As filed with the Securities and Exchange Commission on May 4, 2020
Registration No. [•]
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NICOLET BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin
6021
47-0871001
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
111 North Washington Street Green Bay,
Wisconsin 54301 (920) 430-1400
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Robert B. Atwell
Chairman, President, and Chief Executive Officer
Nicolet Bankshares, Inc.
111 North Washington Street
Green Bay, Wisconsin 54301
(920) 430-1400
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Robert D. Klingler, Esq.
Bryan Cave Leighton Paisner LLP
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488
(404) 572-6600
John T. Reichert, Esq.
Reinhart Boerner Van Deuren, s.c.
N16 W23250 Stone Ridge Drive, Suite One
Waukesha, Wisconsin 53188
(414) 298-8445
Approximate Date of Commencement of Proposed Sale of the Securities to the Public:
As soon as practicable after the effective date of this Registration Statement.
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. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered
Amount to be
registered(1)
Proposed maximum
offering price per unit
Proposed maximum
aggregate offering price(2)
Amount of
registration fee(3)
Common Stock, $0.01 par value
1,825,830 Not applicable $ 68,857,595 $ 8,938.03
(1)
The estimated maximum number of shares of Nicolet Bankshares, Inc. (“Nicolet”) common stock to be issuable upon completion of the merger of Nicolet and Commerce Financial Holdings, Inc. (“Commerce”), as described herein and pursuant to the terms of the Agreement and Plan of Merger by and between Nicolet and Commerce, dated as of February 17, 2020, and attached to the proxy statement-prospectus as Appendix A. Pursuant to Rule 416, this Registration Statement also covers an indeterminate number of shares of common stock as may become issuable as a result of stock splits, stock dividends or similar transactions.
(2)
The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of Commerce common stock (the securities to be cancelled in the merger) in accordance with Rule 457(f) under the Securities Act as follows: the book value of Commerce common stock as of December 31, 2019, the latest practicable date prior to the filing of this Registration Statement, and (ii) the maximum number of shares of Commerce common stock that may be exchanged in the merger.
(3)
Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and computed pursuant to Rule 457(f) under the Securities Act, based on a rate of $129.80 per $1,000,000 of the proposed maximum aggregate offering price.
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 this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement-prospectus 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 proxy statement-prospectus 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.
Preliminary — Subject to Completion Dated May 4, 2020
[MISSING IMAGE: LG_COMMERCE-FIN.JPG]
[MISSING IMAGE: LG_NICOLET.JPG]
PROXY STATEMENT
OF
COMMERCE FINANCIAL HOLDINGS, INC.
PROSPECTUS
OF
NICOLET BANKSHARES, INC.
PROPOSED MERGER — YOUR VOTE IS VERY IMPORTANT
The boards of directors of Commerce Financial Holdings, Inc. (“Commerce”) and Nicolet Bankshares, Inc. (“Nicolet”) have each unanimously approved a transaction that will result in the merger of Commerce with and into Nicolet. Nicolet will be the surviving bank holding company in the merger. If the merger is completed, Commerce shareholders will receive 1.15 shares of Nicolet common stock for each share of Commerce common stock (the “exchange ratio”). The exchange ratio may fluctuate in the event that the Nicolet Common Stock Price, as defined in the merger agreement, is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. In the event the Nicolet Common Stock Price is less than $62.00, in lieu of adjusting the exchange ratio, Nicolet may elect to leave the exchange ratio unchanged and instead add additional cash consideration in an amount sufficient to bring the aggregate per share consideration to $71.30 per share or it may exercise its right to terminate the merger agreement. At this time, in the event the Nicolet Common Stock Price is less than $62.00, Nicolet intends to exercise its right to terminate the merger agreement. If the Nicolet Common Stock Price is less than $62.00 and Nicolet does not elect to increase the exchange ratio or add cash consideration, Commerce may elect to terminate the merger agreement. If and after the merger is completed, we expect that current Commerce shareholders will own approximately [17]% of the outstanding shares of common stock of Nicolet, assuming no adjustment to the exchange ratio.
Nicolet’s common stock trades on the Nasdaq Capital Market under the symbol “NCBS.” The closing price of Nicolet common stock was $72.32 per share on February 14, 2020, the last trading day before public announcement of the merger. The closing price of Nicolet common stock was $[•] per share on [•], the last trading day before the date of this proxy statement-prospectus. If Nicolet’s stock price remains below $62.00 such that Nicolet Common Stock Price is below $62.00 at the time of closing, Nicolet intends to exercise its right to terminate the merger agreement. Commerce’s common stock is privately held and not traded on any public markets. The shares of Nicolet common stock issued pursuant to the merger will be registered under the Securities Act of 1933, as amended, and will trade on the Nasdaq Capital Market.
We cannot complete the merger unless we obtain the necessary governmental approvals and unless the shareholders of Commerce approve the merger agreement and the transactions contemplated thereby. Commerce is asking its shareholders to consider and vote on this merger proposal at Commerce’s special meeting of shareholders. Whether or not you plan to attend the special meeting, please take the time to vote by following the voting instructions included in the enclosed proxy card. If you sign, date and mail your proxy card without indicating how you want to vote, your proxy will be counted as a vote FOR the merger agreement and the transactions contemplated thereby. If you do not vote your shares as instructed in the enclosed proxy card, or if you do not instruct your broker how to vote any shares held for you in “street name,” the effect will be a vote against the merger.
The special meeting will be held on [•] at [•] [•].m., at [•]. Shareholders will be permitted to participate in the special meeting via remote communication, as set forth in more detail under the “Information About the Special Shareholders’ Meeting” heading on page 10.
This document contains a more complete description of the special meeting and the terms of the merger. We urge you to review this entire document carefully. You may also obtain additional information about Nicolet from documents that Nicolet has filed with the Securities and Exchange Commission.
The Commerce board of directors recommends that Commerce shareholders vote FOR approval of the merger agreement and the transactions contemplated thereby.
[MISSING IMAGE: SG_ROBERTB-ATWELL.JPG]
Robert B. Atwell
Chairman, President and Chief Executive Officer
Nicolet Bankshares, Inc.
[MISSING IMAGE: SG_JOSEPHFAZIO-K.JPG]

Joseph Fazio III
Chief Executive Officer
Commerce Financial Holdings, Inc.
You should read this entire proxy statement-prospectus carefully because it contains important information about the merger. In particular, you should read carefully the information under the section entitled “Risk Factors,” beginning on page 14.
Neither the Securities and Exchange Commission nor any state securities regulators have approved or disapproved of the securities to be issued in the merger or determined if this document is truthful or complete. Any representation to the contrary is a criminal offense.
The shares of Nicolet common stock to be issued in the merger are not deposits or savings accounts or other obligations of any bank or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
This proxy statement-prospectus is dated [•], and is first being mailed to Commerce’s shareholders on or about [•].

 
PLEASE NOTE
We have not authorized anyone to provide you with any information other than the information included in this proxy statement-prospectus and the documents to which we refer you herein. If someone provides you with other information, please do not rely on it as being authorized by us.
This proxy statement-prospectus has been prepared as of the date on the cover page. There may be changes since that date in the affairs of Commerce or Nicolet that are not reflected in this document.
As used in this proxy statement-prospectus, the terms “Commerce” and “Nicolet” refer to Commerce Financial Holdings, Inc. and Nicolet Bankshares, Inc., respectively. Where the context requires, “Commerce” may refer to Commerce Financial Holdings, Inc. and its subsidiaries, including Commerce State Bank. Similarly, “Nicolet” may refer to Nicolet Bankshares, Inc. and its subsidiaries, including Nicolet National Bank.
Unless the context indicates otherwise, all references to the “merger agreement” refer to the Agreement and Plan of Merger dated February 17, 2020, by and between Nicolet and Commerce, which is included in its entirety at Appendix A.
 

 
Commerce Financial Holdings, Inc.
1700 S. Silverbrook Drive
West Bend, Wisconsin 53095
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON [], 2020
To the Shareholders of Commerce Financial Holdings, Inc.:
Commerce Financial Holdings, Inc. will hold a special meeting of shareholders at [•], on [•], 2020, at [•] [•].m., local time, for the following purposes:
1.
Merger.   To authorize, approve and adopt the Agreement and Plan of Merger by and between Nicolet Bankshares, Inc. and Commerce Financial Holdings, Inc., pursuant to which Commerce will merge with and into Nicolet, and the other transactions contemplated by the merger agreement. A copy of the merger agreement is attached to the accompanying proxy statement-prospectus as Appendix A.
2.
Other business.   To transact such other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.
3.
Adjournment.   To adjourn the special meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies to approve the merger agreement and the transactions contemplated by the merger agreement.
Only shareholders of record at the close of business on [•], the record date, are entitled to notice of and to vote at the special meeting or any adjournments or postponements of the special meeting. The approval of the merger agreement requires the affirmative vote of at least a majority of the shares of Commerce common stock outstanding on the record date.
After careful consideration, the Commerce board of directors supports the merger and unanimously recommends that you vote FOR approval of the Agreement and Plan of Merger and the transactions contemplated thereby and FOR the adjournment proposal.
YOUR VOTE IS VERY IMPORTANT.   Whether or not you plan to attend the special meeting, please take the time to vote by following the instructions in the enclosed proxy card. You may revoke your proxy at any time before it is voted by giving written notice of revocation to Commerce’s Corporate Secretary or by filing a properly executed proxy card of a later date with Commerce’s Corporate Secretary at or before the meeting. You may also revoke your proxy by attending the meeting, giving oral notice of your revocation, and voting your shares in person at the meeting.
Commerce shareholders have dissenters’ rights with respect to the merger under Wisconsin law. Shareholders who wish to assert their dissenters’ rights and comply with the procedural requirements of Subchapter XIII of the Wisconsin Business Corporation Law will be entitled to receive payment of the fair value of their shares in cash in accordance with Wisconsin law. A copy of Subchapter XIII of the Wisconsin Business Corporation Law is attached as Appendix C to the proxy statement-prospectus.
We do not know of any other matters to be presented at the special meeting, but if other matters are properly presented, the persons named as proxies will vote on such matters at their discretion.
By Order of the Board of Directors
[•]
Joseph Fazio III
Chief Executive Officer
West Bend, Wisconsin
[•]
 

 
TABLE OF CONTENTS
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SUMMARY 6
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EXPERTS 76
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76
A-1
B-1
C-1
 

 
QUESTIONS AND ANSWERS
Q:
On what am I being asked to vote?
A:
You are being asked to approve the Agreement and Plan of Merger by and between Nicolet and Commerce, which we may refer to as the merger agreement, which provides for the merger of Commerce with and into Nicolet, and the other transactions contemplated thereby. You are also being asked to approve a proposal to adjourn the special meeting, if necessary or appropriate, including to solicit additional proxies to approve the merger agreement and the transactions contemplated by the merger agreement.
Q:
How does the board of directors recommend I vote on the merger agreement?
A:
The board of directors of Commerce has unanimously approved and adopted the merger agreement and recommends that Commerce shareholders vote “FOR” approval of the merger agreement and the transactions contemplated thereby, and “FOR” approval of the adjournment proposal.
Q:
What will happen to Commerce State Bank as a result of the merger?
A:
If the merger occurs, Commerce State Bank, which is a wholly owned subsidiary of Commerce, will initially be operated as a standalone subsidiary of Nicolet. Subsequently, it is expected that Commerce State Bank would be merged with and into Nicolet National Bank, which is a wholly owned subsidiary of Nicolet, although no timeframe has been set for such merger. We may refer to this transaction as the “bank merger.” Nicolet National Bank will be the surviving entity in the bank merger if and when it occurs.
Q:
What vote is required to approve the merger agreement and the transactions contemplated thereby?
A:
The merger cannot be completed unless a majority of the outstanding shares of Commerce vote to approve the merger agreement and the transactions contemplated thereby.
Q:
What will happen if Nicolet’s stock price does not increase?
A:
The closing price of Nicolet’s common stock price was $[•] per share on [•], the last day before the date of this proxy statement-prospectus. Under the terms of the merger agreement, if the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is less than $62.00, Nicolet may elect to terminate the merger agreement. As of the date of the proxy statement-prospectus, Nicolet intends to exercise this right to terminate. In this event, the merger would not close, Nicolet would not be obligated to make any payment to Commerce, and Commerce shareholders will continue to hold shares of Commerce stock.
If the Nicolet Common Stock Price is below $62.00 at the time of measurement, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.
Q:
Why does Nicolet intend to exercise its right to terminate the merger agreement if its stock price is below $62.00 per share?
A:
Nicolet believes if its common stock price is below $62.00 per share, such pricing is a signal of the farther-reaching and prolonged impacts of the COVID-19 pandemic, which are still volatile and uncertain. If the Nicolet Common Stock Price is below $62.00, Nicolet believes that consummating a transaction at a fixed exchange ratio reflecting comparative valuations set before the onset of the COVID-19 pandemic is not prudent for Nicolet’s shareholders in today’s unsettled environment.
 
1

 
Q:
What will I receive in the merger?
A:
If the merger is completed, each share of Commerce common stock (excluding treasury shares, shares held directly or indirectly by Nicolet (other than in a fiduciary capacity or in connection with debts previously contracted), shares underlying restricted stock awards, and dissenting shares; all such shares are referred to herein as the “cancelled shares”) will be converted into the right to receive 1.15 shares of Nicolet common stock (the “per share stock consideration”).
Adjustment of Exchange Ratio/Termination of the Merger Agreement
The merger agreement provides that the exchange ratio is fixed unless the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. If the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. Additionally, under no circumstances shall the number of shares of Nicolet common stock to be issued in the merger equal or exceed 19.9% of the number of outstanding shares of Nicolet common stock such that Nasdaq rules would require approval of the merger by Nicolet’s shareholders. The parties agree to reduce the number of shares of Nicolet common stock to be issued and to increase the cash to be issued pro rata to avoid such a shareholder vote.
Cash in Lieu of Fractional Shares
In lieu of any fractional shares of Nicolet common stock, Commerce shareholders will receive an amount in cash (without interest and rounded to the nearest whole cent) as determined by multiplying the Nicolet Common Stock Price by the fractional share of Nicolet common stock to which such holder would otherwise be entitled.
Cash for Cancelled Commerce Stock Options
Pursuant to the merger agreement, each Commerce Stock Option (whether vested or not) will be cancelled in exchange for cash in an amount equal to the product of (i) the number of shares of Commerce common stock subject to such Commerce Stock Option and (ii) the excess of the product of (x) the Nicolet Common Stock Price and (y) the exchange ratio over the exercise price per share of the Commerce common stock subject to such Commerce Stock Option. Following the effective time of the merger, Commerce Stock Options will no longer be valid or exist.
Cash for Commerce Shares held in Commerce State Bank 401(k) & Profit Sharing Plan
Pursuant to the merger agreement, by virtue of the execution of the proposed merger, each share of Commerce common stock held in the Commerce State Bank 401(k) & Profit Sharing Plan will be converted into the right to receive a cash payment equal to the product of the exchange ratio and the Nicolet Common Stock Price.
 
2

 
Relative Ownership of Nicolet following Closing
After the merger is completed, we expect that current Nicolet shareholders will own approximately [83]% of the outstanding shares of common stock of the combined company, and current Commerce shareholders will own approximately [17]% of the outstanding shares of common stock of the combined company, assuming no adjustment to the exchange ratio.
Q:
What are the federal income tax consequences of the merger to me as a holder of Commerce common stock?
A:
Bryan Cave Leighton Paisner LLP has issued an opinion, which it will confirm as of the effective date of the merger, that, subject to certain limitations, the merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. Commerce shareholders receiving Nicolet common stock in the merger will not recognize gain or loss for U.S. federal income tax purposes as a result of the surrender of Commerce common stock for receipt of Nicolet common stock, except that gain may be recognized with respect to any cash received in the merger (other than cash in lieu of fractional shares). However, Commerce shareholders receiving solely cash in the merger, whether as a result of exercising dissenters’ rights or otherwise, will generally recognize gain or loss in an amount equal to the difference between the amount of cash received and the Commerce shareholder’s aggregate tax basis in its Commerce common stock surrendered or cancelled in exchange thereof. Commerce shareholders may also recognize gain or loss for U.S. federal income tax purposes with respect to any cash received in lieu of fractional shares. Your tax treatment will depend on your specific situation and many variables not within our control. You should consult your own tax advisor for a full understanding of the tax consequences of the merger to you.
Q:
What are the federal income tax consequences of the merger to me as a holder of Commerce Stock Option?
A:
The receipt of cash by an employee that has his or her Commerce Stock Option cancelled in connection with the merger will be included as compensation in their Form W-2 for the year in which they receive the cash payment. The amount of the cash payment will be subject to and reduced by any applicable U.S. federal and state income tax withholding, social security (FICA) taxes, and other applicable taxes that Commerce, as an employer, is required to withhold with respect to the payment of wage income to employees. You should consult your own tax advisor for a full understanding of the tax consequences of the receipt of cash in cancellation of your Commerce Stock Option.
Q:
When do you expect the merger to be completed?
A:
We are working to complete the merger on [•], assuming Commerce shareholders and the applicable bank regulatory agencies approve the merger, Nicolet’s stock price increases such that the Nicolet Common Stock Price is at least $62.00, and other conditions to closing are met. We could experience delays in meeting these conditions or be unable to meet them at all. If all other conditions to close have been satisfied, but the Nicolet Common Stock Price is below $62.00, Nicolet intends to terminate the merger agreement and the merger will not be completed. If all other conditions to close have been satisfied, but the Nicolet Common Stock Price is below $62.00 and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. See “Risk Factors” beginning on page 14 for a discussion of these and other risks relating to the merger.
Q:
Will I be able to sell any shares of Nicolet common stock I receive pursuant to the merger?
A:
Yes. The Nicolet common stock issued pursuant to the merger will be registered under the Securities Act of 1933, as amended, and Nicolet will cause the shares to be issued in the merger to be listed on the Nasdaq Capital Market. All shares of Nicolet common stock that you receive pursuant to the merger will be freely transferable unless you are deemed an affiliate of Nicolet. Affiliates of Nicolet will be able to sell the shares they receive pursuant to the merger subject to applicable securities regulations. See “Resale of Nicolet Common Stock” on page 44.
 
3

 
Q:
What should I do now?
A:
After carefully reading and considering the information in this proxy statement-prospectus, follow the voting instructions included in the enclosed proxy card in order to vote your shares as soon as possible, so that your shares will be represented at the special meeting. You can vote by (i) accessing the internet website specified on the enclosed proxy card, (ii) completing, signing and dating the enclosed proxy card and returning it in the postage-paid envelope, or (iii) voting in person or remotely at the special meeting.
NOTE:   If you sign and send in your proxy card and do not indicate how you want to vote, your proxy will be voted “FOR” the proposal to approve the merger agreement and the transactions contemplated thereby, and “FOR” the adjournment proposal.
Q:
What if I do not vote?
A:
If you do not vote, it will have the same effect as voting your shares against the merger.
Q:
If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me?
A:
No. Your broker will vote your shares of stock on the merger agreement only if you provide instructions on how to vote. You should instruct your broker on how to vote your shares, following the directions your broker provides. If you do not provide instructions to your broker, and your broker submits an unvoted proxy, the resulting broker nonvote will not be counted toward a quorum and your shares will not be voted at your company’s special meeting, which will have the same effect as voting your shares against the merger.
Q:
Can I change my vote after I deliver my proxy?
A:
Yes. You can change your vote at any time before your proxy is voted at the special meeting. You can do this in four ways. First, you can revoke your proxy by giving written notice of revocation to Commerce’s Corporate Secretary. Second, you can submit a new properly executed proxy with a later date to Commerce’s Corporate Secretary at or before the special meeting. The latest proxy actually received before the meeting will be counted, and any earlier proxies will be revoked. Third, if you voted over the internet, you can vote again over the internet by the applicable deadline described below or submit a proxy card and return it prior to the vote at the annual meeting. Fourth, you can attend Commerce’s special meeting (either in-person or remotely), give oral notice of your revocation, and vote your shares in person. Any earlier proxy will be thereby revoked. Your last properly submitted vote will be the vote that is counted. However, simply attending the meeting (either in-person or remotely) without voting will not revoke your proxy. If you hold shares in “street name,” you must contact your broker prior to the special meeting if you wish to revoke your proxy or change your vote.
Q:
What is the deadline for voting?
A:
If you are the record holder of shares of our common stock, you may vote by mail at any time prior to the annual meeting as long as we receive your proxy through the mail before the time of the annual meeting or [•] P.M. local time on [•], 2020. In addition, as a record holder, you may vote by internet until noon, local time, on [•], 2020. If your shares are held in “street name,” you must vote your shares in accordance with the voting instruction form by the deadline set by your broker.
Q:
Should I send in my stock certificates now?
A:
No. If the merger is completed, Nicolet or Nicolet’s exchange agent will send a letter of transmittal and other customary transmittal materials providing written instructions for exchanging Commerce common stock certificates for the merger consideration in accordance with the merger agreement. In any event, do not send your stock certificates with your proxy card. If you hold your shares in “street name” or “book-entry form” through a broker, the broker will provide separate instructions for voting and for surrendering and exchanging your shares.
 
4

 
Q:
Who can help answer my questions?
A:
If you would like additional copies of this document, or if you would like to ask any questions about the merger and related matters, you should contact:
Joseph Fazio III
Chief Executive Officer, Commerce State Bank
1700 S. Silverbrook Drive
West Bend, Wisconsin 53095
(262) 247-2802
jfazio@commercesb.com
 
5

 
SUMMARY
We have prepared this summary of certain material information to assist you in your review of this proxy statement-prospectus. It is necessarily general and abbreviated, and it is not intended to be a complete explanation of all of the matters covered in this proxy statement-prospectus. To understand the merger and the issuance of shares of Nicolet common stock in the merger, please see the more complete and detailed information in the sections that follow this summary, as well as the financial statements and appendices included in this proxy statement-prospectus by reference. For more information about Nicolet, please see the section entitled “Where You Can Find Additional Information.” We urge you to read all of these documents in their entirety prior to returning your proxy or voting at the special meeting of your company’s shareholders.
Each item in this summary refers to the page of this document on which that subject is discussed in more detail.
The Companies
NICOLET BANKSHARES, INC.
111 North Washington Street
Green Bay, Wisconsin 54301
(920) 430-1400
Nicolet is a Wisconsin corporation and was incorporated as Green Bay Financial Corporation, a Wisconsin corporation, on April 5, 2000, to serve as the holding company for and the sole shareholder of Nicolet National Bank. It amended and restated its articles of incorporation and changed its name to Nicolet Bankshares, Inc. on March 14, 2002. It subsequently became the holding company for Nicolet National Bank upon completion of Nicolet National Bank’s reorganization into a holding company structure on June 6, 2002.
Nicolet is a registered bank holding company under the Bank Holding Company Act of 1956, as amended. It conducts operations through its wholly owned subsidiary, Nicolet National Bank, which was organized in 2000 as a national bank under the laws of the United States and opened for business on November 1, 2000. Nicolet National Bank provides a full range of traditional banking services throughout northeastern Wisconsin and the upper peninsula of Michigan. Nicolet offers commercial, retail and wealth management services through 39 branch locations in Wisconsin and Menominee, Michigan, as of December 31, 2019.
As of December 31, 2019, Nicolet had consolidated total assets of $3.6 billion, loans of approximately $2.6 billion, deposits of $3.0 billion, and consolidated shareholders’ equity of $516 million. At December 31, 2019, Nicolet had 10,610,259 shares of common stock issued and 10,587,738 shares outstanding, held by approximately 2,500 shareholders of record.
COMMERCE FINANCIAL HOLDINGS, INC.
1700 S. Silverbrook Drive
West Bend, Wisconsin 53095
(262) 247-2800
Commerce is a registered bank holding company headquartered in West Bend, Wisconsin. Commerce State Bank (“Commerce State Bank”), Commerce’s wholly owned banking subsidiary, is a state-chartered banking institution under the laws of the State of Wisconsin. Commerce State Bank offers a full range of traditional banking services, including commercial and retail, through four retail banking locations in the Milwaukee-Waukesha-West Allis Metropolitan Statistical Area and Sheboygan Metropolitan Statistical Area.
As of December 31, 2019, Commerce had consolidated total assets of $713 million, loans of approximately $603 million, deposits of $610 million and consolidated shareholders’ equity of $66 million. At January 31, 2020, Commerce had 1,530,546 shares of common stock issued and outstanding, held by approximately 394 shareholders of record.
 
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The Merger Agreement
(See page 47)
Under the terms of the merger agreement, and if the merger is completed, Commerce will merge with and into Nicolet, with Nicolet being the surviving corporation. Following the merger of Commerce with and into Nicolet, Commerce State Bank will merge with and into Nicolet National Bank, with Nicolet National Bank being the surviving bank. Both Nicolet and Nicolet National Bank will continue their existence under Wisconsin law and the laws of the United States, respectively, while Commerce and Commerce State Bank will cease to exist. The merger agreement is attached to this document as Appendix A and is incorporated into this proxy statement-prospectus by reference. We encourage you to read the entire merger agreement carefully, as it is the legal document that governs the proposed merger.
What You Will Receive in the Merger
(See page 47)
If the merger is completed, each share of Commerce common stock (excluding treasury shares, shares held directly or indirectly by Nicolet (other than in a fiduciary capacity or in connection with debts previously contracted), shares underlying Commerce Stock Options, and dissenting shares; all such shares are referred to herein as the “cancelled shares”) will be converted into the right to receive the per share stock consideration of 1.15 shares of Nicolet common stock.
Adjustment of Exchange Ratio/Termination of the Agreement
The merger agreement provides that the exchange ratio is fixed unless the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price.
If the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.
Additionally, under no circumstances shall the number of shares of Nicolet common stock to be issued in the merger equal or exceed 19.9% of the number of outstanding shares of Nicolet common stock such that Nasdaq rules would require approval of the merger by Nicolet’s shareholders. The parties agree to reduce the number of shares of Nicolet common stock to be issued and to increase the cash to be issued pro rata to avoid such a shareholder vote.
Cash in Lieu of Fractional Shares
In lieu of any fractional shares of Nicolet common stock, Commerce shareholders will receive an amount in cash (without interest and rounded to the nearest whole cent) as determined by multiplying the Nicolet Common Stock Price by the fractional share of Nicolet common stock to which such holder would otherwise be entitled.
Cash for Commerce Shares held in Commerce State Bank 401(k) & Profit Sharing Plan
Each share of Commerce common stock held in the Commerce State Bank 401(k) & Profit Sharing Plan will be converted into the right to receive a cash payment equal to the product of the exchange ratio and the Nicolet Common Stock Price.
 
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Relative Ownership of Nicolet following Closing
After the merger is completed, we expect that current Nicolet shareholders will own approximately [83]% of the outstanding shares of common stock of the combined company, and current Commerce shareholders will own approximately [17]% of the outstanding shares of common stock of the combined company, assuming no adjustment to the exchange ratio.
Effect of the Merger on Commerce Stock Options
(See page 48)
As of January 31, 2020, there were 57,132 shares of Commerce common stock underlying Commerce Stock Options. Pursuant to the merger agreement, each Commerce Stock Option outstanding immediately prior to the effective date (whether vested or not) shall be cancelled in exchange for a cash payment equal to the product of (i) the number of shares of Commerce common stock subject to such Commerce Stock Option immediately prior to the effective time of the merger and (ii) the excess, if any, of the product of (x) the Nicolet Common Stock Price and (y) the exchange ratio, subject to any adjustment, over the exercise price per share of Commerce common stock subject to such Commerce Stock Option immediately prior to the effective time of the merger.
Dissenters’ Rights
(See page 48)
If the merger is completed, Commerce shareholders who do not vote for the merger and who follow certain procedures as required by Wisconsin law and described in this proxy statement-prospectus will be entitled to exercise dissenters’ rights and receive the “fair value” of their shares in cash under Wisconsin law. If you assert and perfect your dissenters’ rights, you will not receive any merger consideration but will be entitled to receive the “fair value” of your shares of stock in cash as determined in accordance with Wisconsin law. The “fair value” of your shares may be more or less than the consideration to be paid in the merger. Appendix C includes the relevant provisions of Wisconsin law regarding these rights. See “Dissenters’ Rights” beginning on page 48 of this proxy statement-prospectus.
Your Expected Tax Treatment as a Result of the Merger
(See page [•])
We expect that the merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code and that Commerce shareholders will not recognize gain or loss for U.S. federal income tax purposes as a result of the surrender of Commerce common stock for receipt of Nicolet common stock, except that gain may be recognized with respect to any cash received in the merger (other than cash in lieu of fractional shares). Commerce shareholders receiving solely cash in the merger, whether as a result of exercising dissenters’ rights or otherwise, will generally recognize gain or loss in an amount equal to the difference between the amount of cash received and the Commerce shareholder’s aggregate tax basis in its Commerce common stock surrendered or cancelled in exchange thereof. Commerce shareholders may also recognize gain or loss for U.S. federal income tax purposes with respect to any cash received in lieu of fractional shares.
Commerce employees that have their Commerce Stock Options cancelled as a result of the merger and receive a cash payment (net of any applicable withholding and other payroll taxes due with respect to such payment) shall be considered to have received a payment of wages subject to U.S. federal and state income taxation in the same manner as other compensation paid to such employee.
The completion of the merger is conditioned on receipt of a tax opinion from Bryan Cave Leighton Paisner LLP that the merger qualifies as a tax-free reorganization under Section 368(a) of the Internal Revenue. The opinion will not bind the Internal Revenue Service, which could take a different view of the tax consequences of the merger.
See “Material U.S. Federal Income Tax Consequences of the Merger” for a more detailed discussion of the tax consequences of the merger. Determining the actual tax consequences of the merger to you as an individual taxpayer can be complicated. The tax treatment will depend on your specific situation and many
 
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variables not within our control. For these reasons, we recommend that you consult your tax advisor concerning the federal and any applicable state, local or other tax consequences of the merger to you.
Comparative Stock Prices
(See page [•])
Nicolet.   Nicolet common stock currently trades on the Nasdaq Capital Market under the ticker “NCBS.” The closing price of Nicolet common stock was $72.32 per share on February 14, 2020, the last trading day before public announcement of the merger. The closing price of Nicolet common stock was $[•] per share on [•], the last trading day before the date of this proxy statement-prospectus.
Commerce.   Commerce’s common stock is privately held and not traded on any public markets.
The Commerce Board of Directors Recommends Shareholder Approval of the Merger
(See page [•])
The board of directors of Commerce has unanimously approved the merger agreement and believes that the merger is in the best interests of Commerce’s shareholders. The board unanimously recommends that you vote FOR approval of the merger proposal and FOR the adjournment proposal.
In deciding to engage in the merger transaction with Nicolet, Commerce’s board of directors consulted with its management, as well as its legal counsel and financial advisor, and considered numerous factors, including the following:

the comparison of the value of the consideration offered by Nicolet to the value of the consideration offered by other parties approached by Commerce;

the relationship of the consideration to be paid in the merger to market prices and the book value and earnings per share of Commerce and Nicolet;

Nicolet’s long term growth strategy;

the payment of the Merger Consideration primarily in the form of registered, freely tradeable stock of Nicolet, giving liquidity along with an opportunity to defer taxes on gain;

the belief that Commerce and Nicolet share a similar strategic vision and a similar community banking philosophy;

the complementary aspects of the Commerce and Nicolet businesses, including customer focus, geographic coverage, business orientation, and compatibility of the companies’ management and operating styles;

the respective presentations by management and Commerce’s financial advisor concerning the operations, financial condition and prospects of Commerce and the expected financial impact of the merger on the combined company;

the potential expense-saving and revenue-enhancing opportunities in connection with the merger, the related potential impact on the combined company’s earnings and the fact that the Commerce shareholders will be able to participate as Nicolet shareholders in the benefits of such savings opportunities and the future performance of the combined company generally;

Nicolet’s history and reputation as an efficient and effective acquirer, and success in integrating acquired organizations into its own;

Nicolet’s access to internal and external resources to complete the merger process on a timely basis;

the higher lending limits and greater breadth of products and services the merged banks will be able to offer to Commerce customers;

the terms of the merger agreement, and the presentation by Commerce’s outside legal advisors regarding the merger and merger agreement;

the financial structure, results of operations, and prospects of Commerce and Nicolet, the capital adequacy of the resulting holding company and the outlook for the organizations in the rapidly changing financial services industry;
 
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the combined resources of the two holding companies are expected to improve the efficiencies associated with the development of new products and services to be offered by Nicolet and its subsidiary bank;

the size and capital structure of the resulting holding company following the merger, which are expected to provide greater capacity to weather adverse market events and opportunities and flexibility in responding to the rapidly changing industry for financial service providers;

the enhanced ability of the combined organization to take advantage of current and emerging opportunities for growth and profitability; and

the receipt by Commerce’s board of directors of the Magstar Capital, LLC opinion (discussed below) concerning the fairness, from a financial point of view, of the merger to holders of Commerce’s common stock.
Opinion of Commerce’s Financial Advisor
(See page 29)
In deciding to approve the merger, the board of directors of Commerce considered the opinion of its financial advisor, Magstar Capital, LLC, an investment banking and financial advisory firm. Magstar Capital, LLC has given a fairness opinion to the Commerce board of directors that, as of the date of the opinion, the merger consideration was fair, from a financial point of view, to the holders of Commerce common stock. The opinion is based on and subject to the procedures, matters and limitations described in the opinion and other matters that Magstar Capital, LLC considered relevant. The fairness opinion is attached to this proxy statement-prospectus as Appendix B. We urge all shareholders of Commerce to read the entire opinion, which describes the procedures followed, matters considered and limitations on the review undertaken by Magstar Capital, LLC in providing its opinion. The opinion provided by Magstar Capital, LLC was prepared prior the coronavirus COVID-19 pandemic, and does not reflect the current financial conditions of Nicolet and Commerce, or the current market conditions. For further information, please see the section entitled “The Merger — Opinion of Commerce’s Financial Advisor” beginning on page 29. See also “Risk Factors” beginning on page 14 for a discussion of risks relating to the potential effects of the COVID-19 pandemic.
Information About the Special Shareholders’ Meeting
(See page 21)
A special meeting of the shareholders of Commerce will be held on [•], at [•].m., local time. The meeting will be held at [•]. Due to the COVID-19 pandemic, and out of an abundance of caution for your safety, we will be allowing shareholders to participate in the special meeting via remote communication. If you join the meeting remotely, you will be able to hear and participate in the meeting.
At the meeting, the shareholders of Commerce will vote on the merger agreement described herein and in the notice for the meeting. If Commerce’s shareholders approve the merger agreement and the other conditions to completing the merger are satisfied, we expect to complete the merger on [•].
Instructions for joining the special meeting via remote communications are set forth below:
[To insert dial-in and pin information.]
Quorum and Vote Required at the Meeting
(See page 21)
Shareholders who own Commerce common stock at the close of business on [•], the record date, will be entitled to vote at the special shareholders’ meeting. A majority of the outstanding shares of Commerce common stock as of the record date for the meeting must be present in person, via remote communication or by proxy at the meeting in order for a quorum to be present. If a quorum is not present at the meeting, the meeting will be adjourned, and no vote will be taken until and unless a quorum is present.
Approval of the merger proposal requires the affirmative vote of a majority of the shares of Commerce common stock outstanding on the record date. Abstentions, shares not voted, and broker nonvotes will have
 
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the same effect as a vote against the merger proposal. Approval of the adjournment proposal requires that the votes cast for the proposal exceed the votes cast against the proposal.
Share Ownership of Management
(See page [])
As of the record date for the special meeting, directors and executive officers of Commerce had or shared voting or dispositive power over approximately 23% of the outstanding shares of Commerce common stock. It is anticipated that these individuals will vote their shares of Commerce common stock in favor of the merger agreement. Certain of these individuals have entered into a written agreement with Nicolet providing that they will vote the shares over which they have voting power in favor of the merger agreement. A copy of the form of such agreement is included as an exhibit to the merger agreement.
As of the record date for the meeting, directors and executive officers of Nicolet had or shared no voting or dispositive power over any of the outstanding shares of Commerce common stock. Nicolet had voting and dispositive power over less than 1% of the outstanding shares of Commerce common stock as of the record date.
Structure of the Merger
(See page 25)

Commerce Financial Holdings, Inc. will cease to exist after the merger.

Initially, Commerce State Bank will be operated as a standalone subsidiary of Nicolet.

Subsequently, it is expected that Commerce State Bank would be merged with and into Nicolet National Bank, and after such bank merger Commerce State Bank will cease to exist.

Subsequent to the bank merger, the business of Commerce State Bank will be conducted through Nicolet National Bank.

Upon consummation of the merger and the bank merger, one person from the Commerce board of directors, to be designated by Commerce and reasonably acceptable to Nicolet (expected to be Joseph Fazio III), is anticipated to join the board of directors of Nicolet and Nicolet National Bank.
We Must Obtain Regulatory Approval to Complete the Merger
(See page [])
We cannot complete the merger unless we receive the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Office of the Comptroller of the Currency (“OCC”) and the Wisconsin Department of Financial Institutions (the “WDFI”). All regulatory applications and notices required to be filed prior to the merger have been or will be filed. Although we do not know of any reason why we could not obtain the necessary regulatory approvals in a timely manner, we cannot be certain whether or when we will obtain them.
We Must Meet Several Conditions to Complete the Merger
(See page [])
In addition to the required regulatory approvals, the merger will be completed only if certain conditions are met or waived, including the following:

approval by Commerce’s shareholders of the merger agreement by the required vote;

receipt by Commerce and Nicolet of an opinion from Bryan Cave Leighton Paisner LLP that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code;

Commerce maintaining tangible common equity of at least $66.5 million (as defined in the merger agreement);

the Nicolet Common Stock Price is at least $62.00 (if Nicolet maintains its intent to terminate the agreement if the Nicolet Common Stock Price is below $62.00); and
 
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each party’s certification to the other as to the continued accuracy of the representations and warranties contained in the merger agreement, compliance with covenants and closing conditions, and the satisfaction of all other matters applicable to the transaction.
If all regulatory approvals are received and the other conditions to completion are satisfied, Nicolet and Commerce contemplate that they will complete the merger on [•]. For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
Termination and Termination Fee
(See page 55)
The merger agreement may be terminated, either before or after shareholder approval, under certain circumstances described in detail later in this proxy statement-prospectus. If Nicolet terminates the merger agreement because Commerce’s board withdraws or changes its recommendation of the merger agreement, if Commerce terminates the agreement to accept an Acquisition Proposal it deems a Superior Proposal, as each term is defined in the merger agreement, or if either party terminates the merger agreement under certain circumstances and within twelve months of such termination Commerce enters into a definitive agreement with respect to an Acquisition Proposal, then Commerce (or its successor) must pay Nicolet a termination fee of $5.0 million. For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
Commerce’s Directors and Executive Officers Have Interests in the Merger that Differ from its Shareholders’ Interests
(See page [])
The executive officers and directors of Commerce have interests in the merger in addition to their interests as shareholders of Commerce generally. The members of the Commerce board of directors knew about these additional interests and considered them when they adopted the merger agreement. Such interests include, among others:

the potential continuation of employee benefits;

Commerce Stock Options;

the potential payment of certain change in control benefits pursuant to the terms of employment agreements;

provisions in the merger agreement relating to director and officer liability insurance and the indemnification of officers and directors of Commerce for certain liabilities; and

the appointment of one Commerce board member (expected to be Joseph Fazio III) to the boards of Nicolet and Nicolet National Bank.
These interests are more fully described in this proxy statement-prospectus under the heading “The Merger — Interests of Certain Persons in the Merger” at page 40.
Employee Benefits of Commerce Employees after the Merger
(See page [])
Nicolet has agreed to offer to all current employees of Commerce and Commerce State Bank who become Nicolet employees as a result of the merger substantially similar employee benefits to those that Nicolet offers to its employees in similar positions.
Differences in Rights of Commerce’s Shareholders after the Merger
(See page [•])
To the extent that they receive Nicolet common stock as merger consideration, Commerce shareholders will become Nicolet shareholders as a result of the merger. Their rights as shareholders after the merger will be governed by Nicolet’s articles of incorporation and bylaws. The rights of Nicolet shareholders are
 
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different in certain respects from the rights of Commerce’s shareholders. The material differences are described later in this proxy statement-prospectus.
Accounting Treatment
(See page 46)
Nicolet is required to account for the merger as a purchase transaction for accounting and financial reporting purposes under accounting principles generally accepted in the United States of America (“GAAP”). Under purchase accounting, the assets (including any identifiable intangible assets) and liabilities (including executory contracts and other commitments) of Commerce at the effective time of the merger will be recorded at their respective fair values and added to those of Nicolet. Any excess of purchase price over the fair values is recorded as goodwill. Any excess of the fair values over the purchase price is recorded in earnings as a bargain purchase gain. Consolidated financial statements of Nicolet issued after the merger would reflect those fair values and would not be restated retroactively to reflect the historical consolidated financial position or results of operations of Commerce.
 
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RISK FACTORS
In addition to the other information included in this proxy statement-prospectus, you should carefully consider the matters described below in determining whether to adopt and approve the merger agreement.
Risks Relating to the Merger
The recent global coronavirus outbreak could harm business and results of operations for each of Nicolet and Commerce and the combined company following the completion of the merger.
In December 2019, a coronavirus (COVID-19) was reported in China, and has since spread to additional countries including the United States. In March 2020, the World Health Organization declared the coronavirus to be a pandemic. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the coronavirus pandemic on the businesses of Nicolet, Commerce and the combined company, and there is no guarantee that efforts by Nicolet, Commerce and the combined company to address the adverse impacts of the coronavirus will be effective. The impact to date has included periods of significant volatility in financial, commodities and other markets. This volatility, if it continues, could have an adverse impact on Nicolet’s and Commerce’s customers and on the companies’ business, financial condition and results of operations.
In addition, recent actions by US federal, state and foreign governments to address the pandemic, including travel bans and school, business and entertainment venue closures, may also have a significant adverse effect on the markets in which Nicolet and Commerce conduct their businesses. The extent of impacts resulting from the coronavirus pandemic and other events beyond the control of Nicolet, Commerce and the combined company will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus pandemic and actions taken to contain the coronavirus or its impact, among others.
The coronavirus pandemic has, and could result in further, business disruption to Nicolet and Commerce, and if either company is unable to recover from such a business disruption on a timely basis, the merger and the combined company’s business and financial conditions and results of operations following the completion of the merger would be adversely affected. The merger and efforts to integrate the businesses of Nicolet and Commerce may also be delayed and adversely affected by the coronavirus pandemic, and become more costly. Each of Nicolet, Commerce and the combined company may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect its financial condition and results of operations.
The effect of the coronavirus pandemic on Nicolet or Commerce may result in either party’s failure to meet the closing requirements contained in the merger agreement. Pursuant to the terms of the merger agreement, either Nicolet or Commerce may terminate the merger agreement at closing if certain conditions are not met. If coronavirus pandemic continues to affect either Nicolet or Commerce through the anticipated time of closing, the parties to the merger agreement may not be able to meet closing conditions. Accordingly, the merger agreement and the entire transaction may be terminated if such closing conditions are not met. For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
Uncertainty regarding the completion of the merger may harm the combined institution if the merger is consummated.
As reflected in this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet intends to terminate the merger agreement. Neither Nicolet nor Commerce can predict whether the Nicolet Common Stock Price will be at least $62.00 at the time of the prospective closing of the merger. This uncertainty may cause Nicolet to experience further difficulties with the integration process or the retention of Commerce’s employees and customers. If Nicolet experiences difficulties with the integration process, Nicolet might not achieve some of the economic benefits expected to result from the merger.
 
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Nicolet’s position regarding the merger agreement with Commerce may negatively affect Nicolet’s ability to successfully acquire future merger targets.
As part of Nicolet’s growth strategy, Nicolet regularly evaluates merger and acquisition opportunities and conducts due diligence activities related to possible transactions with other financial institutions and financial services companies. Nicolet seeks merger or acquisition partners that are culturally similar, have experienced management, and possess either significant market presence or have potential for improved profitability through financial management, economies of scale, or expanded services. Each potential merger or acquisition partner must make an independent decision as to whether a transaction with Nicolet is appropriate and in the best interests of their constituencies. One of the rationales offered by Nicolet to potential targets is Nicolet’s historical ability to execute on merger transactions.
As reflected in this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet intends to terminate the merger agreement. Nicolet believes if its common stock price is below $62.00 per share, such pricing is a signal of the farther-reaching and prolonged impacts of the COVID-19 pandemic, which are still volatile and uncertain. If the Nicolet Common Stock Price is below $62.00, Nicolet believes that consummating a transaction at a fixed exchange ratio reflecting comparative valuations set before the onset of the COVID-19 pandemic is not prudent for Nicolet’s shareholders in today’s unsettled environment. Nicolet’s ability to terminate the agreement in that circumstance is provided for in the terms of the merger agreement as negotiated between Nicolet and Commerce. However, Nicolet’s disclosure of its intent not to consummate the merger in the event that the Nicolet Common Stock Price remains below $62.00 may be perceived by other potential targets as reducing the assurances that Nicolet would be in position to close on future acquisitions. If Nicolet’s ability to attract future market targets is limited, Nicolet may not be able to sustain its historical rate of growth, or may encounter issues associated with its growth, either of which could adversely affect Nicolet’s financial condition, results of operations, and share price.
Because the market price of Nicolet common stock will fluctuate, Commerce shareholders cannot be sure of the exact value of the merger consideration they will receive.
If the merger is completed, each share of Commerce common stock issued and outstanding immediately prior to closing of the merger (excluding cancelled shares) will be converted into the right to receive the merger consideration, which shall consist of 1.15 shares of Nicolet common stock. The value of such shares of Nicolet common stock to be received will depend on the price per share of Nicolet common stock at the time the shares are actually received by a Commerce shareholder. The value of Nicolet common stock has fluctuated from the date the merger agreement was signed and publicly announced to the date this proxy statement-prospectus was prepared, and likely will continue to fluctuate until the date of the Commerce special shareholders’ meeting, and the date immediately prior to the closing of the merger. Accordingly, Commerce shareholders will not know or be able to calculate the value of any Nicolet common stock they are to receive in the merger at the time they submit their proxy or at the time of the special shareholders’ meeting. Stock price changes may result from a variety of factors, including but not limited to general market and economic conditions, the recent outbreak of COVID-19, changes in Nicolet’s businesses, operations and prospects, and regulatory considerations, among other things. Many of these factors are beyond the control of Nicolet and Commerce.
Further, the exchange ratio may adjust in the event that the Nicolet Common Stock Price (defined in the merger agreement as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is greater than $82.00 or less than $62.00. In the event that the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.
 
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Because Commerce common stock is privately held and not traded on any public markets, it is difficult to determine how the fair market value of Commerce common stock compares with the merger consideration.
Commerce common stock is not traded on any public trading markets. Accordingly, it is difficult to determine the fair market value of Commerce common stock and how such value compares with the merger consideration.
The fairness opinion delivered by Magstar Capital to Commerce’s board of directors prior to the entry into the merger agreement will not reflect changes in circumstances that have occurred since the dates of the opinions.
The Commerce board of directors has not obtained an updated fairness opinion either as of the date of this proxy statement-prospectus or as of any other date subsequent to the date of such opinion from Magstar Capital, LLC, Commerce’s financial advisor. Changes in the operations and prospects of Commerce and/or Nicolet, general market and economic conditions and other factors which may be beyond the control of Nicolet and Commerce, including the recent pandemic of COVID-19 that has caused higher than normal volatility in the financial markets generally, and the market prices of Nicolet and Commerce, may have altered the value of Nicolet or Commerce or the prices of shares of Nicolet common stock and shares of Commerce common stock as of the date of this proxy statement-prospectus, or may alter such values and prices by the time the merger is completed. The opinion does not speak as of any date other than its date.
Nicolet’s integration of Commerce may be more difficult, costly, or time-consuming than we expect.
Nicolet and Commerce have operated, and, until completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees or disruption of each company’s ongoing business which could adversely affect the ability to maintain relationships with clients and employees or to achieve some of the anticipated benefits of the merger. Further, the COVID-19 pandemic may cause Nicolet or Commerce to reduce integration efforts in order to focus on internal operations to account for changes in the economic environment. If the merger is consummated, it is currently anticipated that, for a period of time, Commerce State Bank and Nicolet National Bank will each continue to operate independently. Nicolet has previously integrated acquired depository institutions concurrently with the legal closing of the holding company mergers, and may experience further difficulties with this integration process. If Nicolet experiences difficulties with the integration process, Nicolet might not achieve some of the economic benefits expected to result from the merger. As with any merger of banking institutions, there also may be business disruptions that cause the combined entity to lose customers or cause customers to take their deposits out of our banks and move their business to other financial institutions.
Commerce and Nicolet will be subject to business uncertainties while the merger is pending, which could adversely affect their respective businesses.
Uncertainty about the consummation of the merger or the effect of the merger on employees and customers may have an adverse effect on Commerce and Nicolet and consequently on the business and stock price of Nicolet after the merger. Although the parties intend to take steps to reduce any adverse effects, these uncertainties may impair their ability to attract, retain, and motivate key personnel until the merger is consummated and for a period of time thereafter, and such uncertainties could cause customers and others that deal with Commerce or Nicolet to seek to change their existing business relationships. Employee retention could be particularly challenging during the merger, as employees may experience uncertainty about their roles in the combined company following the merger. If key employees depart because of issues relating to the perceived uncertainty and difficulty of integration or a desire not to remain with the combined company, the combined company’s business following the merger could be harmed and the market price of its common stock could decrease.
Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated.
The merger must be approved by the Federal Reserve, the OCC and the WDFI. The Federal Reserve, the OCC and the WDFI will consider, among other factors, the competitive impact of the merger, our financial and managerial resources and the convenience and needs of the communities to be served. As part
 
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of that consideration, we expect that the Federal Reserve, the OCC and the WDFI will review the capital position, safety and soundness, and legal and regulatory compliance matters and Community Reinvestment Act (“CRA”) matters. There can be no assurance as to whether other necessary approvals will be received, the timing of those approvals, or whether any conditions will be imposed. For a discussion of the status of the required regulatory approvals, see “Status and Effect of Approvals” at page 45.
The market price of Nicolet common stock after the merger may be affected by factors different from those currently affecting the market price of Commerce.
The businesses of Nicolet and Commerce differ in some respects and, accordingly, the results of operations of Nicolet and the market price of Nicolet’s shares of common stock after the merger may be affected by factors different from those currently affecting Commerce’s results of operations. For a discussion of the businesses of Nicolet and Commerce and of certain factors to consider in connection with those businesses, see “The Companies” at page 6.
The Merger Agreement limits Commerce’s ability to pursue alternatives to the merger.
The merger agreement contains provisions that limit Commerce’s ability to discuss competing third-party proposals to acquire all or a significant part of either party or any of its subsidiaries. In addition, Commerce has agreed to pay Nicolet a fee of $5.0 million if Nicolet terminates the agreement after Commerce’s board of directors withdraws or changes its recommendation of the merger agreement, if Commerce terminates the merger agreement to accept an Acquisition Proposal that Commerce’s board deems a Superior Proposal, as each term is defined in the merger agreement, or if either party terminates the merger agreement either because Commerce’s shareholders did not approve the merger agreement or because the merger was not consummated on or prior to February 17, 2021, and, within twelve months following such termination, Commerce enters into a definitive agreement with respect to an Acquisition Proposal. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Commerce from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share price than that proposed in the merger, or might result in a potential competing acquirer proposing to pay a lower per share price to acquire Commerce than it might otherwise have proposed to pay.
Certain directors and executive officers of Commerce have interests in the merger other than their interests as shareholders.
Certain directors and executive officers of Commerce have interests in the merger other than their interests as shareholders. The board of directors of Commerce was aware of these interests at the time it approved the merger. These interests may cause Commerce’s directors and executive officers to view the merger proposal differently than you may view it. See “The Merger — Interests of Certain Persons in the Merger” at page 40.
Failure to complete the merger could negatively impact the stock price and future business and financial results of Commerce.
If the merger is not completed for any reason, including Commerce shareholders failing to approve the merger agreement and the merger, the ongoing business of Commerce may be adversely affected and, without realizing any of the benefits of having completed the merger, Commerce could be subject to a number of possible consequences, including the following:

Commerce may be required, under certain circumstances, to pay a termination fee to Nicolet;

Commerce is subject to certain restrictions on the conduct of business prior to completing the merger, which may adversely affect its ability to execute certain business strategies;

Commerce’s relationships with customers, regulators and employees may be negatively affected;

Commerce has incurred and will continue to incur certain costs and fees associated with the merger; and
 
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matters related to the merger (including integration planning) may require substantial commitments of time and resources by the management and employees of Commerce, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to Commerce as an independent company.
Nicolet may fail to realize some or all of the anticipated benefits of the merger.
The success of the merger will depend on, among other things, Nicolet’s ability to successfully combine the businesses of Nicolet and Commerce. If Nicolet is not able to successfully achieve this objective, the anticipated benefits of the merger may not be realized fully, or at all, or may take longer to realize than expected. Nicolet and Commerce have operated and, until the consummation of the merger, will continue to operate independently. It is possible that the integration process or other factors could result in the disruption of the ongoing business of Nicolet or inconsistencies in standards, controls, procedures and policies. It is also possible that clients, customers, depositors and counterparties of Nicolet or Commerce could choose to discontinue their relationships with the combined company post-merger because they prefer doing business with an independent company or for any other reason, which would adversely affect the future performance of the combined company. These transition matters could have an adverse effect on each of Nicolet and Commerce during the pre-merger period and for an undetermined period of time after the consummation of the merger.
You will experience a substantial reduction in percentage ownership and voting power with respect to your shares as a result of the merger.
Commerce shareholders will experience a substantial reduction in their respective percentage ownership interests and effective voting power through their stock ownership in Nicolet after the merger relative to their percentage ownership interest in Commerce prior to the merger. If the merger is consummated, current Commerce shareholders would own approximately [17]% of Nicolet’s outstanding common stock, assuming no adjustments to the exchange ratio, while current Nicolet shareholders would own the remaining [83]%. Consequently, Commerce shareholders will have less voting power per share in Nicolet following the merger than they currently have in Commerce as an independent entity. See “The Merger Agreement — What Commerce Shareholders will Receive in the Merger” at page 47.
 
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A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This proxy statement-prospectus includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “potential,” “predict,” “project,” “seek,” “should,” “will” and other similar words and expressions of future intent.
The ability of Nicolet and Commerce to predict results or the actual effect of future plans or strategies is inherently uncertain. Although Nicolet and Commerce believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could cause actual results and performance to differ from those expressed in the forward-looking statements include, but are not limited to:

the effects of the COVID-19 pandemic on the businesses, customers, employees and third-party services providers of Nicolet and Commerce;

the businesses of Nicolet and Commerce may not integrate successfully or the integration may be more difficult, time-consuming or costly than expected;

the expected growth opportunities and cost savings from the transaction may not be fully realized or may take longer to realize than expected;

revenues following the transaction may be lower than expected as a result of losses of customers or other reasons, including issues arising in connection with integration of the two banks;

deposit attrition, operating costs, customer loss and business disruption following the transaction, including difficulties in maintaining relationships with employees, may be greater than expected;

governmental approvals of the transaction may not be obtained on the proposed terms or expected timeframe;

the terms of the proposed transaction may need to be modified to satisfy such approvals or conditions;

Commerce’s shareholders may fail to approve the transaction;

reputational risks and the reaction of the companies’ customers to the transaction;

diversion of management time on merger-related or pandemic-related issues;

changes in asset quality and credit risk;

the cost and availability of capital;

customer acceptance of the combined company’s products and services;

customer borrowing, repayment, investment and deposit practices;

the introduction, withdrawal, success and timing of business initiatives;

the impact, extent, and timing of technological changes;

severe catastrophic events in our geographic area;

a weakening of the economies in which the combined company will conduct operations may adversely affect its operating results;

changes to statutes, regulations, or regulatory policies or practices resulting from the COVID-19 pandemic;

changes in the U.S. legal and regulatory framework;

the impact of interest rates on margins and net interest income; and
 
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competition from other financial services companies in the companies’ markets could adversely affect operations.
The cautionary statements in the “Risk Factors” section and elsewhere in this proxy statement-prospectus, and other risks detailed in the parties’ press releases, shareholder communications and other SEC filings, including the Form 10-K filed by Nicolet for the year ended December 31, 2019, identify important factors and possible events that involve risk and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Nicolet and Commerce do not intend to, and undertake no obligation to, update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements.
 
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THE COMMERCE SPECIAL SHAREHOLDERS’ MEETING
Purpose
Commerce shareholders are receiving this proxy statement-prospectus because on [•], the record date for a special meeting of shareholders to be held on [•], at [•] at [•] [•].m., they owned shares of the common stock of Commerce, and the board of directors of Commerce is soliciting proxies for the matters to be voted on at this special meeting, as described in more detail below. A copy of this proxy statement-prospectus was mailed to holders of Commerce common stock on [•], accompanied by a proxy card for use at the meeting and at any adjournment(s) of the meeting.
At the meeting, Commerce shareholders will consider and vote upon the merger agreement and the transactions contemplated thereby and any other matters that are properly brought before the meeting or any adjournments(s) of the meeting.
When you sign the enclosed proxy card or otherwise vote pursuant to the instructions set forth on the proxy card, you appoint the proxy holder as your representative at the meeting. The proxy holder will vote your shares as you have instructed in the proxy card, thereby ensuring that your shares will be voted whether or not you attend the meeting. Even if you plan to attend the meeting (including via remote communications), we ask that you instruct the proxies how to vote your shares in advance of the meeting just in case your plans change. In the event that other matters arise at the special meeting, the proxy holder will vote your shares according to his or her discretion.
If you have not already done so, please complete, date and sign the accompanying proxy card and return it promptly in the enclosed, postage paid envelope or otherwise vote pursuant to the instructions set forth on the proxy card. If you do not vote your shares as instructed on the proxy card, or if you do not attend and cast your vote at the special meeting, the effect will be a vote against the merger agreement.
Record Date; Quorum and Vote Required
The record date for the Commerce special meeting is [•]. Commerce’s shareholders of record as of the close of business on that day will receive notice of and will be entitled to vote at the special meeting. As of the record date, there were [•] shares of Commerce common stock outstanding and entitled to vote at the meeting. The outstanding shares are held by approximately [•] holders of record.
The presence, in person, via remote communications or by proxy, of a majority of the shares of Commerce common stock entitled to vote on the merger agreement is necessary to constitute a quorum at the meeting. Each share of Commerce common stock outstanding on the record date entitles its holder to one vote on the merger agreement and any other proposal that may properly come before the meeting.
To determine the presence of a quorum at the meeting, Commerce will also count as present at the meeting the shares of Commerce common stock present in person or via remote communication but not voting, and the shares of common stock for which Commerce has received proxies but with respect to which the holders of such shares have abstained or signed without providing instructions as described in “Solicitation and Revocation of Proxies” below. Based on the number of shares of Commerce common stock outstanding as of the record date, at least [•] shares need to be present at the special meeting, whether in person, via remote communication or by proxy, to constitute a quorum.
Approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Commerce common stock as of the record date for the special meeting. Abstentions, shares not voted, and broker nonvotes will have the same effect as a vote against the merger proposal. Approval of the adjournment proposal requires that more votes be cast in favor of the adjournment proposal than against it; abstentions, shares not voted, and broker nonvotes will have no effect on this proposal.
As of the record date for the meeting, Commerce’s directors and executive officers beneficially owned a total of 357,391 shares, or approximately 23.35% of the shares entitled to vote on the merger, of Commerce common stock. These individuals have entered into a written agreement with Nicolet, as shareholders of Commerce, that they will vote their shares in favor of the merger agreement, except as may be limited by any
 
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existing fiduciary obligations to beneficial owners of such shares. In addition, Nicolet had voting power over less than 1% of the shares entitled to vote on the merger.
Solicitation and Revocation of Proxies
If you have delivered a signed proxy card for the Commerce special meeting, you may revoke it at any time before it is voted by:

attending the meeting (in-person or remotely), giving oral notice of your revocation, and voting in person or over the internet;

giving written notice revoking your proxy to Commerce’s Corporate Secretary prior to the date of the meeting;

if you voted over the internet, voting again over the internet by the applicable deadline described below or submit a proxy card and return it prior to the vote at the annual meeting; or

submitting a signed proxy card that is dated later than your initial proxy card to Commerce’s Corporate Secretary.
The proxy holders will vote as directed on all valid proxies that are received at or prior to the meeting and that are not subsequently revoked. If you complete, date and sign your proxy card but do not provide instructions as to your vote, the proxy holders will vote your shares FOR approval of the merger proposal and FOR the adjournment proposal. If any other matters are properly presented at the meeting for consideration, the persons named in the proxy card will have discretionary authority to vote your shares on those matters. Commerce’s board of directors is not aware of any matter to be presented at the meeting other than the merger proposal and the adjournment proposal.
If you hold shares in “street name” with a broker, bank, or other fiduciary, you will receive voting instructions from the holder of record of your shares. Under the rules of various national and regional securities exchanges, brokers, banks and other fiduciaries may generally vote your shares on routine matters, such as the ratification of an independent registered public accounting firm, even if you provide no instructions, but may not vote on non-routine matters, such as the matters being brought before the special meeting, unless you provide voting instructions. Shares for which a broker does not have the authority to vote are recorded as “broker nonvotes” and are not counted in the vote by shareholders, but will count for purposes of a quorum. As a result, any broker nonvotes will have the practical effect of a vote against the merger proposal but will not affect the adjournment proposal. We therefore encourage you to provide directions to your broker as to how you want your shares voted on all matters to be brought before the special meeting. You should do this by carefully following the instructions your broker gives you concerning its procedures. If you hold shares in “street name” and wish to change your vote at any time, you must contact your broker.
Commerce will bear the cost of soliciting proxies from its shareholders. Commerce will solicit shareholder votes by mail and may also solicit certain shareholders by other means of communication, including telephone or in person. If anyone solicits your vote in person, by telephone, or by other means of communication, they will receive no additional compensation for doing so. Commerce will reimburse brokerage firms and other persons representing beneficial owners of shares for their reasonable expenses in forwarding solicitation material to those beneficial owners.
How to Vote Your Shares
Shareholders of record (i.e., those who own shares in their own name) can vote by [internet], mail or in person as follows:

Voting By Internet.   Access the internet website specified on the enclosed proxy card.

Voting by Mail.   Complete, sign, date, and return the enclosed proxy card in the envelope provided.

Voting at the Special Meeting.   If you decide to attend the special meeting and vote in person, you may deposit your proxy card with a representative of Commerce at the special meeting registration desk. You may also complete a ballot that will be distributed at the meeting. Whether or not you plan
 
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to attend the special meeting, please submit your proxy promptly in the enclosed envelope. If you decide to attend the special meeting via remote communication, you may vote remotely by accessing the internet website specified on the enclosed proxy card.
“Street name” shareholders (i.e., those who own their shares in the name of a broker, bank, or other fiduciary) should refer to the information you receive from your broker to see which voting methods are available to you. Please note, if you are a street name shareholder and wish to vote in person at the special meeting, you must obtain a proxy executed in your favor from your broker to be able to vote at the special meeting.
You should not send any stock certificates with your proxy card. If the merger is completed, you will receive a letter of transmittal with instructions for exchanging your stock certificates.
Dissenters’ Rights
Commerce’s shareholders have dissenters’ rights with respect to the merger under Wisconsin law. Shareholders who wish to assert their dissenters’ rights and comply with the procedural requirements of Subchapter XIII of the Wisconsin Business Corporation Law (“WBCL”) will be entitled to receive payment of the fair value of their shares in cash in accordance with Wisconsin law. For more information regarding the exercise of these rights, see, “Dissenters’ Rights,” at page 48.
Recommendation of the Board of Directors of Commerce
Commerce’s board of directors has unanimously approved the merger agreement and the transactions contemplated thereby, believes that the merger is in the best interests of Commerce and its shareholders, and recommends that you vote FOR approval of the merger agreement and the transactions contemplated thereby and FOR the adjournment proposal.
For a discussion of the factors considered by the board of directors in reaching its conclusion, see “The Merger — Background of the Merger” at page 25 and “The Merger — Reasons for the Merger” at page 26.
Shareholders should note that Commerce’s directors have certain interests in, and may derive benefits as a result of, the merger that are in addition to their interests as shareholders of Commerce. See “The Merger — Interests of Certain Persons in the Merger” at page 40.
 
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THE PROPOSALS
Proposal 1 — Approval of the Merger Agreement and the Merger
At the special meeting, shareholders of Commerce will be asked to approve the merger proposal providing for the merger of Commerce with and into Nicolet. Shareholders of Commerce should read this proxy statement-prospectus carefully and in its entirety, including the appendices, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this proxy statement-prospectus as Appendix A.
After careful consideration, the Commerce board of directors, by a unanimous vote of all directors, approved the merger agreement and the merger, and found them to be advisable and in the best interests of Commerce and its shareholders. See “The Merger — Background of the Merger” and “The Merger — Reasons for the Merger” included elsewhere in this proxy statement-prospectus for a more detailed discussion of the Commerce board’s recommendation.
THE COMMERCE BOARD UNANIMOUSLY RECOMMENDS THAT
COMMERCE SHAREHOLDERS VOTE “FOR” THE MERGER PROPOSAL.
Proposal 2 — Adjournment of the Special Meeting
If Commerce does not receive a sufficient number of votes to constitute a quorum of the common stock or approve the merger agreement and the transactions contemplated thereby, it may propose to adjourn the special meeting for the purpose of soliciting additional proxies to establish such quorum or approve the merger proposal. Commerce does not currently intend to propose adjournment of the special meeting if there are sufficient votes to approve the merger agreement and the transactions contemplated thereby.
THE COMMERCE BOARD UNANIMOUSLY RECOMMENDS THAT
COMMERCE SHAREHOLDERS VOTE “FOR” THE ADJOURNMENT PROPOSAL.
 
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THE MERGER
Structure of the Merger
The merger agreement provides for the merger of Commerce with and into Nicolet, with Nicolet being the surviving entity in the merger. After the merger, Commerce State Bank will merge with and into Nicolet National Bank, with Nicolet National Bank being the surviving bank. Each share of Commerce common stock outstanding at the effective time of the merger, other than certain cancelled shares, will be converted into the right to receive merger consideration consisting of 1.15 shares of Nicolet common stock. The merger agreement provides that the exchange ratio is fixed unless the Nicolet Common Stock Price (as defined in the merger agreement) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. If the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. Additionally, under no circumstances shall the number of shares of Nicolet common stock to be issued in the merger equal or exceed 19.9% of the number of outstanding shares of Nicolet common stock such that Nasdaq rules would require approval of the merger by Nicolet’s shareholders. The parties agree to reduce the number of shares of Nicolet common stock to be issued and to increase the cash to be issued pro rata to avoid such a shareholder vote.
See “The Merger Agreement” on page 47 for additional details regarding the structure of the merger.
Background of the Merger
Commerce’s board of directors and senior management have regularly reviewed and evaluated its business, strategic direction, performance, prospects and strategic alternatives as part of Commerce’s ongoing efforts to strengthen its businesses and improve its operations and financial performance to create value for its shareholders, taking into account economic, regulatory, competitive and other conditions. In recent years, such strategic reviews have identified that the pricing in the strategic market was peaking and such pricing may not be sustainable long term. To assist in the analysis, in August of 2019, the Commerce board approved the retention of Hillworth, LLC (“Hillworth”), an advisory firm specializing in community banks/bank holding companies, and Magstar Capital, LLC (“Magstar”), a registered FINRA-broker dealer that provides investment banking advisory services, of which Hillworth’s principals are registered representatives, and through which broker-dealer and investment banking services are provided. Hillworth and Magstar provided the board with an overview of the market and information on possible transaction parties. Commerce management worked with Hillworth to prepare a company profile and a list of the most likely transaction parties. Over the next several months, Commerce management and/or Hillworth met with five financial institutions that had been identified, each of which executed confidentiality agreements and were provided access to confidential information concerning Commerce.
Late in 2019 or early 2020, Hillworth informed the identified financial institutions that Commerce was seeking initial indications of interest in a transaction by January 13, 2020. In response, three written and one verbal interest indications were received, including an initial offer from Nicolet of a stock for stock merger valuing Commerce at approximately $85 per share.
On January 15, 2020, the Commerce board of directors, along with representatives of Hillworth and outside counsel, discussed the indications of interest received and evaluated them based on previously outlined strategic objectives and current market conditions. Following deliberations, the board directed Hillworth to solicit best and final bids from Nicolet and one other bidder. Joseph Fazio, the Commerce CEO,
 
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met at Nicolet’s offices to discuss possible transaction terms with members of Nicolet’s senior management team, and discussions continued for the next few days, during which a tentative agreement was struck for Nicolet to acquire Commerce in an all-stock transaction based on an exchange ratio of 1.217 shares of Nicolet stock for each Commerce share outstanding, valuing Commerce at approximately $87 per share based on a price per Nicolet share of $71.50. These terms were incorporated in an updated letter of intent, which was approved by the Commerce board of directors at a telephonic meeting the morning of January 24, 2020, and executed by both Commerce and Nicolet later that day.
Immediately following execution of the letter of intent, the drafting and negotiation of the Merger Agreement and related documents began and Nicolet conducted a detailed due diligence review. Based on its diligence review, particularly a review of the Commerce loan portfolio, Nicolet proposed a reduction in the exchange ratio to 1.15 shares of Nicolet stock for each share of Commerce. Following a review of supporting information provided by Nicolet and analysis by Commerce management, the Commerce board of directors participated in a telephonic meeting on February 12 to discuss Nicolet’s revised offer. Hillworth representatives participated on the call and expressed the opinion that even after the reduction in the exchange ratio, the Nicolet offer was superior to other offers received and compared favorably to other transactions. Following discussions, the board authorized management to continue negotiations on a definitive agreement.
Commerce scheduled a board of directors meeting to approve the Merger Agreement with Nicolet for the evening of Sunday, February 16, with the objective of having the agreement signed and announced on Monday February 17, a bank holiday. In advance of the meeting, each director was provided with the latest draft of the merger agreement together with a memorandum from Commerce counsel summarizing the Merger Agreement provisions.
On February 14, 2020, the board of Nicolet met to discuss the terms of the merger. Management provided an in-depth analysis of the bid from a financial perspective. The board also reviewed the final draft of the definitive merger agreement and summarized terms and conditions. After a thorough discussion, the board of Nicolet voted unanimously to proceed with the transaction.
On February 16, 2020, the board of Commerce met again with its advisors from Hillworth, Magstar and Reinhart Boerner Van Deuren s.c., its legal counsel. Counsel reviewed the final draft of the definitive merger agreement and summarized the terms and conditions. On February 16, 2020, Magstar issued its fairness opinion, from a financial point of view, after considering a finalized draft of the definitive merger agreement and the revised merger consideration. After a thorough discussion, the board of Commerce voted unanimously to proceed with the transaction.
Nicolet and Commerce executed the merger agreement on February 17, 2020 and issued a joint press release announcing the execution of the merger agreement and the terms of the merger on the same day.
Reasons for the Merger
General
The financial and other terms of the merger agreement resulted from arm’s-length negotiations between Nicolet’s and Commerce’s representatives. The following discussion of the information and factors considered by the Nicolet and Commerce boards of directors is not intended to be exhaustive, but includes all of the material factors the respective boards considered in determining whether to enter into the merger agreement. In reaching their determinations to approve the merger and to recommend that their respective shareholders approve the merger, neither the Nicolet board of directors nor the Commerce board of directors assigned any relative or specific weight to the following factors, and individual directors may have assigned different weight to different factors.
Nicolet
In deciding to pursue a merger with Commerce, Nicolet’s management and board of directors considered, among other things, the following:

the effectiveness of the merger in allowing Nicolet to expand its competitive position in the Milwaukee-Waukesha-West Allis Metropolitan Statistical Area and Sheboygan Metropolitan Statistical Area markets;
 
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the fact that the merger will allow Nicolet to make a marked entry into the cities of West Bend, Cedarburg, Sheboygan and Elm Grove, as compared to establishing a de novo branch office;

Nicolet’s belief that the expansion into the Milwaukee-Waukesha-West Allis Metropolitan Statistical Area and Sheboygan Metropolitan Statistical Area will provide Nicolet entry into a commercial and industrial hub in the Great Lakes region;

Commerce’s strong reputation and successful track record of organic commercial loan generation abilities;

Nicolet’s belief that the proposed merger will be “geographically accretive” to the surviving institution by moving into a higher growth and higher medium household income market;

the fact that certain members of Nicolet’s and Commerce’s boards of directors have long standing professional relationships and Nicolet’s belief that Commerce’s business values, cultures and philosophies seem to align with those of Nicolet;

Nicolet’s expectation that certain members of Commerce’s executive management team and senior lenders will remain with Nicolet and will lead the markets in West Bend, Cedarburg, Sheboygan and Elm Grove;

Nicolet’s expectation that Nicolet will retain its strong capital position and asset quality upon completion of the transaction; and

Nicolet’s expectations that the merger will offer cost savings opportunities, opportunities for revenue growth through the ability to offer new products and services to Commerce customers, and as a result, be accretive to earnings per share within the first full year.
The Nicolet board of directors approved the merger agreement after Nicolet’s senior management discussed with the Nicolet board of directors a number of factors, including those described above and the business, loan and deposit structure, assets, liabilities, results of operations, financial performance, geographic location and strategic direction of Commerce. The foregoing discussion of the information and factors considered by the Nicolet board of directors is not exhaustive, but includes the material factors considered by the Nicolet board of directors. In view of the wide variety of factors considered by the Nicolet board of directors in connection with its evaluation of the merger, the Nicolet board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. The Nicolet board of directors viewed its position as being based on all of the information and the factors presented to and considered by it. In addition, individual directors may have given different weights to different information and factors. The explanation of Nicolet’s reasons for the merger includes statements that are forward-looking in nature and, therefore, should be read in light of the factors discussed above under “A Warning About Forward-Looking Statements.” Following the effects of the COVID-19 pandemic, if all other closing conditions are met but Nicolet’s Common Stock Price is not above $62.00 at the time of closing, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to exercise its right to terminate the merger agreement.
Commerce
In deciding to pursue the merger transaction with Nicolet, Commerce’s board of directors consulted with its management, as well as its legal counsel and financial advisor, and considered numerous factors, including the following:

the comparison of the value of the consideration offered by Nicolet to the value of the consideration offered by other parties approached by Commerce;

the relationship of the consideration to be paid in the merger to market prices and the book value and earnings per share of Commerce and Nicolet;

Nicolet’s long term growth strategy;

the payment of the Merger Consideration primarily in the form of registered, freely tradeable stock of Nicolet, giving liquidity along with an opportunity to defer taxes on gain;
 
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the belief that Commerce and Nicolet share a similar strategic vision and a similar community banking philosophy;

the complementary aspects of the Commerce and Nicolet businesses, including customer focus, geographic coverage, business orientation, and compatibility of the companies’ management and operating styles;

the respective presentations by management and Commerce’s financial advisor concerning the operations, financial condition and prospects of Commerce and the expected financial impact of the merger on the combined company;

the potential expense-saving and revenue-enhancing opportunities in connection with the merger, the related potential impact on the combined company’s earnings and the fact that the Commerce shareholders will be able to participate as Nicolet shareholders in the benefits of such savings opportunities and the future performance of the combined company generally;

Nicolet’s history and reputation as an efficient and effective acquirer, and success in integrating acquired organizations into its own;

Nicolet’s access to internal and external resources to complete the merger process on a timely basis;

the higher lending limits and greater breadth of products and services the merged banks will be able to offer to Commerce customers;

the terms of the merger agreement, and the presentation by Commerce’s outside legal advisors regarding the merger and merger agreement;

the financial structure, results of operations, and prospects of Commerce and Nicolet, the capital adequacy of the resulting holding company and the outlook for the organizations in the rapidly changing financial services industry;

the combined resources of the two holding companies are expected to improve the efficiencies associated with the development of new products and services to be offered by Nicolet and its subsidiary bank;

the size and capital structure of the resulting holding company following the merger, which are expected to provide greater capacity to weather adverse market events and opportunities and flexibility in responding to the rapidly changing industry for financial service providers;

the enhanced ability of the combined organization to take advantage of current and emerging opportunities for growth and profitability; and

the receipt by Commerce’s board of directors of the Magstar Capital, LLC opinion (discussed below) concerning the fairness, from a financial point of view, of the merger to holders of Commerce’s common stock.
The board also considered certain potential risks associated with the merger, including the following:

the significant time and costs to be undertaken by management in completing the merger and the effort that could cause in disrupting Commerce normal business activities;

the conditions to closing set forth in the merger agreement and the likelihood such conditions will be satisfied, including the receipt of approvals from government agencies;

operating restrictions on Commerce and Commerce State Bank imposed by the Merger Agreement between signing and closing; and

Commerce’s obligation to pay a termination fee of $5 million to Nicolet in certain circumstances.
While each member of Commerce’s board of directors evaluated each of the foregoing as well as other factors, the board of directors collectively did not assign any specific or relative weights to the factors considered and did not make any determination with respect to any individual factor. The Commerce board of directors collectively made its determination with respect to the merger based on its unanimous conclusion that the merger, in light of the factors which each of them individually considered appropriate, is
 
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in the best interest of Commerce’s shareholders. All members of the board of directors voted to approve the merger agreement and the merger.
Opinion of Commerce’s Financial Advisor
The fairness opinion and a summary of the underlying financial analysis of Commerce’s financial advisor, Magstar Capital, LLC, are described below.
The description contains projections, estimates and other forward-looking statements about the future earnings or other measures of the future performance of Commerce. The projections are based on numerous variables and assumptions, which are inherently uncertain, including factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in the projections. These statements should not be relied on as having been made or adopted by Commerce or Nicolet. The copy of the full fairness opinion is attached as Appendix B to this proxy statement-prospectus.
Magstar acted as Commerce’s financial advisor in connection with the proposed merger. Magstar is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger and is familiar with Commerce and its operations. As part of its investment banking business, Magstar is continually engaged in the valuation of businesses and their securities in connection with, among other things, mergers and acquisitions.
Magstar reviewed the financial aspects of the proposed merger with Commerce’s board of directors and, on February 16, 2020, delivered a written opinion to Commerce’s board of directors that, subject to the review, assumptions and limitations set forth in the opinion, the merger consideration to be received by the shareholders of Commerce in connection with the merger is fair to the shareholders of Commerce. In requesting Magstar’s advice and opinion, no limitations were imposed by Commerce upon Magstar with respect to the investigations made or procedures followed by Magstar in rendering its opinion.
The full text of Magstar’s written opinion is attached as Appendix B and is incorporated herein by reference. You 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 Magstar. The summary of Magstar’s opinion included herein is qualified in its entirety by reference to the full text of such opinion.
Magstar’s opinion was directed to Commerce’s board of directors (solely in its capacity as such) and addresses only the fairness of the merger consideration to be paid to Commerce shareholders pursuant to the merger agreement in connection with the merger. Magstar did not opine on any individual stock, cash, or other components of consideration payable in connection with the merger. Magstar’s opinion did not constitute a recommendation to Commerce as to whether or not Commerce should enter into the merger agreement or to any shareholders of Commerce as to how such shareholders should vote at any special meeting of shareholders called to consider and vote upon the merger or any related matter. Magstar’s opinion does not address the underlying business decision to proceed with the merger or the fairness of the amount or nature of the compensation, if any, to be received by any of the officers, directors or employees of Commerce relative to the amount of consideration to be paid with respect to the merger. Magstar’s opinion should not be construed as implying that the value of the merger consideration is necessarily the highest or best price that could be obtained by Commerce in a sale, merger, or combination transaction with a third party. Other than as specifically set forth in the opinion, Magstar is not expressing any opinion with respect to the terms and provisions of the merger agreement or the enforceability of any such terms or provisions.
During the course of Magstar’s engagement and for the purposes of the opinion set forth herein, Magstar:

reviewed a draft of the Agreement dated February 13, 2020, as provided to Magstar by Commerce;

reviewed unaudited financial statements for Commerce, Commerce State Bank, Nicolet and Nicolet National Bank, as of and for the year ending December 31, 2019;

reviewed certain historical annual reports of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank, including for the year ending December 31, 2019;
 
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reviewed certain historical publicly available business and financial information concerning each of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank;

reviewed certain internal financial statements and other financial and operating data of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank including, without limitation, internal financial analyses and forecasts prepared by management of Commerce, Commerce State Bank, and held discussions with senior management of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank regarding recent developments and regulatory matters;

reviewed financial projections prepared by certain members of senior management of Commerce, Commerce State Bank;

discussed with certain members of senior management of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank, the business, financial condition, results of operations and future prospects of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank; the history and past and current operations of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank; Commerce’s, Commerce State Bank’s, Nicolet’s and Nicolet National Bank’s historical financial performance; and their assessment of the rationale for the merger;

reviewed and analyzed materials detailing the merger prepared by Commerce, Commerce State Bank, Nicolet and Nicolet National Bank including the estimated amount and timing of the cost savings and related expenses, certain purchase accounting adjustments and synergies expected to result from the merger (the “Synergies”);

assessed general economic, market and financial conditions;

analyzed the pro forma financial impact of the merger on the combined company’s earnings, tangible book value, financial ratios and other such metrics Magstar deemed relevant, giving effect to the merger based on assumptions relating to the Synergies;

reviewed certain S&P CapIQ consensus income and balance sheet estimates for Nicolet for 2020 and 2021;

reviewed historical market prices and trading volumes of Nicolet’s Common Stock;

reviewed the certain publicly available financial information and stock market data related to selected public financial institutions/commercial banks that Magstar deemed relevant to its analysis;
reviewed the terms of recent merger, acquisition and control investment transactions, to the extent publicly available, involving financial institutions and financial institution holding companies that Magstar considered relevant;

taken into consideration its experience in other similar transactions as well as its knowledge of the banking and financial services industry; and

performed such other analyses and considered such other factors as Magstar deemed appropriate.
Magstar also conducted meetings and had discussions with members of senior management of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank for purposes of reviewing the business, financial condition, results of operations and future prospects of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank; the history and past and current operations of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank; and Commerce’s, Commerce State Bank’s, Nicolet’s and Nicolet National Bank’s historical financial performance. Magstar discussed with management of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank their assessment of the rationale for the merger. Magstar also performed such other analyses and considered such other factors as Magstar deemed appropriate, and took into account its experience in other similar transaction and securities valuations, as well as its knowledge of the banking and financial services industry.
Magstar assumed, without investigation, that there have been, and from the date of its opinion through the effective date of the merger will be, no material changes in the financial condition and results of operations of Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank since the date of the latest financial information described above. Magstar relied, without independent verification or investigation, on the assessments of the management of Commerce, Commerce State Bank, Nicolet, or Nicolet National
 
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Bank as to their existing and future relationships with key employees and partners, clients, products and services, and assumed, with Commerce’s consent, that there will be no developments with respect to any such matters that would affect Magstar’s analyses or opinion. Magstar further assumed, without independent verification, that the representations and financial and other information included in the Agreement and all other related documents and instruments that are referred to therein or otherwise provided to Magstar by Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank are true and complete. Magstar relied upon the management of Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank as to the reasonableness and achievability of the financial forecasts, and projections, estimates and other forward-looking information (including the Synergies) provided to Magstar by Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank, and assumed such forecasts, projections, estimates and other forward-looking information (including the Synergies) have been reasonably prepared by Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank on a basis reflecting the best currently available information and Commerce’s, Commerce State Bank’s, Nicolet’s, or Nicolet National Bank’s judgments and estimates. Magstar assumed that such forecasts, projections, estimates and other forward-looking information (including the Synergies) would be realized in the amounts and at the times contemplated thereby, and does not, in any respect, assume any responsibility for the accuracy or reasonableness thereof. Magstar was authorized by Commerce and Commerce State Bank to rely upon such forecasts, projections, estimates and other information and data, and expresses no view as to any such forecasts, projections, estimates or other forward-looking information or data, or the bases or assumptions on which they were prepared.
In performing its review, Magstar assumed and relied upon the accuracy and completeness of all of the financial and other information that was available to it from public sources, that was provided to it by Commerce, Commerce State Bank, Nicolet, and Nicolet National Bank or their respective representatives or that was otherwise reviewed by it for purposes of rendering its opinion. Magstar further relied on the assurances of the respective management of Commerce, Commerce State Bank, Nicolet, and Nicolet National Bank and that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading. Magstar was not asked to and has not undertaken an independent verification of any of such information, and does not assume any responsibility or liability for the accuracy or completeness thereof. Magstar assumed that each party to the Agreement would advise it promptly if any information previously provided to it became inaccurate or was required to be updated during the period of Magstar’s review.
Magstar is not an expert in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with respect thereto. Magstar assumed that such allowances for Commerce and Nicolet are, in the aggregate, adequate to cover such losses and will be adequate on a pro forma basis for the combined entity. Magstar was not requested to make, and did not make, an independent evaluation, physical inspection or appraisal of the assets, properties, facilities, or liabilities (contingent or otherwise) of Commerce or Nicolet, the collateral securing any such assets or liabilities, or the collectability of any such assets, and Magstar was not furnished with any such evaluations or appraisals; nor did Magstar review any loan or credit files of Commerce or Nicolet.
Magstar did not evaluate the solvency of Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank, under any state or federal law relating to bankruptcy, insolvency or similar matters. Accordingly, Magstar expresses no opinion regarding the liquidation value of Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank, or any other entity. Magstar also assumed that Commerce, Commerce State Bank, Nicolet, and Nicolet National Bank would remain as a going concern for all periods relevant to its analysis. Accordingly, Magstar expresses no opinion with respect to the foregoing. Further, without limiting the generality of the foregoing, Magstar undertook no independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities to which Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank is a party or may be subject, and with Commerce’s consent, Magstar’s opinion makes no assumption concerning, and therefore does not consider, the possible assertion of claims, outcomes or damages arising out of any such matters. Magstar also assumed that neither Commerce, Commerce State Bank, Nicolet, nor Nicolet National Bank is a party to any material pending transaction, including without limitation any financing, recapitalization, acquisition or merger, divestiture or spin-off, other than the merger contemplated by the Agreement.
Magstar relied upon and assumed, with Commerce’s consent and without independent verification, that the merger will be consummated substantially in accordance with the terms set forth in the merger agreement,
 
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without any waiver of material terms or conditions by Commerce, Nicolet or any other party to the merger agreement and that the final agreement will not differ materially from the draft Magstar reviewed. Magstar assumed that the merger will be consummated in compliance with all applicable laws and regulations. Commerce advised Magstar that they were not aware of any factors that would impede any necessary regulatory or governmental approval of the merger. Magstar assumed that the necessary regulatory and governmental approvals as granted would not be subject to any conditions that would be unduly burdensome on Commerce or Nicolet or would have a material adverse effect on the contemplated benefits of the merger.
Magstar’s opinion does not consider, include or address: (i) any legal, tax, accounting, or regulatory consequences of the merger on Commerce or its shareholders; (ii) any advice or opinions provided by any other advisor to the board of directors of Commerce; (iii) any other strategic alternatives that might be available to Commerce; or (iv) whether Nicolet has sufficient cash or other sources of funds to enable it to pay the consideration contemplated by the merger.
Commerce engaged Magstar on August 20, 2019, to serve as a financial advisor to Commerce in connection with the proposed mergers and to issue a fairness opinion to Commerce’s board of directors in connection with such proposed transaction. Pursuant to the terms of the engagement, Magstar received from Commerce an advisory fee for delivery of certain transaction advisory and analysis services, a fairness opinion fee due upon the delivery of the fairness opinion to Commerce, and at the time the merger is completed, Commerce will pay Magstar a completion fee, which is contingent upon the completion of the merger. Pursuant to the engagement agreement, in addition to its fees and regardless of whether the merger is consummated, Commerce has agreed to reimburse Magstar for certain reasonable out-of-pocket expenses incurred in performing its services and to indemnify Magstar and its affiliates against certain claims, losses, liabilities and expenses arising out of the mergers or Magstar’s engagement.
Other than in connection with this present engagement, during the two years preceding the date of its opinion, Magstar has not provided investment banking or financial advisory services to Commerce. During the past two years, certain registered representatives of Magstar, who are also separate owners and employees of Hillworth, have been engaged by, and provided services to the Commerce through Hillworth. During the two years preceding the date of its opinion Magstar has not provided any investment banking or financial advisory services to Nicolet for which it received a fee. Magstar or its affiliates, as well as Hillworth (whose principals are registered with Magstar) may presently or in the future seek or receive compensation from Nicolet in connection with future transactions, or in connection with potential advisory services and corporate transactions, although to Magstar’s knowledge none are expected at this time. Except for the foregoing, during the two years preceding the date of this opinion there have not been, and there currently are no mutual understandings contemplating in the future, any material relationships between Magstar and Commerce or Nicolet.
In performing its analyses, Magstar made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Magstar, Commerce, Commerce State Bank, Nicolet and Nicolet National Bank. Magstar’s opinion was necessarily based on financial, economic, market and other conditions and circumstances as they existed on, and on the information made available to Magstar as of, the dates used in its opinion. Any estimates contained in the analyses performed by Magstar are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities may be sold or the prices at which any securities may trade at any time in the future. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. Magstar’s opinion does not address the relative merits of the mergers as compared to any other business combination in which Commerce might engage. In addition, Magstar’s fairness opinion was among several factors taken into consideration by Commerce’s board of directors in making its determination to approve the merger agreement and the mergers. Consequently, the analyses described below should not be viewed as solely determinative of the decision of Commerce’s board of directors or Commerce’s management with respect to the fairness of the merger consideration to be received by Commerce’s shareholders in connection with the merger.
 
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Magstar’s opinion was based solely upon the information available to Magstar and described above, and the economic, market and other circumstances as they existed as of the date thereof. Events occurring and information that becomes available after the date thereof could materially affect the assumptions and analyses used in preparing its opinion. Magstar has not undertaken to update, revise, reaffirm or withdraw its opinion or to otherwise comment upon events occurring or information that becomes available after the date thereof.
In arriving at its opinion, Magstar did not attribute any particular weight to any single analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Magstar believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all analyses, would create an incomplete view of the process underlying its opinion.
The following is a summary of the material analyses prepared by Magstar and delivered to Commerce’s board of directors on February 16, 2020, in connection with the delivery of its fairness opinion. This summary is not a complete description of the analyses underlying the fairness opinion or the presentation prepared by Magstar, but it summarizes the material analyses performed and presented in connection with such opinion. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances of the contemplated merger. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Magstar did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. The financial analyses summarized below include information presented in tabular format. The analyses and the summary of the analyses must be considered as a whole and selecting portions of the analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying the analyses and opinion of Magstar. The tables alone are not a complete description of the financial analyses. For purposes of the analysis, Deal Value is comprised of Merger Consideration plus Option Consideration.
Market Approach — Comparable Transactions.   As part of its analysis, Magstar reviewed publicly available information related to two comparable groups (a “Regional Group” and a “Nationwide Group”) of select acquisition transactions of banks. The Regional Group consisted of acquisition transactions where targets were headquartered in the Midwest Region of the United States (consisting of the states of Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin) announced since January 1, 2017, in which the target’s total assets were between $300 million and $1.5 billion, last-twelve-months (“LTM”) return on average assets (“ROAA”) was between 0.75% and 1.50%, and nonperforming assets were less than 2.0% of total assets. The Nationwide Group consisted of acquisition transactions of targets in the United States announced since January 1, 2018, in which the target’s total assets were between $500 million and $1.5 billion, LTM ROAA was between 0.85% and 1.35%, and nonperforming assets were less than 1.25% of total assets. Information for the target institutions was based on balance sheet data as of, and income statement data for, the twelve months
 
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preceding the most recent quarter prior to announcement of the transactions. The resulting two groups consisted of the following transactions (21 transactions for the Regional Group and 14 transactions for the Nationwide Group):
Regional Group:
Buyer (State)
Target (State)
Arbor Bancorp, Inc. (MI) FNBH Bancorp, Inc. (MI)
Level One Bancorp, Inc. (MI) Ann Arbor Bancorp, Inc. (MI)
Associated Banc-Corp (WI) First Staunton Bancshares, Inc. (IL)
Nicolet Bankshares, Inc. (WI) Choice Bancorp, Inc. (WI)
ChoiceOne Financial Services, Inc. (MI) County Bank Corp (MI)
German American Bancorp, Inc. (IN) Citizens First Corporation (KY)
Bank First Corporation (WI) Partnership Community Bancshares, Inc. (WI)
Peoples Bancorp Inc. (OH) First Prestonsburg Bancshares, Inc. (KY)
First Merchants Corporation (IN) MBT Financial Corp. (MI)
Stifel Financial Corp. (MO) Business Bancshares, Inc. (MO)
CNB Bank Shares, Inc. (IL) Jacksonville Bancorp, Inc. (IL)
LCNB Corp. (OH) Columbus First Bancorp, Inc. (OH)
Equity Bancshares, Inc. (KS) Kansas Bank Corporation (KS)
Independent Bank Corporation (MI) TCSB Bancorp, Inc. (MI)
Midland States Bancorp, Inc. (IL) Alpine Bancorporation, Inc. (IL)
MutualFirst Financial, Inc. (IN) Universal Bancorp (IN)
Horizon Bancorp (IN) Wolverine Bancorp, Inc. (MI)
First Busey Corporation (IL) Mid Illinois Bancorp, Inc. (IL)
First Merchants Corporation (IN) Independent Alliance Banks, Inc. (IN)
First Busey Corporation (IL) First Community Financial Partners, Inc. (IL)
First Merchants Corporation (IN) Arlington Bank (OH)
Nationwide Group:
Buyer (State)
Target (State)
First Bancshares, Inc. (MS) Southwest Georgia Financial Corporation (GA)
Citizens & Northern Corporation (PA) Covenant Financial Inc. (PA)
Community Bank System, Inc. (NY) Steuben Trust Corporation (NY)
Professional Holding Corp. (FL) Marquis Bancorp, Inc. (FL)
OceanFirst Financial Corp. (NJ) Two River Bancorp (NJ)
Associated Banc-Corp (WI) First Staunton Bancshares, Inc. (IL)
S&T Bancorp, Inc. (PA) DNB Financial Corporation (PA)
BancFirst Corporation (OK) Pegasus Bank (TX)
First Merchants Corporation (IN) MBT Financial Corp. (MI)
Banner Corporation (WA) Skagit Bancorp, Inc. (WA)
Seacoast Banking Corporation of Florida (FL) First Green Bancorp, Inc. (FL)
Stifel Financial Corp. (MO) Business Bancshares, Inc. (MO)
Allegiance Bancshares, Inc. (TX) Post Oak Bancshares, Inc. (TX)
RBB Bancorp (CA) First American International Corp. (NY)
 
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For each precedent transaction, Magstar compared the implied ratio of deal value to certain financial characteristics of Commerce as follows:

the multiple of the deal value to the acquired company’s tangible common book value (the “Price-to-Tangible Common Book Value Multiple”);

the multiple of the deal value to the acquired company’s LTM net earnings per share (the “Price-to-LTM Earnings Multiple”); and

the multiple of the difference between the deal value and the acquired company’s tangible book value to the acquired company’s core deposits (the “Premium-to-Core Deposits Multiple”).
The results of the analysis are set forth in the table below. Transaction multiples for the merger were based on the deal value assumed by Magstar of $129.9 million for Commerce and were based on December 31, 2019 financial results of Commerce.
Assumed Value for Commerce Based On:
Price-to-Tangible
Common Book Value
Multiple
Price-to-LTM
Earnings Multiple
Premium-to-Core
Deposits Multiple
Deal Value
198% 18.0x 16.1%
Precedent Transactions Regional Group:
Median
173% 18.3x 12.7%
Minimum
127% 12.9x 4.1%
Maximum
265% 27.8x 22.6%
Precedent Transactions Nationwide Group:
Median
180% 18.3x 13.1%
Minimum
127% 11.9x 4.1%
Maximum
259% 35.8x 18.8%
Using publicly available information, Magstar compared the financial performance of Commerce with that of the median of the precedent transactions from both the Regional and Nationwide Groups. The performance highlights are based on December 31, 2019 financial results of Commerce.
Tangible
Equity/
Tangible
Assets
Core
Deposits
LTM
ROAA(1)
LTM
ROAE(2)
Efficiency
Ratio
NPAs/
Assets(3)
ALLL/
NPLs (4)
Commerce
9.23% 65.4% 1.06% 11.85% 52.9% 0.37% 180.4%
Precedent Transactions Regional Group:
Median
9.97% 83.9% 1.01% 10.12% 65.4% 0.52% 144.5%
Precedent Transactions Nationwide Group:
Median
9.27% 83.7% 1.01% 10.75% 61.9% 0.47% 185.0%
(1)
Last twelve months return on average assets.
(2)
Last twelve months return on average equity.
(3)
Non-performing assets as a percent of total assets.
(4)
Allowance for loan and lease losses as a percentage of non-performing loans.
No company or transaction used as a comparison in the above transaction analyses is identical to Commerce, and no transaction was consummated on terms identical to the terms of the merger agreement. Accordingly, an analysis of these results is not strictly mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies. The resulting values of the precedent transactions Regional Group using the median values
 
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indicated an implied aggregate valuation ranging between $114.0 million and $132.0 million, with a three factor valuation average of $120.7 million compared to the estimated Deal Value of $129.9 million. The resulting values of the precedent transactions Nationwide Group median values indicated an implied aggregate valuation ranging between $118.1 million and $132.2 million, with a three factor valuation average of $122.8 million compared to the $129.9 million estimated deal value assumed by Magstar.
Income Approach — Discounted Cash Flow Analysis.   Taking into account various factors including, but not limited to, Commerce’s recent performance, the current banking environment and the local economy in which Commerce operates, Magstar utilized information provided by management of Commerce, net income estimates for Commerce over a forward looking five year period which formed the basis for the discounted cash flow analyses. The resulting projected Commerce net income numbers used for the basis of the discounted cash flow analysis were $8.1 million for 2020, $9.1 million for 2021, $10.1 million for 2022, $11.7 million for 2023, and $12.9 million for 2024. No dividends were assumed to be paid by Commerce over the projection period.
To determine present values of Commerce based on these projections, Magstar utilized three discounted cash flow models, each of which capitalized terminal values using a different methodology: (1) Perpetuity Model (“DCF Present Value of Future Free Cash Flow”); (2) Terminal Price/Earnings Multiple (“DCF Terminal P/E Multiple”); and, (3) Terminal Price/Tangible Book Value Multiple (“DCF Terminal P/TBV Multiple”).
In the DCF Present Value of Future Free Cash Flow analysis, a perpetuity model was used assuming Commerce’s assets increase perpetually at an annual growth rate of 4.0%. The terminal value was then calculated assuming a range of discount rates between 11.0% and 15.0%, with a midpoint of 13.0%. The resulting aggregate values of Commerce’s present value of future free cash flows ranged between $98.7 million and $154.7 million, with a midpoint of $123.8 million.
In the DCF Terminal P/E Multiple analysis, an estimated value of Commerce’s common stock was calculated based on the present value of Commerce’s after-tax net income based on Commerce management’s forward-looking projections over the five year projection period. The projected 2024 net income amount was $12.9 million and served as the basis of the terminal earnings value in the DCF Terminal P/E Multiple model. Magstar utilized a terminal value at the end of 2024 by applying a range of price-to-earnings multiples of 16.3x to 20.3x, with a midpoint of 18.3x, which is based around the median price-to-earnings multiple derived from transactions in the Nationwide Group. The present value of Commerce’s projected dividends, plus the terminal value was then calculated assuming a range of discount rates between 11.0% and 15.0%, with a midpoint of 13.0%. This range of discount rates was chosen to reflect different assumptions regarding the required rates of return of holders or prospective buyers of Commerce’s common stock. The resulting aggregate values of Commerce’s common stock of the DCF Terminal P/E Multiple ranged between $111.9 million and $163.5 million, with a midpoint of $136.0 million.
In the DCF Terminal P/TBV Multiple model analysis, the same earnings estimates and projected net income were used as in the preceding DCF Termination P/E Multiple Analysis model, however, in arriving at the terminal value at the end of 2024, Magstar applied a range of price-to-tangible book value multiples of 1.70x to 1.90x with the midpoint being 1.80x, which is based around the median price-to-tangible book value multiple derived from transactions in the Nationwide Group. The present value of projected dividends, plus the terminal value, was then calculated assuming a range of discount rates between 11.0% and 15.0%, with a midpoint of 13.0%. The resulting aggregate values of Commerce’s common stock of the DCF Terminal P/TBV Multiple ranged between $106.6 million and $139.8 million, with a midpoint of $122.2 million.
 
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These analyses and their underlying assumptions yielded a range of implied multiple values for Commerce, which are outlined in the table below:
Implied Value for Commerce Based On:
Price-to-Tangible
Book Value Multiple
Price-to-LTM
Earnings Multiple
Premium-to-Core
Deposits Multiple
Deal Value
198% 18.0x 16.1%
DCF Analysis — Perpetuity Model
Midpoint
188% 17.1x 14.6%
DCF Analysis — Terminal P/E Multiple
Midpoint
207% 16.9x 14.2%
DCF Analysis — Terminal P/TBV Multiple
Midpoint
186% 18.8x 17.6%
Magstar noted that while the discounted cash flow present value analysis is a widely used valuation methodology, it relies on numerous assumptions, including asset and earnings growth rates, projected dividend payouts, terminal values and discount rates. Magstar’s analysis does not purport to be indicative of the actual values or expected values of Commerce’s common stock.
Nicolet Comparable Companies Analysis:   Magstar used publicly available information to compare selected financial and trading information for Nicolet and a group of 28 publicly-traded financial institutions selected by Magstar which was based on publicly-traded banks in the United States with total assets between $2.0 billion and $5.0 billion, LTM ROAA greater than 1.35%, and traded on a major exchange. The following publicly-traded financial institutions comprised the comparable peer group:
Atlantic Capital Bancshares, Inc. Heritage Commerce Corp
Bank First Corporation Home Bancorp, Inc.
Bank of Marin Bancorp Lakeland Financial Corporation
Bridgewater Bancshares, Inc. Macatawa Bank Corporation
Carolina Financial Corporation Mercantile Bank Corporation
CBTX, Inc. Old Second Bancorp, Inc.
Civista Bancshares, Inc. People’s Utah Bancorp
Community Trust Bancorp, Inc. Preferred Bank
Farmers National Banc Corp. Sierra Bancorp
First Community Bankshares, Inc. Silvergate Capital Corporation
First Defiance Financial Corp. Southern Missouri Bancorp, Inc.
First Financial Corporation Sterling Bancorp, Inc.
German American Bancorp, Inc. Stock Yards Bancorp, Inc.
HBT Financial, Inc. Summit Financial Group, Inc.
The analysis compared publicly available financial and market trading information for Nicolet and the data for the 28 financial institutions identified above as of and for the most recent twelve-month period which was publicly available. The table below compares the data for Nicolet and the data for the 28 financial institutions identified above, with pricing data as of February 14, 2020.
 
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Market
Cap
($M)
Price/
Tangible
Book
Value
Price/
LTM
EPS
Price/
2020E
EPS
Dividend
Yield
YTD/Price
Change
One
Year
Total
Return
Nicolet
$ 766 219% 13.1x 15.1x 0.00% (2.1)% 28.8%
Comparable Companies:
Median
$ 513 165% 12.0x 12.5x 2.28% (5.3)% 6.5%
Minimum
$ 306 105% 5.3x 8.2x 0.00% (11.2)% (26.1)%
Maximum
$ 1,206 255% 17.9x 18.7x 4.46% 8.7% 35.9%
Nicolet fell within the range of pricing metrics of comparable companies. No company used as a comparison in the above analyses is identical to Nicolet. Accordingly, an analysis of these results is not strictly mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies.
Commerce Comparable Companies Analysis:   Magstar compared selected financial information and the merger consideration of Commerce to selected publicly available financial and trading information for a group of 10 publicly-traded financial institutions selected by Magstar which was based on publicly-traded banks in the Southwest United States with total assets between $500 million and $2.0 billion, LTM ROAA between 0.5% and 2.0%, NPAs of less than 1.0% of assets, and traded on a major exchange:
Ames National Corporation LCNB Corp.
BankFinancial Corporation Level One Bancorp, Inc.
Central Federal Corporation Limestone Bancorp, Inc.
First Capital, Inc. SB Financial Group, Inc.
Landmark Bancorp, Inc. United Bancshares, Inc.
The analysis compared the financial information for Commerce to the selected publicly available financial information for the 10 financial institutions identified above as of and for the most recent twelve-month period which was publicly available in addition to analyzing the market trading information for the 10 financial institutions. The table below shows the estimated deal value and implied multiples for Commerce and the market trading data and implied multiples for the 10 financial institutions identified above, with pricing data as of February 14, 2020.
Market
Cap
($M)
Price/
Tangible
Book
Value
Price/
LTM
EPS
Price/
2020E
EPS
Dividend
Yield
YTD/Price
Change
One
Year
Total
Return
Deal Value
$ 130 198% 18.0x NA NA NA NA
Comparable Companies:
Median
$ 172 131% 12.0x NA 2.15% (3.1)% 10.2%
Minimum
$ 76 100% 7.2x NA 0.00% (12.6)% (16.7)%
Maximum
$ 250 255% 22.0x NA 4.27% 7.3% 28.9%
The estimated deal value to Commerce fell within the range of pricing metrics of comparable companies. No company used as a comparison in the above analyses is identical to Commerce. Accordingly, an analysis of these results is not strictly mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies.
Contribution Analysis:   Magstar analyzed the relative standalone contribution of Nicolet and Commerce to various pro forma balance sheet and income statement items of the combined entity. This analysis did not include purchase accounting adjustments or synergies. To perform this analysis, Magstar used (i) historical balance sheet data for Nicolet and Commerce as of December 31, 2019, (ii) estimates of net income for 2020 and 2021 for Nicolet based on S&P CapIQ mean consensus estimates, and (iii) estimates of net income for 2020 and 2021 for Commerce provided by Commerce management. The results of Magstar’s
 
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analysis are set forth in the following table, which also compares the results of Magstar’s analysis with the implied pro forma ownership percentages of Nicolet shareholders and Commerce stockholders in the combined company based on the 1.15x exchange ratio in the proposed merger:
Commerce
as a % of
Total
Nicolet
as a % of
Total
Pro Forma Common Stock Ownership
14.3% 85.7%
Financial Characteristics:
Total Assets
16.6% 83.4%
Net Loans & Leases
18.8% 81.2%
Core Deposits
12.1% 87.9%
Tangible Equity
16.2% 83.8%
LTM Net Income
11.6% 88.4%
Est. 2020 Net Income
13.5% 86.5%
Est. 2021 Net Income
14.8% 85.2%
Accretion / Dilution Analysis:   Magstar performed pro forma merger analyses that combined projected income statement and balance sheet information of Commerce and Nicolet. 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 Nicolet. In the course of this analysis, Magstar used the median S&P CapIQ mean consensus estimates for earnings estimates for Nicolet for the years ending December 31, 2020 and December 31, 2021 and used earnings estimates provided by Commerce management for Commerce for the years ending December 31, 2020 and December 31, 2021. This analysis indicated that the merger is expected to be accretive to Nicolet’s consensus estimated earnings per share in 2021. The analysis also indicated that the merger is expected to be dilutive to tangible book value per share for Nicolet in 2020 and that Nicolet would maintain capital ratios in excess of those required for Nicolet to be considered well-capitalized under existing regulations. For all of the above analyses, the actual results achieved by Commerce and Nicolet prior to and following the merger will vary from the projected results, and the variations may be material.
Other Factors and Analyses.   Magstar took into consideration various other factors and analyses, including but not limited to: current market environment; merger and acquisition environment; movements in the common stock valuations of selected publicly-traded banking companies; and movements in the S&P 500 Index.
Conclusion.   Based upon the foregoing analyses and other investigations and assumptions set forth in its opinion, without giving specific weightings to any one factor, analysis or comparison, Magstar determined that, as of the date of its opinion, subject to the review, assumptions and limitations set forth in the opinion, the merger consideration to be paid pursuant to the merger agreement in connection with the merger is fair from a financial point of view to Commerce’s shareholders. Each shareholder is encouraged to read Magstar’s fairness opinion in its entirety. The full text of this fairness opinion is included as Appendix B.
Prospective Financial Information of Commerce
Commerce does not as a matter of course make public projections as to future sales, earnings, or other results. However, the management of Commerce has prepared the prospective financial information set forth in this proxy statement-prospectus to present certain unaudited prospective financial information regarding Commerce’s future operations for the years ending December 31, 2020 and December 31, 2021 (which we refer to in this proxy statement-prospectus as the “Commerce projections”). The accompanying prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of the Commerce’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Commerce. However, this information is not fact and should not be relied upon as being
 
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necessarily indicative of actual future results, and readers of this proxy statement-prospectus are cautioned not to place undue reliance on the prospective financial information.
Neither Commerce’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
The Commerce projections, which were prepared by management of Commerce, were prepared solely for internal use and are subjective in many respects. The Commerce projections reflect numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to the business of Commerce, all of which are difficult to predict and many of which are beyond the control of Commerce. The Commerce projections reflect assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Commerce can give no assurance that the Commerce projections and the underlying estimates and assumptions will be realized. In addition, because the Commerce projections cover multiple years, the information by its nature becomes less predictive with each successive year. Actual results may differ materially from those set forth below, and important factors that may affect actual results and cause the Commerce projections not to be realized include, but are not limited to, risks and uncertainties relating to the business of Commerce, industry performance, general business and economic conditions, customer requirements, competition and adverse changes in applicable laws, regulations or policies. Other factors that could cause actual results to differ are further described in the sections of this proxy statement-prospectus entitled “Risk Factors” and “A Warning About Forward-Looking Statements,” beginning on page 14 and page 19, respectively.
Furthermore, the Commerce projections do not take into account any circumstances or events occurring after the date they were prepared. Commerce can give no assurance that, had the Commerce projections been prepared as of the date of this proxy statement-prospectus, similar estimates and assumptions would be used. Neither Nicolet nor Commerce intend to, and each disclaims any obligation to, make publicly available any update or other revision to the Commerce projections to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions. The Commerce projections do not give effect to the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with consummating the merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect on Commerce of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the Commerce projections do not take into account the effect of any possible failure of the merger to occur. None of Commerce, Nicolet or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any shareholder of Commerce or Nicolet, or any other person, regarding Nicolet’s actual performance compared to the information contained in the Commerce projections or that projected results will be achieved.
In light of the foregoing, and considering that the Commerce special meeting will be held several months after the Commerce projections were prepared, as well as the uncertainties inherent in any forecasted information, shareholders of Commerce are cautioned not to place unwarranted reliance on such information in connection with their consideration of the merger.
As reflected in the Opinion of Commerce’s Financial Advisor, Commerce projected net income of approximately $8 million for 2020, and approximately $9 million for 2021. These projections were prepared prior to the onset of the coronavirus pandemic.
Interests of Certain Persons in the Merger
General
The directors and executive officers of Commerce have interests in the transaction in addition to their interests generally as shareholders of Commerce. These interests are described below. The board of directors
 
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of each of Nicolet and Commerce was aware of these interests and considered them, in addition to other matters, in approving the merger agreement.
Appointment to the Boards of Directors of Nicolet and Nicolet National Bank.   The merger agreement provides that one current member of the Commerce board will be appointed to the boards of Nicolet and Nicolet National Bank, such member is expected to be Joseph Fazio III. Nicolet directors may participate in a director plan, pursuant to which participating directors may defer up to 100% of their board compensation towards the purchase of Nicolet common stock on a quarterly basis to be held in a trust and distributed when each participating director ends his or her service. Although directors are entitled to a separate fee for meetings of each of the boards of Nicolet and Nicolet National Bank, the boards typically meet jointly, and the directors are entitled to only one fee for such joint meetings.
Employment Agreements.   Commerce has entered into separate employment agreements with each of the following Commerce officers: Joseph Fazio III, David Borchardt, Thomas Hopp and Kevin Volm (the “Employment Agreements”). Each Employment Agreement provides for severance benefits in the form of base salary continuation for twenty-four months, plus the bonus to which the officer would have been entitled to receive for the bonus period in which the termination of employment occurred, and twenty-four months of continuation of coverage under benefit plans (or a cash payment equal to the cost of obtaining such health, life, disability and other benefits) in the event such officer’s employment is terminated without “cause” or the officer resigns for “good reason” within two years following the occurrence of a “change in control.” The Employment Agreements limit these payments to the extent necessary so that no portion of the payments constitutes an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code; provided, however, no reduction would be made if the net after-tax payment to an officer (taking into account all taxes) without a reduction is greater than the net after-tax payment to an officer (taking into account all taxes) with the reduction. Each officer also agreed not to compete and not to solicit customers for two years following termination of employment.
Supplemental Executive Retirement Plans.   Commerce has entered into a separate Supplemental Executive Retirement Benefits Agreement with each of the following Commerce officers: Joseph Fazio III, David Borchardt, Thomas Hopp and Kevin Volm (the “SERP Agreements”). Pursuant to the SERP Agreements, the merger would trigger a “change in control,” which would result in a lump sum payment of the present value of the vested portion of the SERP account balance.
Split-Dollar Agreements.   Commerce has entered into a separate split-dollar life insurance agreement with each of the following Commerce officers: Joseph Fazio III, David Borchardt, Thomas Hopp and Kevin Volm (the “Split Dollar Agreements”). The Split Dollar Agreements provide for certain death benefits payable to an officer’s designated beneficiary following death of the officer. However, such Split Dollar Agreements terminate in full (without any payment due to the office or executive) upon termination of the officer’s employment with Commerce or surrender or termination of the life insurance policy by Commerce (in which case the officer has the opportunity to purchase the policy).
The following chart shows the potential contractual payments to Commerce’s executive officers pursuant to such Employment Agreements in the event of their severance of employment following consummation of the merger.
Executive Officer
Severance
Payment
Joseph Fazio III
$ 898,409
David Borchardt
$ 847,799
Thomas Hopp
$ 858,703
Kevin Volm
$ 580,109
Potential Employment or Consultation with Nicolet.   Nicolet has had preliminary discussions with certain Commerce executive officers about the possibility of the executives continuing employment with Nicolet, including preliminary discussions regarding base salary and other terms of potential employment agreements or providing consulting services pursuant to a consulting agreement. In recognition of the potential contractual obligations discussed above in the event of severance of employment following
 
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consummation of the merger, any employment agreement for continued employment or consulting agreement for consulting services may include a signing bonus to offset all or some of the lost severance payment. The merger agreement does not impose any requirement on Nicolet regarding retention or compensation of the Commerce executive officers. At this time, it is expected that certain of Commerce’s executive officers may enter into employment or consulting agreements with Nicolet between the date of this proxy statement-prospectus and the closing of the merger. The terms of these potential employment or consulting agreements have not been finalized.
Payments in Respect of Commerce Stock Options.   Commerce has granted certain of its executive officers stock options under the Commerce 2005 Stock Incentive Compensation Plan. The merger agreement provides that, immediately prior to the effective time of the merger, each Commerce Stock Option (whether vested or not) shall be cancelled in exchange for cash in an amount equal to the product of (i) the number of shares of Commerce common stock subject to such Commerce Stock Option and (ii) the excess of the product of (x) the Nicolet Common Stock Price and (y) the exchange ratio over the exercise price per share of the Commerce common stock subject to such Commerce Stock Option. The following chart shows the potential cash payments to Commerce’s executive officers pursuant to outstanding stock option awards (assuming, in each case, that the amount calculated as the product of (x) and (y) in the immediately foregoing sentence is $[•]).
Executive Officer
Payment
Joseph Fazio III
$ [•]
David Borchardt
$ [•]
Thomas Hopp
$ [•]
Kevin Volm
$ [•]
Indemnification and Insurance.   The merger agreement provides that certain indemnification and insurance arrangements for Commerce’s current officers and directors will be continued for six years after the completion of the transactions. For a summary of the indemnification provisions, see the section entitled “The Merger Agreement — Indemnification and Insurance.”
Trading Market for Nicolet Stock
The shares of Nicolet common stock issued pursuant to the merger will be registered under the Securities Act of 1933, as amended, and will be freely transferable under applicable securities laws, except to the extent of any limitations or restrictions applicable to any shares received by any shareholder who may be deemed an affiliate of Nicolet following completion of the merger. See “Resale of Nicolet Common Stock” at page 44.
Nicolet’s common stock is currently traded on the Nasdaq Capital Market, and the merger agreement requires that the shares issued in the merger also be eligible for trading on the Nasdaq Capital Market. The trading volume of Nicolet’s common stock is less than that of other larger financial services companies, and there is no guarantee that a liquid market for shares of Nicolet common stock will exist in the future.
Nicolet Dividends
The holders of Nicolet common stock receive dividends if and when declared by the Nicolet board of directors out of legally available funds. Nicolet’s board of directors has not declared a dividend since its inception in 2000. The board currently anticipates that all earnings, if any, will be used for working capital, to support Nicolet’s operations and to finance the growth and development of its business, including the merger and integration of Commerce. Any future determination relating to dividend policy will be made at the discretion of Nicolet’s board of directors and will depend on a number of factors, including the company’s future earnings, capital requirements, financial condition, future prospects, regulatory restrictions, stock repurchase strategy and other factors that the board of directors may deem relevant.
Potential Adjustment to Exchange Ratio
The merger agreement provides that the exchange ratio is fixed unless the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price of Nicolet common stock on the
 
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Nasdaq Capital Market over the twenty trading day period immediately preceding the second trading day prior to the closing date) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price.
If the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00 Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.
Additionally, under no circumstances shall the number of shares of Nicolet common stock to be issued in the merger equal or exceed 19.9% of the number of outstanding shares of Nicolet common stock such that Nasdaq rules would require approval of the merger by Nicolet’s shareholders. The parties agree to reduce the number of shares of Nicolet common stock to be issued and to increase the cash to be issued pro rata to avoid such a shareholder vote.
Based on 10,587,738 shares of Nicolet common stock outstanding at December 31, 2019, and an exchange ratio of 1.15 on Commerce common stock outstanding, the number of shares of Nicolet common stock to be issued in the merger would equal approximately [17]% of Nicolet’s outstanding shares of common stock following the merger.
Surrender and Exchange of Commerce Stock Certificates
At the effective time of the merger, Commerce shareholders will automatically become entitled to all of the rights and privileges afforded to Nicolet shareholders as of that time. However, the actual physical exchange of Commerce common stock certificates representing shares of Nicolet common stock will occur after the merger. If you hold your shares in “street name” or “book-entry form” through a broker, the broker will provide separate instructions for surrendering and exchanging your shares.
If the merger is completed, Nicolet or Nicolet’s exchange agent will send or cause to be sent to each of Commerce’s shareholders a letter of transmittal and other customary transmittal materials providing written instructions for exchanging Commerce common stock certificates for the merger consideration in accordance with the merger agreement. Each Commerce stock certificate outstanding immediately prior to the effective time of the merger will be deemed for all purposes to evidence the right to receive the merger consideration to which such holder is entitled, regardless of when they are actually exchanged.
Nicolet will delay paying former shareholders of Commerce who become holders of Nicolet common stock pursuant to the merger any dividends or other distributions that may become payable to holders of record of Nicolet common stock following the effective time of the merger until they have surrendered their certificates evidencing their Commerce common stock, at which time Nicolet will pay any such dividends or other distributions without interest.
You should not send in your Commerce stock certificate(s) until you have received the letter of transmittal and further written instructions after the effective date of the merger. Please do NOT send in your stock certificates with your proxy card.
Assuming the merger has been consummated, after the exchange agent receives your Commerce certificate(s), together with a properly completed letter of transmittal, it will deliver to you the merger consideration to which you are entitled, consisting of Nicolet common stock (in certificated or book entry form, together with any withheld dividends or other distributions, but without interest thereon) and any cash due (whether as a result of exercising dissenters’ rights, cash in lieu of fractional shares or otherwise),
 
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without interest. Within five business days after consummation of the merger, the exchange agent will send a transmittal letter to all Commerce shareholders who did not previously tender their shares.
Shareholders who cannot locate their stock certificates are urged to contact Commerce’s transfer agent promptly:
[   ]
[Address]
Telephone Toll Free: [   ]
Telephone Local: [   ]
Commerce will issue a new stock certificate (or provide book entry) to replace the lost certificate(s) only if the shareholder of Commerce signs an affidavit certifying that his, her or its certificate(s) cannot be located and containing an agreement to indemnify Commerce and Nicolet against any claim that may be made against Commerce or Nicolet by the owner of the certificate(s) alleged to have been lost or destroyed. Commerce or Nicolet may also require the shareholder to post a bond in an amount sufficient to support the shareholder’s agreement to indemnify Commerce and Nicolet.
Resale of Nicolet Common Stock
The shares of Nicolet common stock to be issued in the merger will be registered under the Securities Act. Commerce shareholders who are not affiliates of Nicolet may generally freely trade their Nicolet common stock upon completion of the merger. The term “affiliate” generally means each person who is an executive officer, director or 10% shareholder of Nicolet after the merger.
Those shareholders who are deemed to be affiliates of Nicolet may only sell their Nicolet common stock as provided by Rule 144 under the Securities Act or as otherwise permitted under the Securities Act. Rule 144 requires the availability of current public information about the issuer, a holding period for shares issued without registration with the SEC, volume limitations and other restrictions on the manner of sale of the shares.
Regulatory and Other Required Approvals
Federal Reserve
The Federal Reserve must approve the merger before it can be completed or waive the application. Nicolet filed an application for approval of the merger with the Federal Reserve April 10, 2020. In reviewing the application, the Federal Reserve is required to consider the following:

competitive factors, such as whether the merger will result in a monopoly or whether the benefits of the merger to the public in meeting the needs and convenience of the community clearly outweigh the merger’s anticompetitive effects or restraints on trade; and

banking and community factors, which includes an evaluation of:

the financial and managerial resources of Nicolet, including its subsidiaries, and of Commerce, and the effect of the proposed transaction on these resources;

management expertise;

internal control and risk management systems;

the capital of Nicolet;

the convenience and needs of the communities to be served; and

the effectiveness of Nicolet and Commerce in combating money laundering activities.
The application process includes publication and opportunity for comment by the public. The Federal Reserve may receive, and must consider, properly filed comments and protests from community groups and
 
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others regarding (among other issues) each institution’s performance under the Community Reinvestment Act of 1977, as amended (the “CRA”). The Federal Reserve is also required to ensure that the proposed transaction would not violate Wisconsin law regarding the number of years a bank must be in operation before it can be acquired, deposit concentration limits, Wisconsin community reinvestment laws and any Wisconsin antitrust statutes.
OCC
The merger of Commerce State Bank with and into Nicolet National Bank requires the approval of the OCC. Nicolet filed an Interagency Bank Merger Application for approval of the bank merger with the OCC received approval from the OCC on April 8, 2020. In evaluating the bank merger, the OCC must consider, among other factors, the financial and managerial resources and future prospects of the institutions and the convenience and needs of the communities to be served. The relevant statutes prohibit the OCC from approving the bank merger if:

it would result in a monopoly or be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any part of the United States; or

its effect in any section of the country could be to substantially lessen competition or to tend to create a monopoly, or if it would result in a restraint of trade in any other manner.
However, if the OCC should find that any anticompetitive effects are outweighed clearly by the public interest and the probable effect of the transaction in meeting the convenience and needs of the communities to be served, it may approve the bank merger. The bank merger may not be consummated until the 30th day (which the OCC may reduce to 15 days) following the later of the date of OCC approval, during which time the U.S. Department of Justice would be afforded the opportunity to challenge the transaction on antitrust grounds. The commencement of any antitrust action would stay the effectiveness of the approval of the agencies, unless a court of competent jurisdiction should specifically order otherwise.
WDFI
In addition to the required approvals of the Federal Reserve and OCC discussed above, the merger also requires the approval of the WDFI. Nicolet filed an application with the WDFI and received approval from the WDFI on April 30, 2020. In evaluating the application, the WDFI must consider various aspects of the proposed transaction and the parties thereto, including, among others, the financial and managerial resources and future prospects of the institutions involved, the best interests of their shareholders and customers, safety and soundness considerations, and the CRA compliance status of each bank. The relevant statutes prohibit the WDFI from approving the transaction if, following consummation, the combined institution would control more than 30 percent of the deposits in the state.
In connection with or as a result of the merger, Nicolet or Commerce may be required, pursuant to other laws and regulations, either to notify or obtain the consent of other regulatory authorities and organizations to which such companies or subsidiaries of either or both of them may be subject. The Nicolet common stock to be issued in exchange for Commerce common stock in the merger has been registered with the SEC and will be issued pursuant to available exemptions from registration under state securities laws.
Status and Effect of Approvals
The OCC approved the transaction on April 8, 2020. All other regulatory applications and notices required to be filed prior to the merger are in process. Nicolet and Commerce contemplate that they will complete the merger on [•], assuming the receipt of all required regulatory approvals, approval by Commerce shareholders, and the satisfaction or waiver of all other closing conditions.
Nicolet and Commerce believe that the proposed merger is compatible with the regulatory requirements described in the preceding paragraphs; however, we cannot assure you that we will be able to comply with any required conditions or that compliance or noncompliance with any such conditions would not have adverse consequences for the combined company after the merger.
While Nicolet and Commerce believe that the requisite regulatory approvals for the merger will be obtained, we can give you no assurance regarding the timing of the approvals, our ability to obtain the
 
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approvals on satisfactory terms or the absence of litigation challenging those approvals or otherwise. Similarly, we cannot assure you that any state attorney general or other regulatory authority will not attempt to challenge the merger on antitrust grounds or for other reasons, or, if such a challenge is made, project the result thereof. The merger is conditioned upon the receipt of all consents, approvals and actions of governmental authorities and the filing of all other notices with such authorities in respect of the merger.
We are not aware of any regulatory approvals that would be required for completion of the transactions contemplated by the merger agreement other than as described above. Should any other approvals be required, those approvals would be sought, but we cannot assure you that they will be obtained.
Status of Intentions to Consummate the Merger
Under the terms of the merger agreement, in the event the Nicolet Common Stock Price (defined in the merger agreement to equal the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty trading day period ending on the second trading day prior to the closing date) is below $62.00 per share at the time of closing, Nicolet has the contractual right to elect to terminate the merger agreement. In the weeks prior to the date of this proxy statement-prospectus, the Nicolet Common Stock Price has been below $62.00. The most recent closing price of Nicolet’s common stock as of the date immediately preceding this proxy statement-prospectus was $[•].
In the event that the Nicolet Common Stock Price rises to at least $62.00 per share, and all other conditions to closing are satisfied, Nicolet intends to consummate the merger with Commerce as of the intended legal closing date agreed to between the parties, set to be [•].
In the event that the Nicolet Common Stock Price remains below $62.00 per share, or any other condition to closing is not satisfied, as of the intended legal closing date agreed to between the parties, Nicolet intends to exercise its contractual right to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. Since March of 2020, Nicolet’s and Commerce’s senior executives have had multiple communications discussing each party’s position with regard to the status of the merger and the parties’ intentions.
Nicolet believes if its common stock price is below $62.00 per share, such pricing is a signal of the farther-reaching and prolonged impacts of the COVID-19 pandemic, which are still volatile and uncertain. If the Nicolet Common Stock Price is below $62.00, Nicolet believes that consummating a transaction at a fixed exchange ratio reflecting comparative valuations set before the onset of the COVID-19 pandemic is not prudent for Nicolet’s shareholders in today’s unsettled environment.
Accounting Treatment of the Merger
Nicolet is required to account for the merger as a purchase transaction for accounting and financial reporting purposes under GAAP. Under purchase accounting, the assets (including any identifiable intangible assets) and liabilities (including executory contracts and other commitments) of Commerce at the effective time of the merger will be recorded at their respective fair values and added to those of Nicolet. Any excess of purchase price over the fair values is recorded as goodwill. Any excess of the fair values over the purchase price is recorded in earnings as a bargain purchase gain. Consolidated financial statements of Nicolet issued after the merger would reflect those fair values and would not be restated retroactively to reflect the historical consolidated financial position or results of operations of Commerce.
 
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THE MERGER AGREEMENT
This section of the proxy statement-prospectus describes certain terms of the merger agreement. It is not intended to include every term of the merger, but rather addresses only the significant aspects of the merger. This discussion is qualified in its entirety by reference to the merger agreement, which is attached as Appendix A to this proxy statement-prospectus and is incorporated herein by reference.
General; Business and Operations after the Merger
If the shareholders of Commerce approve the merger agreement and the other conditions to the consummation of the merger are satisfied, Commerce will merge with and into Nicolet. Following the consummation of the merger, Commerce State Bank will merge with and into Nicolet National Bank with Nicolet National Bank surviving the merger. Commerce Financial Holdings, Inc. and Commerce State Bank will cease to exist after the merger, and the business of Commerce State Bank will be conducted through Nicolet National Bank.
What Commerce’s Shareholders Will Receive in the Merger
If the merger is completed, Commerce shareholders will receive 1.15 shares of Nicolet common stock for each share of Commerce common stock.
The exchange ratio may fluctuate in the event that the Nicolet Common Stock Price (defined in the merger agreement to equal the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty trading day period ending on the second trading day prior to the closing date), is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. In the event that the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.
No payment will be made with respect to shares of Commerce common stock held in the treasury of Commerce; shares held directly or indirectly by Nicolet (other than in a fiduciary capacity or in connection with debts previously contracted); shares underlying Commerce Stock Options; and dissenting shares. Upon consummation of the merger, all such shares, referred to herein as the “cancelled shares,” will be canceled and extinguished.
No fractional shares of Nicolet common stock will be issued in connection with the merger. Instead, Nicolet will make a cash payment without interest to each shareholder of Commerce who would otherwise receive a fractional share. The amount of such cash payment will be determined by multiplying the fraction of a share of Nicolet common stock otherwise issuable to such shareholder by the Nicolet Common Stock Price.
Each share of Commerce common stock held in the Commerce State Bank 401(k) & Profit Sharing Plan will be converted into the right to receive a cash payment equal to the product of the exchange ratio and the Nicolet Common Stock Price.
Potential Adjustment of Exchange Ratio
The merger agreement provides that the exchange ratio is fixed unless the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price of Nicolet common stock on the
 
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Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. If the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. Additionally, under no circumstances shall the number of shares of Nicolet common stock to be issued in the merger equal or exceed 19.9% of the number of outstanding shares of Nicolet common stock such that Nasdaq rules would require approval of the merger by Nicolet’s shareholders. The parties agree to reduce the number of shares of Nicolet common stock to be issued and to increase the cash to be issued pro rata to avoid such a shareholder vote.
Based on 10,587,738 shares of Nicolet common stock outstanding at December 31, 2019, and an exchange ratio of 1.15 on Commerce common stock outstanding, the number of shares of Nicolet common stock to be issued in the merger would equal approximately [17]% of Nicolet’s outstanding shares of common stock following the merger.
Dissenters’ Rights
Holders of shares of Commerce common stock who properly elect to exercise the dissenters’ rights provided for in Subchapter XIII of the WBCL will not have their shares converted into the right to receive merger consideration. If a holder’s dissenters’ rights are lost or withdrawn, such holder will receive his, hers or its pro rata portion of the merger consideration. See “Dissenters’ Rights” on page 8 and Appendix C for additional information.
Effect of the Merger on Commerce Stock Options
As of January 31, 2020, there were 57,132 shares of Commerce common stock underlying Commerce Stock Options. Pursuant to the merger agreement, each Commerce Stock Option outstanding immediately prior to the effective date (whether vested or not) shall be cancelled in exchange for a cash payment (without interest and less applicable withholding Taxes) equal to the product of (i) the number of shares of Commerce common stock subject to such Commerce Stock Option immediately prior to the effective time of the merger and (ii) the excess, if any, of the product of (x) the Nicolet Common Stock Price and (y) the exchange ratio, subject to any adjustment, over the exercise price per share of Commerce common stock subject to such Commerce Stock Option immediately prior to the effective time of the merger.
Effect of the Merger on Commerce Shares held in the Commerce State Bank 401(k) & Profit Sharing Plan
At the closing of the proposed merger, each share of Commerce common stock held in the Commerce State Bank 401(k) & Profit Sharing Plan will be converted into the right to receive a cash payment equal to the product of the exchange ratio and the Nicolet Common Stock Price. One of the conditions of the transaction is the termination of the Commerce State Bank 401(k) and Profit Sharing Plan (the “Plan”). The Plan provides that any distributions, including upon termination, are paid in cash. Accordingly, to avoid requiring the Plan to sell Nicolet shares of common stock in connection with the liquidation of the Plan, the parties agreed to convert the Commerce shares held in the Plan to cash in the merger. As of March 20, 2020, 12,515 shares of Commerce common stock were held in the Plan.
 
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Closing and Effective Time of the Merger
The merger will be completed only if all of the following occur:

the merger agreement is approved by a majority of Commerce’s shareholders;

all required regulatory consents and approvals are obtained;

the Nicolet Common Stock Price is at least $62.00 or, if less than $62.00, neither Commerce nor Nicolet exercise their respective rights to terminate; and

all other conditions to the merger discussed in this proxy statement-prospectus and the merger agreement are either satisfied or waived.
If all of these conditions are met, the closing of the merger is expected to occur on [•].
Representations and Warranties in the Merger Agreement
Commerce and Nicolet have made customary representations and warranties to each other as part of the merger agreement. Commerce’s representations and warranties are contained in Article 3 of the merger agreement and relate to, among other things:

its organization and authority to enter into the merger agreement;

its capitalization, subsidiaries, properties and financial statements;

pending and threatened litigation against Commerce and its subsidiaries;

Commerce State Bank’s loan portfolio and allowance for loan losses;

its insurance, employee benefits, tax and environmental matters;

its legal and regulatory compliance;

its contractual obligations and contingent liabilities; and

its financial statements and regulatory filings.
Nicolet’s representations and warranties are contained in Article 4 of the merger agreement and relate to, among other things:

its organization and authority to enter into the merger agreement;

its capitalization, subsidiaries, financial statements and public filings with the SEC;

pending and threatened litigation against Nicolet and its subsidiaries;

Nicolet National Bank’s loan portfolio and allowance for loan losses;

its employee benefits, tax and environmental matters;

legal and regulatory compliance; and

the shares of Nicolet common stock to be issued in the merger.
Each party’s representations and warranties are for the benefit of the other; they are not for the benefit of and may not be relied upon by shareholders. The representations and warranties of the parties will not survive the closing of the merger.
Conditions to the Merger
The merger agreement contains a number of conditions that must be satisfied or waived (if they are waivable) to complete the merger. The conditions include, among other things:

the representations and warranties made by each party in the merger must be accurate as of the closing date of the merger;

each party must have performed or complied in all material respects with all covenants and obligations as established in the merger agreement;
 
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approval by Commerce’s shareholders of the merger agreement by the required vote;

an absence of any commenced or pending legal proceeding that challenges any of the contemplated transactions or that may have the effect of preventing, delaying or making illegal or otherwise interfering with any of the contemplated transactions;

approval of the merger and the transactions contemplated thereby by the Federal Reserve, OCC and WDFI without imposing any restrictions that would have a “material adverse effect,” as defined in the merger agreement, on either Nicolet or Commerce;

the registration statement has become effective under the Securities Act;

the absence of a stop order suspending the effectiveness of Nicolet’s registration statement under the Securities Act with respect to the shares of Nicolet common stock to be issued to the Commerce shareholders;

both parties shall have received a certificate signed by an executive on behalf of the other party certifying that such party’s representations and warranties are accurate and that all covenants and obligations have been performed;

receipt by Commerce and Nicolet of a tax opinion from Bryan Cave Leighton Paisner LLP that the merger qualifies as a tax-free reorganization under the Internal Revenue Code;

Nicolet shall have filed with the Nasdaq Stock Market, LLC a notification form for the listing of all shares of Nicolet common stock to be delivered in the merger, and the Nasdaq Stock Market, LLC shall not have objected to the listing of such shares of Nicolet common stock;

as of the Closing Date, Commerce shall have Tangible Common Equity (as defined in the merger agreement) of no less than $66.5 million (Commerce’s tangible common equity was $[•] million as of December 31, 2019);

the absence of any material adverse change in the financial condition, results of operations, business or prospects of either Commerce or Nicolet;

each party shall have obtained the written consents, permissions and approvals as required under any agreements, contracts, appointments, indentures, plans, trusts or other arrangements with third parties;

the absence of an order, decree or injunction enjoining or prohibiting completion of the merger; and

receipt by Nicolet of documentation from Commerce evidencing the cancellation of Commerce Stock Options.
The conditions to the merger are set forth in Articles 8 and 9 of the merger agreement.
In addition to the contractual conditions to close the transaction, the merger agreement also provides a variety of means for the merger agreement to be terminated prior to closing. If the merger agreement is terminated prior to closing, the merger will not be completed. For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
The parties intend to complete the merger on [•]; however, we cannot assure you that all conditions will be satisfied or waived.
Waiver and Amendment
Nearly all of the conditions to completing the merger may be waived at any time by the party for whose benefit they were created; however, the merger agreement provides that the parties may not waive any condition that would result in the violation of any law or regulation. Also, the parties may amend or supplement the merger agreement at any time by written agreement. Any material change in the terms of the merger agreement after the Commerce special shareholders’ meeting may require a re-solicitation of votes from Commerce’s shareholders with respect to the amended merger agreement.
 
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Business of Commerce Pending the Merger
The merger agreement requires Commerce to continue to operate its business as usual and to preserve its business organization, rights and franchises pending the merger and to refrain from taking any action that would materially adversely affect the receipt of required regulatory or other consents or materially adversely affect either party’s ability to perform its covenants and agreements under the merger agreement.
Among other things, and subject to certain specified exceptions, Commerce may not, without Nicolet’s consent, take or agree to take any of the following actions:

conduct its business in any manner other than in the ordinary course of business in all material respects;

take any action or make any decision in contravention of commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships;

take any action that is intended to or would reasonably be expected to adversely affect or materially delay the ability of Commerce or Nicolet to obtain any of the required regulatory approvals, to provide Commerce’s covenants and agreements under the merger agreement, or to consummate the contemplated merger;

other than pursuant to the terms of any contract to which Commerce is a party that is outstanding on the date of the merger agreement: (i) issue, sell or otherwise permit to become outstanding, or dispose of or encumber or pledge, or authorize or propose the creation of, any additional shares of Commerce capital stock or any security convertible into Commerce capital stock; (ii) permit any additional shares of Commerce capital stock to become subject to new grants; or (iii) grant any registration rights with respect to shares of Commerce capital stock;

make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any distribution on any shares of Commerce capital stock (other than dividends from its wholly owned subsidiary to it or another of its wholly owned subsidiaries);

directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of Commerce capital stock (other than repurchases of shares of Commerce common stock in the ordinary course of business to satisfy obligations under Commerce benefit plans);

amend the terms of, waive any rights under, terminate, knowingly violate the terms of or enter into: (i) any contract that is material to Commerce’s operations; (ii) any material restriction on the ability of Commerce or its subsidiaries to conduct its business as it is presently being conducted; or (iii) any contract or other binding obligation relating to any class of Commerce capital stock or rights associated therewith or any outstanding instrument of indebtedness;

enter into loan transactions not in accordance with, or consistent with, past practices of Commerce State Bank or that are on terms and conditions that, to the knowledge of Commerce, are materially more favorable than those available to the borrower from competitive sources in arm’s-length transactions;

enter into any new credit or new lending relationships greater than $1,000,000 or that are not in compliance with the provisions of Commerce State Bank’s formal loan policy as in effect as of the date of the merger agreement;

other than incident to a reasonable loan restructuring, extend additional credit to any individual or entity, or any director or officer of, or any owner of a material interest in, such entity if such person or entity is the obligor under any indebtedness to Commerce or any of its subsidiaries which constitutes a nonperforming loan or against any part of such indebtedness Commerce or any of its subsidiaries has established loss reserves or any part of which has been charged-off by Commerce or any of its subsidiaries;

maintain an allowance for loan and lease losses which is not appropriate in all material respects under the requirements of GAAP to provide for possible losses, net of recoveries relating to Commerce loans previously charged-off, on Commerce loans and leases outstanding (including accrued interest receivable);
 
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fail to: (i) charge-off any Commerce loans or leases that would be deemed uncollectible in accordance with GAAP or any applicable legal requirement; or (ii) place on nonaccrual any Commerce loans or leases that are past due greater than ninety (90) days;

sell, transfer, mortgage, encumber, license, let lapse, cancel, abandon or otherwise dispose of or discontinue any of its assets, deposits, business or properties, except for sales, transfers, mortgages, encumbrances, licenses, lapses, cancellations, abandonments or other dispositions or discontinuances in the ordinary course of business and in a transaction that, together with other such transactions, is not material to Commerce and its subsidiaries, taken as a whole;

acquire (other than by way of foreclosures or acquisitions of control in a fiduciary or similar capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary course of business) all or any portion of the assets, business, deposits or properties of any other entity except in the ordinary course of business and in a transaction that, together with other such transactions, is not material to Commerce and its subsidiaries, taken as a whole, and does not present a material risk that the closing date of the proposed merger will be materially delayed or that any approvals necessary to complete the merger or the other contemplated transactions will be more difficult to obtain;

purchase any equity security for its investment portfolio that is inconsistent with Commerce State Bank’s formal investment policy as in effect as of the date of the merger agreement or that are not in strict compliance with the provisions of such investment policy;

amend its articles of incorporation or its bylaws, or similar governing documents of any of its subsidiaries;

implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or applicable regulatory accounting requirements;

increase in any manner the compensation or benefits of any of the current or former directors, officers, employees, consultants, independent contractors or other service providers of Commerce or its subsidiaries;

become a party to, establish, amend, commence participation in, terminate or commit itself to the adoption of any stock option plan or other stock-based compensation plan, compensation, severance, pension, consulting, non-competition, change in control, retirement, profit-sharing, welfare benefit, or other employee benefit plan or agreement or employment agreement with or for the benefit of any Commerce employee (or newly hired employees), director or shareholder;

accelerate the vesting of or lapsing of restrictions with respect to any stock-based compensation or other long-term incentive compensation under any Commerce benefit plans;

cause the funding of any rabbi trust or similar arrangement or take any action to fund or in any other way secure the payment of compensation or benefits under any Commerce benefit plan;

materially change any actuarial assumptions used to calculate funding obligations with respect to any Commerce benefit plan that is required by applicable legal requirements to be funded or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or any applicable legal requirement;

conduct the administration of the Commerce benefit plan in any manner other than in the ordinary course of business;

hire any new employees with an annual salary in excess of $75,000;

incur or guarantee any indebtedness for borrowed money other than deposits, overnight fed funds or Federal Home Loan Bank of Chicago advances not over six months in maturity or enter into any capital lease or leases; or, except in the ordinary course of business, (i) lend any money or pledge any of its credit in connection with any aspect of its business, whether as a guarantor, surety, issuer of a letter of credit or otherwise; (ii) mortgage or otherwise subject to any lien any of its assets or sell, assign or transfer any of its assets in excess of $100,000 in the aggregate; or (iii) incur any other liability or loss representing, individually or in the aggregate, over $100,000;
 
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enter into any new line of business or materially change its lending, investment, underwriting, risk and asset liability management and other banking and operating policies, except as required by applicable legal requirements or requested by any regulatory authority;

settle any action, suit, claim or proceeding against it or any of its subsidiaries, except for an action, suit, claim or proceeding that is settled in an amount and for consideration not in excess of $150,000 and that would not: (i) impose any material restriction on the business of Commerce or its subsidiaries; or (ii) create precedent for claims that is reasonably likely to be material to it or its subsidiaries;

make application for the opening, relocation or closing of any, or open, relocate or close any, branch office, loan production office or other significant office or operations facility;

make or change any material tax elections, change or consent to any change in it or its subsidiaries’ method of accounting for tax purposes (except as required by applicable tax law), take any material position on any material tax return filed on or after the date of the merger agreement, settle or compromise any material tax liability, claim or assessment, enter into any closing agreement, waive or extend any statute of limitations with respect to a material amount of taxes, surrender any right to claim a refund for a material amount of taxes, or file any material amended tax return; or

agree to take, make any commitment to take, or adopt any resolutions of the Commerce board of directors in support of, any of the prohibited actions listed immediately above.
The above restrictions on Commerce’s business activities are set forth in Article V of the merger agreement.
Business of Nicolet Pending the Merger
The merger agreement requires Nicolet to continue to operate its business as usual and to preserve its business organization, rights and franchises pending the merger and to refrain from taking any action that would materially adversely affect the receipt of required regulatory or other consents or materially adversely affect either party’s ability to perform its covenants and agreements under the merger agreement.
As set forth in Section 6.1 of the merger agreement, Nicolet may not, without Commerce’s consent, take any action that would reasonably be expected to (a) materially adversely affect the ability of Nicolet to obtain any consents required to consummate the proposed merger without imposition of a condition or restriction by regulatory authorities, or (b) that would reasonably be expected to materially adversely affect the ability of Nicolet to perform its covenants and agreements under the merger agreement.
Covenants of the Parties
In addition to the above restrictions on each party’s business activities prior to consummation of the merger and the covenants discussed elsewhere in this summary of the merger agreement, the parties have agreed to the following covenants:

the parties shall cooperate and use reasonable best efforts to obtain the required regulatory approvals;

the parties are required to prepare and file a proxy statement-prospectus with the SEC, and Nicolet shall use reasonable best efforts to have such proxy statement-prospectus declared effective and to keep it effective as long as necessary to consummate the merger, and Commerce shall use its reasonable best efforts to cause the proxy statement-prospectus to be mailed to its shareholders;

Commerce has agreed that the information to be included in the proxy statement-prospectus shall not be false or misleading;

Commerce shall call a shareholders’ meeting for the purpose of approving the merger agreement and the merger, and Commerce’s board of directors shall use reasonable best efforts to obtain approval of the merger;

each party shall give the other prompt notice of any changes that would constitute a material breach of the merger agreement;
 
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Nicolet shall cause one person from Commerce’s Board (expected to be Joseph Fazio III) to be designated to the board of directors of Nicolet and Nicolet National Bank effective at the consummation of the merger;

the parties shall use commercially reasonable efforts to cause the merger to qualify as a reorganization under the Internal Revenue Code, and shall deliver such certificates and other documents necessary for Nicolet’s counsel to issue its opinion that the merger qualifies as a reorganization;

Nicolet shall maintain employee benefit plans and compensation opportunities that, in the aggregate, are no less favorable than the employee benefit plans and compensation opportunities made available to similarly-situated Nicolet employees, and Nicolet has agreed to credit Commerce employees for their years of service at Commerce to the same extent as if that service had been with Nicolet under the applicable Nicolet benefit plans;

Commerce has agreed to take all appropriate actions, upon the request of Nicolet, to amend, suspend or terminate any benefit plans;

Commerce has agreed, if requested by Nicolet, to use commercially reasonable efforts to repay in full to any lending parties all indebtedness owing under any agreement representing indebtedness incurred by Commerce outstanding at the time of the merger agreement, which may include (i) payment of a dividend by Commerce State Bank in the amount sufficient to enable Commerce to make any requested repayments, and/or (ii) approval by regulatory authorities necessary to enable Commerce to make any requested repayments;

Nicolet has agreed to authorize and reserve the number of shares of Nicolet common stock necessary to constitute the merger and to cause such shares to be approved for listing on the Nasdaq Capital Market;

Nicolet shall take such action to cause the acquisition of Nicolet common stock in the merger to be exempt under Exchange Act Rule 16b-3; and

the parties shall consult concerning the defense of any shareholder litigation.
No Solicitation of Alternative Transactions
Commerce was required to immediately cease any negotiations with any person regarding any Acquisition Proposal, as defined in the merger agreement, existing at the time the merger agreement was executed. In addition, Commerce may not solicit, directly or indirectly, inquiries or proposals with respect to, or, except to the extent determined by its board of directors in good faith, after consultation with its legal counsel, to be required to discharge properly the directors’ fiduciary duties, furnish any information relating to, or participate in any negotiations or discussions concerning, any sale of all or substantially all of its assets, any purchase of a substantial equity interest in it or any merger or other combination with Commerce. Subject to the same fiduciary duties, Commerce’s board may not withdraw its recommendation to its shareholders of the merger or recommend to its shareholders any such other transaction.
Commerce was also required to instruct its officers, directors, agents, and affiliates to refrain from taking such action prohibited by the merger agreement and is required to notify Nicolet immediately if it receives any inquiries from third parties. However, no director or officer of Commerce is prohibited from taking any action that the board of directors determines in good faith, after consultation with counsel, is required by law or is required to discharge such director’s or officer’s fiduciary duties.
Indemnification and Insurance
Nicolet has agreed to provide certain indemnification in favor of the directors, officers and employees of Commerce and its subsidiaries with respect to matters occurring prior to or at the effective time of the merger. Nicolet will cause the officers and directors currently covered by Commerce’s policy to be covered by a directors’ and officers’ liability insurance policy for six years following the effective time of the merger, subject to certain conditions provided in Section 6.3 of the merger agreement.
 
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Termination of the Merger Agreement; Termination Fee
The merger agreement specifies the circumstances under which the parties may terminate the agreement and abandon the merger. Those circumstances are:

by mutual consent of Commerce’s board of directors and Nicolet’s board of directors;

by either party if the other party materially breaches any representation, warranty or covenant, such breach cannot be, or is not, cured within 30 days after written notice, subject to a requirement in certain circumstances that the existence of such breach would result in a “material adverse effect,” as defined in the merger agreement, on the breaching party;

by either party if any regulatory authority that must grant a required approval has denied approval of any of the contemplated transactions and such denial has become final and nonappealable; provided, however, that the right to terminate the merger agreement shall not be available to a party whose failure (or the failure of any of its affiliates) to fulfill any of its obligations (excluding warranties and representations) under the merger agreement has been the cause of or resulted in the occurrence of a regulatory authority denial;

by either party if any application, filing or notice for a required regulatory approval has been withdrawn at the request or recommendation of the applicable regulatory authority; provided, however, that the right to terminate the merger agreement shall not be available to a party whose failure (or the failure of any of its affiliates) to fulfill any of its obligations (excluding warranties and representations) under the merger agreement has been the cause of or resulted in the occurrence of a regulatory request for withdrawal;

by either party if Commerce’s shareholders fail to approve the proposed merger; provided, however, that the right to terminate the merger agreement shall not be available to a party whose failure (or the failure of its affiliates) to fulfill any of its obligations (excluding warranties and representations) under the merger agreement has been the cause of or resulted in the failure to obtain the approval of Commerce’s shareholders;

by either party if the merger is not consummated on or before February 17, 2021;

by either party if any court of competent jurisdiction or other regulatory authority shall have issued a judgment, order, injunction, rule or decree, or taken any other action restraining, enjoining or otherwise prohibiting any of the contemplated transactions and such judgment, order, injunction, rule, decree or other action shall have become final and nonappealable;

by Commerce, prior to receipt of its shareholders’ approval, to accept an Acquisition Proposal that Commerce’s board of directors deems a Superior Proposal, as each term is defined in the merger agreement;

by Nicolet, if Commerce’s board of directors makes an adverse recommendation, whereby the Commerce board of directors withdraws, qualifies or adversely modifies its recommendation to Commerce shareholders that they vote in favor of the adoption and approval of the merger agreement;

by Nicolet, if the holders of more than 10% of the outstanding shares of Commerce common stock assert dissenters’ rights in compliance with Subchapter XIII of the WBCL;

by Nicolet, if the Nicolet Common Stock Price is less than $62.00 per share; or

by Commerce, if the Nicolet Common Stock Price is less than $62.00 per share and Nicolet elects to leave the exchange ratio unchanged and does not supplement the consideration with a cash component sufficient to make the per share merger consideration equal to $71.30.
If Nicolet terminates the merger agreement because Commerce’s board withdraws or changes its recommendation of the merger agreement, or if Commerce terminates the merger agreement to accept an Acquisition Proposal it deems a Superior Proposal, as each term is defined in the merger agreement, then Commerce (or its successor) must pay Nicolet a termination fee of $5.0 million. If an Acquisition Proposal is made, and if either party thereafter terminates the merger agreement either because the Commerce shareholder approval was not obtained or because the merger is not consummated by February 17, 2021,
 
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and within 12 months of such termination Commerce enters into a definitive agreement with respect to such Acquisition Proposal, then Commerce (or its successor) must pay Nicolet a termination fee of $5.0 million.
Provisions of the merger agreement regarding confidentiality, payment of the termination fee and indemnification of Commerce and its controlling persons will survive any termination of the merger agreement.
For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
Payment of Expenses Relating to the Merger
The parties will pay all of their own expenses related to negotiating and completing the merger, whether or not the merger is consummated, except that the expenses incurred in connection with the filing, printing and mailing of this proxy statement-prospectus, and all filing and other fees paid to the SEC, in each case in connection with the merger (other than attorneys’ fees, accountants’ fees and related expenses), shall be shared equally by Nicolet and Commerce.
Affiliate Agreements
Each director of Commerce has executed a Voting and Support Agreement, in which each such director agrees to vote all of his, her or its shares of Commerce common stock in favor of the merger agreement.
Forms of the Voting and Support Agreements are attached as Exhibit B to the merger agreement, which is attached to this proxy statement-prospectus as Appendix A. These agreements may have the effect of discouraging third parties from making an Acquisition Proposal, as defined in the merger agreement. The following is a brief summary of the material provisions of the agreements:

The director agrees to vote, or cause to be voted, in person or by proxy, all of the shares of Commerce common stock that the director owns beneficially or of record in favor of the merger agreement, unless Nicolet is then in breach of the agreement.

The director agrees, except for certain specific transfers set forth in the agreement, not to directly or indirectly transfer any of his, her or its Commerce common stock until the closing date of the merger without prior written consent of Nicolet.
 
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary description of the anticipated material U.S. federal income tax consequences of the merger generally applicable to U.S. Shareholders (as defined below) of Commerce who hold the common stock as capital assets within the meaning of Section 1221 of the Internal Revenue Code (the “Code”). This discussion constitutes the tax opinion of Bryan Cave Leighton Paisner LLP, tax counsel to Nicolet, as to the material U.S. federal income tax consequences of the merger to the U.S. Shareholders of Commerce common stock. This discussion deals only with the U.S. federal income tax consequences of the merger. No information is provided regarding the tax consequences of the merger under state, local, or foreign income tax laws or non-income tax laws. We do not intend this summary to be a complete description of the U.S. federal income tax laws applicable to all Commerce shareholders in light of their particular circumstances or to Commerce shareholders subject to special treatment under U.S. federal income tax laws, such as:

Non-U.S. Shareholders (as defined below) (except to the extent discussed under the subheading “Tax Implications to Non-U.S. Shareholders” below);

entities treated as partnerships for U.S. federal income tax purposes or Commerce shareholders who hold their shares through entities treated as partnerships for U.S. federal income tax purposes;

qualified insurance plans;

tax-exempt organizations;

qualified retirement plans and individual retirement accounts;

brokers or dealers in securities or currencies;

traders in securities that elect to use a mark-to-market method of accounting;

regulated investment companies;

real estate investment trusts;

persons whose functional currency is not the U.S. dollar;

persons who received their stock upon the exercise of employee stock options, who receive payments in cancellation and in lieu of exercise of their stock option, or otherwise acquired their stock as compensation;

persons who purchased or sell their shares of Commerce common stock as part of a wash sale; or

persons who hold the common stock as part of a “hedge,” “straddle” or other risk reduction, “constructive sale,” or “conversion transaction,” as these terms are used in the Code.
This discussion is based upon, and subject to, the Code, the Treasury regulations promulgated under the Code, existing interpretations, administrative rulings and judicial decisions, all of which are in effect as of the date of this statement, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the continuing validity of this discussion. Tax laws are complex, and your individual circumstances may affect the tax consequences to you. We urge you to consult a tax advisor regarding the tax consequences of the merger to you.
U.S. Shareholders
For purposes of this discussion, the term “U.S. Shareholder” means a beneficial owner of Commerce common stock that is:

a citizen or resident of the U.S.;

a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the U.S. or any of its political subdivisions;

a trust that (i) is subject to both the primary supervision of a court within the U.S. and the control of one or more U.S. persons, or (ii) has a valid election in effect under applicable U.S. treasury regulations to be treated as a U.S. person; or
 
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an estate that is subject to U.S. federal income tax on its income regardless of its source.
If a partnership (including any entity or arrangement, domestic or foreign, that is treated as a partnership for U.S. federal income tax purposes) holds Commerce common stock, the tax treatment of a partner will generally depend on the status of the partners and the activities of the partnership. Partnerships and partners in such a partnership should consult their tax advisors regarding the tax consequences of the merger to them.
Qualification of the Merger as a Reorganization
Subject to the limitations set forth herein, the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. The obligation of Nicolet and Commerce to complete the merger is conditioned upon receipt of a tax opinion from Bryan Cave Leighton Paisner LLP to the effect that:

the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Code; and

each of Commerce and Nicolet will be a party to such reorganization within the meaning of Section 368(b) of the Code.
The tax opinion is filed as Exhibit 8.1 to the registration statement of which this proxy statement-prospectus is a part. The tax opinion is based upon law existing on the date of the opinion and upon certain facts, assumptions, limitations, representations and covenants including those contained in representation letters executed by officers of Commerce and Nicolet that, if incorrect in certain material respects, would jeopardize the conclusions reached by Bryan Cave Leighton Paisner LLP in its opinion. The tax opinion will not bind the Internal Revenue Service or prevent the Internal Revenue Service from successfully asserting a contrary opinion. No ruling will be requested from the Internal Revenue Service in connection with the merger.
Tax Implications to U.S. Shareholders
The following discussion summarizes the material U.S. federal income tax consequences of the merger to U.S. Shareholders.
The U.S. federal income tax consequences of the merger to an owner of Commerce common stock that is a U.S. Shareholder generally will depend on whether such U.S. Shareholder receives cash in exchange for all or a portion of its Commerce common stock in the merger (whether by receipt of cash in lieu of a fractional share of Nicolet common stock, exercise of dissenter’s rights or otherwise).

Exchange solely for Nicolet Common Stock. No gain or loss will be recognized by U.S. Shareholders upon the exchange of shares of Commerce common stock solely for shares of Nicolet common stock pursuant to the merger, except in respect of cash received in lieu of the issuance of a fractional share of Nicolet common stock (as discussed below).

Exchange of Cash in Lieu of Fractional Share. A U.S. Shareholder who receives cash in lieu of the issuance of a fractional share of Nicolet common stock will generally be treated as having received such fractional share pursuant to the merger and then as having received cash in exchange for the sale of such fractional share. Gain or loss generally will be recognized in an amount equal to the difference between the amount of cash received and the portion of the U.S. Shareholder’s aggregate adjusted tax basis of the Commerce shares exchanged in the merger which would otherwise be allocable to such fractional share of Nicolet common stock.

Exchange for Cash and Nicolet Common Stock. In the event that the Nicolet Common Stock Price is less than $62.00 and Nicolet elects to leave the exchange ratio unchanged and instead add additional cash consideration in an amount sufficient to bring the aggregate per share consideration to $71.30 per share, a U.S. Shareholder who receives a combination of cash (not including cash received in lieu of the issuance of a fractional share of Nicolet common stock) and Nicolet common stock in exchange for Commerce common stock will generally recognize gain (but not loss) in an amount equal to the lesser of: (i) the excess, if any, of (a) the sum of the amount of cash treated as received in exchange for Commerce common stock in the merger (excluding cash received in lieu of a fractional share) plus the fair market value of Nicolet common stock (including the fair market value of any fractional share) received in the merger, over (b) the U.S. Shareholder’s adjusted tax basis in the shares
 
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of Commerce common stock exchanged, or (ii) the amount of cash (excluding cash received in lieu of a fractional share) received in the merger.

Any taxable gain to a U.S. Shareholder on the exchange of Commerce common stock generally will be treated as capital gain (either long-term capital gain if such shareholder has held such Commerce common stock for more than one year, or short-term capital gain if such shareholder has held such Commerce common stock for one year or less). If a U.S. Shareholder acquired different blocks of Commerce common stock at different times or at different prices, such U.S. Shareholder’s gain may need to be computed separately for each block of Commerce common stock. U.S. Shareholders should consult their individual tax advisors regarding the manner in which gain or loss should be determined.

Tax Basis of Nicolet Common Stock Received in the Merger. The aggregate tax basis of the Nicolet common stock (including a fractional share deemed received and sold for cash as described above) by those Commerce shareholders that receive only Nicolet common stock (and cash in lieu of a fractional share) in the merger will equal the aggregate tax basis of the Commerce common stock surrendered in the exchange. In the event that Commerce shareholders receive both cash and Nicolet common stock in the merger, the aggregate tax basis of the Nicolet common stock (including a fractional share deemed received and sold for cash as described above) will equal the aggregate tax basis of the Commerce common stock surrendered in the exchange decreased by the amount of cash received in the exchange (but not including cash received in lieu of a fractional share) and increased by gain recognized on the exchange (but not including gain attributable to the disposition of a fractional share).

Holding Period of Nicolet Common Stock Received in the Merger. The holding period for any Nicolet common stock received in the merger will include the holding period of the Commerce common stock surrendered in the exchange.

Exchange Solely for Cash. A U.S. Shareholder who receives solely cash in exchange for Commerce common stock as a result exercising dissenter’s rights generally will recognize gain or loss in an amount equal to the difference between the cash received and the U.S. Shareholder’s adjusted tax basis in the shares of Commerce common stock surrendered by such shareholder. Any taxable gain or loss to a U.S. Shareholder on the exchange of Commerce common stock will generally be treated as capital gain or loss, either long-term or short-term depending on such shareholder’s holding period for the Commerce common stock. If a U.S. Shareholder acquired different blocks of Commerce common stock at different times or at different prices, such U.S. Shareholder’s gain or loss may need to be computed separately for each block of Commerce common stock.
Tax Consequences to Nicolet and Commerce.   Neither Nicolet nor Commerce will recognize taxable gain or loss as a result of the merger, except for, in the case of Commerce, gain, if any, that has been deferred in accordance with the consolidated return regulations.
Tax Implications to Non-U.S. Shareholders
The following discussion summarizes the material U.S. federal income tax consequences of the merger to Non-U.S. Shareholders. For purposes of this discussion, the term “Non-U.S. Shareholder” means a beneficial owner of Commerce common stock (other than an entity treated as a partnership for U.S. federal income tax purposes) that is not a U.S. Shareholder. The rules governing the U.S. federal income taxation of Non-U.S. Shareholders are complex, and no attempt will be made herein to provide more than a limited summary of those rules.
Any gain a Non-U.S. Shareholder recognizes from the exchange of Commerce common stock for cash in the merger generally will not be subject to U.S. federal income taxation unless (a) the gain is effectively connected with a trade or business conducted by the Non-U.S. Shareholder in the United States (and, if required by an applicable income tax treaty, the Non-U.S. Shareholder has a permanent establishment in the United States to which such gain is attributable), or (b) the Non-U.S. Shareholder is a nonresident alien individual present in the United States for 183 days or more in the taxable year of the sale and other conditions are met. Non-U.S. Shareholders described in (a) above will be subject to U.S. federal income tax on gain recognized at regular graduated rates and, in addition, Non-U.S. Shareholders that are corporations (or
 
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treated as corporations for U.S. federal income tax purposes) may be subject to a branch profits tax equal to 30% (or a lesser rate under an applicable income tax treaty) on their effectively connected earnings and profits for the taxable year, which would include such gain. Non-U.S. Shareholders described in (b) above will be subject to a flat 30% tax on any gain recognized (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses.
If a Non-U.S. Shareholder’s actual income tax liability is less than the amount withheld, due to withholding at a rate in excess of a reduced rate for which the Non-U.S. Shareholder may be eligible under a tax treaty or otherwise, the Non-U.S. Shareholder may be able to obtain a refund of or credit for any amounts withheld in excess of the applicable rate. Non-U.S. Shareholders are encouraged to consult with their own tax advisers regarding the possible implications of these withholding requirements.
Tax Consequences if the Merger Does Not Qualify as a Reorganization
If the merger fails to qualify as a reorganization within the meaning of Section 368(a) of the Code, and if the parties to the merger elect to waive this condition to closing and consummate the merger, the merger will be a fully taxable transaction to Commerce and the shareholders of Commerce common stock. For federal income tax purposes, the Merger will be deemed to be a taxable sale of assets by Commerce followed by a distribution of the sale proceeds by Commerce to its shareholders in complete liquidation of Commerce. Accordingly, Commerce will recognize, in the aggregate, gain or loss equal to the difference between (i) the sum of the total consideration received in the merger and Commerce’s liabilities deemed assumed and (ii) Commerce’s adjusted tax basis in its assets. A U.S. Shareholder will recognize gain or loss measured by the difference between the total consideration received by such shareholder in the merger (the amount of any cash received plus the fair market value of the Nicolet common stock received) and such shareholders’ tax basis in the shares of Commerce common stock surrendered in the merger. Gain or loss will generally be treated as capital gain or loss (either long-term if such shareholder has held such Commerce common stock for more than one year, or short-term if such shareholder has held such Commerce common stock for one year or less). If a U.S. Shareholder acquired different blocks of Commerce common stock at different times or at different prices, such U.S. Shareholder’s gain may need to be computed separately for each block of Commerce common stock. Each shareholder of Commerce common stock is urged to consult its tax advisor regarding the manner in which gain or loss should be calculated. The aggregate tax basis in the shares of Nicolet common stock received pursuant to the merger will be equal to the fair market value of such Nicolet common stock as of the closing date of the merger. The holding period of such shares of Nicolet common stock will begin on the date immediately following the closing date of the merger.
Additional Federal Tax Considerations
Backup Withholding and Information Reporting
In general, information reporting requirements may apply to the cash payments made to shareholders of Commerce common stock in connection with the merger, unless an exemption applies. Backup withholding may be imposed on the above payments at a rate of 24% if a shareholder (i) fails to provide a taxpayer identification number or appropriate certificates, or (ii) otherwise fails to comply with all applicable requirements of the backup withholding rules.
Any amounts withheld from payments to shareholders of Commerce common stock under the backup withholding rules are not an additional tax and will be allowed as a refund or credit against your applicable U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service. Both U.S. Shareholders and Non-U.S. Shareholders should consult their own tax advisors regarding the application of backup withholding based on their particular circumstances and the availability and procedure for obtaining an exemption from backup withholding.
Medicare Tax on Net Investment Income
In addition to regular U.S. federal income tax, certain U.S. Shareholders that are individuals, estates or trusts are subject to a 3.8% Medicare tax on all or a portion of their net investment income, which may include gain recognized in connection with merger of Commerce and Nicolet. In the case of an individual, the tax will be imposed on the lesser of (i) the shareholder’s net investment income, or (ii) the amount by which the
 
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shareholder’s modified adjusted gross income exceeds a certain threshold (which is $250,000 in the case of married individuals filing jointly, $125,000 in the case of married individuals filing separately, and $200,000 in all other cases).
Nothing in the foregoing summary is intended to be, or should be construed as, tax advice. The United States federal income tax discussion set forth above is included for general information purposes only and is not a complete analysis or discussion of all potential tax consequences relevant to holders of Commerce common stock. Holders of Commerce common stock are strongly urged to consult their tax advisors to determine the federal, state, local and foreign tax consequences to them of the merger and the ownership and disposition of Nicolet common stock received in the merger in light of their own particular circumstances.
 
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CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
To the extent that they receive Nicolet common stock as merger consideration, Commerce’s shareholders will become Nicolet shareholders following completion of the merger. Their rights as shareholders will then be governed by Nicolet’s articles of incorporation and bylaws rather than by Commerce’s articles of incorporation and bylaws.
Nicolet and Commerce are both corporations organized under the laws of the State of Wisconsin. The corporate affairs of Nicolet and Commerce are governed generally by the provisions of the Wisconsin Business Corporation Law (the “WBCL”). The following is a summary of differences between the rights of Commerce shareholders and Nicolet shareholders not described elsewhere in this proxy statement-prospectus. The summary is necessarily general, and it is not intended to be a complete statement of all differences affecting the rights of shareholders. It is qualified in its entirety by reference to the WBCL, as well as the articles of incorporation and bylaws of each corporation. Commerce shareholders should consult their own legal counsel with respect to specific differences and changes in their rights as shareholders that would result from the proposed merger.
Authorized Capital Stock
Nicolet.   Nicolet’s articles of incorporation authorize it to issue 30,000,000 shares of common stock, $0.01 par value, and 10,000,000 shares of preferred stock, no par value, with such preferences, limitations and relative rights as determined by the board of directors. As of January 31, 2020, 10,596,140 shares were issued (including 24,521 shares of restricted stock granted but not yet vested under the Nicolet Stock Plans), 10,571,619 shares were outstanding, and no shares were treasury shares; and (ii) 10,000,000 shares of Nicolet’s preferred stock, no par value per share, of which: (i) 14,964 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, are authorized, but no shares are outstanding; (ii) 748 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B, are authorized but no shares are outstanding; and (iii) 24,400 shares of Non-Cumulative Perpetual Preferred Stock, Series C, are authorized, but no shares are outstanding.
As of January 31, 2020, no shares of Nicolet capital stock were reserved for issuance except for: (i) 1,372,166 shares of Nicolet Common Stock reserved for issuance pursuant to future awards under Nicolet Stock Plans, (ii) 1,478,954 shares of Nicolet Common Stock reserved for issuance in connection with outstanding stock options, restricted stock, or other equity awards under a Nicolet Stock Plan; (iii) 141,082 shares of Nicolet Common Stock reserved for issuance under Nicolet’s 401(k) plan; (iv) 64,352 shares of Nicolet Common Stock reserved for issuance pursuant to Nicolet’s 2009 Deferred Compensation Plan for Non-Employee Directors; and (v) 142,804 shares of Nicolet Common Stock reserved for issuance under the Nicolet Bankshares, Inc. Employee Stock Purchase Plan.
Commerce.   Commerce’s articles of incorporation authorize it to issue 10,000,000 shares of common stock, $0.01 par value, and 1,000,000 shares of preferred stock, $0.01 par value. As of January 31, 2020, there were 1,530,546 shares of Commerce common stock issued and outstanding and no shares of the authorized preferred stock were issued or outstanding. As of January 31, 2020, there were 57,132 shares of Commerce common stock reserved for issuance pursuant to outstanding or future awards under Company Stock Plans.
Composition and Election of the Board of Directors
Nicolet.   Nicolet’s articles of incorporation and bylaws provide that the board of directors shall consist of not fewer than two nor more than 25 directors, with the exact number of directors to be set by resolution of the board. Its articles of incorporation provide for the election of directors by cumulative voting, which means that the number of votes each common shareholder may cast is determined by multiplying the number of shares he, she or it owns by the number of directors to be elected. Those votes may be cumulated and cast for a single candidate or may be distributed among two or more candidates in the manner selected by the shareholder.
Commerce.   Commerce’s bylaws and articles of incorporation provide that the number of directors shall not be less than four and shall not be greater than fifteen. Commerce’s bylaws provide that the number
 
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of directors shall be within the limits specified, but may be amended from time to time by resolution adopted by either the shareholders or the directors. Directors are elected by a plurality vote. The articles of incorporation do not provide for cumulative voting. Commerce’s bylaws provide that each director serves for a term of three years and until his or her successor is elected and qualified, unless the director is removed, resigns, becomes unable to serve or dies. The bylaws also provide for a staggered board, comprised of three classes, each class’s term expiring on the third succeeding annual meeting after their election.
Director Nominations
Nicolet.   Under Nicolet’s bylaws, either directors or shareholders may nominate persons for election as Nicolet directors. Nominations that are not made by or on behalf of Nicolet’s management must be delivered in writing to Nicolet’s President no less than 14 and no more than 50 days before the meeting at which directors will be elected. If less than 21 days’ notice of such meeting is given, then the delivery deadline for the shareholder’s written notice is the close of business on the seventh day after the date on which notice of the meeting was mailed. The shareholder’s nomination must specify (to the extent known to the shareholder) the nominee’s name, address and principal occupation; the number of shares of capital stock that will be voted in favor of the nominee; and the nominating shareholder’s name, address and beneficial ownership of Nicolet capital stock.
Commerce.   Commerce’s articles of incorporation and bylaws do not impose any specific qualification requirements for director nominations.
Director Qualifications
Nicolet.   Under Nicolet’s bylaws, no person shall be eligible to be elected a director at any meeting of shareholders held on or after the date he or she attains age 72. The board of directors, at its discretion, may waive the age limitation or establish a greater age from time to time. Nicolet’s bylaws do not impose any other specific qualification requirements on directors.
Commerce.   Commerce’s articles of incorporation and bylaws do not impose any specific requirements on directors.
Board Committees
Nicolet.   Under the WBCL, unless the articles of incorporation or bylaws provide otherwise, a board of directors may create one or more committees, appoint members of the board of directors to serve on the committees and designate other members of the board of directors to serve as alternates. The WBCL provides that a committee may exercise the authority of the full board of directors except that it cannot approve or recommend to shareholders matters that require shareholder approval under the WBCL and it cannot adopt, amend or repeal a corporate bylaw. In addition to these restrictions, Nicolet’s bylaws provide that no board committee may approve dividends, fill board or committee vacancies without express authorization by the full board, amend the articles of incorporation, approve a plan of merger not requiring shareholder approval, approve the reacquisition of outstanding Nicolet capital stock except pursuant to parameters established by the full board, or approve the issuance of capital stock except to the extent authorized by the full board.
Commerce.   Commerce’s bylaws allow the board of directors to create one or more committees by a resolution approved by either a majority of directors in office at the time. Any committee created shall consist of two or more directors and shall, unless otherwise provided by the board of directors, serve at the pleasure of the board of directors. A committee may exercise, when the board of directors is not in session, any of the powers of the board of directors, except that a committee may not: (i) authorize distributions or dividends to shareholders; (ii) elect any of the principal officers; (iii) fill vacancies on the board of directors or any board committees; (iv) approve or propose to shareholders action that the WBCL requires to be approved by shareholders; (v) amend the articles of incorporation; (vi) adopt, amend or repeal the bylaws; (vii) approve a plan of merger not requiring shareholder approval; (viii) authorize or approve reacquisition of shares except according to a formula or method prescribed by the Board of Directors; or (ix) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation of relative rights,
 
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preferences and limitations of a class or series of shares, except that the board of directors may authorize a committee or a senior executive officer to do so within limits described by the board of directors.
Board Vacancies
Nicolet.   The WBCL provides that unless the articles of incorporation provide otherwise, if a vacancy occurs on the board of directors it may filled by any of the following: (i) the shareholders; (ii) the board of directors; or (iii) if the directors remaining in office constitute fewer than a quorum of the board, the directors, by the affirmative vote of a majority of all directors remaining in office. If the vacant office was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group may vote to fill the vacancy if it is filled by shareholders, and only the remaining directors elected by that voting group may vote to fill the vacancy if it is filled by the directors. A vacancy that will occur at a specific later date may be filled before the vacancy occurs, but the new directors may not take office until the vacancy occurs. Nicolet’s bylaws provide that any vacancy on the board, including a vacancy resulting from an increase in the number of directors, shall be filled by a majority of the board of directors then in office, although less than a quorum, and any directors so chosen shall hold office for the remaining term of directors of the class to which he or she has been elected and until election of his or her duly qualified successor.
Commerce.   Commerce’s bylaws provide that any vacancy on the board, including a vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by (a) the board of directors; (b) the affirmative vote of a majority of the directors then in office, if the directors remaining in office constitute less than a quorum of the board of directors; or (c) by vote of the shareholder. In the case of a vacancy created by the removal of a director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or adjournment thereof. If a vacancy was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group may vote to fill the vacancy.
Director Removal
Nicolet.   Directors may be removed for cause by the affirmative vote of the holders of a majority of the outstanding shares of Nicolet common stock entitled to vote in the election of directors, except that a director may not be removed if a number of cumulative votes sufficient to elect him or her is cast against his or her removal. Removal must be voted upon at a special shareholders’ meeting called for that purpose, and any vacancy so created may be filled by majority vote of the remaining directors. “Cause” is defined as conviction of a felony, a demand for removal by regulatory authorities or a determination by two-thirds of the directors then in office (excluding the director whose removal is being sought) that the director’s conduct was inimical to the best interests of Nicolet.
Commerce.   Commerce’s bylaws provide that any director or the entire board of directors may be removed, with or without cause, by the shareholders if the number of votes cast to remove the director(s) exceeds the number cast not to remove him or her. If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove that director. A director may be removed by the shareholders only at a meeting called for the purpose of removing a director, and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director.
Advance Notice of Shareholder Proposals
Nicolet.   Nicolet’s bylaws provide that in addition to any other requirements generally applicable to matters to be brought before an annual meeting of shareholders under Nicolet’s articles of incorporation or bylaws or the WBCL, a Nicolet shareholder who wishes to present a matter for consideration at such meeting must notify Nicolet’s Corporate Secretary in writing no later than 60 days before the meeting. The shareholder’s notice must specify the nature and reason for the business proposed to be conducted; the shareholder’s name, address and beneficial ownership of Nicolet stock; and any material interest of the shareholder in the matter proposed for consideration. See “Director Nominations” above for special provisions relating to shareholder nominations of candidates for the board of directors.
 
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Commerce.   Commerce’s articles of incorporation and bylaws do not impose any specific requirements on notice of shareholder proposals.
Meetings of Shareholders
Nicolet.   Nicolet’s bylaws provide that annual meetings of shareholders will be held at such date as may be specified by the board of directors or Corporate Secretary. Subject to any contrary requirements of the WBCL, special meetings of shareholders may be called by either Nicolet’s Chief Executive Officer or President at the direction of the board of directors or by the holder(s) of at least 10% of Nicolet’s outstanding stock. Nicolet’s bylaws require at least ten and not more than sixty days’ notice of any meeting of shareholders.
Commerce.   Commerce’s bylaws provide that the annual meeting of the shareholders shall be held on the second Tuesday in the month of May of each year, or on such other date within 30 days thereof as may be authorized by the board of directors and set forth in the notice of the meeting. Special meetings of the shareholders may be called only by (i) the chairman, (ii) chief executive officer, or (iii) the board of directors. A special meeting shall be called by the chief executive officer at the written request of (a) the holders of not less than one tenth of all votes entitled to be cast on any issue proposed to be considered at the special meeting, if such holders sign, date and deliver a written request stating the purpose for such meeting, or (b) one third of the directors then in office.
Shareholder Vote Requirements
Nicolet.   Except as described under “Board of Directors” above and “Mergers, Consolidations and Sales of Assets” below, and unless a greater number of votes is required under Nicolet’s articles of incorporation or the WBCL, a matter voted upon by Nicolet shareholders will be approved if more votes are cast in favor of a matter than against it, assuming a quorum is present.
Commerce.   Except as described under “Board of Directors” above and “Mergers, Consolidations and Sales of Assets” below, and unless a greater number of votes is required under the WBCL, a matter voted upon by a quorum of Commerce shareholders will be approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action. A majority of the votes entitled to be cast by shares entitled to vote as a separate voting group on a matter, whether represented in person or by proxy, constitutes a quorum. Additionally, Commerce shares owned by another corporation (directly or indirectly) are not entitled to vote if this corporation owns (directly or indirectly) sufficient shares to elect a majority of the directors of such other corporation.
Mergers, Consolidations and Sales of Assets
Nicolet.   Nicolet’s articles of incorporation provide that any merger or share exchange of Nicolet with or into any other corporation, or any sale, lease, exchange or other disposition of substantially all of its assets to any other person or entity will require the approval of either: (i) two-thirds of the directors then in office and a majority of the outstanding shares entitled to vote; or (ii) a majority of the directors then in office and two-thirds of the outstanding shares entitled to vote.
Nicolet’s articles of incorporation require that, in considering an offer of another party to make a tender or exchange offer for any equity security of Nicolet; to merge, effect a share exchange or otherwise combine Nicolet with any other corporation; or purchase or otherwise acquire all or substantially all of the assets of Nicolet, the board, in determining what is in the best interests of Nicolet and its shareholders, give due consideration to all relevant factors, including, without limitation, (a) the short-term and long-term social and economic effects on the employees, customers, shareholders and other constituents of Nicolet and its subsidiaries, and on the communities within which Nicolet and its subsidiaries operate (it being understood that Nicolet National Bank is charged with providing support to and being involved in the communities it serves); and (b) the consideration being offered by the other party in relation to the then-current value of Nicolet in a freely negotiated transaction and in relation to the board’s then-estimate of the future value of Nicolet as an independent entity.
 
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Commerce.   Commerce’s articles of incorporation and bylaws provide that any merger or consolidation of Commerce with one or more other corporations (regardless of which is the surviving corporation) or any sale, lease or exchange of all or substantially all of the property and assets of Commerce to or with one or more other corporations, persons or other entities, shall require the affirmative vote of the holders of at least a majority of the outstanding shares of common stock of Commerce entitled to vote on the matter if such transaction is approved by a resolution adopted by the affirmative vote of a majority of the entire board of directors; provided however that if such transaction is not adopted by resolution of the majority of the entire board of directors, such transaction shall require an affirmative vote of at least 80% of the outstanding shares of Commerce common stock entitled to vote on the matter.
Indemnification
Nicolet.   Nicolet’s bylaws provide for the mandatory indemnification of a director, officer, employee or agent of Nicolet (or a person concurrently serving in such a capacity with another entity at Nicolet’s request), to the extent such person has been successful on the merits or otherwise in the defense of any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding brought by or in the right of Nicolet or by any other person or entity to which such person is a party because he or she is a director, officer, employee or agent, for all reasonable fees, costs, charges, disbursements, attorneys’ fees and other expenses incurred in connection with proceeding. In all other cases, Nicolet shall indemnify a director or officer of Nicolet, and may indemnify an employee or agent of Nicolet, against all liability and reasonable fees, costs, charges, disbursements, attorneys’ fees and other expenses incurred by such person in any proceeding brought by or in the right of Nicolet or by any other person or entity to which such person is a party because he or she is a director, officer, employee or agent, unless it has been proven by final adjudication that such person breached or failed to perform a duty owed to Nicolet that constituted:

a willful failure to deal fairly with Nicolet or its shareholders in connection with a matter in which the director, officer, employee or agent has a material conflict of interest;

a violation of criminal law, unless the director, officer, employee or agent had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful;

a transaction from which the director, officer, employee or agent derived an improper personal profit; or

willful misconduct.
Unless modified by written agreement, the determination as to whether indemnification is proper shall be made in accordance with the WBCL. The right to indemnification under Nicolet’s bylaws may only be amended by the vote of two-thirds of the outstanding shares of Nicolet capital stock entitled to vote on the matter. Nicolet is authorized to purchase and maintain insurance on behalf of its directors, officers, employees or agents in connection with the foregoing indemnification obligations.
Commerce.   Commerce’s bylaws provide, in accordance with the WBCL, for the mandatory indemnification of a director, officer, employee or agent, to the extent that he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is or was a director, officer, employee or agent of the corporation. Commerce’s bylaws also provide for indemnification in other instances pursuant to but not required by the WBCL (with no requirement that the director or officer be successful on the merits or otherwise), unless the director, officer, employee or agent is personally liable because the director or officer breached or failed to perform a duty that he or she owes to the corporation and the breach or failure to perform constitutes any of the following:

a willful failure to deal fairly with the corporation or its shareholders in connection with a matter in which the director, officer, employee or agent has a material conflict of interest;

a violation of the criminal law, unless the director, officer, employee or agent had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful;
 
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a transaction from which the director, officer, employee or agent derived an improper personal profit; or

willful misconduct.
The determination as to whether indemnification is proper shall be made in accordance with the WBCL. Commerce may grant additional rights to indemnification and reimbursement of expenses. Indemnification in other circumstances shall be at the discretion of the board of directors and in accordance with the WBCL. Commerce is authorized to purchase and maintain insurance on behalf of its directors, officers, employees or agents in connection with the foregoing indemnification obligations. Commerce’s bylaws also provide for indemnification and allowance of expenses in connection with a proceeding involving securities regulation.
The merger agreement provides that Nicolet will assume Commerce’s indemnification obligations after the merger.
Amendments to Articles of Incorporation and Bylaws
Nicolet.   Nicolet’s articles of incorporation may be amended as provided in the WBCL, which provides that unless the articles of incorporation, bylaws or WBCL requires a higher vote, and subject to any rights of a class to vote separately on the amendment under the WBCL, an amendment to the articles of incorporation will be approved if the number of votes cast in favor of the amendment exceed the votes cast against it.
Nicolet’s bylaws may be amended by the shareholders or by majority vote of the board of directors, except as otherwise provided in the WBCL and except as specified under “Indemnification” above. The WBCL requires shareholder approval for an amendment to any shareholder-adopted bylaw that states that the board may not amend it. Additionally, a bylaw that fixes a greater or lower quorum requirement or a greater voting requirement for shareholders may not be adopted, amended or repealed by the board of directors. A bylaw that fixes a greater or lower quorum requirement or a greater voting requirement for the board of directors may be amended or repealed as follows: (i) if originally adopted by the shareholders, only by the shareholders, unless the bylaw also permits board approval of the amendment, or (ii) if originally adopted by the board of directors, either by the shareholders or by the board of directors.
Commerce.   Commerce’s articles of incorporation may only be amended by the affirmative vote of the holders of a majority of the stock entitled to vote; provided, however that any amendment to Article V (regarding the composition of the Commerce board of directors and its authority), Article VII (regarding shareholder approval of a merger or sale of Commerce) or Article VII (regarding amendments to the articles of incorporation) require the affirmative vote of at least 80% of the outstanding shares of Commerce common stock entitled to vote on the matter.
Commerce’s bylaws may be amended either by the shareholders or, to the extent permitted by WBCL, the articles of incorporation, or Article 10 of the bylaws, by the board of directors. Bylaws amended by the board of directors may be altered, amended or repealed by the shareholders. Bylaws amended by the shareholders may only be altered, amended or repealed by the shareholders. The adoption or amendment of a bylaw that adds, changes or deletes a greater or lower quorum requirement or a greater voting requirement for shareholders must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirement then in effect. Any amendment to the bylaws that amend, change or repeal any of the provisions of Section 2.14 (regarding shareholder approval of a merger or sale of Commerce), Section 3.01 (regarding the number of members of the board of directors), Section 3.02 (regarding the class, tenure and removal of members of the board of directors), Section 3.14 (regarding conduct of board of directors meetings and use of communications equipment) or Section 10.01 (regarding amendment of the bylaws) of the bylaws may be amended only by the affirmative vote of a majority of the holders of Commerce common stock entitled to vote on the matter. If an amendment to any of the aforementioned sections of the bylaws has not been approved by the affirmative vote of a majority of the entire board of directors, then the affirmative vote of at least 80% of the holders of Commerce common stock entitled to vote on the matter shall be required for such amendment.
 
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DISSENTERS’ RIGHTS
The following discussion is not a complete description of the law relating to dissenters’ rights available to holders and beneficial holders of Commerce and Nicolet common stock under Wisconsin law. This description is qualified in its entirety by the full text of the relevant provisions of the WBCL, which are reprinted in their entirety as Appendix C to this proxy statement-prospectus. If you desire to exercise dissenters’ rights, you should review carefully the WBCL and consult a legal advisor before electing or attempting to exercise these rights.
General
Pursuant to the provisions of sections 180.1301 to 180.1331 of the WBCL, holders and beneficial holders of Commerce common stock have the right to dissent from the merger and to receive the fair value of their shares in cash. Holders and beneficial holders of Commerce common stock who fulfill the requirements of the WBCL summarized below and set forth in Appendix C will be entitled to assert dissenters’ rights in connection with the merger. Shareholders or beneficial shareholders considering initiation of a dissenters’ proceeding should review this section and should also review Appendix C in its entirety. A dissenters’ proceeding may involve litigation.
Preliminary Procedural Steps
Pursuant to the provisions of the WBCL, if the merger is consummated, in order to exercise dissenter’s rights you must have:

given to Commerce, prior to the vote at the special meeting with respect to the approval of the merger, written notice of your intent to demand payment for your shares of common stock (hereinafter referred to as “shares”);

not voted in favor of the merger; and

complied with the other statutory requirements summarized below.
If you have perfected your dissenters’ rights and the merger is consummated, you will receive the fair value of your shares as of the effective date of the merger. A shareholder or beneficial shareholder who fails to deliver written notice of his, her or its intent to demand payment for his, her or its shares if the merger is consummated in accordance with the requirements of the WBCL is not entitled to payment for his or her shares pursuant to the provisions of the WBCL and will only be entitled to receive the merger consideration as provided in the merger agreement.
Brokers or others who hold shares in their name that are beneficially owned by others may assert dissenters’ rights as to fewer than all of the shares registered in your name only if they dissent with respect to all shares beneficially owned by any one person and notify Commerce in writing of the name and address of each person on whose behalf they are asserting dissenters’ rights. The rights of a shareholder who asserts dissenters’ rights as to fewer than all of the shares registered in his, her or its name are determined as if the shares as to which that holder dissents and that holder’s other shares were registered in the names of different shareholders.
Written Dissent Demand
Voting against the merger will not independently satisfy the written demand requirement. In addition to not voting in favor of the merger, if you wish to preserve the right to dissent and seek appraisal, you must give a separate written notice of your intent to demand payment for your shares if the merger is effected.
Any written notice of intent to dissent to the merger, satisfying the requirements discussed above, should be addressed to Commerce Financial Holdings, Inc., 1700 S. Silverbrook Drive, West Bend, Wisconsin 53202, Attn: Corporate Secretary. The written notice must be delivered to Commerce prior to the special meeting.
Dissenters’ Notice
If the shareholders of Commerce approve the merger at the special meeting, Commerce (or Nicolet as its successor) must deliver a written dissenters’ notice (the “Dissenters’ Notice”) to all Commerce shareholders
 
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who satisfy the foregoing requirements. The Dissenters’ Notice must be sent no later than ten days after the date that the merger is approved by Commerce’s shareholders and must:

state where dissenting shareholders should send the demand for payment and where and when dissenting shareholders should deposit certificates for the shares;

inform holders of uncertificated shares as to what extent transfer of these shares will be restricted after the demand for payment is received;

include a form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the merger and requires the shareholder or beneficial shareholder asserting dissenters’ rights to certify whether he, she or it acquired beneficial ownership of the shares prior to that date;

set a date by which Commerce (or Nicolet as its successor) must receive the demand for payment (which date may not be fewer than 30 nor more than 60 days after the Dissenters’ Notice is delivered); and

be accompanied by a copy of sections 180.1301 to 180.1331 of the WBCL.
A shareholder or beneficial shareholder who receives the Dissenters’ Notice or a beneficial shareholder whose shares are held by a nominee who is sent a Dissenters’ Notice must demand payment and certify as to his or her ownership of the shares in accordance with the Dissenters’ Notice. A shareholder or beneficial shareholder who holds certificated shares must also deposit his, her or its share certificates with Commerce (or Nicolet as its successor) in accordance with the terms of the Dissenters’ Notice.
A dissenting shareholder or beneficial shareholder who demands payment and deposits his, her or its share certificate in accordance with the terms of the Dissenters’ Notice will retain all of the rights of a shareholder or beneficial shareholder, respectively, until those rights are canceled or modified by the consummation of the merger. Commerce may restrict the transfer of uncertificated shares from the date that the demand for payment for those shares is received until the merger is effected or the restrictions released, in the event that it does not consummate the merger.
A shareholder or beneficial shareholder with certificated or uncertificated shares who does not demand payment by the date set forth in the Dissenters’ Notice is not entitled to payment for his, her or its shares under sections 180.1301 to 180.1331 of the WBCL. A shareholder or beneficial shareholder with certificated shares who does not deposit his, her or its share certificates where required and by the date set forth in the Dissenters’ Notice is not entitled to payment for his, her or its shares under sections 180.1301 to 180.1331 of the WBCL. Commerce (or Nicolet as its successor) may elect to withhold payment from a dissenter and instead make an offer of payment if that dissenter was not the beneficial owner of his, her or its shares prior to the date specified in the Dissenters’ Notice as the date on which the first announcement of the merger was made to the news media or to Commerce’s shareholders.
Payment
Except as described below, Commerce (or Nicolet as its successor) must, as soon as the merger is effected or upon receipt of a payment demand, whichever is later, pay each shareholder who has complied with the payment demand and deposit requirements described above the amount Commerce (or Nicolet as its successor) estimates to be the fair value of the shares, plus accrued interest. The offer of payment must be accompanied by:

recent financial statements of Commerce;

a statement of the estimate of the fair value of the shares;

an explanation of how the interest was calculated;

a statement of the dissenter’s right to demand payment under section 180.1328 of the WBCL if the dissenter is dissatisfied with the payment; and

a copy of sections 180.1301 to 180.1331 of the WBCL.
 
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If the merger is not consummated within 60 days after the date set for demanding payment and depositing share certificates, Commerce must return the deposited certificates and release the transfer restrictions imposed on uncertificated shares. Commerce (or Nicolet as its successor) must send a new Dissenters’ Notice if the merger is consummated after the return of certificates and any dissenting shareholders must repeat the payment demand procedure described above.
Section 180.1328 of the WBCL provides that a dissenter may notify Commerce (or Nicolet as its successor) in writing of his, her or its own estimate of the fair value of such holder’s shares and the interest due, and may demand payment of such holder’s estimate, less any payment received from Commerce (or Nicolet as its successor), if:

he or she believes that the amount paid or offered by Commerce (or Nicolet as its successor) is less than the fair value of his or her shares or that Commerce (or Nicolet as its successor) has calculated incorrectly the interest due;

Commerce (or Nicolet as its successor) fails to make payment within 60 days after the date set in the Dissenters’ Notice for demanding payment; or

Commerce, having failed to consummate the merger, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within 60 days after the date set for demanding payment in the Dissenters’ Notice.
A dissenting shareholder waives his, her or its right to demand payment of his, her or its own estimate of fair value and interest under sections 180.1328 unless such dissenting shareholder provides Commerce (or Nicolet as its successor) with notice of his, her or its demand, in conformance with the notice requirements of section 180.0141, within 30 days after Commerce (or Nicolet as its successor) making or offering of payment for the dissenting shareholder’s shares.
Litigation
If a demand for payment under section 180.1328 remains unsettled, Commerce (or Nicolet as its successor) must commence a nonjury equity valuation proceeding in the Circuit Court of Winnebago County, Wisconsin (in the case of Commerce) or Brown County, Wisconsin (in the case of Nicolet), within 60 days after having received the payment demand under section 180.1328 and must petition the court to determine the fair value of the shares and accrued interest. If Commerce (or Nicolet as its successor) does not commence the proceeding within those 60 days, the WBCL requires Commerce (or Nicolet as its successor) to pay each dissenting shareholder whose demand remains unsettled the amount demanded. Commerce (or Nicolet as its successor) is required to make all dissenting shareholders whose demands remain unsettled parties to the proceeding and to serve a copy of the petition upon each of them.
The jurisdiction of the court in which the proceeding is brought is plenary and exclusive. The court may appoint one or more appraisers to receive evidence and to recommend a decision on fair value. An appraiser has the powers delegated to such appraiser in the court order appointing him or her or in any amendment to the order. Dissenters are entitled to the same discovery rights as parties in other civil proceedings.
Each dissenting shareholder made a party to the proceeding is entitled to judgment for the amount, if any, by which the court finds the fair value of such holder’s shares, plus interest, exceeds the amount paid or offered, as applicable, by Commerce (or Nicolet as its successor).
The court in an appraisal proceeding commenced under the foregoing provision must determine the costs of the proceeding, excluding fees and expenses of attorneys and experts for the respective parties, and must assess those costs against Commerce (or Nicolet as its successor), except that the court may assess the costs against all or some of the dissenting shareholders to the extent the court finds they acted arbitrarily, vexatiously, or not in good faith in demanding payment under section 180.1328 of the WBCL. The court also may assess the fees and expenses of attorneys and experts for the respective parties against Commerce (or Nicolet as its successor) if the court finds Commerce (or Nicolet as its successor) did not substantially comply with the requirements of the WBCL, or against either Commerce (or Nicolet as its successor) or a dissenting shareholder if the court finds that such party acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by the WBCL.
 
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If the court finds that the services of attorneys or experts for any dissenter were of substantial benefit to other dissenters similarly situated, the court may award those attorneys’ reasonable fees out of the amounts awarded the dissenters who were benefited.
This is a summary of the material rights of a dissenting shareholder and is qualified in its entirety by reference to the applicable portions of the WBCL, which are included as Appendix C to this proxy statement-prospectus. If you intend to dissent from approval of the merger, you should review carefully the text of Appendix C and should also consult with your attorney. We will not give you any further notice of the events giving rise to dissenters’ rights or any steps associated with perfecting dissenters’ rights, except as indicated above or otherwise required by law.
We have not made any provision to grant you access to any of the corporate files of Nicolet or Commerce, except as may be required by the WBCL, or to obtain legal counsel or appraisal services at the expense of Commerce (or Nicolet as its successor).
Any dissenting shareholder who perfects his, her or its right to be paid the “fair value” of his, her or its shares will recognize taxable gain or loss upon receipt of cash for such shares for federal income tax purposes. See “Material U.S. Federal Income Tax Consequences of the Merger” at page 57.
You must do all of the things described in this section and as set forth in the WBCL in order to preserve your dissenters’ rights and to receive the fair value of your shares in cash (as determined in accordance with those provisions). If you do not follow each of the steps as described above, you will have no right to receive cash for your shares as provided in the WBCL and you will only be entitled to receive the merger consideration as provided in the merger agreement. In view of the complexity of these provisions of Wisconsin law, shareholders of Commerce who are considering exercising their dissenters’ rights should consult their legal advisors.
 
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF NICOLET
The following table presents Nicolet’s selected historical consolidated financial data as of and for the years ended December 31, 2015 through 2019. The selected financial data as of December 31, 2015 through 2019 is derived from Nicolet’s audited consolidated financial statements and related notes included in Nicolet’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Nicolet Form 10-K”) incorporated by reference into this proxy statement-prospectus and should be read in conjunction with the consolidated financial statements and related notes, along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Nicolet Form 10-K. See “Where You Can Find Additional Information” on page 76.
The selected historical consolidated financial data of Nicolet includes the effect of mergers and other acquisition transactions from the date of each merger or other transaction, including the acquisitions of Choice Bancorp, Inc. on November 8, 2019, First Menasha Bancshares, Inc. on April 28, 2017 and Baylake Corp. on April 29, 2016.
At and for the years ended December 31,
(in thousands, except per share data)
2019
2018
2017
2016
2015
Results of operations:
Interest income
$ 138,588 $ 125,537 $ 109,253 $ 75,467 $ 48,597
Interest expense
22,510 18,889 10,511 7,334 7,213
Net interest income
116,078 106,648 98,742 68,133 41,384
Provision for loan losses
1,200 1,600 2,325 1,800 1,800
Net interest income after provision for loan losses
114,878 105,048 96,417 66,333 39,584
Noninterest income
53,367 39,509 34,639 26,674 17,708
Noninterest expense
96,799 89,758 81,356 64,942 39,648
Income before income tax expense
71,446 54,799 49,700 28,065 17,644
Income tax expense
16,458 13,446 16,267 9,371 6,089
Net income
54,988 41,353 33,433 18,694 11,555
Net income attributable to noncontrolling interest
347 317 283 232 127
Net income attributable to Nicolet Bankshares, Inc.
54,641 41,036 33,150 18,462 11,428
Preferred stock dividends
633 212
Net income available to common
shareholders
$ 54,641 $ 41,036 $ 33,150 $ 17,829 $ 11,216
Earnings per common share:
Basic
$ 5.71 $ 4.26 $ 3.51 $ 2.49 $ 2.80
Diluted
$ 5.52 $ 4.12 $ 3.33 $ 2.37 $ 2.57
Common shares:
Basic weighted average
9,562 9,640 9,440 7,158 4,004
Diluted weighted average
9,900 9,956 9,958 7,514 4,362
Outstanding
10,588 9,495 9,818 8,553 4,154
Year-End Balances:
Loans
$ 2,573,751 $ 2,166,181 $ 2,087,925 $ 1,568,907 $ 877,061
Allowance for loan losses (“ALLL”)
13,972 13,153 12,653 11,820 10,307
Securities available for sale, at fair value
449,302 400,144 405,153 365,287 172,596
Goodwill and other intangibles, net
165,967 124,307 128,406 87,938 3,793
Total assets
3,577,260 3,096,535 2,932,433 2,300,879 1,214,439
Deposits
2,954,453 2,614,138 2,471,064 1,969,986 1,056,417
Short-term and long-term borrowings
67,629 77,305 78,046 37,617 39,788
Common equity
516,262 386,609 364,178 275,947 97,301
 
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At and for the years ended December 31,
(in thousands, except per share data)
2019
2018
2017
2016
2015
Stockholders’ equity
516,262 386,609 364,178 275,947 109,501
Book value per common share
$ 48.76 $ 40.72 $ 37.09 $ 32.26 $ 23.42
Tangible book value per common share*
$ 33.08 $ 27.62 $ 24.01 $ 21.98 $ 22.51
Financial Ratios:
Return on average assets
1.75% 1.38% 1.25% 0.95% 0.96%