424B5 1 tv515583_424b5.htm 424B5

 

Filed pursuant to Rule 424(b)(5)

Registration Statement No. 333-210865

 

PROSPECTUS

 

$814,650,000

 

World Omni Automobile Lease Securitization Trust 2019-A
Issuing Entity

(CIK: 0001766101)

$95,000,000 Class A-1 Asset Backed Notes, Series 2019-A

$288,400,000 Class A-2 Asset Backed Notes, Series 2019-A

$288,500,000 Class A-3 Asset Backed Notes, Series 2019-A

$100,000,000 Class A-4 Asset Backed Notes, Series 2019-A

$42,750,000 Class B Asset Backed Notes, Series 2019-A

 

World Omni Auto Leasing LLC

Depositor

(CIK: 0001439697)

 

World Omni Financial Corp.

Servicer and Sponsor

(CIK: 0001004150)

 

The issuing entity is offering the following classes of World Omni Automobile Lease Securitization Trust 2019-A Notes by this prospectus:

 

You should carefully consider the risk factors beginning on page 9 in this prospectus.

 

The notes are obligations of the issuing entity, World Omni Automobile Lease Securitization Trust 2019-A, and are backed indirectly by automobile or light-duty truck leases and the related leased vehicles. The notes are not obligations of Auto Lease Finance LLC, World Omni LT, World Omni Financial Corp., World Omni Auto Leasing LLC, any of their affiliates or any governmental agency.

  2019-A Asset Backed Notes

Class A-1

Notes

Class A-2
Notes
Class A-3
Notes
Class A-4
Notes
Class B
Notes
 
  Principal Amount $95,000,000 $288,400,000 $288,500,000 $100,000,000 $42,750,000
  Interest Rate 2.60455% 2.89% 2.94% 3.01% 3.24%
  Payment Dates Monthly Monthly Monthly Monthly Monthly
  Initial Payment Date

April 15,

2019

April 15,

2019

April 15,

2019

April 15,

2019

April 15,

2019

  Final Scheduled Payment Date

March 16,

2020

November 15,
2021

May 16,

2022

July 15,

2024

July 15,

2024

  Price to Public 100.00000% 99.99599% 99.98772% 99.98773% 99.98232%
  Underwriting Discount 0.110% 0.200% 0.260% 0.340% 0.400%
  Proceeds to Depositor $94,895,500 $287,811,635 $287,714,472 $99,647,730 $42,571,442

  

Before deducting expenses of $1,100,000 payable by the depositor, proceeds to the depositor are estimated to be $812,640,779.

 

Payments on the Notes

 

The notes are payable solely from the assets of the issuing entity which consist primarily of an exchange note backed by a pool of new automobile and light-duty truck leases and the related leased vehicles.

 

Credit Enhancement

 

·A reserve account with an initial balance of at least $4,750,027.01.

 

·Overcollateralization in an initial amount of $135,355,401.23, representing the excess of the Securitization Value of the leases and leased vehicles as of the actual cutoff date over the aggregate principal amount of notes issued by the issuing entity, to be built up to a target amount on each payment date.

 

·Excess interest on the leases to the extent described in this prospectus.

 

·The Class B Notes are subordinated to the Class A Notes.

 

We will not list the notes on any national securities exchange or on any automated quotation system of any registered securities association such as NASDAQ.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

No secondary market will exist for any notes prior to their offering. We cannot assure you that a secondary market will develop for the notes or, if it does develop, that it will continue.

 

Delivery of the notes, in book-entry form only, will be made through The Depository Trust Company against payment in immediately available funds, on or about March 13, 2019.

 

Joint Bookrunners of the Class A Notes and the Class B Notes

 

MUFG BofA Merrill Lynch Wells Fargo Securities

 

Co-Managers of the Class A Notes

 

BB&T Capital
Markets
Comerica
Securities
Mizuho
Securities
Regions
Securities LLC
SunTrust
Robinson Humphrey

 

The date of this prospectus is March 5, 2019.

 

 

 

  

Important Notice about Information Presented in this Prospectus

 

You should rely only on the information contained in this prospectus, including information that is incorporated by reference. We have not authorized anyone to provide you with other or different information. The information in this prospectus is accurate only as of the date stated on the cover hereof. We are not offering the securities in any jurisdiction where the offer is not permitted.

 

This prospectus begins with several introductory sections describing the notes and the issuing entity in abbreviated form, including:

 

·Summary of Terms, which gives a brief introduction of the key features of the notes and a description of the leases and leased vehicles; and

 

·Risk Factors, which describes risks that apply to the notes.

 

This prospectus includes cross references to sections in these materials where you can find further related discussions. The “Table of Contents” in this prospectus identifies the pages where these sections are located.

 

You can also find a listing of the pages where the principal terms are defined under “Index of Principal Terms” in this prospectus.

 

To understand the structure of, and risks related to, these notes, you must carefully read this prospectus in its entirety.

 

If you require additional information, the mailing address of our principal executive offices is World Omni Auto Leasing LLC, 190 Jim Moran Blvd., Deerfield Beach, Florida 33442 and the telephone number is (954) 429-2200. For other means of acquiring additional information about us or a series of securities, see “Incorporation of Certain Information By Reference” in this prospectus.

 

In this prospectus, the terms “depositor,” “we,” “us” and “our” refer to World Omni Auto Leasing LLC.

 

i 

 

 

NOTICE TO RESIDENTS OF THE UNITED KINGDOM

 

IN THE UNITED KINGDOM, THIS PROSPECTUS MAY ONLY BE COMMUNICATED TO PERSONS WHO (I) FALL WITHIN ARTICLE 19(5) ("INVESTMENT PROFESSIONALS") OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "FINANCIAL PROMOTION ORDER"), AS AMENDED, (II) FALL WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE FINANCIAL PROMOTION ORDER, OR (III) ARE PERSONS TO WHOM THIS PROSPECTUS MAY OTHERWISE LAWFULLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED WITHOUT THE NEED FOR SUCH DOCUMENT TO BE APPROVED, MADE OR DIRECTED BY AN "AUTHORISED PERSON" (AS DEFINED BY SECTION 31(2) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED (THE "FSMA")) UNDER SECTION 21 OF THE FSMA (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

 

NEITHER THIS PROSPECTUS NOR THE NOTES ARE OR WILL BE AVAILABLE TO PERSONS IN THE UNITED KINGDOM OTHER THAN RELEVANT PERSONS AND ANY PERSON IN THE UNITED KINGDOM THAT IS NOT A RELEVANT PERSON MUST NOT RELY ON OR ACT ON ANY INFORMATION IN THIS PROSPECTUS. IN THE UNITED KINGDOM, ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PROSPECTUS RELATES, INCLUDING THE NOTES, IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THE COMMUNICATION OF THIS PROSPECTUS TO ANY PERSON IN THE UNITED KINGDOM OTHER THAN A RELEVANT PERSON IS UNAUTHORIZED AND MAY CONTRAVENE THE FSMA.

 

NOTICE TO RESIDENTS OF CANADA

 

THE NOTES MAY BE SOLD ONLY TO PURCHASERS IN THE PROVINCES OF ALBERTA, BRITISH COLUMBIA, ONTARIO AND QUEBEC PURCHASING, OR DEEMED TO BE PURCHASING, AS PRINCIPALS THAT ARE ACCREDITED INVESTORS, AS DEFINED IN NATIONAL INSTRUMENT 45-106 PROSPECTUS EXEMPTIONS OR SUBSECTION 73.3(1) OF THE SECURITIES ACT (ONTARIO), AND ARE PERMITTED CLIENTS, AS DEFINED IN NATIONAL INSTRUMENT 31-103 REGISTRATION REQUIREMENTS, EXEMPTIONS AND ONGOING REGISTRANT OBLIGATIONS. ANY RESALE OF THE NOTES MUST BE MADE IN ACCORDANCE WITH AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE PROSPECTUS REQUIREMENTS OF APPLICABLE SECURITIES LAWS.

 

SECURITIES LEGISLATION IN CERTAIN PROVINCES OR TERRITORIES OF CANADA MAY PROVIDE A PURCHASER WITH REMEDIES FOR RESCISSION OR DAMAGES IF THIS PROSPECTUS (INCLUDING ANY AMENDMENT THERETO) CONTAINS A MISREPRESENTATION, PROVIDED THAT THE REMEDIES FOR RESCISSION OR DAMAGES ARE EXERCISED BY THE PURCHASER WITHIN THE TIME LIMIT PRESCRIBED BY THE SECURITIES LEGISLATION OF THE PURCHASER’S PROVINCE OR TERRITORY. THE PURCHASER SHOULD REFER TO ANY APPLICABLE PROVISIONS OF THE SECURITIES LEGISLATION OF THE PURCHASER’S PROVINCE OR TERRITORY FOR PARTICULARS OF THESE RIGHTS OR CONSULT WITH A LEGAL ADVISOR.

 

PURSUANT TO SECTION 3A.3 (OR, IN THE CASE OF SECURITIES ISSUED OR GUARANTEED BY THE GOVERNMENT OF A NON-CANADIAN JURISDICTION, SECTION 3A.4) OF NATIONAL INSTRUMENT 33-105 UNDERWRITING CONFLICTS (NI 33-105), THE UNDERWRITERS ARE NOT REQUIRED TO COMPLY WITH THE DISCLOSURE REQUIREMENTS OF NI 33-105 REGARDING UNDERWRITER CONFLICTS OF INTEREST IN CONNECTION WITH THIS OFFERING.

 

ii 

 

 

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

 

THIS PROSPECTUS IS NOT A PROSPECTUS FOR THE PURPOSES OF THE PROSPECTUS DIRECTIVE (AS DEFINED BELOW). The NOTES are not intended To be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of Directive (EU) 2016/97, AS AMENDED, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in DIRECTIVE 2003/71/EC (AS AMENDED OR SUPERSEDED) (the "Prospectus Directive"). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the NOTES or otherwise making them available to retail investors in the European Economic Area has been prepared and therefore offering or selling the NOTES or otherwise making them available to any retail investor in the European Economic Area may be unlawful under the PRIIPS Regulation.

 

THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF NOTES IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A "RELEVANT MEMBER STATE") WILL ONLY BE MADE TO A PERSON OR ENTITY WHICH IS A QUALIFIED INVESTOR UNDER THE PROSPECTUS DIRECTIVE (EACH, A "QUALIFIED INVESTOR"). ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THAT RELEVANT MEMBER STATE OF NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY ONLY DO SO WITH RESPECT TO QUALIFIED INVESTORS. NONE OF THE SPONSOR, THE DEPOSITOR THE ISSUING ENTITY, THE SERVICER, THE UNDERWRITERS, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES HAS AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF NOTES OTHER THAN TO QUALIFIED INVESTORS.

 

iii 

 

 

TABLE OF CONTENTS

 

Important Notice about Information Presented in this Prospectus i
NOTICE TO RESIDENTS OF THE UNITED KINGDOM ii
NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA iii
TRANSACTION STRUCTURE AND PARTIES vii
SUMMARY OF MONTHLY DISTRIBUTIONS OF AVAILABLE FUNDS RECEIVED ON THE EXCHANGE NOTE viii
SUMMARY OF TERMS 1
Parties and Dates 1
The Notes 2
Servicing and Administration 5
Issuing Entity Property 5
Lease Information 6
Credit Enhancement 6
Tax Status 7
ERISA Considerations 8
Certain Investment Company Act Considerations 8
Ratings of the Notes 8
Eligibility of the Class A-1 Notes for Purchase by Money Market Funds 8
Certificates 8
RISK FACTORS 9
You Must Rely For Repayment Only Upon the Issuing Entity’s Assets,  Which May Not Be Sufficient to Make Full Payments On Your Notes. 9
You May Experience Reduced Returns and Delays On Your Notes Resulting From Changes in Delinquency Levels and Losses. 9
A Bankruptcy of the Depositor, Auto Lease Finance LLC, the Servicer or the Titling Trust Could Delay or Limit Payments To You. 9
Consolidation or Disregard of Sale Following A Bankruptcy of World  Omni. 10
Other Adverse Consequences of a  World Omni Bankruptcy. 10
Adverse Consequences of A Bankruptcy or Insolvency of the Titling Trust. 10
You May Suffer Losses On Your Investment Because the Indenture Trustee Lacks Direct Ownership Interests or Perfected Security Interests In the Leased Vehicles and Interests of Other Persons In the Leases and the Leased Vehicles Could Be Superior To the Collateral Agent’s Interest. 11
If the Servicer Does Not Maintain Control of the Leases Evidenced By Electronic Contracts, the Titling Trust May Not Have A Perfected Security Interest In Those Leases. 12
If ERISA Liens Are Placed On the Titling Trust Assets, You Could Suffer  a Loss. 13
Vicarious Tort Liability May Result In  a Loss. 13

 

Class B Notes are Subject to Greater Risk Because of Their Subordination. 15
Holders of the Class B Notes May Suffer Losses Because They Have Limited Control Over Actions of the Issuing Entity and Conflicts Between Classes of Notes May Occur. 15
Payment Priorities May Increase Risk of Loss or Delay in Payment to Certain Notes. 16
The Failure to Pay Interest on the Class B Notes is Not an Event of Default While the Class A Notes Remain Outstanding. 16
The Notes Are Not Suitable Investments for All Investors. 16
The Geographic Concentration and Performance of the Lease Assets May Increase the Risk of Loss on Your Investment. 16
You May Have Difficulty Selling Your Notes and/or Obtaining Your Desired Price Due to the Absence of, or  Illiquidity in, a Secondary Market for Such Notes and Because of General Global Economic Conditions. 17
Changes to the U.S. Federal Income Tax Laws Could Have an Adverse Impact on Holders of the Notes. 18
The Return on Your Notes May be Reduced Due to Varying Economic Circumstances and/or an Economic Downturn. 19
Existing Legislation and Future Regulatory Reforms Could Have An Adverse Effect On World Omni’s Business and Operating Results. 19
Federal Financial Regulatory  Legislation Could Have an Adverse Effect on World Omni, the Titling  Trust, the Initial Beneficiary, the Depositor and the Issuing Entity,  Which Could Result in Losses or  Delays in Payments on Your Notes. 20
Withdrawal or Downgrade of the Initial Ratings of the Notes Will, and the Issuance of Unsolicited Ratings on  Your Notes or any Adverse Changes  to a Hired Rating Agency, May Affect  the Prices for the Notes Upon Resale. 22
The Timing of Principal Payments Is Uncertain and You May Suffer Losses  or Reinvestment Risk if an Event of Default Occurs Under the Indenture. 24
The Concentration of Leased Vehicles to Particular Models Could Negatively Affect the Pool Assets. 25
Used Car Market Factors May Increase the Risk of Loss on Your Investment. 25
Increased Turn-in Rates May Increase Losses. 25
You May Experience Reduced Returns and Delays on Your Notes Resulting From a Vehicle Recall. 25
The Return On Your Notes Could Be Reduced By Shortfalls Due To Military Action. 26

 

iv 

 

 

Leases That Fail To Comply With Consumer Protection Laws May Be Unenforceable, Which May Result In Losses On Your Investment. 27
Commingling By the Servicer May Result In Delays and Reductions In Payments On Your Notes. 27
Because the Notes Are In Book-Entry Form, Your Rights Can Only Be Exercised Indirectly. 28
THE SERVICER, SPONSOR AND ADMINISTRATOR 29
General 29
Securitization Experience 30
Repurchases of Leases in Prior Securitized Lease Pools 30
Origination, Underwriting and Purchasing 30
Underwriting Standards 32
Servicing 33
Like Kind Exchange Program 37
THE TITLING TRUST 38
Formation of the Titling Trust 38
Titling Trustee, Delaware Trustee and Titling Trustee Agent 39
Titling of Leased Vehicles 39
Servicing of Leases and Leased Vehicles 39
Limited Powers of Titling Trust 40
Allocation of Liabilities of the Titling Trust 41
THE INITIAL BENEFICIARY 42
THE DEPOSITOR 43
THE ISSUING ENTITY 44
Capitalization of the Issuing Entity 44
The Trust Property 45
THE TRUSTEES OF THE ISSUING ENTITY 46
The Owner Trustee 46
The Indenture Trustee, Note Registrar and Paying Agent 46
ASSET REPRESENTATIONS REVIEWER 47
THE EXCHANGE NOTE 49
General 49
Transfers of the Exchange Note 50
THE LEASES 52
Characteristics of the Leases 52
Calculation of the Securitization Value 54
Characteristics of the Units 54
Asset-Level Data 59
Pool Underwriting 59
Review of Leases in Reference Pool 59
Representations and Warranties Relating to the Units 60
Asset Representations Review 62
Dispute Resolution for Reallocation Requests 64
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES 66
STATIC POOL INFORMATION 69
PREPAYMENT AND YIELD CONSIDERATIONS—WEIGHTED AVERAGE LIFE OF THE SECURITIES 70

 

NOTE FACTORS AND OTHER INFORMATION 78
USE OF PROCEEDS 79
DESCRIPTION OF THE NOTES 80
Payments of Interest 80
Payments of Principal 81
Redemption Upon Optional Purchase 83
REGISTRATION OF THE NOTES 84
Book-Entry Registration 84
Definitive Notes 86
DESCRIPTION OF THE TRANSACTION DOCUMENTS 87
Reallocation Obligations 87
Accounts 87
The Servicing Agreement and the Servicing Supplement 88
Custody of Lease Documents and Certificates of Title 89
Sale and Disposition of Leased Vehicles 89
Insurance on Leased Vehicles 89
Security Deposits 90
Servicing Compensation 90
Servicing of Defaulted Leases 91
Evidence as to Compliance 91
Noteholder Communication 91
Servicer Resignation, Servicer Liability and Servicer Indemnification 92
Servicer Default 93
Rights upon Exchange Noteholder Servicer Default 93
Waiver of Past Defaults 93
Termination 93
Distributions on the Exchange Note 94
Distributions on the Securities 95
Reserve Account 100
Overcollateralization 100
Indenture 100
Trust Agreement 106
Trustee Indemnification and Trustee Resignation and Removal 107
Amendments 108
Bankruptcy of the Issuing Entity 109
CREDIT RISK RETENTION 110
General 110
Retained Eligible Horizontal Residual Interest 110
CERTAIN PROVISIONS OF THE TITLING TRUST DOCUMENTS AND RELATED AGREEMENTS 113
Closed-end Collateral Specified Interest, Reference Pools and Exchange Notes 113
Titling Trustee 114
Resignation and Removal of the Titling Trustee or Titling Trust Administrator 114
Indemnity of Titling Trustees 114
Issuing Entity as Third-Party Beneficiary 115
Termination 115
Securities Owned by the Issuing Entity, the Depositor, the Servicer and their Affiliates 115

 

v 

 

 

Information Requests 115
Securities Exchange Act Filing 115
Exchange Note Default 115
Application of Collections on the Reference Pools 116
AFFILIATIONS AND RELATIONSHIPS AMONG TRANSACTION PARTIES 117
FEES AND EXPENSES 118
ADDITIONAL LEGAL ASPECTS OF THE TITLING TRUST AND THE EXCHANGE NOTES 119
The Titling Trust 119
Qualification of VT Inc. as Fiduciary 119
Structural Considerations 119
Allocation of Titling Trust Liabilities 120
Insolvency Related Matters 120
Dodd-Frank Act Orderly Liquidation Authority Provisions 123
ADDITIONAL LEGAL ASPECTS OF THE LEASES AND THE LEASED VEHICLES 126
Security Interests 126
Safekeeping of Chattel Paper 126
ERISA Liens and Vicarious Tort Liability 127
Limitations on Collateral Agent’s and Indenture Trustee’s Lien 127
Vicarious Tort Liability 127
Repossession of Leased Vehicles 128
Deficiency Judgments 128
Consumer Protection Law 128
Other Limitations 130
MATERIAL FEDERAL INCOME TAX CONSEQUENCES 131
Tax Consequences to Holders of the Notes 131
Classification of the Issuing Entity 136
Discount and Premium 137
Tax Shelter Disclosure and Investor List Requirements 137
STATE AND LOCAL TAX CONSEQUENCES 138
CERTAIN ERISA CONSIDERATIONS 139
UNDERWRITING 141
European Economic Area 144
United Kingdom 144
FORWARD-LOOKING STATEMENTS 145
LEGAL PROCEEDINGS 146
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 147
LEGAL MATTERS 148
INDEX OF PRINCIPAL TERMS 149
   
APPENDIX A: STATIC POOL INFORMATION A-1

 

vi 

 

 

TRANSACTION STRUCTURE AND PARTIES

 

The following chart summarizes the structure and parties to the transaction and provides only a simplified overview of their relationships. Please refer to this prospectus for a further description.

 

 

 

vii 

 

 

SUMMARY OF MONTHLY DISTRIBUTIONS OF AVAILABLE FUNDS RECEIVED ON THE EXCHANGE NOTE*

  

 

  

* This chart provides only a simplified overview of the priority of monthly distributions. The order in which funds will flow each month as indicated above is applicable for so long as no event of default has occurred. For more detailed information or information regarding the flow of funds upon the occurrence of an event of default, please refer to “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” in this prospectus.

 

viii 

 

 

SUMMARY OF TERMS

 

The following summary is a short, concise description of the main terms of the notes. For this reason, the summary does not contain all the information that may be important to you. You will find a detailed description of the terms of the notes following this summary.

 

Parties and Dates

 

Issuing Entity

 

The issuing entity of the notes is World Omni Automobile Lease Securitization Trust 2019-A, also referred to herein as the Issuing Entity.”

 

Depositor

 

The depositor is World Omni Auto Leasing LLC, a Delaware limited liability company and wholly-owned, special-purpose subsidiary of Auto Lease Finance LLC, a wholly-owned, special-purpose subsidiary of World Omni Financial Corp., a Florida corporation (“World Omni”).

 

The address and telephone number of the depositor is:

 

190 Jim Moran Blvd.
Deerfield Beach, Florida 33442
(954) 429-2200

 

Initial Beneficiary

 

The initial beneficiary is Auto Lease Finance LLC, a Delaware limited liability company and wholly-owned, special-purpose subsidiary of World Omni.

 

Servicer, Sponsor and Administrator

 

The servicer, sponsor and administrator is World Omni, which is a wholly-owned subsidiary of JM Family Enterprises, Inc.

 

Through its subsidiaries, JM Family Enterprises, Inc. provides a full range of automotive-related distribution and financial services to Toyota dealerships in Alabama, Florida, Georgia, North Carolina and South Carolina, referred to herein as the “Five-State Area,” and provides financial services to other dealerships throughout the United States. Southeast Toyota Distributors, LLC, a wholly-owned subsidiary of JM Family Enterprises, Inc., is the exclusive distributor of Toyota cars and light-duty trucks, parts and accessories in the Five-State Area and distributes Toyota vehicles pursuant to a distributor agreement with Toyota Motor Sales, U.S.A., Inc. that commenced in 1968 and has been subsequently renewed through October 2019. World Omni has provided financial services to Toyota dealers in the Five-State Area since 1982, operating under the name Southeast Toyota Finance since 1996.

 

Indenture Trustee, Note Registrar and Paying Agent

 

The indenture trustee, note registrar and paying agent is MUFG Union Bank, N.A., a national banking association.

 

Owner Trustee

 

The owner trustee is U.S. Bank Trust National Association, a national banking association.

 

Asset Representations Reviewer

 

The asset representations reviewer is Clayton Fixed Income Services LLC, a Delaware limited liability company.

 

Titling Trust and Issuer of the Exchange Note

 

The titling trust and issuer of the exchange note is World Omni LT, a Delaware statutory trust. Toyota dealerships within the Five-State Area have assigned and will assign closed-end lease contracts and the related leased vehicles to the titling trust. Some of the leases and related leased vehicles assigned to the titling trust have been allocated to a separate pool of assets of the closed-end collateral specified interest in the titling trust, which we call the “Reference Pool”, cash flow from which is directed to make payments on a note called the “Exchange Note.” The issuing entity will hold the exchange note.

 

Titling Trustee

 

The titling trustee is VT Inc., an Alabama corporation and a wholly-owned, special-purpose subsidiary of U.S. Bank National Association.

 

Titling Trustee Agent and Administrative Agent

 

The titling trustee agent and administrative agent of the titling trust is U.S. Bank National Association, a national banking association.

 

 1 

 

 

Delaware Trustee

 

The Delaware trustee is U.S. Bank Trust National Association, a national banking association.

 

Closed-End Collateral Agent

 

The closed-end collateral agent is AL Holding Corp., a Delaware corporation.

 

Actual Cutoff Date

 

The close of business on January 22, 2019.

 

Closing Date

 

On or about March 13, 2019.

 

The lease information in this prospectus is based on the units related to the reference pool as of the actual cutoff date. See “—Lease Information” below.

 

The Notes

 

The issuing entity will issue the following notes:

 

Class A-1 2.60455% Asset-Backed Notes in the aggregate original principal amount of $95,000,000;

 

Class A-2 2.89% Asset-Backed Notes in the aggregate original principal amount of $288,400,000;

 

Class A-3 2.94% Asset-Backed Notes in the aggregate original principal amount of $288,500,000;

 

Class A-4 3.01% Asset-Backed Notes in the aggregate original principal amount of $100,000,000; and

 

Class B 3.24% Asset-Backed Notes in the aggregate original principal amount of $42,750,000.

 

The Class A-1, Class A-2, Class A-3 and Class A-4 Notes are collectively referred to as the “Class A Notes in this prospectus. The Class A Notes and the Class B Notes are collectively referred to as the “Notes” in this prospectus.

 

The aggregate original principal amount of the Class A Notes will be $771,900,000 and the aggregate original principal amount of the Class B Notes will be $42,750,000. The notes will be issued in minimum denominations of $1,000 and integral multiples of $1,000, in book-entry form only, through The Depository Trust Company, Clearstream Banking, société anonyme, and Euroclear. For more information, read “Registration of the Notes—Book-Entry Registration” in this prospectus. We expect that delivery of the notes will be made on the closing date.

 

Payment Dates

 

The issuing entity will make payments on the notes on the 15th day of each month, except that when the 15th day is not a business day, the issuing entity will make payments on the notes on the next business day. We refer to each such date as a “Payment Date.” The initial payment date will be April 15, 2019.

 

The final scheduled payment date for each class of notes is listed below. The issuing entity expects that each class of notes will be paid in full prior to its final scheduled payment date.

 

Class A-1 Notes March 16, 2020
Class A-2 Notes November 15, 2021
Class A-3 Notes May 16, 2022
Class A-4 Notes July 15, 2024
Class B Notes July 15, 2024

 

Interest

 

On each payment date, the indenture trustee will remit to the holders of record of each class or sub-class of notes as of the close of business on the related record date, interest at the respective per annum interest rate applicable to each class of notes on the outstanding principal amount of that class of notes as of the close of business on the preceding payment date. For notes issued in book-entry form, the record date for a particular payment date will be the business day immediately preceding that payment date.

 

Interest on the Class A-1 Notes will be calculated on the basis of the actual number of days in the related interest accrual period (which period will be from and including the previous payment date to but excluding the related payment date, except for the initial interest accrual period, which period will be from and including the closing date to but excluding the initial payment date) and a 360-day year.

 

This means that the interest due on the Class A-1 Notes on each payment date will be the product of:

 

·the aggregate outstanding principal amount of the Class A-1 Notes;

 

·the interest rate for the Class A-1 Notes; and

 

·the actual number of days from and including the previous payment date (or, in the case of the

 

 2 

 

initial payment date, 33, assuming a closing date of March 13, 2019) to but excluding the current payment date, divided by 360.

 

Interest for a related period on the other classes of notes will be calculated on the basis of a 360-day year of twelve 30-day months (which period will be from and including the 15th day of the preceding calendar month (or, for the initial interest accrual period, from and including the closing date) to but excluding the 15th day of the current calendar month). This means that the interest due on these classes of notes on each payment date will be the product of:

 

·the aggregate outstanding principal amount of the related class of notes;

 

·the related interest rate; and

 

·30 (or, in the case of the initial payment date, 32, assuming a closing date of March 13, 2019) divided by 360.

 

Interest payments on all classes of the Class A Notes will have the same priority. Interest payments on the Class B Notes will be subordinated to the payment of interest on the Class A Notes. Under the limited circumstances described under “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” in this prospectus, the Class A Notes will be entitled to receive specified priority payments of principal before payments of interest are made on the Class B Notes. In addition, in the event that the notes are declared to be due and payable after the occurrence of an event of default, no interest will be payable on the Class B Notes until all principal and interest on the Class A Notes have been paid in full.

 

We refer you to “Description of the Notes—Payments of Interest” in this prospectus.

 

Principal

 

On each payment date, from the amounts allocated to the holders of the notes to pay principal described in clauses (4), (6) and (8) under “—Priority of Payments” below, the issuing entity will pay principal of the notes in the following order of priority:

 

·to the Class A-1 Notes until they are paid in full; then

 

·to the Class A-2 Notes until they are paid in full; then

 

·to the Class A-3 Notes until they are paid in full; then

 

·to the Class A-4 Notes until they are paid in full; and then

 

·to the Class B Notes until they are paid in full.

 

If the notes are declared to be due and payable following the occurrence of an event of default, unless such event of default has been waived or rescinded, the issuing entity will pay principal of the notes from funds allocated to the holders of the notes in the following order of priority:

 

·to the holders of the Class A-1 Notes until they are paid in full; then

 

·to the holders of the other Class A Notes, pro rata, based upon their respective unpaid principal amounts, until they are paid in full; and then

 

·to the holders of the Class B Notes until they are paid in full.

 

All outstanding principal and interest with respect to a class of notes will be payable in full on its final scheduled payment date. We refer you to “Description of the Transaction Documents—Distributions on the Securities—Payments to Noteholders” in this prospectus and “Fees and Expenses” in this prospectus for a description of fees and expenses payable on each payment date out of available funds.

 

Redemption Upon Optional Purchase

 

The servicer will have the right at its option to exercise a “Clean-Up Call” and to purchase the exchange note from the issuing entity on any payment date following the last day of any collection period on which the aggregate outstanding principal amount of the notes is less than or equal to 5% of the initial aggregate outstanding principal amount of the notes on the closing date. If the servicer exercises this option to purchase the exchange note, any notes that are outstanding at that time will be prepaid in whole at a redemption price equal to their unpaid principal amount plus accrued and unpaid interest thereon to but excluding the date of redemption, and the purchase price for the exchange note shall not be less than the redemption price.

 

Priority of Payments

 

On each payment date, any funds available for distribution from the exchange note, funds on deposit in the trust collection account and other specified amounts constituting available funds, if any, in each case, with respect to that payment date, will be distributed in the following amounts and order of priority:

 

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(1) to the administrator, the administration fee;

 

(2) to the asset representations reviewer, all fees, expenses and indemnities due to the asset representations reviewer not previously paid by the servicer, up to a maximum amount of $150,000 per calendar year;

 

(3) interest on the Class A Notes, pro rata among each class of Class A Notes;

 

(4) principal of the notes in an amount equal to the amount by which (a) the aggregate outstanding principal amount of the Class A Notes as of the day immediately preceding such payment date exceeds (b) the aggregate Securitization Value as of the last day of the related collection period, such amount being the “Noteholders’ First Priority Principal Distributable Amount”;

 

(5) interest on the Class B Notes;

 

(6) principal of the notes in an amount equal to the amount by which (a) the aggregate outstanding principal amount of the Class A Notes and the Class B Notes as of the day immediately preceding such payment date exceeds (b) the aggregate Securitization Value as of the last day of the related collection period less (c) any amounts allocated to pay principal of the notes under clause (4) above, such amount being the “Noteholders’ Second Priority Principal Distributable Amount”;

 

(7) to the reserve account, the amount, if any, necessary to fund the reserve account up to its required reserve account balance;

 

(8) principal of the notes in an amount equal to the amount by which (a) the aggregate outstanding principal amount of the notes as of the day immediately preceding such payment date exceeds (b) the aggregate Securitization Value as of the last day of the related collection period less 15.75% of the aggregate initial Securitization Value as of the actual cutoff date less (c) any amounts allocated to pay principal of the notes under clauses (4) and (6) above, such amount being the “Noteholders’ Regular Principal Distributable Amount”;

 

(9) to the asset representations reviewer, all fees, expenses and indemnities due to the asset representations to the extent not paid in clause (2) above; and

 

(10) the remainder, if any, as distributions to the certificateholders.

 

In the event that available funds are not sufficient to make the entire allocations required by clauses (1) through (6) above, the indenture trustee shall withdraw funds from the reserve account and will apply those funds to make the distributions required by those clauses in the priority specified above to the extent funds in the reserve account are available therefor.

 

For a description of the priority of payments in the event that notes are declared to be due and payable following the occurrence of an event of default under the indenture, we refer you to “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” in this prospectus. We also refer you to “Description of the Transaction Documents—Distributions on the Securities—Payments to Noteholders” in this prospectus.

 

Events of Default; Priority and Acceleration

 

The occurrence of any one of the following events will be an “Event of Default” under the indenture:

 

·a default for five business days or more in the payment of interest on any note after the same becomes due; provided, however, that until the outstanding principal amount of the Class A Notes is reduced to zero, a default in the payment of any interest on any Class B Note shall not by itself constitute an event of default;

 

·a default in the payment of principal of a note when the same becomes due and payable, to the extent funds are available therefor, or on the related final scheduled payment date or the redemption date;

 

·a default in the observance or performance of any covenant or agreement of the issuing entity, which default materially and adversely affects the interests of the noteholders, subject to notice and cure provisions;

 

·any representation or warranty made by the issuing entity being materially incorrect as of the date it was made, which inaccuracy materially and adversely affects the interests of the noteholders, subject to notice and cure provisions; or

 

·certain events of bankruptcy, insolvency, receivership or liquidation of the issuing entity, both voluntary and involuntary; provided that any delay in or failure of performance referred to in the first three bullet points above for a period of less than 120 days will not constitute

 

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an event of default if that delay or failure was caused by force majeure or other similar occurrence.

 

The amount of principal required to be paid to noteholders under the indenture, however, generally will be limited to amounts available to make such payments in accordance with the priority of payments. Thus, the failure to pay principal of a class of notes due to a lack of amounts available to make such a payment will not result in the occurrence of an event of default until the final scheduled payment date for that class of notes or the redemption date.

 

Upon any event of default, the indenture trustee or a majority of the holders of controlling securities may immediately declare the unpaid principal amount of the notes, together with accrued and unpaid interest thereon through the date of acceleration, due and payable. If the notes are so accelerated, the priority of payments will change.

 

For further detail, we refer you to “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” and “—Payments to Noteholders” in this prospectus.

 

Controlling Securities

 

So long as the Class A Notes are outstanding, the Class A Notes will be the controlling securities. As a result, holders of each class and subclass of the Class A Notes generally vote together as a single class under the indenture. For additional information about the voting rights of Noteholders, see “Description of the Transaction Documents—Indenture—Voting Rights; Controlling Securities” in this prospectus. Upon payment in full of the Class A Notes, the Class B Notes will be the controlling securities. See “Holders of the Class B Notes May Suffer Losses Because They Have Limited Control Over Actions of the Issuing Entity and Conflicts Between Classes of Notes May Occur” in this prospectus. Notes held by the depositor or any affiliate thereof will be disregarded and deemed not to be outstanding in determining whether the holders of the requisite outstanding principal amount of the controlling securities have given any request, demand, authorization, direction, notice, consent or waiver under any related transaction document.

 

 

Servicing and Administration

 

World Omni will service the titling trust assets, including the leases and leased vehicles in the related reference pool (each lease and the related leased vehicle constitute a “Unit,” and collectively, the “Units”). In addition, World Omni will perform the administrative obligations required to be performed by the issuing entity or the owner trustee under the indenture and the trust agreement. On each payment date, the servicer will be paid a fee for performing its servicing obligations in an amount equal to one–twelfth of 1.00% of the aggregate Securitization Value as of the first day of the related collection period, which fee will be payable from amounts collected under the leases and amounts realized from sales of the related leased vehicles, and will be paid to the servicer prior to the payment of principal of and interest on the exchange note. The servicing fee payable to the servicer on the initial payment date with respect to the initial collection period will be pro-rated, however, to compensate for the length of the initial collection period being longer than one month.

 

On each payment date, the administrator will be paid a fee for performing its administration obligations in an amount equal to one-twelfth of 0.05% of the aggregate Securitization Value as of the first day of the related collection period, which fee will be payable from available amounts received by the issuing entity with respect to the exchange note, and will be paid to the administrator prior to the payment of principal of and interest on the notes. The administration fee payable to the administrator on the initial payment date with respect to the initial collection period will be pro-rated, however, to compensate for the length of the initial collection period being longer than one month.

 

We refer you to “Fees and Expenses” in this prospectus.

 

Issuing Entity Property

 

The “Issuing Entity Property” will include the following:

 

·exchange note secured by the units;

 

·amounts on deposit in the accounts owned by the issuing entity and permitted investments of those accounts;

 

·rights under certain transaction documents; and

 

·the proceeds of any and all of the above.

 

The Units

 

The leased vehicles allocated to the related reference pool are new Toyota branded automobiles and light-duty trucks titled in the name of the titling trust. The leases allocated to the related reference pool are closed-end leases that were originated by

 

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Toyota dealers in the Five-State Area and were acquired by the titling trust. The leases provide for equal monthly payments that amortize the adjusted capitalized cost to the contract residual value of the related leased vehicle established by World Omni at the time of origination of the lease.

 

Lease Information

 

The lease information in this prospectus is based on the units related to the reference pool as of the actual cutoff date. We refer to that reference pool of units as the “Actual Pool.

 

For further information about the characteristics of the units in the actual pool as of the actual cutoff date, see “The Leases” in this prospectus.

 

As of the close of business on the actual cutoff date, the units in the actual pool described in this prospectus had:

 

·an aggregate Securitization Value of $950,005,401.23, of which $571,852,396.16 (approximately 60.19%) represented the discounted Base Residual Values of the leased vehicles;

 

·a weighted average original term to maturity (based on Securitization Value) of approximately 36.50 months; and

 

·a weighted average remaining term to maturity (based on Securitization Value) of approximately 30.14 months.

 

All units in the actual pool satisfy the eligibility criteria specified in the transaction documents.

 

In connection with the offering of the notes, the depositor has performed a review of the leases in the actual pool that will be allocated by the titling trust on the closing date and certain disclosure in this prospectus, including certain asset-level data disclosures incorporated by reference into this prospectus, relating to the leases in the related reference pool, and has concluded that it has reasonable assurance that such disclosure is accurate in all material respects as described under “The Leases—Review of Leases in Reference Pool” in this prospectus.

 

World Omni does not consider any of the leases in the actual pool to constitute exceptions to World Omni’s written underwriting guidelines as described in “The Servicer, Sponsor and Administrator—Underwriting Standards” in this prospectus.

 

The Exchange Note

 

The titling trust will issue an exchange note on the date the notes are issued by the issuing entity. The exchange note will be secured by a reference pool within the closed-end collateral specified interest in the titling trust and related collateral. The titling trust will issue the exchange note to the initial beneficiary, which will then sell the exchange note to the depositor. The exchange note will be transferred by the depositor to the issuing entity at the time the issuing entity issues the notes. The exchange note will evidence a debt secured by the units included in the related reference pool. The issuing entity as holder of the exchange note will not have a beneficial interest in any assets of the titling trust. Payments made on or in respect of any other titling trust assets will not be available to make payments on the exchange note.

 

For more information regarding the issuing entity’s property, you should refer to “The Exchange Note” and “The Leases” in this prospectus.

 

Any noncompliant unit will be removed from the reference pool in connection with the breach of certain representations and warranties concerning the characteristics of the units, as described under “The Leases—Representations and Warranties Relating to the Units—Representations, Warranties and Covenants” in this prospectus.

 

Credit Enhancement

 

Credit enhancement is intended to provide protection against losses or delays in payments on the notes. Credit enhancement increases the likelihood of receipt by the holders of the notes of their full amount of principal and interest and decreases the likelihood that these holders will experience losses. Credit enhancement may not provide protection against all risks of loss and does not guarantee repayment of the entire principal amount and interest thereon. If losses on the units exceed the amount covered by any credit enhancement or are not covered by any credit enhancement, the holders of the notes will bear their allocable share of such losses, as described in this prospectus. Losses not covered by any credit enhancement or support will be effectively allocated to the classes of notes in the reverse order of priority of payments on the notes, such that losses will be first allocated to the excess interest, if any, then to the overcollateralization, if any, then to the principal amount of the Class B Notes and then to the principal amount of the Class A Notes.

 

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The credit enhancement for the notes is in the form of subordination, overcollateralization, a reserve account and excess interest.

 

Subordination of the Class B Notes

 

The subordination in priority of payments of the Class B Notes to the Class A Notes will provide additional credit enhancement to the Class A Notes. The Class B Notes will be allocated available funds only after the Class A Notes have received their applicable portions of available funds for a given payment date. The priority of payments is further described in “Description of the Notes—Payments of Interest,” “Description of the Notes—Payments of Principal” and “Description of the Transaction Documents—Distributions on the Securities” in this prospectus.

 

Overcollateralization

 

Overcollateralization represents the amount by which the aggregate Securitization Value exceeds the aggregate outstanding principal amount of the notes (which we refer to as the “Overcollateralization Amount”). The overcollateralization is composed of (i) the excess of the aggregate Securitization Value over the balance of the exchange note and (ii) the excess of the balance of the exchange note over the principal amount of the notes. Overcollateralization means there will be additional leases and leased vehicles generating collections that will be available to cover losses on the reference pool. Initial overcollateralization is approximately 14.25% of the aggregate initial Securitization Value as of the actual cutoff date. In addition, the application of funds according to clause (3) under “Description of the Transaction Documents—Distributions on the Exchange Note—Application of Collections on the Reference Pool” and clause (8) under “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” is designed to increase the amount of overcollateralization as of any payment date up to an amount equal to 15.75% of the aggregate initial Securitization Value as of the actual cutoff date.

 

Reserve Account

 

The issuing entity will establish a fully-funded reserve account (the “Reserve Account”) in the name of the indenture trustee. On the closing date, at least $4,750,027.01 will be deposited into the reserve account, which is approximately 0.50% of the initial aggregate Securitization Value as of the actual cutoff date. We refer to this amount as the “Required Reserve Account Balance.” In addition, the application of funds according to clause (7) under “Priority of Payments” above is designed to maintain the amount on deposit in the reserve account, if necessary, up to the required reserve account balance.

  

Funds in the reserve account on each payment date (including investment income earned on those amounts) will be available to cover shortfalls in payments on the notes listed in clauses (1) through (6) under “—Priority of Payments” above.

 

For more information regarding the reserve account, you should refer to “Description of the Transaction Documents—Reserve Account” in this prospectus.

 

Excess Interest

 

The amount paid by the lessees in respect of the lease charges of the leases in the reference pool is expected to be greater than the amount of the related servicing fee, administrator fee, amounts payable to the asset representations reviewer and interest on the notes each month. Any such excess in lease charges from lessees will serve as additional credit enhancement.

 

Tax Status

 

Kirkland & Ellis LLP, special federal tax counsel, is of the opinion that for federal income tax purposes, the notes will be characterized as indebtedness to the extent the notes are treated as beneficially owned by a person other than the sponsor or its affiliates for such purposes, and the issuing entity will not be characterized as an association (or publicly traded partnership) taxable as a corporation. In accepting a note, each holder of that note will be deemed to agree to treat the note as indebtedness for federal income tax purposes.

 

We refer you to “Material Federal Income Tax Consequences” in this prospectus for additional information concerning the application of federal tax laws to the issuing entity and the notes and to “State and Local Tax Consequences” in this prospectus for additional information concerning the application of state tax laws to the issuing entity and the notes.

 

We encourage you to consult your own tax advisor regarding the federal income tax consequences of the purchase, ownership and disposition of the notes and the tax consequences arising under the laws of any state or other taxing jurisdiction. See “Material Federal Income Tax Consequences” and “State and Local Tax Consequences” in this prospectus.

 

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ERISA Considerations

 

Subject to the considerations discussed under “Certain ERISA Considerations” in this prospectus, the notes being offered in connection with this prospectus are eligible for purchase by pension, profit-sharing or other employee benefit plans, as well as individual retirement accounts.

 

By its acquisition of a note, each purchaser is deemed to represent either that (i) it is not acquiring such note with the assets of any benefit plan or any plan subject to Similar Law or (ii) that its purchase and holding of such note will not give rise to a non-exempt prohibited transaction or a violation of any Similar Law.

 

We refer you to “Certain ERISA Considerations” in this prospectus.

 

Certain Investment Company Act Considerations

 

The issuing entity is not registered or required to be registered as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In determining that the issuing entity is not required to be registered as an investment company, the issuing entity is relying on the exemption provided by Rule 3a-7 under the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. As of the closing date, the issuing entity is being structured so as not to constitute a “covered fund” for purposes of the “Volcker Rule,” adopted to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

Ratings of the Notes

 

We expect that the notes will receive credit ratings from at least two nationally recognized rating agencies hired by the sponsor to rate the notes.

 

The rating agencies hired by the sponsor have discretion to monitor and adjust the ratings on the notes. The notes may receive an unsolicited rating from a rating agency not hired by the sponsor that is different from the ratings provided by the rating agencies hired by the sponsor to rate the notes. As of the date of this prospectus, we are not aware of any unsolicited ratings on the notes. Ratings on the notes may be lowered, qualified or withdrawn at any time without notice to the noteholders. A rating is based on each rating agency’s independent evaluation of the related units and the availability of any credit enhancement for the notes. A rating, or a change or withdrawal of a rating, by one rating agency will not necessarily correspond to a rating, or a change or a withdrawal of a rating, from any other rating agency. See “Risk Factors—Withdrawal or Downgrade of the Initial Ratings of the Notes Will, and the Issuance of Unsolicited Ratings on Your Notes or any Adverse Changes to a Hired Rating Agency, May Affect the Prices for the Notes Upon Resale” in this prospectus for more information.

 

 

Eligibility of the Class A-1 Notes for Purchase by Money Market Funds

 

The Class A-1 Notes are structured to be eligible for purchase by money market funds under Rule 2a-7 under the Investment Company Act. Rule 2a-7 includes additional criteria for investments by money market funds, including additional requirements relating to portfolio maturity, liquidity and risk diversification. If you are a money market fund contemplating a purchase of Class A-1 Notes, you are encouraged to consult your counsel before making a purchase.

 

Certificates

 

The issuing entity will also issue certificates (the “Certificates”) that represent the equity or residual interest in the issuing entity and the right to receive amounts that remain after the issuing entity makes full payment of interest on and principal of the notes payable on a given payment date, required deposits to the reserve account on that payment date and other required payments. The certificates are not being offered by this prospectus. The depositor will initially retain the certificates in satisfaction of the risk retention obligations of the sponsor. The depositor may transfer all or a portion of the certificates to another majority-owned affiliate of the sponsor on or after the closing date. The certificates will not be transferred or hedged except as permitted under the risk retention regulations. See “Credit Risk Retention” in this prospectus for more information.

 

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RISK FACTORS

 

You should carefully consider the following risks for the notes before making an investment decision. In particular, distributions on your notes will depend on payments received on and other recoveries with respect to the leases in the reference pool. Therefore, you should carefully consider the risk factors relating to the leases and the leased vehicles.

 

Your investment could be materially and adversely affected if any of the following risks are realized.

 

You Must Rely For Repayment Only Upon the Issuing Entity’s Assets, Which May Not Be Sufficient to Make Full Payments On Your Notes.   Your notes represent obligations of the issuing entity. Your notes will not represent an interest in or obligation of World Omni Auto Leasing LLC, World Omni LT, Auto Lease Finance LLC, World Omni, the indenture trustee, the owner trustee or any other person. Distributions on any class of notes will depend solely on the amount and timing of payments on the exchange note held by the issuing entity, which payments depend almost exclusively on the amount and timing of payments and other collections in respect of the leases in the related reference pool of the titling trust and the credit enhancement for the notes specified in this prospectus. World Omni Auto Leasing LLC cannot assure you that these amounts, together with other payments and collections in respect of the related leases, will be sufficient to make full and timely distributions on the exchange note and any notes. The notes, the exchange note and the leases will not be insured or guaranteed, in whole or in part, by the United States or any governmental entity or by any provider of credit enhancement.
     
You May Experience Reduced Returns and Delays On Your Notes Resulting From Changes in Delinquency Levels and Losses.   There can be no assurance that the historical levels of delinquencies and losses experienced by World Omni on its lease portfolio, or as reflected in the static pool information attached hereto as Appendix A, will be indicative of the performance of the leases included in the reference pool or that the levels will continue in the future. Delinquencies and losses could increase significantly for various reasons, including changes in the local, regional or national economies or due to other events.
     
A Bankruptcy of the Depositor, Auto Lease Finance LLC, the Servicer or the Titling Trust Could Delay or Limit Payments To You.  

We have structured the transaction described in this prospectus in an effort to minimize the risk that:

 

• Auto Lease Finance LLC, World Omni Auto Leasing LLC, the titling trust and the issuing entity might be the subject of a bankruptcy or state insolvency proceeding;

     
   

• the bankruptcy or insolvency of World Omni might result in the consolidation of the assets and liabilities of any of those entities with those of World Omni; and

 

• the transfer of the exchange note from Auto Lease Finance LLC to World Omni Auto Leasing LLC might be recharacterized as a loan rather than a true sale, which could result in the exchange note being included in the estate of Auto Lease Finance LLC should it become the subject of a bankruptcy or insolvency proceeding.

     
    If these efforts are unsuccessful, you could experience delays in payments due on your notes or may suffer losses on your notes.
     
    Following a bankruptcy or insolvency of World Omni or Auto Lease Finance LLC, a court could conclude that the exchange note is owned by World Omni or Auto Lease Finance LLC, respectively, instead of

 

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    the issuing entity. A court could reach this conclusion either because the transfer of the exchange note from Auto Lease Finance LLC to World Omni Auto Leasing LLC was not a true sale or because the court concluded that assets and liabilities of World Omni, Auto Lease Finance LLC and World Omni Auto Leasing LLC, or of Auto Lease Finance LLC and World Omni Auto Leasing LLC, should be consolidated and treated as a single estate for bankruptcy purposes. If this were to occur, you could experience delays in payments due to you or may not ultimately receive all interest and principal due to you because of:
     
   

• the automatic stay which prevents a creditor from exercising remedies against a debtor in bankruptcy without permission from the court; and

 

• the fact that neither the issuing entity nor the indenture trustee has a perfected security interest in the vehicles or any cash collections of the leases at the time a bankruptcy proceeding begins.

     
Consolidation or Disregard of Sale Following A Bankruptcy of World Omni.   Any amounts paid by World Omni to Auto Lease Finance LLC, World Omni Auto Leasing LLC, the titling trust or the issuing entity may be recoverable as preferential transfers if World Omni were to become the subject of a bankruptcy case or proceeding and World Omni had paid those amounts within one year of the commencement of the bankruptcy case.
     
Other Adverse Consequences of a World Omni Bankruptcy.  

The insolvency of World Omni also could result in its replacement as servicer, which could temporarily interrupt payments on the notes. A bankruptcy case or an insolvency case under federal or state law against World Omni also would be an event of default under the servicing agreement, which could result in the removal of World Omni as servicer. Either type of case could delay payment to you on the notes. If payments previously made by World Omni were to be recovered as preferential transfers, you could experience delays in payment or suffer a loss on your investment in the notes.

 

Termination of, or the failure to renew, the distributor agreement between Southeast Toyota Distributors, LLC, a wholly-owned subsidiary of JM Family Enterprises, Inc., and Toyota Motor Sales, U.S.A. could materially and adversely affect World Omni’s business or financial condition, including its ability to meet its servicing and repurchase obligations, which could result in a servicer termination event and removal of World Omni as servicer.

     
Adverse Consequences of A Bankruptcy or Insolvency of the Titling Trust.   We have registered the titling trust under various states’ business trust laws. This means that the titling trust may be subject to bankruptcy or state insolvency laws. If, despite the built-in structural protections, the titling trust becomes bankrupt or insolvent, then claims against its assets would be subordinate to the perfected security interest in those assets held by the closed-end collateral agent.

 

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    For further discussion of how a bankruptcy proceeding of the titling trust, Auto Lease Finance LLC, the servicer, World Omni Auto Leasing LLC or other related entities may affect the issuing entity and the notes, we refer you to “Additional Legal Aspects of the Titling Trust and the Exchange Notes—Insolvency Related Matters” and “—Dodd-Frank Act Orderly Liquidation Authority Provisions.”
     
You May Suffer Losses On Your Investment Because the Indenture Trustee Lacks Direct Ownership Interests or Perfected Security Interests In the Leased Vehicles and Interests of Other Persons In the Leases and the Leased Vehicles Could Be Superior To the Collateral Agent’s Interest.   Payments on the notes are ultimately dependent on the payments made under leases and net proceeds from the sale of the related leased vehicles allocated to the actual pool of the titling trust associated with the exchange note held by the issuing entity. Neither the issuing entity nor World Omni Auto Leasing LLC has a direct ownership interest in any lease or a direct ownership interest or perfected security interest in any leased vehicle. Because the interest of the indenture trustee—as pledgee of the issuing entity—is in the exchange note and not directly in the leases or in the leased vehicles, the indenture trustee has no direct rights relating to either the leases or the leased vehicles. If an event of default occurs under the indenture, the indenture trustee would be limited to exercising its rights relating to the exchange note, including selling it, and its rights under the other available credit enhancement. To the extent that the exercise of the indenture trustee’s rights under the exchange note and the other available credit enhancement produces insufficient funds to make all required payments for the notes, you may experience delays in payments or suffer a loss of all or part of your investment. We refer you to “The Issuing Entity—The Trust Property” and “Description of the Transaction Documents—Indenture.”
     
    Even though the closed-end collateral agent for the holders of exchange notes and certain other secured parties with respect to the closed-end collateral specified interest have a prior perfected security interest in the units, events or circumstances could jeopardize the interest, such as:
     
   

•  fraud or forgery by the vehicle lessee;

 

•  negligence or fraud by the servicer;

 

•  mistakes by governmental agencies;

 

•  liens for repairs or unpaid taxes;

 

•  the exercise of legal rights of governmental agencies under various criminal statutes;

 

•  the application of consumer protection laws;

 

•  rights and defenses of lessees made under the vehicle leases; and

 

•  bankruptcy of the lessee.

     
    See “Additional Legal Aspects of the Leases and the Leased Vehicles—Limitations on Collateral Agent’s and Indenture Trustee’s Lien” in this prospectus for other events that could jeopardize that interest.

 

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If the Servicer Does Not Maintain Control of the Leases Evidenced By Electronic Contracts, the Titling Trust May Not Have A Perfected Security Interest In Those Leases.   As described in “The Servicer, Sponsor And Administrator—Electronic Contracts and Electronic Contracting” in this prospectus, World Omni, on behalf of the titling trust, may originate leases electronically through a third-party custodian using the third-party custodian’s technology system.  Such electronic contracts are stored in an electronic vaulting system maintained by such third-party on behalf of World Omni, on behalf of the titling trust and the closed-end collateral agent.  The electronic vaulting system recognizes World Omni, on behalf of the titling trust and the closed-end collateral agent, as the party having control of the leases originated electronically by World Omni, on behalf of the titling trust, and World Omni, as servicer, is required to maintain control of those leases on behalf of the titling trust and its assigns.  The electronic vaulting system is designed to enable World Omni to perfect the titling trust and the closed-end collateral agent’s security interest in the leases evidenced by electronic contracts by satisfying the applicable Uniform Commercial Code’s requirements for “control” of electronic chattel paper.  For a description of these requirements, see “Additional Legal Aspects of the Leases and the Leased Vehicles—Security Interests” and “Description of the Transaction Documents— Custody of Lease Documents and Certificates of Title” in this prospectus.
     
    World Omni will represent that World Omni, as servicer on behalf of the titling trust and the closed-end collateral agent, has “control” (within the meaning of the applicable UCC) of each lease that is evidenced by electronic contracts.  However, it is possible that another person could acquire an interest in an electronic contract that is superior to the titling trust’s interest (and accordingly the closed-end collateral agent’s interest).  This could occur if World Omni, on behalf of the titling trust and the closed-end collateral agent, ceases to have “control” over an electronic contract that is maintained on behalf of World Omni by the third-party custodian and another party purchases that electronic contract (without knowledge that such purchase violates the titling trust’s or its assigns’ rights, as applicable, in the electronic contract) and obtains “control” over the electronic contract.  World Omni, on behalf of the titling trust and the closed-end collateral agent, also could lose control over an electronic contract if through fraud, forgery, negligence or error, or as a result of a computer virus or a failure of or weakness in the electronic vaulting system, a person other than the titling trust or the closed-end collateral agent were able to modify or duplicate the authoritative copy of the contract.
     
    Although the closed-end collateral agent perfects its security interest in the electronic contracts by filing financing statements, if the interests in the leases that the titling trust acquired from the originating dealer were not perfected by control, the priority of the closed-end collateral agent’s security interest in the leases could be affected. The closed-end collateral agent’s interest in the leases could be junior to another party with a perfected security interest in the inventory of the originating dealer or to judgment creditors who obtain a lien on the leases or to a bankruptcy trustee of a dealer that becomes a debtor in bankruptcy.

 

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    There can be no assurances that any third party software employed by World Omni will perform as represented to World Omni in maintaining the systems and controls required to provide assurance that World Omni maintains control over, on behalf of the titling trust and the closed-end collateral agent, an electronic contract.  In that event, there may be delays in obtaining copies of the electronic contract or confirming ownership and control of the electronic contract.
     
    From time to time, the leases evidenced by electronic contracts may be amended, including, without limitation, by extensions of the maturity date.  An amendment may be evidenced in the form of a new amended electronic contract or as a tangible amendment to an existing electronic contract.  To the extent any of those amendments are evidenced in tangible form, World Omni, as servicer, will agree to maintain the perfected security interest in the leases (consisting of the electronic contract and tangible amendment), on behalf of the titling trust and the closed-end collateral agent, by possession of the tangible amendment and control of the electronic contract.
     
If ERISA Liens Are Placed On the Titling Trust Assets, You Could Suffer a Loss.   Liens in favor of and/or enforceable by the Pension Benefit Guaranty Corporation could attach to the units owned by the titling trust and could be used to satisfy unfunded ERISA obligations of any member of a controlled group that includes World Omni and its affiliates. However, because the closed-end collateral agent in connection with the exchange note has a prior perfected security interest in the units, these liens would not have priority over the interest of the closed-end collateral agent in the assets securing the exchange note. As of the closing date, neither World Omni nor any of its affiliates had any material unfunded liabilities with respect to their respective defined benefit pension plans.
     
    Moreover, World Omni Auto Leasing LLC believes that the likelihood of this liability being asserted against the assets of the titling trust or, if so asserted, being successfully pursued, is remote. However, you cannot be sure the units will not become subject to an ERISA liability.
     
    We refer you to “Additional Legal Aspects of the Leases and the Leased Vehicles—ERISA Liens and Vicarious Tort Liability” in this prospectus.
     
Vicarious Tort Liability May Result In a Loss.   Some states permit a party that incurs an injury involving a leased vehicle to recover damages from the owner of the vehicle merely because of that ownership. Most states, however, either prohibit these vicarious liability suits or limit the lessor’s liability to the amount of liability insurance that the lessee was required to carry under applicable law but failed to maintain.
     
    The Safe Accountable, Flexible, and Efficient Transportation Equity Act of 2005 (the “Transportation Act”), Pub. L. No. 109–59, provides that an owner of a motor vehicle that rents or leases the vehicle to a person shall not be liable under the law of a state or political subdivision by reason of being the owner of the vehicle, for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if (i) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and (ii) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner). This provision of the Transportation Act applies to any action commenced on or after August 10, 2005. The

 

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    Transportation Act is intended to preempt state and local laws that impose possible vicarious tort liability on entities owning motor vehicles that are rented or leased.
     
    Most state and federal courts considering whether the Transportation Act preempts state laws permitting vicarious liability have generally concluded that such laws are preempted with respect to cases commenced on or after August 10, 2005. One New York lower court, however, had reached a contrary conclusion in a case involving Nissan-Infiniti LT, a titling trust affiliated with another auto finance company. This New York court concluded that the preemption provision in the Transportation Act was an unconstitutional exercise of congressional authority under the Commerce Clause of the United States Constitution and, therefore, did not preempt New York law regarding vicarious liability. New York’s appellate court overruled the trial court and upheld the constitutionality of the preemption provision in the Transportation Act. New York’s highest court, the Court of Appeals, dismissed the appeal.  In a 2008 decision relating to a case in Florida, the U.S. Court of Appeals for the 11th Circuit upheld the constitutionality of the preemption provision in the Transportation Act, and the plaintiffs’ petition seeking review of the decision by the U.S. Supreme Court was denied.  In 2010, the U.S. Court of Appeals for the 8th Circuit issued a similar decision.  While the outcome in these cases upheld federal preemption under the Transportation Act, there are no assurances that future cases will reach the same conclusion.
     
    In addition to the protection afforded by the Transportation Act, the closed-end collateral agent has a perfected security interest in and to the leases and related leased vehicles allocated to the closed-end collateral specified interest pursuant to the pledge and security agreement. The collateral agent’s security interest would have priority over the lien of a judgment creditor with respect to a vicarious tort liability claim. We refer you to “Additional Legal Aspects of the Leases and the Leased Vehicles—Vicarious Tort Liability” in this prospectus.
     
    World Omni maintains, on behalf of the titling trust, contingent liability insurance coverage against third party claims that provides coverage with no annual or aggregate cap on the number of claims thereunder, providing primary coverage of $5 million combined single limit coverage per occurrence. If World Omni ceases to maintain this insurance coverage or the insurance coverage protecting the titling trust is insufficient to cover, or does not cover, a material claim, that claim could be satisfied out of the proceeds of the vehicles and leases allocated to the reference pool for your notes and you could incur a loss on your investment.
     
    If vicarious liability imposed on the titling trust exceeds the coverage provided by its primary and excess liability insurance policies, or if lawsuits are brought against either the titling trust or World Omni involving the negligent use or operation of a leased vehicle, you could experience delays in payments due to you, or you may ultimately suffer a loss.
     
    For a discussion of the possible liability of the titling trust in connection with the use or operation of the leased vehicles, you should refer to “Additional Legal Aspects of the Leases and the Leased Vehicles—Vicarious Tort Liability” in this prospectus.

 

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Class B Notes are Subject to Greater Risk Because of Their Subordination.   The Class B Notes bear greater risks than the Class A Notes because payments of interest on and principal of the Class B Notes are subordinated, to the extent described in “Description of the Notes—Payments of Interest,” “Description of the Notes—Payments of Principal” and “Description of the Transaction Documents—Distributions on the Securities–Allocations and Distributions on the Securities” in this prospectus, to payments of interest on and principal of the Class A Notes.
     
    Interest payments on the Class B Notes on each payment date will be subordinated to servicing fees and administration fees due, payments to the asset representations reviewer, if any, interest payments on the Class A Notes, and principal payments to the Class A Notes to the extent the aggregate outstanding principal amount of the Class A Notes as of the day immediately preceding the related payment date exceeds the aggregate Securitization Value as of the last day of the related collection period. In addition, in the event the notes are declared to be due and payable after the occurrence of an event of default, no interest will be paid to the Class B Notes until all principal of and interest on the Class A Notes have been paid in full.
     
    Principal payments on the Class B Notes will be subordinated in priority to the Class A Notes, as described in “Description of the Notes—Payments of Principal” in this prospectus. No principal will be paid on the Class B Notes until all principal of the Class A Notes has been paid in full. In addition, principal payments on the Class B Notes will be subordinated to payments of interest on the Class A Notes and the Class B Notes. See “Description of the Notes—Payments of Principal” in this prospectus.
     
    This subordination could result in reduced or delayed payments of principal of and interest on the Class B Notes.
     
Holders of the Class B Notes May Suffer Losses Because They Have Limited Control Over Actions of the Issuing Entity and Conflicts Between Classes of Notes May Occur.  

The Class A Notes will be the “controlling securities” under the indenture while any Class A Notes are outstanding. Only after the Class A Notes have been paid in full will the Class B Notes be the controlling securities.

 

The rights of the controlling securities will include the following:

     
   

•  following an event of default, to direct the indenture trustee to exercise one or more of the remedies specified in the indenture relating to the property of the issuing entity;

 

•  to remove the indenture trustee and appoint a successor; and

 

•  to consent to certain other actions specified in the indenture.

     
    In exercising any rights or remedies under the indenture, the controlling securities may act solely in their own interests. Therefore, holders of Class B Notes that are subordinated to the controlling securities will not be able to participate in the determination of any proposed actions that are within the purview of the controlling securities, and the controlling securities could take actions that would adversely affect the holders of the Class B Notes.

 

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Payment Priorities May Increase Risk of Loss or Delay in Payment to Certain Notes.   Because the principal of each class of notes generally will be paid sequentially, (i) classes of Class A Notes that have higher numerical class designations will generally be outstanding longer than classes of Class A Notes that have lower numerical class designations, and, therefore, will be exposed to greater risk of losses on the units during the period after Class A Notes with lower numerical designations have been receiving most or all amounts payable on such notes, and after a disproportionate amount of credit enhancement may have been applied and not replenished, and (ii) Class B Notes will generally be outstanding longer than the Class A Notes, and, therefore, will be exposed to greater risk of losses on the units during periods after the Class A Notes have been receiving most or all amounts payable on such notes, and after a disproportionate amount of credit enhancement may have been applied and not replenished.
     
    Further, even if there is an event of default and subsequent acceleration of the notes, principal payments will be made first on the Class A-1 Notes until they have been paid in full and then pro rata to the other Class A Notes until they have been paid in full, and then to the Class B Notes until they have been paid in full. As a result, the yields of the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class B Notes, as compared to the yield on the Class A-1 Notes, will be relatively more sensitive to losses on the units and the timing of such losses. If the actual rate and amount of losses exceeds historical levels, and if the available overcollateralization and available amounts from the reserve account are insufficient to cover the resulting shortfalls, the yield to maturity on your notes may be lower than anticipated, and you could suffer a loss.
     
The Failure to Pay Interest on the Class B Notes is Not an Event of Default While the Class A Notes Remain Outstanding.   The indenture provides that, while the Class A Notes remain outstanding, failure to pay interest when due on the Class B Notes will not be an event of default under the indenture. Under these circumstances, the holders of the Class B Notes will not have any right to declare an event of default, to cause the maturity of the notes to be accelerated or to direct or consent to any action under the indenture.
     
The Notes Are Not Suitable Investments for All Investors.   Notes may not be a suitable investment if you require a regular or predictable schedule of payments or payment on any specific date. The notes are complex investments that should be considered only by investors who, either alone or with their financial, tax and legal advisors, have the expertise to analyze the prepayment, reinvestment, default and market risk, the tax consequences of an investment, and the interaction of these factors.
     
The Geographic Concentration and Performance of the Lease Assets May Increase the Risk of Loss on Your Investment.   Lessees related to leases in the actual pool constituting approximately 63.67%, 15.32%, 9.08%, 6.30% and 4.28% of the aggregate Securitization Value as of the actual cutoff date are located in Florida, North Carolina, South Carolina, Georgia and Alabama, respectively, based on the billing addresses of the lessees.
     
    Adverse economic conditions in a state where a large number of lessees are located could have a disproportionately significant effect on the delinquency, loss or repossession experience of the lease assets. The consequences of a significant economic downturn, including rising unemployment and continued lack of availability of credit, may lead to increased delinquency and default rates by lessees, as well as decreased consumer demand for automobiles and declining market value of the leased vehicles, which could increase the amount of a loss if the leases

 

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    included in the reference pool default. These negative conditions could also have an effect on the timing and amount of principal and interest payments on the notes and you may suffer a loss. As of the actual cutoff date, World Omni’s records indicate that the billing addresses of the lessees of the lease assets in the actual pool were concentrated in the Five-State Area. Adverse economic conditions as a result of a recession in the Five-State Area, including a decline in home values, savings and investment portfolios, may affect payments on the leases from lessees residing in those states. The occurrence of natural disasters, such as hurricanes and tornadoes, or geological disasters, such as oil spills or other similar events, in those states may adversely affect lessees and leased vehicles located in those states. In addition, we may be unable to accurately assess the effect of natural disasters, such as hurricanes and tornadoes, or geological disasters, such as oil spills or other similar events, on the economy, consumer confidence, general market liquidity or on the lease assets in those states. Investors should consider the possible effects on delinquency, default and prepayment experience of the lease assets because any adverse impact as a result of a recession, hurricane, tornado or human-caused event or any similar event may be borne by the noteholders. We refer you to “The Leases— Distribution of the Leases by Geographic Location as of the Actual Cutoff Date” in this prospectus.
     
You May Have Difficulty Selling Your Notes and/or Obtaining Your Desired Price Due to the Absence of, or Illiquidity in, a Secondary Market for Such Notes and Because of General Global Economic Conditions.   The notes will not be listed on any securities exchange. Therefore, in order to sell your notes, you will need to find a willing buyer.  The underwriters may, but are not obligated to, provide a secondary market for the notes. We cannot assure you that a market will develop or, if one does develop, that it will provide you with liquidity of investment or continue for the life of your notes.
     
   

For several years after the 2008 financial crisis, major disruptions in the global financial markets caused a significant reduction in liquidity in the secondary market for asset-backed securities. While conditions in the financial markets and the secondary markets have improved, periods of illiquidity could occur again and affect the secondary market, thereby adversely affecting the market value of your notes and your ability to locate a willing purchaser. Furthermore, the global financial markets have experienced increased volatility due to uncertainty surrounding the level and sustainability of the sovereign debt of various countries. Concerns regarding sovereign debt may spread to other countries at any time. There can be no assurance that this uncertainty related to the sovereign debt of various countries will not lead to disruption of the credit markets in the United States. Accordingly, you may not be able to sell your notes when you want to do so or you may be unable to obtain the price that you wish to receive for your notes and, as a result, you could suffer a loss on your investment.

 

On June 23, 2016, the United Kingdom voted in a referendum to discontinue its membership in the European Union. On March 29, 2017, the United Kingdom provided formal notice to the European Council stating its intention to leave the European Union. The exit or the uncertainty about the exit of the United Kingdom or any other country out of the European Union or the abandonment by any country of the euro may have a destabilizing effect on all eurozone countries and their economies and a negative effect on the global economy as a whole. Accordingly, you may not be able to sell your notes when you want to do so, you may be unable to obtain the price that you wish to receive for

 

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    your notes or you may suffer a loss on your investment.
     
   

In addition, the issuance and offering of the notes and related transactions have not been structured to comply or to enable any affected investor to comply with the risk retention and due diligence requirements (the “EU Risk Retention and Due Diligence Requirements”) which under Article 5 of Regulation (EU) 2017/2402 apply to certain types of European Union regulated investors including (with certain exceptions) institutions for occupational retirement, credit institutions, certain investment firms (as well as certain of their consolidated affiliates wherever established or located), pension and their managing entities, alternative investment fund managers who manage or market alternative investment funds in the European Union, insurance and reinsurance undertakings and management companies of Undertakings for Collective Investment in Transferable Securities (“UCITS”) funds (or internally managed UCITS funds).  Lack of compliance with the EU Risk Retention and Due Diligence Requirements may preclude certain investors regulated in the European Union or the European Economic Area and certain of their affiliates from purchasing the notes and may result in the imposition of a penalty regulatory capital charge on the securities acquired by or on behalf of such investors or of other regulatory sanctions. Accordingly, you may not be able to sell your notes when you want to do so or you may be unable to obtain the price that you wish to receive for your notes or you may suffer a loss on your investment.

 

Investors regulated in the European Union and affiliates of European Union credit institutions or investment firms are encouraged to consult with their own investment and legal advisors regarding the suitability of the notes for investment.

     
Changes to the U.S. Federal Income Tax Laws Could Have an Adverse Impact on Holders of the Notes.   On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “Tax Cuts and Jobs Act”), which contains significant changes to the Internal Revenue Code of 1986, as amended (the “Code”) for taxable years beginning in 2018 and could have an adverse impact on certain holders of the notes.  Under the Tax Cuts and Jobs Act, a noteholder that uses an accrual method of accounting for U.S. federal income tax purposes generally is required to include certain amounts in income no later than the time such amounts are reflected on certain financial statements.  The application of this rule thus may require the accrual of income earlier than would be the case under the general tax rules described under “Material Federal Income Tax Consequences” in this prospectus, although the precise application of this rule is unclear at this time.  Further, it is unclear at this time the specific impact that other provisions of the Tax Cuts and Jobs Act could have on holders of the notes.  We cannot predict the impact of the Tax Cuts and Jobs Act nor whether, when, or to what extent any new local, state or U.S. federal tax bills, laws, regulations, interpretations or rulings will be issued or become law, or the long-term impact of any such bills, laws, regulations, interpretations or rulings on holders of the notes.

 

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The Return on Your Notes May be Reduced Due to Varying Economic Circumstances and/or an Economic Downturn.   A deterioration in economic conditions and certain economic factors could adversely affect the ability and willingness of obligors to meet their payment obligations under the leases. Economic conditions could deteriorate in connection with an economic recession, rising oil prices, housing price declines, terrorist events, extreme weather conditions or other events. As a result of any deterioration of economic conditions, you may experience payment delays and losses on your notes. An improvement in economic conditions could result in prepayments by the lessees of their payment obligations under the leases. As a result, you may receive principal payments of your notes earlier than anticipated.
     
   

In addition, a general economic downturn may adversely affect the performance of the leases. During periods of economic slowdown or recession, delinquencies, defaults, repossessions and losses generally increase. High unemployment and a general reduction in the availability of credit may lead to increased delinquencies and defaults by lessees. Further, these periods may also be accompanied by decreased consumer demand for motor vehicles and declining values of leased vehicles, which increases the amount of a loss in the event of default or upon lease termination. Significant increases in the inventory of used motor vehicles during periods of economic slowdown or recession may also depress the prices at which repossessed motor vehicles or returned leased vehicles may be sold or delay the timing of these sales.

 

No prediction or assurance can be made as to the effect of an economic downturn or economic growth on the rate of delinquencies, prepayments and/or losses on the leases.

     
Existing Legislation and Future Regulatory Reforms Could Have An Adverse Effect On World Omni’s Business and Operating Results.   Due to the current economic and political environment, World Omni and other financial institutions have faced increased regulation and regulatory scrutiny. The financial services industry has begun to see increased disclosure obligations and may see restrictions on pricing and enforcement proceedings through the Dodd-Frank Wall Street Reform and Consumer Protection Act and other similar legislation. There can be no assurance that new requirements, or any subsequent implementing regulations, bulletins or other guidance, will not have an adverse impact on the servicing of the units, on World Omni’s securitization programs or on the regulation and supervision of World Omni, the depositor or any issuing entity. The potential impact of such legislation and resulting regulations may include increased cost of operations due to greater regulatory oversight, supervision and examination and limitations on World Omni’s ability to expand product and service offerings due to stricter consumer protection laws and regulations.
     
    Compliance with applicable law is costly and can affect operating results. Compliance requires forms, processes, procedures, controls and the infrastructure to support these requirements. Compliance may create operational constraints and place limits on pricing. Laws in the financial services industry are designed primarily for the protection of consumers. The failure to comply could result in significant statutory civil and criminal penalties, monetary damages, attorneys’ fees and costs, possible revocation of licenses and damage to World Omni’s reputation, brand and valued customer relationships.

 

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Federal Financial Regulatory Legislation Could Have an Adverse Effect on World Omni, the Titling Trust, the Initial Beneficiary, the Depositor and the Issuing Entity, Which Could Result in Losses or Delays in Payments on Your Notes.  

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) took effect on July 22, 2010. The Dodd-Frank Act, among other things:

 

•  created the Bureau of Consumer Financial Protection (commonly known as the Consumer Financial Protection Bureau or the “CFPB”), an agency responsible for administering and enforcing the laws and regulations for consumer financial products and services;

     
   

•  created a new framework for the regulation of over-the-counter derivatives activities;

 

•  strengthened the regulatory oversight of securities and capital markets activities by the Securities and Exchange Commission (the “SEC”); and

 

•  created a liquidation framework for the resolution of bank holding companies and other non-bank financial companies defined as “covered financial companies.”

     
    The Dodd-Frank Act affects the offering, marketing and regulation of consumer financial products and services offered by financial institutions, which includes World Omni or its affiliates.
     
    The CFPB has broad supervision, examination and enforcement authority over the consumer financial products and services of certain non-depository institutions. In this capacity, the CFPB can examine such covered entities for compliance with consumer financial protection laws and has authority to order remediation of violations in a number of ways, including imposing civil monetary penalties and requiring such entities to provide customer restitution and to improve their compliance management systems.  On August 31, 2015, World Omni became subject to the CFPB’s supervisory authority when the CFPB’s final rule over “larger participants” in the auto finance industry took effect.  Such supervisory authority allows the CFPB to conduct comprehensive and rigorous examinations to assess compliance with consumer financial protection laws, which could result in enforcement actions, regulatory fines and mandated changes to World Omni’s business products, policies and procedures.
     
    Two of the primary purposes of the CFPB are to ensure that consumers receive clear and accurate disclosures regarding financial products and to protect consumers from discrimination and unfair, deceptive and abusive acts or practices (“UDAAP”).  CFPB regulation, inquiries and related enforcement actions, including the CFPB’s application of UDAAP principles and supervision of World Omni by the CFPB, may increase World Omni’s compliance costs, require changes in World Omni’s business practices, affect World Omni’s competitiveness, impair World Omni’s profitability, harm World Omni’s reputation or otherwise adversely affect World Omni’s business.
     
    The CFPB and the Federal Trade Commission (the “FTC”) are actively investigating the products, services and operations of credit providers, including banks and other finance companies engaged in auto finance activities. The CFPB has been reviewing the actions of indirect auto finance companies with regard to pricing and other activities and the CFPB has taken action against, and entered into settlements with,

 

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    several such companies under applicable federal or state consumer protection laws. See “Additional Legal Aspects of the Leases and the Leased Vehicles—Consumer Protection Law” in this prospectus. Additionally, there have been news reports indicating that the CFPB is investigating banks and finance companies over the sale and financing of extended warranties and other add-on products. Both the FTC and CFPB have announced various enforcement actions against lenders and finance companies over the last few years involving significant penalties, cease and desist orders and similar remedies that, if applicable to auto finance providers and the type of products, services and operations offered by World Omni, may require it to cease or alter certain business practices, which could have a material adverse effect on its financial condition and results of operations.  If any of World Omni’s practices were found to violate the Equal Credit Opportunity Act or other laws, the related lease may be required to be transferred from the reference pool and Auto Lease Finance LLC would then be obligated to deposit an amount equal to the related repurchase payment into the exchange note collection account.  In addition, the titling trust, World Omni, Auto Lease Finance LLC, the depositor or the issuing entity could become subject to claims by the obligors on those contracts, and any relief granted by a court could potentially adversely affect the issuing entity.
     
   

The CFPB has indicated an intention to focus its resources on certain priorities, including, initiation of the rulemaking process regarding debt collection practices that would apply to third-party collectors and first-party collectors, such as World Omni, and continued examination and investigation of, and potential rulemaking regarding, consumer credit reporting practices.  The timing and impact of these anticipated rules on World Omni’s business remain uncertain. 

 

The Dodd-Frank Act increases the regulation of the securitization markets. For example, it requires securitizers or originators to retain an economic interest in a portion of the credit risk for any asset that they securitize or originate. It also gave broader powers to the SEC to regulate credit rating agencies and adopt regulations governing these organizations and their activities.

 

Compliance with the implementing regulations under the Dodd-Frank Act or the oversight of the SEC or CFPB may impose costs on, create operational constraints for, or place limits on pricing with respect to finance companies such as World Omni or its affiliates. No assurance can be given that these new requirements imposed by the Dodd-Frank Act, or any subsequent implementing regulations, bulletins or other guidance, will not have a significant impact on the servicing of the leases and leased vehicles, on the regulation and supervision of World Omni, as an originator or servicer, the depositor, the issuing entity or their respective affiliates.

 

Additionally, no assurances can be given that the liquidation framework for the resolution of “covered financial companies” would not apply to World Omni or its affiliates, including the titling trust, the initial beneficiary, the depositor and the issuing entity. See “Additional Legal Aspects of the Titling Trust and the Exchange Notes—Dodd-Frank Act Orderly Liquidation Authority Provisions—Potential Applicability to World Omni, the Initial Beneficiary, the Depositor and the Issuing Entity” in this prospectus.

 

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    If the Federal Deposit Insurance Corporation (the “FDIC”) were appointed receiver of World Omni, the titling trust, the initial beneficiary, the depositor or the issuing entity under the Orderly Liquidation Authority provisions (“OLA”) of the Dodd-Frank Act, the FDIC could repudiate contracts deemed burdensome to the estate, including secured debt. World Omni has attempted to structure each of the transfers of the exchange note to the initial beneficiary, the depositor and the issuing entity as a valid and complete sale under applicable state law and under the Bankruptcy Code to mitigate the risk of the recharacterization of the sale as a security interest to secure debt of the initial beneficiary. Any attempt by the FDIC to recharacterize the transfer of the exchange note as a security interest to secure debt that the FDIC then repudiates would cause delays in payments or losses on the notes. In addition, if the issuing entity were to become subject to OLA, the FDIC may repudiate the debt of the issuing entity and the related noteholders would have a secured claim in the receivership of the issuing entity. Also, if the issuing entity were subject to OLA, noteholders would not be permitted to accelerate the debt, exercise remedies against the collateral or replace the servicer without the FDIC’s consent for 90 days after a receiver is appointed. As a result of any of these events, delays in payments on the exchange note and the notes would occur and possible reductions in the amount of those payments could occur. See “Additional Legal Aspects of the Titling Trust and the Exchange Notes—Dodd-Frank Act Orderly Liquidation Authority Provisions—FDIC’s Repudiation Power Under OLA” in this prospectus.
     
    In addition, and also assuming that the FDIC were appointed receiver of World Omni, the titling trust, the initial beneficiary, the depositor or the issuing entity under OLA, the FDIC could avoid transfers of the leases that are deemed “preferential.” If the transfer were voided as a preference under OLA, noteholders would have only an unsecured claim in the receivership for the purchase price of the note. Although the FDIC has issued a final rule to the effect that the preference provisions of OLA should be interpreted in a manner consistent with those of the Bankruptcy Code, the application of the provisions remains uncertain. See “Additional Legal Aspects of the Titling Trust and the Exchange Notes—Dodd-Frank Act Orderly Liquidation Authority Provisions—FDIC’s Avoidance Power Under OLA” in this prospectus.
     
Withdrawal or Downgrade of the Initial Ratings of the Notes Will, and the Issuance of Unsolicited Ratings on Your Notes or any Adverse Changes to a Hired Rating Agency, May Affect the Prices for the Notes Upon Resale.   The depositor expects that the notes will receive ratings from two nationally recognized statistical rating organizations, or “NRSROs,” hired by the sponsor to rate the notes. A note rating is not a recommendation by a rating agency that you buy, sell or hold notes. Similar ratings on different types of notes do not necessarily mean the same thing. You are encouraged to analyze the significance of each rating independently from any other rating. Any rating agency may change its rating of the notes after the notes are issued if that rating agency believes circumstances have changed. A rating downgrade may reduce the price that a subsequent purchaser will be willing to pay for the notes.

 

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    Ratings on the notes will be monitored by the rating agencies hired by the sponsor while the notes are outstanding. There is no assurance that a rating will remain for any given period of time, that a rating agency rating the notes will not lower or withdraw its rating if in its judgment circumstances in the future so warrants or that notice of a lowering, qualification or withdrawal will be provided to the noteholders.
     
    Ratings initially assigned to the notes will be paid for by the sponsor. The sponsor is not aware that any other NRSRO, other than the NRSROs hired by the sponsor to rate the notes, has assigned ratings on the notes. SEC rules state that the payment of fees by the sponsor, the issuing entity or an underwriter to rating agencies to issue or maintain a credit rating on asset-backed securities is a conflict of interest for rating agencies. In the view of the SEC, this conflict is particularly acute because arrangers of asset-backed securities transactions provide repeat business to the rating agencies. Under SEC rules, information provided by the sponsor or the underwriters to a hired NRSRO for the purpose of assigning or monitoring the ratings on the notes is required to be made available to each non-hired NRSRO in order to make it possible for such non-hired NRSROs to assign unsolicited ratings on the notes. An unsolicited rating could be assigned at any time, including prior to the closing date, and none of the depositor, the sponsor, the underwriters or any of their affiliates will have any obligation to inform you of any unsolicited ratings assigned to the notes even if such parties are aware of such unsolicited ratings. NRSROs, including the hired rating agencies, may have different methodologies, criteria, models and requirements. If any non-hired NRSRO assigns an unsolicited rating on the notes, there can be no assurance that such rating will not be lower than the ratings provided by the hired rating agencies, which could adversely affect the market value of your notes and/or limit your ability to resell your notes. In addition, if the sponsor fails to make available to the non-hired NRSROs any information provided to any hired rating agency for the purpose of assigning or monitoring the ratings on the notes, a hired rating agency could withdraw its ratings on the notes, which could adversely affect the market value of your notes and/or limit your ability to resell your notes.
     
    Furthermore, Congress or the SEC may determine at some point in the future that any NRSRO that assigns ratings to the notes no longer qualifies as a nationally recognized statistical rating organization for purposes of the federal securities laws and that determination may also have an adverse effect on the market price of the notes.
     
    Potential investors in the notes are urged to make their own evaluation of the creditworthiness of the lessees on the leases included in the related reference pool and the credit enhancement on the notes, and not to rely solely on the ratings on the notes.

 

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The Timing of Principal Payments Is Uncertain and You May Suffer Losses or Reinvestment Risk if an Event of Default Occurs Under the Indenture.   The amount of distributions of principal on the notes and the timing of when you receive those distributions depends on the rate of prepayments, defaults and early terminations relating to the leases, which cannot be predicted with certainty. Each of these early terminations and unscheduled payments will have the effect of shortening the average life of your notes. In addition, you will bear the risk of slower principal payment due to delinquent payments by lessees.
     
   

If an event of default occurs under the indenture and the maturity dates of the notes are accelerated, the indenture trustee may sell the exchange note and prepay the notes before their respective legal final maturity dates.

 

You will bear any reinvestment risk resulting from a faster or slower rate of payment on the leases. You may not be able to reinvest any principal paid to you earlier than you expected at a rate of return that is equal to or greater than the rate of return on your notes. You also may not be paid the principal amount of your notes in full if the assets of the issuing entity are insufficient to pay the total principal amount of the notes.

     
   

The acceleration of the maturity dates of the notes will change the priority of principal payments on the notes. After an event of default occurs resulting in an acceleration of the maturity dates of the notes under the indenture, distributions in respect of principal to holders of the Class A Notes will not be paid sequentially. Instead, following the payment of accrued and unpaid interest on the notes, the Class A-1 Notes will be paid first, and the other classes of the Class A Notes will be paid proportionally, based on the outstanding principal amount of each class. No amounts will be paid on the Class B Notes following an acceleration until all the Class A Notes have been paid in full.

 

For more information about the risks described above, we refer you to “Prepayment and Yield Considerations—Weighted Average Life of the Securities” in this prospectus.

 

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The Concentration of Leased Vehicles to Particular Models Could Negatively Affect the Pool Assets.   As of the actual cutoff date, Tacoma, RAV4, Camry, Tundra and Corolla represent approximately 19.76%, 19.05%, 16.43%, 10.54% and 10.23% of the aggregate Securitization Value of the actual pool, respectively, and the remaining approximately 23.99% of the aggregate Securitization Value of the actual pool, as of the actual cutoff date, represents all other Toyota branded vehicles. Any adverse change in the value of a specific model type would reduce the proceeds received at disposition of a related leased vehicle. As a result, you may incur a loss on your investment.
     
Used Car Market Factors May Increase the Risk of Loss on Your Investment.   The used car market is affected by supply and demand, consumer tastes, economic factors and manufacturer decisions on pricing of new car models. For instance, introduction of a new model by Toyota or its affiliates may impact the resale value of the existing portfolio of similar model types. Discount pricing incentives or other marketing incentive programs on new cars by Toyota or by its competitors, or by Southeast Toyota Distributors, LLC or World Omni, that effectively reduce the prices of new cars may have the effect of reducing demand by consumers for used cars. Other factors that are beyond the control of the issuing entity, the depositor and the servicer could also have a negative impact on the resale value of a vehicle. In particular, changes in the price of gasoline may have the effect of lowering demand for certain vehicle models and may lower the resale value of such models. If the proceeds actually realized upon the sale of the leased vehicles are substantially lower than Base Residual Values of the vehicles, you may suffer a loss on your investment.
     
Increased Turn-in Rates May Increase Losses.   Under each lease, the lessee may elect to purchase the related vehicle at the expiration of the lease for an amount generally equal to the contract residual value established at the inception of the lease. Lessees who decide not to purchase their related vehicles at the contract residual value before or at lease expiration will expose the issuing entity to possible losses if the sale prices of those vehicles in the used car market are less than their respective Base Residual Values. The level of turn-ins at termination of the leases could be adversely affected by lessee views on vehicle quality, the relative attractiveness of new vehicle models available to the lessees, sales and lease incentives offered with respect to other vehicles (including those offered by World Omni), the level of the purchase option prices for the related vehicles compared to new and used vehicle prices and economic conditions generally. The granting of extensions and the early termination of leases by lessees may affect the number of turn-ins in a particular month. If losses resulting from increased turn-ins exceed the credit enhancement for your notes, you may suffer a loss on your investment.
     
You May Experience Reduced Returns and Delays on Your Notes Resulting From a Vehicle Recall.   Lessees that lease motor vehicles affected by a vehicle recall may be more likely to be delinquent in, or default on, their lease payments. Significant increases in the inventory of used motor vehicles subject to a recall may also depress the prices at which repossessed motor vehicles or turn-ins may be sold or delay the timing of those sales in the used car market. If the default rate on the leases in the related reference pool increases and the price at which the related vehicles may be sold declines, you may experience losses with respect to your notes. If any of these events materially affect collections on the units in the related

 

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    reference pool, you may experience delays in payments or principal losses on your notes. See also “—Increased Turn-in Rates May Increase Losses” in this prospectus.
     
The Return On Your Notes Could Be Reduced By Shortfalls Due To Military Action.   The effect of any current or future military action by or against the United States, as well as any future terrorist attacks, on the performance of the leases is unclear, but there may be an adverse effect on general economic conditions, consumer confidence and general market liquidity. Investors should consider the possible effects on delinquency, default and prepayment experience of the leases and the leased vehicles.
     
    The Servicemembers Civil Relief Act (“SCRA”) and similar state laws may provide relief to members of the military on active duty, including reservists or national guard members and their spouses, who have entered into an obligation, such as a lease contract for a lease of a vehicle, before entering into military service and provide that under some circumstances the lessor may not terminate the lease contract for breach of the terms of the contract, including non–payment. Furthermore, under the SCRA, a lessee may terminate a lease of a vehicle at any time after the lessee’s entry into military service or the date of the lessee’s military orders (as described below) if (i) the lease is executed by or on behalf of a person who subsequently enters military service under a call or order specifying a period of not less than 180 days (or who enters military service under a call or order specifying a period of 180 days or less and who, without a break in service, receives orders extending the period of military service to a period of not less than 180 days); or (ii) the lessee, while in military service, executes a lease of a vehicle and thereafter receives military orders (a) for a change of permanent station from a location in the continental United States to a location outside the continental United States, or (b) for a permanent change of station from a location in a State (as defined in the SCRA) outside the continental United States to a location outside that State, or (c) to deploy with a military unit, or as an individual in support of a military operation, for a period of not less than 180 days. No early termination charges may be imposed on the lessee for such termination. No information can be provided as to the number of leases that may be affected by these laws. In addition, these laws may impose limitations that would impair the ability of the servicer to repossess a vehicle under a defaulted lease during the related lessee’s period of active duty and, in some cases, may require the servicer to extend the lease termination date of the lease contract, lower the monthly payments and readjust the payment schedule for a period of time after the completion of the lessee’s military service. It is not clear that the SCRA would apply to leases such as the leases allocated to the reference pool. If a lessee’s obligation to make lease payments is reduced, adjusted or extended, or if the lease is terminated early and no early termination charge is imposed, the servicer will not be required to advance those amounts. Any resulting shortfalls in interest or principal will reduce the amount available for distribution on the notes.
     
    For more information regarding the effect of the SCRA and other similar legislation, you should refer to “Additional Legal Aspects of the Leases and the Leased Vehicles—Consumer Protection Law” in this prospectus.

 

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Leases That Fail To Comply With Consumer Protection Laws May Be Unenforceable, Which May Result In Losses On Your Investment.   Numerous federal and state consumer protection laws, including the federal Consumer Leasing Act of 1976 and Regulation M promulgated thereunder, regulate the creation, collection, and enforcement of retail lease contracts. The failure by the titling trust to comply with these requirements may give rise to liabilities on the part of the titling trust (as lessor under the leases). Further, many states have adopted “lemon laws” that provide vehicle users certain rights in respect of substandard vehicles. A successful claim under a lemon law could result in, among other things, the termination of the related lease and/or the requirement that all or a portion of payment previously paid by the lessee be refunded. Auto Lease Finance LLC will make representations and warranties that each lease complies with all requirements of applicable law in all material respects. If any such representation and warranty proves incorrect, has certain material and adverse effects on the exchange note, and is not timely cured, Auto Lease Finance LLC will be required to make a reallocation payment in respect of the related lease and leased vehicle and reallocate the related lease and related leased vehicle out of the related reference pool. To the extent that Auto Lease Finance LLC fails to make such a reallocation payment, or to the extent that a court holds the titling trust liable for violating consumer protection laws regardless of such a repurchase, a failure to comply with consumer protection laws could result in required payments by the titling trust. If sufficient funds are not available to make both payments to lessees and on the exchange notes, you may suffer a loss on your investment in the notes.
     
    We refer you to “Additional Legal Aspects of the Leases and the Leased Vehicles—Consumer Protection Law” in this prospectus.
     
Commingling By the Servicer May Result In Delays and Reductions In Payments On Your Notes.   So long as World Omni is servicer, if each condition to making monthly deposits as may be required by the servicing agreement (including World Omni receiving notice from each hired rating agency that the cessation of daily deposits will not result in a reduction or withdrawal of the then current rating of the notes) is satisfied, World Omni, as the servicer, after identifying the applicable specified interest and reference pool, unencumbered pool or warehouse facility pool, may retain all payments on the leases with respect to a reference pool received from the related lessees and all proceeds relating to the leases and the leased vehicles collected during a collection period until the business day preceding the related payment date. During this time, the servicer may invest such amounts at its own risk and for its own benefit and need not segregate such amounts from its own funds. On or before the business day preceding a date on which payments are due to be made on a series of securities, the servicer must deposit into the related collection account, all payments on the leases received from the lessees and all proceeds relating to the leases and the leased vehicles collected during the related collection period.

 

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    To the extent the servicer does not satisfy the monthly remittance conditions, the servicer is required to deposit the collections into the exchange note collection account within two business days of receipt of those collections and identification of the account(s) and obligor(s) to which those collections relate. During such two business days, the servicer need not segregate such amounts from its own funds.
     
    If the servicer is unable to deposit these amounts into the collection account, you might incur a loss on your securities.
     
Because the Notes Are In Book-Entry Form, Your Rights Can Only Be Exercised Indirectly.   Because the notes will be issued in book-entry form, you will be required to hold your interest in your securities through The Depository Trust Company in the United States, or Clearstream Banking, société anonyme, or the Euroclear System in Europe. Transfers of interests in the notes within The Depository Trust Company, Clearstream or Euroclear must be made in accordance with the usual rules and operating procedures of those systems. So long as the notes are in book-entry form, you will not be entitled to receive a physical note representing your interest. The notes will remain in book-entry form except in the limited circumstances described under the caption “Registration of the Notes—Book-Entry Registration.”
     
    Unless and until the notes cease to be held in book-entry form, the trustee will not recognize you as a “noteholder” or “certificateholder.” As a result, you will only be able to exercise the rights of securityholders indirectly through The Depository Trust Company (if in the United States) and its participating organizations, or Clearstream and Euroclear (in Europe) and their participating organizations. Holding the notes in book-entry form could also limit your ability to pledge your notes to persons or entities that do not participate in The Depository Trust Company, Clearstream or Euroclear and to take other actions that require a physical note representing the notes. Interest and principal on the notes will be paid by the issuing entity to The Depository Trust Company as the record holder of the notes while they are held in book-entry form. The Depository Trust Company will credit payments received from the issuing entity to the accounts of its participants which, in turn, will credit those amounts to securityholders either directly or indirectly through indirect participants. This process may delay your receipt of principal and interest payments from the issuing entity.

 

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THE SERVICER, SPONSOR AND ADMINISTRATOR

 

General

 

World Omni is a Florida corporation and a wholly-owned subsidiary of JM Family Enterprises, Inc., a Delaware corporation (“JMFE”). JMFE, through its subsidiaries, provides a full range of automotive-related distribution and financial services to Toyota dealerships in the Five-State Area. Financial services are also provided to other dealerships throughout the United States. The principal executive offices of World Omni are located at 190 Jim Moran Blvd., Deerfield Beach, Florida 33442 and its telephone number is (954) 429-2200.

 

World Omni provides retail installment sale contract and lease financing to retail customers of Toyota automotive dealers within the Five-State Area. World Omni services automobile and light-duty truck retail installment sale contracts and leases for its own account and the account of third parties. World Omni also provides wholesale floorplan financing and capital and mortgage loans to some Toyota dealers, and their affiliates, in the Five-State Area.

 

Southeast Toyota Distributors, LLC, which is a wholly-owned subsidiary of JMFE and a World Omni affiliate, is the exclusive distributor of Toyota cars and light-duty trucks, parts and accessories in the Five-State Area. Southeast Toyota Distributors, LLC distributes Toyota vehicles pursuant to a distributor agreement, which first was entered into in 1968 and has been renewed through October 2019, with Toyota Motor Sales, U.S.A. Inc., a California corporation. World Omni has provided financial services to Toyota dealers in the Five-State Area since 1982, operating under the name “Southeast Toyota Finance” since 1996.

 

As of December 31, 2018, December 31, 2017, December 31, 2016, December 31, 2015, and December 31, 2014, World Omni and its affiliates’ portfolio had 158,010, 132,515, 120,483, 110,557, and 96,797 leases outstanding, respectively. The aggregate outstanding principal balances of leases at the above dates were approximately $4.0 billion, $3.3 billion, $2.8 billion, $2.5 billion, and $2.1 billion, respectively.

 

World Omni will service the Titling Trust assets, including the leases and leased vehicles included in the Reference Pool related to the transaction contemplated by this prospectus. World Omni’s experience in and overall procedures for servicing of leases are further described under “—Securitization Experience” and —Servicing” below. For additional information about World Omni’s responsibilities as Servicer for this transaction, you should also refer to “Description of the Transaction Documents”.

 

World Omni, in its capacity as Administrator under the administration agreement to be dated as of the Closing Date (the “Administration Agreement”), will perform the administrative obligations required to be performed by the Issuing Entity under the Indenture or Trust Agreement, as applicable, and the other transaction documents and will provide additional services as are prescribed under the terms of the other transaction documents. Significant duties of the Administrator will be to monitor the performance of the Issuing Entity and to advise the Owner Trustee when action is necessary to comply with the respective duties and obligations of the Issuing Entity and the Owner Trustee under the transaction documents. Except as otherwise noted in the transaction documents, the Administrator will not be obligated to make any payments to the persons in whose name a Note is registered on the note register (“Noteholders”) under any of the transaction documents. As compensation for the performance of the Administrator’s obligations under the Administration Agreement and as reimbursement for its expenses related thereto, the Administrator will be entitled to an administration fee with respect to each Collection Period equal to 1/12 of 0.05% of the aggregate Securitization Value as of the first day of the related Collection Period. The administration fee payable to the Administrator on the initial Payment Date with respect to the initial Collection Period will be pro-rated, however, to compensate for the length of the initial Collection Period being longer than one month. The administration fee in respect of a Collection Period will be paid to the Administrator on the related Payment Date out of collections before any amounts are made available to make payments to the Noteholders.

 

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World Omni is the Sponsor of, and has participated in the structuring of, the securitization transaction contemplated by this prospectus. As Sponsor, World Omni will also be responsible for selecting the trustees and Asset Representations Reviewer party to the transaction described in this prospectus and paying the expenses of forming the Issuing Entity, legal fees of some transaction parties, rating agency fees for rating the Notes and other transaction expenses. World Omni will select the leases and leased vehicles allocated to the Reference Pool for this securitization transaction using the criteria described in “The Leases—Characteristics of the Leases—Eligibility Criteria and Portfolio Characteristics.”

 

Securitization Experience

 

World Omni has been engaged in the securitization of assets since 1986. World Omni’s first public lease securitization transaction in 1992 involved approximately $150 million of lease contracts. From 1992 through 2018, World Omni securitized an aggregate of approximately $18.0 billion of lease receivables in public securitization transactions. As of the date of this prospectus, World Omni has also sponsored more than 43 term securitizations of retail installment sale contracts and dealer floorplan receivables. World Omni’s most recently completed public lease securitization transaction in September 2018 involved leases and leased vehicles with an aggregate Securitization Value of approximately $937 million. World Omni’s experience in and overall procedures for originating and underwriting leases are described further under “—Origination, Underwriting and Purchasing” and “—Underwriting Standards” below in this prospectus. None of the asset-backed securities offered in the lease securitization program have experienced any losses or events of default and World Omni has never taken any action out of the ordinary in any transaction to prevent losses or events of default.

 

Repurchases of Leases in Prior Securitized Lease Pools

 

The transaction documents for prior securitizations of leases and leased vehicles sponsored by World Omni contain covenants requiring the reallocation of an underlying lease and related leased vehicle from the related reference pool for the breach of a representation or warranty. World Omni, as securitizer, discloses, in a report on Form ABS-15G, all fulfilled and unfulfilled reallocation requests for securitized leases that were the subject of a demand to reallocate. In the three year period ended December 31, 2018, there was no activity to report with respect to any demand to reallocate leases from the reference pool under any such prior securitization sponsored by World Omni. World Omni filed its most recent report on Form ABS-15G with the SEC pursuant to Rule 15Ga-1 on January 10, 2019. World Omni’s CIK number is 0001004150. For additional information about obtaining a copy of the report on Form ABS-15G, you should refer to “Incorporation of Certain Information By Reference” in this prospectus.

 

Origination, Underwriting and Purchasing

 

Use of Titling Trust. World Omni uses a Titling Trust to facilitate its leasing business. For more information about the Titling Trust, see “The Titling Trust.” As Servicer, World Omni is responsible for causing the Titling Trust to purchase closed-end leases and leased vehicles from Toyota dealers in the Five-State Area pursuant to existing dealer agreements in the ordinary course of business. Dealers enter into leases using a World Omni supplied or approved form of closed-end lease contract and disclosure statement that provides for the assignment of the leases to the Titling Trust. The leases are originated by dealers in accordance with World Omni’s requirements and underwriting standards, which emphasize, among other things, the prospective lessee’s ability to make timely payments and creditworthiness. For additional information about World Omni’s underwriting process, you should refer to “—Underwriting Standards” below.

 

Vehicle Leasing.   When a lessee leases a vehicle from a dealer, the lessee and the dealer agree on the price of the vehicle and the purchase of service contracts and other related products offered by the dealer.  If the lessee elects to lease the vehicle through the dealer, the lessee and the dealer decide on the lease term, mileage allowance, residual value and payment terms for the lease.  Leasing terms currently range between 24 and 60 months. The dealer will determine if the lessee is eligible for, and will be using marketing programs that impact the terms of, the lease. Dealers negotiate the terms of the lease with prospective lessees according to guidelines set forth by World Omni.

 

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Each lessee enters into a lease that requires the lessee to make monthly payments, referred to in this prospectus as “Base Monthly Payments,” which, over the lease term, will cover (i) the difference between the adjusted capitalized cost of the lease and the contract residual value plus (ii) lease (or rent) charges (“Lease Charges”). Lease Charges are calculated and determined based on an implicit interest rate referred to in this prospectus as the “Lease Rate.” The “Adjusted Capitalized Cost” for each lease is the difference between (i) the sum of (a) the price of the vehicle agreed upon between the dealer and the lessee, plus (b) the cost of any items that the lessee pays over the lease term, such as taxes, fees, service contracts and other related products, and (ii) the amount of any net trade-in allowance, rebate, non-cash credit or cash paid by the lessee. Each lease sets forth a “Contract Residual Value,” which is the residual value of the leased vehicle at the scheduled termination of the lease as set forth in the lease agreement. In addition, each lease requires the lessee to pay any late payment fees or charges, extension fees or charges, sales, use, excise, lease and other taxes and fees due to any government authority, and other similar charges (referred to as “Additional Lease Charges”). These Additional Lease Charges will not be available to make payments on the Exchange Note or on the Notes. The Servicer may waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a lease.

 

Determination of contract residual values. The Contract Residual Value of a leased vehicle is the estimated value of the vehicle at the end of the lease term and is a major component used to calculate the Base Monthly Payment. The Contract Residual Value impacts the Base Monthly Payment because it represents the amount of the Adjusted Capitalized Cost of the leased vehicle that does not have to be paid for over the lease term by the lessee. The Contract Residual Value is also the basis of the price a lessee would have to pay to purchase a leased vehicle at the end of a lease. As such, the Contract Residual Value impacts return rates to World Omni because a lessee may be less likely to purchase a leased vehicle at the end of the lease if the Contract Residual Value exceeds the actual market value of the leased vehicle.

 

The Contract Residual Value is calculated by a dealer based on benchmark residual value percentages provided by World Omni from time to time. World Omni publishes benchmark residual value percentages for the standard terms of 24, 36, 39, 42, 48, 51, 54 and 60 months. If a term and corresponding benchmark residual value percentage are not published, the Contract Residual Value is calculated by interpolating the appropriate residual value using the published benchmark residual value percentages.

 

World Omni publishes benchmark residual value percentages based on residual value percentage estimates produced by “Automotive Lease Guide” or “ALG,” an independent publisher of residual value percentages recognized throughout the automotive finance industry for projecting vehicle market values at lease termination. From time to time, World Omni may establish benchmark residual value percentages that differ from the residual value percentage estimates produced by ALG. Since 1999, World Omni has limited Contract Residual Values of its leased vehicles by requiring dealers to cap the Manufacturer’s Suggested Retail Price (“MSRP”) used in the residual value calculation at ALG’s published Maximum Residualized MSRP (“MRM”). The MRM represents the maximum dollar MSRP that ALG recommends when applying ALG’s residual value percentages. The MRM was developed by ALG to ensure that vehicles do not become “over accessorized,” thus creating an unreasonable risk of retaining the predicted residual value. World Omni instructs dealers to calculate the Contract Residual Value by multiplying (a) the published benchmark residual value percentage for the appropriate vehicle and term by (b) the lower of (i) the actual MSRP and (ii) the MRM.

 

In connection with vehicle marketing programs supported by World Omni’s affiliate Southeast Toyota Distributors, LLC, World Omni permits the contract residual value that would otherwise be applicable to a lease to be increased by adding a number of percentage points to the benchmark residual value percentage or adding a fixed dollar amount to the contract residual value that would otherwise apply to a lease.

 

Dealers’ obligations to repurchase units. Under agreements between World Omni and the dealers, dealers are contractually obligated to repurchase Units that do not meet the representations and warranties made by those dealers at the time of purchase. These representations and warranties relate primarily to the origination of the leases and the titling of the leased vehicles. Dealers do not normally make representations relating to the creditworthiness of the lessees or the collectability of the leases.

 

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Typically, the dealer agreements do not otherwise provide for recourse to the dealer for unpaid amounts under a Defaulted Lease. World Omni’s rights to receive proceeds from any dealer repurchase obligations have been assigned to the Titling Trust and will constitute assets of the Titling Trust. These payments will be available to make payments on the Exchange Note if they relate to the Reference Pool. However, the related dealer agreements are not—and will not be—assets of the Titling Trust.

 

Underwriting Standards

 

World Omni’s underwriting standards are intended to evaluate a prospective lessee’s credit standing and repayment ability. In general, the dealer requests a prospective lessee to complete a credit application. Upon receipt of a credit application, either electronically through an online source such as DealerTrack or RouteOne or via facsimile, World Omni transfers all application data into a centralized computer loan and lease origination system owned and operated by a third party vendor. The origination system obtains an independent credit bureau report and automatically relays the application and credit bureau data to decision software which has been customized to perform credit evaluations for World Omni.  The decision software uses a number of factors in performing the credit evaluation, such as the amount of the monthly payment, the term of the lease, the lessee’s monthly income, the amount of monthly rent or mortgage payments, and credit bureau attributes, such as number of trade lines, utilization ratio and number of credit inquiries. As part of this process, the decision software generates an internal credit score that is used in addition to credit rules to determine a recommended credit decision. This information enables World Omni to review an application and establish the likelihood that the proposed lease will be paid in accordance with its terms. In limited circumstances, World Omni may pre-approve potential and existing customers with established automobile credit histories for new leases without the use of an internal credit score. World Omni may also automatically approve or deny applicants based on other credit criteria.

 

Automated Underwriting. World Omni has established minimum credit score requirements and applicants who fall below the minimums are automatically declined by the decision software or recommended for decline and referred to a credit analyst for further review. To the extent the decision software’s evaluation results in an automatic approval or automatic decline, such results are communicated directly to the dealer. A credit application rejected by the decision software may also be resubmitted or re-evaluated based on information from the dealer. All other applications are referred to a credit analyst for additional underwriting.

 

If the applicant is a business, the decision software cannot electronically evaluate the application. In other cases, an application is not automatically rejected but does not meet the criteria for automatic approval, either because of incomplete or inconsistent information or because one or more credit-related terms is not within prescribed automatic approval levels. In all such cases, a credit analyst evaluates the application based on the company’s underwriting guidelines. Failure to be automatically approved by the decision software does not mean that an application does not meet World Omni’s underwriting guidelines.

 

Credit Analyst Underwriting. The credit analyst considers information, some of which is evaluated in the decision software, such as the applicant’s income, credit bureau report and internal credit score, and weighs other factors, such as the applicant’s prior experience with World Omni. To support consistent credit decisions, World Omni establishes credit rules that provide a framework to evaluate specific attributes of an application, including affordability measures like payment-to-income ratios, FICO® score and lease term. These credit rules are not strict limits or requirements and the credit analyst evaluating an application may determine whether there may be other factors that, in the credit analyst’s judgment, support approval of an application, including demonstrated ability to pay, strong credit history and residency and employment stability. Based on the credit analyst assessment of the strengths and weaknesses of each application, the credit analyst will either approve the application, reject the application or forward the application for review by a World Omni employee with higher approval authority. The credit analyst may work with the dealer to determine acceptable lease terms for applications that cannot be approved as originally submitted. The credit analyst may grant a conditional approval on the addition of a qualified co-lessee or guarantor or on modifications to the lease terms, such as a higher cash down payment or a less expensive vehicle. If data entry or inconsistent information is the reason a credit application did not receive automatic approval, the credit analyst will contact the dealer if necessary to verify the data in question and to make corrections if necessary or to obtain proof of the inconsistent data.  For certain applicants, or if there is a discrepancy in the information provided by the applicant, the credit analyst may verify the identity, employment, income, residency and other applicant information using World Omni’s established procedures before making a decision.

 

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Lease package and verification. Once World Omni has approved an application and the prospective lessee has agreed to the terms of the lease, the dealer transmits to World Omni a lease package containing, among other things:

 

·the completed standard lease form between the dealer and the lessee;

 

·the customer’s credit application; and

 

·applicable insurance information.

 

World Omni compares the specifics of the lease to the application approved in the underwriting process and verifies, among other items, the rate, truth-in-leasing disclosures and purchase price from the dealer. World Omni also makes efforts to confirm that the dealer has made on a timely basis all filings with state agencies that are necessary to ensure that the vehicle is titled in the name of the Titling Trustee or the Titling Trust and that the Closed-End Collateral Agent is listed as the lienholder on the title to the applicable vehicle.

 

Insurance. Each lease contract requires the lessee to obtain and maintain vehicle liability and physical damage insurance on the leased vehicle. The dealer agreements include a requirement that the dealer provide the Servicer with written evidence that the lessee has insurance which meets the requirements of the lease contract at the inception of the lease. The amount of insurance required by a lease contract is at least equal to the amount required by applicable state law, subject to customary deductibles. The Servicer requires the policy to name the Titling Trust as additional insured with respect to liability and insured and loss payee with respect to physical damage.

 

Electronic Contracts and Electronic Contracting

 

World Omni supports electronic contracting in the Five-State Area, under which the related contracts are evidenced by an electronic record and are electronically signed by the related obligors.  World Omni has contracted with a third-party to facilitate the process of creating and storing such electronic contracts in an electronic vault maintained by such third-party. The third-party’s technology system permits transmission, storage, access and administration of electronic contracts and is comprised of proprietary and third-party software, hardware, network communications equipment, lines and services, computer servers, data centers, support and maintenance services, security devices and other related technology that enable electronic contracting in the automobile retail industry.  Through use of the third-party’s system, a dealer originates electronic lease contracts and then transfers these electronic contracts to the Titling Trust.

 

The electronic vaulting system uses a combination of technological and administrative features that are designed to (i) designate a single copy of the record or records comprising an electronic contract as being the single authoritative copy of the lease receivable, (ii) manage access to and the expression of the authoritative copy, (iii) identify World Omni, on behalf of the Titling Trust, as the owner of record of the authoritative copy and (iv) provide a means for transferring record ownership of, and the exclusive right of access to, the authoritative copy from the current owner of record to a successor owner of record.

 

Servicing

 

Through its service centers located in Mobile, Alabama and Earth City, Missouri, World Omni services the leases following origination. The Mobile and Earth City centers are full service facilities that collectively handle all collection activities, pro-active lease marketing, remarketing, administrative services, dealer services, operational accounting, and customer and dealer inquiries.

 

Lessees will generally make payments on the leases by mail for deposit into a lock box account maintained by the Servicer or directly through electronic means. Unless the conditions described under “Description of the Transaction Documents—Accounts” are satisfied, the Servicer will deposit all payments it receives on or in respect of the leases included in the Reference Pool into the Exchange Note Collection Account not later than two Business Days after receipt of payment and related payment information regarding where to allocate the payment.

 

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Customer Service. In the normal course of business, World Omni responds to requests for information from both dealers and lessees. Incoming calls are processed through a Voice Response Unit (VRU), which provides automated assistance for routine inquiries and services such as payoff quotes, mailing addresses, pay-by-phone, and last payment information. Customer care representatives are also available during standard business hours to assist those dealers and lessees that are unable to resolve their issues through the VRU. World Omni also provides a customer website that allows lessees to self-service accounts including making payments, obtaining extensions based on compliance with automated guidelines, reviewing payment histories, obtaining monthly statements and requesting account revisions.

 

Collections. World Omni makes collection efforts with respect to delinquent accounts. A delinquent account is assigned to a risk group that determines the collection calling and letter strategies and timelines applicable to that account. Risk groups are developed to establish when the first call will be made or the first letter will be sent to that lessee. Accounts are also segregated into specialized call work lists based on legal requirements applicable to the accounts. These specialized work lists generally include active bankruptcies, litigations, confiscations, and accounts protected by the SCRA. Specialized manual account calling is initiated at various stages of delinquency status based on each account’s risk category. Calls to lessees are placed by World Omni or by independent contractors retained by World Omni.

 

During the preceding three years, the Servicer has modified its servicing policies and procedures by substantially revising its policies regarding military accounts. Otherwise, the Servicer has not modified its servicing policies and procedures in any material respect during the preceding three years.

 

Lease Termination. At the end of the lease term, the lessee has the option to (1) purchase the leased vehicle “AS IS” at a price equal to the Contract Residual Value plus a purchase option fee plus any official fees and applicable taxes and other incidental charges due under the lease or (2) return the leased vehicle to World Omni through a dealer or at an agreed upon drop-off location and pay the disposition fee and any applicable charges for excess mileage and excess wear and use. Both the purchase option fee and the disposition fee may be waived in whole or in part by the Servicer. In the case of either a purchase or a return, the lessee must also satisfy any outstanding and unpaid amounts owed by the lessee under the lease and any other fees including actual or estimated property taxes, late charges and parking tickets paid by the lessor on the lessee’s behalf. A lessee can sell a leased vehicle to another party or trade a leased vehicle in to a dealer provided the lease obligations, including the end of term obligations described in the preceding sentence, are satisfied to World Omni’s satisfaction.

 

Early Termination by Lessee. If the lessee returns the vehicle early, the lessee must pay the money owed under the lease, including any remaining Base Monthly Payments and all applicable Additional Lease Charges, plus the disposition fee set forth in the lease, plus any official fees and taxes related to termination (all of the foregoing, collectively, the Remaining Payments Charge”), plus any charges for excess mileage and excess wear and use and World Omni’s reasonable estimate of repairs relating to excess wear and use.  Alternatively, depending on the form of lease the lessee may pay the Remaining Payments Charge, plus the Contract Residual Value set forth in the lease, minus the unearned portions of the Lease Charge and the administrative fee set forth in the lease, minus the realized value of the vehicle as determined by the estimated or appraised wholesale value of the vehicle or by the amount the Servicer receives upon disposition of the vehicle at wholesale (the amount determined as provided in this sentence or the immediately preceding sentence is the Early Termination Charge).  At the lessee’s option, the vehicle’s realized value may be determined by an appraisal of the vehicle’s wholesale value by an independent appraiser selected by the lessee and acceptable to World Omni. In certain situations, the lessee may be billed for and pay the Early Termination Charge over time or in installments after the lease has been terminated on World Omni’s servicing system.

 

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Early Termination Program. To encourage new vehicle sales or to pull leased vehicle returns into periods when vehicle resale prices are expected to be higher, World Omni may allow selected lessees to terminate their leases early without making a stated number of remaining monthly payments. These programs are generally offered to lessees based on the vehicle model they lease and the period during which their lease is scheduled to terminate. To be eligible to participate, a lessee must lease or buy a new Toyota vehicle and finance it through World Omni. If a lessee accepts the offer, World Omni will pay or cause to be paid the total of the Base Monthly Payments that are waived under the program. The lessee must pay any other amounts owed under the lease, including any unwaived remaining monthly payments, excess mileage or excess wear and use charges.

 

Total Loss. If a leased vehicle suffers a total loss, the lessee is obligated to notify such lessee’s insurance company and to coordinate with such lessee’s insurance company for payment to World Omni. If World Omni does not continue the lease by substituting a comparable Replacement Vehicle and the lessee has complied with all other provisions of the lease, then the lease will terminate and the lessee will owe nothing more once World Omni has received all of the insurance proceeds due under the insurance policy, the deductible under such insurance policy and all amounts due under the lease agreement and not paid up to the date the lessor receives the insurance proceeds under such insurance policy. If the insurance proceeds, deductible and other amounts as described above are less than the amount of the lessee’s obligations under the lease, the shortfall will reduce the amount available to the Administrative Agent for distribution to the Exchange Noteholder in respect of the Exchange Note. Conversely, if the insurance proceeds exceed the amount of the lessee’s obligations under the lease, the excess will be refunded to the lessee.

 

Default. The lessor may terminate the lease and repossess a leased vehicle because of a default under the

terms of the lease, which defaults may include any of the following:

 

·failure to make any payment when due;
·bankruptcy or insolvency of the lessee;
·failure of the lessee to maintain the required insurance coverage;
·failure of the lessee to maintain or repair the leased vehicle;
·failure of the lessee to comply with any other provision of the lease;
·material misrepresentations by the lessee in his or her application;
·the vehicle is stolen, lost, destroyed, seized or confiscated or is otherwise rendered unavailable or unsuitable for use;
·incompetency or death;
·assignment, transfer, sublease, rent, or pledge of the lease or leased vehicle without the Servicer’s permission; and

·governmental seizures.

 

In any such case, the lessee will owe the Early Termination Charge (as defined above) plus all collection, repossession, storage, preparation and sale expenses of the vehicle, plus attorney’s fees and disbursements incurred after default and referral to an attorney who is not a salaried employee of the lessor, not to exceed 15% of the amount the lessee owes the lessor or such lesser rate as may be required under applicable law, plus the servicer may collect simple interest at a rate not to exceed 15% per annum or such lesser rate as may be required under applicable law on all expenses and fees incurred by the lessor and all obligations that the lessee owes after termination, other than earned but unpaid Lease Charges (all of the foregoing, collectively, the Defaulted Payment Charge”).

 

The Servicer’s right to repossess the vehicle may be limited or delayed by applicable law, including bankruptcy and other insolvency law, in the event a lessee is entitled to relief under the SCRA and in the event a lessee is identified on the Office of Foreign Assets Control list of Specially Designated Nationals and Blocked Persons.

 

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Excess Wear and Use. At the time the lessee enters into a lease, the lessee may also purchase and enter into an excess wear and use addendum to the lease which serves to waive any excess wear and use charges that may be owed by the lessee upon termination of the lease, up to a specified maximum amount. The cost of such waiver is generally part of the adjusted capitalized cost included in the lease. Upon termination of the lease, the Servicer may in accordance with its standard servicing practices endeavor to collect any excess wear and use charges owed on the related leased vehicle from a third-party vendor providing the related excess wear and use coverage and endeavor to collect any amounts in excess of the maximum amount specified in the addendum from the related lessee.

 

The Servicer may extend the terms of leases in case of financial difficulties of the lessee. Occasionally, a lessee may request an extension or become delinquent and be willing but unable to bring his or her account current. Generally an extension requires the payment by the lessee of an extension charge and approval in accordance with pre-determined approval guidelines. In such situations, World Omni may extend the lease. In circumstances deemed appropriate by World Omni, World Omni may reduce or waive the extension charge owed by a lessee.

 

An extension of a lease as provided above extends the due date of one or more installment(s) without changing the remaining number of installment payments due or the day of the month on which the remaining installments are due. Extended payments are deferred for a set period of time and consequently will defer the original final payment or termination date of the lease by the same period of time. All extensions granted should, unless approved by an authorized employee of World Omni, bring the account current.

 

Extensions of leases are not always associated with financial difficulties of the lessee. Occasionally, a lessee may request an extension of the term of the related lease for one or more months from the original specified termination date of the lease near the end of a lease term, if, for example, the lessee has ordered but has not yet received a new vehicle, is in the process of securing outside financing for the purchase of the related leased vehicle or is selling the vehicle to a third party.

 

In the case of an extension past the lease termination date not relating to financial difficulty, the annual mileage limit on the lease is increased on a basis proportionate to the length of the extension.

 

Under the supplement to the Base Servicing Agreement relating to the Exchange Note, if the Servicer extends a lease beyond the month immediately preceding the month in which the final scheduled Payment Date of the Class B Notes occurs, then the Servicer shall (i) make a reallocation payment with respect to such lease and (ii) reallocate the lease and related leased vehicle to the Warehouse Facility Pool or an unencumbered pool. For extensions that do not result in a reallocation payment, World Omni does not expect that these extensions will materially affect the cash flows on the Notes.

 

Repossession, auction and other disposition of returned leased vehicles. Repossessions are conducted by independent contractors who are engaged in the business of repossessing vehicles. Independent repossession contractors utilized by World Omni are required to maintain all state required licenses, bonds, and insurance coverage. World Omni disposes of repossessed and off-lease vehicles through several outlets including traditional auction houses such as Manheim and ADESA and internet sales systems such as OPENLANE, Inc. These entities are unaffiliated with World Omni and are compensated at market rates for their services. World Omni may also make vehicles available for sale to the dealer to which the customer returns the leased vehicle at lease termination.

 

Deficiency Balances. Upon disposition of a repossessed leased vehicle, World Omni typically pursues the lessee for any remaining deficiency. If the deficiency balance remains uncollected following internal collection efforts by World Omni, then World Omni typically retains an independent collection service provider.

 

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Like Kind Exchange Program

 

Historically, World Omni utilized a like kind exchange (“LKE”) program for its lease portfolio. The LKE program was designed to permit World Omni to defer recognition of taxable gain by exchanging vehicles returned to World Omni (“Relinquished Vehicles”) for new vehicles (“Replacement Vehicles”). Changes to the U.S. federal tax laws under the legislation known as the Tax Cuts and Jobs Act repealed the availability of tax-deferred like kind exchanges for personal property under the federal income tax laws effective as of January 1, 2018. Shortly after the effectiveness of that legislation World Omni discontinued utilizing LKEs, but for administrative convenience World Omni retained the operational and administrative procedures that were utilized in the LKE program, which would again be necessary in the event World Omni elected to again utilize LKEs. The remainder of this section describes certain provisions of the LKE program and the likely provisions of a future LKE program in the event World Omni elects to again utilize LKEs:

 

·The documents governing the LKE program require the actual Net LKE Disposition Proceeds of Relinquished Vehicles to be assigned to, and deposited directly with, a qualified intermediary (the “QI”) rather than being paid directly to World Omni. World Omni assumes responsibility for identifying Relinquished Vehicles and Replacement Vehicles based on its eligibility criteria. The security interest of the Closed-End Collateral Agent in any Net LKE Disposition Proceeds will be automatically released effective on the date on which a Relinquished Vehicle is sold to a purchaser under a disposition contract.

 

·World Omni and the QI promptly deposit the Net LKE Disposition Proceeds of the leased vehicles into designated accounts held as QI funds.

 

To the extent World Omni was or in the future resumes actually performing LKEs:

 

·The QI, acting on behalf of the Titling Trust, uses the Net LKE Disposition Proceeds, together with additional funds, if necessary, to purchase Replacement Vehicles.

 

·The QI is not required to purchase Replacement Vehicles to the extent that the total purchase price amounts exceed the amount of available QI funds, unless World Omni makes an LKE advance in the amount of the shortfall.

 

·The Replacement Vehicles are then transferred to the Titling Trust and became part of the Titling Trust property.

 

·The Titling Trust is then deemed to have exchanged Relinquished Vehicles for the Replacement Vehicles and World Omni is not required to recognize any taxable gain.

 

In the event that any Net LKE Disposition Proceeds are not deposited into the Exchange Note Collection Account, the Servicer must deposit into that account an amount equal to such Net LKE Disposition Proceeds within two Business Days of receiving and identifying such proceeds. This deposit will be treated as equivalent to the deposit into the Exchange Note Collection Account of the actual Net LKE Disposition Proceeds.

 

“Net LKE Disposition Proceeds” means the excess, if any, of the LKE disposition proceeds relating to one or more Relinquished Vehicles over any LKE disposition expenses relating to such Relinquished Vehicles.

 

“LKE disposition proceeds” means for any Relinquished Vehicle, the portion of the Liquidation Proceeds received by World Omni on behalf of the Titling Trust from the disposition of that vehicle relating to one or more Relinquished Vehicles.

 

“Liquidation Proceeds” means, for any vehicle, whether or not subject to a lease, (i) the amounts received from the sale or other disposition of that vehicle and (ii) all other gross amounts received by the Servicer, the QI or a depository bank in connection with the realization of the full amounts due or to become due under the related lease, whether from the proceeds of any collection effort, receipt of insurance proceeds, or collection of amounts due under the Base Servicing Agreement, whether in the form of cash or other property, or applied as an offset against amounts owed to a purchaser by World Omni or any of its affiliates and other amounts received in the form of a cancellation of an offsetting obligation and any portion of the security deposit for the related lease that is retained by the Servicer on behalf of the Titling Trust.

 

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THE TITLING TRUST

 

Formation of the Titling Trust

 

World Omni LT is a Delaware statutory trust. We refer to World Omni LT in this prospectus as the Titling Trust.” The Titling Trust is governed by a second amended and restated trust agreement, dated as of July 16, 2008 (the “Titling Trust Agreement”), and by a fourth amended and restated collateral agency agreement dated as of December 15, 2009 (as amended from time to time, the “Collateral Agency Agreement”), as amended and supplemented from time to time by supplements to that agreement which relate to Exchange Notes issued by the Titling Trust, including the supplement relating to the Exchange Note pledged as Collateral for the Notes (the “Exchange Note Supplement”). In this prospectus, for convenience, we refer to the Titling Trust Agreement, the Collateral Agency Agreement and the Exchange Note Supplement together as the Titling Trust Documents.”

 

The parties to the Titling Trust Documents are:

 

·the Titling Trust;

 

·Auto Lease Finance LLC, as Initial Beneficiary;

 

·World Omni, as Titling Trust Administrator;

 

·VT Inc., as “Titling Trustee”;

 

·U.S. Bank Trust National Association (which we refer to as U.S. Bank Trust), as Delaware Trustee;

 

·U.S. Bank National Association—which we refer to as U.S. Bank or Titling Trustee Agent;

 

·AL Holding Corp., as “Closed-End Collateral Agent”;

 

·World Omni Lease Finance LLC; and

 

·Bank of America, N.A., as Deal Agent.

 

Purposes of the titling trust. The primary business purpose of the Titling Trust is to take assignments of, and serve as record holder of title to, substantially all of the closed-end and open-end leases and the related leased vehicles purchased by or through World Omni from automobile dealers.

 

You can find more information about the Titling Trust Documents in this prospectus under the heading “Certain Provisions of the Titling Trust Documents and Related Agreements.”

 

Property of the titling trust. The assets of the Titling Trust consist of:

 

·closed-end and open-end leases and the related leased vehicles, including the certificates of title, assigned to the Titling Trust by dealers and all collections and proceeds from these Units;

 

·all of World Omni’s rights (but not its obligations) relating to those Units, including the right to receive proceeds from any dealer repurchase obligations;

 

·the right to receive proceeds from physical damage, credit life, disability and any other insurance policies covering those leases or leased vehicles or the related lessees;

 

·all security deposits due to the lessor under the leases; and

 

·the Titling Trust’s rights under the fifth amended and restated servicing agreement, dated as of December 15, 2009 (the “Base Servicing Agreement”), as amended, and each supplement to the Base Servicing Agreement; and

 

·all proceeds of the above.

 

We refer you to “The Servicer, Sponsor and Administrator—Origination, Underwriting and Purchasing” and “—Underwriting Standards” for additional discussion of the origination process of Leases and Leased Vehicles.

 

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Titling Trustee, Delaware Trustee and Titling Trustee Agent

 

Titling trustee. VT Inc., an Alabama corporation, is a wholly-owned, special-purpose subsidiary of U.S. Bank Trust that was organized in 1993 solely for the purpose of acting as Titling Trustee for the Titling Trust.

 

Delaware trustee and titling trustee agent. U.S. Bank Trust, a national banking association, is the Delaware Trustee of the Titling Trust. A corporate trust office of U.S. Bank Trust is located at 190 South LaSalle Street, 7th Floor, Chicago, IL 60603. U.S. Bank, as Titling Trustee Agent serves as agent for the Titling Trustee to perform specified administrative functions.

 

Purchase of titling trustee stock on replacement of the trustee agent. The Titling Trust Documents provide that if U.S. Bank is no longer the Titling Trustee Agent, is no longer able, because of legal or regulatory changes, to own the stock of VT Inc., or the Titling Trustee is no longer eligible to act as Titling Trustee, because it is owned by U.S. Bank and U.S. Bank no longer qualifies as an eligible Titling Trustee, Auto Lease Finance LLC may provide a person or entity the option to purchase the stock of VT Inc. for a nominal amount. That person or entity may not be Auto Lease Finance LLC or any of its affiliates. If the person or entity designated by Auto Lease Finance LLC does not exercise this option timely, then VT Inc. will appoint a new Titling Trustee Agent, and that new Titling Trustee Agent, or the person or entity designated by that Titling Trustee Agent, will next have the option to purchase the stock of VT Inc. If the new Titling Trustee Agent or its designee does not exercise this option in a timely manner, U.S. Bank may sell the stock of VT Inc. to another party or dissolve the Titling Trustee.

 

The Depositor, Auto Lease Finance LLC, World Omni and their affiliates may maintain normal commercial banking and other business relationships with U.S. Bank Trust, U.S. Bank and their affiliates.

 

Titling of Leased Vehicles

 

Leased vehicles will be titled in the name of the titling trust or titling trustee. The Servicer will, on behalf of the Titling Trust, originate or acquire Units on an ongoing basis during the term of the Servicing Agreement. Each such Unit will be originated on a form providing for assignment of the related vehicle by the dealer to the Titling Trust, including the Units allocated to the Reference Pool. Under the Base Servicing Agreement, the Servicer causes the certificate of title for each leased vehicle to be issued in the name of “World Omni LT,” “VT Inc. as Trustee of World Omni LT” or in a similar name acceptable to the relevant governmental departments or agencies.

 

Certificates of title do not reflect the issuing entity’s interest in leased vehicles. The Servicer will not place any lien on the certificates of title to indicate the Issuing Entity’s interest in the leased vehicles. No new certificates of title will be issued. However, the certificates of title to leased vehicles will reflect a first lien recorded in favor of AL Holding Corp. as Closed-End Collateral Agent. This lien exists to assure delivery of the certificates of title for the leased vehicle to the Servicer and to perfect the security interest in and to the leased vehicles and other Titling Trust assets allocated to the Closed-End Collateral Specified Interest granted to the Closed-End Collateral Agent by the Titling Trust under the security agreement. The Servicer will not have any interest in the leased vehicles. For administrative convenience, the Servicer (or, in certain circumstances, a separate custodian) will hold any certificates of title as custodian on behalf of the Titling Trust and the Closed-End Collateral Agent. We refer you to “Additional Legal Aspects of the Titling Trust and the Exchange Note” for additional legal discussion on titling of leased vehicles.

 

Servicing of Leases and Leased Vehicles

 

World Omni services the Units under a Base Servicing Agreement among the Titling Trust, World Omni, as Servicer, and AL Holding Corp., as Closed-End Collateral Agent. To provide for the servicing of the Units in the related Reference Pool, the Titling Trust, World Omni, as Servicer, and AL Holding Corp., as Closed-End Collateral Agent, will enter into a supplement (the “Servicing Supplement”) to the Base Servicing Agreement (the Base Servicing Agreement together with the Servicing Supplement, the “Servicing Agreement”).

 

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Limited Powers of Titling Trust

 

Except as otherwise described in “Certain Provisions of the Titling Trust Documents and Related Agreements,” the Titling Trust will not, among other things:

 

·engage in any activity other than a permitted transaction (as described below);

 

·create, incur or assume any indebtedness, other than pursuant to any Titling Trust debts, including the Exchange Note, any enhancement or any transactions entered into in connection therewith, in each case in accordance with the Titling Trust Documents;

 

·become or remain liable, directly or contingently, in connection with any indebtedness or other liability of Auto Lease Finance LLC or any of its affiliates;

 

·make or suffer to exist any loans or advances to, or extend any credit to, or make any investments in, any affiliate other than in connection with permitted transactions;

 

·enter into any transaction of merger or consolidation with or into any other entity, or convey its properties and assets substantially in their entirety to any entity, other than with respect to certain permitted transactions;

 

·become party to, or permit any of its properties to be bound by, any indenture, mortgage, instrument, contract, agreement, lease or other undertaking, with the exception of any certificate, any notice of registered pledge, any Titling Trust debt, any Titling Trust debt document or any other document relating to a permitted transaction; and

 

·amend, modify, alter, change or repeal the provisions of the Titling Trust Agreement that require the Titling Trust to be operating as a special-purpose, bankruptcy remote entity; provided, however, that, the Titling Trust may amend, alter, change or repeal any provision contained in the certificate of trust or the Titling Trust Documents in a manner now or hereafter prescribed by the Delaware Statutory Trust Act.

 

Permitted transactions under the Titling Trust Documents include, among others:

 

·issuing certificates (“Titling Trust Certificates”) representing a separate series of beneficial interest in the Titling Trust and the related Titling Trust assets in accordance with the terms of the Titling Trust Documents and the related specification notice;

 

·holding title to Titling Trust leases and related vehicles and other Titling Trust assets for the benefit of the holders of the related Titling Trust Certificates, all in accordance with the terms of the Titling Trust Documents and the Base Servicing Agreement;

 

·at the direction of the holders of any series of Titling Trust Certificates relating to a Titling Trust specified interest, issuing one or more Titling Trust debts, including Exchange Notes, with respect to such specified interest, entering into the related Titling Trust debt document and pledging any or all of the related specified assets to secure such Titling Trust debts;

 

·assigning or otherwise transferring title to Titling Trust leases, Titling Trust vehicles and Titling Trust assets to, or to the order of, the related Titling Trust Certificateholders; and

 

·borrowing on a revolving basis or otherwise under one or more Titling Trust debt documents or any other arrangements, as from time to time in effect, to finance the purchase of Titling Trust leases and related vehicles.

 

For more information about the permitted and required activities of the Titling Trust, we refer you to “Certain Provisions of the Titling Trust Documents and Related Agreements.”

 

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Allocation of Liabilities of the Titling Trust

 

The assets of the Titling Trust are divided into several series of specified interests. Currently there are two specified interests: the Closed-End Collateral Specified Interest and the Open-End Collateral Specified Interest.

 

The Closed-End Collateral Specified Interest is further subdivided into one or more reference pools, unencumbered pools and the Warehouse Facility Pool (the “Asset Pools). The Units allocated to the Closed-End Collateral Specified Interest and not allocated to a reference pool will be included in the Warehouse Facility Pool or an unencumbered pool.

 

The Titling Trust Documents will require the holders from time to time of the Closed-End Collateral Specified Interest certificate, other specified interest certificates, and securities, including Exchange Notes and securities of the issuing entities, evidencing obligations of the Titling Trust or obligations of other entities backed by assets of the Titling Trust, to waive any claim they might otherwise have with respect to any unrelated Titling Trust assets and to fully subordinate any claims to those Titling Trust assets in the event that such waiver is not given effect. Similarly, the holders of any certificates or securities described above, or beneficial interests therein, will be deemed to have waived any claim they might otherwise have with respect to those Titling Trust assets not allocated to their specified interest. See “Certain Provisions of the Titling Trust Documents and Related Agreements—Closed-end Collateral Specified Interest, Reference Pools and Exchange Notes.”

 

The Titling Trust is not permitted to grant a security interest in or otherwise encumber any of the Units or other assets allocated to the closed-end specified interest except for the security interest granted to the Closed-End Collateral Agent under the Pledge and Security Agreement to secure the Exchange Notes, warehouse facilities, unencumbered pools and certain other related obligations. Collections on assets allocated to the closed-end specified interests will be distributed to holders of such secured obligations and Auto Lease Finance LLC, as holder of the related Titling Trust Certificate, in accordance with the priority of payments set forth in the Collateral Agency Agreement and the Exchange Note Supplements. Under the Collateral Agency Agreement, beneficiaries of any unencumbered pool and warehouse facility lenders and holders of unrelated Exchange Notes will not receive any collections in respect of a particular reference pool.

 

For a more detailed discussion of the risks relating to potential liabilities of the Titling Trust, we refer you to “Certain Provisions of the Titling Trust Documents and Related Agreements,” “Additional Legal Aspects of the Titling Trust and the Exchange Notes” and “Additional Legal Aspects of the Leases and Leased Vehicles” in this prospectus.

 

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THE INITIAL BENEFICIARY

 

The Initial Beneficiary, Auto Lease Finance LLC, is a Delaware limited liability company and a wholly-owned, special-purpose finance subsidiary of World Omni. Auto Lease Finance LLC was organized in September 1998 solely for the purpose of being grantor and Initial Beneficiary of the Titling Trust, holding and dealing with the Closed-End Collateral Specified Interest, Open-End Collateral Specified Interest, other specified interests in the Titling Trust, and the Titling Trust Certificates representing the Closed-End Collateral Specified Interest and the Open-End Collateral Specified Interest and any such other specified interests; acquiring interests in one or more Exchange Notes; forming securitization entities; and engaging in related transactions.

 

Auto Lease Finance LLC’s limited liability company agreement limits its activities to the purposes described above and to any activities incidental to and necessary for those purposes. World Omni is the sole member of Auto Lease Finance LLC.

 

The principal office of Auto Lease Finance LLC is located at 190 Jim Moran Boulevard, Deerfield Beach, Florida 33442, and its telephone number is (954) 429-2200.

 

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THE DEPOSITOR

 

World Omni Auto Leasing LLC, which was formed as a Delaware limited liability company on June 26, 2008, will be the Depositor for the securitization transaction in which the Notes will be issued. Auto Lease Finance LLC holds all of the outstanding membership interests of the Depositor and is the managing member of the Depositor. The principal executive offices of the Depositor are located at 190 Jim Moran Boulevard, Deerfield Beach, Florida 33442, and its telephone number is (954) 429-2200. The managing member of the Depositor is located at 190 Jim Moran Boulevard, Deerfield Beach, Florida 33442.

 

The Depositor was organized solely for the purpose of acquiring Exchange Notes, securities and other property, forming one or more securitization trusts, such as the Issuing Entity, and transferring the related property and rights to those trusts and engaging in related transactions. The Depositor’s limited liability company agreement limits the activities of the Depositor to the foregoing purposes and to any activities incidental to and necessary for these purposes.

 

In connection with the offering of the Notes, the chief executive officer of the Depositor will make the certifications required under the Securities Act about this prospectus, the disclosures made about the characteristics of the Exchange Note and the structure of this securitization transaction, the risks of owning the Notes and whether the securitization transaction will produce sufficient cash flows to make interest and principal payments on the Notes when due. This certification will be filed by the Depositor with the SEC at the time of filing of this final prospectus. The certification should not be considered to reduce or eliminate the risks of investing in the Notes.

 

The Depositor has met the registration requirements of General Instruction I.A.1 of Form SF-3 by filing no later than the date of the filing of the final prospectus, and determining that each of its affiliated depositors and issuing entities have filed within the prior 90 days:

 

·the certification of the chief executive officer of the Depositor described above; and

 

·the transaction documents containing the provisions described in “The Leases—Asset Representations Review,” and “The Leases—Dispute Resolution for Reallocation Requests” and “Description of the Transaction Documents—Noteholder Communication.”

 

The Depositor, a wholly-owned subsidiary of World Omni, will initially retain the Certificates of the Issuing Entity. The Certificates represent the ownership interest in the Issuing Entity and the right to all funds not needed to make required payments on the Notes, pay fees and expenses of the Issuing Entity or make deposits in the reserve account. The Certificates are subordinated to the Notes and represent the first-loss interest in the securitization transaction. The Depositor’s retained interests will not be hedged by World Omni, the Depositor or any of their affiliates, except as permitted under Regulation RR. For more information about the required retention of credit risk in the transaction by the Sponsor, you should read “Credit Risk Retention.”

 

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THE ISSUING ENTITY

 

The Issuing Entity is a statutory trust formed under the laws of the State of Delaware pursuant to a Trust Agreement (the “Trust Agreement”) between World Omni Auto Leasing LLC, a Delaware limited liability company, and the Owner Trustee. Before the sale and assignment of the trust assets to the Issuing Entity, the Issuing Entity will have no assets, obligations or operating history. The Issuing Entity will not engage in any business other than:

 

·acquiring, financing, owning, pledging and managing the Exchange Note, the other trust assets and any proceeds from the Exchange Note and other trust assets;

 

·issuing and making payments on the Notes and Certificates;

 

·assigning and pledging the property of the Issuing Entity to the Indenture Trustee; and

 

·performing its obligations under the transaction documents and engaging in other activities to accomplish the above.

 

Please see “Description of the Transaction Documents” and “ —Indenture—Material Covenants” in this prospectus for further description of the Issuing Entity and its activities.

 

The requirements that apply to an amendment of the Trust Agreement are described in this prospectus under “Description of the Transaction Documents—Amendments.” The Issuing Entity’s initial equity capitalization is expected to be approximately $83,105,104.17, which is the expected aggregate starting principal balance of the Exchange Note as of the Actual Cutoff Date less the aggregate original principal amount of the Notes as of the Closing Date, plus the amounts on deposit in the reserve account, if any. The Certificates represent the equity or residual interest in the Issuing Entity and are not being offered by this prospectus.

 

Capitalization of the Issuing Entity

 

The following table illustrates the expected capitalization of the Issuing Entity as of the Closing Date:

 

Class A-1 Notes  $95,000,000 
Class A-2 Notes  $288,400,000 
Class A-3 Notes  $288,500,000 
Class A-4 Notes  $100,000,000 
Class B Notes  $42,750,000 
Series 2019-A Overcollateralization  $78,355,077 
Total Trust Capitalization  $893,005,077 
Exchange Note Overcollateralization  $57,000,324 
Total Securitization Value(1)  $950,005,401 

 

 

(1)Rounded for summing purposes. The aggregate Securitization Value as of the Actual Cutoff Date is $950,005,401.23. Does not take into account the amount on deposit in the reserve account which is equal to $4,750,027.01.

 

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No expenses will be incurred in connection with the selection and acquisition of the Exchange Note or the lease assets from the offering proceeds.

 

The Issuing Entity’s fiscal year ends on December 31.

 

The Trust Property

 

The primary assets of the Issuing Entity will include the following:

 

·an Exchange Note issued by the Titling Trust secured by the Units in the related Reference Pool;

 

·amounts that from time to time may be held in one or more Trust Accounts established and maintained on behalf of the Issuing Entity by a trustee;

 

·rights under certain transaction documents; and

 

·any and all proceeds of the foregoing.

 

The leases constituting the Reference Pool will be originated by various dealers and acquired by the Titling Trust. The underwriting criteria applicable to the leases included in the Reference Pool are described under “The Servicer, Sponsor and Administrator—Underwriting Standards.”

 

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THE TRUSTEES OF THE ISSUING ENTITY

 

The Owner Trustee

 

U.S. Bank Trust National Association (“U.S. Bank Trust”) will act as owner trustee and certificate registrar under the Trust Agreement. U.S. Bank Trust is a national banking association and a wholly-owned subsidiary of U.S. Bank National Association (“U.S. Bank”), the fifth largest commercial bank in the United States. U.S. Bancorp, with total assets exceeding $465 billion as of September 30, 2018, is the parent company of U.S. Bank. As of September 30, 2018, U.S. Bancorp served approximately 18 million customers and operated over 3,000 branch offices in 25 states. A network of specialized U.S. Bancorp offices across the nation provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses, and institutions.

 

U.S. Bank Trust has provided owner trustee services since the year 2000. As of September 30, 2018, U.S. Bank Trust was acting as owner trustee with respect to over 700 issuances of securities. This portfolio includes mortgage-backed and asset-backed securities. U.S. Bank Trust has acted as owner trustee of automobile receivables-backed securities since 2000. As of September 30, 2018, U.S. Bank Trust was acting as owner trustee on 59 issuances of automobile receivables-backed securities.

 

The Owner Trustee’s liability in connection with the issuance and sale of the Notes is limited solely to the express obligations of the Owner Trustee described in the trust documents.

 

The Indenture Trustee, Note Registrar and Paying Agent

 

MUFG Union Bank, N.A. (formerly known as Union Bank, National Association) will be the Indenture Trustee under the Indenture. MUFG Union Bank, N.A. is a national banking association and its corporate trust office is located at 1251 Avenue of the Americas, 19th Floor, New York, New York 10020. MUFG Union Bank, N.A. and its predecessors have extensive experience in corporate trust and agency services including roles as collateral agent, depositary, indenture trustee, and escrow agent. MUFG Union Bank, N.A. has acted, and is currently acting, as indenture trustee on a number of asset-backed transactions involving pools of various asset types, including acting as indenture trustee on automobile retail installment sale contract backed securities. MUFG Union Bank, N.A., Servicer, Sponsor, Depositor, and their affiliates may in the future engage in commercial banking transactions with the Indenture Trustee and its affiliates in the ordinary course of their respective business.

 

The Indenture Trustee shall make each monthly statement available to the Noteholders via the indenture trustee’s internet website at https://www.unionbank.com/commercial-bank/trust-custody/corporate-trust-services/asset-backed-servicer-reports.jsp. Noteholders with questions may direct them to the bondholder services group at (646) 452-2114.

 

The Indenture Trustee’s liability in connection with the issuance and sale of the Notes is limited solely to the express obligations of the Indenture Trustee described in the trust documents.

 

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ASSET REPRESENTATIONS REVIEWER

 

Clayton Fixed Income Services LLC, a Delaware limited liability company, will act as the “Asset Representations Reviewer” under the Asset Representations Review Agreement (the “Asset Representations Review Agreement”) between the Issuing Entity, the Sponsor, and the Asset Representations Reviewer. Clayton is a wholly-owned subsidiary of Radian Group, Inc. (NYSE: RDN). Clayton and its affiliates have provided independent due diligence loan review and servicer oversight services since 1989. Clayton has been engaged as the asset representations reviewer on more than 250 auto and equipment loan, lease and dealer floorplan and credit card securitization transactions since 2015.

 

Clayton and its affiliates are providers of targeted due diligence reviews of securitized assets and policies and procedures of originators and servicers to assess compliance with representations and warranties, regulatory and legal requirements, investor guidelines and settlement agreements. Clayton and its affiliates have performed over 12 million loan reviews and have provided ongoing oversight on over $2 trillion of securitization transactions on behalf of investors, sponsors, issuers and originators, including government-sponsored enterprises and other governmental agencies. These services have been performed primarily on residential mortgage loan and residential mortgage-backed security transactions, although Clayton and its affiliates have also performed these services involving auto loans, credit cards, commercial mortgage loans, student loans, timeshare loans and boat and recreational vehicle loans.

 

The Asset Representations Reviewer is not affiliated with the Sponsor, the Depositor, the Servicer, the Indenture Trustee, the Owner Trustee or any of their affiliates and none of the Asset Representations Reviewer’s affiliates has been hired by the Sponsor or the underwriters to perform pre-closing due diligence work on the leases in the actual pool. For so long as the Notes remain outstanding, the Asset Representations Reviewer must satisfy these eligibility criteria.

 

The Asset Representations Reviewer’s main obligations will be:

 

·reviewing each Review Lease following receipt of a review notice from the Indenture Trustee, and

 

·providing a report on the results of the review to the Issuing Entity, the Servicer and the Indenture Trustee.

 

For a description of the Asset Representation Reviewer’s duties and responsibilities and the review to be performed by the Asset Representations Reviewer, you should read “The Leases—Asset Representations Review.”

 

To the extent any fees, expenses and indemnification amounts of the Asset Representations Reviewer are not paid by the Servicer, any such unpaid amounts will be paid by the Issuing Entity from Available Funds on each Payment Date up to the limit of $150,000 per calendar year. The Issuing Entity will pay any of these amounts in excess of the limit only after paying in full on that Payment Date all other fees and expenses of the Issuing Entity and all required interest and principal payments on the Notes and after any required deposits in the reserve account have been made. Following an Event of Default, however, these fees, expenses and indemnities will be paid prior to required interest and principal payments on the Notes. See “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” in this prospectus.

 

The Asset Representations Reviewer’s liability in connection with the asset representations review is limited solely to the express obligations of the Asset Representations Reviewer set forth in the Asset Representations Review Agreement. The Asset Representations Reviewer is not responsible for (a) reviewing the Units for compliance with the representations under the transaction documents, except in connection with a review under the Asset Representations Review Agreement, or (b) determining whether noncompliance with any representation is a breach of the transaction documents or if any Unit is required to be reallocated.

 

The Asset Representations Reviewer will not be liable for any action taken, or not taken, in good faith under the Asset Representations Review Agreement or for errors in judgment. However, the Asset Representations Reviewer will be liable for its willful misconduct, bad faith or negligence in performing its obligations under the Asset Representations Review Agreement. The Issuing Entity will, or will cause the Servicer to, indemnify the Asset Representations Reviewer for all liabilities resulting from the performance of the Asset Representations Reviewer’s obligations under the Asset Representations Review Agreement, other than liabilities resulting from the Asset Representations Reviewer’s willful misconduct, bad faith or negligence, breach of any of its representations or warranties in the Asset Representations Review Agreement or breach of its obligations related to protecting confidential and personally identifiable information provided to it.

 

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The Asset Representations Reviewer may not resign unless it becomes legally unable to act. The Issuing Entity may also remove the Asset Representations Reviewer if the Asset Representations Reviewer (1) ceases to be eligible to continue as an Asset Representations Reviewer, (2) breaches any of its representations, warranties, covenants or obligations contained in the Asset Representations Review Agreement or (3) becomes subject to an insolvency event. Following the resignation or removal of the Asset Representations Reviewer, the Issuing Entity will be obligated to appoint a successor Asset Representations Reviewer. Any resignation or removal of an Asset Representations Reviewer and appointment of a successor Asset Representations Reviewer will not become effective until acceptance of the appointment by the successor Asset Representations Reviewer. As described under “The Leases—Asset Representations Review—Periodic Reports,” each Form 10-D will contain a description of the date and circumstances surrounding any resignation, removal, replacement or substitution of the Asset Representations Reviewer that occurred during the related collection period. Reasonable expenses associated with the termination of the Asset Representations Reviewer and the appointment of a successor will be borne by the outgoing Asset Representations Reviewer.

 

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THE EXCHANGE NOTE

 

General

 

The Exchange Note will be issued by the Titling Trust under the Exchange Note Supplement on the date the Notes are issued.

 

The Exchange Note will be secured by certain Units allocated to the related Reference Pool, which Units are pledged by the Titling Trust to the Closed-End Collateral Agent under the third amended and restated pledge and security agreement dated as of July 16, 2008, as amended and supplemented from time to time (the “Pledge and Security Agreement”). In addition to the Units allocated to the Reference Pool, the Exchange Note will be secured by certain other assets, which include the following (but exclude Additional Lease Charges):

 

·amounts in the Trust Collection Account for the related Reference Pool, received in respect of the leases or the sale of the leased vehicles after the Actual Cutoff Date;

 

·certain monies due under or payable in respect of the Units after the Actual Cutoff Date;

 

·the right to receive the proceeds of any dealer repurchase obligations relating to the Units;

 

·the right to receive any insurance proceeds from any insurance policies with respect to the related Units and lessees;

 

·the Exchange Note Collection Account;

 

·all other assets of the Titling Trust related to the Units; and

 

·all proceeds of the foregoing, except that actual sales proceeds will not constitute part of the Exchange Note security. See “The Servicer, Sponsor and Administrator—Like-Kind Exchange Program” in this prospectus.

 

The Exchange Note will be pledged to the Indenture Trustee to secure the Notes.

 

The principal balance of the Exchange Note will be less than the aggregate Securitization Value. On each Payment Date, other than a date on which the Exchange Note is redeemed, the principal balance of the Exchange Note will be required to be repaid by the Titling Trust by an amount sufficient to reduce its principal balance to an amount equal to 94% of the aggregate Securitization Value as of the end of the prior Collection Period. The difference between the principal balance of the Exchange Note and the aggregate Securitization Value serves as overcollateralization for the Exchange Note.

 

The initial principal balance of the Exchange Note will be $893,005,077.16. The final scheduled maturity date of the Exchange Note will be July 15, 2024. The Exchange Note will bear interest at a rate equal to the Class B Note interest rate.

 

Overcollateralization represents the amount by which the aggregate Securitization Value exceeds the aggregate outstanding principal amount of the Notes, which is referred to as the Overcollateralization Amount. Initial overcollateralization is approximately 14.25% of the aggregate initial Securitization Value as of the Actual Cutoff Date, comprised of overcollateralization on the Exchange Note and overcollateralization on the Notes. Overcollateralization on the Exchange Note as of the Closing Date will be approximately 6.00% of the aggregate initial Securitization Value as of the Actual Cutoff Date. The overcollateralization amount on the Exchange Note as of the Closing Date is expected to represent the difference between the aggregate initial Securitization Value as of the Actual Cutoff Date and the principal balance of the Exchange Note. Additional initial overcollateralization on the Notes as of the Closing Date is expected to be approximately 8.25% of the aggregate initial Securitization Value. This additional initial overcollateralization amount of the Notes as of the Closing Date is expected to represent the difference between the outstanding principal balance of the Exchange Note and the outstanding principal balance of the Notes. In addition, the application of funds according to clause (8) under “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” is designed to increase the amount of overcollateralization on the Notes as of any Payment Date up to an amount equal to 15.75% of the aggregate initial Securitization Value as of the Actual Cutoff Date less the overcollateralization on the Exchange Note as of such Payment Date.

 

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None of the Issuing Entity, the Noteholders and the persons in whose name a Certificate is registered on the certificate register (“Certificateholders”) will have a legal or beneficial interest in any unencumbered pool of the Titling Trust or the Warehouse Facility Pool of the Closed-End Collateral Specified Interest, any Other Reference Pool or any assets of the Titling Trust evidenced by the Closed-End Collateral Specified Interest certificate or any Other Exchange Note. To the extent certain defaults have occurred with respect to Other Exchange Notes related to Other Reference Pools or the Warehouse Facility Pool, the Servicer will deposit into the lease funding account any available amounts up to the aggregate outstanding amount of principal and other amounts due and payable with respect to such Other Exchange Notes and their related reference pools, the Warehouse Facility Pool and certain other secured obligations in accordance with the priority of payments for the Exchange Note, as described in “Description of the Transaction Documents—Distributions on the Exchange Note” in this prospectus.

 

On the Closing Date, the Titling Trust will issue the Exchange Note to or upon the order of Auto Lease Finance LLC, as Initial Beneficiary. For more information regarding the Titling Trust, the Initial Beneficiary and the Titling Trustee, you should refer to “The Titling Trust” in this prospectus.

 

Transfers of the Exchange Note

 

Upon issuance by World Omni LT to Auto Lease Finance LLC, the Initial Beneficiary, the Exchange Note will be sold by the Initial Beneficiary to the Depositor and then transferred by the Depositor to the Issuing Entity.

 

Sale of the Exchange Note by Auto Lease Finance LLC to the Depositor will be made pursuant to an Exchange Note Sale Agreement, to be dated as of the Closing Date (the “Exchange Note Sale Agreement”). Auto Lease Finance LLC will covenant to treat the conveyance of the Exchange Note to the Depositor as an absolute sale and contribution, rather than a pledge or assignment of only a security interest, for all purposes.

 

Immediately after the transfer of the Exchange Note to the Depositor, the Depositor will:

 

·sell, transfer and assign to the Issuing Entity, without recourse, all of its right, title and interest in and to the Exchange Note, including all collections thereon after the Actual Cutoff Date, under an Exchange Note Transfer Agreement, to be dated as of the Closing Date (the “Exchange Note Transfer Agreement”); and

 

·deliver the Exchange Note to the Issuing Entity.

 

In exchange, the Issuing Entity will transfer to the Depositor the Notes and the certificate. The Depositor will retain the Issuing Entity trust Certificates on the Closing Date.

 

Immediately following the transfer of the Exchange Note to the Issuing Entity, the Issuing Entity will pledge its interest in the Issuing Entity’s estate, which includes the Exchange Note, to the Indenture Trustee as security for the Notes.

 

Application of Collected Amounts. Collected amounts include all of the following amounts that the Servicer receives relating to any lease or leased vehicle (collectively, the “Exchange Note Collected Amounts”):

 

·Base Monthly Payments,

 

·Liquidation Proceeds,

 

·insurance proceeds,

 

·prepayments in full of the outstanding principal balance of the lease, including any related payments of interest,

 

·payments remitted by a lessee of one or more scheduled payments (not constituting prepayments) in excess of the scheduled payment due under a lease, which the lessee has instructed the Servicer to apply to scheduled payments that are due under that lease in one or more immediately following calendar months (such payments are referred to in this prospectus as “Payments Ahead”),

 

·released intermediary funds,

 

·proceeds from the exercise of dealer recourse rights, and

 

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·all other payments made by or on behalf of any lessee (other than Additional Lease Charges).

 

The Exchange Note Collected Amounts will not include any payments made by lessees representing Additional Lease Charges. The Additional Lease Charges, other than taxes and other amounts owing to any government authority, will be paid to the Servicer as supplemental servicing fees. The Servicer may waive any late payment fee or charge or any other fees or charges that may be collected in the ordinary course of servicing a lease.

 

In the case of any Relinquished Vehicles included in an Asset Pool, the Servicer and the QI will promptly deposit amounts equal to the Net LKE Disposition Proceeds of the Relinquished Vehicles into the applicable warehouse facility collection account, unencumbered pool collection account or Exchange Note Collection Account. See “The Servicer, Sponsor and Administrator—Like-Kind Exchange Program”.

 

Prior to the required remittance date, the Servicer will identify the Asset Pool to which the Exchange Note collected amounts relate and deposit those amounts (net of reimbursement of any liquidation expenses incurred by the Servicer relating to any vehicle the Liquidation Proceeds of which are included among such funds) into the applicable lease funding account or Exchange Note Collection Account for the related Asset Pool. The Servicer shall from time to time in accordance with the Base Servicing Agreement, the related Servicing Supplement and the Titling Trust Agreement, determine respective amounts and recipients, and direct the Titling Trust to pay out of the applicable lease funding account or Exchange Note Collection Account all necessary and appropriate Titling Trust expenses and liabilities allocable to the respective Warehouse Facility Pool, unencumbered pool or reference pool. In the case of any Payments Ahead, the Servicer will maintain appropriate records in order to apply the Payments Ahead as a scheduled payment relating to the applicable lease.

 

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THE LEASES

 

The leases allocated to the Reference Pool consist of closed-end leases for new Toyota vehicles. Some or all of such leases allocated to the Reference Pool may have previously been included in the Warehouse Facility Pool of the Closed-End Collateral Specified Interest and any interest of the warehouse facility lenders in the leases allocated to the Reference Pool shall be released immediately prior to or contemporaneously with such allocation to the Reference Pool.

 

Characteristics of the Leases

 

The securitized portfolio information presented in this prospectus is stated as of the Actual Cutoff Date and is calculated based on the Securitization Value. As of the Actual Cutoff Date, the Units allocated to the Reference Pool had an aggregate Securitization Value of $950,005,401.23. For more information regarding how the Securitization Value for each Unit is calculated, you should refer to “—Calculation of the Securitization Value” below.

 

Eligibility Criteria and Portfolio Characteristics. The leases and related leased vehicles were selected by World Omni from a pool of eligible leases in the Titling Trust’s portfolio of leases and leased vehicles that all met several criteria. The eligibility criteria for the leases include, among others, as of the Actual Cutoff Date, that each lease:

 

·relates to a Toyota automobile or light-duty truck, of a model year of 2015 or later;

 

·is written with respect to a leased vehicle that was at the time of the origination of the related lease a new vehicle or dealer demonstration vehicle driven fewer than 6,000 miles;

 

·was originated in the Five-State Area by a dealer (a) for a lessee with a United States address and (b) in the ordinary course of such dealer’s business;

 

·has a remaining term to maturity as of the Actual Cutoff Date of less than or equal to 58 months, and had an original lease term greater than or equal to 24 months and less than or equal to 60 months;

 

·was originated on or after October 20, 2014;

 

·provides for level payments that fully amortize the Adjusted Capitalized Cost of the lease at the Lease Rate to the related Contract Residual Value over the lease term and, in the event of a lessee initiated early termination, provides for payment of an Early Termination Charge;

 

·is not more than 30 days past due as of the Actual Cutoff Date and is not a Defaulted Lease;

 

·is owned, and the related leased vehicle is owned, by the Titling Trust, free of all liens (including tax liens, mechanics’ liens, and other liens other than any lien of the Closed-End Collateral Agent or any lien on the certificate of title that arises by operation of law), other than any lien upon a certificate of title of any leased vehicle deemed necessary and useful by the Servicer solely to provide for delivery of title documentation to the Titling Trustee;

 

·was originated in compliance with, and complies in all material respects with, all material applicable legal requirements, including, to the extent applicable, the Federal Consumer Credit Protection Act, Regulation M of the CFPB, all state leasing and consumer protection laws and all state and federal usury laws;

 

·is the valid, legal, and binding full–recourse payment obligation of the related lessee, enforceable against such lessee in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws, now or hereafter in effect, affecting the enforcement of creditors’ rights in general or (b) general principles of equity;

 

·was originated in compliance with customary origination practices;

 

·is payable solely in U.S. dollars;

 

·relates to a Unit that had a Securitization Value as of the Actual Cutoff Date no greater than $82,945.98; and

 

·has as its lessee a person located in any state within the United States or the District of Columbia who is not (a) World Omni or any of its affiliates, or (b) the United States of America or any state or local government or any agency or political subdivision thereof.

 

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General Portfolio Characteristics of the Units. The Units have the following characteristics as of the Actual Cutoff Date:

 

Pool Characteristics as of Actual Cutoff Date
Actual Cutoff Date January 22, 2019
Number of Leases 38,473
Securitization Value  
Average $24,692.78
Minimum $9,216.50
Maximum $82,945.98
Base Residual  
Average $17,977.71
Minimum $6,895.20
Maximum $48,835.92
Original Term (Months)  
Weighted Average(1) 36.50
Minimum 24
Maximum 60
Remaining Term (Months)  
Weighted Average(1) 30.14
Minimum 3
Maximum 58
Seasoning (Months)(2)  
Weighted Average(1) 6.35
Minimum 1
Maximum 52
FICO® Score(3)  
Weighted Average FICO® Score(1)(3)(4)(5) 731
Range of FICO® scores that represents greater than 90%
of all pool FICO® scores(3)(4)(6)
605-854
Maximum Weighted Average FICO® score(1)(3)(4)(7) 737
Discounted Base Residual as a % of Securitization Value 60.19%
Base Residual as a % of lesser of MRM and MSRP 57.98%

 

 

(1) Weighted average by Securitization Value.
(2) Seasoning refers to the number of months elapsed since origination of the leases.
(3) FICO® is a federally registered trademark of Fair, Isaac & Company. An obligor’s FICO® score measures the likelihood that such obligor will repay his or her obligation as expected. The FICO® score for each account reflects the first bureau score reviewed (typically Equifax) at time of application.
(4) FICO® scores are calculated excluding accounts for which no FICO® score is available in World Omni’s account servicing system. Of the 38,473 leases in the Reference Pool as of the Actual Cutoff Date, 694 or 1.80% of the aggregate number of leases in such Reference Pool are accounts for which FICO® scores are unavailable.
(5) FICO® score is calculated using the primary applicant FICO® or, if not available, the co-applicant FICO®.
(6) Less than 5% of the lessee FICO® scores (based on the aggregate Securitization Value) exceed 854 and less than 5% of the lessee FICO® scores (based on the aggregate Securitization Value) fall below 605. Range of FICO® scores represent at least 90% of the aggregate Securitization Value as of origination.
(7) For leases having co-lessees, the maximum weighted average FICO® score is determined by using the greater of the two FICO® scores between the primary applicant and the co-applicant, weighted by the Securitization Value of the related Unit as of the Actual Cutoff Date.

 

A FICO® score is a measurement determined by Fair, Isaac & Company using information collected by the major credit bureaus to assess credit risk. Data from an independent credit reporting agency, such as FICO® score, is one of several factors that may be used by the originator in its credit scoring system to assess the credit risk associated with each applicant. Additionally, FICO® scores are based on independent third party information, the accuracy of which cannot be verified. FICO® scores should not necessarily be relied upon as a meaningful predictor of the performance of the leases.

 

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Calculation of the Securitization Value

 

Under the Servicing Agreement, the Servicer will calculate a “Securitization Value” for each Unit in the related Reference Pool equal to the sum of (i) the present values, calculated using a discount rate equal to the greater of the Securitization Rate and the Lease Rate, of (a) the aggregate scheduled Base Monthly Payments remaining on the lease and (b) the Base Residual Value of the related leased vehicle and (ii) any Base Monthly Payments due but not yet paid, minus any Base Monthly Payments made in advance of the lease’s next due date. The Securitization Value of a Terminated Unit is equal to zero.

 

The “Base Residual Value” of the leased vehicle is the lower of:

 

(a) the ALG Residual Value; and

 

(b) the Contract Residual Value.

 

The “Securitization Rate” will equal 7.45%.

 

The “ALG Residual Value” is calculated by multiplying (a) the residual value percentage estimate published by ALG for the appropriate vehicle and term by (b) the lower of (i) the actual MSRP and (ii) the MRM published by ALG, in each case for such vehicle.

 

For more information on how Contract Residual Values of the leased vehicles are determined, you should refer to “The Servicer, Sponsor and Administrator—Origination, Underwriting and Purchasing—Determination of contract residual values” in this prospectus.

 

A “Terminated Unit” is a lease and related leased vehicle allocated to the Reference Pool for which any of the following has occurred during a Collection Period:

 

· following the scheduled expiration or early termination (including a voluntary early termination by the lessee) of the related lease, the related leased vehicle was either (a) sold or otherwise disposed of by the Servicer or (b) held in inventory for more than 90 days, whichever occurs first;
 
· the related leased vehicle was purchased by a customer or dealer;
 
· the Servicer’s records, in accordance with its Customary Servicing Practices, disclose that all insurance proceeds expected to be received have been received by the Servicer following a casualty or other loss with respect to the related leased vehicle; or
 
· the related lease becoming a Defaulted Lease.

 

A “Defaulted Lease” means a lease for which any of the following has occurred during a Collection Period:

 

· any payment or part thereof in excess of $40.00 is past due 120 or more days;
 
· the related vehicle has been repossessed and sold or repossessed and held in inventory for more than 90 days, whichever occurs first; or
 
· the lease has been charged off in accordance with the Servicer’s Customary Servicing Practices.

 

Characteristics of the Units

 

The following tables show the distribution of the Units in the Reference Pool by geographic location, scheduled year and month of maturity, vehicle model, original term to maturity and remaining term to maturity. The data set forth in the table below entitled “Distribution of the Leases by Geographic Location as of the Actual Cutoff Date” are based on the billing addresses of the lessees.

 

Additionally, as of the Actual Cutoff Date, 6,665 Units, having an aggregate Securitization Value of approximately $164,853,126.03, constituting approximately 17.35% of the aggregate Securitization Value of the Units in the Reference Pool, are evidenced by electronic contracts.

 

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Distribution of the Leases by Geographic Location as of the Actual Cutoff Date

 

As of the Actual Cutoff Date, the composition of the leases by geographic location was as follows:

 

Geographic Location   Number of

Leases
  Percentage of
Number
of Leases(1)
  Securitization
Value(2)
  Percentage of
Securitization
Value(1)
Florida   25,922   67.38%   $604,891,704.56   63.67%
North Carolina   5,202   13.52%   $145,511,951.04   15.32%
South Carolina   3,135   8.15%   $86,293,131.82   9.08%
Georgia   2,261   5.88%   $59,822,802.05   6.30%
Alabama   1,474   3.83%   $40,677,630.50   4.28%
All others   479   1.25%   $12,808,181.26   1.35%
Total   38,473   100.00%   $950,005,401.23   100.00%

 

 

(1) Percentages may not add to total due to rounding.
(2) Based on the greater of the Securitization Rate and the Lease Rate.

 

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Distribution of the Leases by Scheduled Year and Month of Maturity as
of the Actual Cutoff Date

 

As of the Actual Cutoff Date, the composition of the leases by scheduled year and month to maturity was as follows:

 

Scheduled Year and
Month
of Maturity
  Number of
Leases
  Percentage of
Number
of Leases(1)
  Securitization
Value(2)
  Percentage of
Securitization
Value(1)
  Base
Residual
  Percentage of Base
Residual(1)
2019-04   3   0.01%   $56,453.50   0.01%   $54,246.28   0.01%
2019-05   31   0.08%   $657,360.02   0.07%   $628,448.51   0.09%
2019-06   7   0.02%   $138,151.08   0.01%   $131,731.05   0.02%
2019-07   4   0.01%   $71,955.55   0.01%   $67,034.03   0.01%
2019-08   3   0.01%   $79,015.23   0.01%   $76,504.81   0.01%
2019-09   4   0.01%   $67,283.88   0.01%   $61,853.03   0.01%
2019-10   5   0.01%   $90,460.41   0.01%   $78,837.10   0.01%
2019-11   2   0.01%   $45,174.12   0.00%*   $40,293.00   0.01%
2019-12   2   0.01%   $38,354.99   0.00%*   $35,385.27   0.01%
2020-01   2   0.01%   $49,033.44   0.01%   $44,305.76   0.01%
2020-02   24   0.06%   $451,797.23   0.05%   $386,014.91   0.06%
2020-03   41   0.11%   $759,415.14   0.08%   $632,269.80   0.09%
2020-04   63   0.16%   $1,212,594.82   0.13%   $1,014,673.06   0.15%
2020-05   55   0.14%   $1,136,326.59   0.12%   $950,170.48   0.14%
2020-06   61   0.16%   $1,275,405.55   0.13%   $1,048,348.40   0.15%
2020-07   78   0.20%   $1,648,274.22   0.17%   $1,352,763.96   0.20%
2020-08   66   0.17%   $1,324,172.61   0.14%   $1,055,093.45   0.15%
2020-09   83   0.22%   $1,716,278.90   0.18%   $1,333,297.69   0.19%
2020-10   83   0.22%   $1,794,025.87   0.19%   $1,395,848.38   0.20%
2020-11   461   1.20%   $9,479,415.54   1.00%   $7,449,454.19   1.08%
2020-12   1,494   3.88%   $32,444,706.89   3.42%   $25,482,579.92   3.68%
2021-01   1,280   3.33%   $28,681,867.18   3.02%   $22,388,578.39   3.24%
2021-02   1,078   2.80%   $25,314,252.10   2.66%   $19,583,755.60   2.83%
2021-03   1,789   4.65%   $42,979,024.61   4.52%   $33,376,493.74   4.83%
2021-04   2,432   6.32%   $60,008,047.16   6.32%   $46,420,972.56   6.71%
2021-05   1,605   4.17%   $38,753,028.45   4.08%   $29,138,765.81   4.21%
2021-06   1,787   4.64%   $43,398,227.45   4.57%   $32,355,101.44   4.68%
2021-07   2,255   5.86%   $56,799,639.03   5.98%   $41,705,754.76   6.03%
2021-08   4,431   11.52%   $111,163,195.87   11.70%   $81,294,414.57   11.75%
2021-09   4,584   11.91%   $113,979,554.18   12.00%   $81,576,374.24   11.79%
2021-10   4,530   11.77%   $113,237,984.31   11.92%   $80,234,650.50   11.60%
2021-11   4,679   12.16%   $115,846,860.95   12.19%   $81,046,531.50   11.72%
2021-12   4,540   11.80%   $112,148,412.89   11.81%   $78,229,505.80   11.31%
2022-01   123   0.32%   $3,435,482.41   0.36%   $2,365,261.23   0.34%
2022-02   44   0.11%   $1,592,414.42   0.17%   $1,063,288.18   0.15%
2022-03   45   0.12%   $1,614,014.55   0.17%   $1,071,082.51   0.15%
2022-04   49   0.13%   $1,755,968.95   0.18%   $1,196,369.70   0.17%
2022-05   68   0.18%   $2,419,669.03   0.25%   $1,625,253.80   0.23%
2022-06   59   0.15%   $2,129,789.54   0.22%   $1,375,565.22   0.20%
2022-07   51   0.13%   $1,927,011.21   0.20%   $1,217,766.92   0.18%
2022-08   69   0.18%   $2,645,306.07   0.28%   $1,591,268.15   0.23%
2022-09   45   0.12%   $1,702,446.64   0.18%   $971,288.84   0.14%
2022-10   77   0.20%   $3,006,381.89   0.32%   $1,850,910.07   0.27%
2022-11   116   0.30%   $4,521,037.02   0.48%   $2,802,822.80   0.41%
2022-12   132   0.34%   $5,064,891.92   0.53%   $3,141,748.91   0.45%
2023-01   9   0.02%   $416,833.80   0.04%   $233,845.94   0.03%
2023-02   6   0.02%   $219,754.90   0.02%   $122,629.33   0.02%
2023-03   6   0.02%   $264,353.94   0.03%   $135,495.68   0.02%
2023-04   2   0.01%   $74,460.95   0.01%   $35,662.74   0.01%
2023-05   1   0.00%*   $36,682.93   0.00%*   $17,424.00   0.00%*
2023-06   1   0.00%*   $37,730.18   0.00%*   $23,790.00   0.00%*
2023-07   1   0.00%*   $51,451.20   0.01%   $24,378.00   0.00%*
2023-08   1   0.00%*   $24,712.90   0.00%*   $10,578.00   0.00%*
2023-09   1   0.00%*   $34,903.83   0.00%*   $19,765.00   0.00%*
2023-10   2   0.01%   $63,128.24   0.01%   $31,463.94   0.00%*
2023-11   1   0.00%*   $43,478.22   0.00%*   $23,871.20   0.00%*
2023-12   2   0.01%   $77,746.73   0.01%   $34,966.33   0.01%
Total   38,473   100.00%   $950,005,401.23   100.00%   $691,656,548.48   100.00%

 

 

(1) Percentages may not add to total due to rounding.
(2) Based on the greater of the Securitization Rate and the Lease Rate.
* Represents a value that is greater than zero (0.00%) but less than 0.005%.

 

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Distribution of the Leased Vehicles by Vehicle Model as of the Actual Cutoff Date

 

As of the Actual Cutoff Date, the composition of the leased vehicles by vehicle model was as follows:

 

Vehicle Model   Number of
Leases
  Percentage of
Number
of Leases(1)
  Securitization
Value(2)
  Percentage of
Securitization
Value(1)
Tacoma   5,985   15.56%   $187,716,204.79   19.76%
RAV4   8,454   21.97%   $180,946,730.85   19.05%
Camry   7,528   19.57%   $156,058,780.01   16.43%
Tundra   2,588   6.73%   $100,173,294.43   10.54%
Corolla   6,128   15.93%   $97,199,439.32   10.23%
All others   7,790   20.25%   $227,910,951.83   23.99%
Total   38,473   100.00%   $950,005,401.23   100.00%

 

 

(1) Percentages may not add to total due to rounding.
(2) Based on the greater of the Securitization Rate and the Lease Rate.

 

Distribution of the Leases by Original Term to Maturity as of the Actual Cutoff Date

 

As of the Actual Cutoff Date, the distribution of the leases by original term to maturity was as follows:

 

Original Term to Maturity (Months)   Number of
Leases
  Percentage of
Number of
Leases(1)
  Securitization
Value(2)
  Percentage of
Securitization
Value(1)
24 – 27   17   0.04%   $360,234.67   0.04%
28 – 39   37,375   97.15%   $910,972,687.60   95.89%
40 – 51   1,063   2.76%   $38,061,536.88   4.01%
52 – 60   18   0.05%   $610,942.08   0.06%
Total   38,473   100.00%   $950,005,401.23   100.00%

 

(1) Percentages may not add to total due to rounding.
(2) Based on the greater of the Securitization Rate and the Lease Rate.

 

 57 

 

 

Distribution of the Leases by Remaining Term to Maturity as of the Actual Cutoff Date

 

As of the Actual Cutoff Date, the distribution of the leases by remaining term to maturity was as follows:

 

Remaining Term to Maturity (Months)   Number of
Leases
  Percentage of
Number of
Leases(1)
  Securitization
Value(2)
  Percentage of
Securitization
Value(1)
3 – 6   47   0.12%   $979,611.69   0.10%
7 – 12   34   0.09%   $642,301.70   0.07%
13 – 18   356   0.93%   $7,193,359.47   0.76%
19 – 24   4,236   11.01%   $93,509,132.33   9.84%
25 – 30   13,538   35.19%   $333,559,559.49   35.11%
31 – 36   19,508   50.71%   $485,620,781.11   51.12%
37 – 42   338   0.88%   $12,357,455.95   1.30%
43 – 48   396   1.03%   $15,358,029.12   1.62%
49 – 54   14   0.04%   $565,913.35   0.06%
55 – 60   6   0.02%   $219,257.02   0.02%
Total   38,473   100.00%   $950,005,401.23   100.00%

 

 

(1) Percentages may not add to total due to rounding.
(2) Based on the greater of the Securitization Rate and the Lease Rate.

 

 58 

 

 

Asset-Level Data

 

The Depositor prepared asset-level data files for the Units in the actual pool for a hypothetical reporting period commencing on January 1, 2019, and ending on January 31, 2019 and has filed this information with the SEC on Form ABS-EE. The asset data file contains detailed information for each Unit in the actual pool about its identification, origination, lease terms, leased vehicle, lessee, lease activity, servicing and status during such hypothetical reporting period. As described in this prospectus, the Issuing Entity has the right to receive payments made on the Units after the Actual Cutoff Date and will not receive any payments described in such asset-level data files during the hypothetical reporting period. The information contained in each asset-level data file is not a prediction of the future performance of any Units. The Form ABS-EE is incorporated by reference into this prospectus. Investors should carefully review the asset level data.

 

The Servicer will also prepare asset level data about the Units for this securitization transaction for each Collection Period and file it with the SEC on Form ABS-EE at or before the time of filing the related Form 10-D. Such Form ABS-EE, and any information attached as exhibits to the form, will be incorporated by reference into the related Form 10-D.

 

Pool Underwriting

 

As described in “The Servicer, Sponsor and Administrator—Underwriting Standards” in this prospectus, under World Omni’s origination process, credit applications are evaluated when received and are either automatically approved, automatically rejected or forwarded and reviewed by a World Omni associate with appropriate approval authority. 21,264 leases in such Reference Pool, having an aggregate Securitization Value as of the Actual Cutoff Date of $526,834,787.71 (approximately 55.46% of the aggregate Securitization Value as of the Actual Cutoff Date) were automatically approved by World Omni’s computer-based evaluation software, while 17,209 leases in such Reference Pool, having an aggregate Securitization Value as of the Actual Cutoff Date of $423,170,613.52 (approximately 44.54% of the aggregate Securitization Value as of the Actual Cutoff Date) were evaluated and approved by a World Omni associate in accordance with World Omni’s written underwriting guidelines. World Omni does not consider any of the leases in the Reference Pool to constitute exceptions to World Omni’s written underwriting guidelines.

 

Review of Leases in Reference Pool

 

In connection with the offering of the Notes, the Depositor has performed a review of the leases in the Reference Pool to be allocated by the Titling Trust on the Closing Date and the disclosure regarding those leases, including information incorporated by reference from the Form ABS-EE filed in connection herewith, required to be included in this prospectus by Item 1111 of Regulation AB (such disclosure, the Rule 193 Information). This review was designed and effected to provide the Depositor with reasonable assurance that the Rule 193 Information is accurate in all material respects. The Depositor consulted with, and was assisted by, responsible personnel of World Omni in performing the review. In addition, World Omni has engaged third parties to assist with portions of the review. World Omni determined the nature, extent and timing of the review and the sufficiency of the assistance provided by the third parties for purposes of its review. The Depositor had ultimate authority and control over, and assumes all responsibility for, the review and the findings and conclusions of the review. The Depositor attributes all findings and conclusions of the review to itself.

 

As part of the review, World Omni identified the Rule 193 Information to be covered and identified the review procedures for each portion of the Rule 193 Information. Descriptions consisting of factual information, such as business practices and contract terms, were reviewed with responsible personnel of World Omni, who approved those descriptions as accurate in all material respects. World Omni, assisted by external counsel, also reviewed the Rule 193 Information consisting of descriptions of portions of the transaction documents and compared that Rule 193 Information to the related transaction documents to provide reasonable assurance that the descriptions were accurate in all material respects. World Omni also consulted with internal regulatory personnel and counsel, as well as external counsel, with respect to the description of the legal and regulatory provisions that may materially and adversely affect the performance of the leases and the leased vehicles in the Reference Pool or payments on the Notes.

 

 59 

 

 

The Depositor used information from internal databases and other management information systems to assemble an electronic data tape containing relevant data on leases in the Reference Pool (the “Data Tape”). From this Data Tape, the Depositor constructed the pool composition and stratification tables in “The Leases—Characteristics of the Units” in this prospectus. The Depositor also used such databases and other management information systems to assemble the asset-level data file for the Units that was filed with the SEC on Form ABS-EE (the “Asset-Level Data File”).

 

The Depositor designed procedures to test the accuracy of the transmission of individual lease data from information databases maintained by World Omni to the Data Tape and the Asset-Level Data File. Through a random process, 125 leases (the “Sample”) were selected from the leases in the Reference Pool. World Omni made available to responsible personnel of World Omni and third parties that assisted World Omni with its review electronic copies of the pertinent underlying documentation, including data records, for each lease in the Sample. A variety of numerical values and data points for each lease in the Sample were either compared to the corresponding information in the Data Tape or Asset-Level Data File, as applicable, or evaluated for compliance with an eligibility criterion or representation and warranty, to determine whether any inaccuracies existed. No variances between the data points reviewed and the Data Tape were found.

 

The Depositor’s review also evaluated the eligibility criteria that pertain to standard terms of leases and standard business practices, such as the criteria related to each lease providing for level payments that fully amortize the Adjusted Capitalized Cost of the lease. The Depositor confirmed with responsible personnel of World Omni that its systems would not permit the selection of leases for inclusion in the Reference Pool that fail to meet these types of eligibility criteria. The Depositor found no discrepancies in this review.

 

Another aspect of the Depositor’s review consisted of a comparison of selected statistical data contained in this prospectus describing the leases in the Reference Pool to data in, or derived from, the Data Tape. The review consisted of a recalculation from the data in the Data Tape of the number of leases, monetary amounts, amounts and percentages displayed in this prospectus. Differences due to rounding or that were de minimis were not considered exceptions. This comparison found no exceptions within the specified parameters.

 

World Omni monitors internal reports and developments with respect to processes and procedures that are designed to maintain and enhance the quality of decision-making, the quality of originated assets and the accuracy, efficiency and reliability of lease systems and operations. Internal control processes used by World Omni include reviews of lease documentation and other origination functions. Internal control audits are performed regularly on key business functions.

 

After undertaking the review described above, the Depositor has found and concluded that it has reasonable assurance that the Rule 193 Information in this prospectus is accurate in all material respects.

 

Representations and Warranties Relating to the Units

 

Schedule of leases. The Servicer will prepare a schedule describing the Units, which will be attached as an exhibit to the Exchange Note Supplement. This schedule will identify each lease by its identification number and each leased vehicle by its vehicle identification number. The schedule will also include the following information for each lease:

 

· date of origination;
   
· the lease termination date, which is the payment due date in the month after the final scheduled payment by the lessee;
   
· the Base Monthly Payment;
   
· the Securitization Value; and
   
· the Base Residual Value.

 

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Representations, Warranties and Covenants. In the Exchange Note Sale Agreement, Auto Lease Finance LLC will make representations and warranties to the Depositor with respect to each lease and related leased vehicle in the Reference Pool, including, that as of the Actual Cutoff Date:

 

· the information provided with respect to each Unit in the schedule described above is correct in all material respects as of the Actual Cutoff Date;
   
· relates to a new Toyota automobile or light duty truck;
   
· provides for level payments that fully amortize the Adjusted Capitalized Cost of the lease at a Lease Rate to the related Contract Residual Value over the lease term;
   
· is not more than 30 days past due as of the Actual Cutoff Date and is not a Defaulted Lease;
   
· is owned, and the related leased vehicle is owned, by the Titling Trust, free of all liens (including tax liens, mechanics’ liens, and other liens other than any lien of the Closed-End Collateral Agent or any lien on the certificate of title that arise by operation of law), other than certain permitted lien;
   
· was originated in compliance with, and complies in all material respect with, all material applicable legal requirements; and
   
· is the valid, legal, and binding full-recourse payment obligation of the related obligor, enforceable against such obligor in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws, now or hereafter in effect, affecting the enforcement of creditors’ rights in general or (b) general principles of equity.

 

On the Closing Date, the Depositor will assign all of its rights under the Exchange Note Sale Agreement to the Issuing Entity. The Exchange Note Sale Agreement will also provide that if Auto Lease Finance LLC or the Depositor discovers a breach of certain representations or warranties with respect to a lease or the related leased vehicle made by Auto Lease Finance LLC in the Exchange Note Sale Agreement that materially and adversely affects the Issuing Entity’s interest in the related Unit, which breach is not cured in all material respects on or before the end of the Collection Period in which Auto Lease Finance LLC discovers such incorrectness (either pursuant to notice or otherwise), then the applicable Unit will be removed from the Reference Pool for the Exchange Note on the Payment Date related to that Collection Period. In connection with this reallocation, Auto Lease Finance LLC will be required to deposit into the collection account a reallocation payment for the applicable Unit in an amount specified in this prospectus. The reallocation payment must be made by Auto Lease Finance LLC as of the Payment Date immediately following the day on which the related cure period ended. Upon making that payment, the related Unit will no longer be included in the Reference Pool for the Exchange Note. The obligation of Auto Lease Finance LLC to deposit such reallocation payment will constitute the sole remedy respecting such breach.

 

Pursuant to the Indenture, the Issuing Entity will assign its rights in such representations and warranties to the Indenture Trustee for the benefit of the Noteholders.

 

None of the Titling Trust, the Titling Trustee, the Titling Trustee Agent, the Initial Beneficiary, Indenture Trustee, the Owner Trustee, the Asset Representations Reviewer, the Servicer or any other person has any obligation to investigate the accuracy of such representations and warranties of Auto Lease Finance LLC or whether any Unit may be an ineligible Unit.

 

Upon discovery by or notice to Auto Lease Finance LLC of a breach of any representation or warranty with respect to certain characteristics of the Units, including by receipt of a review report from the Asset Representations Reviewer indicating that a test was failed for a lease, Auto Lease Finance LLC will investigate the lease or leases to confirm the breach and determine if it has materially and adversely affected the lease or leases. A Noteholder or beneficial owner of a Note may make a request or demand that a lease be reallocated due to a breach of a representation made about the leases. Any request or demand that a Unit be reallocated must be provided to the Indenture Trustee in writing and provide sufficient detail so as to allow Auto Lease Finance LLC to reasonably investigate the alleged breach of the representations and warranties related to such Unit. The Indenture Trustee will provide any such request or demand to World Omni and Auto Lease Funding LLC.

 

The Depositor will report any requests or demands to repurchase leases and related activity and status on Form ABS-15G.

 

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Asset Representations Review

 

If two triggers are met, the Asset Representations Reviewer will perform a review of leases to test for compliance with the representations made by Auto Lease Finance LLC about the leases and leased vehicles. The first trigger occurs if the Delinquency Percentage for any Payment Date exceeds the Delinquency Trigger for that Payment Date, as described in “— Delinquency Trigger” below. If the Delinquency Trigger occurs, it will be reported in the Form 10-D for the month in which such trigger occurs. The second trigger is a voting trigger that will be met if, following the occurrence of a Delinquency Trigger, the Noteholders (including beneficial owners of Notes) of at least 5% of the outstanding principal amount of Notes demand a vote and, subject to a 5% voting quorum, the Noteholders of a majority of the outstanding principal amount of the Notes that are voted vote for a review. The review fees will be $175 for each lease tested in the review.

 

Delinquency Trigger

 

A delinquent lease is defined as a lease with more than $40 of a scheduled payment past due, including leases with bankrupt lessees but excluding Defaulted Leases.

 

On or prior to each Payment Date, the Servicer will calculate the Delinquency Percentage for the related Collection Period. The Delinquency Percentage for each Payment Date and the related Collection Period is an amount equal to the ratio (expressed as a percentage) of (i) the aggregate Securitization Value of all delinquent leases in the Actual Pool that are more than 60 days delinquent to (ii) the aggregate Securitization Value of all leases in the Actual Pool, in each case, as of the last day of the related Collection Period.

 

The Delinquency Trigger for any Payment Date and the related Collection Period is 2.40%. World Omni developed the Delinquency Trigger by considering the monthly greater than 60-day delinquency rate observed in its prior securitizations of leases in this program from 2009. Such delinquency rate (rounded to the nearest 0.05%) is calculated as (i) the aggregate securitization value of all delinquent leases within the Actual Pool that are more than 60 days delinquent as a percentage of (ii) the aggregate securitization value of all of the leases within the Actual Pool as of the last day of the Collection Period preceding the related payment date. The Delinquency Trigger was calculated as a multiple of 4 times the previous historical peak Delinquency Percentage of its prior securitizations of leases in this program from 2009 through 2018, rounded to the nearest 0.05%. This multiple corresponds generally to the multiple used for calculating expected cumulative net losses before the Notes would realize a loss. The amount of the Delinquency Trigger has been set at a level in excess of the historical peak Delinquency Percentage to assure that the Delinquency Trigger is not breached due to ordinary fluctuations in the economy.

 

World Omni believes that the Delinquency Trigger is appropriate based on:

 

•       its experience with delinquency in its prior securitized pools of leases, and in its portfolio of leases; and

 

•       its assessment of the amount of net cumulative losses that would likely result in a loss to Noteholders of the most junior Notes in its prior securitized pools.

 

For more information regarding greater than 60 day delinquent lease statistics for World Omni’s prior securitized pools, see Appendix A to this prospectus.

 

Voting Trigger

 

If the Delinquency Trigger occurs on the last day of a month, a Noteholder may demand that the Indenture Trustee call a vote of all Noteholders on whether to direct the Asset Representations Reviewer to perform a review. For purposes of this demand, if the demanding Noteholder is the record holder of any Notes, no verification procedures will be required. If the requesting Noteholder is not the record holder of any Notes and is instead a beneficial owner of Notes, the Indenture Trustee may require no more verification than (1) a written certification from the Noteholder that it is a beneficial owner of a specified outstanding principal amount of the Notes and (2) an additional form of documentation, such as a trade confirmation, an account statement, a letter from the broker or dealer or other similar document.

 

If Noteholders of at least 5% of the outstanding principal amount of the Notes demand a vote within 90 days after the filing of the Form 10-D reporting the occurrence of the Delinquency Trigger, the Issuing Entity’s Form 10-D for the Collection Period in which the demand requirement was met will include a statement that sufficient Noteholders are requesting a full Noteholder vote to commence a review by the Asset Representations Reviewer. The Form 10-D will also specify the applicable voting procedures and will also specify the voting deadline that will

 

 62 

 

 

be used to calculate whether the requisite amount of Noteholders have cast affirmative votes to direct the Asset Representations Reviewer to commence a review. Any beneficial owner of Notes may act through their respective DTC participants and the Form 10-D referenced in the prior sentence will include applicable voting procedures for any such beneficial owner of Notes acting through a DTC participant. The vote will remain open until the 150th day after the filing of the Form 10-D reporting the occurrence of the Delinquency Trigger. Assuming a voting quorum of Noteholders holding at least 5% of the outstanding principal amount of the Notes is reached, if the Noteholders of a majority of the outstanding principal amount of the Notes that are voted vote to direct a review, the Indenture Trustee will notify the Asset Representations Reviewer and the Servicer to start the review. The Issuing Entity’s Form 10-D for the Collection Period in which the Asset Representations Reviewer received the notice to start the review will specify that the requisite Noteholders have directed the Asset Representations Reviewer to perform a review. If the requirements of the voting trigger are not met within these time periods, no asset representations review will occur for that occurrence of the Delinquency Trigger.

 

For the purpose of the voting described above, Notes held by the Sponsor or Servicer, or any affiliates thereof, are not included in the calculation of determining whether the Noteholders have elected to initiate a vote.

 

Asset Representations Review Process

 

The review will be performed on each lease that is 60 days or more delinquent at the end of the prior month (the “Review Leases”). Within 60 days of the receipt of a review notice, the Servicer will give the Asset Representations Reviewer access to the lease files and other information necessary for the review of all of the Review Leases. Upon receiving access to the review materials, the Asset Representations Reviewer will start its review of the Review Leases and complete its review within 60 days after receiving access to all review materials. The review period may be extended by up to an additional 30 days if the Asset Representations Reviewer detects missing review materials that are subsequently provided within the 60-day period or requires clarification of any review materials or testing procedures. The review will consist of performing specific tests for each representation and each Review Lease and determining whether each test was passed or failed. If the Servicer notifies the Asset Representations Reviewer that a Review Lease was paid in full or reallocated from the pool before the review report is delivered, the Asset Representations Reviewer will terminate the tests of that Review Lease and the review of that Review Lease will be considered complete.

 

The tests were designed by World Omni to determine whether a Review Lease was not in compliance with the representations made about it in the transaction documents at the relevant time, which is usually at origination of the lease or as of the Actual Cutoff Date or Closing Date. There may be multiple tests for each representation. The review is not designed to determine why the lessee is delinquent or the creditworthiness of the lessee, either at the time of the review or at origination. The review is not designed to determine whether the lease was serviced in compliance with the Servicing Agreement after the Actual Cutoff Date. The review is not designed to establish cause, materiality or recourse for any failed test. The review is not designed to determine whether World Omni’s origination, underwriting and purchasing policies and procedures are adequate, reasonable or prudent.

 

Review Report

 

Within five days after completion of the review, the Asset Representations Reviewer will provide a report to the Issuing Entity, the Servicer and the Indenture Trustee on the test results for each Review Lease and each representation, including any Review Lease for which the tests were considered complete and the related reason. The Asset Representations Reviewer is not responsible for determining whether noncompliance with any representation is a breach of the transaction documents or if any lease is required to be reallocated. The Servicer will investigate any findings of non-compliance contained in any report of the Asset Representations Reviewer and any reallocation request received from the Indenture Trustee, any Noteholder or any other party to any of the transaction documents and make a determination regarding whether any such non-compliance constitutes a breach of any representation or warranty requiring that a reallocation payment or a reallocation of any lease is required.  If the Servicer determines that a breach has occurred, it will provide notice to Auto Lease Finance LLC that it is obligated to pay the reallocation payment or reallocate the lease pursuant to the Exchange Note Sale Agreement.  The Exchange Note Sale Agreement requires that any breach of the representations and warranties must materially and adversely affect the lease before Auto Lease Finance LLC would be required to make a reallocation payment or reallocate the lease.

 

On receipt of the report, the review fee will be paid to the Asset Representations Reviewer by the Servicer, and to the extent not paid by the Servicer, according to the priority of payments as described under “Description of the Transaction Documents—Distributions on the Securities.” A summary of the report of the asset representations

 

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review, including a description of each test that failed, will be included in the Form 10-D for the trust in the next month.

 

For more information about the Asset Representations Reviewer, you should read “The Asset Representations Reviewer.”

 

Periodic Reports

 

The Depositor will file a Form 10-D for the Issuing Entity with the SEC within 15 days after each Payment Date which will include the investor report for that Payment Date and the following information, if applicable:

 

  · a description of the events that triggered a review of the Review Leases by the Asset Representations Reviewer during the prior month;
     
  · if the Asset Representations Reviewer delivered its review report during the prior month, a summary of the report; and
     
  · if the Asset Representations Reviewer resigned or was removed, replaced or substituted, or if a new Asset Representations Reviewer was appointed during the prior month, the identity and experience of the new Asset Representations Reviewer, the date the change occurred and the circumstances surrounding the change.

 

Dispute Resolution for Reallocation Requests

 

If a request is made for the reallocation of a lease due to a breach of a representation made about the leases and leased vehicles, and the reallocation is not resolved within 180 days after receipt by Auto Lease Finance LLC of notice of the reallocation request, the requesting party, including a Noteholder and any beneficial owner of Notes, will have the right to refer the matter, in its discretion, to either mediation (including non-binding arbitration) or binding third-party arbitration. This right is not a mechanism for requesting reallocation or other relief from losses resulting from changes in the credit quality of a lease or other market conditions. Auto Lease Finance LLC will not reallocate a lease with respect to which the related breach of a representation or warranty did not materially adversely affect the lease. If a lease is paid off, satisfied or reallocated, no demands to reallocate are permitted, and there is no further right to mediation or arbitration regarding that lease. None of the representations and warranties related to the leases relate to the performance of the leases or to any credit losses that may occur as a result of a default by the related lessee on the lease. Furthermore, the dispute resolution procedures described below apply only to the specific leases that are related to the dispute. Dispute resolution to resolve reallocation requests will be available regardless of whether the Noteholders voted to direct an asset representations review or whether the Delinquency Trigger occurred. However, if the lease subject to a reallocation request was part of an asset representations review and the findings and conclusions of the Asset Representations Reviewer state that no tests were failed for the lease, the reallocation request for the lease will be deemed to be resolved.

 

The requesting party must start the mediation (including non-binding arbitration) or arbitration proceeding according to the applicable rules of the mediation or arbitration organization within 90 days after the end of the 180-day period. The Administrator will direct the Indenture Trustee to, and the Indenture Trustee will, notify the requesting party at the end of the 180-day period if a reallocation demand is unresolved. Auto Lease Finance LLC must agree to participate in the selected resolution method.

 

A mediation or arbitration will be administered by The American Arbitration Association using its mediation or arbitration rules in effect at the time of the proceeding. If The American Arbitration Association no longer exists, or if its rules would no longer permit mediation or arbitration of the dispute, the matter will be administered by another nationally recognized mediation or arbitration organization selected by Auto Lease Finance LLC, using its relevant rules then in effect. However, if any rules of the mediation or arbitration organization are inconsistent with the procedures for the mediation or arbitration stated in the transaction documents, the procedures in the transaction documents will control. Any mediation or arbitration will be held in New York City at the offices of the mediator or arbitrator or, if mediation or arbitration in New York City at the offices of the mediator or arbitrator is unavailable, the mediator or arbitrator will select another location in a major metropolitan area in the continental United States. Any party or witness may appear by teleconference or video conference.

 

A single mediator or arbitrator will be selected by the mediation or arbitration organization from a list of neutrals maintained by it according to its mediation or arbitration rules then in effect. The mediator or arbitrator must be impartial, an attorney admitted to practice in the state of New York and have at least 15 years of experience

 

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in commercial litigation and, if possible, consumer finance or asset-backed securitization matters.

 

For a mediation, the proceeding will start within 15 days after the selection of the mediator and conclude within 30 days after the start of the mediation. The expenses of the mediation will be allocated among the parties as mutually agreed by the parties as part of the mediation. If the parties fail to agree at the completion of the mediation, the requesting party may refer the reallocation request to arbitration or court adjudication.

 

For an arbitration, the arbitrator will have the authority to schedule, hear and determine any motions, including dispositive and discovery motions, according to New York law, and will do so at the motion of any party. Discovery will be completed with 30 days of selection of the arbitrator and will be limited for each party to two witness depositions not to exceed five hours, two interrogatories, one document request and one request for admissions. However, the arbitrator may grant additional discovery on a showing of good cause that the additional discovery is reasonable and necessary. Briefs will be limited to no more than ten pages each, and will be limited to initial statements of the case, discovery motions and a pre-hearing brief. The evidentiary hearing on the merits will start no later than 60 days after the selection of the arbitrator and will proceed for no more than six consecutive Business Days with equal time allocated to each party for the presentation of direct evidence and cross examination. The arbitrator may allow additional time on a showing of good cause or due to unavoidable delays.

 

The arbitrator will make its final determination in writing no later than 90 days after its selection. The arbitrator will resolve the dispute according to the transaction documents, and may not modify or change the transaction documents in any way or award remedies not consistent with the transaction documents. The arbitrator will not have the power to award punitive or consequential damages. In its final determination, the arbitrator will determine and award the costs of the arbitration to the parties in its reasonable discretion. The final determination of the arbitrator will be final and non-appealable, except for actions to confirm or vacate the determination permitted under federal or state law, and may be entered and enforced in any court with jurisdiction over the parties and the matter. By selecting binding arbitration, the requesting party is giving up its right to sue in court, including the right to a trial by jury.

 

Auto Lease Finance LLC will not be required to produce personally identifiable customer information for purposes of any mediation or arbitration. Each party will agree to keep the details of the reallocation request and the dispute resolution confidential, except as required by law, regulatory requirement or court order.

 

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DELINQUENCIES, REPOSSESSIONS AND NET LOSSES

 

Set forth below is information concerning World Omni’s experience with respect to its entire portfolio of new Toyota and Scion closed-end leases, which includes leases owned by the Titling Trust. The dollar amount of the leases outstanding reflects World Omni’s book value.

 

The data presented in the following tables are for illustrative purposes only. Delinquency, repossession and loss experience may be influenced by a variety of economic, social and geographic conditions and other factors beyond World Omni’s control. There is no assurance that World Omni’s delinquency, repossession and loss experience with respect to its leases and the related leased vehicles in the future will be similar to that set forth below. The percentages in the tables below have not been adjusted to eliminate the effect of the growth of World Omni’s originated portfolio. Accordingly, the repossession and net loss percentages would be expected to be higher than those shown if a group of contracts were isolated for a period of time and the repossession and net loss data showed the activity only for that isolated group over the periods indicated.

 

We have not provided similar delinquency, repossession and net loss data on the leases allocated to the Reference Pool, because none of those leases was more than 30 days delinquent in payments as of the Actual Cutoff Date. See “The Leases—Characteristics of the Leases—Eligibility Criteria and Portfolio Characteristics” in this prospectus.

 

Delinquency Experience

(Dollars in Thousands)

 

  As of December 31,
  2018   2017   2016   2015   2014  
Dollar Amount of
Lease Contracts
 Outstanding(1)
$4,028,118   $3,257,213   $2,824,004   $2,457,606   $2,089,950  
Number of Lease
Contracts  
Outstanding
158,010   132,515   120,483   110,557   96,797  

 

   Unit   %   Unit   %   Unit   %   Unit   %   Unit   % 
Number of
Delinquent Lease
Contracts(2)
                                                  
31-60 Days   1,236    0.78    982    0.74    796    0.66    512    0.46    426    0.44 
61-90 Days   315    0.20    202    0.15    137    0.11    87    0.08    55    0.06 
91-120 Days   85    0.05    42    0.03    38    0.03    25    0.02    11    0.01
121 Days or
More
   13    0.01    7    0.01    6    -    5    -    1    - 
Total 31 days or
more(3)
   1,649    1.04%   1,233    0.93%   977    0.81%   629    0.57%   493    0.51%

 

   $   %   $   %   $   %   $   %   $   % 
Dollar Amount of
Delinquent Lease
Contracts(1)
                                                  
31-60 Days  $31,326    0.78   $23,599    0.72   $18,484    0.65   $10,849    0.44   $8,693    0.42 
61-90 Days  $7,750    0.19   $4,766    0.15   $3,094    0.11   $1,826    0.07   $1,115    0.05 
91-120 Days  $2,006    0.05   $993    0.03   $944    0.03   $541    0.02   $223    0.01 
121 Days or
More
  $338    0.01   $158    -   $140    -   $145    0.01   $18    - 
Total 31 days or
more(3)
  $41,420    1.03%  $29,515    0.91%  $22,662    0.80%  $13,360    0.54%  $10,049    0.48%

 

 

(1)The dollar amount of the leases outstanding represents the sum of (i) the present value of the remaining monthly payments payable under the leases and (ii) the present value of the Contract Residual Value of the leased vehicles. The present value calculation is based on the Lease Rate.
(2)World Omni considers a payment to be past due or delinquent when a lessee owes in excess of $40 of the scheduled Monthly payment after the related due date. The period of delinquency is based on the number of days that in excess of $40 of a payment is contractually past due.
(3)Balances and percentages may not add to total due to rounding.

 

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Net Credit Loss And Repossession Experience(1)

(Dollars in Thousands)

 

   As of and For the Twelve Months Ended December 31, 
   2018   2017   2016   2015   2014 
Dollar Amount of
Lease Contracts
Outstanding(2)
  $4,028,118   $3,257,213   $2,824,004   $2,457,606   $2,089,950 
Dollar Amount of
Average Lease
Contracts
Outstanding(2)(3)
  $3,666,834   $3,035,288   $2,641,446   $2,287,867   $2,014,505 
Number of Lease
Contracts
Outstanding
   158,010    132,515    120,483    110,557    96,797 
Average Number of
Lease Contracts
Outstanding(3)
   145,398    125,904    115,392    103,744    93,635 
Number of
Repossessions
   2,484    2,139    1,697    1,332    1,296 
Number of
Repossessions as a
Percentage
of the Average
Number of Lease
Contracts
Outstanding
   1.71%   1.70%   1.47%   1.28%   1.38%
Charge-offs(4)(6)  $16,175   $12,840   $8,921   $5,379   $5,516 
Recoveries(5)  $4,710   $3,331   $2,164   $1,875   $1,819 
Net Losses  $11,465   $9,509   $6,757   $3,504   $3,697 
Net Losses as a
Percentage of
Average Dollar
Amount of
Lease Contracts
Outstanding
   0.31%   0.31%   0.26%   0.15%   0.18%

 

 

(1)For credit loss terminations, World Omni charges off the account balance of a lease upon the related vehicle’s sale date or at the time the account balance is deemed uncollectible under Customary Servicing Practices. Gains or losses associated with the sale of off-lease inventory are recorded upon the vehicle sale date. Collections of end-of-term charges such as excess wear and use and excess mileage charges are credited when proceeds are received.
(2)The dollar amount of the leases outstanding represents the sum of (i) the present value of the remaining monthly payments payable under the leases and (ii) the present value of the Contract Residual Value of the leased vehicles. The present value calculation is based on the Lease Rate.
(3)Averages are computed by taking a simple average of the month end outstanding amounts for each period presented.
(4)Charge–offs generally represent the total aggregate net outstanding balance of the lease contracts determined to be uncollectible in the period less proceeds from disposition of the related leased vehicles, other than recoveries described in Note (5).
(5)Recoveries generally include the net amount received with respect to lease contracts previously charged off.
(6)Net of subvention dollars. Subvention dollars refer to the dollar value of special marketing programs in the form of enhanced residual value offered and subsidized by Southeast Toyota Distributors, LLC or World Omni to the lessee at the inception of the lease.

 

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Residual Value Loss Experience. Set forth below is information concerning residual value loss experience and return rates for new Toyota and Scion vehicles at termination. The residual value loss rates are indicated as the difference between the ALG Residual Value at origination and the actual amounts received for the off-lease vehicles. See “The Servicer, Sponsor and Administrator—Origination, Underwriting and Purchasing—Determination of contract residual values” and “The Leases—Calculation of the Securitization Value” in this prospectus for a description of ALG Residual Value, MSRP and MRM.

 

Residual Value Loss Experience(1)

(Dollars in Thousands)

 

   For the Twelve Months Ended December 31, 
   2018   2017   2016   2015   2014 
Total Number of Vehicles Scheduled to Terminate   42,238    39,359    44,116    30,248    33,002 
Number of Vehicles Returned to World Omni (2)   26,812    25,564    27,463    16,910    19,558 
Vehicles Returned to World Omni Ratio   63%   65%   62%   56%   59%
Total ALG Residual on Vehicles Scheduled to Terminate(3)  $655,712   $602,380   $663,976   $405,285   $431,460 
Total (Gain)/Loss on ALG Residuals on Vehicles Returned to World Omni (4)  $(31,937)  $(10,715)  $(2,356)  $(23,295)  $(30,178)
Average (Gain)/Loss on ALG Residuals on Vehicles Returned to World Omni(5).  $(1,191)  $(419)  $(86)  $(1,378)  $(1,543)
Total ALG Residual on Vehicles Returned to World Omni  $388,919   $368,578   $397,429   $219,802   $249,286 
Total (Gain)/Loss on ALG Residuals on Vehicles Returned to World Omni as a Percentage of ALG Residuals of Returned Vehicles Sold by World Omni   (8.2)%   (2.9)%   (0.6)%   (10.6)%   (12.1)%
Total (Gain)/Loss on ALG Residuals on Vehicles Returned to World Omni as a Percentage of ALG Residuals of Vehicles Scheduled to Terminate   (4.9)%   (1.8)%   (0.4)%   (5.7)%   (7.0)%
Average Contract Residual Value Percentage of lesser of MRM or MSRP   66%   65%   65%   62%   62%
Average ALG Residual Percentage of lesser of MRM or MSRP   57%   56%   56%   51%   51%
Percentage Difference(6)   (9)%   (9)%   (9)%   (10)%   (11)%

 

 
(1)For credit loss terminations, World Omni charges off the account balance of a lease upon the related vehicle’s sale date or at the time the account balance is deemed uncollectible under Cu stomary Servicing Practices. Gains or losses associated with the sale of off-lease inventory are recorded upon the vehicle sale date. Collections of end-of-term charges such as excess wear and use and excess mileage charges are credited when proceeds are received.
(2)Excludes repossessions and vehicles in inventory. Includes lessee initiated early terminations and vehicles purchased by lessees or other parties for less than World Omni’s contract residual value.
(3)ALG residual is calculated as the ALG residual percentage multiplied by the lesser of MSRP or the MRM at the time of origination of the lease.
(4)Gain/(loss) calculated as the sum of (i) gross sales proceeds plus (ii) excess wear and use and excess mileage charges paid by lessees minus the ALG Residual Value at the time of origination of the lease.
(5)Not stated in thousands.
(6)Percentages may not total due to rounding.

 

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STATIC POOL INFORMATION

 

Appendix A to this prospectus sets forth in tabular and graphical format static pool information of the static pool performance of previous, recent securitizations of the Sponsor. All of the information is incorporated by reference into, and deemed to be part of, this prospectus and the registration statement to which this prospectus relates.

 

The characteristics of leases included in the static pool data discussed above, as well as the social, economic and other conditions existing at the time when those leases were originated and repaid, may vary materially from the characteristics of the leases in the securitized pool described in this prospectus and the social, economic and other conditions existing at the time when the leases in the securitized pool described in this prospectus were originated and those that will exist in the future when the leases in the securitized pool described in this prospectus are required to be repaid. There is no assurance that World Omni’s delinquency, loss and repossession and residual value experience with respect to the leases included in the securitized pool described in this prospectus will be similar to that described in Appendix A to this prospectus.

 

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PREPAYMENT AND YIELD CONSIDERATIONS—WEIGHTED AVERAGE LIFE OF THE SECURITIES

 

The following information is provided solely to illustrate the effect of prepayments of the Units on the unpaid principal amounts of the Notes and the weighted average life of the Notes under the assumptions stated below, and is not a prediction of the prepayment rates that might actually be experienced with respect to the leases. The rate of payment of principal of the Notes will depend on the rate of payments on the related Units allocated to the Reference Pool (including scheduled monthly payments on and prepayments and liquidations of the leases) and losses on the Units, which cannot be predicted with certainty.

 

The weighted average life of each Note is uncertain because it generally will be determined by the rate at which principal payments on the Exchange Note are made, which will be determined based on the rate at which the leases in the Reference Pool are paid and the rate at which returned or repossessed leased vehicles in the Reference Pool are sold. “Prepayments” on the leases will occur in the following circumstances:

 

·Prepayments — proceeds may be received on the sale of leased vehicles because lessees may return or purchase their leased vehicles at any time after paying the money due under their leases.

 

·Defaults — proceeds may be received on the sale of a leased vehicle following a default by the lessee, including rebates on cancelled service contracts, insurance and similar products financed over the term of the lease.

 

·Early termination programs — proceeds may be received on the sale of leased vehicles returned by lessees participating in early termination programs.

 

·Insurance proceeds — proceeds may be received from claims on any insurance policies covering the lessees, the leases or the leased vehicles.

 

·Reallocation of leases and leased vehicles by Auto Lease Finance LLC— Auto Lease Finance LLC may be required to reallocate ineligible and other leases and leased vehicles from the Reference Pool as described in “The Leases—Representations and Warranties Relating to the Units—Representations, Warranties and Covenants.”

 

·Reallocation of leases and leased vehicle by the servicer — the Servicer may be required to reallocate leases and leased vehicles from the Reference Pool if the Servicer grants certain extensions as described under “The Servicer, Sponsor and Administrator —Servicing—Extensions of leases are not always associated with financial difficulties of the lessee.

 

·Exchange Note acceleration — proceeds may be received on the liquidation of the Reference Pool following an Exchange Note default under the Collateral Agency Agreement and the Exchange Note Supplement.

 

·Clean up call option — the Servicer will have the option to purchase the Exchange Note from the Issuing Entity following the last day of any Collection Period on which the aggregate outstanding principal amount of the Notes is less than or equal to 5% of the initial aggregate outstanding principal amount of the Notes on the Closing Date.

 

In World Omni’s experience, prepayments on its leases occur primarily when lessees decide to purchase or lease new vehicles, lessees participate in early termination programs, defaulted contracts are liquidated or insurance proceeds are received after a leased vehicle is determined to be a total loss.

 

The rate of prepayment on the leases may be influenced by a variety of economic, social and other factors, including the availability of competing lease programs and the conditions in the used motor vehicle market. In general, prepayments of leases will shorten the weighted average life of the Notes, which is the average amount of time during which each dollar of the principal amount or certificate balance, as applicable, of a security is outstanding. As the rate of payment of principal on (or the certificate balance of) the securities of any series will depend primarily on the rate of payment—including prepayments—of the related leases, the final payment of principal of (or the final distribution on) a class of a series of securities could occur significantly earlier than the applicable final scheduled Payment Date. If lease prepayments cause the principal of, or certificate balance on, the related class of securities to be paid earlier than anticipated, the related securityholders will bear the risk of being able to reinvest principal payments at interest rates at least equal to the applicable interest rate.

 

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Historical levels of lease delinquencies and defaults, leased vehicle repossessions and losses and residual value losses are discussed under “Delinquencies, Repossessions and Net Losses.” World Omni can give no assurances that the leases will experience the same rate of prepayment or default as World Omni’s historical prepayment and default rates, or that the residual value loss experience of leased vehicles related to leases that are scheduled to reach their lease termination dates will be the same as World Omni’s historical residual value loss experience for all of the leases in its portfolio.

 

The effective yield on, and average life of, the Notes will depend upon, among other things, the amount of scheduled and unscheduled payments on or in respect of the related leases and related leased vehicles and the rate at which those payments are paid to the holders of the Notes. In the event of prepayments of the leases, related securityholders who receive those amounts may be unable to reinvest the related payments received on their Notes at yields as high as the related interest rate on the Notes. The timing of changes in the rate of prepayments on the leases and payments in respect of the related leased vehicles may also significantly affect an investor’s actual yield to maturity and the average life of the Notes. A substantial increase in the rate of payments on or in respect of the leases and related leased vehicles (including prepayments and liquidations of the leases) may shorten the final maturity of, and may significantly affect the yield on, the Notes.

 

The yield to an investor who purchases Notes in the secondary market at a price other than par will vary from the anticipated yield if the actual rate of prepayment on the leases is different than the rate the investor anticipated at the time it purchased those Notes.

 

In sum, the following factors will affect an investor’s expected yield:

 

·the price the investor paid for the Notes;

 

·the rate of prepayments, including losses, in respect of the leases and the related leased vehicles; and

 

·the investor’s assumed reinvestment rate.

 

These factors do not operate independently, but are interrelated. For example, if the rate of prepayments on the leases and the related leased vehicles is slower than anticipated, the investor’s yield will be lower if interest rates exceed the investor’s expectations and higher if interest rates fall below the investor’s expectations. Conversely, if the rate of prepayments on or in respect of the leases and the related leased vehicles is faster than anticipated, the investor’s yield will be higher if interest rates exceed the investor’s expectations and lower if interest rates fall below the investor’s expectations.

 

In addition, any Notes outstanding will be paid in full if and when the Servicer elects to purchase the Exchange Note from the Issuing Entity on any related Payment Date when the aggregate Securitization Value is less than or equal to a threshold percentage of the initial aggregate Securitization Value, as identified in “Description of the Notes—Redemption Upon Optional Purchase.” Any Notes then outstanding at that time will be prepaid in whole at a redemption price equal to their unpaid principal amount plus accrued and unpaid interest.

 

Prepayments on motor vehicle leases may be measured by a prepayment standard or model. The prepayment model used in this prospectus is expressed in terms of percentages of “ABS,” which means a prepayment model that assumes a constant percentage of the original number of leases in the pool prepay each month. The base prepayment assumption, which we refer to in this prospectus as the “100% Prepayment Assumption,” assumes that the original principal balance of the leases will prepay as follows:

 

·In month one, prepayments will occur at 0.35% ABS and increase by 0.06% ABS each month until reaching 1.25% ABS in the 16th month of the life of the lease.

 

·In month 17, prepayments will increase by 0.02% ABS each month until reaching 1.65% ABS in the 36th month of the life of the lease.

 

·In months 37 through 49, prepayments remain at 1.65% ABS.

 

·In month 50, prepayments decrease to 1.50% ABS and remain at that level until the original outstanding principal balance of the contract has been paid in full.

 

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No ABS rate purports to be a historical description of the prepayment experience or a prediction of the anticipated rate of prepayment of the leases. We cannot assure you that the leases will prepay at the levels of the Prepayment Assumption or at any other rate.

 

The tables below were prepared on the basis of certain assumptions, including that:

 

·as of the Actual Cutoff Date, 6 months have elapsed since the inception of each lease;

 

·all monthly payments are timely received and no lease is ever delinquent;

 

·each fiscal month of World Omni is equivalent to a calendar month;

 

·no repurchase payment is required to be made by Auto Lease Finance LLC or the Servicer in respect of any lease included in the Reference Pool;

 

·there are no losses in respect of the leases;

 

·each lease payment is made on the twentieth day of each calendar month starting February 2019; and no prepayments occur for the month of January 2019;

 

·payments on the Notes are made on the 15th day of each month, whether or not that day is a Business Day;

 

·the servicing fee is 1.00% per annum, provided that, for the first Payment Date, the servicing fee will be based on 60 days;

 

·there is no administration fee;

 

·all prepayments on the leases are prepayments in full (and the residual values of the related leased vehicles are paid in full);

 

·the reserve account is funded with an amount equal to $4,750,027.01;

 

·the aggregate Securitization Value as of the Actual Cutoff Date is $950,005,401.23;

 

·the Closing Date (the “Closing Date”) is assumed to be March 13, 2019;
   
 ·the principal amount of the Class A-2 Notes is allocated to fixed rate Class A-2a Notes in the amount of $187,460,000 and to floating rate Class A-2b Notes in the amount of $100,940,000;
   
 ·the Issuing Entity will pay principal to the Class A-2 Notes, pro rata between the Class A-2a Notes and the Class A-2b Notes, until they are paid in full;

 

·interest accrues on the Class A-1 Notes at 2.69000% based on an actual/360 day count, the Class A-2a Notes at 2.93% based on a 30/360 day count, the Class A-2b Notes at 2.789% based on an actual/360 day count, the Class A-3 Notes at 2.99% based on a 30/360 day count, the Class A-4 Notes at 3.16% based on a 30/360 day count, and the Class B Notes at 3.36% based on a 30/360 day count; and

  

·no amounts will be owed by the trust to the Asset Representations Reviewer.

 

No representation is made as to what the actual levels of losses and delinquencies on the leases will be. Because payments on the leases and the leased vehicles will differ from those used in preparing the following tables, distributions of principal of the Notes may be made earlier or later than as set forth in the tables. Investors are urged to make their investment decisions on a basis that includes their determination as to anticipated prepayment rates under a variety of the assumptions discussed herein.

 

The following tables set forth the percentages of the unpaid principal amount of each class of the Notes that would be outstanding after each of the dates shown, based on a rate equal to 0%, 50%, 75%, 100% and 125% of the prepayment assumption. As used in the table, “0% Prepayment Assumption” assumes no prepayments on a lease, “50% Prepayment Assumption” assumes that a lease will prepay at 50% of the prepayment assumption and so forth.

 

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Percentage of Class A-1 Note Balance Outstanding to Optional Purchase

 

    Prepayment Assumption
Payment Date   0%   50%   75%   100%   125%
Closing Date   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2019   75.36%   67.93%   64.09%   60.16%   56.13%
May 15, 2019   63.67%   52.18%   46.22%   40.11%   33.85%
June 15, 2019   51.68%   35.82%   27.58%   19.12%   10.43%
July 15, 2019   42.89%   22.47%   11.84%   0.90%   0.00%
August 15, 2019   34.30%   9.10%   0.00%   0.00%   0.00%
September 15, 2019   25.68%   0.00%   0.00%   0.00%   0.00%
October 15, 2019   17.00%   0.00%   0.00%   0.00%   0.00%
November 15, 2019   8.24%   0.00%   0.00%   0.00%   0.00%
December 15, 2019   0.00%   0.00%   0.00%   0.00%   0.00%
Weighted Average Life to Optional Purchase (years)(1)   0.35   0.25   0.21   0.19   0.17
Weighted Average Life to Maturity (years)(1)   0.35   0.25   0.21   0.19   0.17

 

 

(1)The weighted average life of the Class A-1 Notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the Closing Date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a).

 

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Percentage of Class A-2a and A-2b Note Balance Outstanding to Optional Purchase

 

    Prepayment Assumption
Payment Date   0%   50%   75%   100%   125%
Closing Date   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
June 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
July 15, 2019   100.00%   100.00%   100.00%   100.00%   96.59%
August 15, 2019   100.00%   100.00%   98.66%   94.19%   89.59%
September 15, 2019   100.00%   98.51%   93.29%   87.91%   82.35%
October 15, 2019   100.00%   93.93%   87.80%   81.45%   74.87%
November 15, 2019   100.00%   89.25%   82.15%   74.79%   67.13%
December 15, 2019   99.83%   84.51%   76.40%   67.96%   59.15%
January 15, 2020   96.91%   79.74%   70.62%   61.10%   51.14%
February 15, 2020   94.00%   74.98%   64.84%   54.24%   43.12%
March 15, 2020   90.96%   70.10%   58.96%   47.27%   34.98%
April 15, 2020   87.81%   65.14%   52.99%   40.22%   26.76%
May 15, 2020   84.53%   60.05%   46.90%   33.06%   18.42%
June 15, 2020   81.23%   54.97%   40.82%   25.89%   10.07%
July 15, 2020   77.88%   49.85%   34.71%   18.70%   1.69%
August 15, 2020   74.45%   44.68%   28.56%   11.46%   0.00%
September 15, 2020   71.03%   39.53%   22.42%   4.24%   0.00%
October 15, 2020   67.57%   34.37%   16.28%   0.00%   0.00%
November 15, 2020   64.07%   29.18%   10.13%   0.00%   0.00%
December 15, 2020   59.17%   22.81%   2.90%   0.00%   0.00%
January 15, 2021   48.40%   11.49%   0.00%   0.00%   0.00%
February 15, 2021   37.58%   0.27%   0.00%   0.00%   0.00%
March 15, 2021   28.00%   0.00%   0.00%   0.00%   0.00%
April 15, 2021   14.60%   0.00%   0.00%   0.00%   0.00%
May 15, 2021   0.00%   0.00%   0.00%   0.00%   0.00%
Weighted Average Life to Optional Purchase (years)(1)   1.74   1.34   1.16   1.01   0.89
Weighted Average Life to Maturity (years)(1)   1.74   1.34   1.16   1.01   0.89

 

 

(1)The weighted average life of the Class A-2a and Class A-2b Notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the Closing Date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a).

 

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Percentage of Class A-3 Note Balance Outstanding to Optional Purchase

 

    Prepayment Assumption
Payment Date   0%   50%   75%   100%   125%
Closing Date   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
June 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
July 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
August 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
September 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
October 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
November 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
December 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
January 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
February 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
March 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
June 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
July 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
August 15, 2020   100.00%   100.00%   100.00%   100.00%   93.25%
September 15, 2020   100.00%   100.00%   100.00%   100.00%   84.82%
October 15, 2020   100.00%   100.00%   100.00%   97.02%   76.37%
November 15, 2020   100.00%   100.00%   100.00%   89.78%   67.88%
December 15, 2020   100.00%   100.00%   100.00%   81.57%   58.54%
January 15, 2021   100.00%   100.00%   91.21%   69.43%   45.79%
February 15, 2021   100.00%   100.00%   79.71%   57.54%   33.38%
March 15, 2021   100.00%   90.23%   69.34%   46.75%   21.99%
April 15, 2021   100.00%   77.16%   56.39%   33.83%   8.97%
May 15, 2021   97.01%   60.88%   40.75%   18.81%   0.00%
June 15, 2021   83.67%   48.31%   28.54%   6.88%   0.00%
July 15, 2021   69.96%   35.66%   16.40%   0.00%   0.00%
August 15, 2021   57.01%   23.84%   5.12%   0.00%   0.00%
September 15, 2021   27.55%   0.00%   0.00%   0.00%   0.00%
October 15, 2021   0.00%   0.00%   0.00%   0.00%   0.00%
Weighted Average Life to Optional Purchase (years)(1)   2.45   2.29   2.16   2.01   1.83
Weighted Average Life to Maturity (years)(1)   2.45   2.29   2.16   2.01   1.83

 

 

(1)The weighted average life of the Class A-3 Notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the Closing Date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a).

 

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Percentage of Class A-4 Note Balance Outstanding to Optional Purchase

 

    Prepayment Assumption
Payment Date   0%   50%   75%   100%   125%
Closing Date   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
June 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
July 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
August 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
September 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
October 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
November 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
December 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
January 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
February 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
March 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
June 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
July 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
August 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
September 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
October 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
November 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
December 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
January 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
February 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
March 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2021   100.00%   100.00%   100.00%   100.00%   83.99%
June 15, 2021   100.00%   100.00%   100.00%   100.00%   49.96%
July 15, 2021   100.00%   100.00%   100.00%   86.14%   17.13%
August 15, 2021   100.00%   100.00%   100.00%   55.02%   0.00%
September 15, 2021   100.00%   98.12%   52.04%   0.81%   0.00%
October 15, 2021   90.94%   26.33%   0.00%   0.00%   0.00%
November 15, 2021   8.55%   0.00%   0.00%   0.00%   0.00%
December 15, 2021   0.00%   0.00%   0.00%   0.00%   0.00%
Weighted Average Life to Optional Purchase (years)(1)   2.67   2.61   2.55   2.46   2.30
Weighted Average Life to Maturity (years)(1)   2.67   2.61   2.55   2.46   2.30

 

 

(1)The weighted average life of the Class A-4 Notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the Closing Date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a).

 

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Percentage of Class B Note Balance Outstanding to Optional Purchase

 

    Prepayment Assumption
Payment Date   0%   50%   75%   100%   125%
Closing Date   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
June 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
July 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
August 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
September 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
October 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
November 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
December 15, 2019   100.00%   100.00%   100.00%   100.00%   100.00%
January 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
February 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
March 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
June 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
July 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
August 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
September 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
October 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
November 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
December 15, 2020   100.00%   100.00%   100.00%   100.00%   100.00%
January 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
February 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
March 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
April 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
May 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
June 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
July 15, 2021   100.00%   100.00%   100.00%   100.00%   100.00%
August 15, 2021   100.00%   100.00%   100.00%   100.00%   69.42%
September 15, 2021   100.00%   100.00%   100.00%   100.00%   0.00%
October 15, 2021   100.00%   100.00%   75.67%   0.00%   0.00%
November 15, 2021   100.00%   8.45%   0.00%   0.00%   0.00%
December 15, 2021   0.00%   0.00%   0.00%   0.00%   0.00%
Weighted Average Life to Optional Purchase (years)(1)   2.76   2.68   2.65   2.59   2.48
Weighted Average Life to Maturity (years)(1)   2.76   2.68   2.65   2.59   2.48

 

 

(1)The weighted average life of the Class B Notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the Closing Date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a).

 

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NOTE FACTORS AND OTHER INFORMATION

 

The note factor with respect to any class of Notes is a seven digit decimal which the Servicer will compute each month indicating the outstanding principal amount of that class of Notes, as of the applicable Payment Date, as a fraction of the original principal amount of that class of Notes. The note factor will be 1.0000000 as of the Closing Date; thereafter, the note factor will decline to reflect reductions in the principal amount of the applicable class of Notes. Therefore, if you are a holder of Class A-1 Notes, your principal amount of the Class A-1 Notes outstanding is the product of (1) the original denomination of your Note and (2) the note factor.

 

Under the Indenture, The Depository Trust Company (“DTC”) and any successor clearing agency selected by the Administrator will receive monthly reports concerning the payments received on the leases, the note factors and various other items of information. DTC will supply these reports to Noteholders (other than the Depositor, if applicable) in accordance with its procedures. The Indenture Trustee will furnish to the Noteholders of record during any calendar year information for tax reporting purposes not later than the latest date permitted by law. We refer you to “Description of the Transaction Documents—Indenture—Reports to Noteholders” in this prospectus. In addition, Noteholders of record during any calendar year will be furnished information for tax reporting purposes not later than the latest date permitted by law.

 

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USE OF PROCEEDS

 

The Depositor will use the net proceeds from the sale of the Notes to (1) acquire the Exchange Note from Auto Lease Finance LLC and (2) to fund the initial deposit into the reserve account. As discussed in “Certain Provisions of the Titling Trust Documents and Related Agreements—Closed-end Collateral Specified Interest, Reference Pools and Exchange Notes” in this prospectus, the Exchange Note issued by the Titling Trust will replace indebtedness of the Titling Trust owed to an affiliate of the Titling Trust under a financing facility provided by such affiliate and represent the amount of any funds advanced by the Initial Beneficiary to the Titling Trust pursuant to the Collateral Agency Agreement. Auto Lease Finance LLC will use the purchase price proceeds received from the Depositor to pay to such affiliate the purchase price for any replaced indebtedness acquired from them by Auto Lease Finance LLC and to advance funds to the Titling Trustee pursuant to the Collateral Agency Agreement. Such affiliate will use such net proceeds to pay debt secured by the leases in the Actual Pool prior to their reallocation to the Actual Pool. Any such debt may be owed to the Indenture Trustee, the Owner Trustee or one or more of the underwriters or their affiliates or entities for which their affiliates act as Administrator or provide liquidity lines. Auto Lease Finance LLC will use any remaining proceeds for general corporate purposes.

 

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DESCRIPTION OF THE NOTES

 

The Notes will be issued under the terms of an Indenture (the “Indenture”) between the Issuing Entity and the Indenture Trustee. We have filed forms of the Indenture and the Trust Agreement as exhibits to the registration statement, but the form agreements do not describe the specific terms of the Notes. A copy of the final form of the Indenture will be filed with the SEC no later than the date of the filing of the final prospectus. This is a summary of the material terms of the Notes; it may not contain all the information that may be important to you. You should read the trust documents in their entirety to understand their contents.

 

The Notes will be issued in minimum denominations of $1,000 and integral multiples of $1,000, in book-entry form only, through the Depository Trust Company, Clearstream Banking, société anonyme, and Euroclear. For more information, read “Registration of the Notes—Book-Entry Registration” in this prospectus. Neither the Notes nor the underlying leases will be guaranteed or insured by any governmental agency or instrumentality or any other person. Payments in respect of principal and interest of any class of Notes will be made on a pro rata basis among all the Noteholders of the class.

 

Payments of Interest

 

Interest on the principal amounts of the classes of the Notes will accrue at the Notes’ respective per annum interest rates and will be payable to the Noteholders monthly on each Payment Date, commencing April 15, 2019. Payments will be made to the Noteholders of record as of the Business Day immediately preceding such Payment Date or, if definitive Notes are issued, as of the last Business Day of the preceding month. Interest will accrue on the outstanding principal amount of the Notes as of the previous Payment Date at the applicable interest rate during the related interest accrual period, which is from and including the previous Payment Date to, but excluding, the current Payment Date.

 

Interest on the Class A-1 Notes will be calculated on the basis of the actual number of days in the related interest accrual period (which period will be from and including the previous Payment Date to but excluding the related Payment Date, except for the initial interest accrual period, which period will be from and including the Closing Date to but excluding the initial Payment Date) and a 360-day year. This means that the interest due on the Class A-1 Notes on each Payment Date will be the product of:

 

·the outstanding principal amount of the Class A-1 Notes;

 

·the interest rate for the Class A-1 Notes; and

 

·the actual number of days from and including the previous Payment Date (or, in the case of the initial Payment Date, 33, assuming a Closing Date of March 13, 2019) divided by 360.

 

Interest for a related period on each other class of the Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months, which periods will be from and including the 15th day of the previous calendar month (or, for the initial interest accrual period, from and including the Closing Date) to but excluding the 15th day of the current calendar month. This means that the interest due on these classes of Notes on each Payment Date will be the product of:

 

·the outstanding principal amount of the related class of Notes;

 

·the related interest rate; and

 

·30 (or, in the case of the initial Payment Date, 32, assuming a Closing Date of March 13, 2019) divided by 360.

 

The Indenture Trustee will generally apply the Available Funds to make interest payments on the Notes. We refer you to “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” in this prospectus.

 

Interest payments on each class of the Class A Notes will have the same priority. Interest payments on the Class B Notes will be subordinated to the payment of interest on the Class A Notes. As described under “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” in this prospectus, the Class A Notes will be entitled to receive certain priority payments of principal before payments

 

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of interest are made on the Class B Notes. In addition, in the event that the Notes are declared to be due and payable due to the occurrence of an Event of Default, unless such Event of Default has been waived or rescinded, no interest will be paid on the Class B Notes until all principal of and interest on the Class A Notes has been paid in full. Under some circumstances, the amount available for interest payments on the Notes could be less than the amount of interest payable on the Notes on any Payment Date. In this instance, each holder of Class A Notes will receive its ratable sharebased upon the aggregate amount of interest due to the holders of all Class A Notesof the aggregate amount available to be distributed in respect of interest on the Notes until interest on the Class A Notes has been paid in full and certain allocations of principal of the Class A Notes have been made and then each holder of Class B Notes will receive its ratable share of any remaining amount available to be distributed in respect of interest on the Notes until interest on the Class B Notes has been paid in full. The failure to pay interest when due on the Class B Notes will not be an Event of Default under the Indenture unless and until the Class A Notes have been paid in full.

 

Payments of Principal

 

The Indenture Trustee will remit principal payments to the Noteholders on each Payment Date in an amount generally equal to the excess, if any, of:

 

·the aggregate outstanding principal amount of the Notes as of the day immediately preceding that Payment Date, over

 

·the aggregate Securitization Value as of the last day of the related Collection Period less 15.75% of the aggregate initial Securitization Value as of the Actual Cutoff Date.

 

The Indenture Trustee generally will remit principal payments on the Notes from Available Funds, if any, remaining after the payment of the administration fee and interest on the Notes. We refer you to “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities” in this prospectus.

 

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We refer to the calendar month immediately preceding each Payment Date as a “Collection Period.” The Collection Period for the initial Payment Date shall be from, but excluding, the Actual Cutoff Date to and including March 31, 2019. A “Business Day” is a day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in the State of New York, the State of Florida, the State of Delaware and the states in which the servicing offices of the Servicer are located or the state in which the corporate trust office of the Indenture Trustee is located are required or authorized by law, regulation or executive order to be closed.

 

One Business Day immediately preceding each Payment Date, the Servicer shall determine the amount in the Exchange Note Collection Account for the applicable Collection Period. On each Payment Date, from the amounts allocated to the holders of the Notes to pay principal described in clauses (4), (6) and (8) in “Description of the Transaction Documents—Distributions on the Securities—Allocations and Distributions on the Securities,” the Issuing Entity will pay principal of the Notes in the following order of priority:

 

·to the Class A-1 Notes until they are paid in full;

 

·to the Class A-2 Notes until they are paid in full;

 

·to the Class A-3 Notes until they are paid in full;

 

·to the Class A-4 Notes until they are paid in full; and

 

·to the Class B Notes until they are paid in full.

 

If the Notes are declared to be due and payable following the occurrence of an Event of Default, unless such Event of Default has been waived or rescinded, the Issuing Entity will pay the funds allocated to the holders of the Notes to pay principal of the Notes in the following order of priority:

 

·to the holders of the Class A-1 Notes until they are paid in full;

 

·to the holders of the other Class A Notes pro rata based upon their respective unpaid principal amounts until they are paid in full; and

 

·to the holders of the Class B Notes until they are paid in full.

 

On the final scheduled Payment Date for a class of Notes, the principal amount of that class of Notes, to the extent not previously paid, will be due. The final scheduled Payment Dates for each class of Notes are as follows:

 

·the principal amount of the Class A-1 Notes, to the extent not previously paid, will be due on the Payment Date of March 16, 2020;

 

·the principal amount of the Class A-2 Notes, to the extent not previously paid, will be due on the Payment Date of November 15, 2021;

 

·the principal amount of the Class A-3 Notes, to the extent not previously paid, will be due on the Payment Date of May 16, 2022;

 

·the principal amount of the Class A-4 Notes, to the extent not previously paid, will be due on the Payment Date of July 15, 2024; and

 

·the principal amount of the Class B Notes, to the extent not previously paid, will be due on the Payment Date of July 15, 2024.

 

The actual date on which the aggregate outstanding principal amount of any class of Notes is paid in full may be earlier than the final scheduled Payment Date for that class.

 

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Redemption Upon Optional Purchase

 

The Servicer may, at its option, purchase the Exchange Note from the Issuing Entity on any Payment Date following the last day of any Collection Period on which the aggregate outstanding principal amount of the Notes is less than or equal to 5% of the initial aggregate outstanding principal amount of the Notes on the Closing Date. The purchase price for the Exchange Note will, as calculated by the Servicer, be equal to the aggregate of the unpaid principal balance of the Exchange Note plus accrued and unpaid interest as of such last day. Exercise of this right to purchase the Exchange Note will result in the redemption of the Notes at a price equal to the aggregate outstanding principal amount of the Notes plus accrued and unpaid interest to but excluding the date of redemption. Notice of redemption under the Indenture must be given by the Indenture Trustee not later than 10 days prior to the redemption date to each holder of Notes. In addition, the Issuing Entity will notify each rating agency hired by the Sponsor to rate the Notes upon redemption of the Notes. The final distribution to any Noteholder will be made only upon surrender and cancellation of each Noteholder’s Note at the office or agency of the Indenture Trustee specified in the notice of termination.

 

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REGISTRATION OF THE NOTES

 

Book-Entry Registration

 

Holders of Notes may hold their securities through DTC and any successor clearing agency selected by the Administrator in the United States or Clearstream or Euroclear in Europe if they are participants of the system, or indirectly through organizations that are participants in the systems. Clearstream and Euroclear will hold omnibus positions on behalf of the Clearstream participants and the Euroclear participants, respectively, through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositories which in turn will hold the positions in customers’ securities accounts in the depositories’ names on the books of DTC. DTC is a limited purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to Section 17A of the Securities Exchange Act of 1934, as amended (“Exchange Act”). DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between participants through electronic computerized book-entries, thereby eliminating the need for physical movement of securities. Participants include securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to the DTC system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly.

 

Transfers between DTC participants will occur in accordance with DTC rules. Transfers between Clearstream participants and Euroclear participants will occur in accordance with their applicable rules and operating procedures. Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly through Clearstream participants or Euroclear participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its depository; however, the cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in the system in accordance with its rules and procedures. If the transaction complies with all relevant requirements, Euroclear or Clearstream, as the case may be, will then deliver instructions to the depository to take action to effect final settlement on its behalf.

 

Because of time-zone differences, credits of securities in Clearstream or Euroclear as a result of a transaction with a DTC participant will be made during the subsequent securities settlement processing, dated the business day following the DTC settlement date, and the credits or any transactions in the securities settled during the processing will be reported to the relevant Clearstream participant or Euroclear participant on the same business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream participant or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.

 

The holders of Notes that are not participants or indirect participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, Notes may do so only through participants and indirect participants. In addition, holders of Notes will receive all distributions of principal and interest from the trustee through the participants who in turn will receive them from DTC. Under a book-entry format, holders of Notes may experience some delay in their receipt of payments, since the payments will be forwarded by the trustee to Cede & Co., as nominee for DTC. DTC will forward the payments to its participants, which thereafter will forward them to indirect participants or beneficial owners of Notes.

 

Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers of securities among participants on whose behalf it acts with respect to the securities and to receive and transmit distributions of principal of, and interest on, the securities. Participants and indirect participants with which the holders of securities have accounts with respect to the securities similarly are required to make book-entry transfers and receive and transmit the payments on behalf of their respective holders of securities. Accordingly, although the holders of securities will not possess the securities, DTC rules provide a mechanism by which participants will receive payments on securities and will be able to transfer their interest.

 

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Because DTC can only act on behalf of participants, who in turn act on behalf of indirect participants and some banks, the ability of a holder of securities to pledge the securities to persons or entities that do not participate in the DTC system, or to otherwise act with respect to the securities, may be limited due to the lack of a physical certificate for the securities.

 

DTC has advised the Depositor that it will take any action permitted to be taken by a holder of a security only at the direction of one or more participants to whose accounts with DTC the securities are credited. DTC may take conflicting actions with respect to other undivided interests to the extent that the actions are taken on behalf of participants whose holdings include undivided interests.

 

Clearstream is incorporated under the laws of Luxembourg as a professional depository. Clearstream holds securities for its participating organizations and facilitates the clearance and settlement of securities transactions between Clearstream participants through electronic book-entry changes in accounts of Clearstream participants, thereby eliminating the need for physical movement of securities. Transactions may be settled in Clearstream in any of 28 currencies, including United States dollars. Clearstream provides to Clearstream participants services, including, for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a professional depository, Clearstream is subject to regulation by the Luxembourg Monetary Institute. Clearstream participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and other organizations and may include the underwriters. Indirect access to Clearstream is also available to others, like banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream participant, either directly or indirectly.

 

Euroclear was created in 1968 to hold securities for participants of the Euroclear system and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear includes various other services, including securities lending and borrowing, and interfaces with domestic markets in several countries. The Euroclear System is owned by Euroclear Clearance System Public Limited Company (ECSplc) and operated through a license agreement by Euroclear Bank S.A./N.V., a bank incorporated under the laws of the Kingdom of Belgium, the “Euroclear Operator.” Euroclear participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect access to Euroclear is also available to others that clear through or maintain a custodial relationship with Euroclear participant, either directly or indirectly.

 

The Euroclear Operator is regulated and examined by the Belgian Banking and Finance Commission and the National Bank of Belgium.

 

Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law. These laws and procedures govern transfers of securities and cash within Euroclear, withdrawal of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific securities to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear participants and has no record of or relationship with persons holding through Euroclear participants.

 

Although DTC, Euroclear and Clearstream have implemented the foregoing procedures in order to facilitate transfers of interests in book-entry securities among participants of DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to comply with the procedures, and the procedures may be discontinued at any time. Neither the Depositor nor any other person will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective direct or indirect participants of their respective obligations under the rules and procedures governing their operations.

 

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Definitive Notes

 

The Notes will be issued in fully registered, certificated form as definitive securities to the securityholders of the Notes or their nominees, only if:

 

·the Administrator advises the Indenture Trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to the Notes, and the Indenture Trustee or the Administrator is unable to locate a qualified successor; or

 

·the Administrator at its option advises the Indenture Trustee that it elects to terminate the book-entry system through DTC; or

 

·after the occurrence of an Event of Default under the Indenture or a default by the Servicer under the Servicing Agreement, securityholders representing at least a majority of the outstanding principal amount of the Notes advise the Indenture Trustee through DTC and its participants in writing that the continuation of a book-entry system through DTC or its successor is no longer in the securityholders’ best interest.

 

Upon the occurrence of any event described in the immediately preceding paragraph, the Indenture Trustee will be required to notify all the Noteholders through participants of the availability of definitive securities. Upon surrender to the Indenture Trustee by DTC of the definitive Notes representing the Notes and receipt of instructions for re-registration, the applicable trustee will reissue the Notes as definitive securities to the Noteholders.

 

Distributions of principal of, and interest on, the Notes will thereafter be made by the Indenture Trustee in accordance with the procedures described in the Indenture, Exchange Note Sale Agreement, Exchange Note Transfer Agreement, Servicing Agreement or Trust Agreement directly to holders of definitive Notes in whose names the definitive Notes were registered at the close of business on the applicable record date.

 

The distributions will be made by check mailed to the address of the holder as it appears on the register maintained by the Note Registrar. The final payment on any Note, however, will be made only upon presentation and surrender of the Note at the office or agency specified in the notice of final distribution to the applicable Noteholder.

 

Definitive securities in respect of the Notes will be transferable and exchangeable at the offices of the Indenture Trustee or Note Registrar named in a notice delivered to holders of the definitive Notes. No service charge will be imposed for any registration of transfer or exchange, but the Indenture Trustee or Issuing Entity may require payment of a sum sufficient to cover any tax or other governmental charge imposed.

 

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DESCRIPTION OF THE TRANSACTION DOCUMENTS

 

The following summary describes the material terms of the Titling Trust Documents and transaction documents, which consist of the Exchange Note Supplement, the Exchange Note Sale Agreement, the Exchange Note Transfer Agreement, the Servicing Agreement, the Indenture, the Trust Agreement and the Administration Agreement. We have filed forms of the transaction documents as exhibits to the registration statement, but the form agreements do not describe the specific terms of the Notes. A copy of the final forms of the transaction documents will be filed with the SEC no later than the date of the filing of the final prospectus. This is a summary of the material terms of the transaction documents; it does not contain all the information that may be important to you. You should read the transaction documents in their entirety to understand their contents.

 

On the Closing Date, the Titling Trust will issue the Exchange Note to Auto Lease Finance LLC, the Initial Beneficiary, pursuant to the procedures outlined in “The Exchange Note” in this prospectus, and World Omni Auto Leasing LLC, the Depositor, will purchase from Auto Lease Finance LLC under the Exchange Note Sale Agreement, without recourse (other than to the extent described in “The Leases—Representations and Warranties Relating to the Units—Representations, Warranties and Covenants”), Auto Lease Finance LLC’s entire interest in the Exchange Note. At the time of issuance of the Notes, the Depositor will sell and assign to World Omni Automobile Lease Securitization Trust 2019-A, the Issuing Entity, under the Exchange Note Transfer Agreement, without recourse, except as provided in the Exchange Note Transfer Agreement, its entire interest in the Exchange Note, assign to the Issuing Entity all of its rights under the Exchange Note Sale Agreement and deliver the Exchange Note to the Issuing Entity. The Owner Trustee will, concurrently with such sale and assignment, execute on behalf of the Issuing Entity, and the Indenture Trustee will authenticate and deliver to the Depositor, the Notes and the Certificates in exchange for the Exchange Note. Immediately following the transfer of the Exchange Note to the Issuing Entity, the Issuing Entity will pledge its interest in the Issuing Entity Property, which includes the Exchange Note, to the Indenture Trustee as security for the Notes. Upon the execution of the trust transaction documents and the issuance of the Notes as described in this paragraph, the Indenture Trustee will hold a first priority perfected security interest in the Exchange Note and all identifiable proceeds thereof.

 

Upon delivery to the Depositor of the Notes and Certificates, the Depositor will then sell the underwritten Notes to the underwriters. We refer you to “Underwriting” in this prospectus.

 

Reallocation Obligations

 

In the Exchange Note Sale Agreement, Auto Lease Finance LLC will make certain representations and warranties, including that each lease complies with all requirements of law in all material respects. If certain of such representations and warranties prove to be incorrect with respect to any lease, the result has certain material adverse effects and the breach is not timely corrected or cured, such lease and the related leased vehicle will be transferred out of the Reference Pool and Auto Lease Finance LLC will be required under the Exchange Note Sale Agreement to deposit an amount equal to the repurchase payment in respect of the lease into the Exchange Note Collection Account. See “The Leases—Representations and Warranties Relating to the Units—Representations, Warranties and Covenants” in this prospectus.

 

Accounts

 

The Servicer will establish and maintain one or more accounts (the “Trust Accounts”), in the name of the Indenture Trustee on behalf of the related securityholders.

 

The Servicer will establish and maintain an Exchange Note collection account (the “Exchange Note Collection Account”) in the name of the Closed-End Collateral Agent on behalf of the Exchange Noteholder. Within two Business Days of receipt and identification of funds related to the leases in the Reference Pool, the Servicer will deposit collections into the Exchange Note Collection Account. Notwithstanding the foregoing requirement, for so long as the three conditions listed below are satisfied, World Omni need not deposit collections into the Exchange Note Collection Account on the day indicated in the preceding sentence but may use for its own benefit all of those collections until the Business Day immediately preceding the Payment Date (whether or not such funds will be distributed to the Exchange Noteholder, retained in the Exchange Note Collection Account or deposited in another account on such Payment Date), at which time World Omni will make the deposits in an amount equal to the net

 

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amount of the deposits and withdrawals which would have been made had the conditions of this sentence not applied.

 

The three conditions that must be satisfied are as follows:

 

·World Omni remains the Servicer under the Servicing Agreement;

 

·no default by the Servicer has occurred and is continuing; and

 

·World Omni receives notice from the rating agencies hired by the Sponsor to rate the Notes that the cessation of daily deposits will not result in a reduction or withdrawal of the then current rating of the Notes.

 

The Administrative Agent will deposit amounts released from the Exchange Note Collection Account for distribution to the Exchange Noteholder, which distribution will be deposited into the “Trust Collection Account.” The Servicer will establish and maintain the Trust Collection Account in the name of the Indenture Trustee on behalf of the Noteholders, from which it will make all distributions with respect to the Notes. The Indenture Trustee will deposit amounts released from the Trust Collection Account and the reserve account for distribution to Noteholders into an Eligible Account designated as the principal distribution account (the “Principal Distribution Account”). The Indenture Trustee will make distributions to the Noteholders from the Principal Distribution Account as described under “—Distributions on the Securities—Allocations and Distributions on the Securities” below.

 

So long as no Event of Default shall have occurred and be continuing, funds in the Trust Accounts will be invested in eligible investments. Eligible investments are generally limited to investments acceptable to the rating agencies hired by the Sponsor to rate the securities as being consistent with the rating of the Notes. Eligible investments must generally mature before the related Payment Date. No such investment will be sold prior to maturity. Thus, the amount of cash in any Trust Account at any time may be less than the balance of the Trust Account. If required withdrawals from any Trust Account exceed the amount of cash in the Trust Account, a temporary shortfall in the amounts distributed to the related securityholders could result. The average life of the securities could then increase. The Indenture Trustee will deposit investment earnings on funds in the Trust Accounts in the Trust Collection Account.

 

The Trust Accounts may be maintained as either (“Eligible Accounts”):

 

·a segregated Trust Account in the corporate trust department of the Indenture Trustee; or

 

·a segregated account in a depository institution or trust company organized under the laws of the United States or any one of the states thereof, or the District of Columbia (or any domestic branch of a foreign bank), which at all times maintains:

 

·a long-term unsecured debt rating, or a certificate of deposit rating acceptable to the applicable rating agencies hired by the Sponsor to rate the securities; and

 

·its deposits insured by the FDIC.

 

The Depositor expects that the Trust Accounts will be maintained with the Indenture Trustee so long as they satisfy the requirements above.

 

The Servicing Agreement and the Servicing Supplement

 

Under the Base Servicing Agreement, the Servicer will manage the Titling Trust as agent for, and subject to the supervision, direction and control of, the Titling Trust and Closed-End Collateral Agent. The obligations of the Servicer include, among other things, acquiring vehicles and originating leases on behalf of the Titling Trust, collecting and posting payments, responding to inquiries of lessees, investigating delinquencies, sending payment statements to lessees, disposing of returned vehicles, commencing legal proceedings to enforce leases and servicing the leases, including accounting for collections, remitting to the appropriate taxing authority all sales and use, monthly rental receipts, personal property and ad valorem taxes collected by it from the obligors with respect to the leases and vehicles in accordance with its customary credit and collection policies, collecting and remitting state and local taxes relating to the leases and vehicles and, to the extent required by law, delivering to each holder of an

 

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Exchange Note information for the preparation of the holder’s U.S. federal income tax returns. In this regard, the Servicer will make reasonable efforts to collect all amounts due on or in respect of the leases. The Servicer will apply for and maintain all licenses and make all filings required to be held or filed by the Titling Trust in connection with the ownership of Units and to take all necessary steps to evidence the Titling Trust’s ownership on the certificates of title to the leased vehicles. The Servicer will be obligated to service the leases in accordance with the customary practices of the Servicer with respect to the Units held by the Titling Trust, without regard to whether those Units have been allocated into a reference pool, as those practices may be changed from time to time (the “Customary Servicing Practices”), using the same degree of skill and attention that the Servicer exercises with respect to all comparable retail automotive leases that it services for itself or others.

 

The Servicer will be responsible for filing all periodic sales and use tax or property tax reports, periodic renewals of licenses and permits, periodic renewals of qualifications to act as a statutory trust and a business trust and other governmental filings, registrations or approvals arising with respect to or required of the Titling Trust.

 

The Servicer will also enter into the Servicing Supplement with respect to the Reference Pool related to the Notes. As holder and pledgee of the Exchange Note, the Issuing Entity and the Indenture Trustee, respectively, will be third-party beneficiaries of the Servicing Supplement. The Servicing Supplement will require the Servicer to collect and post payments with respect to the related Reference Pool to the Exchange Note Collection Account.

 

Custody of Lease Documents and Certificates of Title

 

To reduce administrative costs and facilitate servicing of the leases, the Titling Trust and the Closed-End Collateral Agent have appointed the Servicer as their agent and bailee of the leases, the certificates of title relating to the leased vehicles and any other related items that from time to time come into possession of the Servicer (or, with respect to leases represented by an electronic lease contract, the control of the Servicer, on behalf of the Titling Trust and the Closed-End Collateral Agent). Such documents will not be physically segregated from other leases, certificates of title or other documents related to other leases and vehicles owned or serviced by the Servicer. The Servicer may delegate specific custodian duties to sub-contractors who are in the business of performing those duties. (For example, the Servicer may hire a third-party to hold original certificates of title for vehicles that it services.) The accounting records and certain computer systems of Auto Lease Finance LLC will reflect the allocation of the Units to the related Reference Pool. Upon instructions from the Closed-End Collateral Agent, the Servicer will release or cause to be released any certificate of title to the Closed-End Collateral Agent, at the place or places designated by the Closed-End Collateral Agent. As part of each origination of a lease represented by a tangible lease contract, the original lease contract is scanned (typically by a third-party service provider) into World Omni’s imaging system to facilitate access and record retention. World Omni has implemented controls to identify any new financial transactions that do not have an original lease contract in the imaged file.

 

Sale and Disposition of Leased Vehicles

 

Under the Servicing Agreement for the Issuing Entity and in accordance with the Servicer’s Customary Servicing Practices, the Servicer on behalf of the Issuing Entity will use commercially reasonable efforts to enforce the provisions of the leases included in the Reference Pool and to repossess or otherwise take possession of the leased vehicle related to any lease included in the Reference Pool that may have terminated or expired or that the Servicer may have determined (in accordance with its Customary Servicing Practices) to be in default. See “The Servicer, Sponsor and Administrator” and “Additional Legal Aspects of the Leases and the Leased Vehicles—Repossession of Leased Vehicles” and “—Deficiency Judgments.”

 

Insurance on Leased Vehicles

 

Each lease will require the related lessee to maintain in full force and effect during the related lease term a liability and physical damage insurance policy naming the Titling Trust as loss payee. See “The Servicer, Sponsor and Administrator—Underwriting Standards—Insurance” for more information regarding insurance requirements. The Servicer is not obligated to monitor insurance during the term of any lease.

 

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Security Deposits

 

The Titling Trust’s rights related to the leases will include all rights under the leases to any refundable security deposits which may be paid by the lessees at the time the leases are originated. As part of its general servicing obligations, the Servicer will retain possession of each security deposit remitted by the lessees and will apply the proceeds of these security deposits in accordance with the terms of the leases, its Customary Servicing Practices and applicable law, including applying a security deposit in respect of any related lessee’s default or failure to pay all amounts required to be paid under the related lease or resulting from excess mileage or unreasonable wear to the related leased vehicle. However, in the event that any lease is written off by the Servicer in connection with its Customary Servicing Practices or, if earlier, the related leased vehicle is repossessed, the related security deposit will, to the extent provided by applicable law and that lease, constitute Liquidation Proceeds. On the Payment Date related to the Collection Period in which the security deposit becomes Liquidation Proceeds, the Servicer will deposit those amounts in accordance with the provision summarized in “The Servicer, Sponsor and Administrator—Like Kind Exchange Program” in this prospectus. The Titling Trust may not have an interest in the security deposits that is enforceable against third parties until they are deposited into the Exchange Note Collection Account. Each security deposit, after deduction for amounts applied towards the payment of any amount resulting from the related lessee’s default or failure to pay any amounts required to be paid under that lease or damage to the related leased vehicle, will be returned to the related lessee by the Servicer; provided, however, that the Servicer may retain a security deposit (including any interest thereon) until the related lessee has repaid all other charges owed under that lease. Unless required by applicable law, the Servicer will not be required to segregate security deposits from its own funds. Any income earned from any investment on the security deposits by the Servicer will be for the account of the Servicer as additional servicing compensation (to the extent permitted by law and the applicable lease, and to the extent investment earnings are not required to be paid to the applicable lessee).

 

Servicing Compensation

 

The servicing fee payable to the Servicer with respect to a Collection Period will be 1/12 of 1.00% of the aggregate Securitization Value as of the first day of the related Collection Period. With respect to the initial Payment Date, the servicing fee will be based on the aggregate Securitization Value as of the Actual Cutoff Date. The servicing fee payable to the Servicer on the initial Payment Date with respect to the initial Collection Period will be pro-rated, however, to compensate for the initial Collection Period being longer than one month. As long as World Omni believes that sufficient collections will be available from collections on one or more future Payment Dates to pay the servicing fee, World Omni may, as Servicer, elect to defer all or a portion of the servicing fee with respect to the related Collection Period, without interest. If World Omni elects to defer all of the servicing fee, the servicing fee for the related Collection Period will be deemed to equal zero for all purposes of the trust documents.

 

The servicing fee in respect of a Collection Period, together with any portion of the servicing fee that remains unpaid from prior Payment Dates, will be paid to the Servicer on the related Payment Date out of collections before any amounts are made available to make payments to the Noteholders.

 

The Servicer will also collect and retain, as additional servicing compensation, any late fees, prepayment charges, and other administrative fees or similar charges allowed by applicable law with respect to the leases included in the Reference Pool. The Servicer will also be entitled to reimbursement from the Issuing Entity for certain liabilities.

 

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Servicing of Defaulted Leases

 

The Servicing Agreement provides that the Servicer is to exercise discretion, consistent with its customary servicing procedures and the terms of the Servicing Agreement, to service Defaulted Leases in a manner intended to maximize the Issuing Entity’s realization of Defaulted Leases. The Servicing Agreement provides the Servicer with complete discretion to choose to sell, or not to sell, any of the Defaulted Leases.

 

Evidence as to Compliance

 

Annually, the Servicer will make available to the Issuing Entity, the rating agencies hired by the Sponsor to rate the Notes and the Indenture Trustee, an officer’s certificate stating that to the best of such officer’s knowledge the Servicer has complied with the servicing criteria set forth in the relevant SEC regulations for asset-backed securities transactions, including Item 1122 of Regulation AB, throughout the preceding twelve months or such shorter period as shall have elapsed since the Closing Date. If there has been a default in the fulfillment of any of these obligations, the officer’s certificate will describe the default. The Servicer also will agree to give the Indenture Trustee notice of defaults by the Servicer under the Servicing Agreement.

 

The Servicer will also furnish to the Depositor, the Indenture Trustee and the rating agencies hired by the Sponsor to rate the related securities, a statement from a firm of independent public accountants that attests to, and reports on, the assessment made by the Servicer of compliance with the specified servicing criteria described above, during the preceding twelve months, relating to the servicing of leases.

 

Securityholders may obtain copies of the statements and certificates by written request addressed to the trustee.

 

Noteholder Communication

 

A beneficial owner of Notes may send a written request to the Issuing Entity or to the Servicer, on behalf of the Issuing Entity, stating that such beneficial owner is interested in communicating with other beneficial owners of Notes about the possible exercise of rights under the transaction documents. A beneficial owner of Notes should send its request to World Omni Financial Corp., 190 Jim Moran Boulevard, Deerfield Beach, Florida 33442, Attention: General Counsel. The requesting beneficial owner must include in the request a description of the method by which other beneficial owners of Notes may contact the requesting beneficial owner. The trust will promptly deliver any such request to the Servicer. On receipt of a communication request, the Servicer will include in the Form 10-D related to the Collection Period in which the communication request is received the following information:

 

•     a statement that the trust received a communication request;

 

•     the date the request was received;

 

•     the name of the requesting beneficial owner of Notes;

 

•     a statement that the requesting beneficial owner of Notes is interested in communication with other beneficial owners of Notes about the possible exercise of rights under the transaction documents; and

 

•     a description of the method by which the other beneficial owners of Notes may contact the requesting beneficial owner of Notes.

 

The Servicer will bear any costs associated with including the above information in the Form 10-D. The beneficial owners of Notes will pay any costs associated with communicating with other beneficial owners, and no other transaction party, including the Issuing Entity, will be responsible for such costs. The beneficial owners of Notes will not be required to indemnify any transaction party, including the Issuing Entity, in connection with exercising the communication right described under this Noteholder Communication” heading.

 

In order to make a request or demand or to provide notice to the trust, the Owner Trustee, the Indenture Trustee, the Depositor, the Sponsor or the Servicer under the transaction documents, the requesting party must either be a Noteholder of record or must provide a written certification stating that it is a beneficial owner of a Note, together with supporting documentation such as a trade confirmation, an account statement, a letter from a broker or dealer verifying ownership or another similar document evidencing ownership of a Note.

 

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Servicer Resignation, Servicer Liability and Servicer Indemnification

 

Neither the Servicer nor any of its directors, officers, employees or agents will be liable to the Issuing Entity or the securityholders for taking any action or for refraining from taking any action pursuant to the Base Servicing Agreement or Servicing Supplement, or for errors in judgment. This provision will not protect the Servicer or any of these persons against any liability imposed by reason of negligence, willful misfeasance or bad faith. The Servicer is under no obligation to appear in, prosecute, or defend any legal action that is not incidental to its servicing responsibilities under the Base Servicing Agreement or Servicing Supplement and that, in its opinion, may cause it to incur any expense or liability.

 

The Servicer may not resign from its obligations and duties under the Base Servicing Agreement or Servicing Supplement unless it determines that its duties are no longer permissible under applicable law or regulations. No resignation will become effective until the Indenture Trustee or a successor Servicer has assumed the Servicer’s obligations and duties under the Base Servicing Agreement or Servicing Supplement. The Servicer may not assign the Base Servicing Agreement or Servicing Supplement or any of its rights, powers, duties or obligations under the Base Servicing Agreement or Servicing Supplement except as otherwise provided or except in connection with a permitted consolidation, merger, conveyance or transfer of its properties and assets.

 

Any entity into which the Servicer may be merged or consolidated, or any entity resulting from a merger or consolidation, or any entity succeeding to the business, property and assets of the Servicer will succeed the Servicer under the Base Servicing Agreement or Servicing Supplement.

 

Upon a termination of the Servicer, U.S. Bank Trust National Association as Administrative Agent (so long as the Collateral Agency Agreement is in effect), and thereafter, the Titling Trust will select and appoint a successor Servicer to perform the outgoing Servicer’s duties and undertake its responsibilities and liabilities. The appointed successor Servicer must be an established institution with a net worth of at least $50,000,000 whose regular business includes the servicing of automotive leases and the related leased vehicles. The successor Servicer will hold all the rights of the outgoing Servicer under the trust documents and will receive compensation mutually agreed upon between the successor Servicer and the Administrative Agent. The successor Servicer shall receive compensation not to exceed that of the outgoing Servicer, but in no case will the Indenture Trustee be liable for any difference in compensation between the outgoing Servicer and the successor Servicer. No successor Servicer appointed in accordance with the trust documents may resign from its duties unless the law prohibits it from continuing to perform such duties.

 

Upon the termination or resignation of the Servicer, the outgoing Servicer shall transfer all cash amounts that are to be held by the successor Servicer to the successor Servicer and shall provide the successor Servicer with all information regarding the lease files that is required for the proper servicing of the leases. All reasonable and documented costs, expenses and fees incurred in connection with the transfer of lease files to the successor Servicer under the provisions described in this paragraph will be paid by the outgoing Servicer. The Owner Trustee and the Indenture Trustee will provide prom