Term sheet
To prospectus dated November 14, 2011,
prospectus supplement dated November 14, 2011 and
product supplement no. 1-I dated November 14, 2011 |
Term sheet to
Product Supplement No. 1-I
Registration Statement No. 333-177923
Dated January 18, 2013; Rule 433 |
Structured
Investments |
|
JPMorgan Chase & Co.
$
Callable Step-Up Fixed Rate Notes due January 30, 2028 |
General
| · | | Unsecured and unsubordinated
obligations of JPMorgan Chase & Co. maturing January 30, 2028, subject to adjustment as set forth below. |
| · | | Interest on the notes will be
payable semiannually on each Interest Payment Date in arrears at a rate per annum equal to (a) for the first year to the seventh
year, an interest rate equal to 3.00% per annum, (b) for the eighth year to the eleventh year, an interest rate equal to 3.25%
per annum, (c) for the twelfth year, an interest rate equal to 3.50% per annum, (d) for the thirteenth year, an interest rate
equal to 4.00% per annum, (e) for the fourteenth year, an interest rate equal to 5.00% and (f) for the fifteenth year, an interest
rate equal to 6.00%. Any payment on the notes is subject to the credit risk of JPMorgan Chase & Co. |
| · | | Unless general interest rates
rise significantly, you should not expect to earn the highest scheduled Interest Rate below because the notes are likely to be
called prior to maturity if interest rates remain the same or fall during the term of notes. Additionally, the interest rate on
the notes does not step up significantly until later during the term of the notes. See “Selected Risk Considerations”
in this term sheet. |
| · | | These notes, which have a relatively
long term, may be more risky than notes with a shorter term. See “Selected Risk Considerations” in this term sheet. |
| · | | Minimum denominations of $1,000
and integral multiples thereof. |
| · | | At our option, we may redeem
the notes, in whole but not in part, on any of the Redemption Dates specified below. |
| · | | The notes are expected to price
on or about January 25, 2013 and are expected to settle on or about January 30, 2013. |
Key Terms
| Pricing Date: |
January 25, 2013, provided, however, if such day is not a business day, the business day immediately following the Pricing Date. |
| Issue Date: |
January 30, 2013, provided, however, if such day is not a business day, the business day immediately following the Issue Date. |
| Maturity Date: |
January 30, 2028, provided, however, if such day is not a business day, the business day immediately following the Maturity Date. |
| Payment at Maturity: |
If we have not elected to redeem the notes prior to maturity, at maturity you will receive a cash payment for each $1,000 principal amount note of $1,000 plus any accrued and unpaid interest. |
| Payment upon Redemption: |
At our option, we may redeem the notes, in whole but not in part, on the 30th day of January and July of each year (each such date, a “Redemption Date”), commencing January 30, 2016. If the notes are redeemed, you will receive on the applicable Redemption Date a cash payment equal to $1,000 for each $1,000 principal amount note plus any accrued and unpaid interest. Such amounts will be paid to the person who is the holder of record of such notes at the close of business on the business day immediately preceding (a) the Redemption Date or (b) if earlier, the date in which payment is to be made (as described below). We will provide notice of redemption at least 5 business days prior to the applicable Redemption Date. If a Redemption Date is not a business day, payment will be made on the business day immediately following the Redemption Date. |
| Interest: |
With respect to each Interest Period, for each $1,000 principal amount note, the interest payment will be calculated as follows: |
| |
$1,000 × Interest Rate × (180 / 360) |
| |
Notwithstanding anything to the contrary in the product supplement, any accrued and unpaid interest will be paid to the person who is the holder of record of such notes at the close of business on the business day immediately preceding the applicable Interest Payment Date. |
| Interest Rate: |
From (and including) |
To (but excluding) |
Interest Rate |
| |
January 30, 2013 |
January 30, 2020 |
3.00% per annum |
| |
January 30, 2020 |
January 30, 2024 |
3.25% per annum |
| |
January 30, 2024 |
January 30, 2025 |
3.50% per annum |
| |
January 30, 2025 |
January 30, 2026 |
4.00% per annum |
| |
January 30, 2026 |
January 30, 2027 |
5.00% per annum |
| |
January 30, 2027 |
January 30, 2028 |
6.00% per annum |
| |
The dates above refer to originally scheduled Interest Payment Dates and dates on which interest is paid may be adjusted as described below. |
| Interest Period: |
The period beginning on and including the issue date and ending on but excluding the first Interest Payment Date, and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date or, if the notes have been redeemed prior to such next succeeding Interest Payment Date, ending on but excluding the applicable Redemption Date. |
| Interest Payment Date: |
Interest on the notes will be payable semiannually in arrears on the 30th day of January and July of each year (each such date, an “Interest Payment Date”), commencing July 30, 2013, to and including the Interest Payment Date corresponding to the Maturity Date, or, if the notes have been redeemed, the applicable Redemption Date. If an Interest Payment Date is not a business day, payment will be made on the business day immediately following the Interest Payment Date. See “Selected Purchase Considerations — Semiannual Interest Payments” in this term sheet for more information. |
| CUSIP: |
48126DML0 |
Investing in the notes involves a number of risks. See “Risk
Factors” beginning on page PS-13 of the accompanying product supplement no. 1-I and “Selected Risk Considerations”
beginning on page TS-1 of this term sheet.
Neither the U.S. 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,
the accompanying product supplement no. 1-I or the accompanying prospectus supplement and prospectus. Any representation to the
contrary is a criminal offense.
| |
Price to Public (1) |
Fees and Commissions(2) |
Proceeds to Us |
| Per note |
$1,000 |
$ |
$ |
| 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 LLC, which
we refer to as JPMS, acting as agent for JPMorgan Chase & Co., would receive a commission of approximately $37.00 per $1,000
principal amount note and would use a portion of that commission to allow selling concessions to other affiliated or unaffiliated
dealers of approximately $17.00 per $1,000 principal amount note. This commission will include the projected profits that
our affiliates expect to realize, some of which may be allowed to other unaffiliated dealers, for assuming risks inherent in hedging
our obligations under the notes. The concessions of approximately $17.00 include concessions to be allowed to selling dealers and
concessions to be allowed to any arranging dealer. The actual commission received by JPMS may be more or less than $37.00 and will
depend on market conditions on the pricing date. In no event will the commission received by JPMS, which includes concessions that
may be allowed to other dealers, exceed $50.00 per $1,000 principal amount note. See “Plan of Distribution (Conflicts of
Interest)” beginning on page PS-42 of the accompanying product supplement no. 1-I.
The notes 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.
January 18, 2013
Additional Terms Specific to the Notes
JPMorgan Chase & Co. has filed a registration statement
(including a prospectus) with the U.S. Securities and Exchange Commission (“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, the prospectus
supplement, product supplement no. 1-I and this term sheet if you so request by calling toll-free 866-535-9248.
You may revoke your offer to purchase the notes at any time
prior to the time at which we accept such offer by notifying the applicable agent. We reserve the right to change the terms of,
or reject any offer to purchase, the notes prior to their issuance. In the event of any changes to the terms of the notes, we will
notify you and you will be asked to accept such changes in connection with your purchase. You may also choose to reject such changes
in which case we may reject your offer to purchase.
You should read this term sheet together with the prospectus
dated November 14, 2011, as supplemented by the prospectus supplement dated November 14, 2011 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. 1-I dated November
14, 2011. 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. 1-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
| · | | PRESERVATION OF CAPITAL —
You will receive at least 100% of the principal amount of your notes if you hold the notes to maturity or to the Redemption Date,
if any, on which we elect to call the notes. Because the notes are our unsecured and unsubordinated obligations, payment of any
amount at maturity or upon early redemption is subject to our ability to pay our obligations as they become due. |
| · | | SEMIANNUAL INTEREST PAYMENTS
— The notes offer semiannual interest payments which will accrue at a rate equal to the applicable Interest Rate and
will be payable semiannual in arrears on the 30th day of January and July of each year, commencing January 30, 2013, to and including
the Interest Payment Date corresponding to the Maturity Date, or, if the notes have been redeemed, the applicable Redemption Date,
to the holders of record at the close of business on the business day immediately preceding (a) the applicable Interest Payment
Date or (b) if earlier, the date on which the interest payment is to be made (as described below). If an Interest Payment Date
is not a business day, payment will be made on the business day immediately following such day. |
| · | | POTENTIAL SEMIANNUAL REDEMPTION
BY US AT OUR OPTION — At our option, we may redeem the notes, in whole but not in part, on the 30th day of January and
July of each year (each such date, a “Redemption Date”), commencing on January 30, 2016, for a cash payment equal
to $1,000 for each $1,000 principal amount note plus any accrued and unpaid interest on notes. Such amount will be paid to the
person who is the holder of record of such notes at the close of business on the business day immediately preceding (a) the applicable
Redemption Date or (b) if earlier, the date on which payment is to be made (as described below). If a Redemption Date is not a
business day, payment will be made on the business day immediately following such day. |
| · | | TAX TREATMENT –
You should review carefully the section entitled “Material U.S. Federal Income Tax Consequences” in the accompanying
product supplement no. 1-I. Except to the extent of original issue discount, if any, during the term of the notes, interest paid
on the notes will generally be taxable to you as ordinary interest income at the time it accrues or is received in accordance
with your method of accounting for U.S. federal income tax purposes. In addition, a U.S. Holder (as defined in the accompanying
product supplement) must include original issue discount, if any, in income as ordinary interest as it accrues, generally in advance
of receipt of cash attributable to such income. In general, gain or loss realized on the sale, exchange or other disposition of
the notes will be capital gain or loss. Notwithstanding the foregoing discussion of “fixed rate debt instruments,”
because the period between the last step-up date and the final maturity date does not exceed one year, on the deemed reissuance
on January 30, 2027, the CDs should be treated as “short-term debt instruments” for the final period.
See the section entitled “Certain U.S. Federal Income Tax Consequences – CDs that are Treated as ‘Short-Term
Debt Instruments.’” Prospective purchasers are urged to consult their own tax advisers regarding the U.S. federal
income tax consequences of an investment in the notes. Purchasers who are not initial purchasers of notes at their issue
price on the issue date should consult their tax advisers with respect to the tax consequences of an investment in the notes,
and the potential application of special rules. |
Subject
to certain assumptions and representations received from us, the discussion in this section entitled “Tax Treatment”,
when read in combination with the section entitled “Material U.S. Federal Income Tax
JPMorgan Structured Investments —
|
TS-1 |
| Callable Step-Up Fixed Rate Notes |
Consequences”
in the accompanying product supplement, constitutes the full opinion of Sidley Austin llp
regarding the material U.S. federal income tax treatment of owning and disposing of the notes.
Selected Risk Considerations
An investment in the notes involves significant risks.
These risks are explained in more detail in the “Risk Factors” section of the accompanying product supplement no. 1-I
dated November 14, 2011.
| · | | THE
NOTES ARE SUBJECT TO Early redemption PRIOR TO MATURITY – The notes are subject to redemption at the sole discretion
of the Issuer on the specified Redemption Dates indicated above. If the notes are redeemed prior to maturity, you will receive
the principal amount of your notes plus accrued and unpaid interest to, but excluding the applicable Redemption Date. This amount
will be less than you would have received had the notes not been called early and continued to pay interest over the full term
of the notes. We may choose to redeem the notes early or choose not to redeem the notes early on any Redemption Date, in our sole
discretion. If we elect to redeem the notes early, your return may be less than the return you would have earned on your investment
had the notes been held to maturity, and you may not be able to reinvest your funds at the same rate as the notes. We may choose
to redeem the notes early, for example, if U.S. interest rates decrease significantly or if the volatility of U.S. interest rates
decreases significantly. |
| · | | THE
NOTES ARE NOT ORDINARY DEBT SECURITIES; THE Step-up feature presents different investment considerations thaN fixed rate NOTES
— The rate of interest paid by us on the notes will increase upward from the initial stated rate of interest
of the notes. The notes are callable by us, in whole but not in part, prior to maturity and, therefore, contain the call risk
described above. If we do not call the notes, the interest rate will step-up as described on the cover of this term sheet. Unless
general interest rates rise significantly, you should not expect to earn the highest scheduled Interest Rate set forth on the
front cover because the notes are likely to be called prior to maturity if interest rates remain the same or fall during the term
of your notes. When determining whether to invest in a stepped-up rate note, you should not focus on the highest stated Interest
Rate, which usually is the final stepped-up rate of interest. You should instead focus on, among other things, the overall annual
percentage rate of interest to maturity or call as compared to other equivalent investment alternatives. |
| · | | The
INTEREST RATE OF THE NOTES DOES NOT STEP UP SIGNIFICANTLY UNTIL LATER IN THE TERM OF THE NOTES —Unless
general interest rates rise significantly, you should not expect to earn the highest scheduled Interest Rate set forth on the
front cover because the notes are likely to be called prior to maturity if interest rates remain the same or fall during the term
of your notes. Additionally, the interest rate on the notes does not step up significantly until later in the term of the notes.
If interest rates rise faster than the incremental increases in the interest rates of the notes, the notes may have an interest
rate that is significantly lower than the interest rates at that time and the secondary market value of the notes may be significantly
lower than other instruments with a similar term but higher interest rates. In other words, you should only purchase the notes
if you are comfortable receiving the stated interest rates set forth on the front cover of this term sheet for the entire term
of the notes. |
| · | | Credit
Risk of JPMorgan Chase & Co. — The notes are subject to the credit risk of JPMorgan Chase & Co., and
our credit ratings and credit spreads may adversely affect the market value of the notes. Investors are dependent on JPMorgan
Chase & Co.’s ability to pay all amounts due on the notes, and therefore investors are subject to our credit risk and
to changes in the market’s view of our creditworthiness. Any decline in our credit ratings or increase in the credit spreads
charged by the market for taking our credit risk is likely to adversely affect the value of the notes. If we were to default on
our payment obligations, you may not receive any amounts owed to you under the notes and you could lose your entire investment.
Recent events affecting us have led to heightened regulatory scrutiny, may lead to additional regulatory or legal proceedings
against us and may adversely affect our credit ratings and credit spreads and, as a result, the market value of the notes. See
“Executive Overview — Recent Developments,” “Liquidity Risk Management — Credit Ratings,”
“Item 4. Controls and Procedures” and “Part II. Other Information — Item 1A. Risk Factors” in our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. |
| · | | POTENTIAL
CONFLICTS — We and our affiliates play a variety of roles in connection with the issuance of the notes, including
acting as calculation agent and hedging our obligations under the notes. In performing these duties, our economic interests and
the economic interests of the calculation agent and other affiliates of ours are potentially adverse to your interests as an investor
in the notes. In addition, our business activities, including hedging and trading activities for our own accounts or on behalf
of customers, could cause our economic interests to be adverse to yours and could adversely affect any payments on the notes and
the value of the notes. It is possible that hedging or trading activities of ours or our affiliates could result in substantial
returns for us or our affiliates while the value of the notes declines. Please refer to “Risk Factors — Risks Relating
to the Notes Generally” in the accompanying product supplement for additional information about these risks. |
| · | | THESE
NOTES MAY BE MORE RISKY THAN NOTES WITH A SHORTER TERM — By purchasing a note with a longer term, you
are more exposed to fluctuations in interest rates than if you purchased a note with a shorter term. Specifically, you may be
negatively affected if certain interest rate scenarios occur. For example, if interest rates begin to rise, the market value of
your notes will decline because the likelihood of us calling your notes will decline and the Interest Rate applicable to that
specific Interest Period may be less than a note issued at such time. For example, if the Interest Rate applicable to your notes
at such time was 3.00% per annum, but a debt security issued in the then current market could yield an interest rate of 6.00%
per annum, your note would be less valuable if you tried to sell it in the secondary market. |
| · | | CERTAIN BUILT-IN COSTS ARE
LIKELY TO ADVERSELY AFFECT THE VALUE OF THE NOTES PRIOR TO MATURITY — While the payment at maturity or upon early redemption,
as applicable, described in this term sheet is based on the full principal amount of your notes, the original issue price of the
notes includes the estimated cost of hedging our obligations under the notes. As a result, the price, if any, at which JPMS will
be willing to purchase notes from you in secondary market transactions, if at all, will likely be lower than the original issue
price, and any sale prior to the maturity date could result in a substantial loss to you. The notes are not designed to be short-term
trading instruments. Accordingly, you should be able and willing to hold your notes to maturity. |
| · | | LACK OF LIQUIDITY —
The notes will not be listed on any securities exchange. JPMS intends to offer to purchase the notes in the secondary market but
is not required to do so. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell
the notes easily. Because other dealers are not likely to make a secondary market for the notes, the price at which you may be
able to trade your notes is likely to depend on the price, if any, at which JPMS is willing to buy the notes. |
JPMorgan Structured Investments —
|
TS-2 |
| Callable Step-Up Fixed Rate Notes |
| · | | MANY ECONOMIC AND MARKET
FACTORS WILL IMPACT THE VALUE OF THE NOTES — The notes will be affected by a number of economic and market factors that
may either offset or magnify each other, including but not limited to: |
| · | | the time to maturity of the
notes; |
| · | | interest and yield rates in
the market generally, as well as the volatility of those rates; |
| · | | the likelihood, or expectation,
that the notes will be redeemed by us, based on prevailing market interest rates or otherwise; and |
| · | | our creditworthiness, including
actual or anticipated downgrades in our credit ratings. |
| · | | TAX DISCLOSURE – The
information under “Tax Treatment" in this term sheet remains subject to confirmation by our tax counsel. We will notify
you of any revisions to the information under “Tax Treatment" in a supplement to this term sheet on or before the business
day immediately preceding the issue date, or if the information cannot be confirmed by our tax counsel, we may terminate this
offering of Notes. |
JPMorgan Structured Investments —
|
TS-3 |
| Callable Step-Up Fixed Rate Notes |