Term Sheet
To prospectus dated December 1, 2005,
prospectus supplement dated October 12, 2006 and
product supplement no. 98-II dated October 2, 2008

  Term sheet to
Product Supplement No. 98-II
Registration Statement No. 333-130051
Dated October 3, 2008; Rule 433

     

Structured 
Investments 

      JPMorgan Chase & Co.
$
Index Basket Knock-OutNotes Linked to an Equally Weighted Basket Consisting of the S&P 500® Index, the Nikkei 225 Index and the Dow Jones EURO STOXX 50® Index due October 31, 2011

General

Key Terms

Basket:

The notes are linked to an equally weighted basket consisting of the S&P 500® Index, the Nikkei 225 Index and Dow Jones EURO STOXX 50® Index (each a “Basket Index,” and collectively, the “Basket Indices”).

Index Weightings:

The S&P 500 Weighting, the Nikkei Weighting and the EURO STOXX Weighting (each an “Index Weighting,” and collectively, the “Index Weightings”) are each set to equal 1/3 of the value of the Basket, or approximately 33.3333%.

Knock-Out Event:

A Knock-Out Event occurs if, on any trading day during the Monitoring Period, the Index closing level for any Basket Index has decreased, as compared to the Index starting level for such Basket Index, by more than the Knock-Out Buffer Amount.

Knock-Out Buffer Amount:

35%

Payment at Maturity:

If a Knock-Out Event has occurred, you will receive a cash payment at maturity that will reflect the performance of the Basket. Under these circumstances, your final payment at maturity per $1,000 principal amount note will be calculated as follows:

 

$1,000 + ($1,000 x Basket Return)

 

If a Knock-Out Event has occurred, you will lose some or all of your investment at maturity if the Ending Basket Level has declined from the Starting Basket Level.

 

If a Knock-Out Event has not occurred, you will receive a cash payment at maturity that will reflect the performance of the Basket, subject to the Contingent Minimum Return. If a Knock-Out Event has not occurred, your final payment at maturity per $1,000 principal amount note will equal $1,000 plus the product of (a) $1,000 and (b) the greater of (i) the Basket Return and (ii) the Contingent Minimum Return. For additional clarification, please see “What is the Total Return on the Notes at Maturity Assuming a Range of Performance for the Basket?”

Contingent Minimum Return:

At least 20%. The actual Contingent Minimum Return will be determined on the pricing date and will not be less than 20%.

Monitoring Period:

The period from the pricing date to and including the Observation Date.

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 on or about October 28, 2008.

Ending Basket Level:

The Basket Closing Level on the Observation Date.

Basket Closing Level:

The Basket Closing Level will be calculated as follows:

 

100 x [1 + (S&P 500 Return * S&P 500 Weighting) + (Nikkei Return * Nikkei Weighting) + (EURO STOXX Return * EURO STOXX Weighting)]

 

Each of the S&P 500 Return, the Nikkei Return and the EURO STOXX Return is the performance of the relevant Basket Index, expressed as a percentage, from the relevant Index closing level on the pricing date (each an “Index starting level”) to the relevant Index closing level on the Observation Date. For additional information, see “Description of Notes — Payment at Maturity” in the accompanying product supplement no. 98-II.

Observation Date:

October 26, 2011

Maturity Date:

October 31, 2011

CUSIP:

48123LRV8

Subject to postponement in the event of a market disruption event and as described under “Description of Notes — Payment at Maturity” in the accompanying product supplement no. 98-II.

Investing in the Index Basket Knock-Out Notes involves a number of risks. See “Risk Factors” beginning on page PS-7 of the accompanying product supplement no. 98-II 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. 98-II 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 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)

If the notes priced today, J.P. Morgan Securities Inc., which we refer to as JPMSI, acting as agent for JPMorgan Chase & Co., would receive a commission of approximately $42.50 per $1,000 principal amount note. This commission includes the projected profits that our affiliates expect to realize in consideration for assuming risks inherent in hedging our obligations under the notes. JPMSI may use a portion of that commission to pay selling concessions to other dealers of approximately $20.00 per $1,000 principal amount note. The other dealers may forgo in their sole discretion, some or all of their selling concessions. The actual commission received by JPMSI may be more or less than $42.50 and will depend on market conditions on the pricing date. In no event will the commission received by JPMSI, which includes concessions that may be allowed to other dealers, exceed $50.00 per $1,000 principal amount note. See “Underwriting” beginning on page PS-35 of the accompanying product supplement no. 98-II.

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.

JPMorgan

October 3, 2008

Additional Terms Specific to the Notes

You should read this term sheet together with the prospectus dated December 1, 2005, as supplemented by the prospectus supplement dated October 12, 2006 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. 98-II dated October 2, 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. 98-II, 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


JPMorgan Structured Investments —
Index Basket Knock-Out Notes Linked to an Equally Weighted Basket Consisting of the S&P 500® Index, the Nikkei 225 Index and the Dow Jones EURO STOXX 50® Index

 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 Basket or any of the component stocks of the Basket Indices. These risks are explained in more detail in the “Risk Factors” section of the accompanying product supplement no. 98-II dated October 2, 2008.


JPMorgan Structured Investments —
Index Basket Knock-Out Notes Linked to an Equally Weighted Basket Consisting of the S&P 500® Index, the Nikkei 225 Index and the Dow Jones EURO STOXX 50® Index

 TS-2

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 on 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 a Contingent Minimum Return of 20%. The actual Contingent Minimum Return will be determined on the pricing date and will not be less than 20%. 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. The numbers appearing in the following table and examples have been rounded for ease of analysis.


 

 

Total Return

Ending
Basket Level

Basket Return

Knock-Out Event Has
Not Occurred(1)

Knock-Out Event Has
Occurred(2)


190.00

90.00%

90.00%

90.00%

180.00

80.00%

80.00%

80.00%

170.00

70.00%

70.00%

70.00%

160.00

60.00%

60.00%

60.00%

150.00

50.00%

50.00%

50.00%

140.00

40.00%

40.00%

40.00%

130.00

30.00%

30.00%

30.00%

120.00

20.00%

20.00%

20.00%

115.00

15.00%

20.00%

15.00%

110.00

10.00%

20.00%

10.00%

105.00

5.00%

20.00%

5.00%

102.50

2.50%

20.00%

2.50%

100.00

0.00%

20.00%

0.00%

95.00

-5.00%

20.00%

-5.00%

90.00

-10.00%

20.00%

-10.00%

85.00

-15.00%

20.00%

-15.00%

80.00

-20.00%

20.00%

-20.00%

70.00

-30.00%

20.00%

-30.00%

60.00

-40.00%

N/A

-40.00%

50.00

-50.00%

N/A

-50.00%

40.00

-60.00%

N/A

-60.00%

30.00

-70.00%

N/A

-70.00%

20.00

-80.00%

N/A

-80.00%


(1)

The Index closing level of each Basket Index has not declined, as compared to the Index starting level of such Basket Index, by more than 35% on any trading day during the Monitoring Period.

   
(2)

The Index closing level of any Basket Index has declined, as compared to the Index starting level of such Basket Index, by more than 35% on at least one trading day during the Monitoring Period.

Hypothetical Examples of Amounts Payable at Maturity

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

Example 1: A Knock-Out Event has not occurred, and the level of the Basket increases from the Starting Basket Level of 100 to an Ending Basket Level of 115. Because a Knock-Out Event has not occurred and the Basket Return of 15% is less than the hypothetical Contingent Minimum Return of 20%, the investor receives a payment at maturity of $1,200 per $1,000 principal amount note.

Example 2: A Knock-Out Event has not occurred, and the level of the Basket decreases from the Starting Basket Level of 100 to an Ending Basket Level of 80. Because a Knock-Out Event has not occurred and the Basket Return of -20% is less than the hypothetical Contingent Minimum Return of 20%, the investor receives a payment at maturity of $1,200 per $1,000 principal amount note.

Example 3: A Knock-Out Event has not occurred, and the level of the Basket increases from the Starting Basket Level of 100 to an Ending Basket Level of 140. Because a Knock-Out Event has not occurred and the Basket Return of 40% is greater than the hypothetical Contingent Minimum Return of 20%, the investor receives a payment at maturity of $1,400 per $1,000 principal amount note, calculated as follows:

$1,000 + ($1,000 x 40%) = $1,400

Example 4: A Knock-Out Event has occurred, and the level of the Basket decreases from the Starting Basket Level of 100 to an Ending Basket Level of 80. Because a Knock-Out Event has occurred and the Basket Return is -20%, the investor receives a payment at maturity of $800 per $1,000 principal amount note, calculated as follows:

$1,000 + ($1,000 x - -20%) = $800

Example 5: A Knock-Out Event has occurred, and the level of the Basket increases from the Starting Basket Level of 100 to an Ending Basket Level of 120. Because a Knock-Out Event has occurred and the Basket Return is 20%, the investor receives a payment at maturity of $1,200 per $1,000 principal amount note, calculated as follows:

$1,000 + ($1,000 x 20%) = $1,200


JPMorgan Structured Investments —
Index Basket Knock-Out Notes Linked to an Equally Weighted Basket Consisting of the S&P 500® Index, the Nikkei 225 Index and the Dow Jones EURO STOXX 50® Index

 TS-3

Historical Information

The following graphs show the historical weekly performance of each Basket Index as well as the Basket as a whole from January 3, 2003 through September 26, 2008. The graph of the historical Basket performance assumes the Basket level on January 3, 2003 was 100 and the Index Weightings specified on the cover of this term sheet on that date. The Index closing level of the S&P 500® Index on October 2, 2008 was 1114.28. The Index closing level of the Nikkei 225 Index on October 2, 2008 was 11154.76. The Index closing level of the Dow Jones EURO STOXX 50® Index on October 2, 2008 was 3007.51.

We obtained the various Index closing levels below from Bloomberg Financial Markets. We make no representation or warranty as to the accuracy or completeness of information obtained from Bloomberg Financial Markets. The historical levels of each Basket Index and of the Basket should not be taken as an indication of future performance, and no assurance can be given as to the Index closing level of any Basket Index on the Observation Date. We cannot give you assurance that the performance of the Basket Indices will result in the return of any of your initial investment.


JPMorgan Structured Investments —
Index Basket Knock-Out Notes Linked to an Equally Weighted Basket Consisting of the S&P 500® Index, the Nikkei 225 Index and the Dow Jones EURO STOXX 50® Index

 TS-4