JPMorgan Chase & Co.
J P MORGAN CHASE & CO (Form: FWP, Received: 05/12/2009 14:26:46)

Term sheet
To prospectus dated November 21, 2008,
prospectus supplement dated November 21, 2008 and
product supplement no. 165-A-I dated May 1, 2009

Term sheet to
Product Supplement No. 165-A-I
Registration Statement No. 333-155535
Dated May 12, 2009; Rule 433


     

Structured 
Investments 

      JPMorgan Chase & Co.
$
Floating Rate Notes Linked to the 10-Year U.S. Constant Maturity Swap Rate due May 22, 2016

General

Key Terms

Maturity Date:

May 22, 2016, or if such day is not a Business Day, the next succeeding Business Day.

Interest:

With respect to each Interest Period, for each $1,000 principal amount note, the interest payment, if any, will be calculated as follows:

  $1,000 × Interest Rate × (the actual number of days in the Interest Period/365)

Interest Rate:

With respect to each Interest Period, a rate per annum calculated as the lesser of:

  (a) the CMS Rate plus the greater of (i) the CMS Rate minus 4.75% and (ii) 0.00%; and
  (b) the Maximum Rate  
  Notwithstanding the foregoing, in no event will the Interest Rate be less than the Minimum Rate of 0.00%.

CMS Rate:

The CMS Rate refers to the rate for U.S. Dollar swap with a Designated Maturity of 10 years that appears on Reuters page “ISDAFIX1” (or any successor page) at approximately 11:00 a.m., New York City time, on the applicable Determination Date, as determined by the calculation agent. If on the applicable Determination Date, the CMS Rate cannot be determined by reference to Reuters page “ISDAFIX1” (or any successor page), then the calculation agent will determine the CMS Rate in accordance with the procedures set forth under “Description of Notes — Interest — The Underlying Rates — CMS Rate” in the accompanying product supplement no. 165-A-I.

Determination Dates:

Two Business Days immediately prior to the beginning of the applicable Interest Period.

Interest Periods:

The period beginning on and including the issue date of the notes and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date.

Interest Payment Date:

Interest on the notes will be payable quarterly in arrears on the 22 nd calendar day of February, May, August and November of each year (each such date, an “Interest Payment Date”), commencing August 24, 2009, to and including the Interest Payment Date corresponding to the Maturity Date. If an Interest Payment Date is not a Business Day, payment will be made on the immediately following Business Day, provided that any interest payable on such Interest Payment Date, as postponed, will accrue to but excluding such Interest Payment Date, as postponed, and the next Interest Period, if applicable, will commence on such Interest Payment Date, as postponed. See “Selected Purchase Considerations — Quarterly Interest Payments” in this term sheet for more information.

Minimum Rate:

0.00%

Maximum Rate:

15.00%

Payment at Maturity:

At maturity you will receive a cash payment for each $1,000 principal amount note of $1,000 plus any accrued and unpaid interest.

Business Day:

Any day other than a day on which banking institutions in London, England or The City of New York are authorized or required by law, regulation or executive order to close or a day on which transactions in U.S. dollars are not conducted.

CUSIP:

48123LV68

Investing in the Floating Rate Notes involves a number of risks. See “Risk Factors” beginning on page PS-11 of the accompanying product supplement no. 165-A-I and “Selected Risk Considerations” beginning on page TS-1 of this term sheet.

JPMorgan Chase & Co. has filed a registration statement (including a prospectus) with the Securities and Exchange Commission, or SEC, for the offering to which this supplemental term sheet relates. Before you invest, you should read the prospectus in that registration statement and the other documents relating to this offering that JPMorgan Chase & Co. has filed with the SEC for more complete information about JPMorgan Chase & Co. and this offering. You may get these documents without cost by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, JPMorgan Chase & Co., any agent or any dealer participating in this offering will arrange to send you the prospectus, the prospectus supplement, product supplement no. 165-A-I and this supplemental term sheet if you so request by calling toll-free 866-535-9248.

You may revoke your offer to purchase the notes at any time prior to the time at which we accept such offer by notifying the applicable agent. We reserve the right to change the terms of, or reject any offer to purchase the notes prior to their issuance. In the event of any changes to the terms of the notes, we will notify you and you will be asked to accept such changes in connection with your purchase. You may also choose to reject such changes in which case we may reject your offer to purchase.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the accuracy or the adequacy of this term sheet, the accompanying product supplement no. 165-A-I or the accompanying prospectus supplement and prospectus. Any representation to the contrary is a criminal offense.


 

Price to Public (1)

Fees and Commissions (2)

Proceeds to Us


Per note

$

$

$


Total

$

$

$


(1)

The price to the public includes the estimated cost of hedging our obligations under the notes through one or more of our affiliates.

  

 

(2)

Please see “Supplemental Plan of Distribution” in this term sheet for information about fees and commissions.

The notes are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of, or guaranteed by, a bank.  The notes are not guaranteed under the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program.

May 12, 2009

Additional Terms Specific to the Notes

You should read this term sheet together with the prospectus dated November 21, 2008, as supplemented by the prospectus supplement dated November 21, 2008 relating to our Series E medium-term notes of which these notes are a part, and the more detailed information contained in product supplement no. 165-A-I dated May 1, 2009. This term sheet, together with the documents listed below, contains the terms of the notes and supersedes all other prior or contemporaneous oral statements as well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for implementation, sample structures, fact sheets, brochures or other educational materials of ours. You should carefully consider, among other things, the matters set forth in “Risk Factors” in the accompanying product supplement no. 165-A-I, as the notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the notes.

You may access these documents on the SEC website at www.sec.gov as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):

Our Central Index Key, or CIK, on the SEC website is 19617. As used in this term sheet, the “Company,” “we,” “us,” or “our” refers to JPMorgan Chase & Co.

Selected Purchase Considerations

Selected Risk Considerations

An investment in the notes involves significant risks. These risks are explained in more detail in the “Risk Factors” section of the accompanying product supplement no. 165-A-I dated May 1, 2009.

 


JPMorgan Structured Investments —
Floating Rate Notes Linked to the 10-Year U.S. Constant Maturity Swap Rate

 TS-1

JPMorgan Structured Investments —
Floating Rate Notes Linked to the 10-Year U.S. Constant Maturity Swap Rate

 TS-2

Hypothetical Payment at Maturity for Each $1,000 Principal Amount Note

The following table illustrates the Interest Rate determination for a $1,000 principal amount note for a hypothetical range of performance for the CMS Rate and reflects the fixed rate of 4.75%, the minimum value of 0.00% for the spread between the CMS Rate and 4.75% and the Maximum Rate of 15.00%. The hypothetical CMS Rates, spreads between the CMS Rate and 4.75% and interest payments set forth in the following examples are for illustrative purposes only and may not be the actual CMS Rate, spread between the CMS Rate and 4.75% or interest payment applicable to a purchaser of the notes.


CMS Rate

 

(CMS Rate - 4.75%)

 

Interest Rate


2.50%

 

N/A

 

2.50%

3.00%

 

N/A

 

3.00%

3.50%

 

N/A

 

3.50%

4.00%

 

N/A

 

4.00%

4.50%

 

N/A

=

4.50%

4.75%

+

0.00%

=

4.75%

5.00%

+

0.25%

=

5.25%

5.50%

+

0.75%

=

6.25%

6.00%

+

1.25%

=

7.25%

6.50%

+

1.75%

=

8.25%

7.00%

+

2.25%

=

9.25%

7.50%

+

2.75%

=

10.25%

8.00%

+

3.25%

=

11.25%

8.50%

+

3.75%

=

12.25%

9.00%

+

4.25%

=

13.25%

9.50%

+

4.75%

=

14.25%

10.00%

 

5.25%

 

15.00%*

10.50%

 

5.75%

 

15.00%*

11.00%

 

6.25%

 

15.00%*

11.50%

 

6.75%

 

15.00%*


*The Interest Rate is limited by the Maximum Rate of 15.00%.  

Hypothetical Examples of Amounts Payable at Maturity

The following examples illustrate how the hypothetical Interest Rates set forth in the table above are calculated and assume that each Interest Period consists of 91 actual days.

Example 1: The CMS Rate is 5.00%. Because 0.25% (CMS Rate - 4.75%) is greater than the minimum value of 0.00% for the spread between the CMS Rate and 4.75%, the Interest Rate is 5.25% calculated as follows:

5.00% + (5.00% - 4.75%) = 5.25%

The Interest for such Interest Period is calculated as follows:

$1,000 × 5.25% × (91/365) = $13.09  

Example 2: The CMS Rate is 4.00%. Because -0.75% (CMS Rate - 4.75%) is less than the minimum value of 0.00% for the spread between the CMS Rate and 4.75%, the Interest Rate is 4.00% calculated as follows:

4.00% + (0.00%) = 4.00%

The Interest for such Interest Period is calculated as follows:

$1,000 × 4.00% × (91/365) = $9.97  

Example 3: The CMS Rate is 11.00%. The spread between the CMS Rate and 4.75% is 6.25%, which is greater than the minimum value 0.00%. However, because the CMS Rate of 11.00% plus 6.25% exceeds the Maximum Rate of 15.00%, the Interest Rate is the Maximum Rate of 15.00% and the Interest for such Interest Period is calculated as follows:

$1,000 × 15.00% × (91/365) = $37.40


JPMorgan Structured Investments —
Floating Rate Notes Linked to the 10-Year U.S. Constant Maturity Swap Rate

 TS-3
 

Historical Information

The following graph sets forth the daily historical performance of the 10-Year U.S. Constant Maturity Swap Rate from January 1, 2004 through May 11, 2009. We obtained the rates used to construct the graph below from Bloomberg Financial Markets. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg Financial Markets.

The 10-Year U.S. Constant Maturity Swap Rate, as appeared on Reuters page “ISDAFIX1” at approximately 11:00am, New York City time on May 11, 2009 was 3.337%.

The historical rates should not be taken as an indication of future performance, and no assurance can be given as to the 10-Year U.S. Constant Maturity Swap Rate on the Determination Date. We cannot give you assurance that the performance of the 10-Year U.S. Constant Maturity Swap Rate will result in any positive interest payments or a return of more than the principal amount of your notes.

Supplemental Plan of Distribution

JPMSI, acting as agent for JPMorgan Chase & Co., will receive a commission that will depend on market conditions on the pricing date. In no event will that commission, which includes structuring and development fees, exceed $40.00 per $1,000 principal amount note. See “Plan of Distribution” beginning on page PS-29 of the accompanying product supplement no. 165-A-I.  

For a different portion of the notes to be sold in this offering, an affiliated bank will receive a fee and another affiliate of ours will receive a structuring and development fee. In no event will the total amount of these fees exceed $40.00 per $1,000 principal amount note.


JPMorgan Structured Investments —
Floating Rate Notes Linked to the 10-Year U.S. Constant Maturity Swap Rate

 TS-4