JPMorgan Chase & Co.
J P MORGAN CHASE & CO (Form: FWP, Received: 05/13/2009 14:35:44)

Term sheet
To prospectus dated November 21, 2008,
prospectus supplement dated November 21, 2008 and
product supplement no. 146-A-I dated November 24, 2008

  Term sheet to
Product Supplement No. 146-A-I
Registration Statement No. 333-155535
Dated May 13, 2009; Rule 433

     

Structured 
Investments 

      JPMorgan Chase & Co.
$
Return Enhanced Notes Linked to the Performance of an Equally Weighted Basket of Three Currencies Relative to the U.S. Dollar due May 26, 2010

General

Key Terms

Basket:

An equally weighted basket of three currencies consisting of the Brazilian Real (“BRL”), the Australian Dollar (“AUD”) and the Norwegian Krone (“NOK”) (each a “Reference Currency,” and collectively, the “Reference Currencies”) that measures the performance of the Reference Currencies relative to the U.S. Dollar (the “Basket”). For information about the Reference Currencies, the Reference Currency Weights and the calculation of the Starting Spot Rate and Ending Spot Rate for each Reference Currency, see “Additional Key Terms” on page TS-1 of this term sheet.

Base Currency:

The U.S. Dollar

Upside Leverage Factor:

2.1

Payment at Maturity:

If the Ending Basket Level is greater than the Starting Basket Level , you will receive a cash payment that provides you with a return per $1,000 principal amount note equal to the Basket Return multiplied by 2.1*, subject to a Maximum Total Return on the notes that will not be less than 14.70%** at maturity. For example, assuming a Maximum Total Return of 14.70%**, if the Basket Return is equal to or greater than 7.00%, you will receive the Maximum Total Return on the notes of 14.70%**, which entitles you to a maximum payment at maturity of $1,147** for every $1,000 principal amount note that you hold. Accordingly, if the Basket Return is positive, your payment at maturity per $1,000 principal amount note will be calculated as follows:

$1,000 + [$1,000 × (Basket Return × 2.1)]

*The actual Upside Leverage Factor will be determined on the pricing date and will not be less than 2.1.
** The actual Maximum Total Return will be determined on the pricing date and will not be less than 14.70%.

If the Ending Basket Level decreases from the Starting Basket Level, you will lose 1% of the principal amount of your notes for every 1% that the Basket decreases. Under these circumstances, your payment at maturity per $1,000 principal amount note will be calculated as follows:

$1,000 + [$1,000 × (Basket Return)]

You will lose some or all of your investment at maturity if the Ending Basket Level decreases from the Starting Basket Level .

Basket Return:

Ending Basket Level – Starting Basket Level
              Starting Basket Level

Starting Basket Level:

Set equal to 100 on the pricing date, which is expected to be May 13, 2009.

Ending Basket Level:

The Basket Closing Level on the Observation Date.

Basket Closing Level:

The Basket Closing Level on the Observation Date will be calculated as follows:

100 × [1 + (BRL Return * 1/3) + (AUD Return * 1/3) + (NOK Return * 1/3)]

The BRL Return, AUD Return and NOK Return refer to the Reference Currency Return for the Brazilian Real, the Australian Dollar and the Norwegian Krone, respectively.

Reference Currency Return:

With respect to each Reference Currency:

 

Ending Spot Rate – Starting Spot Rate
             Starting Spot Rate

Observation Date:

May 21, 2010

Maturity Date:

May 26, 2010

CUSIP:

48123LX66

*

Subject to postponement as described under “Description of Notes — Payment at Maturity” in the accompanying product supplement no. 146-A-I.

Investing in the Return Enhanced Notes involves a number of risks. See “Risk Factors” beginning on page PS-13 of the accompanying product supplement no. 146-A-I and “Selected Risk Considerations” beginning on page TS-2 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 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, each prospectus supplement, product supplement no. 146-A-I and this 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 or the accompanying product supplement, prospectus supplements 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 13, 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. 146-A-I dated November 24, 2008. 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. 146-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.

Additional Key Terms

Reference Currency Weights:

The following table sets forth the Reference Currencies, the Starting Spot Rate for each Reference Currency, the applicable Reuters Page and the weighting of each Reference Currency:

  Reference Currency
Starting Spot Rate
Reuters Page
Reference Currency Weight
 

 

Brazilian Real (BRL)

 

BRFR

1/3

 

Australian Dollar (AUD) ††

 

WMRSPOT12

1/3

 

Norwegian Krone (NOK)

 

WMRSPOT06

1/3

   

The Starting Spot Rate for each of the Brazilian Real and the Norwegian Krone will be equal to one divided by the amount of the applicable Reference Currency per one U.S. Dollar and will be determined by the calculation agent in good faith and in a commercially reasonable manner at approximately 6:00 p.m., New York City time, on the pricing date taking into account the quotient of one divided by either the applicable intra-day trades or the rates displayed on the applicable Reuters page. For information about the risks related to this discretion, see “Selected Risk Considerations — Potential Conflicts” on page TS-2 of this term sheet.

†† The Starting Spot Rate for the Australian Dollar will be equal to the amount of U.S. Dollars per one unit of Reference Currency and will be determined by the calculation agent in good faith and in a commercially reasonable manner at approximately 6:00 p.m., New York City time, on the pricing date taking into account either the applicable intra-day trades or the rates displayed on the applicable Reuters page.

Spot Rate:

The Spot Rate for each of the Brazilian Real and the Norwegian Krone on a given date that falls after the pricing date will be equal to one divided by the amount of the applicable Reference Currency per one U.S. Dollar and will be determined by the calculation agent in good faith and in a commercially reasonable manner at approximately 6:00 p.m., New York City time, on such date taking into account the quotient of one divided by either applicable intra-day trades or the rates displayed on the applicable Reuters page. The Spot Rate for the Australian Dollar on a given date that falls after the pricing date will be equal to the amount of U.S. Dollars per one unit of Reference Currency and will be determined by the calculation agent in good faith and in a commercially reasonable manner at approximately 6:00 p.m., New York City time, on such date taking into account either applicable intra-day trades or the rates displayed on the applicable Reuters page.

Ending Spot Rate:

For each Reference Currency, the Spot Rate for such Reference Currency on the Observation Date.

Currency Business Day:

With respect to each Reference Currency, (a) any day other than a day on which banking institutions in The City of New York are authorized or required by law, regulation or executive order to close and (b) (i) with respect to the Brazilian Real, a day on which dealings in foreign currency in accordance with the practice of the foreign exchange market occur in Sao Paulo, Brazil, (ii) with respect to the Australian Dollar, a day on which dealings in foreign currency in accordance with the practice of the foreign exchange market occur in Sydney, Australia, and (iii) with respect to the Norwegian Krone, a day on which dealings in foreign currency in accordance with the practice of the foreign exchange market occur in Oslo, Norway.

Selected Purchase Considerations


JPMorgan Structured Investments —
Return Enhanced Notes Linked to the Performance of an Equally Weighted Basket of Three Currencies Relative to the U.S. Dollar

 TS-1

Selected Risk Considerations

An investment in the notes involves significant risks. Investing in the notes is not equivalent to investing directly in the Reference Currencies or any contracts related to the Reference Currencies. These risks are explained in more detail in the “Risk Factors” section of the accompanying product supplement no. 146-A-I dated November 24, 2008.


JPMorgan Structured Investments —
Return Enhanced Notes Linked to the Performance of an Equally Weighted Basket of Three Currencies Relative to the U.S. Dollar

 TS-2

JPMorgan Structured Investments —
Return Enhanced Notes Linked to the Performance of an Equally Weighted Basket of Three Currencies Relative to the U.S. Dollar

 TS-3

What Is the Total Return on the Notes at Maturity Assuming a Range of Performance for the Basket?

The following table illustrates the hypothetical total return at maturity of the notes. The “total return” as used in this term sheet is the number, expressed as a percentage, that results from comparing the payment at maturity per $1,000 principal amount note to $1,000. The hypothetical total returns set forth below assume an Upside Leverage Factor of 2.1 and a Maximum Total Return of 14.70%. The actual Upside Leverage Factor will be determined on the pricing date and will not be less than 2.1. The actual Maximum Total Return will be determined on the pricing date and will not be less than 14.70% . The hypothetical total returns set forth below are for illustrative purposes only and may not be the actual total returns applicable to a purchaser of the notes. You should consider carefully whether the notes are suitable to your investment goals. The numbers appearing in the following table and examples have been rounded for ease of analysis.


Ending Basket
Level

Basket Return

Total Return


180.00

80.00%

14.70%

170.00

70.00%

14.70%

160.00

60.00%

14.70%

150.00

50.00%

14.70%

140.00

40.00%

14.70%

130.00

30.00%

14.70%

120.00

20.00%

14.70%

110.00

10.00%

14.70%

107.00

7.00%

14.70%

105.00

5.00%

10.50%

100.00

0.00%

0.00%

95.00

-5.00%

-5.00%

90.00

-10.00%

-10.00%

80.00

-20.00%

-20.00%

70.00

-30.00%

-30.00%

60.00

-40.00%

-40.00%

50.00

-50.00%

-50.00%

40.00

-60.00%

-60.00%

30.00

-70.00%

-70.00%

20.00

-80.00%

-80.00%


Hypothetical Examples of Amounts Payable at Maturity

The following examples illustrate how the total returns set forth in the table above are calculated.

Example 1: The level of the Basket increases from the Starting Basket Level of 100 to an Ending Basket Level of 105. Because the Ending Basket Level of 105 is greater than the Starting Basket Level of 100, your payment at maturity is equal to $1,105 per $1,000 principal amount note, calculated as follows:

$1,000 + ($1,000 × [(105-100)/100] × 2.1) = $1,105

Example 2: The level of the Basket decreases from the Starting Basket Level of 100 to an Ending Basket Level of 60. Because the Ending Basket Level of 60 is lower than the Starting Basket Level of 100, your payment at maturity per $1,000 principal amount note is $600 per $1,000 principal amount note, calculated as follows:

$1,000 + ($1,000 × [(60-100)/100]) = $600

Example 3: The level of the Basket increases from the Starting Basket Level of 100 to an Ending Basket Level of 120. Because the Ending Basket Level of 120 is greater than the Starting Basket Level of 100, and the Basket Return of 20% multiplied by the hypothetical Upside Leverage Factor of 2.1 exceeds the hypothetical Maximum Total of 14.70%, your payment at maturity will equal $1,147, the maximum payment on the notes.

Example 4: The level of the Basket decreases from the Starting Basket Level of 100 to an Ending Basket Level of 0. Because the Ending Basket Level of 0 is lower than the Starting Basket Level of 100, your payment at maturity is $0 per $1,000 principal amount note, calculated as follows:

$1,000 + ($1,000 × [(0-100)/100]) = $0


JPMorgan Structured Investments —
Return Enhanced Notes Linked to the Performance of an Equally Weighted Basket of Three Currencies Relative to the U.S. Dollar

 TS-4

Historical Information

The first three graphs below show the historical weekly performance of each Reference Currency expressed in terms of the conventional market quotation, as shown on Bloomberg Financial Markets, for each currency (which, in the case of the Brazilian Real (BRL) and the Norwegian Krone (NOK), is the amount of the applicable Reference Currency that can be exchanged for one U.S. Dollar and, in the case of the Australian Dollar (AUD), is the amount of U.S. Dollars that can be exchanged for one unit of the applicable Reference Currency, and which, in each case, we refer to in this term sheet as the exchange rate) from January 1, 2003 through May 8, 2009. The exchange rates of the Brazilian Real, the Norwegian Krone and the Australian Dollar, at approximately 6:00 p.m., New York City time, on May 8, 2008, were 2.0608, 6.3385 and 0.7686, respectively.

The exchange rates displayed in the graphs below are for illustrative purposes only and do not form part of the calculation of the Basket Return. The value of the Basket increases, and thus the Basket Return increases, when the U.S. Dollar depreciates in value against the individual Reference Currencies. Therefore, the Basket Return is calculated using Spot Rates for each currency expressed, for the Brazilian Real and the Norwegian Krone, as one divided by the amount of the applicable Reference Currency per one U.S. Dollar, which is the inverse of the conventional market quotation for each such Reference Currency set forth in the applicable graphs below and, for the Australian Dollar, as the amount of U.S. Dollars per one unit of Reference Currency, which is largely consistent with the approach used to determine the conventional market quotation for each such Reference Currency set forth in the applicable graphs below.

The last graph below shows the weekly performance of the Basket from January 1, 2003 through May 8, 2009, assuming that the Basket Closing Level on January 1, 2003 was 100, that each Reference Currency had a 1/3 weight in the Basket on that date and that the closing spot rates of each Reference Currency on the relevant dates were the Spot Rates on such dates. The closing spot rates and the historical weekly Basket performance data in such graph were determined by, for the Brazilian Real and the Norwegian Krone, dividing one by the rates reported by Bloomberg Financial Markets and, for the Australian Dollar, the rates reported by Bloomberg Financial Markets, and may not be indicative of the Basket performance using the Spot Rates of the Reference Currencies at approximately 6:00 p.m., New York City time, that would be derived from the applicable Reuters page.

The Spot Rates of the Brazilian Real, the Norwegian Krone and the Australian Dollar, at approximately 6:00 p.m., New York City time, on May 12, 2009, were 0.482975, 0.155195 and 0.765, respectively, calculated in the manner set forth under “Additional Key Terms — Spot Rate” in this term sheet.

We obtained the data needed to construct the graph which displays the weekly performance of the Basket from Bloomberg Financial Markets, and we obtained the exchange rates and the denominators used to calculate the Spot Rates from Reuters Group PLC. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg Financial Markets or Reuters Group PLC. The historical performance of each Reference Currency and the Basket should not be taken as an indication of future performance, and no assurance can be given as to the Spot Rate of any of the Reference Currencies on the Observation Date. We cannot give you assurance that the performance of the Basket will result in the return of any of your initial investment.

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 $35 per $1,000 principal amount note. See “Plan of Distribution” beginning on page PS-35 of the accompanying product supplement no. 146-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 $35 per $1,000 principal amount note.


JPMorgan Structured Investments —
Return Enhanced Notes Linked to the Performance of an Equally Weighted Basket of Three Currencies Relative to the U.S. Dollar

 TS-5