered by Article IX of its Restated Articles of Incorporation. In brief summary, these factors include:

Based on this consideration, the board of directors determined that Chemical's proposal would be in the best interests of Shoreline and its shareholders.

          In reaching its decision, the board of directors gave particular consideration to the following factors:

          In the proposed merger, Shoreline's shareholders would receive approximately 7,383,000 shares of Chemical stock, using an Exchange Ratio of 0.64 for each share of Chemical. This Exchange Ratio resulted in a $15.04 per share market value, based on Chemical's closing price on August 21, 2000. This market value was higher than the concurrent market value of the per share consideration offered by the other financial institution with which Shoreline had been negotiating.

Merger Recommendation and Reasons for the Merger

Shoreline

          The Shoreline board of directors, with the assistance of outside financial and legal advisors, evaluated the financial, legal, and market considerations impacting the decision to proceed with the merger. The terms of the merger, including the Exchange Ratio, are the result of arm's-length negotiations between the representatives of Shoreline and Chemical. In deciding to proceed with the transaction, the board of directors considered a number of material factors with a view to maximizing shareholder value in the intermediate and long-term, including the following:

          The board of directors of Shoreline also believes that, by becoming part of a larger organization with greater resources, Shoreline will be able to serve its customers and communities better and provide a broader array of products and services that will be more competitive with other financial service providers in southwestern Michigan.

Shoreline's board of directors recommends that you
vote FOR the approval of the merger agreement

Chemical

          Chemical believes the proposed merger with Shoreline will enable Chemical to establish a presence in southwestern Michigan. Chemical believes that its expansion into southwestern Michigan should supplement Chemical's strong presence in the mid-section of Michigan's lower peninsula and contribute to Chemical's overall ability to compete in the regional banking industry.

Chemical's board of directors recommends that you
vote FOR the approval of the merger agreement

Opinion of Shoreline's Financial Advisor

          In June 2000, Keefe, Bruyette, & Woods, Inc. were retained by Shoreline to advise Shoreline in connection with a possible merger or sale of Shoreline. Shoreline selected KBW because KBW is a nationally recognized investment banking firm with substantial experience in transactions similar to the proposed merger and is familiar with Shoreline and its business. As part of its investment banking business, KBW is continually engaged in the valuation of banking companies and their securities in connection with mergers and acquisitions.

          As part of its engagement, representatives of KBW participated in a meeting of the Shoreline board of directors held on August 20, 2000 and presented its financial analyses of the proposed merger. During the August 20, 2000 meeting, KBW rendered an oral opinion (subsequently confirmed in writing) that, as of such date, the financial terms of the merger were fair to the shareholders of Shoreline common stock from a financial point of view. Such opinion was reconfirmed in writing as of the date of this prospectus and joint proxy statement.

          The full text of KBW's updated written opinion dated as of the date of this prospectus and joint proxy statement is attached as Appendix C to this document and is here incorporated by reference. The description of the opinion set forth in this discussion is qualified in its entirety by reference to Appendix C. Shoreline shareholders are urged to read the opinion in its entirety for a description of the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in connection with the proposed merger.

          KBW'S OPINION IS DIRECTED TO THE SHORELINE BOARD OF DIRECTORS AND ADDRESSES ONLY THE FINANCIAL TERMS OF THE PROPOSED MERGER. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION TO PROCEED WITH THE PROPOSED MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHORELINE SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING WITH RESPECT TO THE PROPOSED MERGER OR ANY OTHER MATTER.

          KBW has informed Shoreline that in arriving at its written opinion, KBW, among other things, (1) reviewed Shoreline's annual reports on Form 10-K and related audited financial information for the three fiscal years ended December 31, 1999 and Shoreline's quarterly reports on Form 10-Q and related unaudited financial information for the quarterly periods ended June 30, 2000 and March 31, 2000; (2) reviewed Chemical's annual reports on Form 10-K and related audited financial information for the three fiscal years ended December 31, 1999 and Chemical's quarterly reports on Form 10-Q and related unaudited financial information for the quarterly periods ended June 30, 2000 and March 31, 2000; (3) reviewed certain limited financial information, including financial forecasts related to the respective businesses, earnings, assets and prospects, of Shoreline and Chemical furnished to KBW by senior management of Shoreline and Chemical as well as projected cost savings estimates and transaction related expenses expected to result from the proposed merger furnished to it by senior management of Shoreline; (4) conducted certain limited discussions with members of senior management of Shoreline and Chemical concerning their respective businesses, financial conditions, earnings, assets, liabilities, operations, regulatory condition, financial forecasts, contingencies and prospects of Shoreline and Chemical, and their respective views as to the future financial performance of Shoreline, Chemical, and the combined entity, as the case may be, following the proposed merger; (5) reviewed the historical market prices and trading activity for Shoreline common stock and Chemical common stock and compared them with that of certain publicly traded companies that KBW deemed to be relevant; (6) compared the respective results of operations of Shoreline and Chemical with those of certain companies that KBW deemed to be relevant; (7) considered, based upon information provided by Shoreline's and Chemical's senior management, the pro forma impact of the proposed merger on the earnings and book value per share, consolidated capitalization and certain balance sheet and profitability ratios of Shoreline and Chemical; (8) compared the proposed financial terms of the proposed merger contemplated by the merger agreement with the financial terms of certain other mergers and acquisitions that KBW deemed to be relevant; (9) reviewed the merger agreement and related stock option agreement; and (10) reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as KBW deemed necessary.

          In preparing its opinion, KBW, with Shoreline's consent, assumed and relied on the accuracy and completeness of all financial and other information supplied or otherwise made available to it by Shoreline and Chemical, including that which is contemplated in the numbered items above, and KBW has not assumed responsibility for independently verifying such information or undertaken an independent evaluation or appraisal of the assets or liabilities, contingent or otherwise, of Shoreline or Chemical or any of their subsidiaries, nor has it been furnished any such evaluation or appraisal. KBW is not an expert in the evaluation of allowances for loan losses, and, with Shoreline's consent, it has not made an independent evaluation of the adequacy of the allowance for loan losses of Shoreline or Chemical, nor has it reviewed any individual credit files relating to Shoreline or Chemical, and, with Shoreline's consent, it assumed that the respective aggregate allowances for loan losses for both Shoreline and Chemical are adequate to cover such losses and will be adequate on a pro forma basis for the

          KBW's opinion was rendered without regard to the necessity for, or level of, any restrictions, obligations, undertakings or divestitures that may be imposed or required in the course of obtaining regulatory approval for the proposed merger.

          In connection with rendering its opinion dated August 20, 2000, KBW performed a variety of financial analyses, consisting of those summarized below. The summary set forth below does not purport to be a complete description of the analyses performed by KBW in this regard, although it describes all material analyses performed by KBW. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to a partial analysis or summary description. Accordingly, notwithstanding the separate factors summarized below, KBW believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors considered by it, without considering all analyses and factors, or attempting to ascribe relative weights to some or all such analyses and factors, could create an incomplete view of the evaluation process underlying KBW's opinion.

          In performing its analyses, KBW made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Shoreline, Chemical, and KBW. The analyses performed by KBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. Such analyses were prepared solely as part of KBW's analysis of the fairness to the shareholders of Shoreline common stock of the financial terms of the proposed merger and were provided to Shoreline's board of directors in connection with the delivery of KBW's opinion. KBW gave the various analyses described below approximately similar weight and did not draw any specific conclusions from or with regard to any one method of analysis. With respect to the comparison of selected companies analysis and the analysis of selected merger transactions summarized below, no company utilized as a comparison is identical to Shoreline or Chemical. Accordingly, an analysis of comparable companies and comparable business combinations is not mathematical; rather it involves complex considerations and judgments concerning the differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or announced merger transaction values, as the case may be, of the companies concerned. The analyses do not purport to be appraisals or to reflect the prices at which Shoreline and Chemical might actually be sold or the prices at which any securities may trade at the present time or at any time in the future. In addition, as described above, KBW's opinion is just one of many factors taken into consideration by Shoreline's board of directors.

          The projections furnished to KBW and used by it in certain of its analyses were prepared by the senior management of Shoreline and Chemical. Shoreline and Chemical do not publicly disclose internal management projections of the type provided to KBW in connection with its review of the proposed merger, and as a result, such projections were not prepared with a view towards public disclosure. The projections were based on numerous variables and assumptions which are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions, and accordingly, actual results could vary significantly from those set forth in such projections.

          The following is a summary of the material analyses presented by KBW to Shoreline's board of directors in connection with its August 20, 2000 opinion.

          Fixed Exchange Ratio Summary. KBW reviewed with the Shoreline board of directors the 0.64 fixed Exchange Ratio offered for each share of Shoreline and the range of values of the Exchange Ratio at different stock prices of Chemical. KBW also reviewed the average $19.55 price of Chemical common stock (walkaway price) below which Shoreline could decline to move forward with the merger unless Chemical agreed to adjust the Exchange Ratio in order to assure that Shoreline shareholders would receive no less than $12.51 of Chemical stock.

          Valuation Analysis of the Fixed Exchange Offer. Based upon the closing price of Chemical common stock at $23.00 per share on August 18, 2000, and 11,529,000 fully diluted shares outstanding, KBW valued the 0.64 Exchange Ratio at

          Relative Contribution Analysis. KBW analyzed the contribution of each of Chemical and Shoreline to the combined entity based on certain balance sheet and income statement data for quarter ended June 30, 2000 and based on the projections of future financial performance provided by senior management of Chemical and Shoreline. The analysis showed that, among other things, Chemical and Shoreline would contribute 64.7% and 35.3%, respectively, to the total assets of the combined company, 65.7% and 34.3% to total deposits, 75.8% and 24.2% to total stockholders' equity and 68.4% and 31.6% to latest quarter annualized net income available to common equity. The analysis further showed that, based on 2000 projected earnings, Chemical and Shoreline would contribute 68.6% and 31.4%, respectively.

          Pro Forma Merger Analysis. KBW performed pro forma merger analysis of combined projected income statement and balance sheet information to estimate the financial impact of the merger on Chemical and Shoreline shareholders. Assumptions regarding the accounting treatment, acquisition adjustments and cost savings were used to calculate the financial impact that the merger would have on certain projected financial results of the pro forma company.

          This analysis indicated that the merger is expected to be accretive to Chemical's estimated GAAP earnings per share and slightly dilutive to Chemical's estimated cash earnings per share beginning in 2001. The analysis also indicated that the merger is expected to be dilutive to Chemical's book value per share and dilutive to tangible book value per share.

          From the perspective of a Shoreline shareholder, KBW's analysis indicated that the merger is expected to be accretive to Shoreline's estiamted GAAP earnings per share and accretive to Shoreline's estimated cash earnings per share beginning in 2001. The analysis also indicated that the merger is expected to be accretive to Shoreline's book value per share and accretive to tangible book value per share. The analysis also indicated that the merger is expected to be dilutive to Shoreline's dividends per share; however, pursuant to the merger agreement, Chemical is expected to increase its pro forma dividend rate to a level that would cause the merger to be accretive to Shoreline's dividends per share.

          These analysis were based in part on KBW's published earnings estimates, management's earnings estimates, KBW's and management's long-term estimated growth rates, and on Shoreline management's estimates of the expected savings. KBW assumed 100% of the expected savings would be achieved in 2001. For all of the above analyses, the actual results achieved by the pro forma company following the merger will vary from the projected results, and the variations may be material.

          Discounted Cash Flow Analysis. KBW estimated the present value of future cash flows that would accrue to a holder of a share of Shoreline common stock assuming that Shoreline were to remain independent and the shareholder held the stock for five years and then sold it at the end of that period. The analysis was based on an earnings forecast prepared by Shoreline's management on a stand-alone, independent basis for 2000 and annual net income growth rates of 8% for the years 2001 through 2005. Shoreline's annual dividend rate was assumed to grow at 8% per annum for years 2001 to 2005. Shoreline's terminal value was determined by using market and acquisition price/earnings multiples of 11.2x and 14.0x, respectively. The terminal value and the dividends received were discounted at a rate of 12.0%. This rate was selected because, in KBW's experience, it represents the risk-adjusted rate of return that investors in securities such as the Shoreline common stock would require. On the basis of these assumptions, KBW calculated present values per share of $12.01 and $14.29. KBW also performed present value sensitivity analysis using a range of discount rates and terminal values.

          KBW also estimated the present value of future cash flows that would accrue to a holder of 0.64 shares of Chemical assuming the merger were to occur and assuming the shareholder held the stock through 2005 and sold it at the end of 2005. This analysis was based on several assumptions including Chemical's estimated pro forma earnings per share and net income

          KBW stated that the discounted cash flow present value analysis is a widely used valuation methodology but noted that it relies on numerous assumptions, including asset and earnings growth rates, terminal values and discount rates. The analysis did not purport to be indicative of the actual values or expected values of Shoreline common stock.

          Selected Merger Transactions. KBW also analyzed the proposed merger against two groups of selected bank merger transactions. The analysis was based upon the announced acquisition price of these transactions relative to the last twelve months earnings, stated book value, stated tangible book value, assets and tangible book premium to core deposits. The information analyzed was compiled by KBW from a data firm that monitors and publishes transaction summaries and descriptions of mergers and acquisitions in the financial services industry.

          The first group of merger transactions consisted of nine selected midwestern bank transactions announced between January 1999 and August 2000 with target asset size between $500 million and $2 billion.

          The second group consisted of eight selected nationwide bank merger and acquisition transactions from January 2000 through August 2000 that had a target asset size between $500 million and $2.0 billion.

          The table below summarizes the average multiples for the proposed merger between Chemical and Shoreline versus the two selected comparable transaction groups as of August 18, 2000.

          KBW noted that, during the period covered, there had been a distinct trend of decline in bank stock valuation and transaction multiples. Accordingly, KBW noted that multiples of transactions during this period, especially earlier transactions, were not necessarily representative of multiples that could reasonably be expected in current transactions. Due to the recent decline in bank stock valuations since the fourth quarter 1999, KBW also analyzed selected midwestern acquisitions where the transaction multiples were adjusted to reflect the decline in acquirors' stock prices from the announcement date to August 18, 2000.

          The table below summarizes the multiples for the proposed merger between Chemical and Shoreline versus the median multiples at announcement and as adjusted to reflect the acquirors current market prices of the selected comparable transaction group.

          Selected Peer Group Analysis. KBW reviewed the financial and market performances of Chemical, Shoreline and each of their respective peer groups based on various financial measures, including earnings performance, operating efficiency, capital adequacy and asset quality, and various measures of market performance, including market to book values, price to earnings, price to estimated earnings and dividend yield. For purposes of such analysis, the financial information used by KBW for Chemical and Shoreline and their comparable companies was as of and for the quarter ended June 30, 2000, unless otherwise noted, and market price information was as of August 18, 2000. Additionally, estimated earnings per share data were derived from Institutional Broker's Estimate System ("IBES") unless otherwise noted.

          KBW analyzed a set of comparable companies used as peers of Chemical which were comprised of ten financial institutions headquartered in the midwest and having assets between $1.5 billion and $5 billion. This group included the following companies:

The following table is a review of the financial performance ratios of Chemical compared to its peers:

KBW also analyzed the market performance ratios of Chemical and its peer group:

          The set of comparable companies used as peers of Shoreline was comprised of thirteen midwestern banking institutions having assets between $975 million and $2.0 billion. These companies are listed as follows, along with the state in which each is headquartered.

The following table compares the financial performance ratios of Shoreline to its peer group:

          KBW also compared the market performance ratios as of August 18, 2000 of Shoreline to the midwestern peer group in the following table:

          In performing its analyses, KBW made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Chemical and Shoreline. The analyses performed by KBW are not necessarily indicative of actual values or actual future results that may be significantly more or less favorable than suggested by such analyses. Such analyses were prepared solely as part of KBW's analysis of the fairness, from a financial point of view, and were provided to the Shoreline board of directors in connection with the delivery of KBW's opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company actually might be sold or the prices at which any securities may trade at the present time or at any time in the future. In addition, as described above, KBW's opinion, along with its presentation to the Shoreline board of directors, was just one of many factors taken into consideration by Shoreline's board of directors in unanimously approving the merger agreement.

          The summary contained herein provides a description of material analyses prepared by KBW in connection with the rendering of its opinion. The summary set forth above does not purport to be a complete description of the analyses performed by KBW in connection with the rendering of its opinion. The preparation of the fairness opinion is not necessarily susceptible to partial analysis or summary description. KBW believes that its analyses and the summary set forth above must be considered as a whole and that selecting portions of its analyses without considering all analyses, or selecting part of the above summary, without considering all factors and analyses, would create an incomplete view of the processes underlying the analyses set forth in KBW's presentation and opinion. The ranges of valuation resulting from any particular analysis described above should not be taken to be KBW's view of the actual value of Shoreline or Chemical. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analyses.

          Pursuant to their engagement letter, Shoreline agreed to pay KBW a cash fee of equal to 0.80% of the aggregate consideration offered in the proposed merger ("Cash Fee") with the first $100,000 payable concurrently with the execution of an agreement in principle or a definitive agreement contemplating the consummation of the proposed merger, with the next $200,000 payable promptly after the mailing of any proxy statement or registration statement relating to the proposed merger, and with the balance payable at the time of closing. Shoreline has also agreed to reimburse KBW for its reasonable out-of-pocket expenses, including the fees and expenses of legal counsel and any other advisor retained by KBW. Shoreline has also agreed to indemnify KBW, its affiliates, and their respective partners, directors, officers, agents, consultants, employees and controlling persons against certain liabilities, including liabilities under the Federal securities laws. In addition, KBW has provided, and may provide in the future, certain investment banking services to Shoreline from time to time, for which it has received, and will receive, customary compensation, including acting as financial advisor for Shoreline in connection with the merger agreement.

          In the ordinary course of its business as a broker-dealer, KBW may, from time to time, purchase securities from, and sell securities to, Chemical and Shoreline, and, as a market maker in securities, KBW may, from time to time, have a long or short position in, and buy or sell, equity securities of Chemical and Shoreline for its own account and for the accounts of its customers. To the extent that KBW has any such position as of the date of the fairness opinion attached as Appendix C hereto, it has been disclosed to Shoreline.

Opinion of Chemical's Financial Advisor

          In July 2000, W.Y. Campbell & Company ("WYC&C") was retained by Chemical to advise Chemical in connection with a possible merger or acquisition of Shoreline. WYC&C is an investment banking and merger and acquisition advisory firm and has been a financial advisor to Chemical on numerous banking transactions over the past number of years. In addition to the general financial analysis, transaction structure analysis, and pricing analysis, advice and negotiation which WYC&C

          Chemical's board of directors retained WYC&C based upon the recognized experience and expertise of WYC&C. WYC&C is a nationally recognized investment banking and advisory firm. WYC&C, as part of its investment banking and advisory business, is continually engaged in the valuation of businesses and securities in connection with mergers and acquisitions and private placements of securities and valuations for estate, corporate and other purposes. Chemical selected WYC&C as its financial advisor because of its reputation and because of its experience in transactions such as the merger.

          WYC&C delivered its oral opinion to Chemical's management on August 17, 2000, confirmed by its written opinion dated August 21, 2000, stating that, as of the date of such opinion and based on the matters set forth in such opinion, the Exchange Ratio was fair, from a financial point of view, to the holders of Chemical common stock. WYC&C was retained by Chemical to express an opinion as to the fairness, from a financial point of view, to the holders of Chemical common stock of the Exchange Ratio. WYC&C did not address Chemical's underlying business decision to proceed with the merger and did not make any recommendation to the Chemical board of directors or to the shareholders of Chemical with respect to approval of the merger. Chemical determined the Exchange Ratio and WYC&C made no recommendation as to the Exchange Ratio.

          The full text of the opinion of WYC&C, which sets forth, among other things, assumptions made, procedures followed, matters considered and limits on the review undertaken by WYC&C, is attached as Appendix D to this prospectus and joint proxy statement. Holders of Chemical common stock are urged to read the opinion in its entirety. WYC&C'S OPINION IS DIRECTED ONLY TO THE EXCHANGE RATIO IN THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO CHEMICAL SHAREHOLDERS AS TO HOW SUCH SHAREHOLDERS SHOULD VOTE RELATIVE TO THE MERGER. The summary set forth in this document of the opinion of WYC&C is qualified in its entirety by reference to the full text of the opinion attached hereto as Appendix D.

          In arriving at its opinion, WYC&C reviewed: (i) the merger agreement; (ii) certain publicly available information for Chemical and Shoreline, including each of the annual reports on Form 10-K for each of the years ended December 31, 1997, December 31, 1998 and December 31, 1999 of Chemical and Shoreline and each of the quarterly reports of Chemical and Shoreline on Form 10-Q for each of the quarters ended March 31, 2000 and June  30, 2000; (iii) certain internal financial analyses, financial forecasts of cost savings and other synergies, reports and other information concerning Chemical and Shoreline prepared by the respective managements of Chemical and Shoreline; (iv)  discussions that WYC&C had with certain members of the managements of each of Chemical and Shoreline concerning the historical and current business operations, financial conditions and prospects of Chemical and Shoreline and such other matters as WYC&C deemed relevant; (v) the reported price and trading histories of the shares of common stock of Chemical and Shoreline as compared to the reported price and trading histories of certain publicly traded companies that WYC&C deemed relevant; (vi) the respective financial conditions of Chemical and Shoreline as compared to the financial conditions of certain publicly traded companies that WYC&C deemed relevant; (vii) certain financial terms of the merger as compared to the financial terms of selected other business combinations that WYC&C deemed relevant; and (viii) such other information, financial studies, analyses and investigations and such other factors that WYC&C deemed relevant for the purpose of its opinion.

          In conducting its review and arriving at its opinion, as contemplated under the terms of its engagement by Chemical, WYC&C, with the consent of Chemical, relied, without independent investigation, upon the accuracy and completeness of all financial and other information provided to it by Chemical or Shoreline, respectively, or publicly available. WYC&C did not undertake any responsibility for the accuracy, completeness or reasonableness of, or any obligation independently to verify, such information. WYC&C further relied upon the assurance of management of Chemical that they were unaware of any facts that would make the information provided or available to WYC&C incomplete or misleading in any respect. WYC&C, with the consent of Chemical, assumed that the forecasted cost savings and other synergies that WYC&C examined were reasonably prepared by management of Chemical on bases reflecting the best currently available estimates and good faith judgments of such management. Chemical informed WYC&C, and WYC&C assumed, that the merger would be recorded as a pooling-of-interests under generally accepted accounting principles. Further, WYC&C assumed, with the consent of Chemical, that the management projections supplied to WYC&C as to the future financial performance of Chemical and Shoreline provide a reasonable basis for its opinion. WYC&C did not make or obtain any independent evaluations, valuations or appraisals of the assets or liabilities of Chemical or Shoreline, nor was WYC&C furnished with such materials. WYC&C assumed, without independent verification, that the aggregate allowances for credit losses for Chemical and Shoreline were adequate to cover such losses. WYC&C's opinion was necessarily based upon economic and market conditions and other circumstances as they existed and could be evaluated by WYC&C on the date thereof. WYC&C does not have any obligation to update its opinion, unless requested by Chemical in writing to do so, and WYC&C expressly disclaimed any responsibility to do so in the absence of any such request.

          In connection with rendering its opinion to the board of directors of Chemical, WYC&C performed a variety of financial analyses that are summarized below. WYC&C believes that its analyses and the factors must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without consideration of all factors and analyses, could create a misleading view of the analyses and the process underlying WYC&C's opinion. WYC&C arrived at its opinion based on the results of all the analyses it undertook assessed as a whole, and it did not draw conclusions from or with regard to any one method of analysis. The preparation of a fairness opinion is a complex process involving subjective judgments, and is not necessarily susceptible to partial analysis or summary description. With respect to the comparable company analysis and bank merger transaction analysis summarized below, no public company utilized as a comparison is identical to Chemical or Shoreline, and such analyses necessarily involve complex considerations and judgments concerning the differences in financial and operating characteristics of the companies and other factors that could affect the acquisition or public trading values of the companies concerned. The financial forecasts of cost savings and other synergies furnished by management of Chemical and Shoreline, and their estimates of future earnings, contained in or underlying WYC&C's analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than such forecasts and estimates. The forecasts and estimates were based on numerous variables and assumptions that are inherently uncertain, including without limitation factors related to general economic and competitive conditions. Estimates of values of companies or assets do not purport to be appraisals or necessarily reflect the prices at which companies or their securities actually may be sold. None of the analyses performed by WYC&C was assigned a greater significance by WYC&C than any other.

          The following is a brief summary of the analyses performed by WYC&C in connection with providing its oral opinion as of August 17, 2000 and its written confirmation dated August 21, 2000:

          Analysis of Comparable Merger Transactions. WYC&C analyzed commercial bank acquisition transactions announced in 1999 and 2000 involving institutions with a total asset size of between $500 million and $2 billion. Additionally, WYC&C further analyzed this pool of transactions by location of the target institution, specifically looking at Midwest banking transactions as compared to national banking transactions.

          The national comparable transactions which were analyzed by WYC&C were:

          The Midwest merger transactions analyzed by WYC&C were:

          The first analysis performed on these comparable transactions was based on publicly announced book values and earnings per shares for the 12 months preceding the announcement of the relevant transaction and the consensus of publicly available earnings per share estimates for the next fiscal year and subsequent to the announcement date of the relevant transaction.

          The table below represents the average multiples for the proposed merger between Chemical and Shoreline utilizing the closing price of Chemical as of August 21, 2000 and an Exchange Ratio of 0.64 versus the two selected comparable transaction groups:

          WYC&C noted that, during the period covered, there had been a distinct trend of decline in bank stock valuation and transaction multiples. Accordingly, WYC&C noted that multiples of transactions during this period, especially earlier transactions, were not necessarily representative of multiples that could reasonably be expected in current transactions.

          The second analysis performed on these two groups of comparable transactions was a comparison of the per share acquisition price at the time of initial announcement relative to the target's trading price at one day prior to the announcement date, five days prior to the announcement date and one month prior to the announcement date.

          The table below represents the premium to the trading price for the proposed merger between Chemical and Shoreline versus the two selected comparable transaction groups:

          Pro Forma Merger Analysis. WYC&C analyzed the financial impact of the merger on the holders of Chemical common stock and Shoreline common stock. This analysis showed that the Exchange Ratio would result in a pro forma ownership of the combined entity of approximately 66% by the shareholders of Chemical and approximately 34% by the shareholders of Shoreline, prior to exercise of any outstanding options, and that Chemical would issue approximately 7.4 million shares of Chemical common stock in the merger.

          Summary Contribution Analysis. WYC&C computed the contribution of each of Chemical and Shoreline to the combined entity's income statement and balance sheet data for the period ended June 30, 2000 and for the projections of future financial performance provided by the managements of Chemical and Shoreline. This analysis showed that, among other things, Chemical and Shoreline contribute 64.7% and 35.3%, respectively, to the total assets of the combined company, 65.7% and 34.3%, respectively, to the total deposits of the combined company, 75.7% and 24.3%, respectively, to the total shareholders' equity of the combined company, and 69.1% and 30.9%, respectively, to the total trailing 12  months net income available to common equity. On further analysis, it was determined that based on projected 2000 earnings, Chemical and Shoreline would contribute 69.0% and 31.0%, respectively.

          Accretion/Dilution Analysis. WYC&C analyzed the pro forma financial impact of the merger, on both a generally accepted accounting principles basis and on a cash basis, on Chemical's earnings per share. For purposes of these analyses, WYC&C utilized management's estimates for net income and the anticipated cost savings and synergies. Further, WYC&C assumed that 76%, 93% and 100% of the anticipated cost savings would be achieved in 2001, 2002 and 2003, respectively. WYC&C's analyses of the merger from Chemical's perspective showed that the transaction would be accretive to Chemical's earnings per share on a GAAP basis and on a cash basis in the fiscal year ended 2002.

          Discounted Cash Flow Analysis. WYC&C performed discounted cash flow analysis to determine the present value of Shoreline through 2005 using the estimates for net income provided by Chemical's and Shoreline's management in the event Shoreline remained independent during this period. This analysis was based on the assumption that net income would grow at the rate of 7% per year during the period of 2001 to 2006. Additionally, it was assumed that Shoreline's annual dividend would increase at the rate of 7% per year during this time period. Shoreline's terminal value was determined by using an average multiple to trailing earnings of 20.2, which represents the acquisition multiple for selected Midwestern banks for 1999 and 2000. The terminal value and the dividends received were discounted at the rates of 12% and 14%. This range was selected because, in WYC&C's opinion, it represents the range of risk-adjusted rates of return required by investors in securities of a similar nature to Shoreline. On the basis of these assumptions, WYC&C calculated a range of present values per share of $15.64 to $17.39. Additionally, WYC&C performed additional sensitivity analysis on the above analysis utilizing alternative terminal values and discount rates.

          Chemical and WYC&C have entered into a letter agreement, dated July 20, 2000 (the "WYC&C Engagement Letter"), relating to the services to be provided by WYC&C in connection with the Merger. Chemical has agreed to pay WYC&C a fee equal to $800,000 for these services including the rendering of the opinion. Chemical has also agreed to reimburse WYC&C for out-of-pocket expenses. Chemical also has agreed to indemnify WYC&C, its officers, directors and affiliates against certain liabilities, including liabilities under the federal securities laws.

          WYC&C in the past from time to time has provided financial advisory services to Chemical, for which services WYC&C has received customary fees.

Closing and Effective Time of the Merger

          Chemical and Shoreline have agreed to schedule the closing of the merger on a mutually agreed upon date and anticipate that the closing will occur in January or February 2001. If they cannot agree upon a date, either party may schedule the closing by giving the other party five business days' prior written notice of the desired closing date. However, neither party

          The "Effective Time" of the merger is the date and time following the closing that the merger is legally completed. The Effective Time will be specified in the Certificate of Merger filed with the state of Michigan and will be a time and date selected by Chemical. The Effective Time may not be later than five business days after the closing occurs.

Effect of Certain Declines in the Chemical Common Stock Price

          Shoreline has the right to terminate the merger agreement and not complete the merger if:

The "Final Chemical Price" is the average closing price of Chemical common stock during the 20 consecutive trading days ending on the sixth trading day before the closing.

          In other words, if the Final Chemical Price is less than $19.55 and there is a decline in the trading price of Chemical common stock which is more than 15% greater than the change in the prices of the stocks of the Index Companies over the same period (as calculated above), Shoreline has the right (but not the obligation) to terminate the merger agreement or to request an adjustment to the Exchange Ratio. You should note that this right to terminate the merger agreement or request an adjustment to the Exchange Ratio is only available to Shoreline after the Final Chemical Price has been determined. The Final Chemical Price may be determined only after the closing of the merger has been scheduled. The closing will either be scheduled by the mutual agreement of the parties or by either Chemical or Shoreline upon five business days' notice to the other party. The party that schedules the closing will therefore know what the Final Chemical Price is at the time that it elects to give notice of the closing.

          If Shoreline requests an adjustment to the Exchange Ratio, the Exchange Ratio would be adjusted by multiplying the Exchange Ratio by $19.55 and then dividing the resulting amount by the Final Chemical Price. The effect of any such adjustment would be to increase the Exchange Ratio and therefore increase the number of shares of Chemical common stock receivable for each share of Shoreline common stock. If Shoreline requests that the Exchange Ratio be adjusted, Chemical has a limited period of time in which to agree to the adjustment or refuse to adjust the Exchange Ratio. If within that time period Chemical refuses to adjust the Exchange Ratio, then Shoreline has the option to either proceed with the merger using the original Exchange Ratio or terminate the merger agreement and abandon the merger.

Effect of Decrease in Shoreline's Shareholders' Equity

          If as of the "Final Statement Date," the adjusted shareholders' equity of Shoreline is less than $86,500,000, Chemical has the right to terminate the merger agreement. The "Final Statement Date" is the month-end agreed upon by the parties after the shareholders of Shoreline and Chemical have approved the merger agreement and after all regulatory approvals have been obtained (which may be prior to the expiration of all related statutory waiting periods). If Shoreline and Chemical do not agree upon a month-end, either party may specify the preceding month-end as the Final Statement Date. Once the Final Statement Date has been determined, Shoreline will prepare a consolidated balance sheet of Shoreline as of the Final Statement Date and the computation of Shoreline's adjusted shareholders' equity as of the Final Statement Date. The balance sheet will be prepared in accordance with generally accepted accounting principles and will be reviewed by Crowe, Chizek and Company LLP, Shoreline's independent auditors. Chemical must deliver notice of its decision to terminate the merger agreement to Shoreline in writing within three business days of Chemical's receipt of the balance sheet. Although Chemical would have the right to terminate the merger agreement, Chemical is not obligated to terminate the merger agreement under these circumstances.

          Shoreline's adjusted shareholders' equity is its total shareholders' equity as of the Final Statement Date, computed in accordance with generally accepted accounting principles and in a manner consistent with Shoreline's annual and quarterly

Regulatory Approvals

          Before Chemical and Shoreline may complete the merger, Chemical must receive the approval of the Federal Reserve Board. In addition, if and when the Federal Reserve Board approves the merger, Chemical and Shoreline must wait an additional 30 days before completing the merger to allow the U.S. Department of Justice to take further action to delay or block the merger. However, if the Department of Justice does not issue adverse comments during the first 15 days of this period, Chemical and Shoreline may complete the merger at that time. Chemical filed its application for approval of the merger with the Federal Reserve Board on or about October 24, 2000. While Chemical expects to receive Federal Reserve Board approval, no assurance can be made as to whether or when the approval will be given.

Distribution of Chemical Common Stock

          At the Effective Time of the merger, Shoreline will cease to have shareholders. Certificates that represented shares of Shoreline common stock outstanding immediately before the merger (referred to as the "Old Certificates") will then represent the right to receive (1) shares of Chemical common stock and (2) cash in lieu of fractional shares.

          If Chemical declares a dividend on the Chemical common stock payable to shareholders of record of Chemical as of a record date after the merger, holders of the Old Certificates will be entitled to receive that dividend. However, holders of Old Certificates will not actually receive dividends payable to holders of record of Chemical common stock after the merger until they physically deliver the Old Certificates with properly submitted transmittal materials. Upon physical exchange of the Old Certificates, former Shoreline shareholders will be entitled to receive from Chemical an amount equal to all such dividends declared and paid with respect to those shares (without interest and less the amount of taxes, if any, that may have been imposed or paid).

          As soon as practicable after the merger, Chemical will cause Computershare, Inc. or another bank or trust company that Chemical may designate (referred to as the "Exchange Agent") to send former Shoreline shareholders transmittal materials to be used to exchange the Old Certificates. Holders of the Old Certificates may then elect (1) to receive Chemical common stock certificates; or (2) to enroll in Chemical's dividend reinvestment program. If you elect to enroll in Chemical's dividend reinvestment program, any cash payable to you for fractional shares will be invested in Chemical common stock at the next regular investment date under the dividend reinvestment program. The transmittal materials will contain instructions with respect to the surrender of Old Certificates and the selection of these exchange options. In the absence of a selection by you of any of these options, you will receive Chemical common stock certificates for your Old Certificates without enrolling in Chemical's dividend reinvestment program. Chemical will deliver to the Exchange Agent that number of shares of Chemical common stock issuable in the merger and the amount of cash payable for fractional shares in the merger.

          Promptly after former Shoreline shareholders deliver their Old Certificates to the Exchange Agent, the Exchange Agent will register the shares of Chemical common stock issuable to them in the name and at the address appearing on Shoreline's stock records as of the time of the merger or such other name or address requested by them in the transmittal materials. The Exchange Agent will not be required to register the shares in that manner until it has received all of your Old Certificates (or an affidavit of loss and indemnity bond for such certificate or certificates), together with properly executed transmittal materials. Such Old Certificates, transmittal materials, and affidavits must be in a form and condition reasonably acceptable to Chemical and the Exchange Agent. The Exchange Agent will have discretion to determine reasonable rules and procedures relating to the exchange (or lack thereof) of Old Certificates and the payment for fractional shares.

          After the merger, ownership of shares represented by Old Certificates may be transferred only on the stock transfer records of Chemical. After the merger, Chemical will not transfer any shares of Shoreline common stock that were issued and

Exclusive Commitment to Chemical

Board Recommendation

          In the merger agreement, the board of directors of Chemical and Shoreline have agreed to recommend approval of the merger agreement to their respective shareholders. However, Shoreline's board of directors may abstain from recommending the approval of the merger agreement to its shareholders if a "Superior Proposal" has been received in writing and is still pending. A "Superior Proposal" means any bona fide unsolicited offer, proposal, solicitation, or expression of interest made by a third party on terms that the Shoreline board of directors determines in good faith, based on the written advice of KBW or another financial advisor of nationally recognized reputation, to be more materially favorable to Shoreline shareholders than the merger agreement from a financial point of view.

          Withdrawal or modification of the Shoreline board of directors' recommendation of the merger will not be a breach of the merger agreement if a "Fiduciary Event" has occurred and Shoreline provides Chemical at least ten business days' advance notice. A "Fiduciary Event" will be considered to have occurred if and when the Shoreline board of directors has:

However, after a Fiduciary Event has occurred, Chemical may terminate the merger agreement and will retain its rights under the Stock Option Agreement. The existence of such rights under the Stock Option Agreement may reduce the likelihood that a Superior Proposal will be received (see "- Stock Option Agreement" below).

No Negotiations with Third Parties

          In addition to the commitment of the board of directors of Shoreline to recommend the merger to its shareholders, Shoreline has agreed that it (and its directors, officers, employees, attorneys, investment bankers, and other agents) will not directly or indirectly invite, initiate, solicit or encourage any other party to make any proposal involving the sale of Shoreline or Shoreline Bank. Further, Shoreline has agreed that it (and its directors, officers, employees, attorneys, investment bankers, and other agents) will not negotiate with any other party regarding a possible sale of Shoreline or, except as required by applicable law, provide any nonpublic information about itself or any of Shoreline's subsidiaries to any party other than Chemical, unless (1) a Fiduciary Event has occurred and is continuing or (2) there is a reasonable likelihood that a Superior Proposal would result. Before disclosing any information to a party other than Chemical under such circumstances, Shoreline must obtain from such party a confidentiality agreement with terms no less favorable to Shoreline than the terms of the confidentiality agreement between Chemical and Shoreline, and Shoreline can provide to such person only information that has been previously disclosed to Chemical.

Conduct of Shoreline Pending the Completion of the Merger

          In the merger agreement, Shoreline made certain covenants to Chemical. These covenants, which remain in effect until the merger is completed or until the merger agreement has been terminated, are summarized below.

Ordinary Course of Business

          Shoreline has agreed to conduct its business, manage its property and invest its assets only in the usual, regular, and ordinary course in substantially the same manner as before the merger agreement was signed. In particular, Shoreline has agreed, among other things, to:

Dividends

          Shoreline may not pay any dividends or other distributions, or purchase or redeem any shares of Shoreline common stock, other than the payment of regular quarterly cash dividends in an amount per share not to exceed $0.15 per share per quarter in 2000 and $0.17 per quarter in 2001, payable in a manner and on dates consistent with Shoreline's prior practice. Chemical and Shoreline have agreed that they will cooperate to assure that the then-former shareholders of Shoreline will not receive two dividends for any calendar quarter with respect to their Shoreline common stock and Chemical common stock that any such holder receives in exchange for shares of Shoreline common stock. Notwithstanding this commitment, if the payment of a dividend would, in Chemical's reasonable judgment, present a significant risk that the merger would not qualify for pooling-of-interests accounting treatment, a dividend shall not be paid, but an equitable adjustment shall be made to the Exchange Ratio for the amount of the dividend not paid.

          Subject to applicable legal and regulatory restrictions and to Chemical's board of directors' discretion as to bank safety and soundness, Chemical's first regular quarterly cash dividend on Chemical common stock with a record date after the Effective Time will be at least $0.24 per share, payable in a manner and on dates consistent with Chemical's prior practice.

Environmental Investigation

          Shoreline has agreed to permit Chemical to conduct an environmental assessment of each parcel of Shoreline's currently owned real property, any other real estate formerly owned by Shoreline or any of its subsidiaries to the extent permitted by the current owners of the property, and any real estate acquired by Shoreline Bank in satisfaction of a debt previously contracted.

          If Chemical discovers any facts or conditions that it reasonably believes could pose a current or future risk of a liability, interference with use, or diminution of value of the property that could be material, then Chemical will identify that risk to Shoreline, identify the facts or conditions underlying that risk, and provide Shoreline with a copy of the environmental assessment for that property. In addition, Chemical may obtain estimates of the proposed scope of work and the cost of any further environmental investigation, remediation, or other follow-up work it reasonably considers necessary or appropriate to assess and, if necessary, clean-up the environmental risk. Chemical will provide copies of such estimates to Shoreline. Chemical and Shoreline will cooperate in the review, approval and implementation of work plans for such further assessment or clean-up. All work plans for any investigation and clean-up will be mutually satisfactory to Chemical and Shoreline. The costs of such investigation and clean-up will be allocated among the parties as they may agree.

          If Chemical and Shoreline are unable to agree upon a course of action to promptly complete any investigation and clean-up and/or a mutually acceptable modification to the merger agreement, and Chemical cannot be reasonably assured that the after-tax cost of the sum of (1) the actual cost of all investigative and remedial or other corrective actions or measures that it desires to take, (2) the estimated cost of all investigative and remedial or other corrective actions or measures not undertaken by Shoreline but required by law or necessary to avoid future exposure to material liability, and (3) all decreases in the value of such properties resulting from such environmental problems will not exceed, in the aggregate, $1,750,000, then Chemical may terminate the merger agreement.

Technology-Related Contracts

          Shoreline and its subsidiaries may not enter into any new technology-related agreement without the consent of Chemical, which consent may not be unreasonably withheld if the agreement is necessary for Shoreline to conduct business in the ordinary course through completion of the merger. Shoreline has agreed to advise Chemical of all anticipated renewals or extensions of existing data processing service agreements, data processing software license agreements, data processing hardware lease agreements and other material technology-related licensing or servicing agreements with independent vendors and to cooperate with Chemical in negotiating with those vendors the length of any extension or renewal term of those agreements where such extension or term would extend beyond the completion of the merger. Shoreline has agreed to send to each vendor, as and when due, such notices of nonrenewal as may be necessary or appropriate under the terms of the applicable agreements to prevent those agreements from automatically renewing for a term extending beyond the completion of the merger. Such notices may be conditioned upon the completion of the merger. Shoreline is not obligated, however, to take any irrevocable action, or irrevocably forego taking any action with respect to a technology-related contract, that would cause any such agreement to terminate, expire, or be materially modified before the merger.

Insurance and Indemnification

          Chemical has agreed to honor any and all rights to indemnification and advancement of expenses existing, at the time of the merger, in favor of the directors and officers of Shoreline and its subsidiaries under their articles of incorporation, charter, or existing bylaws. These enforceable contractual rights will remain in effect following the merger with respect to acts or omissions occurring before the merger with the same force and effect as before the merger.

          In addition, Chemical has agreed to use all reasonable efforts to cause the officers and directors of Shoreline immediately prior to the merger to be covered for a period of at least six years immediately following the merger by the directors' and officers' liability insurance policy maintained by Shoreline with respect to acts or omissions occurring before the merger that were committed by such officers and directors in their capacities as such. Chemical may substitute for Shoreline's current coverage new coverage under policies offering at least comparable or better coverage and amounts, and containing terms and conditions that are not materially less advantageous than Shoreline's current policy. However, in no event will Chemical be required to pay, directly or indirectly through Shoreline or its subsidiaries, more than $250,000 in the aggregate either to maintain or to procure insurance coverage pursuant to the merger agreement. If Chemical does not advise Shoreline in writing before the scheduled date of the closing that it undertakes to procure and maintain comparable or better coverage for the six-year period, Shoreline will be permitted, after giving Chemical three business days' prior written notice and an additional two business days' to purchase such coverage, in lieu of receiving the foregoing insurance coverage, to purchase tail coverage for past acts and omissions for a single premium amount not in excess of the limit of $250,000.

Management of Chemical After the Merger

          Upon completion of the merger, Chemical's executive officers will remain the same, but the board of directors of Chemical shall be changed to consist of eleven persons, including Mr. Dan L. Smith and two other members of Shoreline' current board of directors who are selected by Shoreline and subject to approval by the board of directors of Chemical.

Conditions to Closing the Merger

Mutual Conditions to Close

          The obligations of each of Chemical and Shoreline to complete the merger are subject to the fulfillment of certain conditions, including the following:

          The term "Material Adverse Effect" is defined to mean any change or effect that, individually or when taken together with all other such changes or effects that have occurred before the date of determination of the occurrence of the Material Adverse Effect, has had or could have a material negative impact on the business, assets, condition, results of operations, or value of Chemical and its subsidiaries, taken as a whole, or, as the case may be, Shoreline and its subsidiaries, taken as a whole; or the ability of Chemical or Shoreline, as the case may be, to satisfy the applicable closing conditions, complete the merger or perform its obligations under the stock option agreement. The following will not be included in any determination of a Material Adverse Effect: (1) changes in generally accepted accounting principles that are generally applicable to financial institutions and their holding companies; (2) actions and omissions of a party taken with the prior written consent of the other party; (3) changes in economic conditions (including a change in the level of interest rates) generally affecting institutions; and (4) fees and expenses reasonably related to the merger (such as any additional insurance coverages, employment and consulting services, legal, accounting, and investment banking fees and expenses, and severance and retention provisions) incurred or paid without violating the merger agreement.

Chemical's Conditions to Close

          In addition, Chemical's obligation to complete the merger is subject to the fulfillment of additional conditions, including the following:

Shoreline's Conditions to Close

          In addition, Shoreline's obligation to complete the merger is subject to the fulfillment of additional conditions, including the following:

          Prior to the merger, the merger agreement may be terminated by Chemical or Shoreline by mutual consent or may be terminated by either of them if the merger has not been completed on or before March 31, 2001.

Chemical's Right to Terminate

          In addition, Chemical may terminate the merger agreement and abandon the merger on its own action upon the occurrence of additional events specified in the merger agreement including, among others, the following:

Shoreline's Right to Terminate

          In addition, Shoreline may terminate the merger agreement and abandon the merger on its own action upon the occurrence of additional events specified in the merger agreement including, among others, the following:

Effect of Termination

          If either Chemical or Shoreline terminates the merger agreement in accordance with its terms, neither Chemical, Shoreline, nor any of their respective subsidiaries, officers, directors, or employees will be liable to the other party. The stock option agreement (unless it is terminated in accordance with its terms) and certain provisions regarding confidentiality and expenses will survive the termination of the merger agreement. In addition, neither company will be released from liability to the other for any liabilities or damages arising out of its breach of any provision of the merger agreement.

Description of Chemical Common Stock

          Chemical's authorized capital stock consists of 18 million shares of common stock, $1.00 par value per share. Chemical's board of directors has proposed that the authorized capital stock of Chemical be increased from 18 million shares of common stock to 30 million shares of common stock and will submit this proposal at the Chemical special meeting (See "- Proposed Amendment to Article 3 of Chemical's Restated Articles of Incorporation" below). As of October 20, 2000, Chemical had 13,998,491 shares of Chemical common stock outstanding. Chemical expects to issue not more than 7,437,754 shares of Chemical common stock in the merger.

          Holders of Chemical common stock are entitled to dividends out of funds legally available for that purpose when, as, and if declared by Chemical's board of directors. Each holder of Chemical common stock is entitled to one vote for each share held on each matter submitted for shareholder action. Chemical common stock has no preemptive rights, cumulative voting rights, conversion rights or redemption provisions.

          In the case of any liquidation, dissolution or winding up of the affairs of Chemical, holders of Chemical common stock would be entitled to receive, pro rata, any assets distributable to common shareholders in proportion to the number of shares held by them.

          All outstanding shares of Chemical common stock are, and shares to be issued pursuant to the merger will be, when issued, fully paid and non-assessable.

Stock Option Agreement

          As an inducement and condition to Chemical's willingness to enter into the merger agreement, Shoreline entered into the stock option agreement with Chemical. The stock option agreement is attached as Appendix B to this prospectus and joint proxy statement.

          Under the stock option agreement, Shoreline has granted Chemical an option to purchase up to 2,301,146 shares of Shoreline common stock (referred to as the "Option"). The exercise price of the Option is $12.75 per share, subject to adjustment under specified circumstances described below. The exercise price, as so adjusted, is referred to as the "Option Price." The number of shares for which the Option is exercisable shall not exceed 19.999% of Shoreline's issued and outstanding shares of common stock without giving effect to any shares subject or issued pursuant to the Option.

          The Option will become exercisable in whole or in part if both an "Initial Triggering Event" and a "Subsequent Triggering Event" occur with respect to Shoreline before the Option expires. The purchase of any shares of Shoreline common stock pursuant to the Option is subject to compliance with applicable law, including, without limitation, the receipt of necessary approvals under the Bank Holding Company Act of 1956.

Initial Triggering Event

          Under the stock option agreement, an "Initial Triggering Event" occurs upon the earliest of any of the following events or transactions:

          The term "Acquisition Transaction" is defined to include any of the following transactions: (1) a merger, consolidation, share exchange or any similar transaction involving Shoreline or its subsidiaries; (2) a purchase, lease, or other acquisition of all or a substantial part of the assets or deposits of Shoreline or any of its subsidiaries; (3) a purchase or other acquisition of securities representing 10% or more of the voting power of Shoreline or any of its subsidiaries; or (4) any substantially similar transaction. The phrase "in anticipation of engaging in an Acquisition Transition" includes any action taken by Shoreline's officers or board of directors after any written or oral, authorized or unauthorized, proposal or expression of interest has been communicated to any member of Shoreline's management or board of directors concerning an Acquisition

Subsequent Triggering Event

          Under the stock option agreement, a "Subsequent Triggering Event" generally would occur upon the earlier of the following events:

Expiration of the Option

          The Option will expire upon the earliest of: (1) completion of the merger; (2) termination of the merger agreement in accordance with its terms, assuming that the termination occurs before the occurrence of an Initial Triggering Event; or (3) 12 months after the termination of the merger agreement if such termination follows an Initial Triggering Event. Chemical may not exercise the Option at any time when it is in material breach of the merger agreement such that Shoreline would be entitled to terminate the merger agreement pursuant to its terms. The stock option agreement automatically terminates if Shoreline terminates the merger agreement as a result of a material breach by Chemical of the merger agreement or if Chemical or Shoreline terminates the merger agreement due to a failure to obtain the consent or approval of any federal or state governmental authority necessary to complete the merger.

Exercise of the Option

          If the Option becomes exercisable, Chemical may exercise it in whole or in part by giving notice within six months following the applicable Subsequent Triggering Event. Chemical's right to exercise the Option and certain other rights under the stock option agreement are subject to an extension to obtain required regulatory approvals and comply with applicable regulatory waiting periods, to avoid liability under Section 16(b) of the Exchange Act, and to permit the passage of any cure periods associated with breaches of the merger agreement. The Option Price and the number of shares issuable under the Option would be adjusted in the event of specified changes in the capital stock of Shoreline. In addition, Shoreline has granted Chemical certain registration rights with respect to the shares of Shoreline common stock issued or issuable pursuant to the Option.

          The number of shares of Shoreline common stock that Chemical may purchase pursuant to the Option is also limited by the "Spread Value" of shares purchased under the Option. Chemical may only purchase a number of shares of Shoreline common stock that have a "Spread Value" not exceeding $5,083,472. The "Spread Value" is equal to the difference between (1) the number of shares to be purchased upon a proposed exercise of the Option plus the number of all shares previously purchased pursuant to prior exercises of the Option, multiplied by the closing price of Shoreline common stock on the Nasdaq National Market on the last trading day before the date of the proposed exercise, and (2) the number of shares to be purchased upon a proposed exercise of the Option plus the number of all shares previously purchased pursuant to prior exercises of the Option, multiplied by the applicable Option Price of such shares.

Repurchase and Surrender of the Option

          The Stock Option Agreement also provides that at any time after the occurrence of a "Repurchase Event," and upon a request delivered by Chemical before the Option expires, Shoreline must repurchase the Option and all or any part of the shares received upon the full or partial exercise of the Option ("Option Shares"). The term "Repurchase Event" means the acquisition by any third party of beneficial ownership of 50% or more of the then outstanding shares of Shoreline common stock or the completion of an Acquisition Transaction where the purchasing entity acquires 50% or more of the voting power of Shoreline or any of its subsidiaries.

          The repurchase of the Option by Shoreline from Chemical will be at a price equal to the amount by which the "Market/Offer Price" exceeds the Option Price multiplied by the number of shares for which the Option may be exercised. A repurchase of Option Shares will be at a price per share equal to the Market/Offer Price. The term "Market/Offer Price" means

          The stock option agreement also provides that Chemical may, at any time following a Repurchase Event and before the Option expires, surrender the Option (and any shares obtained upon the exercise of the Option that are still held by Chemical) for a surrender fee equal to $5,038,472 (1) plus Chemical's purchase price with respect to any shares purchased upon exercise of the Option and (2) minus the excess of the net cash amounts received by Chemical pursuant to a sale of shares purchased upon exercise of the Option to any party over the Option Price.

          If, before the Option expires: (1) Shoreline enters into a transaction in which Shoreline is not the surviving corporation, (2) as a result of a merger or plan of exchange, the capital stock of Shoreline is exchanged for securities of any other entity or into cash or any other property or represents less than 50% of the outstanding shares and share equivalents of the merged or acquiring company, or (3) Shoreline sells all or a substantial part of its or its subsidiaries' assets; the Option shall be converted into a substitute option, with terms similar to those of the Option, to purchase capital stock of the entity that acquires or is the effective successor to Shoreline or any entity that controls such acquiring or successor entity.

          The stock option agreement provides that neither Chemical nor Shoreline may assign any of its rights or obligations under it without the written consent of the other party, except that if a Subsequent Triggering Event occurs before the Option expires, Chemical may, subject to certain limitations, assign its rights and obligations under the stock option agreement in whole or in part.

Objectives of the Stock Option Agreement

          Arrangements such as the stock option agreement are often entered into in connection with mergers and acquisitions between institutions such as Chemical and Shoreline in an effort to increase the likelihood that the transactions will be completed in accordance with their terms and to compensate the grantee of such an option (e.g., Chemical) for its efforts undertaken and the expenses, losses, and opportunity costs incurred if the transaction is not completed under certain circumstances involving an acquisition or potential acquisition of the issuer of the option (e.g., Shoreline) by a third party. Chemical and Shoreline entered into the stock option agreement to accomplish these objectives.

          The existence of the Option could significantly increase the cost to a potential third party purchaser of acquiring Shoreline compared to the cost had Chemical and Shoreline not entered into the stock option agreement. As a result, the stock option agreement may have the effect of discouraging offers by third parties to acquire Shoreline, even if such a third party was prepared to offer to pay consideration to Shoreline shareholders that has a higher current market value than the shares of Chemical common stock to be received by Shoreline shareholders pursuant to the merger agreement.

          To the best knowledge of Chemical and Shoreline, as of the date of this prospectus and joint proxy statement, no event creating a right to exercise the Option has occurred.

Comparison of Rights of Chemical and Shoreline Shareholders

          If the merger is completed, holders of Shoreline common stock will become holders of Chemical common stock. Holders of Chemical common stock will continue to be holders of Chemical common stock after the merger.

          Because both Shoreline and Chemical are incorporated under Michigan law, their respective shareholders' rights are governed by the MBCA. As a Shoreline shareholder, your rights are currently governed by Shoreline's Restated Articles of Incorporation and Bylaws and the MBCA. However, after the merger your rights will be governed by Chemical's Restated Articles of Incorporation and Bylaws and the MBCA. The following discussion compares Shoreline's Restated Articles of Incorporation and Bylaws to Chemical's Restated Articles of Incorporation and Bylaws.

          The following comparison of Chemical's Restated Articles of Incorporation and Bylaws and Shoreline's Restated Articles of Incorporation and Bylaws is not intended to be complete and is qualified in its entirety by reference to Chemical's Restated Articles of Incorporation and Bylaws and Shoreline's Restated Articles of Incorporation and Bylaws. Copies of these documents are available upon request. See "Where You Can Find More Information" below.

Anti-Takeover Provisions - In General

          Shoreline's Restated Articles of Incorporation contain provisions that could prevent or delay the acquisition of Shoreline by means of a tender offer, proxy contest, or otherwise. These provisions could also limit shareholders' participation in certain types of business combinations or other transactions that might be proposed in the future, regardless of whether those transactions were favored by a majority of shareholders, and could enhance the ability of officers and directors to retain their positions.

          Chemical's Restated Articles of Incorporation do not contain similar types of provisions. Material differences in the companies' organizational documents with respect to such anti-takeover provisions are discussed separately below under separate sections, such as "- Size and Classification of the Board of Directors," "- Removal of Directors," and "- Evaluation of Proposed Offers."

Authorized Capital

          After the merger, and assuming that Chemical's shareholders vote to approve the proposed amendment to Chemical's Restated Articles of Incorporation to increase the number of authorized shares of Chemical common stock, the total authorized capital stock of Chemical will consist of 30 million shares of common stock, $1.00 par value. No share of Chemical common stock will be entitled to any preferences and all shares will be equal. Chemical's Restated Articles of Incorporation do not authorize any other shares or classes of capital stock.

          The total authorized shares of capital stock of Shoreline consists of 15 million shares of common stock and one million shares of preferred stock. On the record date, there were ________ shares of Shoreline common stock and no shares of Shoreline preferred stock outstanding. Shoreline's Restated Articles of Incorporation authorize Shoreline's board to issue preferred stock from time to time and to fix the rights, preferences and limitations of each series of preferred stock. This includes the designation of the series and the number of shares in it, the dividend rate, whether and when shares will be redeemable, the prices at which shares will be redeemable, rights upon liquidation, any sinking fund provisions, any conversion or exchange privileges, voting rights, any restrictions on the payment of dividends or other distributions on other classes of stock and any other rights, preferences or limitations.

          The issuance of shares of Shoreline preferred stock could adversely affect the rights of the holders of Shoreline common stock and adversely affect the availability of earnings for distribution to the holders of Shoreline common stock.

Size and Classification of the Board of Directors

          Under Chemical's Bylaws, Chemical's entire board of directors is elected each year at the annual meeting of shareholders. Therefore, a majority of the board of directors of Chemical could be changed at any single annual meeting. The number of directors is fixed by a resolution of Chemical's board of directors, but there may never be less than five or more than 25 directors. Currently Chemical has eight directors.

          Under Shoreline's Restated Articles of Incorporation, Shoreline's board of directors is divided into three classes, as nearly equal in number as possible. The term of office of one class of directors expires each year. The number of directors may not be less than three with the exact number to be fixed by resolution adopted by the affirmative vote of at least two-thirds of the directors of Shoreline. Currently, Shoreline's board of directors is composed of ten members. Because of the classification of Shoreline's board of directors, it would normally take at least two annual meetings of shareholders to change a majority of the members of Shoreline's board of directors.

Limitation of Personal Liability of Directors

          Both Chemical's Restated Articles of Incorporation and Shoreline's Restated Articles of Incorporation as modified by the MBCA, provide that a director will not be personally liable to the corporation for money damages except for: (1) the amount of any financial benefit received by a director to which he or she is not entitled; (2) intentional infliction of harm on the corporation or its shareholders; (3) an illegal dividend, distribution or loan to an officer, director or employee of the corporation that is contrary to the MBCA; or (4) an intentional criminal act.

Removal of Directors

          Under Chemical's Bylaws, a director or the entire board of directors may be removed from office at any time, with or without cause, by vote of a majority of the shares entitled to vote at an election of directors.

          Under Shoreline's Restated Articles of Incorporation, a director may be removed from office at any time, but only for cause. Except as may be provided otherwise by law, "cause" for removal of a director exists if: (1) the director has been convicted of a felony by a court and the conviction is no longer subject to direct appeal; (2) a court has found the director to be liable for negligence or misconduct in the performance of his or her duty to Shoreline in a matter of substantial importance to Shoreline and that determination is no longer subject to a direct appeal; (3) the director has become mentally incompetent, whether or not so determined by a court, and the mental incompetency directly affects his or her ability as a director of Shoreline; (4) the director's actions or failure to act are considered by Shoreline's board of directors to be in derogation of the director's duties; or (5) the director's removal is required or recommended by the Federal Reserve Board. Removal for cause must be approved by at least two-thirds of the total number of directors (excluding the director who is being removed). Any action to remove a director under (1) or (2) above must be taken within one year of the conviction or court judgment.

Shareholder Nominations of Directors

          Neither Chemical's Restated Articles of Incorporation nor its Bylaws contain provisions specifically dealing with shareholder nominations of directors.

          Under Shoreline's Restated Articles of Incorporation, director nominations at any annual meeting of shareholders or at any special meeting of shareholders called for election of directors (referred to as an "election meeting") may be made by Shoreline's board of directors, or by a shareholder who is entitled to vote at an election meeting under the limited circumstances described in the next paragraph. Nominations made by Shoreline's board of directors are made at a meeting of the board, or by written consent of directors in lieu of a meeting, at least 20 days before the date of an election meeting.

          A Shoreline shareholder may make a nomination at an election meeting if, and only if, the shareholder has delivered a notice to the Secretary of Shoreline setting forth with respect to each proposed nominee: (1) the nominee's name, age, business address, and residence address; (2) the nominee's principal occupation or employment; (3) the number of shares of Shoreline capital stock that are beneficially owned by the nominee; (4) a statement that the nominee is willing to be nominated; and (5) such other information concerning the nominee as would be required under the rules of the Securities and Exchange Commission to be included in a proxy statement soliciting proxies for the election of the nominee. The notice must be delivered not less than 120 days before the date of the election meeting in the case of an annual meeting and not more than seven days following the date of notice of the election meeting in the case of a special meeting.

Shareholder Proposals

          Under Chemical's Bylaws, a shareholder who wishes to present a proposal for action at a shareholders' meeting must follow certain procedures. In order to present the proposal, the shareholder must give timely notice of the matter in writing to Chemical's Secretary. For annual meetings, to be timely the notice must be delivered to or mailed to and received at Chemical's principal executive offices not less than 120 days prior to the date corresponding to the date of Chemical's proxy statement or notice of meeting for the last year (with certain exceptions). For example, Chemical's proxy statement for its 2000 annual meeting of shareholders was dated March 6, 2000. If a Chemical shareholder wanted to present a proposal for action at Chemical's 2001 annual meeting of shareholders, then the shareholder's notice must be received no later than 120 days before March 6, 2001. However, if Chemical did not hold an annual meeting within the last year, or if the date of the upcoming annual meeting changes by more than 30 days from the date of the last meeting, then the notice must be received not more than ten days after the earlier of the date of the notice of the meeting or public disclosure of the date of the meeting. For special meetings of shareholders, the shareholder's notice must be received not more than ten days after the earlier of the date of the notice of the meeting or public disclosure of the date of the meeting.

          The notice by the shareholder must include the following information: (1) a brief description of the matter to be acted on; (2) the shareholder's name and record address; (3) the class and number of shares of Chemical stock that the shareholder beneficially owns; and (4) any material interest that the shareholder has in the proposal.

          Furthermore, if the shareholder wants Chemical to include the proposal in Chemical's proxy materials, the proposal must comply with applicable Securities and Exchange Commission rules, including Rule 14a-8 under the Securities Exchange Act of 1934.

          Neither Shoreline's Restated Articles of Incorporation nor its Bylaws contain provisions specifically dealing with shareholder proposals. However, if a Shoreline shareholder wanted Shoreline to include a proposal in Shoreline's proxy materials for a meeting, the proposal would have to comply with Securities and Exchange Commission Rule 14a-8.

State Anti-Takeover Laws

          Fair Price Act. Certain provisions of the MBCA establish a statutory scheme similar to the supermajority and fair price provisions found in many corporate charters (the "Fair Price Act"). The Fair Price Act applies to both Chemical and Shoreline. The Fair Price Act provides that a supermajority vote of 90% of the shareholders and no less than two-thirds of the votes of noninterested shareholders must approve a "business combination." The Fair Price Act defines a "business combination" to include nearly any merger, consolidation, share exchange, sale of assets, stock issuance, liquidation, or reclassification of securities involving an "interested shareholder" or certain "affiliates" of an interested shareholder. An "interested shareholder" is generally any person who owns 10% or more of the outstanding voting shares of the corporation. An "affiliate" is a person who directly or indirectly controls, is controlled by, or is under common control with a specified person.

          The supermajority vote required by the Fair Price Act does not apply to business combinations that satisfy certain conditions. These conditions include, among others: (1) the purchase price to be paid for the shares of common stock in the business combination must be at least equal to the highest of either (a) the market value of the shares on the date that the business combination was announced or on the date that the interested shareholder first became an interested shareholder, whichever is higher, or (b) the highest per share price paid by an interested shareholder within the two-year period preceding the announcment of the business combination or in the transaction in which the shareholder first became an interested shareholder, whichever is higher; (2) once becoming an interested shareholder, the person may not become the beneficial owner of any additional shares of the corporation except as part of the transaction that resulted in the interested shareholder becoming an interested shareholder or by virtue of proportionate stock splits or stock dividends; and (3) at least five years have passed since the date the interested shareholder first became an interested shareholder and the date the business combination is completed. The requirements of the Fair Price Act do not apply to business combinations with an interested shareholder that the board of directors has approved or exempted from the requirements of the Fair Price Act by resolution before the time that the interested shareholder first became an interested shareholder.

          Control Share Act. Certain portions of the MBCA also regulate the acquisition of "control shares" of widely held Michigan corporations (the "Control Share Act"). The Control Share Act applies to both Chemical and Shoreline and their shareholders. The Control Share Act establishes procedures governing "control share acquisitions." A control share acquisition is defined as an acquisition of shares by an acquiror which, when combined with other shares held by that person or entity, would give the acquiror voting power in the election of directors of the corporation at or above any of the following thresholds: 20%, 33%, and 50%. Under the Control Share Act, an acquiror may not vote "control shares" that were acquired in a control share acquisition unless the corporation's disinterested shareholders (defined to exclude the acquiring person, officers of the target corporation and directors of the target corporation who are also employees of the corporation) vote to confer voting rights on the control shares. The Control Share Act does not affect the voting rights of shares owned by an acquiring person before the control share acquisition. The Control Share Act entitles corporations to redeem control shares from the acquiring person under certain circumstances. In other cases, the Control Share Act confers dissenters' rights upon all of a corporation's shareholders except the acquiring person.

Evaluation of Proposed Offers

          Shoreline's Restated Articles of Incorporation provide that Shoreline's board of directors cannot initate, approve, adopt, or recommend any proposal of any party other than Shoreline to make a tender or exchange offer for any equity security of Shoreline, or engage in any merger or consolidation of Shoreline with or into another entity, any sale, exchange, lease, mortgage, pledge, transfer, or other disposition of all or substantially all of Shoreline's assets, any liquidation or dissolution of Shoreline, or any reorganization or recapitalization of Shoreline that would result in a change of control of Shoreline, unless it has first evaluated the proposal and determined, in its judgment, that the proposal would be in compliance with all applicable laws. If Shoreline's board of directors makes that determination, the board of directors must then evaluate the proposal and determine whether the proposal is in the best interests of Shoreline and its shareholders. In evaluating a proposed offer to determine whether it would be in the best interests of Shoreline and its shareholders, the board of directors may consider all factors that it considers relevant including, without limitation: (1) the fairness of the consideration to be received by Shoreline's shareholders under the proposed offer; (2) the possible economic and social impact of the proposed offer and its completion on Shoreline and its employees, customers, and suppliers; (3) the possible economic and social impact of the proposed offer and its completion on the communities in which Shoreline and its subsidiaries operate or are located; (4) the business and financial conditions and earning prospects of the offering party; (5) the competence, experience, and integrity of the offering party and its management; and (6) the intentions of the offering party regarding the use of the assets of Shoreline to finance the transaction.

          Chemical's Restated Articles of Incorporation do not include a similar provision.

Amendments to Articles of Incorporation and Bylaws

          Under the MBCA, a corporation's articles of incorporation may be amended by the affirmative vote of the majority of the outstanding shares entitled to vote. In addition, an amendment to a corporation's articles of incorporation may require the approval of the majority of the outstanding shares of a class or series of stock if the amendment would (1) increase or decrease the authorized number of shares of that class or series or (2) alter or change the powers, preferences or special rights of that class or series so as to affect them directly. However, a corporation's articles of incorporation may specify that an amendment to one or more provisions of the articles must be approved by higher percentages.

          Chemical's Restated Articles of Incorporation do not contain any such "supermajority" requirements. Shoreline's Restated Articles of Incorporation provide that no amendment may be made to Article VI (which deals with the board of directors), Article VII (which deals with limitations on directors' personal liability), Article VIII (which deals with indemnification), Article IX (which deals with board evaluation of proposed acquisition offers) or Article X (which deals with amendments to Shoreline's Restated Articles of Incorporation) unless the amendment is approved by at least 80% of the outstanding shares entitled to vote. However, this "supermajority" vote requirement does not apply to amendments that have first been approved by at least two-thirds of Shoreline's board of directors, including at least one member of each of the three classes of the board.

          Under the MBCA, a corporation's bylaws may be amended by either the board of directors or the shareholders, unless the corporation's articles of incorporation or bylaws provide that only the shareholders may amend the bylaws or any particular bylaw. Both Chemical's Bylaws and Shoreline's Bylaws provide that they may be amended either by the shareholders or the board of directors.

Indemnification Provisions

          Under the MBCA, a corporation is permitted to, and in some circumstances must, indemnify its officers, directors, employees and agents, as well as persons who were serving in similar positions with another entity at the corporation's request, in a variety of situations. Chemical's Restated Articles of Incorporation and its Bylaws provide that Chemical will indemnify such persons to the fullest extent permitted by the MBCA.

          The indemnification provisions in Shoreline's charter documents are somewhat more limited. Generally, Shoreline's Restated Articles of Incorporation provide that directors of Shoreline and its subsidiaries will be indemnified to the fullest extent permitted by the MBCA. Persons who are not directors of Shoreline or its subsidiaries may be similarly indemnified, but only if the indemnification is approved by the board of directors or required by the MBCA.

Shareholder Action by Written Consent

          Under the MBCA, the shareholders of a corporation may take an action either at a meeting or without a meeting if all of the shareholders sign a written consent authorizing the action. However, unanimous approval by written consent is not required if the corporation's articles of incorporation allow the shareholders holding a majority of the voting power (or such higher level as may be required) to take action by written consent. In that case, certain other conditions must be met, such as providing notice of the action to all shareholders who did not sign the consent.

          Shoreline's Restated Articles of Incorporation do not allow shareholders to take action by less than unanimous consent. Chemical's Restated Articles of Incorporation provide that the shareholders may take an action without a meeting if written consents to the action are signed by the holders of shares having at least the minimum number of votes necessary to approve the action.

Public Markets for Chemical's and Shoreline's Shares

          Both Chemical and Shoreline common stock are listed on The Nasdaq Stock Market.

Restrictions on Shoreline Affiliates

          All shares of Chemical common stock received by Shoreline shareholders in the merger will be freely transferable, except that shares of Chemical common stock received by persons who are deemed to be "affiliates" (as such term is defined under the Securities Act of 1933) of Shoreline before the merger may only be resold in transactions permitted by the resale provisions of Rule 145 under the Securities Act or as otherwise permitted under the Securities Act. Persons who may be deemed to be affiliates of Shoreline generally include individuals or entities that control, are controlled by, or are under common control with, Shoreline and may include certain officers, directors, and principal shareholders of Shoreline.

          This prospectus and joint proxy statement covers Chemical common stock to be issued in connection with the merger. It does not cover any resales of Chemical common stock to be received by affiliates upon completion of the merger, and no person is authorized to make any use of this prospectus and joint proxy statement in connection with any such resale.

          Pursuant to the merger agreement, each person identified by Shoreline as an affiliate executed a written agreement to the effect that such persons will not offer or sell or otherwise dispose of any of the shares of Chemical common stock issued to such persons in the merger in violation of the Securities Act.

          Subject to the terms and conditions of the Merger Agreement, each affiliate of Shoreline has agreed that he or she will use his or her best efforts to cause the Merger Agreement to be adopted by the shareholders of Shoreline and completed according to its terms. Each affiliate has also agreed not to invite, initiate, solicit, or encourage or negotiate any offers, proposals or expressions of interest from any third party concerning a tender offer, merger, consolidation, share exchange, sale of shares, sale of assets or assumption of liabilities not in the ordinary course, or other business combination involving Shoreline or Shoreline's subsidiaries; or furnish any nonpublic information concerning Shoreline or Shoreline's subsidiaries to any person not affiliated or under contract with Chemical, except as required by law or regulation.

          In addition, each affiliate of Shoreline has agreed not to sell or dispose of any Shoreline common stock owned or controlled by the affiliate without Chemical's consent, subject to certain limited exceptions for certain gifts, fiduciary requirements and dispositions upon death. Shoreline's affiliates have also agreed not to sell or otherwise dispose of any shares of Shoreline common stock or any shares of Chemical common stock presently owned or to be issued in the merger until such time as financial results of the post-merger combined operations of Chemical have been published covering a period of at least 30 days. Chemical may place a legend reflecting the transfer restrictions on the certificates representing the shares of Chemical common stock.

Restrictions on Chemical Affiliates

          Persons who are considered to be "affiliates" (as that term is defined under the Securities Act of 1933) of Chemical have agreed to certain restrictions on transactions in shares of Chemical common stock during certain periods of time. Persons who may be considered to be affiliates of Chemical generally include individuals or entities that control, are controlled by, or are under common control with, Chemical and may include certain officers, directors, and principal shareholders of Chemical.

          Each affiliate of Chemical has agreed not to sell or dispose of any shares of Chemical common stock owned or controlled by the affiliate during a period extending from 30 days prior to the effective date of the merger until publication of financial results of the post-merger combined operations of Chemical covering a period of at least 30 days, subject to limited exceptions for certain gifts, fiduciary requirements and dispositions upon death. Chemical's affiliates are also prohibited by Securities and Exchange Commission rules from purchasing shares of Chemical common stock during a period beginning on the day this document was mailed to shareholders of Shoreline for its special meeting of shareholders to consider the merger and ending on the day after the special meeting of Shoreline shareholders. Securities and Exchange Commission rules also prohibit Chemical's affiliates from purchasing shares of Chemical common stock during the period during which the Final Chemical Price will be determined for purposes of determining whether Shoreline would have a right to request an adjustment to the Exchange Ratio or terminate the merger agreement.

Material Federal Income Tax Consequences

          The following general discussion summarizes the material federal income tax consequences of the merger and is based on the Internal Revenue Code, the regulations issued under the Internal Revenue Code, existing administrative interpretations, and court decisions. Future legislation, regulations, administrative interpretations, or court decisions could significantly change such authorities either prospectively or retroactively. This summary does not address all aspects of federal income taxation that may be important to you in light of your particular circumstances or if you are subject to special rules, such as rules regarding shareholders who are not citizens or residents of the United States, or who are institutions, or tax-exempt organizations. This discussion also assumes that Shoreline shareholders hold their shares of Shoreline stock as capital assets within the meaning of Section 1221 of the Internal Revenue Code.

          It is a condition to the obligations of Shoreline and Chemical to complete the merger that they receive from Warner Norcross & Judd LLP an opinion regarding material federal income tax consequences of the merger. Chemical and Shoreline believe, based on these opinions, that the merger will have the following federal income tax consequences:

          In addition: (1) the merger will constitute a "reorganization" within the meaning of Section 368(a)(1) of the Internal Revenue Code and Chemical and Shoreline will each be a "party to a reorganization" within the meaning of Section 368(b); (2) the basis of the Shoreline's assets in the hands of Chemical will be the same as the basis of those assets in the hands of Shoreline immediately before the reorganization; (3) no gain or loss will be recognized by Chemical on the receipt by Chemical of the assets of Shoreline in exchange for Chemical common stock and the assumption by Chemical of the liabilities of Shoreline; and (4) the holding period of the assets of Shoreline in the hands of Chemical will include the holding period during which such assets were held by Shoreline.

          The tax opinions assume the absence of changes in existing facts and rely on assumptions, representations, and covenants, including those contained in certificates of officers of Chemical and Shoreline. The tax opinions neither bind nor preclude the Internal Revenue Service from adopting a contrary position. An opinion of counsel sets forth such counsel's legal judgment and has no binding effect or official status of any kind and no assurance can be given that contrary positions will not be successfully asserted by the Internal Revenue Service or adopted by a court if the issues are litigated. Accordingly, you are strongly urged to consult with your tax advisor to determine the particular United States federal, state, local, or foreign income or other tax consequences of the merger to you.

Accounting Treatment

          Chemical and Shoreline intend to account for the merger as a pooling-of-interests business combination. It is a condition of the completion of the merger that both Chemical and Shoreline each receive a letter from their respective independent auditors to the effect that pooling-of-interests accounting for the merger is appropriate under generally accepted accounting principles and other applicable accounting rules, if the merger is completed in accordance with the merger agreement. Under the pooling-of-interests method of accounting, each company's historical recorded assets and liabilities will be carried forward to the combined company at their recorded amounts. In addition, the operating results of the combined company will include both companies' operating results for the entire fiscal year in which the merger is completed and both companies' historical reported operating results for prior periods will be combined and restated as the operating results of the combined company.

          The unaudited pro forma financial information contained in this prospectus and joint proxy statement has been prepared using the pooling-of-interests accounting method to account for the merger. See "Comparative Share Data," "Unaudited Pro Forma Combined Selected Financial Data" and "Unaudited Pro Forma Condensed Combined Financial Statements."

No Dissenters' Rights

          Chemical Shareholders. You are not entitled to exercise dissenters' rights as a result of approval of the amendment to Article 3 of Chemical's Restated Articles of Incorporation or the merger, and you are not entitled to demand payment for your shares under the MBCA.

          Shoreline Shareholders. You are not entitled to exercise dissenters' rights as a result of approval of the merger, and you are not entitled to demand payment for your shares under the MBCA.

Unaudited Pro Forma Condensed Combined Financial Statements

          The following unaudited pro forma condensed combined balance sheet as of September 30, 2000, and the pro forma condensed combined statements of income for the nine-month periods ended September 30, 2000 and 1999, and for each year in the three-year period ended December 31, 1999, give effect to the merger, using the pooling-of-interests method of accounting. This pro forma financial information is based on the historical consolidated financial statements of Chemical and Shoreline and their subsidiaries under the assumptions and adjustments set forth in the accompanying notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined balance sheets assume the merger was consummated on September 30, 2000. The unaudited pro forma condensed combined statements of income give effect to the merger as if the merger occurred at the beginning of each period covered by such statements of income. Pro forma

          The unaudited pro forma condensed combined financial statements do not reflect restructuring and other merger related expenses expected to be incurred by Chemical and Shoreline, or the anticipated cost savings. As a result, the pro forma combined financial condition and results of operations of Chemical as of and after the Effective Time of the merger may not be indicative of the results that actually would have occurred if the merger had been in effect during the periods presented or of the results that may be attainted in the future.

          This pro forma financial information should be read in conjunction with the historical consolidated financial statements of Chemical and Shoreline, including the respective notes to those financial statements, that are incorporated by reference in this prospectus and joint proxy statement, and in conjunction with the pro forma financial data, appearing elsewhere in this prospectus and joint proxy statement. See "Where You Can Find More Information."

Unaudited Pro Forma Condensed Combined Balance Sheets
September 30, 2000
(Dollars in Thousands)