Merrill Lynch Depositor Inc Indexplus Trust Series 2003-1 10-K, filed Mar 22, 2024
Merrill Lynch Depositor Inc Indexplus Trust Series 2003-1 (IPB)
About this 10-K
Merrill Lynch Depositor Inc Indexplus Trust Series 2003-1 filed this 10-K on March 22, 2024, covering the fiscal year ended December 31, 2023.
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
| ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the fiscal year ended: | Commission file number: | |
| December 31, 2023 | 001-31941 |
MERRILL LYNCH DEPOSITOR, INC.
(ON BEHALF OF INDEXPLUS TRUST SERIES 2003-1)
(Exact name of registrant as specified in its charter)
| DELAWARE (State or other jurisdiction of incorporation) |
13-3891329 (I. R. S. Employer Identification No.) |
| ONE
BRYANT PARK, 4th FL NEW YORK, NEW YORK (Address of principal executive offices) |
10036 (Zip Code) |
Registrant’s telephone number, including area code: (646) 855-6745
Securities registered pursuant to Section 12(b) of the Act:
INDEXPLUS Trust Certificates Series 2003-1, listed on The New York Stock Exchange American. Trading Symbol: IPB
Securities registered pursuant to Section 12(g) of the Act:
Not Applicable.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☐ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an 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 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Yes ☐ No ☑
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Yes ☐ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☑
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
Not Applicable.
Indicate the number of shares outstanding for each of the registrant’s classes of common stock, as of the latest practicable date.
Not Applicable.
DOCUMENTS INCORPORATED BY REFERENCE
For information with respect to the underlying securities held by INDEXPLUS Trust Series 2003-1, please refer to respective periodic reports, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and other information of: The Boeing Company (Commission file number 001-00442); Citigroup Inc. (Commission file number 001-09924); Credit Suisse Group AG (Commission file number 333-272452-02) (condensed consolidated financial statements with respect to guarantor Credit Suisse Group AG and issuer Credit Suisse (USA) of the underlying securities) and guarantor UBS Group AG (Commission file number 333-272452); Ford Motor Company (Commission file number 001-03950); Ally Financial Inc. (Commission file number 001-03754); General Motors Acceptance Corporation (Commission file number 001-06461); The Goldman Sachs Group, Inc. (Commission file number 001-14965); Johnson & Johnson (Commission file number 001-03215); Macy's Retail Holdings LLC (formerly known as Macy’s Retail Holdings, Inc. and the May Department Stores Company) (Commission file number 333-42940); Macy's, Inc. (Commission file number 001-13536); Warner Media, LLC (formerly known as Time Warner LLC and Time Warner Inc.) (Commission file number 001-15062); Time Warner Companies, Inc. (Commission file number 001-08637); Turner Broadcasting System, Inc. (Commission file number 001-08911); United States Department of Treasury; Valero Energy Corporation (Commission file number 001-13175); Verizon Communications Inc. (Commission file number 001-08606); Paramount Global (formerly known as ViacomCBS Inc. and CBS Corporation) (Commission file number 001-09553); and Weyerhaeuser Company (Commission file number 001-04825) on file with the Securities and Exchange Commission (the “SEC”). You can read and copy these reports and other information at the public reference facilities maintained by the SEC at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. You may obtain copies of this material for a fee by writing to the SEC's Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access some of this information electronically by means of the SEC's website on the Internet at http://www.sec.gov, which contains reports, proxy and information statements and other information that the respective underlying securities issuers have filed electronically with the SEC. The underlying securities issuer DaimlerChrysler North America Holding Corp. (now known as Daimler Finance North America LLC) and the guarantor, Daimler AG, no longer file periodic Exchange Act reports. Unless and until the underlying securities comprise 10% of the assets held by the trust, the trust is not required to liquidate its holdings of the asset. If such circumstances were to occur, such as an increase in concentration of DaimlerChrysler assets to at least 10% of total trust assets, the asset would have to be liquidated.
Although we have no reason to believe the information concerning the respective underlying securities or the respective underlying securities issuers contained in the underlying securities issuer’s Exchange Act reports are not reliable, neither the depositor nor the trustee participated in the preparation of such documents or made any due diligence inquiry with respect to the information provided therein. No investigation with respect to the respective underlying securities issuers (including, without limitation, no investigation as to their respective financial condition or creditworthiness) or of the respective underlying securities has been made. You should obtain and evaluate the same information concerning the respective underlying securities issuers as you would obtain and evaluate if your investment were directly in the respective underlying securities or in other securities issued by the respective underlying securities issuers. There can be no assurance that events affecting the respective underlying securities or the respective underlying securities issuers have not occurred or have not yet been publicly disclosed which would affect the accuracy or completeness of the publicly available documents described above.
TABLE OF CONTENTS
Not Applicable.
2
Your investment in the trust certificates will involve certain risks. You should carefully consider the following discussion of risks, and the other information included or incorporated by reference in the applicable prospectus supplement and the accompanying prospectus. You should also carefully consider any risk factors and other information that the underlying securities issuer may file in its Exchange Act reports as referenced in the “Documents Incorporated by Reference” section above.
IF THE TRUST CERTIFICATES OR ANY OF THE UNDERLYING SECURITIES ARE REDEEMED PRIOR TO THEIR MATURITY DATE, YOU MAY NOT BE ABLE TO REINVEST YOUR REDEMPTION PROCEEDS AT A YIELD COMPARABLE TO THE YIELD YOU WOULD HAVE RECEIVED ON YOUR TRUST CERTIFICATES.
The yield you will realize on your trust certificates depends upon several factors, including:
| • | the purchase price of the trust certificates, | |
| • | when you acquire your trust certificates, | |
| • | whether an underlying securities issuer exercises an option to redeem underlying securities, and | |
| • | whether the trust redeems the trust certificates prior to the final scheduled distribution date. |
The description of the underlying securities in the applicable prospectus supplement indicates which of the underlying securities can be redeemed prior to maturity at the option of the associated underlying securities issuer. Because the indicated underlying securities issuers have the right to redeem the indicated underlying securities early, we cannot assure you that the trust will be able to hold those underlying securities until their maturity date.
3
YOU MAY NOT BE PAID IF THE ASSETS OF THE TRUST ARE INSUFFICIENT
Distributions on the trust certificates will be made only from available assets of the trust. The trust will have no significant assets other than the portfolio of underlying securities. The trust certificates are not obligations of and do not represent any interests in the underwriter, the depositor, the trustee, the market agent, the calculation agent or any of their affiliates. Neither we nor the underwriter, the trustee, the market agent, the calculation agent or any other person or entity will be obligated to make any payments on the trust certificates from its own assets, and trust certificates holders will have no recourse against any of them or their respective assets. If the payments received from the underlying securities are insufficient to make distributions on the trust certificates, you may not receive all or part of the full amount due on your trust certificates.
NEITHER WE NOR THE TRUSTEE, THE UNDERWRITER, THE MARKET AGENT, THE CALCULATION AGENT NOR ANY OF THEIR AFFILIATES WILL MANAGE THE UNDERLYING SECURITIES
Except as described below, the trust will not dispose of any of the underlying securities, even if an event occurs that adversely affects any underlying securities issuer and/or the value of any or all of the underlying securities. Under the applicable trust agreement, the trust will dispose of an underlying security only if:
| • | there is a credit event on an underlying security or an underlying securities issuer, | |
| • | there is a non-payment-related default that accelerates the maturity of an underlying security, or | |
| • | in the case of an underlying securities issuer that is obliged to file Exchange Act reports, the relevant underlying securities issuer ceases to file Exchange Act reports and the related underlying securities comprise 10% or more of the assets of the trust. |
Under the above circumstances, the trustee must retain a market agent who will sell the defaulted underlying security on or after the 30th day after receipt of notice of the default in accordance with the sale procedures described in the applicable prospectus supplement and distribute the net proceeds from such sale to the holders of the trust certificates pro rata even if adverse market conditions exist. Neither the trustee nor the market agent has discretion to do otherwise. If adverse market conditions exist at the time of the sale of the underlying securities, you may incur greater losses than if the trust continued to hold the underlying securities and sold them at a later date.
4
THE VALUE OF THE TRUST CERTIFICATES DEPENDS UPON THE CREDITWORTHINESS OF THE UNDERLYING SECURITIES ISSUERS AND THE MARKET PRICES OF THE UNDERLYING SECURITIES.
The trust certificates represent interests in obligations of the underlying securities issuers and will be subject to all the risks associated with directly investing in each underlying securities issuer’s debt obligations. The underlying indenture and the terms and conditions governing each underlying security may not limit the amount of indebtedness that may be incurred by the relevant underlying securities issuer. In addition, an investment in the trust certificates represents an investment in the underlying securities and most of the underlying securities are not listed on any securities exchange. The underlying securities are generally purchased and sold through dealers who make a market in such securities for their own accounts, and there may be significant disparities in the prices quoted for any of the underlying securities by securities dealers at any point in time. Therefore, the market for any of the underlying securities is less liquid than the market for securities which are traded through a securities exchange and the aggregate market value of a comparable amount of the underlying securities may be higher than the market price of the trust certificates. You should consider the nature of each underlying security and the credit risk of each underlying securities issuer before making an investment decision regarding the trust certificates.
THE TRUST CERTIFICATEHOLDERS MAY SUFFER A LOSS UPON THE OCCURRENCE OF A REMOVAL EVENT
Should a removal event, as described in the applicable prospectus supplement, occur with respect to an underlying security, the trustee on behalf of the trust will instruct the market agent to sell such underlying security and distribute the net proceeds of the sale of such underlying security to the trust certificateholders. In such case, the certificate principal balance of the trust certificates will be reduced by the principal amount of the underlying security subject to such removal event. If the amount distributable to the trust certificateholders from the proceeds of the sale of the underlying securities subject to the removal event is less than the principal amount of such underlying securities plus any accrued and unpaid interest thereof the trust certificateholders will suffer a loss. Additionally, if less than all of such underlying securities are sold and the applicable underlying securities issuer defaults on payments due on such unsold underlying securities, the trust certificateholders will suffer a loss. The trust certificateholders will also bear the risk of reinvestment resulting from the reduction in the certificate principal balance of the trust certificates.
5
THE PASS-THROUGH RATE MAY BE REDUCED UPON PAYMENT OF PRINCIPAL ON OR THE OCCURRENCE OF A REMOVAL EVENT WITH RESPECT TO UNDERLYING SECURITIES
Because the pass-through rate on the trust certificates will be determined in part by the weighted average interest rate of the underlying securities, payments of principal on an underlying security or the occurrence of a removal event may cause the pass-through rate to decrease depending upon the interest rate of such underlying security.
AS UNDERLYING SECURITIES ARE REMOVED FROM THE TRUST AT THEIR MATURITY, REDEMPTION OR SALE, THE POOL OF UNDERLYING SECURITIES WILL BECOME LESS DIVERSIFIED AND YOUR EXPOSURE TO ECONOMIC FACTORS THAT DISPROPORTIONATELY AFFECT ONE OR MORE OF THE REMAINING UNDERLYING SECURITIES WILL INCREASE.
As underlying securities mature, underlying securities are redeemed or sold, or removal events occur, the pool of underlying securities held by the trust will become less diversified. These events could increase your risk of loss resulting from the decline in one or more of the economic factors disproportionately affecting any of the remaining underlying securities.
PRINCIPAL AND INTEREST PAYMENTS ON THE UNDERLYING SECURITIES ARE UNSECURED OBLIGATIONS OF THE UNDERLYING SECURITIES ISSUERS
Distributions on the trust certificates depend primarily on principal and interest payments on the underlying securities. Some of these payments are unsecured obligations of the underlying securities issuers. In any proceedings involving the insolvency, liquidation or winding up of an underlying securities issuer, holders of unsecured securities of that underlying issuer will be paid only after the holders of that underlying securities issuer’s secured obligations are paid in full. As a result, you may not recover the principal amount of your trust certificates attributable to such underlying security.
THE RATINGS OF THE TRUST CERTIFICATES MAY CHANGE
At the time of issuance, Moody’s and/or Fitch Ratings assigned ratings to the trust certificates on the original issue date in one of the four highest categories assigned to long-term debt.
Any rating issued with respect to the trust certificates is not a recommendation to purchase, sell or hold a security. Ratings do not reflect upon the market price of the trust certificates or their suitability for a particular investor. We cannot assure you that initial ratings will remain for any given period of time or that a ratings agency would not revise or withdraw entirely the ratings if, in its judgment, circumstances (including, without limitation, the rating of any of the underlying securities) merit. A revision or withdrawal of a rating may adversely affect the market price of the trust certificates.
6
POTENTIAL CONFLICTS OF INTERESTS MAY ARISE BETWEEN US, THE UNDERWRITER AND THE TRUST
We, BofA Securities, Inc. (formerly known as Bank of America Merrill Lynch, the successor-in-interest to Merrill Lynch, Pierce, Fenner & Smith Incorporated), or one of its affiliates acquired the underlying securities comprising the trust’s portfolio. Potential conflicts of interests may arise as BofA Securities, Inc. and its affiliates may engage in investment banking or may provide other services for some or all of the underlying securities issuers. In addition, BofA Securities, Inc. and its affiliates may also own, make purchases or sales, including sales to the trust, establish long or short positions or engage in hedging activities in some or all of the underlying securities for their own accounts. All such activities may result in conflicts of interests among BofA Securities, Inc., its affiliates and the trust certificateholders.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
Not Applicable.
None.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Trust Certificates issued by INDEXPLUS Trust Series 2003-1 are represented by one or more physical certificates registered in the name of Cede & Co., the nominee of the Depository Trust Company. The Trust Certificates are listed on The New York Stock Exchange American.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Not Applicable.
7
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Not Applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The Registrant has procedures so as to provide reasonable assurance that its future Exchange Act filings will be filed within the applicable time periods.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Not Applicable.
ITEM 11. EXECUTIVE COMPENSATION
Not Applicable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
| (a) | Securities Authorized For Issuance Under Equity Compensation Plans: None. | |
| (b) | Security Ownership Of Certain Beneficial Owners: None. | |
| (c) | Security Ownership Of Management: Not Applicable. | |
| (d) | Changes In Control: None. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
None.
8
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not Applicable.
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements: Not Applicable.
(a)(2) Financial Statement Schedules: Not Applicable.
(a)(3) List of Exhibits
The following exhibits are filed as part of, and incorporated by reference into, this Annual Report on Form 10-K:
(b) Exhibits
The Registrant hereby files as part of this Annual Report on Form 10-K the exhibits listed in Item 15(a)(3) set forth above.
(c) Financial Statement Schedules
Not Applicable.
9
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MERRILL LYNCH DEPOSITOR, INC. |
||||
| Date: March 22, 2024 | By: | /s/ Matthew J. Nelson | ||
| Name: | Matthew J. Nelson | |||
| Title: | President | |||
EXHIBIT 31.1
I, Matthew J. Nelson, certify that:
1. I have reviewed this annual report on Form 10-K, and all reports on Form 8-K containing distribution or servicing reports filed in respect of periods included in the year covered by this annual report, of Merrill Lynch Depositor, Inc., on behalf of INDEXPLUS Trust Series 2003-1;
2. Based on my knowledge, the information in these reports, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading as of the last day of the period covered by this annual report;
3. Based on my knowledge, the distribution or servicing information required to be provided to the depositor by the trustee under the pooling and servicing, or similar, agreement, for inclusion in these reports is included in these reports;
4. I am responsible for reviewing the activities performed by the depositor and the trustee under the pooling and servicing, or similar, agreement and based upon my knowledge and the annual compliance review required under that agreement, and except as disclosed in the reports, the depositor and trustee have each fulfilled its obligations under that agreement; and
5. The reports disclose all significant deficiencies relating to the compliance by the depositor or trustee with the minimum servicing or similar standards based upon the report provided by an independent public accountant, after conducting a review in compliance with the Uniform Single Attestation Program for Mortgage Bankers or similar procedure, as set forth in the pooling or servicing, or similar, agreement, that is included in these reports.
In giving the certifications above, I have reasonably relied on information provided to me by the following unaffiliated parties: The Bank of New York Mellon and its officers and agents.
| Date: March 22, 2024 | /s/ Matthew J. Nelson | |
| Matthew J. Nelson | ||
| President |
EXHIBIT 97
Incentive Compensation Recoupment Policy
This Incentive Compensation Recoupment Policy (“Policy”) shall be administered by the Board of Directors (the “Board”) of Bank of America Corporation (the “Company”) or an appropriate Board committee. Any determinations made by the Board or committee shall be final and binding on all affected individuals. Additionally, this Policy incorporates by reference the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and its implementing rules and regulations thereunder and the New York Stock Exchange listing standards. This Policy operates in addition to any (a) recoupment provisions contained in the terms of other compensation awards or programs, and (b) recoupment requirements imposed under applicable laws.
Covered Officers
This Policy applies to all of the Company’s current and former “executive officers,” as determined by the Board pursuant to Rule 16a-1(f) promulgated under the Exchange Act (“Covered Officers”) and in accordance with Section 10D of the Exchange Act and the New York Stock Exchange listing standards. This Policy shall be binding and enforceable against all such Covered Officers and their beneficiaries, heirs, executors, administrators or other legal representatives.
Compensation Subject to Recoupment
For purposes of this Policy, covered compensation subject to recoupment includes any non-equity incentive plan awards, bonuses paid to a Covered Officer from a bonus pool, cash awards, equity or equity-based awards, or proceeds received upon sale of shares acquired through an incentive plan; provided that, such compensation is granted, earned, and/or vested based wholly or in part on the attainment of a financial reporting measure (“Incentive-based Compensation”). For purposes of this Policy, Incentive-based Compensation will also include any amounts which were determined based on (or were otherwise calculated by reference to) Incentive-based Compensation. A financial reporting measure includes those found in financial statements prepared under U.S. Generally Accepted Accounting Principles or derived in whole or in part from such measure (e.g., total shareholder return, stock price, revenue, net income, return on assets, tangible book value).
Incentive-based Compensation shall not include any salaries, discretionary cash bonuses, non-equity incentive plan awards earned by a Covered Officer upon satisfying a strategic measure or operational measure (e.g., completion of a project), or equity-based awards that are not contingent on achieving any financial reporting measure.
Required Recoupment; Accounting Restatement
In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirement under U.S. securities laws or regulations issued by the Securities and Exchange Commission, the Board or applicable committee shall require reimbursement, forfeiture, or other recovery of any excess Incentive-based Compensation (described below) received by any Covered Officer during the applicable look-back period (described below). Covered accounting restatements include those that either (a) correct an error in a previously issued financial statement that is material to such previously issued financial statement or (b) correct an error that is not material to a previously issued financial statement, but would result in a material misstatement if left uncorrected in a current report or the error correction was not recognized in the current period.
The amount of excess Incentive-based Compensation to be recouped due to a covered accounting restatement will be the amount the Covered Officer received in excess of the amount that would have otherwise been received by the Covered Officer had the Incentive-based Compensation been determined based on the restated amounts, calculated on a pre-tax basis. If the Board or committee cannot determine the amount of excess compensation received by the Covered Officer directly from the information in the accounting restatement, then it shall make its determination based on a reasonable estimate of the effect of the covered accounting restatement.
The look-back period will be the three completed fiscal years immediately preceding the earlier of the date on which (a) the Board or committee concludes or reasonably should have concluded that an accounting restatement is required or (b) a court, regulator, or other legally authorized body directs a restatement.
Additional Recoupment; Fraud or Intentional Misconduct
If the Board or an appropriate committee has determined that any fraud or intentional misconduct by one or more Covered Officers caused, directly or indirectly, the Company to restate its financial statements, the Board or committee shall take, in its sole discretion, such additional action, if any, as it deems necessary to remedy the misconduct and prevent its recurrence. Notwithstanding the “Compensation Subject to Recoupment” and “Required Recoupment; Accounting Restatement” sections above, this may include requiring reimbursement of any bonus or incentive compensation awarded to such officers and/or the cancellation of unvested equity-based awards previously granted to such Covered Officers in the amount by which compensation exceeded any lower payment that would have been made based on the restated financial results.
Recoupment Method
The Board or committee may determine, in its sole discretion, the method for recouping compensation from a Covered Officer reasonably promptly under this Policy including, without limitation: (a) requiring reimbursement of cash previously paid; (b) seeking recoupment of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity or equity-based awards; (c) offsetting the recouped amount from any compensation otherwise owed to the Covered Officer; (d) cancelling outstanding vested or unvested equity or equity-based awards; (e) forfeiting any vested non-qualified deferred compensation account balances; and/or (f) taking any other remedial and recoupment action permitted by law, as determined by the Board or committee. The Board or committee shall not be required to seek to recoup compensation under this Policy if such recoupment would (i) be impracticable, (ii) violate home country laws, or (iii) likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the U.S. Internal Revenue Code of 1986, as amended; each as determined by the Board or committee in accordance with the New York Stock Exchange listing standards. Any such determination that recoupment is not required shall be evidenced by the Board or committee.
The Company shall not indemnify any Covered Officers against the loss of any compensation resulting from the application of this Policy.
EXHIBIT 99.1
THE BANK OF NEW YORK MELLON
Officer’s Certificate
March 18, 2024
MERRILL LYNCH DEPOSITOR, INC.
One Bryant Park
4th Floor – Structured Credit Trading
New York, New York 10036
PREFERREDPLUS, PPLUS TRUST AND INDEXPLUS CERTIFICATE
The undersigned, Terrence White, Vice President of The Bank of New York Mellon (formerly The Bank of New York), a New York corporation (the “Trustee”), hereby certifies in such capacity that, based on his knowledge, the Trustee has complied, in all material respects, with all conditions and covenants applicable to the Trustee under the Standard Terms for Trust Agreements dated February 20, 1998 between MERRILL LYNCH DEPOSITOR, INC., as depositor (the “Depositor”) and the Trustee, as successor to United States Trust Company of New York, as trustee and securities intermediary (the “Securities Intermediary”), in each case amended as by a series supplement between the Depositor, the Trustee and the Securities Intermediary for each trust series listed in the attached schedule.
| Very truly yours, The Bank of New York Mellon (formerly The Bank of New York), as Trustee |
||||
| By: | /s/ | Terrence White | ||
| Name: | Terrence White | |||
| Title: | Vice President | |||
SCHEDULE
PPLUS Trust Series GSC-2
INDEXPLUS Trust Series 2003-1
EXHIBIT 99.2
[PricewaterhouseCoopers Letterhead]
Report of Independent Accountants
To the Board of Directors and Management of Merrill Lynch Depositor, Inc.:
We have examined the accompanying management assertion of Merrill Lynch Depositor, Inc. (the “Company”), that the Company complied with the PPLUS Minimum Servicing Standards with respect to the INDEXPLUS Trust Series 2003-1 as set forth in Appendix I as of and for the year ended December 31, 2023. The Company’s management is responsible for its assertion. Our responsibility is to express an opinion on management's assertion based on our examination.
Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether management's assertion is fairly stated, in all material respects. An examination involves performing procedures to obtain evidence about management’s assertion. The nature, timing and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of management’s assertion, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.
We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements related to the engagement.
Our examination does not provide a legal determination on the Company’s compliance with the specified requirements.
In our opinion, management’s assertion that the Company complied with the PPLUS Minimum Servicing Standards with respect to the INDEXPLUS Trust Series 2003-1 as set forth in Appendix I as of and for the year ended December 31, 2023 is fairly stated, in all material respects.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 7, 2024
Management’s Assertion on Compliance
with PPLUS Minimum
Servicing Standards
March 7, 2024
As of and for the year ended December 31, 2023, Merrill Lynch Depositor, Inc. (the “Company”) has complied, in all material respects, with the Company’s established minimum servicing standards, as set forth in Appendix I, for servicing the securities in each of the Trust Series, as listed on Schedule A hereto, excluding those with respect to the Bank of New York Mellon as Trustee, Custodian, Paying Agent and Transfer Agent.
| By: | /s/ Matthew J. Nelson | |
| Matthew J. Nelson | ||
| President Merrill Lynch Depositor, Inc. |
***************
SCHEDULE A
PPLUS Trust Series GSC-2
INDEXPLUS Trust Series 2003-1
Appendix I
PPLUS Minimum Servicing Standards intended for use
in connection with the Annual Accountants Report ("AAR")
Below is Merrill Lynch Depositor, Inc.'s ("the Depositor"), Merrill Lynch Structured Credit Derivatives ("SCD") and the Merrill Lynch Credit Derivatives Operations Group ("OG") (collectively, “Merrill Lynch”) minimum servicing standards for the PreferredPlus Program ("PPlus").
The Bank of New York Mellon ("the Bank" or “the Trustee”) acting as Trustee, Custodian, Paying Agent, and Transfer Agent on behalf of the PPlus Program has agreed to comply with all of the following minimum servicing standards. Merrill Lynch has obtained a certification from the Bank that it has complied with these criteria for the period January 1, 2023 to December 31, 2023.
| MINIMUM Servicing STANDARD | Applicable Servicing STANDARD | ||
| Reference | Criteria | Performed by the Depositor | Performed by Bank/Trustee |
| CUSTODIAL BANK ACCOUNT RECONCILIATIONS | |||
| 1 | The Bank must reconcile all related custodial bank accounts. | X | |
| The Bank will include the Distribution report as Exhibit 99.1 in the Form 8-Ks filed with the SEC. | X | ||
| VERIFICATION OF INCOMING TRUST COLLATERAL INTEREST PAYMENTS | |||
| 2 | The Bank must have a tickler system in place so that they will be expecting and monitoring the custodial bank account for receipt of the collateral coupon interest. Each of the tickler systems shall be updated on an on-going basis as each new trust series is created. | X | |
| The Bank will ensure all interest payments are deposited into the custodial bank accounts and related bank clearing accounts on the day the Bank is in receipt of the funds. | X | ||
| The Bank must prove the arithmetic accuracy of the amount of interest received by the Trust from the underlying securities and ensure that the face amount, description, coupon rate, and maturity date of the securities held in the Trust agree to the PPM Supplement dated Date XX, 20XX. | X | ||
1
| MINIMUM Servicing STANDARD | Applicable Servicing STANDARD | ||
| Reference | Criteria | Performed by the Depositor | Performed by Bank/Trustee |
| TRUST DISBURSEMENTS | |||
| 3 | The Bank must prove the arithmetic accuracy of the amount of interest to be paid by the Trust to the Debt Unit holders by referring to the PPM Supplement dated Date XX, 20XX.
|
X | |
The Bank will make all disbursements via wire transfer to The Depository Trust Company ("DTC") on the scheduled trust distribution date as soon as the amount of interest received from the underlying collateral into the custodial bank account has been received and verified for accuracy.
|
X | ||
| PARTIAL REDEMPTIONS | |||
| 4 | If there is a partial redemption of the trust certificates the Bank and the Depositor must ensure that the redemption proceeds received by the Trust and distributed by the Bank are in accordance with the series supplement.
|
X | X |
| DEFAULTS | |||
| 5 | If the Bank has actual knowledge of an event of default on the underlying securities that did not cause the Trust to liquidate, the Bank must distribute a formal notice of default to the Depositor, the certificateholders, the rating agencies and SCD/OG.
|
X | |
If the Bank has actual knowledge of an event of default on the underlying securities that did not cause the Trust to liquidate, the procedures for a vote or consent of the certificateholders as set forth in the Standard Terms and series Supplement must be complied with.
|
X | ||
| CALL WARRANT EXERCISES AND OPTIONAL EXCHANGES | |||
| 6 | If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the Trust to liquidate, the Bank must give the Depositor and the affected certificateholders notice of any exercise of call warrants or optional exchange. Such notice must contain the amount of certificates to be purchased, the call price, and any other relevant information.
|
X | |
2
| MINIMUM Servicing STANDARD | Applicable Servicing STANDARD | ||
| Reference | Criteria | Performed by the Depositor | Performed by Bank/Trustee |
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the trust to liquidate, the Bank must notify the rating agencies of the call exercise or optional exchange.
|
X | ||
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the trust to liquidate, the Bank must give notice of exercise or optional exchange to the Depositor and certificate registrar of any certificates that were called.
|
X | ||
| COMMUNICATIONS WITH CERTIFICATEHOLDERS | |||
| 7 | If there was any occasion for the exercise of voting rights or giving consents by the certificateholders, the Bank must provide notice to the certificateholders within 5 business days of the Trust's receipt of notice of the occasion and the Bank must vote or give consents as directed by certificateholders.
|
X | |
3
EXHIBIT 99.3
[KPMG LLP Letterhead]
KPMG LLP
Aon Center
Suite 5500
200 E. Randolph Street
Chicago, IL 60601-6436
Independent Accountants’ Report
The Board of Directors
The Bank of New York Mellon:
We have examined the management of The Bank of New York Mellon’s (the “Bank”) asssertion that the Bank complied with the PPLUS Minimum Servicing Standards (“Servicing Standards”) for the INDEXPLUS Trust Series 2003-1 transaction as of and for the year ended December 31, 2023. With respect to Servicing Standards 4, 5 and 6, the management assertion indicates that there were no activities performed as of and for the year ended December 31, 2023 with respect to the INDEXPLUS Trust Series 2003-1 transaction, because there were no occurrences of events that would require the Bank to perform such activities. The Bank’s management is responsible for its assertion. Our responsibility is to express an opinion on management’s assertion about the Bank’s compliance with the specified requirements based on our examination.
Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether management’s assertion about compliance with the specified requirements is fairly stated, in all material respects. An examination involves performing procedures to obtain evidence about whether management’s assertion is fairly stated, in all material respects. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of management’s assertion, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.
We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the engagement.
Our examination does not provide a legal determination on the Bank’s compliance with specified requirements.
In our opinion, management’s assertion that the Bank complied with the aforementioned PPLUS Minimum Servicing Standards for the INDEXPLUS Trust Series 2003-1 transaction as of and for the year ended December 31, 2023 is fairly stated, in all material respects.
We do not express an opinion or any other form of assurance on management’s statement referring to its responsibility for establishing and maintaining effective internal control over compliance with the Servicing Standards.
/s/ KPMG LLP
Chicago, Illinois
February 21, 2024
MANAGEMENT ASSERTION
The Bank of New York Mellon (formerly The Bank of New York) (the “Bank”) is responsible for complying with the requirements of the PPLUS Minimum Servicing Standards (“Servicing Standards”) as they relate to the INDEXPLUS Trust Series 2003-1 transaction. With respect to Servicing Standards 4, 5 and 6, there were no activities performed as of and for the year ended December 31, 2023 with respect to the INDEXPLUS Trust Series 2003-1 transaction, because there were no occurrences of events that would require the Bank to perform such activities. The Bank is responsible for establishing and maintaining effective internal control over compliance with the Servicing Standards. The Bank has performed an evaluation of its compliance with the requirements of the Servicing Standards as it relates to INDEXPLUS Trust Series 2003-1 as of and for the year ended December 31, 2023. Based on this evaluation, the Bank asserts that as of and for the year ended December 31, 2023, it has complied with the requirements of the PPLUS Minimum Servicing Standards (attached).
| /s/ Linda Derrick | |
|
The Bank of New York Mellon |
Appendix I
PPLUS Minimum Servicing Standards intended for use
in connection with the Annual Accountants Report (“AAR”)
Below is Merrill Lynch Depositor, Inc.’s (“the Depositor”), Merrill Lynch Structured Credit Derivatives (“SCD”) and the Merrill Lynch Credit Derivatives Operations Group (“OG”) (collectively Merrill Lynch) minimum servicing standards for the PreferredPlus Program (“PPlus”).
The Bank of New York Mellon (“the Bank” or “the Trustee”) acting as Trustee, Custodian, Paying Agent, and Transfer Agent on behalf of the PPlus Program has agreed to comply with all of the following minimum servicing standards. Merrill Lynch has obtained a certification from the Bank that it has complied with these criteria for the period January 1, 2023 to December 31, 2023.
| MINIMUM Servicing STANDARD | Applicable Servicing STANDARD | ||
| Reference | Criteria | Performed by the Depositor | Performed by Bank/Trustee |
| CUSTODIAL BANK ACCOUNT RECONCILIATIONS | |||
| 1 | The Bank must reconcile all related custodial bank accounts.
|
X | |
The Bank will include the Distribution report as Exhibit 99.1 in the Form 8-Ks filed with the SEC.
|
X | ||
| VERIFICATION OF INCOMING TRUST COLLATERAL INTEREST PAYMENTS | |||
| 2 | The Bank must have a tickler system in place so that they will be expecting and monitoring the custodial bank account for receipt of the collateral coupon interest. Each of the tickler systems shall be updated on an on-going basis as each new trust series is created.
|
X | |
The Bank will ensure all interest payments are deposited into the custodial bank accounts and related bank clearing accounts on the day the Bank is in receipt of the funds.
|
X | ||
The Bank must prove the arithmetic accuracy of the amount of interest received by the Trust from the underlying securities and ensure that the face amount, description, coupon rate, and maturity date of the securities held in the Trust agree to the PPM Supplement dated Date XX, 20XX.
|
X | ||
1
| MINIMUM Servicing STANDARD | Applicable Servicing STANDARD | ||
| Reference | Criteria | Performed by the Depositor | Performed by Bank/Trustee |
TRUST DISBURSEMENTS | |||
| 3 | The Bank must prove the arithmetic accuracy of the amount of interest to be paid by the Trust to the Debt Unit holders by referring to the PPM Supplement dated Date XX, 20XX.
|
X | |
The Bank will make all disbursements via wire transfer to The Depository Trust Company (“DTC”) on the scheduled trust distribution date as soon as the amount of interest received from the underlying collateral into the custodial bank account has been received and verified for accuracy.
|
X | ||
| PARTIAL REDEMPTIONS | |||
| 4 | If there is a partial redemption of the trust certificates the Bank and the Depositor must ensure that the redemption proceeds received by the Trust and distributed by the Bank are in accordance with the series supplement.
|
X | X |
| DEFAULTS | |||
| 5 | If the Bank has actual knowledge of an event of default on the underlying securities that did not cause the Trust to liquidate, the Bank must distribute a formal notice of default to the Depositor, the certificateholders, the rating agencies and SCD/OG.
|
X | |
If the Bank has actual knowledge of an event of default on the underlying securities that did not cause the Trust to liquidate, the procedures for a vote or consent of the certificateholders as set forth in the Standard Terms and series Supplement must be complied with.
|
X | ||
| CALL WARRANT EXERCISES AND OPTIONAL EXCHANGES | |||
| 6 | If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the Trust to liquidate, the Bank must give the Depositor and the affected certificateholders notice of any exercise of call warrants or optional exchange. Such notice must contain the amount of certificates to be purchased, the call price, and any other relevant information.
|
X | |
2
| MINIMUM Servicing STANDARD | Applicable Servicing STANDARD | ||
| Reference | Criteria | Performed by the Depositor | Performed by Bank/Trustee |
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the trust to liquidate, the Bank must notify the rating agencies of the call exercise or optional exchange.
|
X | ||
If there is an exercise of call warrants or an optional exchange of trust certificates for underlying securities that did not cause the trust to liquidate, the Bank must give notice of exercise or optional exchange to the Depositor and certificate registrar of any certificates that were called.
|
X | ||
| COMMUNICATIONS WITH CERTIFICATEHOLDERS | |||
| 7 | If there was any occasion for the exercise of voting rights or giving consents by the certificateholders, the Bank must provide notice to the certificateholders within 5 business days of the Trust’s receipt of notice of the occasion and the Bank must vote or give consents as directed by certificateholders.
|
X | |
3