Japan 3 Final PS E

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This pricing supplement, together with the short form base shelf prospectus to which it relates, as amended or supplemented, and each document deemed to be incorporatereference into the prospectus, as amended or supplemented constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for

and therein only by persons permitted to sell such securities. No securities regulatory authority in Canada has expressed an opinion about these securities and it is an offenclaim otherwise. These securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), and may not be offered, resold or delivered directly or indirectly within the United States, its territories or possessions or to, or for the account or benefit of, U.S. persons (as defined in Regulat

under the 1933 Act). Neither these securities nor any interest therein may be owned by a U.S. person. These securities may not be offered, sold or delivered within the U

States or to a U.S. person who would, upon the completion of such sale, be a U.S. holder. These securities may be subject to United States tax law requirements.

Pricing Supplement to Short Form Base Shelf Prospectus dated June 30, 2006 (the "Prospectus")

Merrill Lynch Canada Finance Company

Merrill Lynch Japanese Equity Accelerator Securities, Series 3 (the "Securities")

$100 per Security

$7,936,800

The Securities are 20% principal protected and

include an accelerated positive return, if any, at maturity

Unconditionally guaranteed by Merrill Lynch & Co., Inc., a Delaware corporation (the "Guarantor"). Both Merrill Lynch Can

Finance Company (the "Company") and Merrill Lynch Canada Inc. are indirect wholly-owned subsidiaries of the GuaranConsequently, the Company is a "related issuer" and a "connected issuer" of Merrill Lynch Canada Inc. within the meaning of

securities legislation of certain provinces of Canada, as more fully described at "Plan of Distribution" herein.

The Securities:

The Securities are designed for investors who are willing to foregointerest payments on the Securities for the ability to participate in a

possible increase in the level of the Reference Index (as definedbelow) to the extent described herein over the term of theSecurities.

Senior unsecured securities of the Company.

The Securities are not fully principal protected.

Minimum repayment on the Maturity Date (as defined below) willnot be less than 20% of the principal amount per Security.

The Securities will not be listed on any securities exchange.

Expected settlement date: May 3, 2007.

Maturity Date: May 3, 2013, subject to a postponement if a marketdisruption event occurs.

Reference Index:

The return on the Securities will be linked to the performance ofthe Nikkei 225 Index (the "Reference Index").

The return on the Securities will not reflect dividends (or thereinvestment thereof) that you would receive if you owned theSecurities included in the Reference Index.

Payment on the Maturity Date for the Securities:

On the Maturity Date, for each Security you own, we will paythe Redemption Amount in cash, provided, however, that inevent will you receive less than 20% of the principal amounSecurity. If the value of the Reference Index decreases, you lose up to 80% of your initial investment.

We will pay the Redemption Amount for the SecuritieCanadian dollars.

Redemption Amount:

If the Reference Index Ending Value, as defined below, is grthan the Reference Index Starting Value, as defined belowRedemption Amount for the Securities will be calculated usin"Accelerated Participation Factor" of 168%. As a result, return on the Securities will be increased by 68% over the aincrease in value of the Reference Index over the term ofSecurities. If the Reference Index Ending Value is equal to orthan the Reference Index Starting Value, the Redemption Amwill be calculated so that your return is directly proportionate tamount by which the Reference Index has decreased since Ma2007, the date on which the Securities are priced for initial sathe public (the "Pricing Date"), as described below. In no eshall the Redemption Amount be less than $20.

Investing in the Securities involves risks that are described in the "Risk Factors" section beginning on page 11 of this pricing supplement.

Per Security Security TotalPublic offering price ..................................................................................................................... 100.00 $7,936,800Agency fee(1). .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 4.00 $317,472Proceeds, before expenses, to Merrill Lynch Canada Finance Company.......................................... 96.00 $7,619,328

(1) Merrill Lynch Canada Inc. will also pay National Bank Financial Inc. a one-time fee equal to 0.10% of the principal amount of Securities issued and sold

hereunder for acting as independent underwriter.

Merrill Lynch Canada Inc.

The date of this pricing supplement is May 2, 2007.


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The securities differ from conventional debt and fixed income investments because they do not provide holders with a return or incostream prior to maturity and the return is not determinable prior to maturity. The Securities are not fully principal protected. Any paymon the Securities at maturity depends on the Reference Index Ending Value (as defined herein). Investors in the Securities could lose u80% of their initial investment. A return, if any, is payable on the issue price of the Securities at maturity only to the extent thatReference Index Ending Value (as defined herein) is greater than the Reference Index Starting Value (as defined herein). There can bassurance that the Securities or the Reference Index will show any return. Accordingly, the Securities are suitable for investors that dorequire interest income and that can withstand a loss of 80% of their investment. The Securities are designed for investors with a long tinvestment horizon who are prepared to hold the Securities to maturity and are prepared to assume risks with respect to a return tied toperformance of the Reference Index. Prospective purchasers should take into account additional risk factors associated with this offerinSecurities. See "Risk Factors". This pricing supplement, together with the Prospectus to which it relates, constitutes a public offerin

securities offered pursuant hereto only in the jurisdictions where they may be lawfully offered for sale and therein only by persons permto sell such securities.

The Guarantor is incorporated under the laws of Delaware, a foreign jurisdiction, and it resides in, and has substantial assets located inUnited States. Although the Guarantor has appointed the Company as its agent for service of process for certain securities law purposeeach of the provinces of Canada, it may not be possible for investors to collect from the Guarantor judgments obtained in Canadian couJudgments on the Guarantee obtained in Canada may therefore have to be enforced in the United States and may be subject to additiodefences as a result. In addition, all of the Guarantor's directors and officers reside outside Canada and most of their assets are locoutside Canada. It may not be possible therefore for you to effect service of process within Canada upon the Guarantor's directorsofficers or to collect from them judgments obtained in Canadian courts.

Merrill Lynch Canada Inc. and National Bank Financial Inc., as agents, are conditionally offering the Securities subject to prior sale on a efforts basis, if, as and when issued by the Company and accepted by the agents in accordance with the conditions contained in the DeAgreement between the Company, the Guarantor and the agents described herein and in the accompanying Prospectus.


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TABLE OF CONTENTS

Pricing Supplement

Page

SUMMARY OF THE OFFERING..........................................................................................................................4

EXAMPLES OF REDEMPTION AMOUNT CALCULATIONS............................................................................7SUMMARY INFORMATIONQ&A ............ ............. .............. ............. ............. ............. ............. .............. ..........8RISK FACTORS............ ............. .............. ............. ............. ............. ............. .............. ............. ............. ............. ..11DESCRIPTION OF THE SECURITIES................................................................................................................16THE REFERENCE INDEX..................................................................................................................................21INCOME TAX CONSIDERATIONS APPLICABLE TO CANADIAN RESIDENT INVESTORS............... ........25CIRCULAR 230...................................................................................................................................................26ELIGIBILITY FOR INVESTMENT.....................................................................................................................26USE OF PROCEEDS AND HEDGING................................................................................................................27PLAN OF DISTRIBUTION................ ............. ............. .............. ............. ............. ............. ............. .............. ........27DOCUMENTS INCORPORATED BY REFERENCE............. .............. ............. ............. ............. ............. ...........27

ProspectusELIGIBILITY FOR INVESTMENT.......................................................................................................................4ML FINANCE........................................................................................................................................................4ML&CO CANADA................................................................................................................................................4THE GUARANTOR...............................................................................................................................................6CREDIT RATINGS................................................................................................................................................6RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXEDCHARGES AND PREFERRED STOCK DIVIDENDS .............. ............. ............. ............. ............. .............. .......... 7USE OF PROCEEDS ............ ............. ............. ............. .............. ............. ............. ............. ............. .............. .......... 7RISK FACTORS............ ............. .............. ............. ............. ............. ............. .............. ............. ............. ............. ....8DOCUMENTS INCORPORATED BY REFERENCE............. .............. ............. ............. ............. ............. ............. 9DESCRIPTION OF THE NOTES.........................................................................................................................13DESCRIPTION OF GUARANTEES....................................................................................................................27PLAN OF DISTRIBUTION..................................................................................................................................32SELLING RESTRICTIONS............. ............. ............. ............. .............. ............. ............. ............. ............. ........... 33INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM................. .............. ............. ............. ............. ..34REGISTRAR, TRANSFER AND PAYING AGENT............. ............. .............. ............. ............. ............. ............. 34LEGAL MATTERS..............................................................................................................................................34PURCHASERS' STATUTORY RIGHTS ............. ............. ............. ............. ............. .............. ............. ............. .... 34CERTIFICATE OF THE ISSUERS AND THE GUARANTOR............. ............. ............. ............. ............. ......... C-1CERTIFICATE OF THE DEALERS ............. ............. ............. .............. ............. ............. ............. ............. ......... C-3


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SUMMARY OF THE OFFERING

The following summary of the terms of the offering of the Securities is subject to, and should be read inconjunction with, the more detailed information which follows in this pricing supplement and the accompanying

Prospectus. References in this pricing supplement to "dollars" or "$" are to Canadian currency unless otherwisespecified.

Issuer: Merrill Lynch Canada Finance Company (the "Company")

Guarantor: Merrill Lynch & Co., Inc. (the "Guarantor")

Securities: Merrill Lynch Japanese Equity Accelerator Securities, Series 3 (the "Securities")

Issue Price: $100 per Security

Denominations: The Securities will be issued in denominations of $100 per Security.

Minimum Subscription: $2,000

Pricing Date: May 2, 2007.

Issue Date: May 3, 2007Valuation Date: April 26, 2013

Maturity Date: May 3, 2013, subject to a postponement if a market disruption event occurs.

Reference Index: The Reference Index will be the Nikkei 225 Index.

Payment at Maturity forSecurities:

On the Maturity Date, for each Security you own, we will pay you theRedemption Amount in cash. If the Index Level (as hereinafter defined)decreases, you may lose a portion of your initial investment and that loss could

be significant. The Securities will not be redeemable prior to the Maturity Dateexcept for certain tax reasons described under the section "Description of the

Notes Redemption for Tax Reasons" in the accompanying Prospectus.

Record Date: The fifteenth day immediately preceding the Maturity Date, whether or not abusiness day, but in any event shall not be later than April 18, 2013.

Redemption Amount: If the Reference Index Ending Value is greater than the Reference Index StartingValue, the Redemption Amount for each Security will be equal to the product of$100 and the Positive Performance Amount. The Securities are not fully

principal protected. If the Reference Index Ending Value is equal to or less thanthe Reference Index Starting Value, the Redemption Amount for each Securitywill be equal to the product of $100 and the Negative Performance Amount,

provided that in no event will the Redemption Amount be less than $20 perSecurity. You could lose up to 80% of your investment.

Calculation of Positive

Performance Amount:

The Positive Performance Amount will be calculated by the Calculation Agentby using the following formula:

1 + Accelerated Participation Factor (Xm / Xo 1)

where:

The Accelerated Participation Factor is 168%.

Xm is the Reference Index Ending Value (as defined under "Description of theSecurities Calculation and Payment of the Redemption Amount").

Xo is the Reference Index Starting Value (as defined under "Description of theSecurities Calculation and Payment of the Redemption Amount").

The Reference Index Starting Value will be 1,000. See "Description of theSecurities Calculation and Payment of the Redemption Amount" in this

pricing supplement.


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Calculation of Negative

Performance Amount:

The Negative Performance Amount will be calculated by the Calculation Agentby using the following formula:

Xm / Xo

Redemption Amount at Maturity

Date:

On the basis of an Accelerated Participation Factor of 168% in the positiveperformance of the Reference Index, the Redemption Amount for the Securities

would be as follows:Redemption Amount

at Maturity Date /

Redemption Date% Return of Reference Index over

6 years {(Xm/Xo)/Xo}

($100 Invested) (% Return)

100% $268 168%

80% $234.40 134.4%

60% $200.80 100.80%

40% $167.20 67.2%

20% $133.60 33.6%

0% $100 0%

-20% $80 -20%

-40% $60 -40%

-60% $40 -60%

-80% $20 -80%

-100% $20 -80%

As a result, if the performance of the Reference Index over the term of theSecurities is positive, the return on the Securities will be increased by 68% overthe actual increase in value of the Reference Index over the term of the

Securities. If the performance of the Reference Index is 0% or negative, thereturn on the Securities is directly proportionate to the performance of theReference Index, provided that in no event will the Redemption Amount be lessthan $20 per Security.

Reference Index Values: The "Reference Index Starting Value" will be 1,000, as determined bymultiplying the Index Starting Value by a fraction, the numerator of which is1,000 and the denominator of which is the Index Starting Value on the PricingDate. See "Description of the Securities Calculation and Payment of theRedemption Amount".

The Index Starting Value was determined on the Pricing Date to be 17,394.92.

The "Reference Index Ending Value" is the product of the Index Level on the

Valuation Date and a fraction, the numerator of which is 1,000 and thedenominator of which is the Index Starting Value on the Pricing Date. See"Description of the Securities Calculation and Payment of the RedemptionAmount".

No Payments Before MaturityDate:

We will not make any payments on the Securities until the Maturity Date except inthe limited circumstances described under "Description of the Securities Eventsof Default and Acceleration" in this pricing supplement.

Status/Ranking: The Securities are senior securities and will be unsecured and will rank equallywith our unsecured and unsubordinated debt.


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Guarantee: All amounts payable or deliverable under the Securities will be unconditionallyguaranteed by the Guarantor. The Guarantee is a direct and unsecured obligationof the Guarantor and will rank pari passu with all other unsecured andunsubordinated indebtedness of the Guarantor.

Income Tax Considerations: Upon the redemption or payment of a Security on or prior to the Maturity Date,the holder of a Security (the "Securityholder") will generally be required toinclude in computing income the amount by which the Redemption Amountexceeds the Issue Price. If the Redemption Amount is less than the Issue Priceand a Security is held by a Securityholder as capital property, the Securityholderwill realize a capital loss on the redemption of the Security. If a Security is held

by a Securityholder as capital property and is disposed of (other than upon theredemption or payment of the Security on or prior to the Maturity Date), theSecurityholder should realize a capital gain (or capital loss). Prospective

purchasers of Securities should read the section entitled "Income TaxConsiderations Applicable to Canadian Resident Investors" in this pricingsupplement and consult with their own tax advisors regarding the application ofthe law to their particular circumstances.

Investment Eligibility: The Securities when issued will be qualified investments for registered

retirement savings plans, registered retirement income funds, registerededucation savings plans and deferred profit sharing plans (other than a deferredprofit sharing plan to which payments are made by the Company or an employerwith which the Company does not deal at arm's length).

Currency Risk: The performance of the Reference Index will be based solely upon the changesto the value of the Reference Index determined in Japanese yen and thus will beunaffected by changes in the exchange rate of Canadian dollars relative toJapanese yen.

Risk Factors: You should consider carefully the factors set out under "Risk Factors" in thispricing supplement before reaching a decision to buy the Securities.

Calculation Agent: Merrill Lynch International, as Calculation Agent, will be our agent for purposes

of calculating, among other things, the Redemption Amount.Index Calculation Agent: The "Index Calculation Agent" with respect to the Reference Index, will be

Nikkei Inc.

No Listing of Securities: The Securities will not be listed on any stock exchange.

Secondary Trading of Securities: Merrill Lynch Canada Inc. ("ML Canada") intends to buy and sell the Securitiesto create a daily secondary market for holders of the Securities. However, MLCanada will not be obligated to engage in any of these activities or continuethem once it has started.

Book-Entry Registration: The Securities will be issued in the form of global certificates which will be heldby CDS Clearing and Depository Services Inc., also known as CDS, or itsnominee. Except in certain limited circumstances, you will not be entitled to

receive certificates evidencing the Securities in certificated form.

Dealers for the Securities: ML Canada and National Bank Financial Inc., as agents

Dealer Fee: 4.0%

Early Sales Fee: To the extent that you sell any Securities to ML Canada, the purchase price youreceive for those Securities will reflect the deduction of a fee as follows:

Sale Period Fee Deduction

May 4, 2007 to May 3, 2008May 4, 2008 to May 3, 2009May 4, 2009 to May 3, 2010On or after May 4, 2010

$3 per Security$2 per Security$1 per Security

Nil


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EXAMPLES OF REDEMPTION AMOUNT CALCULATIONS

Below are examples of Redemption Amount calculations assuming the purchase of one Security with aninvestment term equal to that of the Securities. These examples are included for purposes of illustration onlyand should not be construed as a forecast or projection. No assurance can be given that the results shown in

these examples would ever be realized.

Example #1: "Gain" Scenario

Index Starting Value

Index Ending Value

11,766.48

20,591.34

Reference Index Starting Value 1,000

Reference Index Ending Value 1,750

Accelerated Participation Factor 168%

Redemption Amount (per Security) $100 x {1 + 168% (1750/1,000 - 1)}

= $226.00

(126.00% return)

Example #2: "Slight Gain" Scenario


Index Ending Value

11,766.48

12,354.80


Reference Index Ending Value 1,050

Accelerated Participation Factor 168%

Redemption Amount (per Security) $100 x {1 + 168% (1,050/1,000 - 1)}= $108.40

(8.40% return)

Example #3: "Loss" Scenario


Index Ending Value

11,766.48

10,589.83


Reference Index Ending Value 900

Redemption Amount (per Security) $100 x (900/1,000) = $90

(-10% loss)


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SUMMARY INFORMATIONQ&A

This summary includes questions andanswers that highlight selected information from this

pricing supplement and the accompanying Prospectusto help you understand the Merrill Lynch JapaneseEquity Accelerator Securities, Series 3 due May 3,2013 (the "Securities").

You should carefully read this pricingsupplement and the accompanying Prospectus to

fully understand the information relating to the

Company, the terms of the Securities, the

Reference Index and the tax and other

considerations that are important to you in

making a decision about whether to invest in the

Securities. You should carefully review the "Risk

Factors" section in this pricing supplement, which

highlights certain risks associated with an

investment in the Securities, to determine whether

an investment in the Securities is appropriate for

you.

References in this pricing supplement to"the Company", "we", "us" and "our" are to MerrillLynch Canada Finance Company and references to"dollars" or "$" are to Canadian currency unlessotherwise specified.

Who is the Company?

The Company is an unlimited liabilitycompany incorporated under the Companies Act(Nova Scotia) whose business is to make loans to orinvestments in, and to grant financial assistance byway of guarantee or otherwise to, affiliates of the

Guarantor. To that effect the Company may borrowmoney in whatever form and currency, issue bonds,debentures or other debt instruments in whateverform and in any manner whatsoever. The Companyis an indirect wholly owned subsidiary of theGuarantor. See the section "ML Finance" in theaccompanying Prospectus.

Who is the Guarantor?

The Guarantor is a holding company withvarious subsidiary and affiliated companies that

provide investment, financing, insurance and relatedservices on a global basis. For information about theGuarantor, see the section "The Guarantor" in theaccompanying Prospectus. You should also read theother documents the Guarantor has filed with theU.S. Securities and Exchange Commission (the"SEC") and the securities regulatory authorities inCanada, which you can find by referring to thesection "Documents Incorporated by Reference" inthis pricing supplement.

What are the Securities?

The Securities will be a series of seniorSecurities issued by the Company and will not be

secured by collateral. The Securities will rankequally with all of our other unsecured andunsubordinated debt. The Securities will mature onMay 3, 2013 (the "Maturity Date"), subject to a

postponement if a Market Disruption Event (asdefined below) occurs and the Redemption Amount

(as defined below) will be paid on the Maturity Date.We cannot redeem the Securities at an earlier dateexcept for certain tax reasons described under thesection "Description of the Notes Redemption forTax Reasons" in the accompanying Prospectus. Wewill not make any payments on the Securities untilthe Maturity Date or any earlier date as describedunder "Description of the Securities Events ofDefault and Acceleration" in this pricing supplement.

Each Security represents $100 principalamount of Securities. You may transfer theSecurities only in whole units. You will not have theright to receive physical certificates evidencing yourownership except under limited circumstances.Instead, we will issue the Securities in the form of aglobal certificate, which will be held by CDSClearing and Depository Services Inc., also known asCDS, or its nominee. Direct and indirect participantsin CDS will record your ownership of the Securities.You should refer to the section entitled "Descriptionof the Securities Depository" in this pricingsupplement.

Are there any risks associated with my

investment?

Yes, an investment in the Securities issubject to certain risks, including the risk that youmay lose up to 80% of your initial investment.Please refer to the section "Risk Factors" in this

pricing supplement.

What about income taxes?

Upon the redemption or payment of aSecurity on or prior to the Maturity Date, the holderof the Security (the "Securityholder") will generally

be required to include in computing income theamount by which the Redemption Amount exceeds

the Issue Price. If the Redemption Amount is lessthan the Issue Price and the Security is held by aSecurityholder as capital property, a Securityholderwill realize a capital loss on the redemption of theSecurity. If a Security is held by a Securityholder ascapital property and is disposed of (other than uponthe redemption or payment of a Security on or priorto the Maturity Date), the Securityholder shouldrealize a capital gain (or capital loss). Prospective

purchasers of Securities should read the sectionentitled "Income Tax Considerations Applicable toCanadian Resident Investors" in this pricingsupplement and consult with their own tax advisors


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regarding the application of the law to their particularcircumstances.

Are the Securities RRSP eligible?

Yes, the Securities are eligible for RRSPs,RRIFs, DPSPs and RESPs.

Will I receive interest payments on the Securities?

You will not receive any interest paymentson the Securities, but will instead receive theRedemption Amount on the Maturity Date. We havedesigned the Securities for investors who are willingto forego periodic interest payments on theSecurities, in exchange for the ability to participate in

possible increases in the value of the ReferenceIndex.

Who determines the value of the Reference Index

and what does the Reference Index reflect?

Merrill Lynch International (the"Calculation Agent") will determine the value of theRedemption Amount which is based upon theReference Index as determined by Nikkei Inc.("NKS") and as described in the section entitled "TheReference Index" in this pricing supplement. TheSecurities are designed to allow investors to

participate in changes in the value of the ReferenceIndex. The Reference Index is denominated inJapanese yen. General information relating to theReference Index, its publisher and its composition isincluded in the section entitled "The ReferenceIndex" in this pricing supplement.

What is my exposure to currency risk?

The performance of the Reference Indexwill be based solely on changes in the ReferenceIndex determined at all times in Japanese yen andthus will not be directly affected by changes in theexchange rate of Canadian dollars relative toJapanese yen.

How has the Reference Index performed

historically?

We have included tables showing thehistorical values of the Reference Index. We have

provided this historical information to help youevaluate the past performance of the ReferenceIndex; however, this past performance is notindicative of how the Reference Index will performin the future.

What will I receive on the Maturity Date?

On the Maturity Date, you will receive acash payment equal to the "Redemption Amount"for each Security. If the Reference Index Ending

Value is greater than the Reference Index StartingValue, the Redemption Amount per Security towhich you will be entitled will be equal to the

product of $100 and the Positive PerformanceAmount (as defined below). As a result, your returnon the Securities will be increased by 68% over theactual increase in the value of the Reference Indexover the term of the Securities. If the Reference

Index Ending Value is equal to or less than theReference Index Starting Value, the RedemptionAmount for each Security will be equal to the productof $100 and the Negative Performance Amount (asdefined below), provided that such RedemptionAmount will not be less than $20. The NegativePerformance Amount is calculated such that yourreturn is directly proportionate to the amount bywhich the Reference Index has decreased ascompared to the Index Starting Value, provided thatthe Redemption Amount will not be less than $20 perSecurity.

For more specific information about theRedemption Amount, please see the section entitled"Description of the Securities Calculation andPayment of the Redemption Amount" in this pricingsupplement.

Will the Securities be listed on a stock exchange?

The Securities will not be listed on anysecurities exchange and we do not expect a tradingmarket for the Securities to develop, which mayaffect the price that you receive for your Securitiesupon any sale prior to the Maturity Date. You shouldreview the section entitled "Risk Factors A trading

market for the Securities is not expected to develop"in this pricing supplement.

What is the role of Merrill Lynch Canada Inc.?

Our affiliate, Merrill Lynch Canada Inc.("ML Canada"), is the lead agent for the offering andsale of the Securities. After the initial offering, MLCanada intends to buy and sell the Securities to createa daily secondary market for holders of theSecurities. However, ML Canada will not beobligated to engage in any of these market activitiesor continue them once it has started.

What are the roles of the Calculation

Agent and the Index Calculation Agent?

Merrill Lynch International will be our agentfor purposes of calculating, among other things, theReference Index Starting Value, the Reference IndexEnding Value and the Redemption Amount. Undercertain circumstances, these duties could result in aconflict of interest between the status of MerrillLynch International as our affiliate and as asubsidiary of the Guarantor and its responsibilities asCalculation Agent. For purposes of calculating the


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value for the Reference Index, our agent will be NKS(the "Index Calculation Agent"). Under certaincircumstances, the duties of the Index CalculationAgent and its other business activities could give riseto conflicts of interest. Whenever the CalculationAgent is required to act, it will do so in good faithusing its reasonable judgment.


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RISK FACTORS

Your investment in the Securities will involve risks. You should carefully consider the followingdiscussion of risks and the discussion of risks included in the Prospectus before deciding whether an investment inthe Securities is appropriate for you.

An investment in the Securities entails significant risks that are not generally associated with similarinvestments in conventional fixed rate or floating rate debt securities

The return on the Securities is linked to the Reference Index, which may increase or decrease over the termof the Securities. Although the investor has the opportunity to receive a positive return, the investor risks a lowerreturn than conventional interest-bearing debt securities or a negative return, and an investor could lose a significant

portion of the principal amount of the Securities purchased. As such, the investment may not be suitable for personsunfamiliar with the Reference Index, or unwilling or unable to bear the risk attendant to a debt security of this type.

Your yield may be lower than the yield on a standard debt security with a comparable term

The amount you receive on your investment may be less than the return you could earn on otherinvestments. Your investment may not reflect the full opportunity cost to you when you take into account factorsthat affect the time value of money.

Your investment may result in a loss

We will not repay you a fixed amount of principal on the Maturity Date equal to your initial investment inthe Securities. The Redemption Amount will depend on the change in the level of the Reference Index. Because thelevel of the Reference Index is subject to market fluctuations, the amount you receive on the Maturity Date may bemore or less, and possibly significantly less, than the principal amount per Security. As a result, you may lose up to80% of your investment in the Securities.

Your return will not reflect the total return of owning the securities included in the Reference Index

The return on your Securities will not reflect the total return you would realize if you actually owned thesecurities included in the Reference Index and received the income, if any, paid on those securities because the value

of the Reference Index is calculated, in part, by reference to the prices of the securities included in the ReferenceIndex without taking into consideration the value of dividends or other distributions paid on those securities. By

purchasing a Security, you will not be entitled to any rights with respect to any securities which comprise theReference Index.

Your return will not reflect the total return of an investment in the Reference Index directly

The return on the Securities is tied to the value of the Reference Index as of the Valuation Date. TheSecurities are designed to provide an accelerated return to you if the Reference Index Ending Value is greater thanthe Reference Index Starting Value; however, the value of the Securities will not reflect fluctuations in the value ofthe Reference Index at any time prior to the Valuation Date. The Redemption Amount is based on the ReferenceIndex Ending Value, and you will not be entitled to the benefit of any prior increase in the value of the ReferenceIndex if the Reference Index Ending Value is not greater than the Reference Index Starting Value on the Valuation

Date.

Your return depends on the Reference Index Ending Value being greater than the Reference Index Starting

Value on the Valuation Date; your principal will not be protected if the Reference Index Ending Value is not

equal to or greater than the Reference Index Starting Value

The Reference Index will have an initial level of 1,000; the Reference Index Ending Value must be greaterthan 1,000 in order for investors to receive a Redemption Amount greater than the principal amount of theSecurities. If the Reference Index Ending Value is equal to 1,000 on the Valuation Date, investors will receive the

principal amount of the Securities on the Maturity Date and therefore will not have earned any return on theirinvestment. If the Reference Index Ending Value is less than 1,000 on the Valuation Date, investors will be entitled


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12

to a Redemption Amount that is less than the principal amount of the Securities (although such amount may not beless than 20% of the principal amount per Security). As a result, you could lose up to 80% of your investment.

Your return may be affected by factors affecting the Japanese securities market

The Reference Index is computed by reference to the value of the equity securities of companies listed on

the Nikkei 225 Index. The return on the Securities will be affected by factors affecting the value of securities in thismarket. The Japanese securities market may be more volatile than U.S., Canadian or other securities markets andmay be affected by market developments in different ways than U.S., Canadian or other securities markets. Director indirect government intervention to stabilize that securities market and cross-shareholdings in companies on thatmarket may affect prices and the volume of trading on that market. Also, there is generally less publicly availableinformation about Japanese companies than about North American companies that are subject to the reportingrequirements of Canadian or U.S. securities regulatory authorities. Additionally, accounting, auditing and financialreporting standards and requirements in Japan differ from one another and from those applicable to Canadianreporting companies.

The prices and performance of securities of companies in Japan may be affected by political, economic,financial and social factors in that region. In addition, recent or future changes in Japan's government, economicand fiscal policies, the possible imposition of, or changes in, currency exchange laws or other laws or restrictions arefactors that could negatively affect the Japanese securities market. Moreover, the Japanese economy may differfavourably or unfavourably from the Canadian economy in economic factors such as growth of gross national

product, rate of inflation, capital reinvestment, resources and self-sufficiency.

You must rely on your own evaluation of the merits of an investment linked to equity securities

In the ordinary course of their business, affiliates of the Company from time to time express views onexpected movements with respect to the price of certain equities. These views are sometimes communicated toclients who participate in equity markets. However, these views, depending upon world wide economic, politicaland other developments, may vary over differing time horizons and are subject to change. Moreover, other

professionals who deal in equities may at any time have significantly different views from those of our affiliates.For reasons such as these, we believe that most investors in equities markets derive information concerning thosemarkets from multiple sources. In connection with your purchase of the Securities, you should investigate the equitymarkets and not rely on views which may be expressed by our affiliates in the ordinary course of their businesses

with respect to futures price movements or fluctuations in the prices of certain equities.

You should make investigations as you deem appropriate as to the merits of an investment linked to equityindices. Neither the offering of the Securities nor any views which may from time to time be expressed by ouraffiliates in the ordinary course of their businesses with respect to fluctuations in equity prices constitutes arecommendation as to the merits of an investment in the Securities.

A trading market for the Securities is not expected to develop

The Securities will not be listed on any securities exchange and we do not expect a trading market for theSecurities to develop. ML Canada intends to buy and sell the Securities to create a daily secondary market forholders of the Securities. However, ML Canada will not be obligated to engage in any of these market activities orcontinue them once it has started. ML Canada intends to bid for Securities offered for sale to it by holders of the

Securities following the issue date of the Securities, although it is not required to do so and may cease making bidsat any time. The limited trading market for your Securities may affect the price that you receive for your Securitiesif you do not wish to hold your investment until the Maturity Date. In addition, if you sell your Securities betweenMay 4, 2007 and May 3, 2010 to ML Canada, ML Canada will deduct an early sales fee from the price paid to youfor the Securities ranging from $3 per Security to $1 per Security depending on when you sell your Securities. See"Summary of the Offering Early Sales Fee".

The Index Calculation Agent has no obligations relating to the Securities

The Index Calculation Agent has no obligations relating to the Securities or amounts to be paid to you,including any obligation to take the needs of the Company or of beneficial owners of the Securities intoconsideration for any reason. The Index Calculation Agent will not receive any of the proceeds of the offering of


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the Securities and is not responsible for, and has not participated in, the offering of the Securities and is notresponsible for, and will not participate in, the determination or calculation of the amount receivable by beneficialowners of the Securities.

The Index Calculation Agent is under no obligation to continue the calculation and dissemination of theReference Index. The Securities are not sponsored, endorsed, sold or promoted by the Index Calculation Agent. No

inference should be drawn from the information contained in this pricing supplement or the accompanyingProspectus that the Index Calculation Agent makes any representation or warranty, implied or express, to theCompany, the holders of the Securities or any member of the public regarding the advisability of investing insecurities generally or in the Securities in particular or the ability of the Reference Index to track general stockmarket performance.

Many factors affect the trading value of the Securities; these factors interrelate in complex ways and the

effect of any one factor may offset or magnify the effect of another factor

The trading value of the Securities will be affected by factors that interrelate in complex ways. The effectof one factor may offset the increase in the trading value of the Securities caused by another factor and the effect ofone factor may exacerbate the decrease in the trading value of the Securities caused by another factor. Thefollowing paragraphs describe the expected impact on the trading value of the Securities given a change in a specificfactor, assuming all other conditions remain constant.

The value of the Reference Index is expected to affect the trading value of the Securities . We expect thatthe trading value of the Securities will depend substantially on whether the value of the Reference Index exceeds (oris less than) the Index Starting Value. If you choose to sell your Securities when the value of the Reference Indexexceeds the Index Starting Value, you may receive substantially less than the Redemption Amount that would be

payable on the Maturity Date based on that value because of the expectation that the value of the Reference Indexwill continue to fluctuate until the Reference Index Ending Value is determined. If you choose to sell yourSecurities when the value of the Reference Index is below the Index Starting Value, you may receive less than $100

per Security.

As the time remaining to the Maturity Date decreases, the "time premium" associated with the Securitieswill decrease. We anticipate that before the Maturity Date, the Securities may trade at a value above that whichwould be expected based on the level of interest rates and the value of the Reference Index. This difference will

reflect a "time premium" due to expectations concerning the performance of the Reference Index during the periodbefore the Maturity Date. However, as the time remaining to the Maturity Date decreases, we expect that this timepremium will decrease, lowering the trading value of the Securities.

Changes in the levels of interest rates may affect the trading value of the Securities . In general, if Canadianinterest rates increase, we expect that the trading value of the Securities may decrease because such Securities may

be less attractive relative to interest bearing alternative investments; and, conversely, if Canadian interest ratesdecrease, we expect that the trading value of the Securities may increase. The level of interest rates in Japan mayalso affect the economy in Japan and, in turn, the value of the Reference Index. Rising interest rates may lower thevalue of the Reference Index and, thus, may decrease the value of the Securities. Falling interest rates may increasethe value of the Reference Index and, thus, may increase the value of the Securities.

Changes in the volatility of the Reference Index are expected to affect the trading value of the Securities.

Volatility is the term used to describe the size and frequency of price and/or market fluctuations. If the volatility, oranticipated volatility, of the Reference Index decreases, the trading value of the Securities may be adverselyaffected.

Changes in dividend yields of the stocks included in the Reference Index are expected to affect the tradingvalue of the Securities. In general, if dividend yields on the stocks included in the Reference Index increase, weexpect that the value of the Securities will decrease and, conversely, if dividend yields on the stocks included in theReference Index decrease, we expect that the value of the Securities will increase.

Changes in our credit ratings may affect the trading value of the Securities. Our credit ratings and thecredit ratings of the Guarantor are an assessment of our ability to pay our obligations. Consequently, real oranticipated changes in our credit ratings may affect the trading value of the Securities. However, because your


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return on your Securities is dependent upon factors in addition to our ability to pay our obligations under theSecurities, such as the performance of the Reference Index, an improvement in our credit ratings will not reduce theother investment risks related to the Securities.

In general, assuming all relevant factors are held constant, we expect that the effect on the trading value ofthe Securities of a given change in most of the factors listed above will be less if it occurs later in the term of the

Securities than if it occurs earlier in the term of the Securities. However, we expect that the effect on the tradingvalue of the Securities of a given increase in the value of the Reference Index will be greater if it occurs later in theterm of the Securities than if it occurs earlier in the term of the Securities.

Purchases and sales of stocks by us and our affiliates may affect your return

We and our affiliates may from time to time buy or sell the stocks included in the Reference Index for ourown accounts for business reasons or in connection with hedging our obligations under the Securities. Also, we mayissue or our affiliates may issue or underwrite other financial instruments with returns indexed to the prices of theReference Index. These trading and underwriting activities could affect the level of the Reference Index in a mannerthat would be adverse to your investment in the Securities.

You are not entitled to any of the securities which comprise the Reference Index

While the value of the Securities is tied to the performance of the Reference Index, your purchase of theSecurities will not entitle you to any rights with respect to the securities that comprise the Reference Index.

Index Levels will not be directly affected by exchange rate changes

The performance of the Reference Index will be based solely on changes in the Reference Indexdetermined at all times in Japanese yen and thus will not be directly affected by changes in the exchange rate ofCanadian dollars relative to Japanese yen.

Potential conflicts

Our affiliate, Merrill Lynch International, is our agent for the purposes of calculating, among other things,the Reference Index Starting Value, Reference Index Ending Value and the Redemption Amount. Under certain

circumstances, the role of Merrill Lynch International as our affiliate and its responsibilities as Calculation Agent forthe Securities could give rise to conflicts of interest. These conflicts could occur, for instance, in connection with

judgments that it would be required to make in the event of a discontinuance or unavailability of the ReferenceIndex. See "Description of the Securities Adjustments to the Reference Index" and " Discontinuance of theReference Index" in this pricing supplement. Merrill Lynch International is required to carry out its duties asCalculation Agent in good faith and using its reasonable judgment. However, because we are affiliated with MerrillLynch International, potential conflicts of interest could arise.

We have entered into arrangements with one of our affiliates to hedge the market risks to us associated withour obligation to pay the amounts due on the Securities. This affiliate expects to make a profit in connection withthese arrangements. We did not seek competitive bids for these arrangements from unaffiliated parties.

The Company or its affiliates may presently or from time to time engage in business with one or more of

the companies included in the Reference Index including extending loans to, making equity investments in orproviding advisory services to those companies, including merger and acquisition advisory services. In the courseof business, the Company or its affiliates may acquire non-public information relating to the companies included inthe Reference Index and, in addition, one or more affiliates of the Company may publish research reports about thecompanies included in the Reference Index. The Company does not make any representation to any purchasers ofthe Securities regarding any matters whatsoever relating to the companies included in the Reference Index. Any

prospective purchaser of the Securities should undertake an independent investigation of the companies included inthe Reference Index as in its judgment is appropriate to make an informed decision regarding an investment in theSecurities. The composition of the companies included in the Reference Index does not reflect any investment orsell recommendations of the Company or its affiliates.


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You may not be able to effect service of process or enforce judgments obtained against the Guarantor in

Canada

The Guarantor is incorporated under the laws of Delaware, a foreign jurisdiction, and resides, and itsprincipal assets are located, in the United States. It may not be possible therefore for you to effect service of processwithin Canada upon the Guarantor in respect of actions under the Securities. Although the Guarantor has appointedML Canada as its agent for service of process for certain securities law purposes in each of the provinces andterritories of Canada, it may not be possible for you to collect from the Guarantor judgments obtained in Canadiancourts. Judgments against the Guarantor may therefore have to be enforced in the United States and may be subjectto additional defences as a result. In addition, all of the Guarantor's directors and officers reside outside Canada andmost of their assets are located outside Canada. It may not be possible therefore for you to effect service of processwithin Canada upon the Guarantor's directors and officers or to collect from them judgments obtained in Canadiancourts.

Amounts payable on the Securities may be limited by applicable law

Under the Criminal Code (Canada), a lender is prohibited from entering into an agreement or arrangementto receive interest at an effective annual rate of interest, calculated in accordance with generally accepted actuarial

practices and principles, exceeding 60% of the credit advanced under the agreement or arrangement. We willpromise, for the benefit of the holders of the Securities, to the extent permitted by law, not to voluntarily claim thebenefits of any laws concerning usurious rates of interest.


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DESCRIPTION OF THE SECURITIES

Description of the Securities

The Company will issue the Securities as series of senior securities under the indenture dated as of June 30,2006, as may be amended and supplemented from time to time (the "Indenture"). The Indenture is more fullydescribed in the accompanying Prospectus under the section entitled "Description of the Notes". The Securities will

mature on May 3, 2013 (the "Maturity Date"), subject to a postponement if a Market Disruption Event (as definedbelow) occurs.

While on the Maturity Date a beneficial owner of a Security as of the fifteenth day immediately precedingthe Maturity Date, but in any event not later than April 18, 2013 (the "Record Date") will receive an amount equal tothe Redemption Amount, there will be no payments of interest, periodic or otherwise. See " Calculation andPayment of the Redemption Amount" in this pricing supplement.

The Securities will not be subject to redemption by the Company or at the option of any beneficial ownerbefore the Maturity Date except for certain tax reasons described under the section "Description of the Notes Redemption for Tax Reasons" in the accompanying Prospectus. If an Event of Default occurs with respect to theSecurities, holders of the Securities may accelerate the maturity of the Securities, as described under " Events ofDefault and Acceleration" in this pricing supplement and "Description of the Notes Events of Default" in the

accompanying Prospectus.

The Company will issue the Securities in denominations of whole units each with a principal amount of$100 per Security and a minimum subscription of $2,000. You may transfer the Securities only in whole units. Youwill not have the right to receive physical certificates evidencing your ownership except under limitedcircumstances. Instead, we will issue the Securities in the form of a global certificate, which will be held by CDSClearing and Depository Services Inc. ("CDS"), or its nominee. Direct and indirect participants in CDS will recordyour ownership of the Securities. You should refer to the section " Depository" in this pricing supplement.

The Securities will not have the benefit of any sinking fund.

Calculation and Payment of the Redemption Amount

On the Maturity Date, a beneficial owner of a Security as of the Record Date will be entitled to receive theRedemption Amount for each Security. The Redemption Amount to which the holder of a Security will be entitledwill be equal to the product of $100 and the Positive Performance Amount (if the Reference Index Ending Value isgreater than the Reference Index Starting Value) or the product of $100 and the Negative Performance Amount (ifthe Reference Index Ending Value is equal to or less than the Reference Index Starting Value). In no event shall theRedemption Amount be less than $20.

All determinations made by the Calculation Agent and the Index Calculation Agent will be at its solediscretion and, absent manifest error, will be conclusive for all purposes and binding on the Company, the Guarantorand the holders and beneficial owners of the Securities. Whenever the Calculation Agent is required to act, it willdo so in good faith using its reasonable judgment.

The Positive Performance Amount will be calculated by the Calculation Agent by using the following

formula:1 + Accelerated Participation Factor (Xm / Xo 1).

The Negative Performance Amount will be calculated by the Calculation Agent by using the followingformula:

Xm / Xo

Where:

"Xm" means the Reference Index Ending Value; and

"Xo" means the Reference Index Starting Value.


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DEFINITIONS

"Accelerated Participation Factor" is 168% for the Securities.

"Index Calculation Agent" means Nikkei Inc. ("NKS").

"Index Level" means the closing level of the Reference Index as quoted on the "NKY Index" Bloombergpage.

If the Index Level is not published on the relevant Bloomberg page referred to above, the CalculationAgent may in its sole discretion use a successor page/publication or alternative source as it considersappropriate.

"Index Starting Value" means 17,394.92, the Index Level on the Pricing Date.

"Pricing Date" means May 2, 2007, the date on which the Securities are priced for initial sale to the public.

"Reference Index" is the Nikkei 225 Index.

"Reference Index Ending Value" means the product of the Index Level for the Reference Index on theValuation Date and a fraction, the numerator of which is 1,000 and the denominator of which is the IndexStarting Value.

"Reference Index Starting Value" means the product of the Index Starting Value and a fraction, thenumerator of which is 1,000 and the denominator of which is the Index Starting Value. For greatercertainty, the Reference Index Starting Value is equal to 1,000.

"Valuation Date" means April 26, 2013.

Market Disruptions

If the Valuation Date is a Disrupted Day (as defined below), the date on which the Index Level isdetermined shall be the first succeeding Scheduled Trading Day (as defined below) that is not a Disrupted Day,unless each of the eight Scheduled Trading Days following the Valuation Date to and including the Cut-off Date is aDisrupted Day. In that case (i) the Cut-Off Date shall be deemed to be the Valuation Date for the Reference Index,notwithstanding the fact that such day is a Disrupted Day, and (ii) the Calculation Agent shall determine the IndexLevel as of the Valuation Time (as defined below) on the Cut-Off Date in accordance with the formula for andmethod of calculating the Reference Index last in effect prior to the occurrence of the first Disrupted Day using theExchange (as defined below) traded or quoted price as of the Valuation Time on the Cut-Off Date of each securitycomprised in the Reference Index (or, if an event giving rise to a Disrupted Day has occurred in respect of therelevant security on the Cut-Off Date, its good faith estimate of the value for the relevant security as of theValuation Time on the Cut-Off Date).

For the purposes of the foregoing:

"Cut-off Date" means the eighth Scheduled Trading Day immediately following the Valuation Date,

whether or not such date is a Disrupted Day.

"Disrupted Day" means any Scheduled Trading Day on which the Exchange or any Related Exchange failsto open for trading during its regular trading session or on which a Market Disruption Event has occurred.

"Early Closure" means the closure on an Exchange Business Day of the Exchange(s) relating to securitiesthat comprise 20 per cent or more of the level of the Reference Index or any Related Exchange(s) prior to itsScheduled Closing Time unless such earlier closing time is announced by such Exchange(s) or Related Exchange(s)at least one hour prior to the earlier of (i) the actual closing time for the regular trading session on such Exchange(s)or Related Exchange(s) on such Exchange Business Day and (ii) the submission deadline for orders to be entered


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into the Exchange or Related Exchange system for execution at the Valuation Time on such Exchange BusinessDay.

"Exchange" means in respect of each security comprising the Reference Index, the exchange or quotationsystem on which such security is listed (for the avoidance of doubt, where such security has more than one listing,"Exchange" shall mean the exchange or quotation system used by the Index Calculation Agent when calculating the

Reference Index), any successor to such exchange or quotation system or any substitute exchange or quotationsystem to which trading in such security has temporarily relocated (provided that the Calculation Agent hasdetermined that there is comparable liquidity relative to such security on such temporary substitute exchange orquotation system as on the original Exchange).

"Exchange Business Day" means any Scheduled Trading Day on which each Exchange and each RelatedExchange are open for trading during their respective regular trading sessions, notwithstanding such Exchange orRelated Exchange closing prior to its scheduled weekday closing time.

"Exchange Disruption" means any event (other than Early Closure) that disrupts or impairs (as determinedby the Calculation Agent) the ability of market participants in general (i) to effect transactions in, or obtain marketvalues for, securities that comprise 20 per cent or more of the level of the Reference Index, or (ii) to effecttransactions in, or obtain market values for, futures or options contracts relating to the Reference Index on anyrelevant Related Exchange.

"Market Disruption Event" means in respect of the Reference Index, the occurrence or existence of (i) aTrading Disruption, (ii) an Exchange Disruption, which in either case the Calculation Agent determines is material,at any time during the one hour period that ends at the relevant Valuation Time, or (iii) an Early Closure. For the

purposes of determining whether a Market Disruption Event exists at any time, if a Market Disruption Event occursin respect of a security included in the Reference Index at any time, then the relevant percentage contribution of thatsecurity to the level of the Reference Index shall be based on a comparison of (x) the portion of the level of theReference Index attributable to that security and (y) the overall level of the Reference Index, in each caseimmediately before the occurrence of such Market Disruption Event.

"Related Exchange" means each exchange or quotation system on which options contracts and futurescontracts relating to the Reference Index are traded, any successor to such exchange or quotation system or anysubstitute exchange or quotation system to which trading in futures or options contracts relating to the Reference

Index has temporarily relocated (provided that the Calculation Agent has determined that there is comparableliquidity relative to the futures or options contracts relating to the Reference Index on such temporary substituteexchange or quotation system as on the original Related Exchange).

"Scheduled Closing Time" means, in respect of an Exchange or Related Exchange and a ScheduledTrading Day, the scheduled weekday closing time of such Exchange or Related Exchange on such ScheduledTrading Day, without regard to after hours or any other trading outside of the regular trading session hours.

"Scheduled Trading Day" means any day on which each Exchange and Related Exchange are scheduledto be open for trading for their respective regular trading sessions.

"Trading Disruption" means any suspension of, or limitation imposed on, trading by the Exchange orRelated Exchange or otherwise and whether by reason of movements in price exceeding limits permitted by the

Exchange or Related Exchange or otherwise (i) relating to securities that comprise 20 per cent or more of the levelof the Reference Index, or (ii) in futures or options contracts relating to the Reference Index on any RelatedExchange.

"Valuation Time" means in relation to each constituent of the Reference Index, the close of trading on theExchange on which such constituent is traded or, following a Disrupted Day, the time the Calculation Agentconsiders (in its sole discretion) to be the regular close of trading on the Exchange.

Adjustments to the Reference Index

If the Reference Index is (i) not calculated and announced by the Index Calculation Agent but is calculatedand announced by a successor sponsor acceptable to the Calculation Agent, or (ii) replaced by a successor index


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using, in the determination of the Calculation Agent, the same or a substantially similar formula for and method ofcalculation as used in the calculation of the Reference Index, then in each case, that reference index (the "SuccessorIndex") will be deemed to be the Reference Index and the Calculation Agent shall notify the Trustee (as defined inthe accompanying Prospectus) and the Company of that determination as soon as reasonably practicable thereafter.

Discontinuance of the Reference Index

If (i) on or prior to the Valuation Date, the Index Calculation Agent announces that it will make a materialchange in the formula for or the method of calculating the Reference Index or in any other way materially modifiesthe Reference Index (other than a modification prescribed in that formula or method to maintain the Reference Indexin the event of changes in constituent stock and capitalization and other routine events) (an "Index Modification"),or permanently cancels the Reference Index and no Successor Index exists (an "Index Cancellation"), or (ii) on theValuation Date, the Index Calculation Agent fails to calculate and announce the Reference Index (an "IndexDisruption" and, together with an Index Modification and an Index Cancellation, each an "Index AdjustmentEvent"), then the Calculation Agent shall determine if such Index Adjustment Event has a material effect on thevalue of the Securities and, if so, shall calculate the Index Level for the Reference Index, using in lieu of a publishedlevel for the Reference Index, the level for the Reference Index as at the Valuation Time on the Valuation Date asdetermined by the Calculation Agent in accordance with the formula for and method of calculating the ReferenceIndex last in effect prior to the change, failure or cancellation, but using only those securities that comprised theReference Index immediately prior to that Index Adjustment Event.

Events of Default and Acceleration

In case an Event of Default (as described under "Description of Notes Events of Default" in theaccompanying Prospectus) with respect to any Securities has occurred and is continuing, the amount payable to a

beneficial owner of a Security upon any acceleration permitted by the Securities, with respect to each Security, willbe equal to the Redemption Amount, calculated as though the date of acceleration were the Maturity Date of theSecurities and using such valuation date as the Calculation Agent shall determine in its sole discretion. See "Calculation and Payment of the Redemption Amount" in this pricing supplement.

Depository

Book-Entry Only Securities

Upon issuance, the Securities will be issued in book-entry form and will be represented by fully registeredglobal securities ("Book Entry Securities"). Each Book Entry Security will be held by, or on behalf of, CDS or suchother entity designated in writing by the Company to act as depository. The Book Entry Securities will be registeredin the name of CDS or its nominee. Except as described below under " Exchange for Securities in CertificatedForm" in this pricing supplement, no Book Entry Security may be transferred except as a whole by the depository toa nominee of the depository or by a nominee of the depository to the depository, or another nominee of thedepository, or by the depository or any such nominee to a successor of the depository, or a nominee of the successor.

Ownership of the Securities will be constituted through beneficial interests in the Book Entry Securities,and will be represented through book-entry accounts of institutions, as direct and indirect participants of thedepository, acting on behalf of the beneficial owners of such Securities. Each purchaser of a Security represented by

a Book Entry Security will receive a customer confirmation of purchase from the selling agent from whom theSecurities are purchased in accordance with practices and procedures of such selling agent.

CDS Procedures

The following is based on information provided by CDS:

Upon the issuance by the Company of Book Entry Securities represented by a certificate in global form (a"Global Security"), the depository will credit, on its book-entry registration and transfer system, the respective

principal amounts of the Book Entry Securities represented by such Global Security to the accounts of itsparticipants. The accounts to be credited shall be designated by the agents of such Book Entry Securities, or theCompany, if such Book Entry Securities are offered and sold directly by the Company, as the case may be.


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Ownership of beneficial interests in a Global Security will be limited to participants or persons that hold intereststhrough participants. Ownership of beneficial interests in Book Entry Securities represented by a Global Security orGlobal Securities will be shown on, and the transfer of that ownership will be effected only through, recordsmaintained by the depository (with respect to interests of participants in the depository), or by participants in thedepository or persons that may hold interests through such participants (with respect to persons other than

participants in the depository).

So long as the depository for a Global Security, or its nominee, is the registered owner of the GlobalSecurity, the depository or its nominee, as the case may be, will be considered the sole owner or holder of the BookEntry Securities represented by such Global Security. Except as provided below, owners of beneficial interests inBook Entry Securities represented by such Global Security or Global Securities will not be entitled to have BookEntry Securities represented by such Global Security registered in their names, will not receive or be entitled toreceive physical delivery of Book Entry Securities in definitive form and will not be considered the registeredowners or holders thereof.

Accordingly, each person owning a beneficial interest in a Global Security must rely on the procedures ofthe depository and, if such person is not a participant, on the procedures of the participant through which such

person owns its interest, to exercise any rights of a holder under a Global Security. The Company understands thatunder existing policies of the depository and industry practices, if the Company requests any action of holders or ifan owner of a beneficial interest in such a Global Security desires to give any notice or take any action which a

holder is entitled to give or take under a Global Security, the depository would authorize the participants holding therelevant beneficial interests to give such notice or take such action. Any beneficial owner that is not a participantmust rely on the contractual arrangements it has directly, or indirectly through its financial intermediary, with a

participant to give such notice or take such action.

Payments of the Redemption Amount on the Book Entry Securities represented by a Global Securityregistered in the name of the depository or its nominee will be made by the Company (or a paying agent, if specified

by the Company) to the depository or its nominee, as the case may be, as the registered owner of a Global Security.None of the Company, the paying agent (if any) or any other agent of the Company will have any responsibility orliability for any aspect of the records relating to or payments made on account of beneficial ownership interests of aGlobal Security or for maintaining, supervising or reviewing any records relating to such beneficial ownershipinterests. Except in the circumstance described in the following paragraph, the Company expects that the depositoryor its nominee, upon receipt of any payment of the Redemption Amount on a Global Security will immediately

credit the accounts of the related participants with payment in amounts proportionate to their respective holdings inprincipal amount of beneficial interests in such Global Security as shown on the records of the depository. TheCompany also expects that payments by participants to owners of beneficial interests in a Global Security will begoverned by standing customer instructions and customary practices as is now the case with securities held for theaccounts of customers in bearer form or registered in "street name" and will be the responsibility of such

participants.

Exchange for Securities in Certificated Form

If an Event of Default has occurred or if the depository is at any time unwilling or unable to continue asdepository for the Securities and a successor depository is not appointed by the Company within 60 days, theCompany will issue certificated Securities in exchange for all outstanding Global Securities. In addition, theCompany may at any time determine not to have Book Entry Securities represented by Global Securities and, insuch event, will issue certificated Securities in exchange for all Global Securities. In either instance, an owner of a

beneficial interest in a Global Security will be entitled to have certificated Securities equal in principal amount tosuch beneficial interest registered in its name and will be entitled to physical delivery of such certificated Securities.Such certificated Securities shall be registered in such name or names as the depository shall instruct the Companyor its paying agent. It is expected that such instructions may be based upon directions received by the depositoryfrom participants with respect to beneficial interests in such Global Securities. Certificated Securities so issued will

be issued in such denominations as the Company may determine from time to time and will be issued in registeredform only. No service charge will be made for any transfer or exchange of such certificated Securities, but theCompany may require payment of a sum sufficient to cover any tax or other governmental charge payable inconnection therewith.


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THE REFERENCE INDEX

The Securities are designed to allow investors to participate in the movement of the value of the ReferenceIndex over the term of the Securities. The Reference Index is described in the section below.

The Index Calculation Agent has no obligations relating to the Securities or amounts to be paid to you,including any obligation to take the needs of the Company or of beneficial owners of the Securities into

consideration for any reason. The Index Calculation Agent will not receive any of the proceeds of the offering ofthe Securities and is not responsible for, and has not participated in, the offering of the Securities and is notresponsible for, and will not participate in, the determination or calculation of the amount receivable by beneficialowners of the Securities.

All disclosure contained in this pricing supplement regarding the Reference Index, including, withoutlimitation, its make-up, method of calculation and changes in its components, unless otherwise stated, has beenderived from the Stock Market Indices Data Book published by NKS and other publicly available sources. Theinformation reflects the policies of NKS as stated in these sources and the policies are subject to change at thediscretion of NKS. None of the Company, the Guarantor nor the Agents assume any responsibility for the accuracyor completeness of that information.

The Reference Index is a stock index calculated, published and disseminated by NKS that measures the

composite price performance of selected Japanese stocks. The Reference Index is currently based on 225 underlyingstocks trading on the Tokyo Stock Exchange (the "Tokyo Exchange") and represents a broad cross-section ofJapanese industry. All 225 of the stocks underlying the Reference Index are stocks listed in the First Section of theTokyo Exchange. Stocks listed in the First Section are among the most actively traded stocks on the TokyoExchange. Futures and options contracts on the Reference Index are traded on the Singapore International MonetaryExchange, the Osaka Securities Exchange and the Chicago Mercantile Exchange.

The Reference Index is a modified, price-weighted index. Each stock's weight in the Reference Index isbased on its price per share rather than the total market capitalization of the issuer. NKS calculates the ReferenceIndex by multiplying the per share price of each underlying stock by the corresponding weighting factor for thatunderlying stock (a "Weight Factor"), calculating the sum of all these products and dividing that sum by a divisor.The divisor, initially set on May 16, 1949 at 225, was 24.293 as of May 2, 2007, and is subject to periodicadjustments as set forth below. Each Weight Factor is computed by dividing 50 by the par value of the relevant

underlying stock, so that the share price of each underlying stock when multiplied by its Weight Factor correspondsto a share price based on a uniform par value of 50. Each Weight Factor represents the number of shares of therelated underlying stock which are included in one trading unit of the Reference Index. The stock prices used in thecalculation of the Reference Index are those reported by a primary market for the underlying stocks, which iscurrently the Tokyo Exchange. The level of the Reference Index is calculated once per minute during TokyoExchange trading hours. The Reference Index does not reflect a reinvestment of dividend payments on theunderlying stocks.

In order to maintain continuity in the level of the Reference Index in the event of certain changes due tonon-market factors affecting the underlying stocks, such as the addition or deletion of stocks, substitution of stocks,stock dividends, stock splits or distributions of assets to stockholders, the divisor used in calculating the ReferenceIndex is adjusted in a manner designed to prevent any instantaneous change or discontinuity in the level of theReference Index. The divisor remains at the new value until a further adjustment is necessary as the result of

another change. As a result of each change affecting any underlying stock, the divisor is adjusted in such a way thatthe sum of all share prices immediately after the change multiplied by the applicable Weight Factor and divided bythe new divisor, i.e., the level of the Reference Index immediately after the change, will equal the level of theReference Index immediately prior to the change.

Underlying stocks may be deleted or added by NKS. However, to maintain continuity in the ReferenceIndex, the policy of NKS is generally not to alter the composition of the underlying stocks except when anunderlying stock is deleted in accordance with the following criteria. Any stock becoming ineligible for listing inthe First Section of the Tokyo Exchange due to any of the following reasons will be deleted from the underlyingstocks: bankruptcy of the issuer; merger of the issuer into, or acquisition of the issuer by, another company;delisting of the stock or transfer of the stock to the "Seiri-Post" because of excess debt of the issuer or because ofany other reason; or transfer of the stock to the Second Section of the Tokyo Exchange. Upon deletion of a stock


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from the Reference Index, NKS will select, in accordance with certain criteria established by it, a replacement forthe deleted underlying stock. In an exceptional case, a newly listed stock in the First Section of the Tokyo Exchangethat is recognized by NKS to be representative of a market may be added to the underlying stocks. As a result, anexisting underlying stock with low trading volume and not representative of a market will be deleted.

The Tokyo Stock Exchange

The Tokyo Exchange is one of the world's largest securities exchanges in terms of market capitalization.Trading hours are currently from 9:00 a.m. to 11:00 a.m. and from 12:30 p.m. to 3:00 p.m. (Tokyo time), Mondaythrough Friday.

Due to the time zone difference, on any normal trading day the Tokyo Exchange will close prior to theopening of business in London on the same calendar day. Therefore, the closing level of the Reference Index on atrading day will generally be available in London by the opening of business on the same calendar day.

The Tokyo Exchange has adopted certain measures, including daily price floors and ceilings on individualstocks, intended to prevent any extreme short-term price fluctuations resulting from order imbalances. In general,any stock listed on the Tokyo Exchange cannot be traded at a price lower than the applicable price floor or higherthan the applicable price ceiling. These price floors and ceilings are expressed in absolute Japanese yen, rather than

percentage limits based on the closing price of the stock on the previous trading day. In addition, when there is amajor order imbalance in a listed stock, the Tokyo Exchange posts a "special bid quote" or a "special asked quote"for that stock at a specified higher or lower price level than the stock's last sale price in order to solicit counter-orders and balance supply and demand for the stock. Prospective investors should also be aware that the TokyoExchange may suspend the trading of individual stocks in certain limited and extraordinary circumstances,including, for example, unusual trading activity in that stock. As a result, changes in the Reference Index may belimited by price limitations or special quotes, or by suspension of trading, on individual stocks which comprise theReference Index, and these limitations may, in turn, adversely affect the value of the Securities.

The Nikkei 225 Index

The following table sets out the top ten companies, their industry sectors and respective percentageweightings in the Nikkei 225 Index as of April 27, 2007.

Company Percentage Weighting Industry Sector

Fanuc Ltd. 2.79% Industrial

Kyocera Corp. 2.76% Industrial

Advantest Corp. 2.53% Industrial

TDK Corp. 2.45% Technology

Canon Inc. 2.40% Technology

KDDI Corp. 2.23% Communications

Tokyo Electron Ltd. 2.00% Technology

Honda Motors Co., Ltd. 1.95% Consumer, Cyclical

Fast Retailing Co Ltd. 1.95% Consumer, Cyclical

Softbank Corp. 1.84% Communications

Source: Bloomberg


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The following table and chart set out the nine main industry sectors of companies that comprise the Nikkei225 Index and the respective percentage weighting of each as of April 27, 2007.

Industry Sector Percentage Weighting

Basic Material 6.32%Communications

7.45%Consumer, Cyclical

21.37%Consumer, Non-cyclical

15.99%Energy

1.03%Finanical

9.01%Industrial

28.31%Technology

9.48%Utilities

0.51%

Source: Bloomberg

Historical Data on the Reference Index

The following table sets forth the closing values of the Reference Index on the last business day of eachyear from 1967 through 2006. The historical performance of the Reference Index should not be taken as anindication of future performance and no assurance can be given that the value of the Reference Index will notdecline and thereby reduce the Redemption Amount which may be payable to you.

Year-End Closing Values of the Reference Index

Year

Closing

Value Year

Closing

Value1967 1,281 1987 21,5641968 1,715 1988 30,1591969 2,359 1989 38,9161970 1,987 1990 23,8491971 2,714 1991 22,9841972 5,208 1992 16,9251973 4,307 1993 17,4171974 3,817 1994 19,7231975 4,359 1995 19,8681976 4,991 1996 19,3611977 4,866 1997 15,2591978 6,002 1998 13,8421979 6,569 1999 18,9341980 7,116 2000 13,7861981 7,682 2001 10,5431982 8,017 2002 8,5791983 9,894 2003 10,6771984 11,543 2004 11,4891985 13,113 2005 16,1111986 18,701 2006 17,225


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The following table sets forth the closing value of the Reference Index at the end of each month, calculatedon a price return basis, in the period from January 1999 through April 2007. These historical data on the ReferenceIndex are not necessarily indicative of the future performance of the Reference Index or what the value of theSecurities may be. Any historical upward or downward trend in the level of the Reference Index during any periodset forth below is not an indication that the Reference Index is more or less likely to increase or decrease at any timeduring the term of the Securities.

1999 2000 2001 2002 2003 2004 2005 2006 2007

January........... 14,499 19,540 13,844 9,998 8,340 10,784 11,388 16,650 17,383February......... 14,368 19,960 12,884 10,588 8,363 11,042 11,741 16,205 17,604March............. 15,837 20,337 13,000 11,025 7,973 11,716 11,669 17,060 17,287April............... 16,702 17,974 13,934 11,493 7,831 11,762 11,009 16,906 17,400May................ 16,112 16,332 13,262 11,764 8,425 11,237 11,277 15,467June................ 17,530 17,411 12,969 10,622 9,083 11,859 11,584 15,505July ................ 17,862 15,727 11,861 9,878 9,563 11,326 11,900 15,457August............ 17,437 16,861 10,714 9,619 10,344 11,082 12,414 16,141September ...... 17,605 15,747 9,775 9,383 10,219 10,824 13,574 16,127October .......... 17,942 14,540 10,366 8,640 10,560 10,771 13,606 16,399

November....... 18,558 14,649 10,697 9,216 10,101 10,899 14,872 16,274December ....... 18,934 13,786 10,543 8,579 10,677 11,489 16,111 17,225

The following graph sets forth the historical performance of the Reference Index presented in the precedingtable. The Reference Index is a price return index and accordingly does not include dividends or the reinvestmentthereof. Past movements of the Reference Index are not necessarily indicative of the future Reference Index values.On May 2, 2007, the closing value of the Reference Index was 17,394.92.

0

5,000

10,000

15,000

20,000

25,000

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Source: Bloomberg

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Japan 3 Final PS E

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