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January 2010

Preliminary Terms No. 18

Registration Statement No. 333-155535

Dated December 22, 2009

Filed pursuant to Rule 433

STRUCTURED INVESTMENTS
Opportunities in U.S. Equities

Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

The Jump Securities offer the opportunity for investors to earn a return based on the performance of the iShares® Dow Jones U.S. Real Estate Index Fund. Unlike ordinary debt securities, the securities do not pay interest and do not guarantee the return of 100% of the principal at maturity. Instead, at maturity, you will receive a positive return on the securities equal to 44% to 48%, which we refer to as the upside payment, if the share price on the valuation date is above the initial share price. If, on the other hand, the share price on the valuation date is at or below the initial share price, you will receive for each $10 stated principal amount of securities that you hold, a payment that is equal to or less than the stated principal amount of $10 by an amount that is proportionate to any percentage decrease from the initial share price. This amount may be significantly less than the stated principal amount of the securities and may be zero. The securities are senior unsecured obligations of JPMorgan Chase & Co., and all payments on the securities are subject to the credit risk of JPMorgan Chase & Co.

SUMMARY TERMS

Issuer:

JPMorgan Chase & Co.

ETF Shares:

Shares of the iShares® Dow Jones U.S. Real Estate Index Fund

Underlying Index:

Dow Jones U.S. Real Estate Index

Aggregate principal amount:

$

Stated principal amount:

$10 per security

Issue price:

$10 per security (see “Commissions and Issue Price” below)

Pricing date:

January     , 2010 (expected to price on or about January 25, 2010)

Original issue date:

January     , 2010 (3 business days after the pricing date)

Maturity date:

January 27, 2012, subject to adjustment for certain market disruption events and as described under “Description of Securities — Payment at Maturity” in the accompanying product supplement no. MS-7-A-I

Payment at maturity:

  • If the final share price is greater than the initial share price, for each $10 stated principal amount security,

$10 + upside payment
  • If the final share price is less than or equal to the initial share price, for each $10 stated principal amount security,

$10 x share performance factor

This amount will be equal to or less than the stated principal amount of $10.

There is no minimum payment at maturity.

Upside payment:

$4.40 to $4.80 per security (44% to 48% of the stated principal amount). The actual upside payment will be determined on the pricing date and will not be less than $4.40 or greater than $4.80. Accordingly, even if the final share price is significantly greater than the initial share price, your payment at maturity will not exceed $14.40 to $14.80 per security.

Initial share price:

The closing price of one ETF Share on the pricing date, divided by the adjustment factor

Final share price:

The closing price of one ETF Share on the valuation date

Valuation date:

January 24, 2012, subject to adjustment for certain market disruption events and as described under “Description of Jump Securities — Payment at Maturity” in the accompanying product supplement no. MS-7-A-I

Share performance factor:

final share price / initial share price

Adjustment factor:

Set equal to 1.0 on the pricing date, subject to adjustment under certain circumstances. See “General Terms of Notes — Anti-Dilution Adjustments” in the accompanying product supplement no. MS-7-A-I.

CUSIP / ISIN:

46634E767 / US46634E7673

Listing:

The securities will not be listed on any securities exchange.

Agent:

J.P. Morgan Securities Inc. (“JPMSI”)

Commissions and issue price:

Price to Public(1)(2)

Fees and Commissions(2)(3)

Proceeds to Issuer

Per Security

$10

$0.225

$9.775

Total

$

$

$
(1) The price to the public includes the estimated cost of hedging our obligations under the securities through one or more of our affiliates, which includes our affiliates’ expected cost of providing such hedge as well as the profit our affiliates expect to realize in consideration for assuming the risks inherent in providing such hedge. For additional related information, please see “Use of Proceeds” beginning on PS-19 of the accompanying product supplement no. MS-7-A-I.
(2) The actual price to public and commissions for a particular investor may be reduced for volume purchase discounts depending on the aggregate amount of securities purchased by that investor. The lowest price payable by an investor is $9.925 per security. Please see “Syndicate Information” on page 5 for further details.
(3) JPMSI, acting as agent for JPMorgan Chase & Co., will receive a commission and will use all of that commission to allow selling concessions to Morgan Stanley Smith Barney LLC (“MSSB”) that will depend on market conditions on the pricing date. In no event will the commission received by JPMSI and the selling concessions to be allowed to MSSB exceed $0.225 per $10 stated principal amount security. See “Underwriting (Conflicts of Interest)” beginning on page PS-51 of the accompanying product supplement no. MS-7-A-I.

Investing in the securities involves a number of risks. See “Risk Factors” on page PS-7 of the accompanying product supplement no. MS-7-A-I and “Risk Factors” beginning on page 8 of these preliminary terms.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the securities or passed upon the accuracy or the adequacy of this document or the accompanying prospectus supplement and prospectus. Any representation to the contrary is a criminal offense.

The securities are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of, or guaranteed by, a bank.

YOU SHOULD READ THIS DOCUMENT TOGETHER WITH THE RELATED PRODUCT SUPPLEMENT NO. MS-7-A-I, PROSPECTUS SUPPLEMENT AND PROSPECTUS, EACH OF WHICH CAN BE ACCESSED VIA THE HYPERLINKS BELOW, BEFORE YOU DECIDE TO INVEST.

Product supplement no. MS-7-A-I dated December 18, 2009:
http://www.sec.gov/Archives/edgar/data/19617/000089109209004690/e37328_424b2.pdf
Prospectus supplement dated November 21, 2008:
http://www.sec.gov/Archives/edgar/data/19617/000089109208005661/e33600_424b2.pdf
 Prospectus dated November 21, 2008:
http://www.sec.gov/Archives/edgar/data/19617/000089109208005658/e33655_424b2.pdf

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free (800) 869-3326.

Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

Investment Overview
The Jump Securities
The Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012, which we refer to as the securities, provide investors the opportunity for a fixed positive return of 44% to 48% if the ETF Shares have appreciated in value at all at maturity from the initial share price.

The securities can be used:

The securities are exposed on a 1:1 basis to the negative performance of the ETF Shares.

Maturity:

24 months

Upside payment:

$4.40 to $4.80 per security(44.00% to 48.00% of the stated principal amount) (to be determined on the pricing date).

Minimum payment at maturity:

There is no minimum payment at maturity.

iShares® Dow Jones U.S. Real Estate Index Fund Overview

The iShares® Dow Jones U.S. Real Estate Index Fund is an exchange-traded fund managed by iShares® Trust, a registered investment company, and seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the real estate sector of the U.S. equity market, as represented by the Dow Jones U.S. Real Estate Index. The Dow Jones U.S. Real Estate Index attempts to measure the performance of the real estate sector of the United States equity market, including, primarily, real estate investment trusts (REITs) subsectors, and real estate holding and developing subsectors.

Information as of market close on December 21, 2009:

Bloomberg Ticker Symbol:

IYR

Current ETF Share Price:

$46.16

52 Weeks Ago:

$36.47

52 Week High (on 12/21/2009):

$46.16

52 Week Low (on 3/6/2009):

$22.21

ETF Shares Historical Performance — Daily Closing Price
January 5, 2004 to December 21, 2009


January 2010

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Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

Key Investment Rationale

Investors will receive a positive return on the securities if the final share price on the valuation date is above the initial share price.

Payment Scenario 1

The final share price is greater than the initial share price. In this scenario, you will receive $14.40 to $14.80 per security (144% to 148% of the stated principal amount), as determined on the pricing date. Accordingly, even if the final share price is significantly greater than the initial share price, your payment at maturity will not exceed $14.40 to $14.80 per security, and your return may be less than if you invested in the ETF Shares directly.

Payment Scenario 2

The final share price is less than or equal to the initial share price. In this scenario, you will receive less than the stated principal amount of $10 by an amount proportionate to the decrease in the value of the ETF Shares on the valuation date from the initial share price. There is no minimum payment at maturity.

Summary of Selected Key Risks (see page 8)

January 2010

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Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

Fact Sheet

The securities offered are senior unsecured obligations of JPMorgan Chase & Co., will pay no interest, do not guarantee any return of your principal at maturity and have the terms described in product supplement no. MS-7-A-I, the prospectus supplement and the prospectus, as supplemented or modified by these preliminary terms. At maturity, if the final share price is greater than the initial share price an investor will receive for each $10 stated principal amount security that the investor holds, the $10 stated principal amount and a fixed return equal to the upside payment. However, if the final share price is less than or equal to the initial share price, the payment at maturity will be less than the stated principal amount of $10 by an amount that is proportionate to the percentage decrease of the final share price from the initial share price. The securities are senior notes issued as part of JPMorgan Chase & Co.’s Series E Medium-Term Notes program. All payments on the securities are subject to the credit risk of JPMorgan Chase & Co.

Expected Key Dates

Pricing date:

Original issue date (settlement date):

Maturity date:

January    , 2010 (expected to price on or about January 25, 2010)

January    , 2010 (3 business days after the pricing date)

January 27, 2012,subject to postponement due to a market disruption event and as described under “Description of Securities — Payment at Maturity” in the accompanying product supplement no. MS-7-A-I.

Key Terms

 

Issuer:

JPMorgan Chase & Co.

ETF Shares:

Shares of the iShares® Dow Jones U.S. Real Estate Index Fund

Underlying Index:

Dow Jones U.S. Real Estate Index
Aggregate principal amount: $

Issue price:

$10 per security (see “Syndicate Information” on page 5)

Stated principal amount:

$10 per security

Denominations:

$10 per security and integral multiples thereof

Interest:

None

Payment at maturity:
  • If the final share price is greater than the initial share price, for each $10 stated principal amount security,

 

$10 + upside payment

 
  • If the final share price is less than or equal to the initial share price, for each $10 stated principal amount security,

 

$10 x share performance factor

 

This amount will be equal to or less than the stated principal amount of $10.

There is no minimum payment at maturity.

Upside payment:

$4.40 to $4.80 per security (44% to 48% of the stated principal amount). The actual upside payment will be determined on the pricing date and will not be less than $4.40 or greater than $4.80. Accordingly, even if the final share price is significantly greater than the initial share price, your payment at maturity will not exceed $14.40 to $14.80 per security.

Initial share price:

The closing price of one ETF Share on the pricing date, divided by the adjustment factor

Final share price:

The closing price of one ETF Share on the valuation date

Valuation date:

January 24, 2012, subject to adjustment for certain market disruption events

Share performance factor:

final share price / initial share price

Adjustment factor:

Set equal to 1.0 on the pricing date, subject to adjustment under certain circumstances. See “General Terms of Notes — Anti-Dilution Adjustments” in the accompanying product supplement no. MS-7-A-I.

Postponement of maturity date:

If the scheduled maturity date is not a business day, then the maturity date will be the following business day. If the scheduled valuation date is not a trading day or if a market disruption event occurs on that day so that the valuation date as postponed falls less than three business days prior to the scheduled maturity date, the maturity date of the securities will be postponed until the third business day following the valuation date as postponed.

Risk factors:

Please see “Risk Factors” beginning on page 8.

 

January 2010

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Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

General Information

Listing:

The securities will not be listed on any securities exchange.

CUSIP / ISIN:

46634E767 / US46634E7673

Minimum ticketing size:

100 securities

Tax considerations:

You should review carefully the section entitled “Certain U.S. Federal Income Tax Consequences” in the accompanying product supplement no. MS-7-A-I. Subject to the limitations described therein, and based on certain factual representations received from us, in the opinion of our special tax counsel, Davis Polk & Wardwell LLP, your securities should be treated as “open transactions” for U.S. federal income tax purposes that generate long-term capital gain or loss if held for more than one year. In addition, in December 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, such as the securities. The notice focuses in particular on whether to require holders of these instruments to accrue income over the term of their investment. It also asks for comments on a number of related topics, including the character of income or loss with respect to these instruments; the relevance of factors such as the nature of the underlying property to which the instruments are linked; the degree, if any, to which income (including any mandated accruals) realized by Non-U.S. Holders should be subject to withholding tax; and whether these instruments are or should be subject to the “constructive ownership” regime, which very generally can operate to recharacterize certain long-term capital gain as ordinary income that is subject to an interest charge. While the notice requests comments on appropriate transition rules and effective dates, 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 securities, possibly with retroactive effect. Both U.S. and Non-U.S. Holders should consult their tax advisers regarding the U.S. federal income tax consequences of an investment in the securities, including possible alternative treatments and the issues presented by this notice. Non-U.S. Holders should also note that they may be withheld upon at a rate of up to 30% unless they have submitted a properly completed IRS Form W-8BEN or otherwise satisfied the applicable documentation requirements.
Subject to certain assumptions and representations received from us, the discussion in the preceding paragraph, when read in combination with the discussion in “Risk Factors — The tax consequences of an investment in the securities are unclear” in this document and the section entitled “Certain U.S. Federal Income Tax Consequences” in the accompanying product supplement, constitutes the full opinion of Davis Polk & Wardwell LLP regarding the material U.S. federal income tax consequences of owning and disposing of securities.

Trustee:

Deutsche Bank Trust Company Americas (formerly Bankers Trust Company)

Calculation agent:

J.P. Morgan Securities Inc. (“JPMSI”)

Use of proceeds and hedging:

The net proceeds we receive from the sale of the securities will be used for general corporate purposes and, in part, by us or by one or more of our affiliates in connection with hedging our obligations under the securities.

For further information on our use of proceeds and hedging, see “Use of Proceeds” in the accompanying product supplement no. MS-7-A-I.

Benefit plan investor considerations:

See “Benefit Plan Investor Considerations” in the accompanying product supplement no. MS-7-A-I.

Contact:

Morgan Stanley Smith Barney clients may contact their local Morgan Stanley Smith Barney branch office or Morgan Stanley Smith Barney’s principal executive offices at 2000 Westchester Avenue, Purchase, New York 10577 (telephone number (800) 869-3326).


Syndicate Information

Issue price of the securities

Commissions

Principal amount of securities
for any single investor

$10.0000

$0.2250

<$1MM

$9.9625

$0.1875

≥$1MM and <$3MM

$9.9438

$0.1688

≥$3MM and <$5MM

$9.9250

$0.1500

≥$5MM

Selling concessions allowed to sub-dealers in connection with the offering may be reclaimed by MSSB, if, within 30 days of the offering, MSSB repurchases the securities distributed by such sub-dealers.

This offering summary represents a summary of the terms and conditions of the securities. We encourage you to read the accompanying product supplement no. MS-7-A-I, the prospectus supplement and prospectus for this offering, which can be accessed via the hyperlinks on the front page of this document.

January 2010

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Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

How the Jump Securities Work

Payoff Diagram

The payoff diagram below illustrates the payment at maturity on the securities for a range of hypothetical percentage changes in the final share price of the ETF Shares. The payoff diagram is based on the following terms:

Stated principal amount:

$10 per security

Hypothetical upside payment:

$4.40 per security (44% of the stated principal amount)

Hypothetical payment at maturity:

$14.40 per security

Minimum payment at maturity:

None

Jump Securities Payoff Diagram

How it works

January 2010

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Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

Payment at Maturity

At maturity, investors will receive for each $10 stated principal amount of securities that they hold an amount in cash based upon the final share price, determined as follows:

If the final share price is greater than the initial share price:

$10    +    upside payment:

The upside payment will be $4.40 to $4.80 per security, to be determined on the pricing date.

If the final share price is less than or equal to the initial share price:

$10    ×    share performance factor

Because the share performance factor will be less than or equal to 1.0, this payment at maturity will be less than or equal to $10.

January 2010

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Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

Risk Factors

The following is a non-exhaustive list of certain key risk factors for investors in the securities. For further discussion of these and other risks, you should read the section entitled “Risk Factors” beginning on page PS-7 of the accompanying product supplement no. MS-7-A-I. We also urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the securities.

January 2010

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January 2010

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charge. While the notice requests comments on appropriate transition rules and effective dates, 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 securities, possibly with retroactive effect. Both U.S. and Non-U.S. Holders should review carefully the section entitled “Certain U.S. Federal Income Tax Consequences” in the accompanying product supplement no. MS-7-A-I and consult their tax advisers regarding the U.S. federal income tax consequences of an investment in the securities, including possible alternative treatments and the issues presented by this notice. Non-U.S. Holders should also note that they may be withheld upon at a rate of up to 30% unless they have submitted a properly completed IRS Form W-8BEN or otherwise satisfied the applicable documentation requirements.

January 2010

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Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

Information about the ETF Shares and the Underlying Index

The iShares® Dow Jones U.S. Real Estate Index Fund. The iShares® Dow Jones U.S. Real Estate Index Fund is an exchange-traded fund managed by iShares® Trust (“iShares”), a registered investment company. iShares consists of numerous separate investment portfolios, including the iShares® Dow Jones U.S. Real Estate Index Fund. BlackRock Fund Advisors (“BFA”) is currently the investment adviser for the iShares® Dow Jones U.S. Real Estate Index Fund. This fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the real estate sector of the U.S. equity market, as represented by the Dow Jones U.S. Real Estate Index. The fund’s investment objective and the underlying index may be changed without shareholder approval. Shares of the fund trade on NYSE Arca, Inc. under the ticker symbol IYR. Information provided to or filed with the SEC by iShares pursuant to the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, can be located by reference to the SEC file numbers 333-92935 and 811-09729, respectively, through the SEC’s website at http://www.sec.gov. In addition, information may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated documents. We make no representation or warranty as to the accuracy or completeness of such information.

These preliminary terms relate only to the securities offered hereby and do not relate to the ETF Shares. We have derived all disclosures contained in these preliminary terms regarding iShares from the publicly available documents described in the preceding paragraph. In connection with the offering of the securities, neither we nor the agent has participated in the preparation of such documents or made any due diligence inquiry with respect to iShares. Neither we nor the agent makes any representation that such publicly available documents or any other publicly available information regarding iShares is accurate or complete. Furthermore, we cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described in the preceding paragraph) that would affect the trading price of the ETF Shares (and therefore the price of the ETF Shares at the time we price the securities) have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning iShares could affect the value received at maturity with respect to the securities and therefore the trading prices of the securities.

Neither we nor any of our affiliates makes any representation to you as to the performance of the ETF Shares.

We and/or our affiliates may presently or from time to time engage in business with iShares. In the course of such business, we and/or our affiliates may acquire non-public information with respect to iShares, and neither we nor any of our affiliates undertakes to disclose any such information to you. In addition, one or more of our affiliates may publish research reports with respect to the ETF Shares. The statements in the preceding two sentences are not intended to affect the rights of investors in the securities under the securities laws. As a prospective purchaser of the securities, you should undertake an independent investigation of iShares as in your judgment is appropriate to make an informed decision with respect to an investment in securities linked to the ETF Shares.

iShares® is a registered trademark of BlackRock Institutional Trust Company, N.A. (“BTC”). The securities are not sponsored, endorsed, sold, or promoted by BTC. BTC makes no representations or warranties to the owners of the securities or any member of the public regarding the advisability of investing in the securities. BTC has no obligation or liability in connection with the operation, marketing, trading or sale of the securities.

The Dow Jones U.S. Real Estate Index. The Dow Jones U.S. Real Estate Index attempts to measure the performance of the real estate sector of the United States equity market and primarily includes companies in the REITs industry, as well as companies in the real estate holding and development industry. REITs are passive investment vehicles that invest primarily in income-producing real estate or real estate related loans and interests. The Dow Jones U.S. Real Estate Index is sponsored by Dow Jones, an organization independent of the iShares® Dow Jones U.S. Real Estate Index Fund and BFA. Dow Jones determines the relative weightings of the securities in the Dow Jones U.S. Real Estate Index and publishes information regarding the market value of the Dow Jones U.S. Real Estate Index. The Dow Jones U.S. Real Estate Index is described under the sub-heading “The Dow Jones U.S. Real Estate Index” in the section “The iShares® Dow Jones U.S. Real Estate Index Fund” in the accompanying product supplement no. MS-7-A-I.

January 2010

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Jump Securities Based on the iShares® Dow Jones U.S. Real Estate Index Fund due January 27, 2012

Historical Information

The following table sets forth the published high and low closing prices, as well as end-of-quarter closing prices, of the ETF Shares for each quarter in the period from January 2, 2004 through December 21, 2009. The closing price of one ETF Share on December 21, 2009 was $46.16. We obtained the information in the table below from Bloomberg Financial Markets, without independent verification. The historical closing prices of one ETF Share should not be taken as an indication of future performance, and no assurance can be given as to the closing price of one ETF Share on the valuation date.

iShares® Dow Jones U.S. Real Estate Index Fund

High ($)

Low ($)

Period End ($)

2004

 

 

 

First Quarter

54.85

49.46

54.73

Second Quarter

55.08

44.94

50.64

Third Quarter

55.78

49.89

55.10

Fourth Quarter

62.36

54.84

61.58

2005

 

 

 

First Quarter

60.83

55.53

56.10

Second Quarter

65.03

55.78

63.55

Third Quarter

68.28

62.27

64.27

Fourth Quarter

66.50

59.24

64.28

2006

 

 

 

First Quarter

75.02

65.73

73.50

Second Quarter

72.20

67.29

71.30

Third Quarter

78.20

71.33

77.13

Fourth Quarter

86.83

77.03

83.71

2007

 

 

 

First Quarter

94.71

82.34

85.27

Second Quarter

87.77

76.86

77.20

Third Quarter

80.25

67.79

76.57

Fourth Quarter

80.85

65.00

65.70

2008

 

 

 

First Quarter

68.22

59.02

65.10

Second Quarter

71.65

60.95

60.95

Third Quarter

67.20

56.34

61.95

Fourth Quarter

61.17

25.40

37.23

2009

 

 

 

First Quarter

37.26

22.21

25.46

Second Quarter

35.55

25.30

32.34

Third Quarter

45.04

29.88

42.66

Fourth Quarter (through December 21, 2009)

46.16

39.63

46.16

January 2010

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Supplemental Plan of Distribution

Subject to regulatory constraints, JPMSI intends to use its reasonable efforts to offer to purchase the securities in the secondary market, but is not required to do so.

We or our affiliate may enter into swap agreements or related hedge transactions with one of our other affiliates or unaffiliated counterparties in connection with the sale of the securities and JPMSI and/or an affiliate may earn additional income as a result of payments pursuant to the swap or related hedge transactions. See “Use of Proceeds” beginning on page PS-19 of the accompanying product supplement no. MS-7-A-I.

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Where You Can Find More Information

You may revoke your offer to purchase the securities 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 securities prior to their issuance. In the event of any changes to the terms of the securities, 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.

You should read this document 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 securities are a part, and the more detailed information contained in product supplement no. MS-7-A-I dated December 18, 2009.

This document, together with the documents listed below, contains the terms of the securities 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, stand-alone 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. MS-7-A-I, as the securities 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 securities.

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 document, the “Company,” “we,” “us,” or “our” refers to JPMorgan Chase & Co.

January 2010

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