Term Sheet |
Term Sheet to Product Supplement No. 108-I Registration Statement No. 333-130051 Dated May 6, 2008; Rule 433 |
Structured |
JPMorgan
Chase & Co. $ Upside Auto Callable Reverse Exchangeable Notes due December 1, 2008 Each Linked to the Common Stock of a Different Single Reference Stock Issuer |
General
Key Terms
Automatic Call: |
If on the Call Date, the closing price of the applicable Reference Stock is greater than the applicable Initial Share Price, the notes will be automatically called. |
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Payment if Called: |
If the notes are automatically called, on the Call Settlement Date, for each $1,000 principal amount note, you will receive $1,000 plus any accrued and unpaid interest to but excluding the Call Settlement Date. |
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Payment at Maturity: |
If the notes are not automatically called, the payment at maturity, in excess of any accrued and unpaid interest, will be based on the performance of the applicable Reference Stock. If the notes are not automatically called, for each $1,000 principal amount note, you will receive $1,000 plus any accrued and unpaid interest at maturity, unless: |
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(1) | the applicable Final Share Price is less than the applicable Initial Share Price; and | |
(2) | on any day during the Monitoring Period, the closing price of the applicable Reference Stock has declined, as compared to the applicable Initial Share Price, by more than the applicable Protection Amount. | |
If the notes are not automatically called and the conditions described in both (1) and (2) are satisfied, at maturity you will receive, in addition to any accrued and unpaid interest and instead of the principal amount of your notes, the number of shares of the applicable Reference Stock equal to the applicable Physical Delivery Amount (or, at our election, the Cash Value thereof). Fractional shares will be paid in cash. The market value of the Physical Delivery Amount or the Cash Value thereof will most likely be substantially less than the principal amount of your notes, and may be zero. | ||
Maturity Date: |
December 1, 2008* |
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Pricing Date: |
On or about May 27, 2008 |
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Settlement Date: |
On or about May 30, 2008 |
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Call Date: |
August 26, 2008* |
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Call Settlement Date: |
August 29, 2008*, which is the third business day after the Call Date. |
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Observation Date: |
November 25, 2008* |
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Interest Payment Date: |
Interest on the notes will be payable monthly in arrears on the last calendar day of each month, except for the final interest payment, which will be payable on the Maturity Date (each such date, an Interest Payment Date), commencing June 30, 2008, to and including the Interest Payment Date corresponding to the Maturity Date, unless the notes are automatically called. If the notes are automatically called, interest will accrue to but excluding the Call Settlement Date, and will be payable on each Interest Payment Date occurring before the Call Settlement Date and on the Call Settlement Date. See Selected Purchase Considerations Monthly Interest Payments in this term sheet for more information. |
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Monitoring Period: |
The period from the Pricing Date to and including the Observation Date. |
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Physical Delivery Amount: |
The number of shares of the applicable Reference Stock, per $1,000 principal amount note, equal to $1,000 divided by the applicable Initial Share Price, subject to adjustments. |
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Cash Value: |
For each Reference Stock, the amount in cash equal to the product of (1) $1,000 divided by the Initial Share Price of such Reference Stock and (2) the Final Share Price of such Reference Stock, subject to adjustments. |
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Initial Share Price: |
The closing price of the applicable Reference Stock on the Pricing Date. The Initial Share Price is subject to adjustments in certain circumstances. See Description of Notes Payment at Maturity and General Terms of Notes Anti-Dilution Adjustments in the accompanying product supplement no. 108-I for further information about these adjustments. |
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Final Share Price: |
The closing price of the applicable Reference Stock on the Observation Date. |
Interest Rate | Approximate
Tax Allocation of Monthly Coupon |
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Page Number |
Ticker |
If Not
|
If |
Protection
|
Initial |
CUSIP |
Approximate
|
Interest on
|
Put |
||
Amazon.com, Inc. |
TS-4 |
AMZN |
6.75%
|
3.375% |
30% of the
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|
48123MY30 |
$11.25 |
20.74% |
79.26% |
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General Motors |
TS-6 |
GM |
10.00% |
5.00% |
40% of the
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|
48123MY48 |
$16.67 |
14.00% |
86.00% |
||
Target |
TS-8 |
TGT |
5.375%
|
2.6875% |
30% of the
|
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48123MY55 |
$8.96 |
26.05% |
73.95% |
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* |
Subject to postponement in the event of a market disruption event and as described under Description of Notes Automatic Call or Description of Notes Payment at Maturity, as applicable, in the accompanying product supplement no. 108-I. |
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Based on one reasonable treatment of the notes, as described herein under Selected Purchase Considerations Tax Treatment as a Unit Comprising a Put Option and a Deposit and in the accompanying product supplement no. 108-I under Certain U.S. Federal Income Tax Consequences on page PS-29. The allocations presented herein were determined as of May 5, 2008; the actual allocations will be determined as of the Pricing Date and may differ. |
Investing in the Upside Auto Callable Reverse Exchangeable Notes involves a number of risks. See Risk Factors beginning on page PS-8 of the accompanying product supplement no. 108-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.
Neither the SEC 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.
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Price to Public |
Fees and Commissions (1) |
Proceeds to Us |
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Per note |
$ |
$ |
$ |
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Total |
$ |
$ |
$ |
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(1) |
In no event will the fees and commissions received by J.P. Morgan Securities Inc., which we refer to as JPMSI, which include concessions to be allowed to other dealers, exceed $60.00 per $1,000 principal amount note for any of the three (3) offerings listed above. For more detailed information about fees, commissions and concessions, please see Supplemental Underwriting Information on the last page of this term sheet. |
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
May 6, 2008
Additional Terms Specific to Each Note Offering
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. 108-I and this term sheet if you so request by calling toll-free 866-535-9248.
This term sheet relates to three (3) separate note offerings. Each issue of offered notes is linked to one, and only one, Reference Stock. The purchaser of a note will acquire a security linked to a single Reference Stock (not to a basket or index that includes another Reference Stock). You may participate in any of the three (3) note offerings or, at your election, in two or more of the offerings. 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 withdraw, cancel or modify any offering and to reject orders in whole or in part. 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. While each note offering relates only to a single Reference Stock identified on the cover page, you should not construe that fact as a recommendation of the merits of acquiring an investment linked to that Reference Stock (or any other Reference Stock) or as to the suitability of an investment in 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. 108-I dated December 13, 2007. 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. 108-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
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JPMorgan
Structured Investments |
TS-1 |
Selected Risk Considerations
An investment in the notes involves significant risks. Investing in the notes is not equivalent to investing directly in any of the Reference Stocks. These risks are explained in more detail in the Risk Factors section of the accompanying product supplement no. 108-I dated December 13, 2007.
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JPMorgan
Structured Investments |
TS-2 |
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JPMorgan
Structured Investments |
TS-3 |
The Reference Stocks
Public Information
All information contained herein on the Reference Stocks and on the Reference Stock issuers is derived from publicly available sources and is provided for informational purposes only. Companies with securities registered under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, are required to periodically file certain financial and other information specified by the SEC. Information provided to or filed with the SEC by a Reference Stock issuer pursuant to the Exchange Act can be located by reference to the SEC file number provided below and can be accessed through www.sec.gov. We do not make any representation that these publicly available documents are accurate or complete. See The Reference Stock beginning on page PS-13 of the accompanying product supplement no. 108-I for more information.
Amazon.com, Inc. (Amazon.com)
According to its publicly available filings with the SEC, Amazon.com operates retail websites and offers programs that enable third parties to sell products on their websites. The common stock of Amazon.com, par value $0.01 per share, is listed on The NASDAQ Stock Market, which we refer to as the Relevant Exchange for purposes of Amazon.com in the accompanying product supplement no. 108-I. Amazon.com's SEC file number is 000-22513.
Historical Information of the Common Stock of Amazon.com
The following graph sets forth the historical performance of the common stock of Amazon.com based on the weekly closing price (in U.S. dollars) of the common stock of Amazon.com from January 3, 2003 through May 2, 2008. The closing price of the common stock of Amazon.com on May 5, 2008 was $75.92. We obtained the closing prices and other information below from Bloomberg Financial Markets, without independent verification. The closing prices and this other information may be adjusted by Bloomberg Financial Markets for corporate actions such as public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg Financial Markets.
Since the commencement of trading of the common stock of Amazon.com, the price of the common stock of Amazon.com has experienced significant fluctuations. The historical performance of the common stock of Amazon.com should not be taken as an indication of future performance, and no assurance can be given as to the closing prices of the common stock of Amazon.com during the term of the notes. We cannot give you assurance that the performance of the common stock of Amazon.com will result in the return of any of your initial investment. We make no representation as to the amount of dividends, if any, that Amazon.com will pay in the future. In any event, as an investor in the notes, you will not be entitled to receive dividends, if any, that may be payable on the common stock of Amazon.com.
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JPMorgan
Structured Investments |
TS-4 |
Examples of Hypothetical Payment at Maturity or Upon an Automatic Call for a $1,000 Investment in the Notes Linked to the Common Stock of Amazon.com
The following table illustrates hypothetical payments at maturity or upon an automatic call on a $1,000 investment in the notes linked to the common stock of Amazon.com, based on a range of hypothetical Final Share Prices and closing prices on the Call Date of the Reference Stock and assuming that the closing price of the Reference Stock declines in the manner set forth in the column titled Hypothetical lowest closing price during the Monitoring Period. The numbers appearing in the following table and examples have been rounded for ease of analysis. For this table of hypothetical payments at maturity, we have also assumed the following:
the Initial Share Price: | $76.00 |
the Protection Amount: $22.80
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the Interest Rate: | 6.75% (equivalent to 13.50% per annum) if the note is held to maturity | |
3.375% (equivalent to 13.50% per annum) if the note is automatically called |
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Hypothetical lowest |
Hypothetical |
Hypothetical |
Payment at Maturity** |
Payment on |
Total Value of Payment |
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$72.20 |
$72.20 |
$152.00 |
$1,000.00 |
N/A |
$1,000.00 |
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$76.00 |
$152.00 |
N/A |
N/A |
$1,000.00 |
$1,000.00 |
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$38.00 |
$72.20 |
$79.80 |
$1,000.00 |
N/A |
$1,000.00 |
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$38.00 |
$79.80 |
N/A |
N/A |
$1,000.00 |
$1,000.00 |
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$76.00 |
$76.00 |
$76.00 |
$1,000.00 |
N/A |
$1,000.00 |
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$53.20 |
$60.80 |
$53.20 |
$1,000.00 |
N/A |
$1,000.00 |
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$38.00 |
$76.00 |
$72.20 |
13 shares of the |
N/A |
$950.00 |
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$38.00 |
$57.00 |
$38.00 |
13 shares of the |
N/A |
$500.00 |
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$19.00 |
$38.00 |
$19.00 |
13 shares of the |
N/A |
$250.00 |
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$0.00 |
$22.80 |
$0.00 |
13 shares of the |
N/A |
$0.00 |
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** |
Note that you will receive at maturity or on the Call Settlement Date, as applicable, accrued and unpaid interest in cash, in addition to (1) at maturity, either shares of the Reference Stock (or, at our election, the Cash Value thereof) or the principal amount of your note in cash or (2) on the Call Settlement Date, $1,000 in cash. Also note that if you receive the Physical Delivery Amount at maturity, the total value of payment received at maturity shown in the table above includes the value of any fractional shares, which will be paid in cash. |
The following examples illustrate how the total value of payments received at maturity or on the Call Settlement Date, as applicable, set forth in the table above are calculated.
Example 1: The closing price of the Reference Stock on the Call Date is $79.80. Because the closing price of the Reference Stock of $79.80 on the Call Date is greater than the Initial Share Price of $76.00, the notes are automatically called and you will receive a payment on the Call Settlement Date of $1,000 per $1,000 principal amount note.
Example 2: The closing price of the Reference Stock on the Call Date was $72.20, the lowest closing price of the Reference Stock during the Monitoring Period was $38.00 and the Final Share Price is $79.80. Because the closing price of the Reference Stock of $72.20 on the Call Date was less than the Initial Share Price of $76.00, the notes are not automatically called. Because the Final Share Price of $79.80 is greater than the Initial Share Price of $76.00, you will receive a payment at maturity of $1,000 per $1,000 principal amount note.
Example 3: The closing price of the Reference Stock on the Call Date was $76.00, the lowest closing price of the Reference Stock during the Monitoring Period was $38.00 and the Final Share Price is $72.20. Because the closing price of the Reference Stock of $76.00 on the Call Date was equal to the Initial Share Price of $76.00, the notes are not automatically called. Because the Final Share Price of $72.20 is less than the Initial Share Price of $76.00 and the closing price of the Reference Stock declined by more than the Protection Amount on at least one day during the Monitoring Period, you will receive the Physical Delivery Amount, or at our election, the Cash Value thereof, at maturity. Because the Final Share Price of the Reference Stock is $72.20, the total value of your final payment at maturity, whether in cash or shares of the Reference Stock, is $950.00.
Example 4: The closing price of the Reference Stock on the Call Date was $57.00, and the closing price of the Reference Stock does not decline as compared with the Initial Share Price, by more than the Protection Amount on any day during the Monitoring Period prior to the Observation Date. However, the closing price of the Reference Stock on the Observation Date is $38.00, a decline of more than the Protection Amount. Because the closing price of the Reference Stock of $57.00 on the Call Date was less than the Initial Share Price of $76.00, the notes are not automatically called. Because the Final Share Price of $38.00 is less than the Initial Share Price of $76.00 and the Final Share Price has declined by more than the Protection Amount, you will receive the Physical Delivery Amount, or at our election, the Cash Value thereof, at maturity. Because the Final Share Price of the Reference Stock is $38.00, the total value of your final payment at maturity, whether in cash or shares of the Reference Stock, is $500.00.
Example 5: The closing price of the Reference Stock on the Call Date was $60.80, the Final Share Price of $53.20 is less than the Initial Share Price of $76.00 but does not decline by more than the Protection Amount and the closing price of the Reference Stock does not decline by more than the Protection Amount on any day during the Monitoring Period. Because the closing price of the Reference Stock of $60.80 on the Call Date was less than the Initial Share Price of $76.00, the notes are not automatically called. Because the closing price of the Reference Stock has not declined by more than the Protection Amount, you will receive a payment at maturity of $1,000 per $1,000 principal amount note, even though the Final Share Price of $53.20 is less than the Initial Share Price of $76.00.
Regardless of the performance of the Reference Stock, you will receive interest payments, for each $1,000 principal amount note, in the aggregate amount of (1), if the notes are held to maturity, approximately $67.50 over the term of the notes or (2) if the notes are automatically called, approximately $33.75 from the issue date to but excluding the Call Settlement Date. If we had priced the notes on May 5, 2008 and the notes were not automatically called, you would have received 13 shares of the Reference Stock, or at our election, the Cash Value thereof, at maturity, provided the Final Share Price declined from the Initial Share Price and the closing price of the Reference Stock declined by more than the Protection Amount from the Initial Share Price on at least one day during the Monitoring Period. If the notes are held to maturity, the actual number of shares of the Reference Stock, or the Cash Value thereof, you may receive at maturity and the actual Protection Amount applicable to your notes may be more or less than the amounts displayed in this hypothetical and will depend in part on the closing price of the Reference Stock on the Pricing Date.
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JPMorgan
Structured Investments |
TS-5 |
General Motors Corporation (General Motors)
According to its publicly available filings with the SEC, General Motors is primarily engaged in the worldwide development, production, and marketing of cars, trucks and parts. Also, General Motors finance and insurance operations are primarily conducted through GMAC LLC, in which General Motors owns a 49% interest. The common stock of General Motors, par value $12/3 per share, is listed on the New York Stock Exchange, which we refer to as the Relevant Exchange for purposes of General Motors in the accompanying product supplement no. 108-I. General Motors SEC file number is 001-00043.
Historical Information of the Common Stock of General Motors
The following graph sets forth the historical performance of the Reference Stock based on the weekly closing price (in U.S. dollars) of the Reference Stock from January 3, 2003 through May 2, 2008. The closing price of the common stock of General Motors on May 5, 2008 was $22.36. We obtained the closing prices and other information below from Bloomberg Financial Markets, without independent verification. The closing prices and this other information may be adjusted by Bloomberg Financial Markets for corporate actions such as public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg Financial Markets.
Since the commencement of trading of the common stock of General Motors, the price of the common stock of General Motors has experienced significant fluctuations. The historical performance of the common stock of General Motors should not be taken as an indication of future performance, and no assurance can be given as to the closing prices of the common stock of General Motors during the term of the notes. We cannot give you assurance that the performance of the common stock of General Motors will result in the return of any of your initial investment. We make no representation as to the amount of dividends, if any, that General Motors will pay in the future. In any event, as an investor in the notes, you will not be entitled to receive dividends, if any, that may be payable on the common stock of General Motors.
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JPMorgan
Structured Investments |
TS-6 |
Examples of Hypothetical Payment at Maturity or Upon an Automatic Call for a $1,000 Investment in the Notes Linked to the Common Stock of General Motors
The following table illustrates hypothetical payments at maturity or upon an automatic call on a $1,000 investment in the notes linked to the common stock of General Motors, based on a range of hypothetical Final Share Prices and closing prices on the Call Date of the Reference Stock and assuming that the closing price of the Reference Stock declines in the manner set forth in the column titled Hypothetical lowest closing price during the Monitoring Period. The numbers appearing in the following table and examples have been rounded for ease of analysis. For this table of hypothetical payments at maturity, we have also assumed the following:
the Initial Share Price: | $22.50 |
the Protection Amount: $9.00
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the Interest Rate: | 10.00% (equivalent to 20.00% per annum) if the note is held to maturity | |
5.00% (equivalent to 20.00% per annum) if the note is automatically called |
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Hypothetical lowest |
Hypothetical |
Hypothetical |
Payment at Maturity** |
Payment on |
Total Value of |
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$21.38 |
$21.38 |
$45.00 |
$1,000.00 |
N/A |
$1,000.00 |
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$22.50 |
$45.00 |
N/A |
N/A |
$1,000.00 |
$1,000.00 |
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$11.25 |
$21.38 |
$23.63 |
$1,000.00 |
N/A |
$1,000.00 |
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$11.25 |
$23.63 |
N/A |
N/A |
$1,000.00 |
$1,000.00 |
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$22.50 |
$22.50 |
$22.50 |
$1,000.00 |
N/A |
$1,000.00 |
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$13.50 |
$15.75 |
$13.50 |
$1,000.00 |
N/A |
$1,000.00 |
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$11.25 |
$22.50 |
$21.38 |
44 shares of the |
N/A |
$950.22 |
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|||||
$11.25 |
$14.63 |
$11.25 |
44 shares of the |
N/A |
$500.00 |
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|||||
$5.63 |
$11.25 |
$5.63 |
44 shares of the |
N/A |
$250.22 |
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|||||
$0.00 |
$6.75 |
$0.00 |
44 shares of the |
N/A |
$0.00 |
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** |
Note that you will receive at maturity or on the Call Settlement Date, as applicable, accrued and unpaid interest in cash, in addition to (1) at maturity, either shares of the Reference Stock (or, at our election, the Cash Value thereof) or the principal amount of your note in cash or (2) on the Call Settlement Date, $1,000 in cash. Also note that if you receive the Physical Delivery Amount at maturity, the total value of payment received at maturity shown in the table above includes the value of any fractional shares, which will be paid in cash. |
The following examples illustrate how the total value of payments received at maturity or on the Call Settlement Date, as applicable, set forth in the table above are calculated.
Example 1: The closing price of the Reference Stock on the Call Date is $23.63. Because the closing price of the Reference Stock of $23.63 on the Call Date is greater than the Initial Share Price of $22.50, the notes are automatically called and you will receive a payment on the Call Settlement Date of $1,000 per $1,000 principal amount note.
Example 2: The closing price of the Reference Stock on the Call Date was $21.38, the lowest closing price of the Reference Stock during the Monitoring Period was $11.25 and the Final Share Price is $23.63. Because the closing price of the Reference Stock of $21.38 on the Call Date was less than the Initial Share Price of $22.50, the notes are not automatically called. Because the Final Share Price of $23.63 is greater than the Initial Share Price of $22.50, you will receive a payment at maturity of $1,000 per $1,000 principal amount note.
Example 3: The closing price of the Reference Stock on the Call Date was $22.50, the lowest closing price of the Reference Stock during the Monitoring Period was $11.25 and the Final Share Price is $21.38. Because the closing price of the Reference Stock of $22.50 on the Call Date was equal to the Initial Share Price of $22.50, the notes are not automatically called. Because the Final Share Price of $21.38 is less than the Initial Share Price of $22.50 and the closing price of the Reference Stock declined by more than the Protection Amount on at least one day during the Monitoring Period, you will receive the Physical Delivery Amount, or at our election, the Cash Value thereof, at maturity. Because the Final Share Price of the Reference Stock is $21.38, the total value of your final payment at maturity, whether in cash or shares of the Reference Stock, is $950.22.
Example 4: The closing price of the Reference Stock on the Call Date was $14.63, and the closing price of the Reference Stock does not decline as compared with the Initial Share Price, by more than the Protection Amount on any day during the Monitoring Period prior to the Observation Date. However, the closing price of the Reference Stock on the Observation Date is $11.25, a decline of more than the Protection Amount. Because the closing price of the Reference Stock of $14.63 on the Call Date was less than the Initial Share Price of $22.50, the notes are not automatically called. Because the Final Share Price of $11.25 is less than the Initial Share Price of $22.50 and the Final Share Price has declined by more than the Protection Amount, you will receive the Physical Delivery Amount, or at our election, the Cash Value thereof, at maturity. Because the Final Share Price of the Reference Stock is $11.25, the total value of your final payment at maturity, whether in cash or shares of the Reference Stock, is $500.00.
Example 5: The closing price of the Reference Stock on the Call Date was $15.75, the Final Share Price of $13.50 is less than the Initial Share Price of $22.50 but does not decline by more than the Protection Amount and the closing price of the Reference Stock does not decline by more than the Protection Amount on any day during the Monitoring Period. Because the closing price of the Reference Stock of $15.75 on the Call Date was less than the Initial Share Price of $22.50, the notes are not automatically called. Because the closing price of the Reference Stock has not declined by more than the Protection Amount, you will receive a payment at maturity of $1,000 per $1,000 principal amount note, even though the Final Share Price of $13.50 is less than the Initial Share Price of $22.50.
Regardless of the performance of the Reference Stock, you will receive interest payments, for each $1,000 principal amount note, in the aggregate amount of (1), if the notes are held to maturity, approximately $100.00 over the term of the notes or (2) if the notes are automatically called, approximately $50.00 from the issue date to but excluding the Call Settlement Date. If we had priced the notes on May 5, 2008 and the notes were not automatically called, you would have received 44 shares of the Reference Stock, or at our election, the Cash Value thereof, at maturity, provided the Final Share Price declined from the Initial Share Price and the closing price of the Reference Stock declined by more than the Protection Amount from the Initial Share Price on at least one day during the Monitoring Period. If the notes are held to maturity, the actual number of shares of the Reference Stock, or the Cash Value thereof, you may receive at maturity and the actual Protection Amount applicable to your notes may be more or less than the amounts displayed in this hypothetical and will depend in part on the closing price of the Reference Stock on the Pricing Date.
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JPMorgan
Structured Investments |
TS-7 |
Target Corporation (Target)
According to its publicly available filings with the SEC, Target operates large-format general merchandise and food discount stores in the United States, which include Target and SuperTarget stores. The common stock of Target, par value $0.0833 per share, is listed on the New York Stock Exchange, which we refer to as the Relevant Exchange for purposes of Target in the accompanying product supplement no. 108-I. Targets SEC file number is 001-06049.
Historical Information of the Common Stock of Target
The following graph sets forth the historical performance of the common stock of Target based on the weekly closing price (in U.S. dollars) of the common stock of Target from January 3, 2003 through May 2, 2008. The closing price of the common stock of Target on May 5, 2008 was $53.19. We obtained the closing prices and other information below from Bloomberg Financial Markets, without independent verification. The closing prices and this other information may be adjusted by Bloomberg Financial Markets for corporate actions such as public offerings, mergers and acquisitions, spin-offs, delistings and bankruptcy. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg Financial Markets.
Since the commencement of trading of the common stock of Target, the price of the common stock of Target has experienced significant fluctuations. The historical performance of the common stock of Target should not be taken as an indication of future performance, and no assurance can be given as to the closing prices of the common stock of Target during the term of the notes. We cannot give you assurance that the performance of the common stock of Target will result in the return of any of your initial investment. We make no representation as to the amount of dividends, if any, that Target will pay in the future. In any event, as an investor in the notes, you will not be entitled to receive dividends, if any, that may be payable on the common stock of Target.
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JPMorgan
Structured Investments |
TS-8 |
Examples of Hypothetical Payment at Maturity or Upon an Automatic Call for a $1,000 Investment in the Notes Linked to the Common Stock of Target
The following table illustrates hypothetical payments at maturity or upon an automatic call on a $1,000 investment in the notes linked to the common stock of Target, based on a range of hypothetical Final Share Prices and closing prices on the Call Date of the Reference Stock and assuming that the closing price of the Reference Stock declines in the manner set forth in the column titled Hypothetical lowest closing price during the Monitoring Period. The numbers appearing in the following table and examples have been rounded for ease of analysis. For this table of hypothetical payments at maturity, we have also assumed the following:
the Initial Share Price: | $53.00 |
the Protection Amount: $15.90
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the Interest Rate: | 5.375% (equivalent to 10.75% per annum) if the note is held to maturity | |
2.6875% (equivalent to 10.75% per annum) if the note is automatically called |
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Hypothetical lowest |
Hypothetical |
Hypothetical |
Payment at Maturity** |
Payment on |
Total Value of Payment |
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$50.35 |
$50.35 |
$106.00 |
$1,000.00 |
N/A |
$1,000.00 |
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$53.00 |
$106.00 |
N/A |
N/A |
$1,000.00 |
$1,000.00 |
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$26.50 |
$50.35 |
$55.65 |
$1,000.00 |
N/A |
$1,000.00 |
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$26.50 |
$55.65 |
N/A |
N/A |
$1,000.00 |
$1,000.00 |
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$53.00 |
$53.00 |
$53.00 |
$1,000.00 |
N/A |
$1,000.00 |
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$37.10 |
$42.40 |
$37.10 |
$1,000.00 |
N/A |
$1,000.00 |
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$26.50 |
$53.00 |
$50.35 |
18 shares of the |
N/A |
$950.00 |
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$26.50 |
$39.75 |
$26.50 |
18 shares of the |
N/A |
$500.00 |
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$13.25 |
$26.50 |
$13.25 |
18 shares of the |
N/A |
$250.00 |
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$0.00 |
$15.90 |
$0.00 |
18 shares of the |
N/A |
$0.00 |
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** |
Note that you will receive at maturity or on the Call Settlement Date, as applicable, accrued and unpaid interest in cash, in addition to (1) at maturity, either shares of the Reference Stock (or, at our election, the Cash Value thereof) or the principal amount of your note in cash or (2) on the Call Settlement Date, $1,000 in cash. Also note that if you receive the Physical Delivery Amount at maturity, the total value of payment received at maturity shown in the table above includes the value of any fractional shares, which will be paid in cash. |
The following examples illustrate how the total value of payments received at maturity or on the Call Settlement Date, as applicable, set forth in the table above are calculated.
Example 1: The closing price of the Reference Stock on the Call Date is $55.65. Because the closing price of the Reference Stock of $55.65 on the Call Date is greater than the Initial Share Price of $53.00, the notes are automatically called and you will receive a payment on the Call Settlement Date of $1,000 per $1,000 principal amount note.
Example 2: The closing price of the Reference Stock on the Call Date was $50.35, the lowest closing price of the Reference Stock during the Monitoring Period was $26.50 and the Final Share Price is $55.65. Because the closing price of the Reference Stock of $50.35 on the Call Date was less than the Initial Share Price of $53.00, the notes are not automatically called. Because the Final Share Price of $55.65 is greater than the Initial Share Price of $53.00, you will receive a payment at maturity of $1,000 per $1,000 principal amount note.
Example 3: The closing price of the Reference Stock on the Call Date was $53.00, the lowest closing price of the Reference Stock during the Monitoring Period was $26.50 and the Final Share Price is $50.35. Because the closing price of the Reference Stock of $53.00 on the Call Date was equal to the Initial Share Price of $53.00, the notes are not automatically called. Because the Final Share Price of $50.35 is less than the Initial Share Price of $53.00 and the closing price of the Reference Stock declined by more than the Protection Amount on at least one day during the Monitoring Period, you will receive the Physical Delivery Amount, or at our election, the Cash Value thereof, at maturity. Because the Final Share Price of the Reference Stock is $50.35, the total value of your final payment at maturity, whether in cash or shares of the Reference Stock, is $950.00.
Example 4: The closing price of the Reference Stock on the Call Date was $39.75, and the closing price of the Reference Stock does not decline as compared with the Initial Share Price, by more than the Protection Amount on any day during the Monitoring Period prior to the Observation Date. However, the closing price of the Reference Stock on the Observation Date is $26.50, a decline of more than the Protection Amount. Because the closing price of the Reference Stock of $39.75 on the Call Date was less than the Initial Share Price of $53.00, the notes are not automatically called. Because the Final Share Price of $26.50 is less than the Initial Share Price of $53.00 and the Final Share Price has declined by more than the Protection Amount, you will receive the Physical Delivery Amount, or at our election, the Cash Value thereof, at maturity. Because the Final Share Price of the Reference Stock is $26.50, the total value of your final payment at maturity, whether in cash or shares of the Reference Stock, is $500.00.
Example 5: The closing price of the Reference Stock on the Call Date was $42.40, the Final Share Price of $37.10 is less than the Initial Share Price of $53.00 but does not decline by more than the Protection Amount and the closing price of the Reference Stock does not decline by more than the Protection Amount on any day during the Monitoring Period. Because the closing price of the Reference Stock of $42.40 on the Call Date was less than the Initial Share Price of $53.00, the notes are not automatically called. Because the closing price of the Reference Stock has not declined by more than the Protection Amount, you will receive a payment at maturity of $1,000 per $1,000 principal amount note, even though the Final Share Price of $37.10 is less than the Initial Share Price of $53.00.
Regardless of the performance of the Reference Stock, you will receive interest payments, for each $1,000 principal amount note, in the aggregate amount of (1), if the notes are held to maturity, approximately $53.75 over the term of the notes or (2) if the notes are automatically called, approximately $26.875 from the issue date to but excluding the Call Settlement Date. If we had priced the notes on May 5, 2008 and the notes were not automatically called, you would have received 18 shares of the Reference Stock, or at our election, the Cash Value thereof, at maturity, provided the Final Share Price declined from the Initial Share Price and the closing price of the Reference Stock declined by more than the Protection Amount from the Initial Share Price on at least one day during the Monitoring Period. If the notes are held to maturity, the actual number of shares of the Reference Stock, or the Cash Value thereof, you may receive at maturity and the actual Protection Amount applicable to your notes may be more or less than the amounts displayed in this hypothetical and will depend in part on the closing price of the Reference Stock on the Pricing Date.
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JPMorgan
Structured Investments |
TS-9 |
Supplemental Underwriting Information
If the notes linked to the common stock of Amazon.com priced today, JPMSI, acting as agent for JPMorgan Chase & Co., would receive a commission of approximately $40.00 per $1,000 principal amount note and would use a portion of that commission to allow selling concessions to other dealers of approximately $27.50 per $1,000 principal amount note. The concessions of approximately $27.50 include concessions to be allowed to selling dealers and concessions to be allowed to an arranging dealer. The actual commission received by JPMSI may be more or less than $40.00 and will depend on market conditions on the Pricing Date. In no event will the commission received by JPMSI exceed $60.00 per $1,000 principal amount note.
If the notes linked to the common stock of General Motors priced today, JPMSI, acting as agent for JPMorgan Chase & Co., would receive a commission of approximately $40.00 per $1,000 principal amount note and would use a portion of that commission to allow selling concessions to other dealers of approximately $27.50 per $1,000 principal amount note. The concessions of approximately $27.50 include concessions to be allowed to selling dealers and concessions to be allowed to an arranging dealer. The actual commission received by JPMSI may be more or less than $40.00 and will depend on market conditions on the Pricing Date. In no event will the commission received by JPMSI exceed $60.00 per $1,000 principal amount note.
If the notes linked to the common stock of Target priced today, JPMSI, acting as agent for JPMorgan Chase & Co., would receive a commission of approximately $40.00 per $1,000 principal amount note and would use a portion of that commission to allow selling concessions to other dealers of approximately $27.50 per $1,000 principal amount note. The concessions of approximately $27.50 include concessions to be allowed to selling dealers and concessions to be allowed to an arranging dealer. The actual commission received by JPMSI may be more or less than $40.00 and will depend on market conditions on the Pricing Date. In no event will the commission received by JPMSI exceed $60.00 per $1,000 principal amount note.
The total aggregate principal amount of any series of notes being offered by this term sheet may not be purchased by investors in the applicable offering. Under these circumstances, JPMSI will retain the unsold portion of the applicable offering and has agreed to hold such notes for investment for a period of at least 30 days. The unsold portion of any series of notes will not exceed 15% of the aggregate principal amount of those notes. Any unsold portion may affect the supply of applicable notes available for secondary trading and, therefore, could adversely affect the price of the applicable notes in the secondary market. Circumstances may occur in which our interests or those of our affiliates could be in conflict with your interests.
See Underwriting beginning on page PS-35 of the accompanying product supplement no. 108-I.
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JPMorgan
Structured Investments |
TS-10 |