Term sheet

To prospectus dated November 21, 2008,

prospectus supplement dated November 21, 2008 and

product supplement no. 108-A-III dated February 7, 2011

07- #02-2011-R

Term Sheet

Product Supplement No. 108-A-III

Registration Statement No. 333-155535

Dated July 6, 2011; Rule 433

$

4.62%^† (equivalent to 9.24%^† per annum) Upside Auto Callable Reverse Exchangeable Notes due January 11, 2012 Linked to the Common Stock of Freeport-McMoRan Copper & Gold Inc.

The notes are designed for investors who seek a higher interest rate than either the current dividend yield on the Reference Stock or the yield on a conventional debt security with the same maturity issued by us or an issuer with a comparable credit rating. Investors should be willing to forgo the potential to participate in the appreciation in the Reference Stock, to accept the risks of exposure to equities in general and the common stock of Freeport-McMoRan Copper & Gold Inc., in particular, to assume the risk that the notes will be automatically called and the investors will receive less interest than if the notes are not automatically called and, if the notes are not automatically called, to lose some or all of their principal at maturity.

If the notes are not automatically called, the notes will pay at least 4.62% interest over the term of the notes (equivalent to 9.24% per annum). However, the notes do not guarantee any return of principal at maturity. Instead, if the notes are not automatically called, the payment at maturity will be based on whether the Final Share Price of the Reference Stock is less than the Initial Share Price by more than the Protection Amount as described below. If the notes are automatically called, you will receive, for each $1,000 principal amount note, $1,000 plus accrued and unpaid interest. Any payment on the notes is subject to the credit risk of JPMorgan Chase & Co.

Senior unsecured obligations of JPMorgan Chase & Co. maturing January 11, 2012*

If the notes are not automatically called, payment at maturity for each $1,000 principal amount note will be either a cash payment of $1,000 or the Cash Value, in each case, together with any accrued and unpaid interest, as described below.

Minimum denominations of $10,000 and integral multiples of $1,000 in excess thereof

If the Final Share Price is less than the Initial Share Price by more than the Protection Amount, we will elect to pay you the Cash Value at maturity.

The terms of the notes as set forth in “Key Terms” below, including those set forth under “Key Terms — Payment at Maturity,” to the extent they differ or conflict with those set forth in the accompanying product supplement no. 108-A-III, supersede the terms set forth in product supplement no. 108-A-III. Please refer to “Supplemental Terms of the Notes” in this term sheet for more information.

—     at least 4.62% (equivalent to 9.24% per annum) if the notes are not automatically called; or

—     if the notes are automatically called:

—    at least 0.77% if the notes are automatically called on the first Call Date;

—    at least 1.54% if the notes are automatically called on the second Call Date;

—    at least 2.31% if the notes are automatically called on the third Call Date;

—    at least 3.08% if the notes are automatically called on the fourth Call Date;

—    at least 3.85% if the notes are automatically called on the fifth Call Date; or

—    at least 4.62% if the notes are automatically called on the final Call Date;

in each case equivalent to at least 4.62% (equivalent to 9.24% per annum), paid monthly and calculated on a 30/360 basis. The actual interest rate will be determined on the Pricing Date and will not be less than 4.62% over the term of the notes (equivalent to 9.24% per annum).

Per note

Total

Product supplement no. 108-A-III dated February 7, 2011:

Prospectus supplement dated November 21, 2008:

Prospectus dated November 21, 2008:

JPMorgan Structured Investments —

Upside Auto Callable Reverse Exchangeable Notes Linked to the Common Stock of Freeport-McMoRan Copper & Gold Inc.

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•      the Initial Share Price:

•      the Interest Rate:

Hypothetical Highest
Closing Price on any

of the Call Dates

Hypothetical Final

Share Price

Hypothetical Final

Share Price

expressed as a

percentage of Initial

Share Price

Payment on the

applicable Call

Settlement Date**

$108.00

$81.00

$67.50

$56.70

$54.00

$54.00

$48.60

$43.20

$35.10

$27.00

$16.20

JPMorgan Structured Investments —

Upside Auto Callable Reverse Exchangeable Notes Linked to the Common Stock of Freeport-McMoRan Copper & Gold Inc.

TS-2        

THE NOTES OFFER A HIGHER INTEREST RATE THAN THE YIELD ON DEBT SECURITIES OF COMPARABLE MATURITY ISSUED BY US OR AN ISSUER WITH A COMPARABLE CREDIT RATING — The notes will pay (1) if the notes are not automatically called, at least 4.62% interest over the term of the notes (equivalent to 9.24% per annum), or (2) if the notes are automatically called: (i) at least 0.77% if called on the first Call Date, (ii) at least 1.54% if called on the second Call Date; (iii) at least 2.31% if called on the third Call Date; (iv) at least 3.08% if called on the fourth Call Date; (v) at least 3.85% if called on the fifth Call Date or (vi) at least 4.62% if called on the final Call Date, in each case equivalent to at least 4.62% (equivalent to 9.24% per annum) interest, from the issue date to but excluding the applicable Call Settlement Date, each of which is higher than the yield currently available on debt securities of comparable maturity issued by us or an issuer with a comparable credit rating. The actual interest rate will be determined on the Pricing Date and will not be less than 4.62% (equivalent to 9.24% per annum). Because the notes are our senior unsecured obligations, any interest payment or any payment at maturity is subject to our ability to pay our obligations as they become due.

MONTHLY INTEREST PAYMENTS — The notes offer monthly interest payments at a rate of (1) if the notes are not automatically called, at least 4.62% (equivalent to 9.24% per annum) interest over the term of the notes, or (2) if the notes are automatically called: (i) at least 0.77% if called on the first Call Date, (ii) at least 1.54% if called on the second Call Date; (iii) at least 2.31% if called on the third Call Date; (iv) at least 3.08% if called on the fourth Call Date; (v) at least 3.85% if called on the fifth Call Date or (vi) at least 4.62% if called on the final Call Date, in each case equivalent to at least 4.62% (equivalent to 9.24% per annum) interest, from the issue date to but excluding the applicable Call Settlement Date. Interest will be payable monthly in arrears on the 8th calendar day of each month, except for the final monthly interest payment which will be payable on the Maturity Date (each such day, an “Interest Payment Date”), commencing August 8, 2011, unless the notes are automatically called. If the notes are automatically called, interest will accrue to but excluding the applicable Call Settlement Date, and will be payable on each Interest Payment Date occurring before the applicable Call Settlement Date and on the applicable Call Settlement Date. Interest will be payable to the holders of record at the close of business on the business day immediately preceding the applicable Interest Payment Date or applicable Call Settlement Date. If an Interest Payment Date is not a business day, payment will be made on the next business day immediately following such day, but no additional interest will accrue as a result of the delayed payment. For example, the monthly interest payment due in October 2011 will be payable on October 11, 2011.

POTENTIAL EARLY EXIT AS A RESULT OF THE AUTOMATIC CALL FEATURE — If the closing price of the Reference Stock is greater than the Initial Share Price on any of the six (6) Call Dates, your notes will be automatically called prior to the maturity date. Under these circumstances, on the applicable Call Settlement Date, for each $1,000 principal amount note, you will receive $1,000 plus accrued and unpaid interest to but excluding the applicable Call Settlement Date.

THE NOTES DO NOT GUARANTEE THE RETURN OF YOUR PRINCIPAL IF THE NOTES ARE NOT AUTOMATICALLY CALLED — If the notes are not automatically called, we will pay you your principal back at maturity so long as the Final Share Price is not less than the Initial Share Price by more than the Protection Amount on the Observation Date. However, if the notes are not automatically called and if the Final Share Price is less than the Initial Share Price by more than the Protection Amount, you could lose the entire principal amount of your notes.

TAX TREATMENT AS A UNIT COMPRISING A PUT OPTION AND A DEPOSIT — You should review carefully the section entitled “Certain U.S. Federal Income Tax Consequences” in the accompanying product supplement no. 108-A-III. By purchasing the notes, you agree (in the absence of an administrative determination or judicial ruling to the contrary) to treat (i) the notes for U.S. federal income tax purposes as units comprising: (a) a cash-settled Put Option written by you to us with respect to the Reference Stock that is automatically terminable in circumstances where an Automatic Call occurs and (b) a Deposit of $1,000 per $1,000 principal amount note to secure your potential obligation under the Put Option, and (ii) each coupon payment consistently with the allocation described below. We will follow the same approach in determining our reporting responsibilities, if any. We will determine the portion of each coupon payment that we will allocate to interest on the Deposit and to Put Premium, respectively, and will provide that allocation in the pricing supplement for the notes. If the notes had priced on July 1, 2011, we would have allocated approximately 8.98% of each coupon payment as interest on the Deposit and the remainder as Put Premium. The actual allocation that we will determine for the notes may differ from this hypothetical allocation, and will depend upon a variety of factors, including actual market conditions and our borrowing costs for debt instruments of comparable maturities on the Pricing Date. Assuming this characterization is respected, amounts treated as interest on the Deposit will be taxed as ordinary income, while the Put Premium will not be taken into account prior to maturity or sale, including as a result of an Automatic Call. However, there are other reasonable treatments that the Internal Revenue Service (the “IRS”) or a court may adopt, in which case the timing and character of any income or loss on the notes could be significantly and adversely affected. In addition, in 2007 Treasury and the IRS released a notice requesting comments on the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. While it is not clear whether the notes would be viewed as similar to the typical prepaid forward contract described in the notice, it is possible that any Treasury regulations or other guidance promulgated after consideration of these issues could materially and adversely affect the tax consequences of an investment in the notes, possibly with retroactive effect. The notice focuses on a number of issues, the most relevant of which for holders of the notes are the character of income or loss (including whether the Put Premium might be currently included as ordinary income) and the degree, if any, to which income realized by Non-U.S. Holders should be subject to withholding tax. Both U.S. and Non-U.S. Holders should consult their tax advisers regarding all aspects of the U.S. federal income tax consequences of an investment in the notes, including possible alternative treatments and the issues presented by this notice. Non-U.S. Holders should also note that they may be withheld upon unless they have submitted a properly completed IRS Form W-8BEN or otherwise satisfied the applicable documentation requirements. Purchasers who are not initial purchasers of notes at the issue price should also consult their tax advisers with respect to the tax consequences of an investment in the notes, including possible alternative characterizations as well as the allocation of the purchase price of the notes between the Deposit and the Put Option.

JPMorgan Structured Investments —

Upside Auto Callable Reverse Exchangeable Notes Linked to the Common Stock of Freeport-McMoRan Copper & Gold Inc.

TS-3        

YOUR INVESTMENT IN THE NOTES MAY RESULT IN A LOSS — The notes do not guarantee any return of principal. If the notes are not automatically called, the payment at maturity will be based on whether the Final Share Price is less than the Initial Share Price by more than the Protection Amount. Under certain circumstances, you will receive the Cash Value instead of the principal amount of the notes. The Cash Value will be less than the principal amount of each note and may be zero. Accordingly, you could lose up to the entire principal amount of your notes.

THE AUTOMATIC CALL FEATURE MAY FORCE A POTENTIAL EARLY EXIT — The notes will be called before maturity if the closing price of the Reference Stock is greater than the Initial Share Price on any of the six (6) Call Dates. Under these circumstances, the amount of interest payable on the notes will be less than the full amount of interest that would have been payable if the notes were held to maturity, and, for each $1,000 principal amount note, you will receive $1,000 plus accrued and unpaid interest to but excluding the applicable Call Settlement Date.

YOUR PROTECTION MAY TERMINATE ON THE OBSERVATION DATE — If the notes are not automatically called and the closing price of the Reference Stock on the Observation Date (i.e., the Final Share Price) is less than the Initial Share Price minus the Protection Amount, you will be fully exposed to any depreciation in the Reference Stock. Because the Final Share Price will be determined based on the closing price on a single trading day near the end of the term of the notes, the price of the Reference Stock at the maturity date or at other times during the term of the notes could be at a level above the Initial Share Price minus the Protection Amount. This difference could be particularly large if there is a significant decrease in the price of the Reference Stock during the later portion of the term of the notes or if there is significant volatility in the price of the Reference Stock during the term of the notes, especially on dates near the Observation Date.

CREDIT RISK OF JPMORGAN CHASE & CO. — The notes are subject to the credit risk of JPMorgan Chase & Co. and our credit ratings and credit spreads may adversely affect the market value of the notes. Investors are dependent on JPMorgan Chase & Co.’s ability to pay all amounts due on the notes at maturity or on any Call Settlement Date and on the Interest Payment Dates, and therefore investors are subject to our credit risk and to changes in the market’s view of our creditworthiness. Any decline in our credit ratings or increase in the credit spreads charged by the market for taking our credit risk is likely to adversely affect the value of the notes.

POTENTIAL CONFLICTS — We and our affiliates play a variety of roles in connection with the issuance of the notes, including acting as calculation agent. In performing these duties, the economic interests of the calculation agent and other affiliates of ours are potentially adverse to your interests as an investor in the notes. We and/or our affiliates may also currently or from time to time engage in business with Freeport-McMoRan, including extending loans to, or making equity investments in, Freeport-McMoRan or providing advisory services to Freeport-McMoRan. In addition, one or more of our affiliates may publish research reports or otherwise express opinions with respect to Freeport-McMoRan, and these reports may or may not recommend that investors buy or hold the Reference Stock. As a prospective purchaser of the notes, you should undertake an independent investigation of Freeport-McMoRan as in your judgment is appropriate to make an informed decision with respect to an investment in the notes.

REINVESTMENT RISK — If your notes are automatically called early, the term of the notes may be reduced to as short as one month and you will not receive interest payments after the applicable Call Settlement Date. There is no guarantee that you would be able to reinvest the proceeds from an investment in the notes at a comparable return and/or with a comparable interest rate for a similar level of risk in the event the notes are automatically called prior to the Maturity Date.

SINGLE STOCK RISK — The price of the Reference Stock can fall sharply due to factors specific to the Reference Stock and its issuer, such as stock price volatility, earnings, financial conditions, corporate, industry and regulatory developments, management changes and decisions and other events, as well as general market factors, such as general stock market volatility and levels, interest rates and economic and political conditions.

CERTAIN BUILT-IN COSTS ARE LIKELY TO AFFECT ADVERSELY THE VALUE OF THE NOTES PRIOR TO MATURITY — While the payment at maturity, if any, or upon an automatic call described in this term sheet is based on the full principal amount of your notes, the original issue price of the notes includes the agent’s commission and the estimated cost of hedging our obligations under the notes. As a result, and as a general matter, the price, if any, at which JPMS will be willing to purchase notes from you in secondary market transactions, if at all, will likely be lower than the original issue price and any sale prior to the maturity date could result in a substantial loss to you. This secondary market price will also be affected by a number of factors aside from the agent’s commission and hedging costs, including those referred to under “Many Economic and Market Factors Will Influence the Value of the Notes” below.

PROTECTION AMOUNT APPLIES ONLY IF YOU HOLD THE NOTES TO MATURITY — Assuming the notes are not automatically called, we will pay you your principal back at maturity only if the Final Share Price is not below the Initial Share Price by more than the Protection Amount and the notes are held to maturity. If the notes are not automatically called and the Final Share Price is less than the Initial Share Price by more than the Protection Amount, the protection provided by the Protection Amount will be eliminated and you will be fully exposed at maturity to any decline in the market price of the Reference Stock.

VOLATILITY RISK — Greater expected volatility with respect to the Reference Stock indicates a greater likelihood as of the Pricing Date that the Reference Stock could close below the Initial Share Price by more than the Protection Amount on the Observation Date. The Reference Stock’s volatility, however, can change significantly over the term of the notes. The closing price of the Reference Stock could fall sharply on the Observation Date, which could result in a significant loss of principal.

JPMorgan Structured Investments —

Upside Auto Callable Reverse Exchangeable Notes Linked to the Common Stock of Freeport-McMoRan Copper & Gold Inc.

TS-4        

YOUR RETURN ON THE NOTES IS LIMITED TO THE PRINCIPAL AMOUNT PLUS ACCRUED INTEREST REGARDLESS OF ANY APPRECIATION IN THE VALUE OF THE REFERENCE STOCK — If the notes are not automatically called and the Final Share Price is not below the Initial Share Price by more than the Protection Amount, for each $1,000 principal amount note, you will receive $1,000 at maturity plus any accrued and unpaid interest, regardless of any appreciation in the value of the Reference Stock, which may be significant. If the notes are automatically called, for each $1,000 principal amount note, you will receive $1,000 on the applicable Call Settlement Date plus any accrued and unpaid interest, regardless of the appreciation in the value of the Reference Stock, which may be significant. Accordingly, the return on the notes may be significantly less than the return on a direct investment in the Reference Stock during the term of the notes.

NO OWNERSHIP RIGHTS IN THE REFERENCE STOCK — As a holder of the notes, you will not have any ownership interest or rights in the Reference Stock, such as voting rights or dividend payments. In addition, the Reference Stock issuer will not have any obligation to consider your interests as a holder of the notes in taking any corporate action that might affect the value of the Reference Stock and the notes.

NO AFFILIATION WITH FREEPORT-MCMORAN CORPORATION — We are not affiliated with Freeport-McMoRan. We assume no responsibility for the adequacy of the information about Freeport-McMoRan contained in this term sheet or in product supplement no. 108-A-III. You should undertake your own investigation into the Reference Stock and Freeport-McMoRan. We are not responsible for Freeport-McMoRan’s public disclosure of information, whether contained in SEC filings or otherwise.

LACK OF LIQUIDITY — The notes will not be listed on any securities exchange. JPMS intends to offer to purchase the notes in the secondary market but is not required to do so. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the notes easily. Because other dealers are not likely to make a secondary market for the notes, the price at which you may be able to trade your notes is likely to depend on the price, if any, at which JPMS is willing to buy the notes.

HEDGING AND TRADING IN THE REFERENCE STOCK — While the notes are outstanding, we or any of our affiliates may carry out hedging activities related to the notes, including in the Reference Stock or instruments related to the Reference Stock. We or our affiliates may also trade in the Reference Stock or instruments related to the Reference Stock from time to time. Any of these hedging or trading activities as of the Pricing Date and during the term of the notes could adversely affect the likelihood of an automatic call or our payment to you at maturity. It is possible that such hedging or trading activities could result in substantial returns for us or our affiliates while the value of the notes declines.

MANY ECONOMIC AND MARKET FACTORS WILL INFLUENCE THE VALUE OF THE NOTES — In addition to the value of the Reference Stock and interest rates on any trading day, the value of the notes will be affected by a number of economic and market factors that may either offset or magnify each other and which are set out in more detail in product supplement no. 108-A-III.

JPMorgan Structured Investments —

Upside Auto Callable Reverse Exchangeable Notes Linked to the Common Stock of Freeport-McMoRan Copper & Gold Inc.

TS-5        

JPMorgan Structured Investments —

Upside Auto Callable Reverse Exchangeable Notes Linked to the Common Stock of Freeport-McMoRan Copper & Gold Inc.

TS-6        

JPMorgan Structured Investments —

Upside Auto Callable Reverse Exchangeable Notes Linked to the Common Stock of Freeport-McMoRan Copper & Gold Inc.

TS-7