Amendment Notice XS0297741299

RNS Number : 7982S

JPMorgan Chase & Co

16 September 2010

 

From JPMorgan Chase & Co. 270 Park Avenue New York, New York 10017-2070 United States of America

To: The holders of the Notes

16 September 2010

AMENDMENT NOTICE

JPMorgan Chase & Co.EUR 10,000,000 Zero Coupon Notes due 2019 (the "Notes") (ISIN: XS0297741299)

Under the U.S.$30,000,000,000 Euro Medium Term Note Programme of The Bear Stearns Companies Inc., Bear Stearns Bank plc, Bear Stearns Global Assets Holdings, Ltd. And Bear Stearns Caribbean Asset Holdings Ltd. (the "Programme")

We refer to the prospectus dated 30 April 2007 (the "Prospectus") setting out the terms of the Notes, subject to the Conditions (the "Conditions") set forth in the Offering Circular dated 15 August 2006 (as amended and/or completed and/or restated as at the Issue Date of the Notes). We also refer to the prospectus dated 7 August 2007 (the "Listed Prospectus") which constitutes a prospectus for the purpose of Article 5 Directive 2003/71/EC (the "Prospectus Directive"). The Listed Prospectus was approved by the United Kingdom Listing Authority as Competent Authority for the purposes of the Prospective Directive.

Capitalised terms used but not defined herein will have the meanings ascribed to them in the Prospectus.

We further refer to the fact that on 27 February 2009, JPMorgan Chase & Co. was substituted for, and assumed all of the rights and obligations of, The Bear Stearns Companies LLC (formerly known as The Bear Stearns Companies Inc.) as issuer and as guarantor of outstanding notes issued under the Programme.

The Issuer, with the consent of all Noteholders, has amended (the "Amendments") the terms and conditions of the Notes by way of an Amended and Restated Prospectus dated 14 September 2010 (and attached at Schedule 1 hereto) which does not constitute a prospectus for the purposes of the Prospectus Directive. A 'blackline' Amended and Restated Prospectus showing the Amendments is attached at Schedule 2 (the "Blackline Amended and Restated Prospectus"), such that the insertions into the terms and conditions of the Notes are underlined in the Blackline Amended and Restated Prospectus, and deletions are struck out in the Blackline Amended and Restated Prospectus.

The amendments described above are deemed to be effective for all purposes from 14 September 2010 and are binding on all holders of the Notes.

SCHEDULE 1

Amended and Restated Prospectus dated 14 September 2010

A NOTEHOLDER MAY RECEIVE LESS THAN THE PRINCIPAL AMOUNT IN RESPECT OF ANY NOTE IN THE EVENT THAT (1) SUCH NOTEHOLDER SELLS SUCH NOTE PRIOR TO MATURITY OR (2) THE NOTES ARE REDEEMED EARLY PURSUANT TO CONDITION 8(b) OR CONDITION 11. 

NEITHER THE ISSUER NOR ANY OF ITS CONSOLIDATED SUBSIDIARIES MAKES ANY REPRESENTATION AS TO THE EXISTENCE OF A MARKET FOR THE NOTES. AS SUCH THE NOTES SHOULD BE VIEWED AS ILLIQUID.

THE NOTES ARE UNSECURED AND UNSUBORDINATED GENERAL OBLIGATIONS OF JPMORGAN CHASE & CO. AND ARE NOT SAVINGS ACCOUNTS OR DEPOSITS OF JPMORGAN CHASE & CO. OR ANY BANK OR NON-BANK SUBSIDIARY OF JPMORGAN CHASE & CO. THE NOTES ARE NOT INSURED BY THE U.S. FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC"), THE U.S. DEPOSIT INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

JPMORGAN CHASE & CO.

Issue of EUR 10,000,000 Zero Coupon Notes due 2019

issued pursuant to the U.S.$ 30,000,000,000 Euro Medium-Term Note Programme

PART A - CONTRACTUAL TERMS

This Amended and Restated Prospectus dated 14 September 2010 has not been approved for the purposes of Directive 2003/71/EC (the "Prospectus Directive") but provides updated disclosure and amends and restates certain of the Terms of the Notes incorporated in the Prospectus dated 30 April 2007.

JPMorgan Chase & Co. (the "Issuer") accepts responsibility for the information contained in this Amended and Restated Prospectus. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Amended and Restated Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.

This Amended and Restated Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see the section headed "Substitution of Issuer and Incorporation by Reference" herein).

Application has been made to the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000 (the "UK Listing Authority") for the Notes to be admitted to the Official List of the UK Listing Authority (the "Official List") and to the London Stock Exchange plc (the "London Stock Exchange") for such Notes to be admitted to trading on the Main Market of the London Stock Exchange.

The Notes were issued on 30 April 2007 under the U.S.$30,000,000,000 Euro Medium Term Note Programme of The Bear Stearns Companies Inc., Bear Stearns Global Assets Holdings, Ltd., Bear Stearns Caribbean Asset Holdings Ltd. and Bear Stearns Bank plc (the "Programme"). On 27 February 2009, JPMorgan Chase & Co. was substituted for The Bear Stearns Companies LLC (formerly known as The Bear Stearns Companies Inc.) as issuer and as guarantor of outstanding notes issued under the Programme. Further information in relation to this substitution can be found under the heading "Substitution of Issuer and Incorporation by Reference" herein. References herein to The Bear Stearns Companies Inc. shall be deemed to be references to JPMorgan Chase & Co., except where the context otherwise requires.

Pursuant to an order of the High Court of England and Wales dated 3 April 2007 with effect from 19 May 2007, all rights and obligations of JPMorgan Chase Bank N.A. as Agent, Paying Agent and Transfer Agent in relation to all documents entered into in connection with the Programme (including all the existing Notes) were transferred to The Bank of New York Mellon, in the manner and to the extent provided in the Court Order.

References herein to the "Terms of the Notes" shall be deemed to be references to the Terms of the Notes as amended and restated by this Amended and Restated Prospectus.

CONTENTS

SUBSTITUTION OF ISSUER AND INCORPORATION BY REFERENCE

RISK FACTORS

TERMS OF THE NOTES

 

SUBSTITUTION OF ISSUER AND INCORPORATION BY REFERENCE

The Notes were issued by The Bear Stearns Companies Inc. ("TBSCI") on 30 April 2007 under the Programme.

On 30 May 2008, BSC Merger Corporation, a wholly-owned subsidiary of JPMorgan Chase & Co. merged with and into TBSCI pursuant to the Agreement and Plan of Merger, dated as of 16 March 2008, as amended 24 March 2008, and TBSCI became a wholly-owned subsidiary of JPMorgan Chase & Co. On 16 July 2008, TBSCI was converted from a corporation into a limited liability company under the laws of the State of Delaware, United States of America, and its name became The Bear Stearns Companies LLC ("TBSC LLC").

On 31 July 2008, JPMorgan Chase & Co. and TBSC LLC entered into the Thirteenth Supplemental Trust Deed to the Trust Deed dated 4 August 1994 (as amended and supplemented, the "Trust Deed"), pursuant to which JPMorgan Chase & Co. fully and unconditionally guaranteed (the "Guarantee") the obligations of TBSC LLC as issuer and as guarantor of outstanding notes issued under the Trust Deed.

On 27 February 2009, JPMorgan Chase & Co. and TBSC LLC entered into the Fourteenth Supplemental Trust Deed to the Trust Deed, pursuant to which (i) JPMorgan Chase & Co. was substituted for, and assumed all of the rights and obligations of, TBSC LLC as issuer and as guarantor of outstanding notes issued under the Programme and (ii) the Guarantee was discharged.

Further information concerning JPMorgan Chase & Co., including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the U.S. Securities Exchange Commission (the "SEC"), as they become available, can be viewed on the SEC's website at www.sec.gov and on JPMorgan Chase & Co.'s investor relations website at http://investor.shareholder.com/jpmorganchase/. No websites that are cited or referred to herein shall be deemed to form part of, or to be incorporated by reference in, this Amended and Restated Prospectus.

The Offering Circular dated August 15, 2006 which constitutes a base prospectus (the "Base Prospectus") for the purposes of the Prospectus Directive shall be deemed to be incorporated into and form part of this Amended and Restated Prospectus. To the extent there is any conflict between the Base Prospectus and this Amended and Restated Prospectus, this Amended and Restated Prospectus shall take precedence.

Copies of documents incorporated by reference in this Amended and Restated Prospectus can be obtained from the registered office of the Issuer and from the specified office of the Paying Agent for the time being in London.

 

RISK FACTORS

Noteholders should also read the risk factors set out in the Base Prospectus (including, for the avoidance of doubt, the introductory paragraphs thereto) which are incorporated by reference into this Amended and Restated Prospectus.

An investment in the Notes involves substantial risks. The Issuer believes that the following factors may affect its ability to fulfil its obligations in respect of the Notes and/or are material for the purpose of assessing the market risks associated with the Notes. All of these factors are contingencies which may or may not occur and the Issuer does not express a view on the likelihood of any such contingency occurring. The factors discussed below regarding the risks of acquiring or holding any Notes are not exhaustive, and additional risks and uncertainties that are not presently known to the Issuer or that the Issuer currently believes to be immaterial could also have a material impact on the business operations or financial condition of the Issuer or the Notes. 

"Fundamental risks" of the potential loss of investment and potential lack of suitability in relation to an investment in the Notes

1.1 Investors in the Notes may receive back less than the original invested amount

Investors in the Notes may lose up to the entire value of their investment in the Notes as a result of the occurrence of any one or more of the following events:

(a) mandatory early redemption of the Notes in accordance with the Terms and Conditions thereof;

(b) the Issuer of the Notes is subject to insolvency proceedings or some other event impairing the ability of it to meet its obligations under the Notes; and

(c) the investor seeks to sell the Notes prior to their scheduled maturity, and the sale price of the Notes in the secondary market is less than the purchaser's initial investment.

The obligations of the Issuer of the Notes are not secured.

None of the Issuer, Dealers or any J.P. Morgan affiliate has given, and will not give, to any investor in the Notes (either directly or indirectly) any assurance or guarantee as to the merits, performance or suitability of such Notes, and the investor should be aware that the Issuer is acting as an arm's-length contractual counterparty and not as an advisor or fiduciary.

2. Risk factors that are generic to Notes to be issued under the Programme

2.1 The Issue Price of the Notes may be more than the market value of such Notes as at the Issue Date and the price of the Notes in secondary market transactions

The Issue Price in respect of the Notes may have been more than the market value of such Notes as at the Issue Date, and more than the price, if any, at which the Dealer or any other person was or is willing to purchase such Notes in secondary market transactions. In particular, the Issue Price in respect of any Notes may take into account amounts with respect to commissions relating to the issue and sale of such Notes and amounts relating to the hedging of the Issuer's obligations under such Notes.

2.2 The market value and the amount payable on early redemption of the Notes may be adversely affected by a number of factors, and the price at which a Noteholder of those Notes may be able to sell Notes prior to maturity may be at a substantial discount to the market value of such Notes on the Issue Date, and a Noteholder may suffer a loss of some or up to all of the entire invested amount of the Notes on early redemption of the Notes.

The market value of the Notes is expected to be affected, in part, by the credit rating of JPMorgan Chase & Co.

The value of the Notes is expected to be affected, in part, by investors' general appraisal of the creditworthiness of JPMorgan Chase & Co. Such perceptions may be influenced by the ratings accorded to outstanding Notes of JPMorgan Chase & Co. by well-recognised rating agencies, such as Moody's Investors Service Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. A reduction in the rating, if any, accorded to outstanding Notes of JPMorgan Chase & Co., by one of these rating agencies could result in a reduction in the trading value of the Notes.

In certain circumstances, the Early Redemption Amount payable on the redemption of the Notes prior to their scheduled maturity may be less than its original purchase price and could be as low as zero.

Following early redemption of the Notes, the Noteholders may not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate or yield on the Notes being redeemed and may only be able to do so at a significantly lower rate. Purchasers of the Notes should consider such reinvestment risk in light of other investments available at that time.

The Notes may be redeemed prior to maturity for any of the following reasons:

(i) the Issuer determines that its performance under any Note has become unlawful in whole or in part for any reason (see Condition 11);

(ii) the occurrence of certain taxation events (see Condition 9); or

(iii) following an Event of Default (see Condition 11).

With regard to early redemption due to any of illegality or tax, the Early Redemption Amount in respect of each Note shall be an amount determined by the Calculation Agent as representing the fair market value of such Notes immediately prior (and ignoring the circumstances leading) to such Early Redemption, adjusted to account fully for any reasonable expenses and costs of unwinding any underlying and/or related hedging and funding arrangements (including, without limitation any equity options, equity swaps or other Notes of any type whatsoever hedging the Issuer's obligations under the Notes). A purchaser of Notes should be aware that this Early Redemption Amount may be less than the purchaser's initial investment, and in such case see risk factor 1.1 (Investors in the Notes may receive back less than the original invested amount).

2.3 There may be price discrepancies with respect to the Notes as between various dealers or other purchasers in the secondary market

If at any time a third party dealer quotes a price to purchase Notes or otherwise values Notes, that price may be significantly different (higher or lower) from any price quoted by any J.P. Morgan affiliate. Furthermore, if any Noteholder sells their Notes, the Noteholder will likely be charged a commission for secondary market transactions, or the price may reflect a dealer discount.

2.4 The Issuer may be substituted without the consent of the Noteholders

The Issuer may be substituted as obligor under the Notes in favour of any successor company (as defined in the Trust Deed) or any wholly owned subsidiary from JPMorgan Chase & Co. in accordance with Condition 20 (Substitution). Noteholders will not have the right to object to such substitution. See Condition 20 (Substitution).

2.5 Notes may be amended without the consent of the Noteholders or with the consent of only some of the Noteholders binding all of the Noteholders

Subject as provided below, the terms and conditions of the Notes may be amended by the Issuer with the approval of the Trustee but without the consent of the Noteholders if the amendment:

(A) is of a formal, minor or technical nature; or

(B) is made to correct a manifest error; or

(C) is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders, Receiptholders or Couponholders.

See Condition 17 (Meetings Of Noteholders, Modification And Waiver).

3. Risk factors associated with Notes that include certain features

3.1 There are specific risks with regard to Zero Coupon Notes

Changes in market interest rates have a greater impact on the prices of zero coupon bonds than on the prices of ordinary bonds because the discounted issue prices may be substantially below par. If market interest rates increase, zero coupon bonds can suffer higher price losses than other bonds having the same maturity and credit rating. Due to their leverage effect, zero coupon bonds are a type of investment associated with a particularly high price risk.

4. Risk factors that may affect the Issuer's ability to fulfil its obligations under the Notes

4.1 JPMorgan Chase's results of operations have been, and may continue to be, adversely affected by U.S. and international financial market and economic conditions

JPMorgan Chase's businesses have been, and in the future will continue to be, materially affected by economic and market conditions, including factors such as the liquidity of the global financial markets; the level and volatility of debt and equity prices, interest rates and currency and commodities prices; investor sentiment; corporate or other scandals that reduce confidence in the financial markets; inflation; the availability and cost of capital and credit; the occurrence of natural disasters, acts of war or terrorism; and the degree to which U.S. or international economies are expanding or experiencing recessionary pressures. These factors can affect, among other things, the activity levels of clients with respect to the size, number and timing of transactions involving JPMorgan Chase's investment and commercial banking businesses, including its underwriting and advisory businesses; the realisation of cash returns from JPMorgan Chase's private equity and principal investments businesses; the volume of transactions that JPMorgan Chase executes for its customers and, therefore, the revenue that it receives from commissions and spreads; the number and size of underwritings that JPMorgan Chase manages on behalf of clients; and the willingness of financial sponsors or other investors to participate in loan syndications or underwritings managed by JPMorgan Chase.

JPMorgan Chase generally maintains large trading portfolios in the fixed income, currency, commodity and equity markets and may have from time to time significant positions, including positions in securities in markets that lack pricing transparency or liquidity. The revenue derived from mark-to-market values of JPMorgan Chase's businesses are affected by many factors, including JPMorgan Chase's credit standing; its success in effectively hedging its market and other risks; volatility in interest rates and equity, debt and commodities markets; credit spreads and availability of liquidity in the capital markets; and other economic and business factors. JPMorgan Chase anticipates that revenue relating to its trading and principal investment businesses will continue to experience volatility and there can be no assurance that such volatility relating to the above factors or other conditions that may affect pricing or JPMorgan Chase's ability to realise returns from such investments could not materially adversely affect JPMorgan Chase's earnings.

The fees that JPMorgan Chase earns for managing third-party assets are also dependent upon general economic conditions. For example, a higher level of U.S. or non-U.S. interest rates or a downturn in trading markets could affect the valuations of the third-party assets that JPMorgan Chase manages or holds in custody, which, in turn, could affect JPMorgan Chase's revenue. Moreover, even in the absence of a market downturn, below-market or sub-par performance by JPMorgan Chase's investment management businesses could result in outflows of assets under management and supervision and, therefore, reduce the fees that JPMorgan Chase receives.

During 2008, U.S. and global financial markets were extremely volatile and were materially and adversely affected by a significant lack of liquidity, loss of confidence in the financial sector, disruptions in the credit markets, reduced business activity, rising unemployment, declining home prices, and erosion of consumer confidence. These factors contributed to adversely affecting JPMorgan Chase's business, financial condition and results of operations in 2008 and into early 2009. While the business environment stabilised during the latter half of 2009, the current economic environment remains weak, which affects the profitability of JPMorgan Chase's businesses.

JPMorgan Chase's consumer businesses are particularly affected by U.S. domestic economic conditions. Such conditions include U.S. interest rates; the rate of unemployment; housing prices; the level of consumer confidence; changes in consumer spending; and the number of personal bankruptcies, among others. The deterioration of these conditions can diminish demand for the products and services of JPMorgan Chase's consumer businesses, or increase the cost to provide such products and services. In addition, adverse economic conditions, such as declines in home prices, could lead to an increase in mortgage and other loan delinquencies and higher net charge-offs, which can adversely affect JPMorgan Chase's earnings.

During 2008 and continuing in 2009, higher levels of bank failures have dramatically increased resolution costs of the U.S. Federal Deposit Insurance Corporation ("FDIC") and depleted the deposit insurance fund. In order to maintain a strong funding position and restore reserve ratios of the deposit insurance fund, the FDIC has increased assessment rates of insured institutions and adopted a rule in November 2009 requiring banks to prepay three years' worth of premiums to replenish the depleted insurance fund. If there are additional bank or financial institution failures, JPMorgan Chase may be required to pay even higher FDIC premiums than the recently increased levels. Any future increases of FDIC insurance premiums may adversely impact JPMorgan Chase's earnings.

In connection with the sale and securitisation of loans (whether with or without recourse), the originator is generally required to make a variety of customary representations and warranties regarding both the originator and the loans being sold or securitised. JPMorgan Chase and certain of its subsidiaries, as well as entities acquired by JPMorgan Chase as part of the merger (the "Bear Stearns Merger") by JPMorgan Chase and The Bear Stearns Companies Inc. ("Bear Stearns"), the acquisition of Washington Mutual Bank's ("Washington Mutual") banking operations (the "Washington Mutual Transaction") and other transactions, have made such representations and warranties in connection with the sale and securitisation of loans, and JPMorgan Chase will continue to do so in the ordinary course of its lending business. If a loan which does not comply with such representations or warranties is sold or securitised, JPMorgan Chase may be obligated to repurchase the loan and bear any associated loss directly, or it may be obligated to indemnify the purchaser against any such losses. In 2009, the costs of repurchasing mortgage loans that had been sold to government agencies such as Freddie Mac and Fannie Mae increased substantially, and could continue to increase substantially further. Accordingly, repurchase and/or indemnity obligations to government-sponsored enterprises or to private third-party purchasers could materially and adversely affect JPMorgan Chase's results of operations and earnings in the future.

JPMorgan Chase cannot provide assurance that any of the above-mentioned conditions, or further continued deterioration in economic, market or business conditions, will not have a material negative effect on JPMorgan Chase in the future.

4.2 If JPMorgan Chase does not effectively manage its liquidity, its business could be negatively affected

JPMorgan Chase's liquidity is critical to its ability to operate its businesses, grow and be profitable. Some potential conditions that could negatively affect JPMorgan Chase's liquidity include illiquid or volatile markets, diminished access to capital markets, unforeseen cash or capital requirements (including, among others, commitments that may be triggered to special purpose entities ("SPEs") or other entities), difficulty or inability to sell assets, unforeseen outflows of cash or collateral, and lack of market or customer confidence in JPMorgan Chase or its prospects. These conditions may be caused by events over which JPMorgan Chase has little or no control. For example, the liquidity crisis experienced in 2008 and into early 2009 increased JPMorgan Chase's cost of funding and limited its access to some of its traditional sources of liquidity such as securitised debt offerings backed by mortgages, loans, credit card receivables and other assets. These or other conditions detrimental to JPMorgan Chase's liquidity may occur in the future.

The credit ratings of JPMorgan Chase & Co., JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. are important in order to maintain JPMorgan Chase's liquidity. A reduction in their credit ratings could have an adverse effect on JPMorgan Chase's access to liquidity sources, increase its cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to JPMorgan Chase, thereby curtailing its business operations and reducing its profitability. Reduction in the ratings of certain SPEs or other entities to which JPMorgan Chase has a funding or other commitment could also negatively affect its liquidity where such ratings changes lead, directly or indirectly, to JPMorgan Chase being required to purchase assets or otherwise provide funding. Critical factors in maintaining high credit ratings include a stable and diverse earnings stream, strong capital ratios, strong credit quality and risk management controls, diverse funding sources, and disciplined liquidity monitoring procedures.

JPMorgan Chase's cost of obtaining long-term unsecured funding is directly related to its credit spreads (the amount in excess of the interest rate of U.S. Treasury Notes (or other benchmark Notes) of the same maturity that JPMorgan Chase needs to pay to its debt investors). Increases in JPMorgan Chase's credit spreads can significantly increase the cost of this funding. Changes in credit spreads are continuous and market-driven, and influenced by market perceptions of JPMorgan Chase's creditworthiness. As such, JPMorgan Chase's credit spreads may be unpredictable and highly volatile.

As a holding company, JPMorgan Chase & Co. relies on the earnings of its subsidiaries for its cash flow and consequent ability to pay dividends and satisfy its obligations. These payments by subsidiaries may take the form of dividends, loans or other payments. Several of JPMorgan Chase & Co.'s principal subsidiaries are subject to capital adequacy requirements or other regulatory or contractual restrictions on their ability to provide such payments. Limitations in the payments that JPMorgan Chase & Co. receives from its subsidiaries could negatively affect its liquidity position.

4.3 The financial condition of JPMorgan Chase's customers, clients and counterparties, including other financial institutions, could adversely affect JPMorgan Chase

A number of JPMorgan Chase's products expose it to credit risk, including loans, leases and lending commitments, derivatives, trading account assets and assets held-for-sale. As one of the largest lenders in the United States, JPMorgan Chase has exposures to many different products and counterparties, and the credit quality of JPMorgan Chase's exposures can have a significant impact on its earnings. JPMorgan Chase estimates and establishes reserves for credit risks and potential credit losses inherent in its credit exposure (including unfunded lending commitments). This process, which is critical to JPMorgan Chase's financial results and condition, requires difficult, subjective and complex judgments, including forecasts of how economic conditions might impair the ability of JPMorgan Chase's borrowers to repay their loans. As is the case with any such assessments, there is always the chance that JPMorgan Chase will fail to identify the proper factors or that it will fail to accurately estimate the impact of factors that it identifies. Any such failure could result in increases in delinquencies and default rates.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. JPMorgan Chase routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. Many of these transactions expose JPMorgan Chase to credit risk in the event of default by the counterparty or client, which can be exacerbated during periods of market illiquidity, such as those experienced in 2008 and early 2009. During such periods, JPMorgan Chase's credit risk also may be further increased when the collateral held by it cannot be realised upon or is liquidated at prices that are not sufficient to recover the full amount of the loan or derivative exposure due to it. In addition, disputes with counterparties as to the valuation of collateral significantly increases in times of market stress and illiquidity. JPMorgan Chase cannot provide assurance that any such losses would not materially and adversely affect its results of operations or earnings.

An example of the risks associated with JPMorgan Chase's relationships with other financial institutions is the collapse of Lehman Brothers Holdings Inc. ("LBHI"). On 15 September 2008, LBHI filed a voluntary petition for relief under Chapter 11 of Title 11 of the U.S. Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court for the Southern District of New York, and thereafter several of its subsidiaries also filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (LBHI and such subsidiaries collectively, "Lehman"). On 19 September 2008, a liquidation case under the U.S. Notes Investor Protection Act ("SIPA") was commenced in the United States District Court for the Southern District of New York for Lehman Brothers Inc. ("LBI"), LBHI's U.S. broker-dealer subsidiary, and that court now presides over the LBI SIPA liquidation case. JPMorgan Chase was LBI's clearing bank and, among other actions, made collateral calls totalling approximately U.S.$8 billion in September 2008 and liquidated approximately U.S.$18 billion of Notes subsequent to Lehman's bankruptcy filing. JPMorgan Chase is the largest secured creditor in the Lehman and LBI cases, according to Lehman's schedules. It is possible that claims may be asserted against JPMorgan Chase and/or its security interests, including by the LBHI Creditors Committee, the SIPA trustee appointed in the LBI liquidation case, the principal acquirer of LBI's assets, and others in connection with Lehman and LBI cases. JPMorgan Chase intends to defend itself against any such claims.

If the current weak economic environment continues for an extended period of time, or deteriorates further, there is a greater likelihood that more of JPMorgan Chase's customers or counterparties could become delinquent on their loans or other obligations to JPMorgan Chase which, in turn, could result in a higher level of charge-offs and provision for credit losses, or requirements that JPMorgan Chase purchase assets or provide other funding, any of which could adversely affect JPMorgan Chase's financial condition. Moreover, a significant deterioration in the credit quality of one of JPMorgan Chase's counterparties could lead to concerns about the credit quality of other counterparties in the same industry, thereby exacerbating JPMorgan Chase's credit risk exposure, and increasing the losses, including mark-to-market losses, that JPMorgan Chase could incur in its trading and clearing businesses.

4.4 Concentration of credit and market risk could increase the potential for significant losses

JPMorgan Chase has exposure to increased levels of risk when a number of customers are engaged in similar business activities or activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. JPMorgan Chase regularly monitors various segments of its portfolio exposures to assess potential concentration risks. JPMorgan Chase's efforts to diversify or hedge its credit portfolio against concentration risks may not be successful and any concentration of credit risk could increase the potential for significant losses in its credit portfolio. In addition, disruptions in the liquidity or transparency of the financial markets may result in JPMorgan Chase's inability to sell, syndicate or realise upon Notes, loans or other instruments or positions held by JPMorgan Chase, thereby leading to increased concentrations of such positions. These concentrations could expose JPMorgan Chase to losses if the mark-to-market value of the Notes, loans or other instruments or positions decline causing JPMorgan Chase to take write downs. Moreover, the inability to reduce positions not only increases the market and credit risks associated with such positions, but also increases the level of risk-weighted assets on JPMorgan Chase's balance sheet, thereby increasing its capital requirements and funding costs, all of which could adversely affect the operations and profitability of JPMorgan Chase's businesses.

4.5 JPMorgan Chase's framework for managing risks may not be effective in mitigating risk and loss to it

JPMorgan Chase's risk management framework seeks to mitigate risk and loss to it. JPMorgan Chase has established processes and procedures intended to identify, measure, monitor, report and analyse the types of risk to which JPMorgan Chase is subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, legal and fiduciary risk, reputational risk and private equity risk, among others. However, as with any risk management framework, there are inherent limitations to JPMorgan Chase's risk management strategies as there may exist, or develop in the future, risks that JPMorgan Chase has not appropriately anticipated or identified. If its risk management framework proves ineffective, JPMorgan Chase could suffer unexpected losses and could be materially adversely affected.

JPMorgan Chase's risk management strategies may not be effective because in a difficult or less liquid market environment other market participants may be attempting to use the same or similar strategies to deal with the difficult market conditions. In such circumstances, it may be difficult for JPMorgan Chase to reduce its risk positions due to the activity of such other market participants.

JPMorgan Chase's derivatives businesses may expose it to unexpected market, credit and operational risks that could cause JPMorgan Chase to suffer unexpected losses. Severe declines in asset values, unanticipated credit events, or unforeseen circumstances that may cause previously uncorrelated factors to become correlated (and vice versa) may create losses resulting from risks not appropriately taken into account in the development, structuring or pricing of a derivative instrument. In addition, certain of JPMorgan Chase's derivative transactions require the physical settlement by delivery of Notes, commodities or obligations that JPMorgan Chase does not own; if JPMorgan Chase is not able to obtain such Notes, commodities or obligations within the required timeframe for delivery, this could cause JPMorgan Chase to forfeit payments otherwise due to it and could result in settlement delays, which could damage JPMorgan Chase's reputation and ability to transact future business. In addition, in situations where derivatives transactions are not settled or confirmed on a timely basis, JPMorgan Chase may be subject to heightened credit and operational risk, and in the event of a default, JPMorgan Chase may find the contract more difficult to enforce. Further, as new and more complex derivative products are created, disputes regarding the terms or the settlement procedures of the contracts could arise, which could force JPMorgan Chase to incur unexpected costs, including transaction and legal costs, and impair its ability to manage effectively its risk exposure from these products.

Many of JPMorgan Chase's hedging strategies and other risk management techniques have a basis in historic market behaviour, and all such strategies and techniques are based to some degree on management's subjective judgment. For example, many models used by JPMorgan Chase are based on assumptions regarding correlations among prices of various asset classes or other market indicators. In times of market stress, such as occurred during 2008, or in the event of other unforeseen circumstances, previously uncorrelated indicators may become correlated, or conversely, previously correlated indicators may make unrelated movements. These sudden market movements or unanticipated or unidentified market or economic movements have in some circumstances limited the effectiveness of JPMorgan Chase's risk management strategies, causing it to incur losses. In addition, as JPMorgan Chase's businesses change and grow and the markets in which they operate continue to evolve, JPMorgan Chase's risk management framework may not always keep sufficient pace with those changes. For example, there is the risk that the credit and market risks associated with new products or new business strategies may not be appropriately identified, monitored or managed. JPMorgan Chase cannot provide assurance that its risk management framework, including its underlying assumptions or strategies, will at all times be accurate and effective.

4.6 JPMorgan Chase's operations are subject to risk of loss from unfavourable economic, monetary, political, legal and other developments in the United States and around the world

JPMorgan Chase's businesses and earnings are affected by the fiscal and other policies that are adopted by various regulatory authorities of the United States, non-U.S. governments and international agencies.

The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the United States. Its policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments. The market impact from such policies can also materially decrease the value of financial assets that JPMorgan Chase holds, such as debt Notes and mortgage servicing rights ("MSRs"). Federal Reserve policies also can adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans or satisfy their obligations to JPMorgan Chase. Changes in Federal Reserve policies are beyond JPMorgan Chase's control and, consequently, the impact of these changes on its activities and results of operations is difficult to predict.

JPMorgan Chase's businesses and revenue are also subject to the risks inherent in maintaining international operations and in investing and trading in Notes of companies worldwide. These risks include, among others, risk of loss from the outbreak of hostilities or acts of terrorism and various unfavourable political, economic, legal or other developments, including social or political instability, changes in governmental policies or policies of central banks, expropriation, nationalisation, confiscation of assets, price controls, capital controls, exchange controls, and changes in laws and regulations. Further, various countries in which JPMorgan Chase operates or invests, or in which it may do so in the future, have in the past experienced severe economic disruptions particular to that country or region, including extreme currency fluctuations, high inflation, or low or negative growth, among other negative conditions. Crime, corruption, war or military actions, acts of terrorism and a lack of an established legal and regulatory framework are additional challenges in some of these countries, particularly in certain emerging markets. Revenue from international operations and trading in non-U.S. Notes may be subject to negative fluctuations as a result of the above considerations. The impact of these fluctuations could be accentuated as some trading markets are smaller, less liquid and more volatile than larger markets. Also, any of the above-mentioned events or circumstances in one country can, and has in the past, affected JPMorgan Chase's operations and investments in another country or countries, including its operations in the United States. Any such unfavourable conditions or developments could have an adverse impact on JPMorgan Chase's business and results of operations.

4.7 JPMorgan Chase's power generation and commodities activities are subject to extensive regulation, potential catastrophic events and environmental risks and regulation that may expose JPMorgan Chase to significant cost and liability

JPMorgan Chase engages in power generation, and in connection with the commodities activities of its Investment Bank, engages in the storage, transportation, marketing or trading of several commodities, including metals, agricultural products, crude oil, oil products, natural gas, electric power, emission credits, coal, freight, and related products and indices. JPMorgan Chase has also invested in companies engaged in wind energy and in sourcing, developing and trading emission reduction credits. As a result of these activities, JPMorgan Chase is subject to extensive and evolving energy, commodities, environmental, and other governmental laws and regulations. JPMorgan Chase expects laws and regulations affecting its power generation and commodities activities to expand in scope and complexity. JPMorgan Chase may incur substantial costs in complying with current or future laws and regulations and the failure to comply with these laws and regulations may result in substantial civil and criminal fines and penalties. In addition, liability may be incurred without regard to fault under certain environmental laws and regulations for remediation of contaminations. JPMorgan Chase's power generation and commodities activities also further expose it to the risk of unforeseen and catastrophic events, including natural disasters, leaks, spills, explosions, release of toxic substances, fires, accidents on land and at sea, wars, and terrorist attacks that could result in personal injuries, loss of life, property damage, damage to JPMorgan Chase's reputation and suspension of operations. In addition, JPMorgan Chase's power generation activities are subject to disruptions, many of which are outside its control, from the breakdown or failure of power generation equipment, transmission lines or other equipment or processes, and the contractual failure of performance by third-party suppliers or service providers, including the failure to obtain and deliver raw materials necessary for the operation of power generation facilities. JPMorgan Chase actions to mitigate its risks related to the above-mentioned considerations may not prove adequate to address every contingency. In addition, insurance covering some of these risks may not be available, and the proceeds, if any, from insurance recovery may not be adequate to cover liabilities with respect to particular incidents. As a result, JPMorgan Chase's financial condition and results of operations may be adversely affected by such events.

4.8 JPMorgan Chase relies on its systems, employees and certain counterparties, and certain failures could materially adversely affect JPMorgan Chase's operations

JPMorgan Chase's businesses are dependent on its ability to process, record and monitor a large number of increasingly complex transactions. If any of its financial, accounting, or other data processing systems fail or have other significant shortcomings, JPMorgan Chase could be materially adversely affected. JPMorgan Chase is similarly dependent on its employees. JPMorgan Chase could be materially adversely affected if one of its employees causes a significant operational break-down or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates its operations or systems. Third parties with which JPMorgan Chase does business could also be sources of operational risk to JPMorgan Chase, including relating to breakdowns or failures of such parties' own systems or employees. Any of these occurrences could diminish JPMorgan Chase's ability to operate one or more of its businesses, or result in potential liability to clients, reputational damage and regulatory intervention, any of which could materially adversely affect JPMorgan Chase.

If personal, confidential or proprietary information of customers or clients in JPMorgan Chase's possession were to be mishandled or misused, JPMorgan Chase could suffer significant regulatory consequences, reputational damage and financial loss. Such mishandling or misuse could include circumstances where, for example, such information was erroneously provided to parties who are not permitted to have the information, either by fault of JPMorgan Chase's systems, employees, or counterparties, or such information was intercepted or otherwise inappropriately taken by third parties.

JPMorgan Chase may be subject to disruptions of its operating systems arising from events that are wholly or partially beyond its control, which may include, for example, computer viruses, electrical or telecommunications outages, or other damage to JPMorgan Chase's property or assets; natural disasters; health emergencies or pandemics; or events arising from local or larger scale political events, including terrorist acts. Such disruptions may give rise to losses in service to customers and loss or liability to JPMorgan Chase.

In a firm as large and complex as JPMorgan Chase, lapses or deficiencies in internal control over financial reporting may occur from time to time, and there is no assurance that significant deficiencies or material weaknesses in internal controls may not occur in the future. In addition, there is the risk that JPMorgan Chase's controls and procedures as well as business continuity and data security systems could prove to be inadequate. Any such failure could adversely affect JPMorgan Chase's operations and results of operations by requiring it to expend significant resources to correct the defect, as well as by exposing JPMorgan Chase to litigation, regulatory fines or penalties or losses not covered by insurance.

4.9 JPMorgan Chase operates within a highly regulated industry and its business and results are significantly affected by the laws and regulations to which it is subject. Financial services legislative and regulatory reforms may, if enacted or adopted, have a significant impact on JPMorgan Chase's business and results of operations and on its credit ratings.

JPMorgan Chase is subject to regulation under state and federal laws in the United States, as well as the applicable laws of each of the various other jurisdictions outside the United States in which JPMorgan Chase does business. These laws and regulations affect the type and manner in which JPMorgan Chase does business and may limit its ability to expand its product offerings, pursue acquisitions, or restrict the scope of operations and services provided.

Recent market and economic conditions have led to new legislation and numerous proposals for changes in the regulation of the financial services industry, including significant additional legislation and regulation in the United States. For example, new legislation and regulation affecting the credit card industry is expected to adversely affect JPMorgan Chase's Card Services business by reducing revenue and increasing compliance costs.

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act which will make significant structural reforms to the financial services industry. The legislation will, among other things: establish a Bureau of Consumer Financial Protection having broad authority to regulate providers of credit, savings, payment and other consumer financial products and services, and may narrow the scope of federal preemption of state consumer laws and expand the authority of state attorneys general to bring actions to enforce federal consumer protection legislation; create a structure to regulate systemically important financial companies, and provide regulators with the power to require such companies to sell or transfer assets and terminate activities if the regulators determine that the size or scope of activities of the company pose a threat to the safety and soundness of the company or the financial stability of the United States; require more comprehensive regulation of the over-the-counter derivatives market, including providing for more strict capital and margin requirements, the central clearing of standardized over-the-counter derivatives, and heightened supervision of all over-the-counter derivatives dealers and major market participants, including JPMorgan Chase; potentially require banking entities, such as JPMorgan Chase, to significantly restructure or restrict their derivatives businesses or to change the legal entities through which such businesses are conducted; prohibit banking entities, such as JPMorgan Chase, from engaging in certain proprietary trading activities and restricting their ownership of, investment in or sponsorship of hedge funds and private equity funds; restrict the interchange fees payable on debit card transactions; and give regulators the authority to phase out the treatment of trust preferred capital debt securities as Tier 1 capital for regulatory capital purposes. These or any other new legislative changes enacted (as well as any rules or regulations issued by U.S. regulators implementing any such legislation, and any actions by legislatures and regulatory bodies in other countries) could result in significant loss of revenue, limit JPMorgan Chase's ability to pursue business opportunities it might otherwise consider engaging in, impact the value of assets that it holds, require it to change certain of its business practices, impose additional costs on it, establish more stringent capital, liquidity and leverage ratio requirements, or otherwise adversely affect its businesses. Accordingly, JPMorgan Chase cannot provide assurance that any such new legislation or regulation would not have an adverse effect on its business, results of operations or financial condition.

If JPMorgan Chase does not comply with current or future legislation and regulations that apply to its operations, it may be subject to fines, penalties or material restrictions on its businesses in the jurisdiction where the violation occurred. In recent years, regulatory oversight and enforcement have increased substantially, imposing additional costs and increasing the potential risks associated with JPMorgan Chase's operations. As this regulatory trend continues, it could adversely affect JPMorgan Chase's operations and, in turn, its financial results.

4.10 JPMorgan Chase faces significant legal risks, both from regulatory investigations and proceedings and from private actions brought against it

JPMorgan Chase is named as a defendant or is otherwise involved in various legal proceedings, including class actions and other litigation or disputes with third parties, as well as investigations or proceedings brought by regulatory agencies. Actions brought against JPMorgan Chase may result in judgments, settlements, fines, penalties or other results adverse to it, which could materially adversely affect JPMorgan Chase's business, financial condition or results of operation, or cause it serious reputational harm. As a participant in the financial services industry, it is likely that JPMorgan Chase will continue to experience a high level of litigation and regulatory scrutiny and investigations related to its businesses and operations.

4.11 There is increasing competition in the financial services industry which may adversely affect JPMorgan Chase's results of operations

JPMorgan Chase operates in a highly competitive environment and it expects competitive conditions to continue to intensify as continued merger activity in the financial services industry produces larger, better-capitalised and more geographically diverse companies that are capable of offering a wider array of financial products and services at more competitive prices.

JPMorgan Chase also faces an increasing array of competitors. Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, private equity firms, insurance companies, mutual fund companies, credit card companies, mortgage banking companies, trust companies, Notes processing companies, automobile financing companies, leasing companies, e-commerce and other Internet-based companies, and a variety of other financial services and advisory companies. Technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products, and for financial institutions and other companies to provide electronic and Internet-based financial solutions, including electronic Notes trading. JPMorgan Chase's businesses generally compete on the basis of the quality and variety of JPMorgan Chase's products and services, transaction execution, innovation, reputation and price. Ongoing or increased competition in any one or all of these areas may put downward pressure on prices for JPMorgan Chase's products and services or may cause JPMorgan Chase to lose market share. Increased competition also may require JPMorgan Chase to make additional capital investment in its businesses in order to remain competitive. These investments may increase expense or may require JPMorgan Chase to extend more of its capital on behalf of clients in order to execute larger, more competitive transactions. JPMorgan Chase cannot provide assurance that the significant and increasing competition in the financial services industry will not materially adversely affect its future results of operations.

4.12 JPMorgan Chase's acquisitions and the integration of acquired businesses may not result in all of the benefits anticipated

JPMorgan Chase has in the past and may in the future seek to grow its business by acquiring other businesses. There can be no assurance that JPMorgan Chase's acquisitions will have the anticipated positive results, including results relating to: the total cost of integration; the time required to complete the integration; the amount of longer-term cost savings; the overall performance of the combined entity; or an improved price for JPMorgan Chase & Co.'s common stock. Integration of an acquired business can be complex and costly, sometimes including combining relevant accounting and data processing systems and management controls, as well as managing relevant relationships with employees, clients, suppliers and other business partners. Integration efforts could divert management attention and resources, which could adversely affect JPMorgan Chase's operations or results. JPMorgan Chase cannot provide assurance that any integration efforts for acquisitions already consummated or any new acquisitions would not result in the occurrence of unanticipated costs or losses.

JPMorgan Chase may continue to experience increased credit costs or need to take additional markdowns and allowances for loan losses on the assets and loans acquired in the Bear Stearns Merger and in connection with the Washington Mutual Transaction. JPMorgan Chase cannot provide assurance that as its integration efforts continue in connection with these transactions, other unanticipated costs or losses will not be incurred.

Acquisitions may also result in business disruptions that cause JPMorgan Chase to lose customers or cause customers to remove their accounts from JPMorgan Chase and move their business to competing financial institutions. It is possible that the integration process related to acquisitions could result in the disruption of JPMorgan Chase's ongoing businesses or inconsistencies in standards, controls, procedures and policies that could adversely affect JPMorgan Chase's ability to maintain relationships with clients, customers, depositors and employees. The loss of key employees in connection with an acquisition could adversely affect JPMorgan Chase's ability to successfully conduct its business.

4.13 Damage to JPMorgan Chase's reputation could damage its businesses

Maintaining a positive reputation is critical to JPMorgan Chase's attracting and maintaining customers, investors and employees. Damage to JPMorgan Chase's reputation can therefore cause significant harm to its business and prospects. Harm to JPMorgan Chase's reputation can arise from numerous sources, including, among others, employee misconduct, litigation or regulatory outcomes, failing to deliver minimum standards of service and quality, compliance failures, unethical behaviour, and the activities of customers and counterparties. Further, negative publicity regarding JPMorgan Chase, whether or not true, may result in harm to JPMorgan Chase's prospects.

Actions by the financial services industry generally or by certain members of or individuals in the industry can also affect JPMorgan Chase's reputation. For example, the role played by financial services firms in the financial crisis has damaged the reputation of the industry as a whole.

JPMorgan Chase could suffer significant reputational harm if it fails to properly identify and manage potential conflicts of interest. Management of potential conflicts of interests has become increasingly complex as JPMorgan Chase expands its business activities through more numerous transactions, obligations and interests with and among JPMorgan Chase's clients. The failure to adequately address, or the perceived failure to adequately address, conflicts of interest could affect the willingness of clients to deal with JPMorgan Chase, or give rise to litigation or enforcement actions. Therefore, there can be no assurance that conflicts of interest will not arise in the future that could cause material harm to JPMorgan Chase

4.14 JPMorgan Chase's ability to attract and retain qualified employees is critical to the success of its business and failure to do so may materially adversely affect its performance

JPMorgan Chase's employees are its most important resource and, in many areas of the financial services industry, competition for qualified personnel is intense. The imposition on JPMorgan Chase or on its employees of certain of the currently proposed restrictions or taxes on executive compensation may adversely affect JPMorgan Chase's ability to attract and retain qualified senior management and employees. If JPMorgan Chase is unable to continue to retain and attract qualified employees, its performance, including its competitive position, could be materially adversely affected.

4.15 JPMorgan Chase's financial statements are based in part on assumptions and estimates which, if wrong, could cause unexpected losses in the future

Pursuant to accounting principles generally accepted in the United States, JPMorgan Chase is required to use certain assumptions and estimates in preparing its financial statements, including in determining credit loss reserves, reserves related to litigations and the fair value of certain assets and liabilities, among other items. If assumptions or estimates underlying its financial statements are incorrect, JPMorgan Chase may experience material losses.

Certain of JPMorgan Chase's financial instruments, including trading assets and liabilities, available-for-sale Notes, certain loans, MSRs, private equity investments, structured notes and certain repurchase and resale agreements, among other items, require a determination of their fair value in order to prepare JPMorgan Chase's financial statements. Where quoted market prices are not available, JPMorgan Chase may make fair value determinations based on internally developed models or other means which ultimately rely to some degree on management judgment. Some of these and other assets and liabilities may have no direct observable price levels, making their valuation particularly subjective, being based on significant estimation and judgment. In addition, sudden illiquidity in markets or declines in prices of certain loans and Notes may make it more difficult to value certain balance sheet items, which may lead to the possibility that such valuations will be subject to further change or adjustment and could lead to declines in JPMorgan Chase's earnings.

4.16 Status of the Notes

The Notes (i) are unsecured and unsubordinated general obligations of JPMorgan Chase & Co., and not of any of its affiliates, (ii) are not savings accounts or deposits of JPMorgan Chase & Co. or any bank or non-bank subsidiary of JPMorgan Chase & Co. and (iii) will rank pari passu with all other unsecured and unsubordinated indebtedness of JPMorgan Chase & Co., except obligations that are subject to any priorities or preferences by law.

None of the Notes is a deposit insured by the FDIC, the U.S. Deposit Insurance Fund or any other governmental agency or instrumentality.

4.17 The Calculation Agent, which will generally be a J.P. Morgan affiliate, has broad discretionary powers which may not take into account the interests of the Holders

As the Calculation Agent will generally be a J.P. Morgan affiliate, potential conflicts of interest may exist between the Calculation Agent and the Noteholders, including with respect to the exercise of the very broad discretionary powers of the Calculation Agent. For example, the Calculation Agent has the authority (i) to determine whether certain specified events and/or matters so specified in the Conditions relating to the Notes have occurred and (ii) to determine any resulting adjustments and calculations as described in the Conditions. Potential purchasers should be aware that any determination made by the Calculation Agent may have an impact on the value and financial return of the Notes. Any such discretion exercised by, or any calculation made by, the Calculation Agent (in the absence of manifest or proven error) shall be binding on the Issuer and all Noteholders.

4.18 J.P. Morgan may have confidential information relating to the Notes

Certain J.P. Morgan affiliates may from time to time, by virtue of their status as underwriter, advisor or otherwise, possess or have access to information relating to the Notes. Such affiliates will not be obliged to disclose any such information to a purchaser of the Notes.

 

 

TERMS OF THE NOTES

 

1.	(a)	Issuer:	JPMorgan Chase & Co.
2.	(a)	Series Number:	1625
	(b)	Tranche Number:	1
3.	Specified Currency or Currencies:		Euro ("€", "EUR")
4.	Aggregate Nominal Amount:
	Series:		EUR 10,000,000
	Tranche:		1
5.	Issue Price:		100 per cent. of the Aggregate Nominal Amount
6.	Specified Denominations:		The Specified Denominations of the Notes shall be EUR 100,000
7.	Issue Date:		30 April 2007
8.	Maturity Date:		30 April 2019
9.	Interest Basis:		The Notes will not bear interest. Prior to the amendment and restatement of the Notes on 14 September 2010 the Interest Basis of the Notes was Linked Notes with interest payment dates falling on 30 April in each year from and including 30 April 2008, subject to the Modified Following Business Day Convention. With effect from and including the final Interest Payment Date falling prior to 14 September 2010 (being 30 April 2010) the Notes do not bear interest.
10.	Redemption / Payment Basis:		Redemption at par.
11.	Change of Interest Basis Redemption / Payment Basis:		Not Applicable
12.	Put / Call Options:		Not Applicable
13.	Status of the Notes:		Senior
14.	Method of distribution:		Non-syndicated
Provisions Relating to Interest (if any) Payable
15.	Fixed Rate Note Provisions		Not Applicable
16.	Floating Rate Note Provisions		Not Applicable
17.	Zero Coupon Note Provisions		Not Applicable
18.	Indexed Note Provisions		Not Applicable
19.	Linked Interest Note Provisions:		Not Applicable
20.	Dual Currency Interest Note Provisions:		Not Applicable
Provisions Relating to REDEMPTION
21.	Issuer Call:		Not Applicable
22.	Investor Put:		Not Applicable
23.	Final Redemption Amount of each Note:		EUR 100,000 per Specified Denomination
24.	Early Redemption Amount of each Note payable on redemption for taxation reasons or on Event of Default and/or the method of calculating the same (if required or if different from that set out in Condition 8(e)):		The Early Redemption Amount of the Notes payable on redemption for tax reasons or following an Event of Default shall be an amount equal to the market value of the Notes on the date of redemption, adjusted to account fully for any losses, expenses and costs to the Issuer (or any of its affiliates) of unwinding any underlying or related hedging and funding arrangements, all as determined by the Issuer in its sole and absolute discretion.

 

GENERAL PROVISIONS APPLICABLE TO THE NOTES
25.	(a)	Form of Notes:	Temporary Bearer Global Note exchangeable for a Permanent Bearer Global Note which is exchangeable for Definitive Notes only upon an Exchange Event.
	(b)	New Global Note:	No
26.	Other special provisions relating to Payment Business Days (Condition 7(c)):		As set out in Condition 7(c), save that Condition 7(c)(iii) shall not apply
27.	Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):		No
28.	Details retailing to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences of failure to pay, including any right of the Issuer to forfeit the Note and interest due on late payment:		Not Applicable
29.	Details relating to Instalment Notes		Not Applicable
30.	Redenomination applicable:		Not Applicable
31.	Other final terms:		The Calculation Agent shall be J.P. Morgan Securities Ltd.
DISTRIBUTION
32.	(a)	If syndicated, names of Managers:	Not Applicable
	(b)	Date of Subscription Agreement:	Not Applicable
	(c)	Stabilising Manager (if any):	Not Applicable
33.	If non-syndicated, name and address of relevant Dealer:		Bear, Stearns International Limited One Canada Square London E14 5AD
34.	Total commission and concession:		Not Applicable
35.	Whether TEFRA D rules applicable or TEFRA rules not applicable:		TEFRA D

 

 

36.	Additional selling restrictions:		Austria
			The following selling restriction shall apply to offers of the Notes in Austria to the extent it contradicts those for the European Economic Area set out below. The Notes have not been and will not be offered to the public in Austria, except that an offer of the Notes may be made to the public in Austria: (a) in the case of bearer Notes in the period beginning one bank working day following: (i) the date of publication of the Base Prospectus including any supplements but excluding any Final Terms, in relation to those Notes issued by an Issuer which has been approved by Finanzmarktaufsichtsbehörde in Austria (the "FMA") or, where appropriate, approved in another Member State of the EEA and notified to the FMA, all in accordance with the Prospectus Directive and the pertaining adoption procedures of the EEA bodies; (ii) or being the date of publication of the relevant Final Terms for the Notes issued by an Issuer; and (iii) the date of filing of a notification with Oesterreichische Kontrollbank, all as prescribed by the Capital Market Act 1991, as amended ("CMA"; Kapitalmarktgesetz 1991); or (b) in the case of bearer Notes otherwise in compliance with the CMA. No Registered Notes have been and will not be offered in Austria, either by private placement or to the public in Austria. For the purposes of this provision, the expression "an offer of the Notes to the public" means the communication to the public in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes issued by the Issuer. If this Amended and Restated Prospectus and any supplement thereto has not been notified to or, as well as the pertaining Final Terms, has not been published in Austria, then any individual offer of bearer Notes to any person in Austria is made only to qualified investors in accordance with § 3/1/11 and § 1/1/5a CMA or in a private placement where a maximum of 99 investors is individually approached all of whom have individually been pre-selected in line with capital market-related qualitative criteria, in each case provided that a notification pursuant to the CMA was filed with Oesterreichische Kontrollbank one bank business day before the launch of the first offering or placement in Austria. Whenever the Notes will be resold or sold by the purchaser and whenever investment advice or a recommendation is given, or brokerage services are provided in relation to the Notes, the information contained in the Base Prospectus must not be used for purposes of a public offer or a public solicitation to subscribe for the Notes or an invitation to make an offer for the Notes or any marketing or advertisement which is equivalent to such an offer or solicitation pursuant to the CMA, provided that such public offer is unlawful pursuant to the CMA.   European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date")no offer of Notes which are the subject of the offering contemplated by this Amended and Restated Prospectus to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State: (b) if the final terms in relation to the Notes specify that an offer of the Notes may be made other than pursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State (a "Non-exempt Offer"), following the date of publication of a prospectus in relation to such Notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, provided that any such prospectus has subsequently been completed by the final terms contemplating such Non-exempt Offer, in accordance with the Prospectus Directive, in the period beginning and ending on the dates specified in such prospectus or final terms, as applicable; (c) at any time to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; (d) at any time to any legal entity which has two or more of (1) an average of at least 250 employees during the last (or, in Sweden, last two) financial year, (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last (or, in Sweden, last two) annual or consolidated accounts (and in respect of Denmark, if such entities are included in the register of qualified investors kept by the Danish FSA or otherwise are registered as qualified investors within the EU or EEA) (and in respect of Norwegian investors, if such investors are registered as professional investors with Oslo Stock Exchange (Oslo Børs)); (e) at any time to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; (f) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive; or (g) in Hungary at any time to any other entity which falls within the definition of a "qualified investor" as that term is defined in point 92 of Article 5 of the (Hungarian) Act on Capital Markets, provided that no such offer of Notes referred to in (b) to (e) (inclusive) above shall require the Issuer or a Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression an "offer of Notes to the public" in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe to the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
RESPONSIBILITY
The Issuer accepts responsibility for the information contained in this Amended and Restated Prospectus.
Signed on behalf of the Issuer:
By
Duly authorised

 

PART B - OTHER INFORMATION

 

1.	LISTING
	(i)	Listing:	London
	(ii)	Admission to trading:	Application has been made for the Notes to be admitted to trading on the London Stock Exchange's Main Market. There can be no assurance that such listing and admission to trading will be maintained. Notes may be suspended from trading and/or de-listed at any time in accordance with applicable rules and regulations of the relevant stock exchange(s)
	(ii)	Estimate of total expenses related to admission to trading:	£2,100
2.	RATINGS
	The Notes to be issue will not be rated
3.	NOTIFICATION
	Not Applicable
4.	INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE
	So far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer.
5.	REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES
	(i)	Reasons for the Offer	The net proceeds from the issue of Notes will be applied by the Issuer for the general corporate purposes of the Group which may include making a profit, additions to working capital, the repayment of short term indebtedness, the replacement or repayment of long term debt, investments in, or extensions of credit to, subsidiaries of the Parent, the purchase and maintenance of positions in certain stocks, bonds, other securities or assets or certain options contracts or forward contracts or other derivative or synthetic instruments relating thereto in connection with hedging obligations relating to the Notes and other investment activities.
	(ii)	Estimated Net Proceeds	EUR 10,000,000
	(ii)	Estimated total expenses	Not Applicable
6.	YIELD (Fixed Rate Notes only)
	Not Applicable
7.	HISTORIC INTEREST RATES (Floating Rate Notes Only)
	Not Applicable
8.	PERFORMANCE OF INDEX/FORMULA, EXPLANATION OF EFFECT ON VALUE OF INVESTMENT AND ASSOCIATED RISKS AND OTHER INFORMATION CONCERNING THE UNDERLYING (Index-Linked Notes only)
	Not Applicable With effect from 14 September 2010, the Notes are no longer linked to an Index.
9.	PERFORMANCE OF RATE[S] OF EXCHANGE AND EXPLANATION OF EFFECT ON VALUE OF INVESTMENT (Dual Currency Notes Only)
	Not Applicable
10.	OPERATIONAL INFORMATION
	(i)	ISIN Code:	XS0297741299
	(ii)	Common Code:	029774129
	(ii)	Any clearing system(s) other than Euroclear Bank S.A. / N.V. and Clearstream Banking, Société anonyme and the relevant identification number(s):	Not Applicable
	(iv)	Delivery:	Delivery against payment
	(v)	Names and addresses of additional Paying Agent(s) (if any):	Not Applicable
	(vi)	Intended to be held in a manner which would allow Eurosystem eligibility:	No
11.	NOTEHOLDERS' REPRESENTATIONS
	By purchasing the Notes, each Noteholder represents and agrees that:
	(a)	in deciding whether or not to purchase the Notes it has carefully read and has fully understood the Base Prospectus and this Amended and Restated Prospectus;
	(b)	it has been afforded the opportunity to ask questions of, and receive answers from, the Issuer concerning the terms of the Notes, the offering contemplated by the Base Prospectus and this Amended and Restated Prospectus and related matters;
	(c)	it has sufficient knowledge and experience and has taken such professional advice and has independently obtained such information as it thinks necessary to make its own evaluation of the merits and risks involved in purchasing the Notes and in making an investment of this type;
	(d)	it has itself been, and will at all times continue to be, solely responsible for making its own independent appraisal of and investigation into the business, financial condition, prospects, creditworthiness, status and affairs of the Issuer;
	(e)	in deciding whether or not to purchase the Notes, it is not relying on any communication (written or oral) of the Issuer as investment advice or as a recommendation to purchase the Notes, it being understood that information and explanations related to the terms and conditions of the Notes and the agreements that are described in the Base Prospectus and in this Amended and Restated Prospectus shall not be considered investment advice or a recommendation to purchase the Notes;
	(f)	it represents that it is a non-U.S. person purchasing this Note in an offshore transaction in accordance with Regulation S under the Securities Act;
	(g)	it understands that the Notes have not been registered under the Securities Act, or any state securities laws, and that neither these Notes nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the absence of such registration or unless such transaction is exempt from, or not subject to, registration;
	(h)	it has all necessary power and authority to acquire the Notes and such acquisition will not contravene any law, rule or regulation binding on it or such account or any investment guideline or restriction applicable to it or such account;
	(i)	it acknowledges and agrees that the Issuer has not made any representation to it regarding the legality of its investment in the Note under applicable legal investment or similar laws or regulations and that the appropriate characterization of the Notes under various legal invest restrictions may be subject to significant interpretative uncertainties.
	(j)	it understands that it may suffer a loss of its investment in the Notes in the event of an early redemption pursuant to Condition 8(b) or Condition 11;
	(k)	it understands and agrees that the Issue Price may have included an amount related to hedging arrangements entered into by the Issuer and one of its affiliates and the Notes may be re-sold in the future at prices which may be greater or less than such price;
	(l)	it understands and agrees that the Dealer may have offered to sell the Notes to the initial purchaser at varying prices above or below the Issue Price and that the Notes may then be re-sold by the initial purchaser (and where relevant, subsequent purchasers) at prices above or below the Issue Price;
	(m)	it understands that since the entity acting as Calculation Agent is an affiliate of the Issuer, potential conflicts of interest may exist between such affiliate in its capacity as the Calculation Agent, on the one hand, and the Noteholders on the other; and
	(n)	it acknowledges that, in acting hereunder, the Calculation Agent is acting as agent of the Issuer and such entity shall not thereby assume and obligations towards or relationship of agency or trust for or with the Noteholders.

 

DESCRIPTION OF THE ISSUER

History, Development and Organisational Structure

JPMorgan Chase is a leading global financial services firm and one of the largest banking institutions in the United States, with $2.1 trillion in assets, $164.7 billion in total stockholders' equity and operations in more than 60 countries as of 31 March 2010. JPMorgan Chase is a leader in investment banking, financial services for consumers and businesses, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, JPMorgan Chase serves millions of customers in the United States and many of the world's most prominent corporate, institutional and government clients.

JPMorgan Chase & Co. is a financial holding company and was incorporated under Delaware law on 28 October 1968 with file number 0691011. JPMorgan Chase & Co.'s principal bank subsidiaries are JPMorgan Chase Bank, National Association, a national bank with branches in 23 states in the United States, and Chase Bank USA, National Association, a national bank that is JPMorgan Chase's credit card issuing bank. JPMorgan Chase & Co.'s principal non-bank subsidiary is J.P. Morgan Securities Inc., its U.S. investment banking firm.

Under Article Four of its Restated Certificate of Incorporation, JPMorgan Chase & Co. may engage in any lawful act or activity for which a corporation may be organised under the General Corporation Law of the State of Delaware.

The principal executive office of JPMorgan Chase & Co. is located at 270 Park Avenue, New York, New York 10017, U.S.A. and its telephone number is +1 212 270-6000.

Principal Activities and Principal Markets

JPMorgan Chase's activities are organised, for management reporting purposes, into six business segments, as well as a Corporate/Private Equity segment. The wholesale businesses are the Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management segments, and the consumer businesses are the Retail Financial Services and Card Services segments. A description of these business segments, and the products and services they provide to their respective client bases, follows.

Investment Bank

J.P. Morgan is one of the world's leading investment banks, with deep client relationships and broad product capabilities. The Investment Bank's clients are corporations, financial institutions, governments and institutional investors. JPMorgan Chase offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, sophisticated risk management, market-making in cash securities and derivative instruments, prime brokerage and research. The Investment Bank also commits JPMorgan Chase's own capital to principal investing and trading activities on a limited basis.

Retail Financial Services

Retail Financial Services serves consumers and businesses through personal service at bank branches and through ATMs, online banking and telephone banking as well as through auto dealerships and school financial-aid offices. Customers can use more than 5,100 bank branches and 15,500 ATMs in the United States as well as online and mobile banking around the clock. More than 25,300 branch salespeople assist customers with checking and savings accounts, mortgages, home equity and business loans, and investments across the 23-state footprint from New York and Florida to California. Consumers also can obtain loans through more than 15,800 auto dealerships and nearly 2,200 schools and universities throughout the United States.

Card Services

Chase Card Services is one of the largest credit card issuers in the United States, with nearly $150 billion in managed loans and nearly 90 million open accounts. Customers used Chase cards to meet more than $328 billion worth of their spending needs in 2009. Through its merchant acquiring business, Chase Paymentech Solutions, Chase is a global leader in payment processing and merchant acquiring.

Commercial Banking

Commercial Banking serves nearly 25,000 clients in the United States, including corporations, municipalities, financial institutions and not-for-profit entities with annual revenue generally ranging from $10 million to $2 billion, and more than 30,000 real estate investors/owners. Delivering extensive industry knowledge, local expertise and dedicated service, Commercial Banking partners with JPMorgan Chase's other businesses to provide comprehensive solutions, including lending, treasury services, investment banking and asset management to meet its clients' U.S. domestic and international financial needs.

Treasury & Securities Services

Treasury & Securities Services is a global leader in transaction, investment and information services. Treasury & Securities Services is one of the world's largest cash management providers and a leading global custodian. Treasury Services provides cash management, trade, wholesale card and liquidity products and services to small and mid-sized companies, multinational corporations, financial institutions and government entities. Treasury Services partners with the Commercial Banking, Retail Financial Services and Asset Management businesses to serve clients firm-wide. As a result, certain Treasury Services revenue is included in other segments' results. Worldwide Securities Services holds, values, clears and services securities, cash and alternative investments for investors and broker-dealers, and it manages depositary receipt programs globally.

Asset Management

Asset Management, with assets under supervision of $1.7 trillion, is a global leader in investment and wealth management. Asset Management clients include institutions, retail investors and high-net-worth individuals in every major market throughout the world. Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity products, including money-market instruments and bank deposits. Asset Management also provides trust and estate, banking and brokerage services to high-net-worth clients, and retirement services for corporations and individuals. The majority of Asset Management's client assets are in actively managed portfolios.

Trend Information

The following forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase's management and are subject to significant risks and uncertainties. These risks and uncertainties could cause JPMorgan Chase's actual results to differ materially from those set forth in such forward-looking statements.

JPMorgan Chase's outlook for the second quarter of 2010 should be viewed against the backdrop of the global and U.S. economies, financial markets activity, the geopolitical environment, the competitive environment and client activity levels. Each of these linked factors will affect the performance of JPMorgan Chase and its lines of business.

As noted in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the JPMorgan Chase & Co. March 2010 Form 10-Q, some normalisation of the financial markets has occurred, and there are early indications of broad-based improvements in underlying economic trends. Specifically, JPMorgan Chase began to see credit delinquencies stabilise and, in certain portfolios, improve. However, economic pressures on consumers continued to drive losses in the consumer loan portfolios in the first quarter of 2010. Further declines in U.S. housing prices in certain markets and increases in the unemployment rate remain possible; if this were to occur, it would adversely affect JPMorgan Chase's results. At the same time, the U.S. Congress and regulators (as well as legislative and regulatory bodies in other countries) continue to intensify their focus on the regulation of financial institutions; any legislation or regulations that may be adopted as a result could limit or restrict JPMorgan Chase's operations, impose additional costs on JPMorgan Chase in order to comply with such new laws or regulations, or significantly and adversely affect the revenues of certain lines of business. Accordingly, JPMorgan Chase continues to monitor closely U.S. and international economies and political environments.

In the Retail Banking business within Retail Financial Services, management expects continued strong revenue over the next several quarters, despite continued economic pressure on consumers and consumer spending levels. Additionally, JPMorgan Chase has made changes consistent with and, in certain respects, beyond the requirements of newly-enacted legislation, in its policies relating to non-sufficient funds and overdraft fees.

Although management estimates are subject to change, such changes may result in an annualised reduction in net income in Retail Banking of approximately $500 million by the fourth quarter of 2010.

In the Mortgage Banking & Other Consumer Lending business within Retail Financial Services, management expects revenue to continue to be negatively affected by continued elevated levels of repurchases of mortgages previously sold to, for example, government-sponsored entities. In the Real Estate Portfolios business within Retail Financial Services, management has not changed prior loss guidance, that quarterly net charge-offs could reach $1.4 billion for the home equity portfolio, $600 million for the prime mortgage portfolio and $500 million for the subprime mortgage portfolio over the next several quarters. However, if the initial improvements in delinquency and other loss trends currently being observed continue, net charge-offs may not reach these levels. Given current origination and production levels, combined with management's current estimate of portfolio run-off levels, the residential real estate portfolio is expected to decline by approximately 10-15 per cent. annually for the foreseeable future. Based on management's preliminary estimate, the effect of such a reduction in the residential real estate portfolio is expected to reduce 2010 net interest income in the portfolio by more than $1.0 billion from the 2009 level, excluding any impact from changes in the interest rate environment.

Finally, management expects noninterest expense in Retail Financial Services to remain modestly above 2009 levels, reflecting investments in new branch builds and sales force hires, as well as continued elevated servicing-, default- and foreclosed asset-related costs.

Management expects average outstandings in Card Services to decline by approximately 10-15 per cent. in 2010 due to run-off of both the Washington Mutual portfolio and lower-yielding promotional balances. In addition, management estimates Card Services' annual net income may be adversely affected by approximately $500 million to $750 million as a result of the recently enacted credit card legislation; this estimate is subject to change as components of the new legislation are finalised. The net charge-off rate for Card Services (excluding the Washington Mutual credit card portfolio) is anticipated to be approximately 9.5 per cent. in the second quarter of 2010, with the potential for improvement in the second half of 2010. The net charge-off rate for the Washington Mutual credit card portfolio is expected to remain at or above 20 per cent. over the next several quarters. Excluding the effect of any potential reserve actions, management currently expects Card Services to report a net loss in the second quarter of 2010; however, the loss will likely improve from the level reported in the first quarter of 2010. Results in the second half of 2010 will depend on the economic environment and potential reserve actions.

Revenue in the Investment Bank, Treasury & Securities Services and Asset Management will be affected by market levels, volumes and volatility, which will influence client flows and assets under management, supervision and custody. In addition, Investment Bank and Commercial Banking results will continue to be affected by the credit environment, which will influence levels of charge-offs, repayments and reserving actions with regard to credit loss allowances.

Earnings in Private Equity (within the Corporate/Private Equity segment) will likely continue to be volatile and be influenced by capital markets activity, market levels, the performance of the broader economy and investment-specific issues. The Corporate segment's net interest income levels and securities gains will generally trend with the size and duration of the investment securities portfolio in Corporate; however, the high level of trading and securities gains in the first quarter of 2010 is not likely to continue throughout 2010. While management currently anticipates that Corporate will realise additional securities gains in the second quarter of 2010, it is not anticipated that such gains will be of the same magnitude as those reported in the first quarter. Over the next several quarters, Corporate quarterly net income (excluding Private Equity, merger-related items and any significant non-recurring items) is expected to decline to approximately $300 million.

Lastly, with regard to any decision by JPMorgan Chase & Co.'s Board of Directors concerning any increase in the level of the common stock dividend, their determination will be subject to their judgement that the likelihood of another severe economic downturn has sufficiently diminished; that there is evidence of sustained underlying growth in employment for at least several months; that overall business performance and credit have stabilised or improved; and that such action is warranted, taking into consideration JPMorgan Chase's earnings outlook, need to maintain adequate capital levels (in light of business needs and regulatory requirements), alternative investment opportunities and appropriate dividend payout ratios. Ultimately, the Board would seek to return to JPMorgan Chase & Co.'s historical dividend ratio of approximately 30 per cent. to 40 per cent. of normalised earnings over time, though it would consider moving to that level in stages.

Save as disclosed in this Amended and Restated Prospectus, including the information incorporated by reference into this Amended and Restated Prospectus, there has been no material adverse change in the prospects of JPMorgan Chase & Co. since 31 December 2009.

Save as disclosed in this Amended and Restated Prospectus, including the information incorporated by reference into this Amended and Restated Prospectus, there has been no significant change in the financial or trading position of JPMorgan Chase & Co. and its subsidiaries taken as a whole since 31 March 2010.

Executive Officers and Directors

Executive Officers

The following persons are the Executive Officers of JPMorgan Chase & Co. as at the date of this Amended and Restated Prospectus. The business address of each Executive Officer is 270 Park Avenue, New York, New York 10017, U.S.A.

Name	Title
James Dimon	Chairman of the Board, President and Chief Executive Officer
Frank J. Bisignano	Chief Administrative Officer
Douglas L. Braunstein	Chief Financial Officer
Steven D. Black	Vice Chairman
Michael J. Cavanagh	Chief Executive Officer, Treasury & Securities Services
Stephen M. Cutler	General Counsel
William M. Daley	Head, Corporate Responsibility
John L. Donnelly	Director, Human Resources
Ina R. Drew	Chief Investment Officer
Mary Callahan Erdoes	Chief Executive Officer, Asset Management
Samuel Todd Maclin	Chief Executive Officer, Commercial Banking
Jay Mandelbaum	Head, Strategy and Business Development
Heidi Miller	President, International
Charles W. Scharf	Chief Executive Officer, Retail Financial Services
Gordon A. Smith	Chief Executive Officer, Card Services
James E. Staley	Chief Executive Officer, Investment Bank
Barry L. Zubrow	Chief Risk Officer

 

Directors

The following persons are the members of the Board of Directors of JPMorgan Chase & Co. as at the date of this Amended and Restated Prospectus. The business address of each Director is JPMorgan Chase & Co., 270 Park Avenue, New York, New York 10017, U.S.A.

Name Principal Occupation

Crandall C. Bowles Chairman of Springs Industries, Inc.

Stephen B. Burke Chief Operating Officer of Comcast Corporation

David M. Cote Chairman and Chief Executive Officer of Honeywell International Inc.

James S. Crown President of Henry Crown and Company

James Dimon Chairman of the Board, Chief Executive Officer and President of JPMorgan Chase & Co.

Ellen V. Futter President and Trustee of the American Museum of Natural History

William H. Gray, III Co-Chairman of GrayLoeffler, LLC

Laban P. Jackson, Jr. Chairman and Chief Executive Officer of Clear Creek Properties, Inc.

David C. Novak Chairman and Chief Executive Officer of Yum! Brands, Inc.

Lee R. Raymond Retired Chairman and Chief Executive Officer of Exxon Mobil Corporation

William C. Weldon Chairman and Chief Executive Officer of Johnson & Johnson

Conflicts of Interest

There are no material potential conflicts of interest between the duties to JPMorgan Chase & Co. of each of the Executive Officers and Directors named above and his/her private interests and/or other duties.

Corporate governance

Governance is a continuing focus at JPMorgan Chase, starting with the Board of Directors and extending throughout the firm. Several of JPMorgan Chase & Co.'s key governance practices are summarised below. In addition to the practices discussed below, JPMorgan Chase & Co. solicits periodic feedback from its shareholders on governance matters and on shareholder proposals, and engages in discussion with many of the proponents of shareholder proposals. Additional information concerning key corporate governance practices of JPMorgan Chase is contained in the Proxy Statement on Schedule 14A of JPMorgan & Co. dated 31 March 2010 (the "JPMorgan Chase & Co. 2010 Proxy Statement") filed with the SEC.

Corporate Governance Principles of the Board

The Board of Directors of JPMorgan Chase & Co. (the "Board") first adopted Corporate Governance Principles in 1997, and has revised them periodically since then to reflect evolving best practices and regulatory requirements, including the corporate governance listing standards of the New York Stock Exchange (the "NYSE"). The Corporate Governance Principles establish a framework for the governance of JPMorgan Chase & Co.

2009 and 2010 Initiatives

Actions taken during 2009 and 2010 include:

Special shareholder meetings - The Board amended the By-laws of JPMorgan Chase & Co. in January 2010 to permit shareholders holding at least 20 per cent. of the outstanding common shares (net of hedges) to call special meetings of shareholders. This action reduced the ownership threshold required to call special meetings from 33 1/3 per cent. of outstanding common shares, and was taken in response to a shareholder proposal presented at the 2009 annual shareholder meeting calling for a 10 per cent. threshold. That proposal did not pass but received a substantial favourable vote.

Say on Pay - JPMorgan Chase & Co.'s proxy statement for 2009 contained an advisory vote on executive compensation as required for participants in the U.S. Department of the Treasury's Capital Purchase Program under the Troubled Asset Relief Program, or TARP. JPMorgan Chase & Co.'s shareholders approved the compensation of executives named in the Summary compensation table in the 2009 proxy statement, as disclosed pursuant to the compensation disclosure rules of the SEC. JPMorgan Chase & Co. repaid the TARP funds as soon as it was permitted to do so, on June 17 June 2009. Although JPMorgan Chase & Co. is no longer required to do so, because of the current level of interest in executive compensation, JPMorgan Chase & Co. is submitting to its shareholders an advisory vote at the 2010 annual shareholders meeting on both JPMorgan Chase & Co.'s compensation principles and practices and their implementation for 2009.

Compensation recovery policies- JPMorgan Chase & Co.'s compensation recovery policies go beyond the Sarbanes-Oxley Act and other minimum requirements. In addition to JPMorgan Chase & Co.'s longstanding Board policy on recoupment in the event of a material restatement of its financial results or a termination for cause, JPMorgan Chase & Co. has implemented provisions in 2009 and 2010 that enable cancellation or recovery if the award was based on materially inaccurate performance metrics or a misrepresentation by an employee, the employee engaged in conduct that causes material financial or reputational harm to JPMorgan Chase or its business activities, or, for certain senior employees, the employee failed to properly identify, raise or assess risks material to JPMorgan Chase or its business activities.

Majority voting for directors

In 2007, the Board amended JPMorgan Chase & Co.'s By-laws to provide a majority voting standard for election of directors in uncontested elections (resignation by any incumbent director who is not re-elected) and plurality voting in any election that is contested.

Board leadership structure

JPMorgan Chase & Co. is governed by a Board of Directors. Directors discharge their duties at Board and committee meetings and also through telephone contact and other communications with the Chairman and Chief Executive Officer, management and others regarding matters of concern and interest to JPMorgan Chase & Co. Key elements of the Board leadership structure include:

• Chairman of the Board - While the Board has no set policy on whether or not to have a non-executive chairman, it has determined that the most effective leadership model for JPMorgan Chase & Co. currently is that Mr. Dimon serve as both Chairman and Chief Executive Officer.

• Independent oversight - Independent directors comprise more than 90 per cent. of the Board and 100 per cent. of the Audit Committee, Compensation & Management Development Committee, Corporate Governance & Nominating Committee, Public Responsibility Committee and Risk Policy Committee.

• Presiding Director - The Presiding Director presides at executive sessions of non-management directors and at Board meetings at which the Chairman is not present, and has the authority to call meetings of non-management directors. The position rotates semi-annually, between two independent directors, with the chair of the Compensation & Management Development Committee, currently Mr. Raymond, serving from January through June, and the chair of the Corporate Governance & Nominating Committee, currently Mr. Novak, serving from July through December.

• Committee Chairs - all are independent and are annually appointed by the Board, approve agendas and material for respective committee meetings, and act as liaison between committee members and the Board and between committee members and senior management.

Board's role in risk oversight

JPMorgan Chase's risk management is described in the "Management's discussion and analysis" section of the JPMorgan Chase & Co. 2009 Form 10-K.

Risk is an inherent part of JPMorgan Chase's business activities and JPMorgan Chase's overall risk tolerance is established in the context of its earnings power, capital, and diversified business model. JPMorgan Chase's risk management framework and governance structure are intended to provide comprehensive controls and ongoing management of the major risks inherent in its business activities. JPMorgan Chase's risk governance structure starts with each line of business being responsible for managing its own risks, with its own risk committee and a chief risk officer to manage its risk. Overlaying the line of business risk management are four corporate functions with risk management-related responsibilities. Risk Management is responsible for providing an independent firm-wide function of risk management and controls and is headed by JPMorgan Chase & Co.'s Chief Risk Officer, who is a member of JPMorgan Chase & Co.'s Operating Committee and reports to the Chief Executive Officer and the Board, primarily through the Board's Risk Policy Committee. The Chief Investment Office and Corporate Treasury are responsible for managing JPMorgan Chase's liquidity, interest rate and foreign exchange risk. Legal and Compliance has oversight for legal and fiduciary risk.

The Board exercises its oversight of risk management principally through the Board's Risk Policy Committee and Audit Committee. The Risk Policy Committee oversees senior management risk-related responsibilities, including reviewing management policies and performance against these policies and related benchmarks. The Audit Committee reviews with management the system of internal controls and financial reporting that is relied upon to provide reasonable assurance of compliance with JPMorgan Chase's operational risk management processes. In addition, the Compensation & Management Development Committee is responsible for reviewing JPMorgan Chase's compensation practices and the relationship among risk, risk management and compensation in light of JPMorgan Chase's objectives. Each of the committees oversees reputation risk issues within their scope of responsibility. The Board also reviews selected risk topics directly as circumstances warrant.

Non-management director meetings

Non-management directors generally meet in executive session as part of each regularly scheduled Board meeting, with discussion led by the Presiding Director.

Code of Conduct and Code of Ethics for Finance Professionals

The JPMorgan Chase Code of Conduct is a collection of rules and policy statements governing employees' conduct in relation to JPMorgan Chase's business. In addition, JPMorgan Chase has a Code of Ethics for Finance Professionals that applies to the Chairman and Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer of JPMorgan Chase & Co. and to all other professionals serving in a finance, accounting, corporate treasury, tax or investor relations role. The purpose of the Code of Ethics for Finance Professionals is to promote honest and ethical conduct and compliance with the law, particularly as related to the maintenance of JPMorgan Chase's financial books and records and the preparation of its financial statements.

Director independence

Pursuant to the corporate governance listing standards of the NYSE, a majority of the Board (and each member of the Audit Committee, Compensation & Management Development Committee and Corporate Governance & Nominating Committee) must be independent. The Board may determine a director to be independent if the director has no disqualifying relationship as defined in the NYSE corporate governance rules and if the Board has affirmatively determined that the director has no material relationship with JPMorgan Chase & Co., either directly or as a partner, shareholder, officer or employee of an organization that has a relationship with JPMorgan Chase & Co.

The Board reviewed the relationships between JPMorgan Chase & Co. and each director and determined that in accordance with the NYSE corporate governance listing standards and JPMorgan Chase & Co.'s independence standards, each non-management director (Crandall C. Bowles, Stephen B. Burke, David M. Cote, James S. Crown, Ellen V. Futter, William H. Gray, III, Laban P. Jackson, Jr., David C. Novak, Lee R. Raymond and William C. Weldon) has only immaterial relationships with JPMorgan Chase & Co. and accordingly each is an independent director under these standards. There are additional objective tests for independence in the NYSE rules and each of the named directors meets these objective tests for independence as well. Under the NYSE rules, a director employed by JPMorgan Chase & Co. cannot be deemed to be an independent director, and consequently, James Dimon is not an independent director of JPMorgan Chase & Co.

Committees of the Board

The Board has five principal committees. Each member of the Audit Committee, the Compensation & Management Development Committee and the Corporate Governance & Nominating Committee has been determined by the Board to be independent for purposes of the NYSE corporate governance listing standards and within the meaning of regulations of the SEC.

Audit Committee - provides oversight of the independent registered public accounting firm's qualifications and independence; the performance of the internal audit function and that of the independent registered public accounting firm; and management's responsibilities to assure that there is in place an effective system of controls reasonably designed to safeguard the assets and income of JPMorgan Chase & Co., assure the integrity of its financial statements, assure compliance with its operational risk management processes, and maintain compliance with its ethical standards, policies, plans and procedures, and with laws and regulations.

Compensation & Management Development Committee - reviews and approves JPMorgan Chase & Co.'s compensation and benefit programs; ensures the competitiveness of these programs; and advises the Board on the development of and succession for key executives. The Compensation & Management Development Committee periodically reviews and approves a statement of JPMorgan Chase & Co.'s compensation practices and principles and also reviews the relationship among risk, risk management and compensation in light of JPMorgan Chase & Co.'s objectives, including its safety and soundness and the avoidance of practices that would encourage excessive risk.

Corporate Governance & Nominating Committee - exercises general oversight with respect to the governance of the Board, including reviewing the qualifications of nominees for election to the Board and making recommendations to the Board regarding director compensation.

Public Responsibility Committee - reviews and considers JPMorgan Chase & Co.'s position and practices on charitable contributions, community development, legislation, protection of the environment, shareholder proposals involving issues of public interest and public responsibility and other similar issues as to which JPMorgan Chase relates to the community at large, and provides guidance to management and the Board as appropriate.

Risk Policy Committee - provides oversight of the responsibilities of the Chief Executive Officer and senior management to assess and manage JPMorgan Chase & Co.'s credit risk, market risk, interest rate risk, investment risk, liquidity risk, reputational risk, and fiduciary risk.

Committee Membership

The following table summarises the membership of each of the Board's principal committees:

Director	Audit	Compensation & Management Development	Corporate Governance & Nominating	Public Responsibility	Risk Policy
Crandall C. Bowles	Member
Stephen B Burke		Member	Member
David M. Cote				Member	Member
James S. Crown				Member	Chair
James Dimon
Ellen V. Futter				Member	Member
William H. Gray, III	Member			Chair
Laban P. Jackson, Jr.	Chair
David C. Novak		Member	Chair
Lee R. Raymond		Chair	Member
William C. Weldon		Member	Member

Copies of the Corporate Governance Principles, Code of Conduct, Code of Ethics for Finance Professionals, and the JPMorgan Chase & Co. Political Contributions Statement, as well as JPMorgan Chase & Co.'s By-laws and charters of JPMorgan Chase & Co. principal Board committees, can be found on JPMorgan Chase & Co.'s website at www.jpmorganchase.com.

Financial information

Selected financial information

The selected consolidated financial data set forth in the below table have been extracted from the audited consolidated financial statements of JPMorgan Chase & Co. for the year ended 31 December 2009 contained in the JPMorgan Chase & Co. 2009 Form 10-K and from the unaudited consolidated financial statements of JPMorgan Chase & Co. for the quarter ended 31 March 2010 contained in the JPMorgan Chase & Co. March 2010 Form 10-Q. This information should be read in conjunction with the notes to the consolidated financial statements and the other detailed financial information concerning JPMorgan Chase & Co. The financial data as of and for each of the quarters presented in the table are unaudited and do not necessarily indicate the results that may be expected for the entire year.

Selected income statement data

(in millions) Three months ended Year ended 31 March (unaudited) 31 December

2010 2009 2009 2008

Total net revenue $ 27,671 $ 25,025 $ 100,434 $ 67,252

Total noninterest expense 16,124 13,373 52,352 43,500

Pre-provision profit (a) 11,547 11,652 48,082 23,752

Provision for credit losses 7,010 8,596 32,015 19,445

Provision for credit losses - accounting

conformity (b) -- -- -- 1,534

Income before income tax expense/(benefit) 4,537 3,056 16,067 2,773

Income tax expense/(benefit) 1,211 915 4,415 (926)

Income before extraordinary gain 3,326 2,141 11,652 3,699

Extraordinary gain (c) -- -- 76 1,906

Net income $ 3,326 $ 2,141 $.11,728 $ 5,605

 

Selected balance sheet data

31 March 2010 31 December

(in millions) (unaudited) 2009 2008

Trading assets $ 426,128 $ 411,128 $ 509,983

Securities 344,376 360,390 205,943

Loans 713,799 633,458 744,898

Total assets 2,135,796 2,031,989 2,175,052

Deposits 925,303 938,367 1,009,277

Long-term debt 262,857 266,318 252,094

Common stockholders' equity (d) 156,569 157,213 134,945

Total stockholders' equity (d) 164,721 165,365 166,884

Notes:

(a) Pre-provision profit is total net revenue less noninterest expense. JPMorgan Chase & Co. believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.

(b) Results for 2008 included an accounting conformity loan loss reserve provision related to the acquisition of Washington Mutual Bank's banking operations.

(c) On 25 September 2008, JPMorgan Chase acquired the banking operations of Washington Mutual. On 30 May 2008, a wholly-owned subsidiary of JPMorgan Chase merged with and into The Bear Stearns Companies Inc., which became a wholly-owned subsidiary of JPMorgan Chase. The Washington Mutual acquisition resulted in negative goodwill, and accordingly, JPMorgan Chase & Co. recorded an extraordinary gain. For additional information on these transactions, see Note 2 on pages 151 to 156 of the JPMorgan Chase & Co. 2009 Form 10-K.

(d) Effective 1 January 2010, JPMorgan Chase & Co. adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of variable interest entities. Upon adoption of the new guidance, JPMorgan Chase & Co. consolidated its firm-sponsored credit card securitisation trusts, firm-administered multi-seller conduits and certain other consumer loan securitisation entities, primarily mortgage-related, by adding approximately $87.6 billion and $92.1 billion of assets and liabilities, respectively, and decreasing stockholders' equity by approximately $4.5 billion.

Auditors

The consolidated financial statements of JPMorgan Chase & Co. as at and for the years ended 31 December 2009 and 2008 and for each of the three years in the period ended 31 December 2009 and management's assessment of the effectiveness of internal control over financial reporting (which is included in Management's Report on Internal Control over Financial Reporting) as of 31 December 2009 and 31 December 2008, which are contained respectively in the JPMorgan Chase & Co. 2009 Form 10-K and the JPMorgan Chase & Co. 2008 Form 10-K, were audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their reports appearing therein. Copies of those reports can be found on page 137 of the JPMorgan Chase & Co. 2009 Form 10-K and on page 117 of the JPMorgan Chase & Co. 2008 Form 10-K. PricewaterhouseCoopers LLP have not resigned and were not removed during the periods covered by those reports.

PricewaterhouseCoopers LLP is an independent registered public accounting firm within the meaning of the applicable rules and regulations adopted by the SEC and the U.S. Public Company Accounting Oversight Board. PricewaterhouseCoopers LLP is a member of the American Institute of Certified Public Accountants and is registered with the Public Company Accounting Oversight Board. The address of PricewaterhouseCoopers LLP is 300 Madison Avenue, New York, NY 10017, United States of America.

Net Revenue

JPMorgan Chase & Co.'s total net revenue was $100.4 billion and $67.3 billion for the years ended 31 December 2009 and 2008, respectively.

Dividends

The following cash dividends per share of common stock of JPMorgan Chase & Co. were paid for each of the five consecutive fiscal years ended 31 December 2009:

Fiscal Year Dividend per share

2009 $0.20

2008 $1.52

2007 $1.48

2006 $1.36

2005 $1.36

Capital Structure

Stockholder's Equity

The following table provides information concerning the stockholder's equity of JPMorgan Chase & Co. as at 31 March 2010, and has been extracted from the unaudited consolidated financial statements of JPMorgan Chase & Co. for the quarter ended 31 March 2010 contained in the JPMorgan Chase & Co. March 2010 Form 10-Q. This information should be read in conjunction with the notes to the consolidated financial statements and the other detailed financial information concerning JPMorgan Chase & Co.

 (in millions, except share data) 31 March 2010

(unaudited)

Stockholders' equity

Preferred stock ($1 par value; authorised 200,000,000 shares) $ 8,152

Common stock ($1 par value; authorised 9,000,000,000 shares; issued

2,538,107 shares) 4,105

Capital surplus 96,450

Retained earnings 61,043

Accumulated other comprehensive income/(loss) 761

Shares held in RSU Trust, at cost (1,524,785 shares) (68)

Treasury stock, at cost (129,577,403 shares) (5,722)

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Total stockholders' equity $ 164,721

Common Stock

As of 31 March 2010, JPMorgan Chase & Co. had 3.98 billion shares of its common stock outstanding with a par value of $1.00 each and held 129.6 million shares of its common stock as treasury shares.

Convertible Securities and Warrants, Bonds, Borrowings and Contingent Liabilities

Refer to the notes to the audited consolidated financial statements of JPMorgan Chase & Co. for the year ended 31 December 2009 contained in the JPMorgan Chase & Co. 2009 Form 10-K and the unaudited consolidated financial statements of JPMorgan Chase & Co. for the quarter ended 31 March 2010 contained in the JPMorgan Chase & Co. March 2010 Form 10-Q, for information regarding warrants, bonds, borrowings and contingent liabilities outstanding as at 31 December 2009 and 31 March 2010.

Principal Subsidiaries

JPMorgan Chase & Co.'s principal bank subsidiaries are JPMorgan Chase Bank, National Association, a national bank with its registered office in Ohio and its principal place of business in New York; and Chase Bank USA, National Association, a national bank with its registered office and principal place of business in Delaware. JPMorgan Chase & Co.'s principal non-bank subsidiary is J.P. Morgan Securities Inc., a Delaware corporation with its principal place of business in New York. These subsidiaries are wholly owned by JPMorgan Chase & Co. and their accounts are included in the consolidated financial statements of JPMorgan Chase & Co. Exhibit 21.1 to the JPMorgan Chase & Co. 2009 Form 10-K contains a list of JPMorgan Chase & Co.'s subsidiaries which has been prepared in accordance with SEC rules.

Properties

At 31 December 2009, JPMorgan Chase owned or leased approximately 72.5 million total square feet of space, including offices, retail space and administrative and operational facilities, in the United States; approximately 3.7 million total square feet of space, including offices and an operations centre, in Europe, Middle East and Africa; and approximately 4.4 million total square feet of space, including offices and administrative and operational facilities, in the Asia Pacific region, Latin America and Canada. The properties occupied by JPMorgan Chase are used across all of the firm's business segments and for corporate purposes.

Litigation

The following summary of certain significant legal proceedings has been extracted from the JPMorgan Chase & Co. March 2010 Form 10-Q.

Bear Stearns Shareholder Litigation and Related Matters. Various shareholders of Bear Stearns have commenced purported class actions against Bear Stearns and certain of its former officers and/or directors on behalf of all persons who purchased or otherwise acquired common stock of Bear Stearns between 14 December 2006 and 14 March 2008 (the "Class Period"). During the Class Period, Bear Stearns had between 115 and 120 million common shares outstanding, and the price of those securities declined from a high of $172.61 to low of $30 at the end of the period. The actions, originally commenced in several U.S. federal courts, allege that the defendants issued materially false and misleading statements regarding Bear Stearns' business and financial results and that, as a result of those false statements, Bear Stearns' common stock traded at artificially inflated prices during the Class Period. In connection with these allegations, the complaints assert claims for violations of Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). Separately, several individual shareholders of Bear Stearns have commenced or threatened to commence arbitration proceedings and lawsuits asserting claims similar to those in the putative class actions.

In addition, Bear Stearns and certain of its former officers and/or directors have also been named as defendants in a number of purported class actions commenced in the U.S. District Court for the Southern District of New York seeking to represent the interests of participants in the Bear Stearns Employee Stock Ownership Plan ("ESOP") during the time period of December 2006 to March 2008. These actions allege that defendants breached their fiduciary duties to plaintiffs and to the other participants and beneficiaries of the ESOP by (a) failing to manage prudently the ESOP's investment in Bear Stearns securities; (b) failing to communicate fully and accurately about the risks of the ESOP's investment in Bear Stearns stock; (c) failing to avoid or address alleged conflicts of interest; and (d) failing to monitor those who managed and administered the ESOP. In connection with these allegations, each plaintiff asserts claims for violations under various sections of the U.S. Employee Retirement Income Security Act ("ERISA") and seeks reimbursement to the ESOP for all losses, an unspecified amount of monetary damages and imposition of a constructive trust.

Bear Stearns, former members of Bear Stearns' Board of Directors and certain of Bear Stearns' former executive officers have also been named as defendants in two purported shareholder derivative suits, subsequently consolidated into one action, pending in the U.S. District Court for the Southern District of New York. Plaintiffs are asserting claims for breach of fiduciary duty, violations of U.S. federal securities laws, waste of corporate assets and gross mismanagement, unjust enrichment, abuse of control and indemnification and contribution in connection with the losses sustained by Bear Stearns as a result of its purchases of sub-prime loans and certain repurchases of its own common stock. Certain individual defendants are also alleged to have sold their holdings of Bear Stearns common stock while in possession of material non-public information. Plaintiffs seek compensatory damages in an unspecified amount and an order directing Bear Stearns to improve its corporate governance procedures. Plaintiffs later filed a second amended complaint asserting, for the first time, purported class action claims for violation of Section 10(b) of the Exchange Act, as well as new allegations concerning events that took place in March 2008.

All of the above-described actions filed in U.S. federal courts were ordered transferred and joined for pre-trial purposes before the U.S. District Court for the Southern District of New York. Motions to dismiss have been filed in the purported securities class action, the shareholders' derivative action and the ERISA action.

Bear Stearns Merger Litigation. Seven putative class actions (five that were commenced in New York and two that were commenced in Delaware) were consolidated in New York State Court in Manhattan under the caption In re Bear Stearns Litigation. Bear Stearns, as well as its former directors and certain of its former executive officers, were named as defendants. JPMorgan Chase & Co. was also named as a defendant. The actions allege, among other things, that the individual defendants breached their fiduciary duties and obligations to Bear Stearns' shareholders by agreeing to the proposed merger. JPMorgan Chase was alleged to have aided and abetted the alleged breaches of fiduciary duty; breached its fiduciary duty as controlling shareholder/controlling entity; tortiously interfered with the Bear Stearns shareholders' voting rights; and to have been unjustly enriched. In December 2008, the court granted summary judgment in favour of all the defendants. Plaintiffs did not file an appeal and the matter is concluded.

Bear Stearns Hedge Fund Matters. Bear Stearns, certain current or former subsidiaries of Bear Stearns, including Bear Stearns Asset Management, Inc. ("BSAM") and Bear Stearns & Co. Inc., and certain current or former Bear Stearns employees are named defendants (collectively the "Bear Stearns defendants") in multiple civil actions and arbitrations relating to alleged losses of more than $1 billion resulting from the failure of the Bear Stearns High Grade Structured Credit Strategies Master Fund, Ltd. (the "High Grade Fund") and the Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage Master Fund, Ltd. (the "Enhanced Leverage Fund") (collectively, the "Funds"). BSAM served as investment manager for both of the Funds, which were organised such that there were U.S. and Cayman Islands "feeder funds" that invested substantially all their assets, directly or indirectly, in the Funds. The Funds are in liquidation.

There are five civil actions pending in the U.S. District Court for the Southern District of New York relating to the Funds. Three of these actions involve derivative lawsuits brought on behalf of purchasers of partnership interests in the two U.S. feeder funds. Plaintiffs in these actions allege that the Bear Stearns defendants mismanaged the Funds and made material misrepresentations to and/or withheld information from investors in the funds. These actions seek, among other things, unspecified compensatory damages based on alleged investor losses. A fourth action, brought by the Joint Voluntary Liquidators of the Cayman Islands feeder funds, makes allegations similar to those asserted in the derivative lawsuits related to the U.S. feeder funds, and seeks compensatory and punitive damages. A motion to dismiss or alternatively to stay is pending in one of the derivative suits relating to one of the U.S. feeder funds. In the remaining three cases, motions to dismiss have been granted in part and denied in part, and discovery is ongoing. The fifth action was brought by Bank of America and Banc of America Securities LLC (together "BofA") alleging breach of contract and fraud in connection with a May 2007 $4 billion securitisation, known as a "CDO-squared", for which BSAM served as collateral manager. This securitisation was composed of certain collateralised debt obligation ("CDO") holdings that were purchased by BofA from the High Grade Fund and the Enhanced Leverage Fund. Defendants' motion to dismiss in this action was largely denied; an amended complaint was filed; and discovery is ongoing in this case as well.

Ralph Cioffi and Matthew Tannin, the portfolio managers for the Funds, were tried on criminal charges of securities fraud and conspiracy to commit securities and wire fraud brought by the U.S. Attorney's Office for the Eastern District of New York. The U.S. Attorney's Office contended, among other things, that Cioffi and Tannin made misrepresentations concerning the Funds' performance, prospects and liquidity, as well as their personal investments in the Funds. On 10 November 2009, after a five-week trial, the jury found Cioffi and Tannin not guilty of all charges submitted to the jury. The SEC is proceeding with its action against Cioffi and Tannin.

Municipal Derivatives Investigations and Litigation. The U.S. Department of Justice's Antitrust Division and the SEC have been investigating JPMorgan Chase and Bear Stearns for possible antitrust and securities violations in connection with the bidding or sale of guaranteed investment contracts and derivatives to municipal issuers. A group of state attorneys general and the U.S. Office of the Comptroller of the Currency (the "OCC") have opened investigations into the same underlying conduct. JPMorgan Chase has been cooperating with all of these investigations. The Philadelphia Office of the SEC provided notice to J.P. Morgan Securities Inc. ("JPMSI") that it intends to recommend that the SEC bring civil charges in connection with its investigations. JPMSI has responded to that notice, as well as to a separate notice that that Philadelphia Office provided to Bear, Stearns & Co. Inc.

Purported class action lawsuits and individual actions (the "Municipal Derivatives Actions") have been filed against JPMorgan Chase and Bear Stearns, as well as numerous other providers and brokers, alleging antitrust violations in the reportedly $100 billion to $300 billion annual market for financial instruments related to municipal bond offerings referred to collectively as "municipal derivatives." The Municipal Derivatives Actions have been consolidated in the U.S. District Court for the Southern District of New York. The court denied in part and granted in part defendants' motions to dismiss the purported class and individual actions, permitting certain claims to proceed against JPMorgan Chase and others under U.S. federal and California state antitrust laws and under the California false claims act.

As previously reported, following public reports of JPMSI's settlement with the SEC in connection with certain Jefferson County, Alabama (the "County") warrant underwritings and related swap transactions, the County filed a complaint against JPMorgan Chase and several other defendants in the Circuit Court of Jefferson County, Alabama. The suit alleges that JPMorgan Chase made payments to certain third parties in exchange for which it was chosen to underwrite more than $3 billion in warrants issued by the County and chosen as the counterparty for certain swaps executed by the County. In its complaint, Jefferson County alleges that JPMorgan Chase concealed these third party payments and that, but for this concealment, the County would not have entered into the transactions. The County further alleges that the transactions increased the risks of its capital structure and that, following the downgrade of certain insurers that insured the warrants, the County's interest obligations increased and the principal due on a portion of its outstanding warrants was accelerated. JPMorgan Chase moved to dismiss.

A putative class action was filed on behalf of sewer ratepayers against JPMorgan Chase and Bear Stearns and numerous other defendants, based on substantially the same conduct described above (the "Wilson Action"). Defendants moved to dismiss the claims. The plaintiff in the Wilson Action recently filed a sixth amended complaint. The court has ordered that defendants file briefs in support of their motion to dismiss.

An insurance company that guaranteed the payment of principal and interest on warrants issued by the County has also filed an action against JPMorgan Chase and others in New York state court asserting that defendants fraudulently misled it into issuing the insurance coverage, based upon substantially the same alleged conduct described above and other alleged non-disclosures. Plaintiff claims that it insured an aggregate principal amount of nearly $1.2 billion in warrants, and seeks unspecified damages in excess of $400 million, as well as unspecified punitive damages.

The Alabama Public Schools and College Authority ("APSCA") brought a declaratory judgment action in the U.S. District Court for the Northern District of Alabama claiming that certain interest rate swaption transactions entered into with JPMorgan Chase Bank, N.A. are void on the grounds that the APSCA purportedly did not have the authority to enter into transactions or, alternatively, are voidable at the APSCA's option because of its alleged inability to issue refunding bonds in relation to the swaption. Following the denial of its motion to dismiss the action, JPMorgan Chase Bank, N.A. answered the complaint and filed a counterclaim seeking the amounts due under the swaption transactions. Discovery is under way.

Interchange Litigation. A group of merchants have filed a series of putative class action complaints in several U.S. federal courts. The complaints allege that Visa and MasterCard, as well as certain other banks and their respective bank holding companies, conspired to set the price of credit card interchange fees, enacted respective association rules in violation of Section 1 of the Sherman Antitrust Act (the "Sherman Act"), and engaged in tying/bundling and exclusive dealing. The complaint seeks unspecified damages and injunctive relief based on the theory that interchange would be lower or eliminated but for the challenged conduct. Based on publicly available estimates, Visa and MasterCard branded payment cards generated approximately $40 billion of interchange industry-wide in 2009. All cases have been consolidated in the U.S. District Court for the Eastern District of New York for pretrial proceedings. The amended consolidated class action complaint extended the claims beyond credit to debit cards. Defendants filed a motion to dismiss all claims that predated January 2004. The Court granted the motion to dismiss those claims.

Plaintiffs then filed a second amended consolidated class action complaint. The basic theories of the complaint remain the same, and defendants again filed motions to dismiss. The Court has not yet ruled on the motions. Fact discovery has closed, and expert discovery in the case is ongoing. The plaintiffs have filed a motion seeking class certification, and the defendants have opposed that motion. The Court has not yet ruled on the class certification motion.

In addition to the consolidated class action complaint, plaintiffs filed supplemental complaints challenging the MasterCard and Visa initial public offerings (the "IPO Complaints"). With respect to MasterCard, plaintiffs allege that the offering violated Section 7 of the U.S. Clayton Antitrust Act and Section 1 of the Sherman Act and that the offering was a fraudulent conveyance. With respect to the Visa IPO, plaintiffs are challenging the Visa IPO on antitrust theories parallel to those articulated in the MasterCard IPO pleading. Defendants have filed motions to dismiss the IPO Complaints. The Court has not yet ruled on those motions.

Mortgage-Backed Securities Litigation. JPMorgan Chase and affiliates, heritage-Bear Stearns and affiliates and heritage-Washington Mutual affiliates have been named as defendants in a number of cases relating to various roles they played in mortgage-backed securities ("MBS") offerings. These cases are generally purported class action suits, actions by individual purchasers of securities, or actions by insurance companies that guaranteed payments of principal and interest for particular tranches. Although the allegations vary by lawsuit, these cases generally allege that the offering documents for dozens of securitisation trusts in the aggregate more than $140 billion of securities contained material misrepresentations and omissions, including statements regarding the underwriting standards pursuant to which the underlying mortgage loans were issued, the ratings given to the tranches by rating agencies, and the appraisal standards that were used.

Purported class actions are pending against JPMorgan Chase, heritage-Bear Stearns, and certain of their affiliates and current and former employees in the U.S. District Courts for the Eastern and Southern Districts of New York. Defendants have moved to dismiss the action pending against heritage Bear Stearns entities and certain of their former employees. Heritage Washington Mutual affiliates, Washington Mutual.

Asset Acceptance Corp. and Washington Mutual Capital Corp., are defendants, along with certain former officers or directors of Washington Mutual Asset Acceptance Corp., in two now-consolidated purported class action cases pending in the Western District of Washington. In addition to allegations as to mortgage underwriting standards and ratings, plaintiffs in these cases allege that defendants failed to disclose Washington Mutual Bank's alleged coercion of or collusion with appraisal vendors to inflate appraisal valuations of the loans in the pools. Defendants have moved to dismiss. In addition to the purported class actions, certain JPMorgan Chase entities and several heritage Bear Stearns entities are defendants in actions filed in state courts in Pennsylvania and Washington brought by the Federal Home Loan Banks ("FHLB") of Pittsburgh and Seattle, respectively. These actions relate to each Federal Home Loan Bank's purchases of certificates in MBS offerings. Defendants moved to dismiss the complaint brought by the FHLB of Pittsburgh. Defendants removed the action by FHLB Seattle to federal court, where it was consolidated with 10 other identical lawsuits by that FHLB against other financial services firms. FHLB of Seattle has moved to remand the consolidated cases back to state court. Two additional and virtually identical suits have been filed in California state court by the Federal Home Loan Bank of San Francisco against various financial services firms, including certain heritage Bear Stearns entities.

EMC Mortgage Corporation ("EMC"), a subsidiary of JPMorgan Chase, is a defendant in four pending actions commenced by bond insurers that guaranteed payment on certain classes of MBS offerings sponsored by EMC. Two of the actions, commenced respectively by Ambac Assurance Corporation and Syncora Guarantee, Inc. ("Syncora"), are pending in the U.S. District Court for the Southern District of New York and involve five securitisations sponsored by EMC. The third action was commenced by Syncora, seeking access to certain loan files. The fourth was filed by CIFG Assurance North America, Inc. in state court in Texas, and involves one securitisation sponsored by EMC. In each action, plaintiffs claim the underlying mortgage loans had origination defects that purportedly violate certain representations and warranties given by EMC to plaintiffs and that EMC has breached the relevant agreements between the parties by failing to repurchase allegedly defective mortgage loans. Each action seeks unspecified damages and an order compelling EMC to repurchase those loans.

An action is pending in the U.S. District Court for the Southern District of New York brought on behalf of purchasers of certificates issued by various MBS securitisations sponsored by affiliates of IndyMac Bancorp ("IndyMac Trusts"). JPMSI, along with numerous other underwriters and individuals, is named as a defendant, both in its own capacity and as successor to Bear Stearns & Co. Inc. The defendants have moved to dismiss. JPMorgan Chase and JPMSI are defendants in an action pending in state court in Pennsylvania brought by FHLB-Pittsburgh, relating to its purchase of a certificate issued by one IndyMac Trust. Defendants have moved to dismiss. JPMorgan Chase, as alleged successor to Bear Stearns & Co. Inc., and other underwriters, along with certain individuals, are defendants in an action pending in state court in California brought by MBIA Insurance Corp. ("MBIA") relating to certain certificates issued by three IndyMac trusts, as to two of which Bear Stearns was an underwriter, and as to which MBIA provided guaranty insurance policies. MBIA purports to be subrogated to the rights of the certificate holders, and seeks recovery of sums it has paid and will pay pursuant to those policies.

A heritage-Bear Stearns subsidiary is a defendant in a purported class action that is pending in U.S. federal court in New Mexico against a number of financial institutions that served as depositors and/or underwriters for ten MBS offerings issued by Thornburg Mortgage, a bankrupt mortgage originator.

JPMorgan Chase and certain other heritage entities have been sued in other purported class actions for their roles an underwriter or depositor of third party MBS offerings but, other than the matters described in the above two paragraphs, JPMorgan Chase is indemnified in these other litigations.

Auction-Rate Securities Investigations and Litigation. Beginning in March 2008, several regulatory authorities initiated investigations of a number of industry participants, including JPMorgan Chase, concerning possible state and federal securities law violations in connection with the sale of auction-rate securities. The market for many such securities had frozen and a significant number of auctions for those securities began to fail in February 2008.

JPMorgan Chase, on behalf of itself and affiliates, agreed to a settlement in principle with the New York Attorney General's Office which provided, among other things, that JPMorgan Chase would offer to purchase at par certain auction-rate securities purchased from JPMSI, Chase Investment Services Corp. and Bear, Stearns & Co. Inc. by individual investors, charities, and small- to medium-sized businesses. JPMorgan Chase also agreed to a substantively similar settlement in principle with the Office of Financial Regulation for the State of Florida and the North American Securities Administrator Association ("NASAA") Task Force, which agreed to recommend approval of the settlement to all remaining states, Puerto Rico and the U.S. Virgin Islands. JPMorgan Chase finalised the settlement agreements with the New York Attorney General's Office and the Office of Financial Regulation for the State of Florida. The settlement agreements provide for the payment of penalties totalling $25 million to all states. JPMorgan Chase is currently in the process of finalising consent agreements with NASAA's member states. More than 30 of these consent agreements have been finalised to date.

JPMorgan Chase is also the subject of a putative securities class action in the U.S. District Court for the Southern District of New York and a number of individual arbitrations and lawsuits in various forums, brought by institutional and individual investors that together allege damages of more than $200 million, relating to JPMorgan Chase's sales of auction-rate securities. One action is brought by an issuer of auction-rate securities. The actions generally allege that JPMorgan Chase and other firms manipulated the market for auction-rate securities by placing bids at auctions that affected these securities' clearing rates or otherwise supported the auctions without properly disclosing these activities. Some actions also allege that JPMorgan Chase misrepresented that auction-rate securities were short-term instruments. Plaintiffs filed an amended consolidated complaint, which JPMorgan Chase moved to dismiss. JPMorgan Chase also filed a motion to transfer and coordinate before the Southern District five other purported auction-rate securities class actions. The Southern District subsequently denied the motion to dismiss the purported securities class action with leave to re-file upon resolution of the transfer motion.

Additionally, JPMorgan Chase was named in two putative antitrust class actions in the U.S. District Court for the Southern District of New York, which actions allege that JPMorgan Chase, in collusion with numerous other financial institution defendants, entered into an unlawful conspiracy in violation of Section 1 of the Sherman Act. Specifically, the complaints allege that defendants acted collusively to maintain and stabilise the auction-rate securities market and similarly acted collusively in withdrawing their support for the auction-rate securities market in February 2008. On 26 January 2010, the District Court dismissed both actions. The appeal is currently pending in the Second Circuit Court of Appeals.

City of Milan Litigation and Criminal Investigation. In January 2009, the City of Milan, Italy (the "City") issued civil proceedings against (among others) JPMorgan Chase Bank, N.A. and J.P. Morgan Securities Ltd. in the District Court of Milan. The proceedings relate to (a) a bond issue by the City in June 2005 (the "Bond") and (b) an associated swap transaction, which was subsequently restructured on a number of occasions between 2005 and 2007 (the "Swap"). The City seeks damages and/or other remedies against JPMorgan Chase (among others) on the grounds of alleged "fraudulent and deceitful acts" and alleged breach of advisory obligations by JPMorgan Chase (among others) in connection with the Swap and the Bond, together with related swap transactions with other counterparties. The civil proceedings continue and no trial date has been set as yet. JPMorgan Chase Bank, N.A. filed a challenge to the Italian Supreme Court's jurisdiction over it. In January 2009, JPMorgan Chase Bank, N.A. also received a notice from the Prosecutor at the Court of Milan placing it and certain current and former JPMorgan Chase personnel under investigation in connection with the above transactions. Since April 2009, JPMorgan Chase Bank, N.A. has been contesting an attachment order obtained by the Prosecutor, purportedly to freeze assets potentially subject to confiscation in the event of a conviction. The original Euro 92 million attachment has been reduced to Euro 44.9 million, and JPMorgan Chase Bank, N.A.'s application for a further reduction remains pending. The judge has directed four current and former JPMorgan Chase personnel and JPMorgan Chase Bank, N.A. (as well as other individuals and three other banks) to go forward to a full trial starting in May 2010. Although JPMorgan Chase is not charged with any crime and does not face criminal liability, if one or more of its employees were found guilty, JPMorgan Chase could be subject to administrative sanctions, including restrictions on its ability to conduct business in Italy and monetary penalties.

Physical Segregation of Assets in U.K. Affiliate. JPMorgan Chase discovered in July 2009 that one of its U.K. affiliates was not holding certain client money in a segregated trust status account with JPMorgan Chase Bank, N.A. as required by the rules of the U.K. Financial Services Authority (the "FSA"). JPMorgan Chase took immediate action to rectify the error and to notify the FSA. The matter is being reviewed by the FSA's Enforcement Division.

Washington Mutual Litigations. Subsequent to JPMorgan Chase's acquisition from the U.S. Federal Deposit Insurance Corporation ("FDIC") of substantially all of the assets and certain specified liabilities of Washington Mutual Bank, Henderson Nevada ("Washington Mutual Bank"), in September 2008, Washington Mutual Bank's parent holding company, Washington Mutual, Inc. ("WMI") and its wholly-owned subsidiary, WMI Investment Corp. (together, the "Debtors") both commenced voluntary cases under Chapter 11 of Title 11 of the U.S. Code in the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Case"). In the Bankruptcy Case, the Debtors have asserted rights and interests in certain assets. The assets in dispute include principally the following: (a) approximately $4 billion in securities contributed by WMI to Washington Mutual Bank; (b) the right to tax refunds arising from overpayments attributable to operations of Washington Mutual Bank and its subsidiaries; (c) ownership of and other rights in approximately $4 billion that WMI contends are deposit accounts at Washington Mutual Bank and one of its subsidiaries; and (d) ownership of and rights in various other contracts and other assets (collectively, the "Disputed Assets").

JPMorgan Chase commenced an adversary proceeding in the Bankruptcy Case against the Debtors and (for interpleader purposes only) the FDIC seeking a declaratory judgment and other relief determining JPMorgan Chase's legal title to and beneficial interest in the Disputed Assets. Discovery is underway in the JPMorgan Chase adversary proceeding.

The Debtors commenced a separate adversary proceeding in the Bankruptcy Case against JPMorgan Chase, seeking turnover of the same $4 billion in purported deposit funds and recovery for alleged unjust enrichment for failure to turn over the funds. The Debtors have moved for summary judgment in the turnover proceeding. Discovery is under way in the turnover proceeding.

In both JPMorgan Chase's adversary proceeding and the Debtors' turnover proceeding, JPMorgan Chase and the FDIC have argued that the Bankruptcy Court lacks jurisdiction to adjudicate certain claims. JPMorgan Chase moved to have the adversary proceedings transferred to U.S. District Court for the District of Columbia and to withdraw jurisdiction from the Bankruptcy Court to the District Court. That motion is fully briefed. In addition, JPMorgan Chase and the FDIC filed papers with the U.S. District Court for the District of Delaware appealing the Bankruptcy Court's rulings rejecting the jurisdictional arguments, and that appeal is fully briefed. JPMorgan Chase is also appealing a separate Bankruptcy Court decision holding, in part, that the Bankruptcy Court could proceed with certain matters while the first appeal is pending. Briefing on that appeal is under way.

The Debtors submitted claims substantially similar to those submitted in the Bankruptcy Court in the FDIC receivership for, among other things, ownership of certain Disputed Assets, as well as claims challenging the terms of the agreement pursuant to which substantially all of the assets of Washington Mutual Bank were sold by the FDIC to JPMorgan Chase. The FDIC, as receiver, disallowed the Debtors' claims and the Debtors filed an action against the FDIC in the U.S. District Court for the District of Columbia challenging the FDIC's disallowance of the Debtors' claims, claiming ownership of the Disputed Assets, and seeking money damages from the FDIC. JPMorgan Chase has intervened in the action. In January 2010, the District Court stayed the action pending developments in the Bankruptcy Court and ordered the parties to submit a joint status report every 120 days. In connection with the stay, the District Court denied WMI's and the FDIC's motions to dismiss without prejudice.

In addition, the Debtors moved in the Bankruptcy Court to take discovery from JPMorgan Chase purportedly related to a litigation originally filed in the 122nd State District Court of Galveston County, Texas (the "Texas Action"). JPMorgan Chase opposed the motion, but the Bankruptcy Court ordered that the discovery proceed. Debtors are also seeking related discovery from various third parties, including several government agencies. Plaintiffs in the Texas Action are certain holders of WMI common stock and the debt of WMI and Washington Mutual Bank who have sued JPMorgan Chase for unspecified damages alleging that JPMorgan Chase acquired substantially all of the assets of Washington Mutual Bank from the FDIC at an allegedly too low price. The FDIC intervened in the Texas Action, had it removed to the U.S. District Court for the Southern District of Texas, and then the FDIC and JPMorgan Chase moved to have the Texas Action dismissed or transferred. The Court transferred the Texas Action to the District of Columbia. Plaintiffs have moved to have the FDIC dismissed as a party and to remand the action to the state court, or, in the alternative, dismissed for lack of subject matter jurisdiction. JPMorgan Chase and the FDIC have moved to have the entire action dismissed. In April 2010, in the previously disclosed Texas Action, the U.S. District Court for the District of Columbia granted JPMorgan Chase's motion to dismiss the complaint, granted the FDIC's parallel motion to dismiss the complaint and denied plaintiffs' motion to dismiss the FDIC as a party and to remand the case to Texas state court.

Other proceedings related to Washington Mutual's failure also pending before the U.S. District Court for the District of Columbia include a lawsuit brought by Deutsche Bank National Trust Company against the FDIC alleging breach of various mortgage securitisation agreements and alleged violation of certain representations and warranties given by certain WMI subsidiaries in connection with those securitisation agreements. JPMorgan Chase has not been named a party to the Deutsche Bank litigation, but the complaint includes assertions that JPMorgan Chase may have assumed certain liabilities.

On 12 March 2010, at a hearing for the previously disclosed Bankruptcy Case, the Debtors announced on the record that they had reached a settlement with JPMorgan Chase and FDIC that, subject to documentation, would resolve the previously disclosed disputes. On 26 March 2010, the Debtors filed a Plan and Proposed Disclosure Statement, together with a proposed global settlement agreement (the "Proposed Global Settlement Agreement"), by and among Debtors, JPMorgan Chase, and the FDIC, which incorporated the terms of the announced settlement. Debtors disclosed that while the provisions of the Proposed Global Settlement Agreement were agreed to by WMI, JPMorgan Chase and significant creditor groups of WMI, the FDIC has not agreed to all of the provisions contained in the Proposed Global Settlement Agreement. Settlement discussions are ongoing among the parties. It is unclear if those discussions will result in adherence to the terms contained in the Proposed Global Settlement Agreement or any settlement at all. While these discussions are ongoing, the previously disclosed appeals and motion to withdraw the reference pending before the U.S. District Court for the District of Delaware have been stayed. Likewise, the stay of the action Debtors commenced against the FDIC in the U.S. District Court for the District of Columbia also remains in place.

Securities Lending Litigation. JPMorgan Chase Bank N.A. has been named as a defendant in four putative class actions asserting ERISA and non-ERISA claims pending in the U.S. District Court for the Southern District of New York related to JPMorgan Chase's securities lending business. Three of the pending actions relate to losses of plaintiffs' money (i.e., cash collateral for securities loan transactions) in medium-term notes of a structured investment vehicle known as Sigma Finance Inc. ("Sigma"). The fourth action concerns losses of money invested in Lehman Brothers medium-term notes, as well as asset-backed securities offered by nine other issuers. JPMorgan Chase has moved to dismiss the claims regarding Lehman Brothers medium-term notes and the asset-backed securities.

Investment Management Litigation. Four cases have been filed claiming that investment portfolios managed by JPMorgan Investment Management Inc. ("JPMIM") were inappropriately invested in securities backed by subprime residential real estate collateral. Plaintiffs claim that JPMIM and related defendants are liable for the loss in market value of these securities. The first case was filed by NM Homes One, Inc. in U.S. federal court in New York. The Southern District Court granted JPMIM's motion to dismiss nine of plaintiff's ten causes of action. Five of the claims were dismissed without prejudice to plaintiff's right to replead. The remaining four claims were dismissed with prejudice. The second case, filed by Assured Guaranty (U.K.) in New York state court, was dismissed and Assured has appealed the court's decision. In the third case, filed by Ambac Assurance UK Limited in New York state court, the Court granted JPMIM's motion to dismiss in March 2010, and plaintiff has filed a notice of appeal. The fourth case was filed by CMMF LLP in New York state court in December 2009; the Court granted JPMIM's motion to dismiss the claims, other than claims for breach of contract and misrepresentation. Both CMMF and JPMIM have filed notices of appeal.

Lehman Brothers Bankruptcy Proceedings. In March 2010, the Examiner appointed by the Bankruptcy Court presiding over the Chapter 11 bankruptcy proceedings of Lehman Brothers Holdings Inc ("LBHI") and several of its subsidiaries (collectively, "Lehman") released a report as to his investigation into Lehman's failure and related matters. The Examiner concluded that one common law claim potentially could be asserted against JPMorgan Chase for contributing to Lehman's failure, though he characterised the claim as "not strong." The Examiner also opined that certain cash and securities collateral provided by LBHI to JPMorgan Chase in the weeks and days preceding LBHI's demise potentially could be challenged under the Bankruptcy Code's fraudulent conveyance or preference provisions, though JPMorgan Chase is of the view that its right to such collateral is protected by the Bankruptcy Code's safe harbor provisions. In addition, JPMorgan Chase may also face claims in the liquidation proceeding pending before the same Bankruptcy Court under the U.S. Securities Investor Protection Act ("SIPA") for LBHI's U.S. broker-dealer subsidiary, Lehman Brothers Inc. ("LBI"). The SIPA Trustee has advised JPMorgan Chase that certain of the securities and cash pledged as collateral for JPMorgan Chase's claims against LBI may be customer property free from any security interest in favour of JPMorgan Chase.

Enron Litigation. JPMorgan Chase and certain of its officers and directors are involved in several lawsuits that together seek damages of more than $1.6 billion arising out of its banking relationships with Enron Corp. and its subsidiaries ("Enron"). A number of actions and other proceedings against JPMorgan Chase have been resolved, including a class action lawsuit captioned Newby v. Enron Corp. and adversary proceedings brought by Enron's bankruptcy estate. The remaining Enron-related actions include individual actions by Enron investors, creditors and counterparties.

The remaining litigation also includes a suit against JPMorgan Chase alleging, in relevant part, breach of contract and breach of fiduciary duty based upon JPMorgan Chase's role as Indenture Trustee in connection with an indenture agreement between JPMorgan Chase and Enron. The case has been dismissed. In April 2010, the New York Court of Appeals affirmed the order dismissing the action.

A putative class action on behalf of JPMorgan Chase employees who participated in JPMorgan Chase's 401(k) plan asserted claims under ERISA for alleged breaches of fiduciary duties and negligence by JPMorgan Chase, its directors and named officers. JPMorgan Chase moved for judgment on the pleadings and the district court granted the motion in March 2010. Plaintiffs have appealed.

IPO Allocation Litigation. JPMorgan Chase and certain of its securities subsidiaries, including Bear Stearns, were named, along with numerous other firms in the securities industry, as defendants in a large number of putative class action lawsuits filed in the U.S. District Court for the Southern District of New York alleging improprieties in connection with the allocation of securities in various public offerings, including some offerings for which a JPMorgan Chase entity served as an underwriter. They also claim violations of securities laws arising from alleged material misstatements and omissions in registration statements and prospectuses for the initial public offerings ("IPOs") and alleged market manipulation with respect to aftermarket transactions in the offered securities. Antitrust lawsuits based on similar allegations have been dismissed with prejudice. A settlement was reached in the securities cases, which the District Court approved; JPMorgan Chase's share of the settlement is approximately $62 million. Appeals have been filed in the U.S. Court of Appeals for the Second Circuit seeking reversal of the decision approving the settlement.

In addition to the various cases, proceedings and investigations discussed above, JPMorgan Chase & Co. and its subsidiaries are named as defendants or otherwise involved in a number of other legal actions and governmental proceedings arising in connection with their businesses. JPMorgan Chase believes it has meritorious defences to the claims asserted against it in its currently outstanding litigations, investigations and proceedings and it intends to defend itself vigorously in all such matters. Additional actions, investigations or proceedings may be initiated from time to time in the future.

In view of the inherent difficulty of predicting the outcome of legal matters, particularly where the claimants seek very large or indeterminate damages, or where the cases present novel legal theories, involve a large number of parties or are in early stages of discovery, JPMorgan Chase cannot state with confidence what the eventual outcome of these pending matters will be, what the timing of the ultimate resolution of these matters will be or what the eventual loss, fines, penalties or impact related to each pending matter may be. JPMorgan Chase believes, based upon its current knowledge, after consultation with counsel and after taking into account its current litigation reserves, that the legal actions, proceedings and investigations currently pending against it should not have a material adverse effect on JPMorgan Chase's consolidated financial condition. However, in light of the uncertainties involved in such proceedings, actions and investigations, there is no assurance that the ultimate resolution of these matters will not significantly exceed the reserves currently accrued by JPMorgan Chase; as a result, the outcome of a particular matter may be material to JPMorgan Chase's operating results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of JPMorgan Chase's income for that period.

Save as disclosed above, JPMorgan Chase & Co. is not and has not been involved in any governmental, legal or arbitration proceedings relating to claims or amounts that are material during the 12 month period ending on the date of this Amended and Restated Prospectus which may have, or have had in the recent past, significant effects on the financial position or profitability of JPMorgan Chase & Co. nor, so far as JPMorgan Chase & Co. is aware, are any such governmental, legal or arbitration proceedings pending or threatened.

Additional Information

The periodic reports that JPMorgan Chase & Co. files with the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as they become available, can be viewed on the SEC's website at www.sec.gov. Those reports and additional information concerning JPMorgan Chase & Co. can also be viewed on JPMorgan Chase & Co.'s investor relations website at http://investor.shareholder.com/jpmorganchase/.

 

 

SCHEDULE 2

Amended and Restated Prospectus dated 30 April 200714 September 2010

NOTEHOLDERS SHOULD UNDERSTAND THAT PAYMENTS OF PRINCIPAL AND INTEREST AMOUNTS UNDER THE NOTES WILL BE LINKED TO THE PERFORMANCE OF THE DYNAMIC BASKET (AS DESCRIBED HEREIN), WHICH ITSELF CONTAINS SUBSTANTIAL MARKET RISKS. NEVERTHELESS, IN NO CIRCUMSTANCES (OTHER THAN THE INSOLVENCY OF THE ISSUER OR IN THE EVENT OF AN EARLY REDEMPTION PURSUANT TO CONDITION 8(b) OR CONDITION 11) MAY THE AGGREGATE PRINCIPAL RECEIVED IN RESPECT OF THE NOTES BE LESS THAN PAR. NOTEHOLDERS SHOULD ALSO UNDERSTAND THAT AMOUNTS RECEIVED BY THEM ON MATURITY OF THE NOTES ABOVE THE PRINCIPAL AMOUNT WILL BE AFFECTED BY THE PERFORMANCE OF THE REFERENCE INDEX (AS DEFINED HEREIN). EACH NOTEHOLDER SHOULD HAVE FULLY INVESTIGATED THE REFERENCE INDEX (AS DEFINED BELOW) ON THE LEVEL OF WHICH THE PAYMENTS OF PRINCIPAL AND INTEREST AMOUNTS SHALL IN PART BE BASED.

THE MARKET VALUE OF THE NOTES MAY BE SIGNIFICANTLY LESS THAN THEIR NOMINAL AMOUNT DURING THEIR LIFETIME DUE TO FACTORS INCLUDING, BUT NOT LIMITED TO: THE REMAINING TERM OF THE NOTES, THE GENERAL LEVEL OF INTEREST RATES, THE LEVEL OF THE REFERENCE INDEX AND THE PERFORMANCE OF THE DYNAMIC BASKET. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT NOTEHOLDERS WILL REALISE THE NOMINAL AMOUNT OF THE NOTES IF THE NOTES ARE SOLD PRIOR TO THE MATURITY DATE.

THE BEAR STEARNS COMPANIES INC.

A NOTEHOLDER MAY RECEIVE LESS THAN THE PRINCIPAL AMOUNT IN RESPECT OF ANY NOTE IN THE EVENT THAT (1) SUCH NOTEHOLDER SELLS SUCH NOTE PRIOR TO MATURITY OR (2) THE NOTES ARE REDEEMED EARLY PURSUANT TO CONDITION 8(b) OR CONDITION 11. 

NEITHER THE ISSUER NOR ANY OF ITS CONSOLIDATED SUBSIDIARIES MAKES ANY REPRESENTATION AS TO THE EXISTENCE OF A MARKET FOR THE NOTES. AS SUCH THE NOTES SHOULD BE VIEWED AS ILLIQUID.

THE NOTES ARE UNSECURED AND UNSUBORDINATED GENERAL OBLIGATIONS OF JPMORGAN CHASE & CO. AND ARE NOT SAVINGS ACCOUNTS OR DEPOSITS OF JPMORGAN CHASE & CO. OR ANY BANK OR NON-BANK SUBSIDIARY OF JPMORGAN CHASE & CO. THE NOTES ARE NOT INSURED BY THE U.S. FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC"), THE U.S. DEPOSIT INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

JPMORGAN CHASE & CO.

Issue of EUR 10,000,000 Zero Coupon Notes linked to the Bear Stearns Institutional Adagio Index due 2019

issued pursuant to the U.S.$ 30,000,000,000 Euro Medium-Term Note Programme

PART A - CONTRACTUAL TERMS

This Amended and Restated Prospectus comprises a prospectusdated 14 September 2010 has not been approved for the purposes of Article 5 Directive 2003/71/EC (the "Prospectus Directive") and for the purpose of giving information with regard to The Bear Steams Companies Inc. (the "Issuer") which is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the Issuer."Prospectus Directive") but provides updated disclosure and amends and restates certain of the Terms of the Notes incorporated in the Prospectus dated 30 April 2007.

The JPMorgan Chase & Co. (the "Issuer") accepts responsibility for the information contained in this Amended and Restated Prospectus. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Amended and Restated Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.

This Amended and Restated Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see the section headed "Substitution of Issuer and Incorporation by Reference" herein).

Application will behas been made to the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000 (the "UK Listing Authority") for the Notes to be admitted to the Official List of the UK Listing Authority (the "Official List") and to the London Stock Exchange plc (the "London Stock Exchange") for such Notes to be admitted to trading on the Main Market of the London Stock Exchange's Gilt Edged and Fixed Interest Market, which is a regulated market for the purposes of the Investment Services Directive (Directive 93/22/EEC).

The Notes were issued on 30 April 2007 under the U.S.$30,000,000,000 Euro Medium Term Note Programme of The Bear Stearns Companies Inc., Bear Stearns Global Assets Holdings, Ltd., Bear Stearns Caribbean Asset Holdings Ltd. and Bear Stearns Bank plc (the "Programme"). On 27 February 2009, JPMorgan Chase & Co. was substituted for The Bear Stearns Companies LLC (formerly known as The Bear Stearns Companies Inc.) as issuer and as guarantor of outstanding notes issued under the Programme. Further information in relation to this substitution can be found under the heading "Substitution of Issuer and Incorporation by Reference" herein. References herein to The Bear Stearns Companies Inc. shall be deemed to be references to JPMorgan Chase & Co., except where the context otherwise requires.

Pursuant to an order of the High Court of England and Wales dated 3 April 2007 with effect from 19 May 2007, all rights and obligations of JPMorgan Chase Bank N.A. as Agent, Paying Agent and Transfer Agent in relation to all documents entered into in connection with the Programme (including all the existing Notes) were transferred to The Bank of New York Mellon, in the manner and to the extent provided in the Court Order.

References herein to the "Terms of the Notes" shall be deemed to be references to the Terms of the Notes as amended and restated by this Amended and Restated Prospectus.

CONTENTS

SUBSTITUTION OF ISSUER AND INCORPORATION BY REFERENCE................................. 24

RISK FACTORS.............................................................................................................................. 35

TERMS OF THE NOTES.................................................................................................................. 5

schedule 1........................................................................................................................................ 12

ANNEX 1.......................................................................................................................................... 15

ANNEX 2.......................................................................................................................................... 18

ANNEX 3.......................................................................................................................................... 19

 

SUBSTITUTION OF ISSUER AND INCORPORATION BY REFERENCE

The following documents (with the exception of any document

The Notes were issued by The Bear Stearns Companies Inc. ("TBSCI") on 30 April 2007 under the Programme.

On 30 May 2008, BSC Merger Corporation, a wholly-owned subsidiary of JPMorgan Chase & Co. merged with and into TBSCI pursuant to the Agreement and Plan of Merger, dated as of 16 March 2008, as amended 24 March 2008, and TBSCI became a wholly-owned subsidiary of JPMorgan Chase & Co. On 16 July 2008, TBSCI was converted from a corporation into a limited liability company under the laws of the State of Delaware, United States of America, and its name became The Bear Stearns Companies LLC ("TBSC LLC").

On 31 July 2008, JPMorgan Chase & Co. and TBSC LLC entered into the Thirteenth Supplemental Trust Deed to the Trust Deed dated 4 August 1994 (as amended and supplemented, the "Trust Deed"), pursuant to which JPMorgan Chase & Co. fully and unconditionally guaranteed (the "Guarantee") the obligations of TBSC LLC as issuer and as guarantor of outstanding notes issued under the Trust Deed.

On 27 February 2009, JPMorgan Chase & Co. and TBSC LLC entered into the Fourteenth Supplemental Trust Deed to the Trust Deed, pursuant to which (i) JPMorgan Chase & Co. was substituted for, and assumed all of the rights and obligations of, TBSC LLC as issuer and as guarantor of outstanding notes issued under the Programme and (ii) the Guarantee was discharged.

Further information concerning JPMorgan Chase & Co., including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the U.S. Securities Exchange Commission (the "SEC"), as they become available, can be viewed on the SEC's website at www.sec.gov and on JPMorgan Chase & Co.'s investor relations website at http://investor.shareholder.com/jpmorganchase/. No websites that are cited or referred to herein shall be deemed to form part of, or to be incorporated by reference thereto) which have previously been published and have been filed with the UK's Financial Services Authority are also deemed to be incorporated into and form part of this Prospectus:

(A) the reports of the Independent Registered Public Accounting Firm and the Issuer's audited consolidated financial statements and related financial statement schedule for the year ended November 30, 2006, 2005 and 2004 (included in the Issuer's Annual Reports to Stockholders included in the Issuer's Forms 10-K);

(B) the interim financial statements of the Issuer on Form 10-Q for (i) the quarter ended February 28, 2006; (ii) the quarter and six months ended May 31, 2006, (iii) the quarter ended August 31, 2006 and (iv) the quarter ended February 28, 2007 (and the amended Form 10-Q/A in respect of the quarter ended February 28, 2007);

(C) the Issuer's Form 10-K for the fiscal year ended November 30, 2006, 2005 and 2004 (and the amended Form 10-K/A in respect of the fiscal year ended November 30, 2005);

(D) the current reports of the Issuer on Form 8-K which contain consolidated financial information of the Issuer and its subsidiaries dated December 9, :2005, December 15, 2005, December 27, 2005, January 20, 2006, January 25, 2006, March 16, 2006, June 15, 2006, June 21, 2006, August 10, 2006, August 15, 2006; September 14, 2006, September 20, 2006, October 10, 2006, November, 15,2006, December 14,2006, January 10,2007, January 25, 2007, February 14,2007, March 15, 2007, March 22, 2007 and April 18,2007;

(E) the Issuer's Proxy Statement in respect of the annual meeting of stockholders April 11, 2006 and (ii) the annual meeting of stockholders April 18, 2007

(F) the Base Prospectus dated August 15, 2006 of the Company (the "Base Prospectus"). in, this Amended and Restated Prospectus.

The Offering Circular dated August 15, 2006 which constitutes a base prospectus (the "Base Prospectus") for the purposes of the Prospectus Directive shall be deemed to be incorporated into and form part of this Amended and Restated Prospectus. To the extent there is any conflict between the Base Prospectus and this Amended and Restated Prospectus, this Amended and Restated Prospectus shall take precedence.

Copies of documents incorporated by reference in this Amended and Restated Prospectus can be obtained from the registered office of the Issuer and from the specified office of the Paying Agent for the time being in London.

 

RISK FACTORS

Noteholders should also read the risk factors set out in the EaseBase Prospectus (including, for the avoidance of doubt, the introductory paragraphs thereto) which are incorporated by reference into this Amended and Restated Prospectus.

Credit, Principal and Interest

The Notes are an unsecured obligation of the Issuer. The payment of the Interest Amount and Final Redemption Amount is linked to the performance of the underlying Dynamic Basket. Accordingly, prospective investors should consult their own financial and legal advisors as to the risks entailed by an investment in the Notes and the suitability of such Notes in light of their particular circumstances.

Liquidity Risk

Neither the Issuer nor the Dealer makes any representation as to the existence of a market for the Notes. The market value of the Notes, if any, may be affected by many factors including, but not limited to: the remaining term of the Notes, the general level of interest rates, the current and prior levels of the Basket Value, the level of the Reference Index and the cost to the Issuer of unwinding any related hedging activity or any funding arrangement.

Dynamic Basket

The Dynamic Basket measures the performance of a notional portfolio of assets and the Basket Value is calculated solely for the purposes of these Notes. The Dynamic Basket is comprised of a synthetic portfolio of three classes of assets: Reference Index Units, Swap Units and Cash (each as defined below). The composition of the Dynamic Basket from time to time will reflect the performance of a portfolio based risk management technique which seeks to maximise, within a predetermined set of risk constraints, the exposure of the Dynamic Basket to Reference Index Units whilst seeking to protect the value of the Dynamic Basket at its initial value, as of a given future date. The operation of the Dynamic Basket including the Allocation Mechanism, determination of Basket Value and duties of the Calculation Agent are set out in Schedule 1 of the Terms of the Notes and the Annexes thereto.

Performance of Notes

These Notes are principal protected. The Notes are, however, only partially performance protected for the following reasons:

(i) In the event that a Restructuring Event (as defined in Annex 2 hereto) or a Clean Up Call (as defined in Annex i hereto) occurs, the Reference Index Units shall be removed from the Dynamic Basket and the Dynamic Basket shall be allocated entirely to synthetic swap contracts (the "Swap Unit" as defined below). Any increase in the performance of the Reference Index following a Restructuring Event or a Clean Up Call will not result in an increased redemption payment to the Noteholder at maturity:

(ii) Due to the features of the Notes, in particular the possible allocation to Cash Balance or to Swap Units, in certain circumstances the performance of the Reference Index will not be fully reflected in the performance of the Notes; in other circumstances the performance of the Reference Index will be magnified in the performance of the Notes through the use of leverage; and

(iii) Volatility in the Reference Index performance resulting in a deleveraging occurring may result in the Final Redemption Amount not reflecting the performance of the Reference Index to its full extent.

Noteholders Recourse

The Notes present risks in addition to those resulting from the direct exposure to the Reference Index. The Noteholders will not have any rights attaching to, or security over, the Dynamic Basket or assets in the Dynamic Basket, in particular the Reference Index Units. Noteholders will have recourse solely to the Issuer of the Notes and may not enforce any rights the Issuer or its affiliates may have in relation to the Reference Index, Reference Index Units, Cash Balance or Swap Unit.

Early Redemption

There is no Noteholder's early redemption option in relation to the Notes.

Performance of Reference Index

Noteholders should be aware that the Final Redemption Amount will be affected by the performance of the Reference Index. Noteholders should make their own evaluation of the Reference Index and should understand that the Dealer is not making any representation as to the future performance of the Reference Index.

The Reference Index

The Reference Index is a proprietary index of the Issuer which has been compiled by Standard & Poor's, a division of the McGraw-Hill Companies, Inc. on behalf of, and in accordance with the directions of, the Issuer or any affiliate of the Issuer. Accordingly, the Issuer has an interest in the composition and performance of the Reference Index and there is therefore a potential conflict of interest in this respect between the Reference Index and the Notes. Noteholders should be aware that as the Reference Index was launched on 15 July 2006, historical information in respect (of the Reference Index is therefore limited.

General

Prospective purchasers of the Notes should ensure that they understand the nature of the Notes and the extent of their exposure to risk and that they consider the suitability of the Notes as an investment in the light of their own circumstances and financial condition. Prospective purchasers should conduct their own investigations and, in deciding whether or not to purchase Notes, prospective purchasers should form their own views of the merits of an investment related to the Notes based upon such investigations and not in reliance upon any information given.

An investment in the Notes involves substantial risks. The Issuer believes that the following factors may affect its ability to fulfil its obligations in respect of the Notes and/or are material for the purpose of assessing the market risks associated with the Notes. All of these factors are contingencies which may or may not occur and the Issuer does not express a view on the likelihood of any such contingency occurring. The factors discussed below regarding the risks of acquiring or holding any Notes are not exhaustive, and additional risks and uncertainties that are not presently known to the Issuer or that the Issuer currently believes to be immaterial could also have a material impact on the business operations or financial condition of the Issuer or the Notes.

"Fundamental risks" of the potential loss of investment and potential lack of suitability in relation to an investment in the Notes

4.17 Investors in the Notes may receive back less than the original invested amount

Investors in the Notes may lose up to the entire value of their investment in the Notes as a result of the occurrence of any one or more of the following events:

(a) mandatory early redemption of the Notes in accordance with the Terms and Conditions thereof;

(b) the Issuer of the Notes is subject to insolvency proceedings or some other event impairing the ability of it to meet its obligations under the Notes; and

(c) the investor seeks to sell the Notes prior to their scheduled maturity, and the sale price of the Notes in the secondary market is less than the purchaser's initial investment.

The obligations of the Issuer of the Notes are not secured.

None of the Issuer, Dealers or any J.P. Morgan affiliate has given, and will not give, to any investor in the Notes (either directly or indirectly) any assurance or guarantee as to the merits, performance or suitability of such Notes, and the investor should be aware that the Issuer is acting as an arm's-length contractual counterparty and not as an advisor or fiduciary.

5. Risk factors that are generic to Notes to be issued under the Programme

5.1 The Issue Price of the Notes may be more than the market value of such Notes as at the Issue Date and the price of the Notes in secondary market transactions

The Issue Price in respect of the Notes may have been more than the market value of such Notes as at the Issue Date, and more than the price, if any, at which the Dealer or any other person was or is willing to purchase such Notes in secondary market transactions. In particular, the Issue Price in respect of any Notes may take into account amounts with respect to commissions relating to the issue and sale of such Notes and amounts relating to the hedging of the Issuer's obligations under such Notes.

5.2 The market value and the amount payable on early redemption of the Notes may be adversely affected by a number of factors, and the price at which a Noteholder of those Notes may be able to sell Notes prior to maturity may be at a substantial discount to the market value of such Notes on the Issue Date, and a Noteholder may suffer a loss of some or up to all of the entire invested amount of the Notes on early redemption of the Notes.

The market value of the Notes is expected to be affected, in part, by the credit rating of JPMorgan Chase & Co.

The value of the Notes is expected to be affected, in part, by investors' general appraisal of the creditworthiness of JPMorgan Chase & Co. Such perceptions may be influenced by the ratings accorded to outstanding Notes of JPMorgan Chase & Co. by well-recognised rating agencies, such as Moody's Investors Service Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. A reduction in the rating, if any, accorded to outstanding Notes of JPMorgan Chase & Co., by one of these rating agencies could result in a reduction in the trading value of the Notes.

In certain circumstances, the Early Redemption Amount payable on the redemption of the Notes prior to their scheduled maturity may be less than its original purchase price and could be as low as zero.

Following early redemption of the Notes, the Noteholders may not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate or yield on the Notes being redeemed and may only be able to do so at a significantly lower rate. Purchasers of the Notes should consider such reinvestment risk in light of other investments available at that time.

The Notes may be redeemed prior to maturity for any of the following reasons:

(i) the Issuer determines that its performance under any Note has become unlawful in whole or in part for any reason (see Condition 11);

(ii) the occurrence of certain taxation events (see Condition 9); or

(iii) following an Event of Default (see Condition 11).

With regard to early redemption due to any of illegality or tax, the Early Redemption Amount in respect of each Note shall be an amount determined by the Calculation Agent as representing the fair market value of such Notes immediately prior (and ignoring the circumstances leading) to such Early Redemption, adjusted to account fully for any reasonable expenses and costs of unwinding any underlying and/or related hedging and funding arrangements (including, without limitation any equity options, equity swaps or other Notes of any type whatsoever hedging the Issuer's obligations under the Notes). A purchaser of Notes should be aware that this Early Redemption Amount may be less than the purchaser's initial investment, and in such case see risk factor 1.1 (Investors in the Notes may receive back less than the original invested amount).

5.3 There may be price discrepancies with respect to the Notes as between various dealers or other purchasers in the secondary market

If at any time a third party dealer quotes a price to purchase Notes or otherwise values Notes, that price may be significantly different (higher or lower) from any price quoted by any J.P. Morgan affiliate. Furthermore, if any Noteholder sells their Notes, the Noteholder will likely be charged a commission for secondary market transactions, or the price may reflect a dealer discount.

5.4 The Issuer may be substituted without the consent of the Noteholders

The Issuer may be substituted as obligor under the Notes in favour of any successor company (as defined in the Trust Deed) or any wholly owned subsidiary from JPMorgan Chase & Co. in accordance with Condition 20 (Substitution). Noteholders will not have the right to object to such substitution. See Condition 20 (Substitution).

5.5 Notes may be amended without the consent of the Noteholders or with the consent of only some of the Noteholders binding all of the Noteholders

Subject as provided below, the terms and conditions of the Notes may be amended by the Issuer with the approval of the Trustee but without the consent of the Noteholders if the amendment:

is of a formal, minor or technical nature; or

is made to correct a manifest error; or

is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders, Receiptholders or Couponholders.

See Condition 17 (Meetings Of Noteholders, Modification And Waiver).

6. Risk factors associated with Notes that include certain features

6.1 There are specific risks with regard to Zero Coupon Notes

Changes in market interest rates have a greater impact on the prices of zero coupon bonds than on the prices of ordinary bonds because the discounted issue prices may be substantially below par. If market interest rates increase, zero coupon bonds can suffer higher price losses than other bonds having the same maturity and credit rating. Due to their leverage effect, zero coupon bonds are a type of investment associated with a particularly high price risk.

7. Risk factors that may affect the Issuer's ability to fulfil its obligations under the Notes

7.1 JPMorgan Chase's results of operations have been, and may continue to be, adversely affected by U.S. and international financial market and economic conditions

JPMorgan Chase's businesses have been, and in the future will continue to be, materially affected by economic and market conditions, including factors such as the liquidity of the global financial markets; the level and volatility of debt and equity prices, interest rates and currency and commodities prices; investor sentiment; corporate or other scandals that reduce confidence in the financial markets; inflation; the availability and cost of capital and credit; the occurrence of natural disasters, acts of war or terrorism; and the degree to which U.S. or international economies are expanding or experiencing recessionary pressures. These factors can affect, among other things, the activity levels of clients with respect to the size, number and timing of transactions involving JPMorgan Chase's investment and commercial banking businesses, including its underwriting and advisory businesses; the realisation of cash returns from JPMorgan Chase's private equity and principal investments businesses; the volume of transactions that JPMorgan Chase executes for its customers and, therefore, the revenue that it receives from commissions and spreads; the number and size of underwritings that JPMorgan Chase manages on behalf of clients; and the willingness of financial sponsors or other investors to participate in loan syndications or underwritings managed by JPMorgan Chase.

JPMorgan Chase generally maintains large trading portfolios in the fixed income, currency, commodity and equity markets and may have from time to time significant positions, including positions in securities in markets that lack pricing transparency or liquidity. The revenue derived from mark-to-market values of JPMorgan Chase's businesses are affected by many factors, including JPMorgan Chase's credit standing; its success in effectively hedging its market and other risks; volatility in interest rates and equity, debt and commodities markets; credit spreads and availability of liquidity in the capital markets; and other economic and business factors. JPMorgan Chase anticipates that revenue relating to its trading and principal investment businesses will continue to experience volatility and there can be no assurance that such volatility relating to the above factors or other conditions that may affect pricing or JPMorgan Chase's ability to realise returns from such investments could not materially adversely affect JPMorgan Chase's earnings.

The fees that JPMorgan Chase earns for managing third-party assets are also dependent upon general economic conditions. For example, a higher level of U.S. or non-U.S. interest rates or a downturn in trading markets could affect the valuations of the third-party assets that JPMorgan Chase manages or holds in custody, which, in turn, could affect JPMorgan Chase's revenue. Moreover, even in the absence of a market downturn, below-market or sub-par performance by JPMorgan Chase's investment management businesses could result in outflows of assets under management and supervision and, therefore, reduce the fees that JPMorgan Chase receives.

During 2008, U.S. and global financial markets were extremely volatile and were materially and adversely affected by a significant lack of liquidity, loss of confidence in the financial sector, disruptions in the credit markets, reduced business activity, rising unemployment, declining home prices, and erosion of consumer confidence. These factors contributed to adversely affecting JPMorgan Chase's business, financial condition and results of operations in 2008 and into early 2009. While the business environment stabilised during the latter half of 2009, the current economic environment remains weak, which affects the profitability of JPMorgan Chase's businesses.

JPMorgan Chase's consumer businesses are particularly affected by U.S. domestic economic conditions. Such conditions include U.S. interest rates; the rate of unemployment; housing prices; the level of consumer confidence; changes in consumer spending; and the number of personal bankruptcies, among others. The deterioration of these conditions can diminish demand for the products and services of JPMorgan Chase's consumer businesses, or increase the cost to provide such products and services. In addition, adverse economic conditions, such as declines in home prices, could lead to an increase in mortgage and other loan delinquencies and higher net charge-offs, which can adversely affect JPMorgan Chase's earnings.

During 2008 and continuing in 2009, higher levels of bank failures have dramatically increased resolution costs of the U.S. Federal Deposit Insurance Corporation ("FDIC") and depleted the deposit insurance fund. In order to maintain a strong funding position and restore reserve ratios of the deposit insurance fund, the FDIC has increased assessment rates of insured institutions and adopted a rule in November 2009 requiring banks to prepay three years' worth of premiums to replenish the depleted insurance fund. If there are additional bank or financial institution failures, JPMorgan Chase may be required to pay even higher FDIC premiums than the recently increased levels. Any future increases of FDIC insurance premiums may adversely impact JPMorgan Chase's earnings.

In connection with the sale and securitisation of loans (whether with or without recourse), the originator is generally required to make a variety of customary representations and warranties regarding both the originator and the loans being sold or securitised. JPMorgan Chase and certain of its subsidiaries, as well as entities acquired by JPMorgan Chase as part of the merger (the "Bear Stearns Merger") by JPMorgan Chase and The Bear Stearns Companies Inc. ("Bear Stearns"), the acquisition of Washington Mutual Bank's ("Washington Mutual") banking operations (the "Washington Mutual Transaction") and other transactions, have made such representations and warranties in connection with the sale and securitisation of loans, and JPMorgan Chase will continue to do so in the ordinary course of its lending business. If a loan which does not comply with such representations or warranties is sold or securitised, JPMorgan Chase may be obligated to repurchase the loan and bear any associated loss directly, or it may be obligated to indemnify the purchaser against any such losses. In 2009, the costs of repurchasing mortgage loans that had been sold to government agencies such as Freddie Mac and Fannie Mae increased substantially, and could continue to increase substantially further. Accordingly, repurchase and/or indemnity obligations to government-sponsored enterprises or to private third-party purchasers could materially and adversely affect JPMorgan Chase's results of operations and earnings in the future.

JPMorgan Chase cannot provide assurance that any of the above-mentioned conditions, or further continued deterioration in economic, market or business conditions, will not have a material negative effect on JPMorgan Chase in the future.

7.2 If JPMorgan Chase does not effectively manage its liquidity, its business could be negatively affected

JPMorgan Chase's liquidity is critical to its ability to operate its businesses, grow and be profitable. Some potential conditions that could negatively affect JPMorgan Chase's liquidity include illiquid or volatile markets, diminished access to capital markets, unforeseen cash or capital requirements (including, among others, commitments that may be triggered to special purpose entities ("SPEs") or other entities), difficulty or inability to sell assets, unforeseen outflows of cash or collateral, and lack of market or customer confidence in JPMorgan Chase or its prospects. These conditions may be caused by events over which JPMorgan Chase has little or no control. For example, the liquidity crisis experienced in 2008 and into early 2009 increased JPMorgan Chase's cost of funding and limited its access to some of its traditional sources of liquidity such as securitised debt offerings backed by mortgages, loans, credit card receivables and other assets. These or other conditions detrimental to JPMorgan Chase's liquidity may occur in the future.

The credit ratings of JPMorgan Chase & Co., JPMorgan Chase Bank, N.A. and Chase Bank USA, N.A. are important in order to maintain JPMorgan Chase's liquidity. A reduction in their credit ratings could have an adverse effect on JPMorgan Chase's access to liquidity sources, increase its cost of funds, trigger additional collateral or funding requirements, and decrease the number of investors and counterparties willing to lend to JPMorgan Chase, thereby curtailing its business operations and reducing its profitability. Reduction in the ratings of certain SPEs or other entities to which JPMorgan Chase has a funding or other commitment could also negatively affect its liquidity where such ratings changes lead, directly or indirectly, to JPMorgan Chase being required to purchase assets or otherwise provide funding. Critical factors in maintaining high credit ratings include a stable and diverse earnings stream, strong capital ratios, strong credit quality and risk management controls, diverse funding sources, and disciplined liquidity monitoring procedures.

JPMorgan Chase's cost of obtaining long-term unsecured funding is directly related to its credit spreads (the amount in excess of the interest rate of U.S. Treasury Notes (or other benchmark Notes) of the same maturity that JPMorgan Chase needs to pay to its debt investors). Increases in JPMorgan Chase's credit spreads can significantly increase the cost of this funding. Changes in credit spreads are continuous and market-driven, and influenced by market perceptions of JPMorgan Chase's creditworthiness. As such, JPMorgan Chase's credit spreads may be unpredictable and highly volatile.

As a holding company, JPMorgan Chase & Co. relies on the earnings of its subsidiaries for its cash flow and consequent ability to pay dividends and satisfy its obligations. These payments by subsidiaries may take the form of dividends, loans or other payments. Several of JPMorgan Chase & Co.'s principal subsidiaries are subject to capital adequacy requirements or other regulatory or contractual restrictions on their ability to provide such payments. Limitations in the payments that JPMorgan Chase & Co. receives from its subsidiaries could negatively affect its liquidity position.

7.3 The financial condition of JPMorgan Chase's customers, clients and counterparties, including other financial institutions, could adversely affect JPMorgan Chase

A number of JPMorgan Chase's products expose it to credit risk, including loans, leases and lending commitments, derivatives, trading account assets and assets held-for-sale. As one of the largest lenders in the United States, JPMorgan Chase has exposures to many different products and counterparties, and the credit quality of JPMorgan Chase's exposures can have a significant impact on its earnings. JPMorgan Chase estimates and establishes reserves for credit risks and potential credit losses inherent in its credit exposure (including unfunded lending commitments). This process, which is critical to JPMorgan Chase's financial results and condition, requires difficult, subjective and complex judgments, including forecasts of how economic conditions might impair the ability of JPMorgan Chase's borrowers to repay their loans. As is the case with any such assessments, there is always the chance that JPMorgan Chase will fail to identify the proper factors or that it will fail to accurately estimate the impact of factors that it identifies. Any such failure could result in increases in delinquencies and default rates.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. JPMorgan Chase routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. Many of these transactions expose JPMorgan Chase to credit risk in the event of default by the counterparty or client, which can be exacerbated during periods of market illiquidity, such as those experienced in 2008 and early 2009. During such periods, JPMorgan Chase's credit risk also may be further increased when the collateral held by it cannot be realised upon or is liquidated at prices that are not sufficient to recover the full amount of the loan or derivative exposure due to it. In addition, disputes with counterparties as to the valuation of collateral significantly increases in times of market stress and illiquidity. JPMorgan Chase cannot provide assurance that any such losses would not materially and adversely affect its results of operations or earnings.

An example of the risks associated with JPMorgan Chase's relationships with other financial institutions is the collapse of Lehman Brothers Holdings Inc. ("LBHI"). On 15 September 2008, LBHI filed a voluntary petition for relief under Chapter 11 of Title 11 of the U.S. Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court for the Southern District of New York, and thereafter several of its subsidiaries also filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (LBHI and such subsidiaries collectively, "Lehman"). On 19 September 2008, a liquidation case under the U.S. Notes Investor Protection Act ("SIPA") was commenced in the United States District Court for the Southern District of New York for Lehman Brothers Inc. ("LBI"), LBHI's U.S. broker-dealer subsidiary, and that court now presides over the LBI SIPA liquidation case. JPMorgan Chase was LBI's clearing bank and, among other actions, made collateral calls totalling approximately U.S.$8 billion in September 2008 and liquidated approximately U.S.$18 billion of Notes subsequent to Lehman's bankruptcy filing. JPMorgan Chase is the largest secured creditor in the Lehman and LBI cases, according to Lehman's schedules. It is possible that claims may be asserted against JPMorgan Chase and/or its security interests, including by the LBHI Creditors Committee, the SIPA trustee appointed in the LBI liquidation case, the principal acquirer of LBI's assets, and others in connection with Lehman and LBI cases. JPMorgan Chase intends to defend itself against any such claims.

If the current weak economic environment continues for an extended period of time, or deteriorates further, there is a greater likelihood that more of JPMorgan Chase's customers or counterparties could become delinquent on their loans or other obligations to JPMorgan Chase which, in turn, could result in a higher level of charge-offs and provision for credit losses, or requirements that JPMorgan Chase purchase assets or provide other funding, any of which could adversely affect JPMorgan Chase's financial condition. Moreover, a significant deterioration in the credit quality of one of JPMorgan Chase's counterparties could lead to concerns about the credit quality of other counterparties in the same industry, thereby exacerbating JPMorgan Chase's credit risk exposure, and increasing the losses, including mark-to-market losses, that JPMorgan Chase could incur in its trading and clearing businesses.

7.4 Concentration of credit and market risk could increase the potential for significant losses

JPMorgan Chase has exposure to increased levels of risk when a number of customers are engaged in similar business activities or activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. JPMorgan Chase regularly monitors various segments of its portfolio exposures to assess potential concentration risks. JPMorgan Chase's efforts to diversify or hedge its credit portfolio against concentration risks may not be successful and any concentration of credit risk could increase the potential for significant losses in its credit portfolio. In addition, disruptions in the liquidity or transparency of the financial markets may result in JPMorgan Chase's inability to sell, syndicate or realise upon Notes, loans or other instruments or positions held by JPMorgan Chase, thereby leading to increased concentrations of such positions. These concentrations could expose JPMorgan Chase to losses if the mark-to-market value of the Notes, loans or other instruments or positions decline causing JPMorgan Chase to take write downs. Moreover, the inability to reduce positions not only increases the market and credit risks associated with such positions, but also increases the level of risk-weighted assets on JPMorgan Chase's balance sheet, thereby increasing its capital requirements and funding costs, all of which could adversely affect the operations and profitability of JPMorgan Chase's businesses.

7.5 JPMorgan Chase's framework for managing risks may not be effective in mitigating risk and loss to it

JPMorgan Chase's risk management framework seeks to mitigate risk and loss to it. JPMorgan Chase has established processes and procedures intended to identify, measure, monitor, report and analyse the types of risk to which JPMorgan Chase is subject, including liquidity risk, credit risk, market risk, interest rate risk, operational risk, legal and fiduciary risk, reputational risk and private equity risk, among others. However, as with any risk management framework, there are inherent limitations to JPMorgan Chase's risk management strategies as there may exist, or develop in the future, risks that JPMorgan Chase has not appropriately anticipated or identified. If its risk management framework proves ineffective, JPMorgan Chase could suffer unexpected losses and could be materially adversely affected.

JPMorgan Chase's risk management strategies may not be effective because in a difficult or less liquid market environment other market participants may be attempting to use the same or similar strategies to deal with the difficult market conditions. In such circumstances, it may be difficult for JPMorgan Chase to reduce its risk positions due to the activity of such other market participants.

JPMorgan Chase's derivatives businesses may expose it to unexpected market, credit and operational risks that could cause JPMorgan Chase to suffer unexpected losses. Severe declines in asset values, unanticipated credit events, or unforeseen circumstances that may cause previously uncorrelated factors to become correlated (and vice versa) may create losses resulting from risks not appropriately taken into account in the development, structuring or pricing of a derivative instrument. In addition, certain of JPMorgan Chase's derivative transactions require the physical settlement by delivery of Notes, commodities or obligations that JPMorgan Chase does not own; if JPMorgan Chase is not able to obtain such Notes, commodities or obligations within the required timeframe for delivery, this could cause JPMorgan Chase to forfeit payments otherwise due to it and could result in settlement delays, which could damage JPMorgan Chase's reputation and ability to transact future business. In addition, in situations where derivatives transactions are not settled or confirmed on a timely basis, JPMorgan Chase may be subject to heightened credit and operational risk, and in the event of a default, JPMorgan Chase may find the contract more difficult to enforce. Further, as new and more complex derivative products are created, disputes regarding the terms or the settlement procedures of the contracts could arise, which could force JPMorgan Chase to incur unexpected costs, including transaction and legal costs, and impair its ability to manage effectively its risk exposure from these products.

Many of JPMorgan Chase's hedging strategies and other risk management techniques have a basis in historic market behaviour, and all such strategies and techniques are based to some degree on management's subjective judgment. For example, many models used by JPMorgan Chase are based on assumptions regarding correlations among prices of various asset classes or other market indicators. In times of market stress, such as occurred during 2008, or in the event of other unforeseen circumstances, previously uncorrelated indicators may become correlated, or conversely, previously correlated indicators may make unrelated movements. These sudden market movements or unanticipated or unidentified market or economic movements have in some circumstances limited the effectiveness of JPMorgan Chase's risk management strategies, causing it to incur losses. In addition, as JPMorgan Chase's businesses change and grow and the markets in which they operate continue to evolve, JPMorgan Chase's risk management framework may not always keep sufficient pace with those changes. For example, there is the risk that the credit and market risks associated with new products or new business strategies may not be appropriately identified, monitored or managed. JPMorgan Chase cannot provide assurance that its risk management framework, including its underlying assumptions or strategies, will at all times be accurate and effective.

7.6 JPMorgan Chase's operations are subject to risk of loss from unfavourable economic, monetary, political, legal and other developments in the United States and around the world

JPMorgan Chase's businesses and earnings are affected by the fiscal and other policies that are adopted by various regulatory authorities of the United States, non-U.S. governments and international agencies.

The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the United States. Its policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments. The market impact from such policies can also materially decrease the value of financial assets that JPMorgan Chase holds, such as debt Notes and mortgage servicing rights ("MSRs"). Federal Reserve policies also can adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans or satisfy their obligations to JPMorgan Chase. Changes in Federal Reserve policies are beyond JPMorgan Chase's control and, consequently, the impact of these changes on its activities and results of operations is difficult to predict.

JPMorgan Chase's businesses and revenue are also subject to the risks inherent in maintaining international operations and in investing and trading in Notes of companies worldwide. These risks include, among others, risk of loss from the outbreak of hostilities or acts of terrorism and various unfavourable political, economic, legal or other developments, including social or political instability, changes in governmental policies or policies of central banks, expropriation, nationalisation, confiscation of assets, price controls, capital controls, exchange controls, and changes in laws and regulations. Further, various countries in which JPMorgan Chase operates or invests, or in which it may do so in the future, have in the past experienced severe economic disruptions particular to that country or region, including extreme currency fluctuations, high inflation, or low or negative growth, among other negative conditions. Crime, corruption, war or military actions, acts of terrorism and a lack of an established legal and regulatory framework are additional challenges in some of these countries, particularly in certain emerging markets. Revenue from international operations and trading in non-U.S. Notes may be subject to negative fluctuations as a result of the above considerations. The impact of these fluctuations could be accentuated as some trading markets are smaller, less liquid and more volatile than larger markets. Also, any of the above-mentioned events or circumstances in one country can, and has in the past, affected JPMorgan Chase's operations and investments in another country or countries, including its operations in the United States. Any such unfavourable conditions or developments could have an adverse impact on JPMorgan Chase's business and results of operations.

7.7 JPMorgan Chase's power generation and commodities activities are subject to extensive regulation, potential catastrophic events and environmental risks and regulation that may expose JPMorgan Chase to significant cost and liability

JPMorgan Chase engages in power generation, and in connection with the commodities activities of its Investment Bank, engages in the storage, transportation, marketing or trading of several commodities, including metals, agricultural products, crude oil, oil products, natural gas, electric power, emission credits, coal, freight, and related products and indices. JPMorgan Chase has also invested in companies engaged in wind energy and in sourcing, developing and trading emission reduction credits. As a result of these activities, JPMorgan Chase is subject to extensive and evolving energy, commodities, environmental, and other governmental laws and regulations. JPMorgan Chase expects laws and regulations affecting its power generation and commodities activities to expand in scope and complexity. JPMorgan Chase may incur substantial costs in complying with current or future laws and regulations and the failure to comply with these laws and regulations may result in substantial civil and criminal fines and penalties. In addition, liability may be incurred without regard to fault under certain environmental laws and regulations for remediation of contaminations. JPMorgan Chase's power generation and commodities activities also further expose it to the risk of unforeseen and catastrophic events, including natural disasters, leaks, spills, explosions, release of toxic substances, fires, accidents on land and at sea, wars, and terrorist attacks that could result in personal injuries, loss of life, property damage, damage to JPMorgan Chase's reputation and suspension of operations. In addition, JPMorgan Chase's power generation activities are subject to disruptions, many of which are outside its control, from the breakdown or failure of power generation equipment, transmission lines or other equipment or processes, and the contractual failure of performance by third-party suppliers or service providers, including the failure to obtain and deliver raw materials necessary for the operation of power generation facilities. JPMorgan Chase actions to mitigate its risks related to the above-mentioned considerations may not prove adequate to address every contingency. In addition, insurance covering some of these risks may not be available, and the proceeds, if any, from insurance recovery may not be adequate to cover liabilities with respect to particular incidents. As a result, JPMorgan Chase's financial condition and results of operations may be adversely affected by such events.

7.8 JPMorgan Chase relies on its systems, employees and certain counterparties, and certain failures could materially adversely affect JPMorgan Chase's operations

JPMorgan Chase's businesses are dependent on its ability to process, record and monitor a large number of increasingly complex transactions. If any of its financial, accounting, or other data processing systems fail or have other significant shortcomings, JPMorgan Chase could be materially adversely affected. JPMorgan Chase is similarly dependent on its employees. JPMorgan Chase could be materially adversely affected if one of its employees causes a significant operational break-down or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates its operations or systems. Third parties with which JPMorgan Chase does business could also be sources of operational risk to JPMorgan Chase, including relating to breakdowns or failures of such parties' own systems or employees. Any of these occurrences could diminish JPMorgan Chase's ability to operate one or more of its businesses, or result in potential liability to clients, reputational damage and regulatory intervention, any of which could materially adversely affect JPMorgan Chase.

If personal, confidential or proprietary information of customers or clients in JPMorgan Chase's possession were to be mishandled or misused, JPMorgan Chase could suffer significant regulatory consequences, reputational damage and financial loss. Such mishandling or misuse could include circumstances where, for example, such information was erroneously provided to parties who are not permitted to have the information, either by fault of JPMorgan Chase's systems, employees, or counterparties, or such information was intercepted or otherwise inappropriately taken by third parties.

JPMorgan Chase may be subject to disruptions of its operating systems arising from events that are wholly or partially beyond its control, which may include, for example, computer viruses, electrical or telecommunications outages, or other damage to JPMorgan Chase's property or assets; natural disasters; health emergencies or pandemics; or events arising from local or larger scale political events, including terrorist acts. Such disruptions may give rise to losses in service to customers and loss or liability to JPMorgan Chase.

In a firm as large and complex as JPMorgan Chase, lapses or deficiencies in internal control over financial reporting may occur from time to time, and there is no assurance that significant deficiencies or material weaknesses in internal controls may not occur in the future. In addition, there is the risk that JPMorgan Chase's controls and procedures as well as business continuity and data security systems could prove to be inadequate. Any such failure could adversely affect JPMorgan Chase's operations and results of operations by requiring it to expend significant resources to correct the defect, as well as by exposing JPMorgan Chase to litigation, regulatory fines or penalties or losses not covered by insurance.

7.9 JPMorgan Chase operates within a highly regulated industry and its business and results are significantly affected by the laws and regulations to which it is subject. Financial services legislative and regulatory reforms may, if enacted or adopted, have a significant impact on JPMorgan Chase's business and results of operations and on its credit ratings.

JPMorgan Chase is subject to regulation under state and federal laws in the United States, as well as the applicable laws of each of the various other jurisdictions outside the United States in which JPMorgan Chase does business. These laws and regulations affect the type and manner in which JPMorgan Chase does business and may limit its ability to expand its product offerings, pursue acquisitions, or restrict the scope of operations and services provided.

Recent market and economic conditions have led to new legislation and numerous proposals for changes in the regulation of the financial services industry, including significant additional legislation and regulation in the United States. For example, new legislation and regulation affecting the credit card industry is expected to adversely affect JPMorgan Chase's Card Services business by reducing revenue and increasing compliance costs.

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act which will make significant structural reforms to the financial services industry. The legislation will, among other things: establish a Bureau of Consumer Financial Protection having broad authority to regulate providers of credit, savings, payment and other consumer financial products and services, and may narrow the scope of federal preemption of state consumer laws and expand the authority of state attorneys general to bring actions to enforce federal consumer protection legislation; create a structure to regulate systemically important financial companies, and provide regulators with the power to require such companies to sell or transfer assets and terminate activities if the regulators determine that the size or scope of activities of the company pose a threat to the safety and soundness of the company or the financial stability of the United States; require more comprehensive regulation of the over-the-counter derivatives market, including providing for more strict capital and margin requirements, the central clearing of standardized over-the-counter derivatives, and heightened supervision of all over-the-counter derivatives dealers and major market participants, including JPMorgan Chase; potentially require banking entities, such as JPMorgan Chase, to significantly restructure or restrict their derivatives businesses or to change the legal entities through which such businesses are conducted; prohibit banking entities, such as JPMorgan Chase, from engaging in certain proprietary trading activities and restricting their ownership of, investment in or sponsorship of hedge funds and private equity funds; restrict the interchange fees payable on debit card transactions; and give regulators the authority to phase out the treatment of trust preferred capital debt securities as Tier 1 capital for regulatory capital purposes. These or any other new legislative changes enacted (as well as any rules or regulations issued by U.S. regulators implementing any such legislation, and any actions by legislatures and regulatory bodies in other countries) could result in significant loss of revenue, limit JPMorgan Chase's ability to pursue business opportunities it might otherwise consider engaging in, impact the value of assets that it holds, require it to change certain of its business practices, impose additional costs on it, establish more stringent capital, liquidity and leverage ratio requirements, or otherwise adversely affect its businesses. Accordingly, JPMorgan Chase cannot provide assurance that any such new legislation or regulation would not have an adverse effect on its business, results of operations or financial condition.

If JPMorgan Chase does not comply with current or future legislation and regulations that apply to its operations, it may be subject to fines, penalties or material restrictions on its businesses in the jurisdiction where the violation occurred. In recent years, regulatory oversight and enforcement have increased substantially, imposing additional costs and increasing the potential risks associated with JPMorgan Chase's operations. As this regulatory trend continues, it could adversely affect JPMorgan Chase's operations and, in turn, its financial results.

7.10 JPMorgan Chase faces significant legal risks, both from regulatory investigations and proceedings and from private actions brought against it

JPMorgan Chase is named as a defendant or is otherwise involved in various legal proceedings, including class actions and other litigation or disputes with third parties, as well as investigations or proceedings brought by regulatory agencies. Actions brought against JPMorgan Chase may result in judgments, settlements, fines, penalties or other results adverse to it, which could materially adversely affect JPMorgan Chase's business, financial condition or results of operation, or cause it serious reputational harm. As a participant in the financial services industry, it is likely that JPMorgan Chase will continue to experience a high level of litigation and regulatory scrutiny and investigations related to its businesses and operations.

7.11 There is increasing competition in the financial services industry which may adversely affect JPMorgan Chase's results of operations

JPMorgan Chase operates in a highly competitive environment and it expects competitive conditions to continue to intensify as continued merger activity in the financial services industry produces larger, better-capitalised and more geographically diverse companies that are capable of offering a wider array of financial products and services at more competitive prices.

JPMorgan Chase also faces an increasing array of competitors. Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, private equity firms, insurance companies, mutual fund companies, credit card companies, mortgage banking companies, trust companies, Notes processing companies, automobile financing companies, leasing companies, e-commerce and other Internet-based companies, and a variety of other financial services and advisory companies. Technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products, and for financial institutions and other companies to provide electronic and Internet-based financial solutions, including electronic Notes trading. JPMorgan Chase's businesses generally compete on the basis of the quality and variety of JPMorgan Chase's products and services, transaction execution, innovation, reputation and price. Ongoing or increased competition in any one or all of these areas may put downward pressure on prices for JPMorgan Chase's products and services or may cause JPMorgan Chase to lose market share. Increased competition also may require JPMorgan Chase to make additional capital investment in its businesses in order to remain competitive. These investments may increase expense or may require JPMorgan Chase to extend more of its capital on behalf of clients in order to execute larger, more competitive transactions. JPMorgan Chase cannot provide assurance that the significant and increasing competition in the financial services industry will not materially adversely affect its future results of operations.

7.12 JPMorgan Chase's acquisitions and the integration of acquired businesses may not result in all of the benefits anticipated

JPMorgan Chase has in the past and may in the future seek to grow its business by acquiring other businesses. There can be no assurance that JPMorgan Chase's acquisitions will have the anticipated positive results, including results relating to: the total cost of integration; the time required to complete the integration; the amount of longer-term cost savings; the overall performance of the combined entity; or an improved price for JPMorgan Chase & Co.'s common stock. Integration of an acquired business can be complex and costly, sometimes including combining relevant accounting and data processing systems and management controls, as well as managing relevant relationships with employees, clients, suppliers and other business partners. Integration efforts could divert management attention and resources, which could adversely affect JPMorgan Chase's operations or results. JPMorgan Chase cannot provide assurance that any integration efforts for acquisitions already consummated or any new acquisitions would not result in the occurrence of unanticipated costs or losses.

JPMorgan Chase may continue to experience increased credit costs or need to take additional markdowns and allowances for loan losses on the assets and loans acquired in the Bear Stearns Merger and in connection with the Washington Mutual Transaction. JPMorgan Chase cannot provide assurance that as its integration efforts continue in connection with these transactions, other unanticipated costs or losses will not be incurred.

Acquisitions may also result in business disruptions that cause JPMorgan Chase to lose customers or cause customers to remove their accounts from JPMorgan Chase and move their business to competing financial institutions. It is possible that the integration process related to acquisitions could result in the disruption of JPMorgan Chase's ongoing businesses or inconsistencies in standards, controls, procedures and policies that could adversely affect JPMorgan Chase's ability to maintain relationships with clients, customers, depositors and employees. The loss of key employees in connection with an acquisition could adversely affect JPMorgan Chase's ability to successfully conduct its business.

7.13 Damage to JPMorgan Chase's reputation could damage its businesses

Maintaining a positive reputation is critical to JPMorgan Chase's attracting and maintaining customers, investors and employees. Damage to JPMorgan Chase's reputation can therefore cause significant harm to its business and prospects. Harm to JPMorgan Chase's reputation can arise from numerous sources, including, among others, employee misconduct, litigation or regulatory outcomes, failing to deliver minimum standards of service and quality, compliance failures, unethical behaviour, and the activities of customers and counterparties. Further, negative publicity regarding JPMorgan Chase, whether or not true, may result in harm to JPMorgan Chase's prospects.

Actions by the financial services industry generally or by certain members of or individuals in the industry can also affect JPMorgan Chase's reputation. For example, the role played by financial services firms in the financial crisis has damaged the reputation of the industry as a whole.

JPMorgan Chase could suffer significant reputational harm if it fails to properly identify and manage potential conflicts of interest. Management of potential conflicts of interests has become increasingly complex as JPMorgan Chase expands its business activities through more numerous transactions, obligations and interests with and among JPMorgan Chase's clients. The failure to adequately address, or the perceived failure to adequately address, conflicts of interest could affect the willingness of clients to deal with JPMorgan Chase, or give rise to litigation or enforcement actions. Therefore, there can be no assurance that conflicts of interest will not arise in the future that could cause material harm to JPMorgan Chase

7.14 JPMorgan Chase's ability to attract and retain qualified employees is critical to the success of its business and failure to do so may materially adversely affect its performance

JPMorgan Chase's employees are its most important resource and, in many areas of the financial services industry, competition for qualified personnel is intense. The imposition on JPMorgan Chase or on its employees of certain of the currently proposed restrictions or taxes on executive compensation may adversely affect JPMorgan Chase's ability to attract and retain qualified senior management and employees. If JPMorgan Chase is unable to continue to retain and attract qualified employees, its performance, including its competitive position, could be materially adversely affected.

7.15 JPMorgan Chase's financial statements are based in part on assumptions and estimates which, if wrong, could cause unexpected losses in the future

Pursuant to accounting principles generally accepted in the United States, JPMorgan Chase is required to use certain assumptions and estimates in preparing its financial statements, including in determining credit loss reserves, reserves related to litigations and the fair value of certain assets and liabilities, among other items. If assumptions or estimates underlying its financial statements are incorrect, JPMorgan Chase may experience material losses.

Certain of JPMorgan Chase's financial instruments, including trading assets and liabilities, available-for-sale Notes, certain loans, MSRs, private equity investments, structured notes and certain repurchase and resale agreements, among other items, require a determination of their fair value in order to prepare JPMorgan Chase's financial statements. Where quoted market prices are not available, JPMorgan Chase may make fair value determinations based on internally developed models or other means which ultimately rely to some degree on management judgment. Some of these and other assets and liabilities may have no direct observable price levels, making their valuation particularly subjective, being based on significant estimation and judgment. In addition, sudden illiquidity in markets or declines in prices of certain loans and Notes may make it more difficult to value certain balance sheet items, which may lead to the possibility that such valuations will be subject to further change or adjustment and could lead to declines in JPMorgan Chase's earnings.

7.16 Status of the Notes

The Notes (i) are unsecured and unsubordinated general obligations of JPMorgan Chase & Co., and not of any of its affiliates, (ii) are not savings accounts or deposits of JPMorgan Chase & Co. or any bank or non-bank subsidiary of JPMorgan Chase & Co. and (iii) will rank pari passu with all other unsecured and unsubordinated indebtedness of JPMorgan Chase & Co., except obligations that are subject to any priorities or preferences by law.

None of the Notes is a deposit insured by the FDIC, the U.S. Deposit Insurance Fund or any other governmental agency or instrumentality.

4.17 The Calculation Agent, which will generally be a J.P. Morgan affiliate, has broad discretionary powers which may not take into account the interests of the Holders

As the Calculation Agent will generally be a J.P. Morgan affiliate, potential conflicts of interest may exist between the Calculation Agent and the Noteholders, including with respect to the exercise of the very broad discretionary powers of the Calculation Agent. For example, the Calculation Agent has the authority (i) to determine whether certain specified events and/or matters so specified in the Conditions relating to the Notes have occurred and (ii) to determine any resulting adjustments and calculations as described in the Conditions. Potential purchasers should be aware that any determination made by the Calculation Agent may have an impact on the value and financial return of the Notes. Any such discretion exercised by, or any calculation made by, the Calculation Agent (in the absence of manifest or proven error) shall be binding on the Issuer and all Noteholders.

4.18 J.P. Morgan may have confidential information relating to the Notes

Certain J.P. Morgan affiliates may from time to time, by virtue of their status as underwriter, advisor or otherwise, possess or have access to information relating to the Notes. Such affiliates will not be obliged to disclose any such information to a purchaser of the Notes.

 

 

TERMS OF THE NOTES

 

1.	(a)	Issuer:	The Bear Stearns Companies IncJPMorgan Chase & Co.
2.	(a)	Series Number:	1625
	(b)	Tranche Number:	1
3.	Specified Currency or Currencies:		Euro ("€", "EUR")
4.	Aggregate Nominal Amount:
	Series:		EUR 10,000,000
	Tranche:		1
5.	Issue Price:		100 per cent. of the Aggregate Nominal Amount
6.	Specified Denominations:		The Specified Denominations of the Notes shall be EUR 100,000
7.	Issue Date:		30 April 2007
8.	Maturity Date:		30 April 2019
9.	Interest Basis:		Linked Notes (further particulars specified below)The Notes will not bear interest. Prior to the amendment and restatement of the Notes on 14 September 2010 the Interest Basis of the Notes was Linked Notes with interest payment dates falling on 30 April in each year from and including 30 April 2008, subject to the Modified Following Business Day Convention. With effect from and including the final Interest Payment Date falling prior to 14 September 2010 (being 30 April 2010) the Notes do not bear interest.
10.	Redemption / Payment Basis:		As set out in Schedule 1 heretoRedemption at par.
11.	Change of Interest Basis Redemption / Payment Basis:		Not Applicable
12.	Put / Call Options:		Not Applicable
13.	Status of the Notes:		Senior
14.	Method of distribution:		Non-syndicated
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
15.	Fixed Rate Note Provisions		Not Applicable
16.	Floating Rate Note Provisions		Not Applicable
17.	Zero Coupon Note Provisions		Not Applicable
18.	Indexed Note Provisions		Not Applicable
19.	Linked Interest Note Provisions:		Not Applicable
	(a)	Underlying Securities and/or Formula to be used to determine principal and/or interest or the Securities Amount (Linked Note):	See Schedule 1 and the Annexes hereto
	(b)	Interest Payment Dates:	30 April in each year from and including 30 April 2008 to and including 30 April 2019, in each case subject to the Modified Following Business Day Convention.
	(c)	Settlement by way of cash and/or physical delivery (Linked Note):	Cash (See Schedule 1 and the Annexes hereto)
	(d)	Issuer/Noteholder option to vary method of settlement and, if yes, method of election, and procedure, for variation of settlement (Linked Note):	Not Applicable
	(e)	Provisions where calculation by reference to the Underlying Securities and/or Formula is impossible or impracticable (Linked Note):	See Schedule 1 and the Annexes hereto
	(f)	Correction Cut Off Date (as defined in Condition 6(a)(iv)):	Not Applicable
	(g)	Any other terms for Linked Notes:	See Schedule 1 and the Annexes hereto
	(h)	Calculation Agent:	Bear, Stearns International Limited One Canada Square London E14 5AD
20.	Dual Currency Interest Note Provisions:		Not Applicable
PROVISIONS RELATING TO REDEMPTION
21.	Issuer Call:		Not Applicable
22.	Investor Put:		Not Applicable
23.	Final Redemption Amount of each Note:		As set out in Schedule 1 heretoEUR 100,000 per Specified Denomination
24.	Early Redemption Amount of each Note payable on redemption for taxation reasons or on Event of Default and/or the method of calculating the same (if required or if different from that set out in Condition 8(e)):		The Early Redemption Amount of the Notes payable on redemption for tax reasons or following an Event of Default shall be an amount equal to the market value of the Notes on the date of redemption, adjusted to account fully for any losses, expenses and costs to the Issuer (or any of its affiliates) of unwinding any underlying or related hedging and funding arrangements, all as determined by the Issuer in its sole and absolute discretion.

 

GENERAL PROVISIONS APPLICABLE TO THE NOTES
25.	(a)	Form of Notes:	Temporary Bearer Global Note exchangeable for a Permanent Bearer Global Note which is exchangeable for Definitive Notes only upon an Exchange Event.
	(b)	New Global Note:	No
26.	Other special provisions relating to Payment Business Days (Condition 7(c)):		As set out in Condition 7(c), save that Condition 7(c)(iii) shall not apply
27.	Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):		No
28.	Details retailing to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences of failure to pay, including any right of the Issuer to forfeit the Note and interest due on late payment:		Not Applicable
29.	Details relating to Instalment Notes		Not Applicable
30.	Redenomination applicable:		Not Applicable
31.	Other final terms:		Not ApplicableThe Calculation Agent shall be J.P. Morgan Securities Ltd.
DISTRIBUTION
32.	(a)	If syndicated, names of Managers:	Not Applicable
	(b)	Date of Subscription Agreement:	Not Applicable
	(c)	Stabilising Manager (if any):	Not Applicable
33.	If non-syndicated, name and address of relevant Dealer:		Bear, Stearns International Limited One Canada Square London E14 5AD
34.	Total commission and concession:		Not Applicable
35.	Whether TEFRA D rules applicable or TEFRA rules not applicable:		TEFRA D

 

 

36.	Additional selling restrictions:		SwitzerlandAustria
			The Notes may not, directly nor indirectly, be offered for subscription or purchase, nor may invitations to subscribe for or buy or sell the Notes be issued, nor any draft or definitive document be distributed in relation to any such offer, invitation or sale in Switzerland except in compliance with the laws of Switzerland and in such manner that no obligation for a the Issuer to prepare any prospectus in respect of the issuance of the Notes pursuant to Swiss law and regulation will arise.following selling restriction shall apply to offers of the Notes in Austria to the extent it contradicts those for the European Economic Area set out below. The Notes have not been and will not be offered to the public in Austria, except that an offer of the Notes may be made to the public in Austria: (a) in the case of bearer Notes in the period beginning one bank working day following: (i) the date of publication of the Base Prospectus including any supplements but excluding any Final Terms, in relation to those Notes issued by an Issuer which has been approved by Finanzmarktaufsichtsbehörde in Austria (the "FMA") or, where appropriate, approved in another Member State of the EEA and notified to the FMA, all in accordance with the Prospectus Directive and the pertaining adoption procedures of the EEA bodies; (ii) or being the date of publication of the relevant Final Terms for the Notes issued by an Issuer; and (iii) the date of filing of a notification with Oesterreichische Kontrollbank, all as prescribed by the Capital Market Act 1991, as amended ("CMA"; Kapitalmarktgesetz 1991); or (b) in the case of bearer Notes otherwise in compliance with the CMA. No Registered Notes have been and will not be offered in Austria, either by private placement or to the public in Austria. For the purposes of this provision, the expression "an offer of the Notes to the public" means the communication to the public in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes issued by the Issuer. If this Amended and Restated Prospectus and any supplement thereto has not been notified to or, as well as the pertaining Final Terms, has not been published in Austria, then any individual offer of bearer Notes to any person in Austria is made only to qualified investors in accordance with § 3/1/11 and § 1/1/5a CMA or in a private placement where a maximum of 99 investors is individually approached all of whom have individually been pre-selected in line with capital market-related qualitative criteria, in each case provided that a notification pursuant to the CMA was filed with Oesterreichische Kontrollbank one bank business day before the launch of the first offering or placement in Austria. Whenever the Notes will be resold or sold by the purchaser and whenever investment advice or a recommendation is given, or brokerage services are provided in relation to the Notes, the information contained in the Base Prospectus must not be used for purposes of a public offer or a public solicitation to subscribe for the Notes or an invitation to make an offer for the Notes or any marketing or advertisement which is equivalent to such an offer or solicitation pursuant to the CMA, provided that such public offer is unlawful pursuant to the CMA.   European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date")no offer of Notes which are the subject of the offering contemplated by this Amended and Restated Prospectus to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State: (b) if the final terms in relation to the Notes specify that an offer of the Notes may be made other than pursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State (a "Non-exempt Offer"), following the date of publication of a prospectus in relation to such Notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, provided that any such prospectus has subsequently been completed by the final terms contemplating such Non-exempt Offer, in accordance with the Prospectus Directive, in the period beginning and ending on the dates specified in such prospectus or final terms, as applicable; (c) at any time to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; (d) at any time to any legal entity which has two or more of (1) an average of at least 250 employees during the last (or, in Sweden, last two) financial year, (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last (or, in Sweden, last two) annual or consolidated accounts (and in respect of Denmark, if such entities are included in the register of qualified investors kept by the Danish FSA or otherwise are registered as qualified investors within the EU or EEA) (and in respect of Norwegian investors, if such investors are registered as professional investors with Oslo Stock Exchange (Oslo Børs)); (e) at any time to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; (f) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive; or (g) in Hungary at any time to any other entity which falls within the definition of a "qualified investor" as that term is defined in point 92 of Article 5 of the (Hungarian) Act on Capital Markets, provided that no such offer of Notes referred to in (b) to (e) (inclusive) above shall require the Issuer or a Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression an "offer of Notes to the public" in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe to the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
RESPONSIBILITY
The Issuer accepts responsibility for the information contained in this Amended and Restated Prospectus.
Signed on behalf of the Issuer:
By
Duly authorised

 

PART B - OTHER INFORMATION

 

1.	LISTING
	(i)	Listing:	London
	(ii)	Admission to trading:	Application will behas been made for the Notes to be admitted to trading on the London Stock Exchange's Gilt Edged and Fixed InterestMain Market, there. There can be no assurance that such listing and admission to trading will be grantedmaintained. Notes may be suspended from trading and/or de-listed at any time in accordance with applicable rules and regulations of the relevant stock exchange(s)
	(ii)	Estimate of total expenses related to admission to trading:	£2,100
2.	RATINGS
	The Notes to be issue will not be rated
3.	NOTIFICATION
	Not Applicable
4.	INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE
	So far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer.
5.	REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES
	(i)	Reasons for the Offer	The net proceeds from the issue of Notes will be applied by the Issuer for the general corporate purposes of the Group which may include making a profit, additions to working capital, the repayment of short term indebtedness, the replacement or repayment of long term debt, investments in, or extensions of credit to, subsidiaries of the Parent, the purchase and maintenance of positions in certain stocks, bonds, other securities or assets or certain options contracts or forward contracts or other derivative or synthetic instruments relating thereto in connection with hedging obligations relating to the Notes and other investment activities.
	(ii)	Estimated Net Proceeds	EUR 10,000,000
	(ii)	Estimated total expenses	Not Applicable
6.	YIELD (Fixed Rate Notes only)
	Not Applicable
7.	HISTORIC INTEREST RATES (Floating Rate Notes Only)
	Not Applicable
8.	PERFORMANCE OF INDEX/FORMULA, EXPLANATION OF EFFECT ON VALUE OF INVESTMENT AND ASSOCIATED RISKS AND OTHER INFORMATION CONCERNING THE UNDERLYING (Index-Linked Notes only)
	Information on the Reference Index can be obtained from Bloomberg. Current and future closing levels of the Reference Index can be obtained from Bloomberg page "ADAGlNST Index". The Reference Index was officially launched on 15July 2006, but closing levels of the Index calculated retrospectively from 02 January 1996 are also available on Bloomberg page "ADAGINST Index".Not Applicable With effect from 14 September 2010, the Notes are no longer linked to an Index.
9.	PERFORMANCE OF RATE[S] OF EXCHANGE AND EXPLANATION OF EFFECT ON VALUE OF INVESTMENT (Dual Currency Notes Only)
	Not Applicable
10.	OPERATIONAL INFORMATION
	(i)	ISIN Code:	XS0297741299
	(ii)	Common Code:	029774129
	(ii)	Any clearing system(s) other than Euroclear Bank S.A. / N.V. and Clearstream Banking, Société anonyme and the relevant identification number(s):	Not Applicable
	(iv)	Delivery:	Delivery against payment
	(v)	Names and addresses of additional Paying Agent(s) (if any):	Not Applicable
	(vi)	Intended to be held in a manner which would allow Eurosystem eligibility:	No
11.	NOTEHOLDERS' REPRESENTATIONS
	By purchasing the Notes, each Noteholder represents and agrees that:
	(a)	in deciding whether or not to purchase the Notes it has carefully read and has fully understood the Base Prospectus and this Amended and Restated Prospectus;
	(b)	it has been afforded the opportunity to ask questions of, and receive answers from, the Issuer and the Dealer concerning the terms of the Notes, the offering contemplated by the Base Prospectus and this Amended and Restated Prospectus and related matters;
	(c)	it has sufficient knowledge and experience and has taken such professional advice and has independently obtained such information as it thinks necessary to make its own evaluation of the merits and risks involved in purchasing the Notes and in making an investment of this type;
	(d)	it has itself been, and will at all times continue to be, solely responsible for making its own independent appraisal of and investigation into the business, financial condition, prospects, creditworthiness, status and affairs of the Issuer;
	(e)	in deciding whether or not to purchase the Notes, it is not relying on any communication (written or oral) of the Issuer or the Dealer as investment advice or as a recommendation to purchase the Notes, it being understood that information and explanations related to the terms and conditions of the Notes and the agreements that are described in the Base Prospectus and in these Final Termsthis Amended and Restated Prospectus shall not be considered investment advice or a recommendation to purchase the Notes;
	(f)	it represents that it is a non-U.S. person purchasing this Note in an offshore transaction in accordance with Regulation S under the Securities Act;
	(g)	it understands that the Notes have not been registered under the Securities Act, or any state securities laws, and that neither these Notes nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the absence of such registration or unless such transaction is exempt from, or not subject to, registration;
	(h)	it has all necessary power and authority to acquire the Notes and such acquisition will not contravene any law, rule or regulation binding on it or such account or any investment guideline or restriction applicable to it or such account;
	(i)	it acknowledges and agrees that neither the Dealer nor the Issuer havehas not made any representation to it regarding the legality of its investment in the Note under applicable legal investment or similar laws or regulations and that the appropriate characterization of the Notes under various legal invest restrictions may be subject to significant interpretative uncertainties.
	(j)	it understands that it may suffer a loss of its investment in the Notes in the event of an early redemption pursuant to Condition 8(b) or Condition 11;
	(k)	it understands that the Final Redemption Amount and Interest Amount will be dependent upon the performance of the Reference Index (as defined in Schedule 1 attached hereto), which contains substantial credit and interest rate risks;
	(lk)	it understands and agrees that the Issue Price may includehave included an amount related to hedging arrangements entered into by the Issuer and one of its affiliates and the Notes may be re-sold in the future at prices which may be greater or less than such price;
	(ml)	it understands and agrees that the Dealer may offerhave offered to sell the Notes to the initial purchaser at varying prices above or below the Issue Price and that the Notes may then be re-sold by the initial purchaser (and where relevant, subsequent purchasers) at prices above or below the Issue Price;
	(nm)	it understands that since the entity acting as Calculation Agent is an affiliate of the Issuer, potential conflicts of interest may exist between such affiliate in its capacity as the Calculation Agent, on the one hand., and the Noteholders on the other; and
	(on)	it acknowledges that, in acting hereunder, the Calculation Agent is acting as agent of the Issuer and such entity shall not thereby assume anyand obligations towards or relationship of agency or trust for or with the Noteholders; and.
	(p)	it understands that although long term debt of the Issuer has been rated "A1" by Moody's Investors Service, Inc., "A" by Standard and Poor's Rating E Services and "A+" by Fitch Ratings Limited, such ratings would not necessarily apply to the Notes if they were rated since the Final Redemption Amount is linked to the performance of the Reference Index.

 

SCHEDULE 1

DESCRIPTION OF THE ISSUER

The following provisions apply to the Notes. Unless otherwise defined in the Conditions, the capitalised terms used in this Schedule 1 and the Annexes shall have the meanings given to them below.

 

1. INTEREST AMOUNTS

On each Interest Payment Date, the Interest Amount payable in respect of each Note on such Interest Payment Date shall be an amount determined by the Calculation Agent in relation to the relevant interest period ending on or around such Interest Payment Date in accordance with the following formula:

3% x Basket Value

However, if on such Interest Payment Date the Basket Value after deduction of an amount equal to such Interest Amount as determined in accordance with the above formula would trigger a Clean-Up Call, the Interest Amount payable in respect of each Note on such Interest Payment Date shall be zero.

where, for the purposes of this paragraph:

"Basket Value" means the value of the Dynamic Basket, as determined by the Calculation Agent, as of the Interest Determination Date immediately preceding the relevant Interest Payment Date.

"Interest Determination Date" means, in respect of each Interest Payment Date, the day falling three Business Days prior to such Interest Payment Date.

2. FINAL REDEMPTION AMOUNT

The Final Redemption Amount payable in respect of each Note on the Maturity Date shall be, subject to the provisions of paragraph 3 below, an amount calculated by the Calculation Agent as being equal to whichever is the higher of:

(A) SD x 100 per cent.; and

(B) the Basket Value as of the Final Valuation Date.

Where:

"SD" means the Specified Denomination of EUR 100,000.

3. BASKET VALUE DETERMINATIONS

The Calculation Agent shall calculate the value of the Dynamic Basket (such value, the "Basket Value") on each Basket Valuation Date as being the value of the Reference Index Units, Swap Units and Cash Balance comprised in the Dynamic Basket as at any Basket Valuation Date. The Basket Value on the Issue Date is equals 97% of the Specified Denomination.

4. DEFINITIONS

For the purposes of this Prospectus, the following definitions shall apply:

"Allocation Mechanism" means the procedure whereby the Calculation Agent makes adjustments to the Dynamic Basket, in accordance with the provisions of Annex 1 below.

"Basket Fee" means, in respect of a Basket Valuation Date, a fee of 1.4 per cent. per annum of the Basket Value as at the immediately preceding Basket Valuation Date. Such Basket Fee will be deducted from the Cash Balance on every Basket Valuation Date.

"Basket Valuation Date" means each Business Day in the period from and including the Issue Date to and including the Final Valuation Date.

"Cash Balance" means such amount in the Dynamic Basket as is allocated to cash from time to time, which amount may be positive or negative, comprising:

(i) the cash amount (which may be positive or negative) resulting from the addition or removal of Reference Index Units pursuant to the Allocation Mechanism;

(ii) any Basket Fees (which will be negative); and

(iii) any Interest Amounts (which will be negative),

PROVIDED that the minimum amount of the Cash Balance at any time in the Dynamic Basket shall be minus EUR 200,000 (such negative amount the "Minimum Cash Amount").

If the Cash Balance should fall below the Minimum Cash Amount, the Calculation Agent may reduce the exposure to the Reference Index in order to increase the Cash Balance to an amount equal to the Minimum Cash Amount plus EUR 5,000

Any positive amount of the Cash Balance shall accrue interest, and any negative amount of the Cash Balance shall incur interest, at the Relevant Accrual Rate.

"Clean-Up Call" as defined in Annex 1.

"Dynamic Basket" means a basket consisting of a notional portfolio of Reference Index Units, Swap Units and the Cash Balance.

"EONIA" means a rate equal to the overnight rate as calculated by the European Central Bank and appearing on the Reuters Screen EONIA Page in respect of that day

"Final Reallocation Date" means the Final Valuation Date, or any earlier date determined as a result of a Restructuring Event or a Clean-Up Call.

"Final Valuation Date" means the date that is two Business Days before the Maturity Date.

"Reference Index" means The Bear Steams Institutional Adagio Index (Bloomberg Page: ADAGINST Index).

"Relevant Accrual Rate" means:

(i) in respect of a positive amount of the Cash Balance, EONIA minus 0.10 per cent. per annum;

(ii) in respect of a negative amount of the Cash Balance, EONIA plus 0.50 per cent. per annum.

"Reference Index Calculation Agent" means Standard & Poor's, a division of the McGraw-Hill Companies, Inc.

"Reference Index Units" means such synthetic EUR amount that replicates the value of the Reference Index. The value of a Reference Index Units at the Issue Date shall be deemed to be EUR 1. The allocation of the Dynamic Basket to Shares on the Issue Date will be determined by the Calculation Agent. As at the date of this Prospectus, it is expected that the Dynamic Basket will have an initial exposure of 177 per cent. of the Specified Denomination the Reference Index and minus 80 per cent. to the Cash Balance. Over time such allocation will vary in accordance with the Allocation Mechanism.

"Restructuring Event" means an event described in Annex 2 hereto.

"Swap Unit" means a synthetic swap contract with the Swap Unit Counterpart with a redemption amount of EUR 100,000 on the Final Valuation Date. The present value of each Swap Unit shall be determined by the Calculation Agent, with reference to the spot EURIBOR swap rate to discount the Swap Unit notional amount from its payment date to the current spot value date.

"Swap Unit Counterparty" means Bear, Steams International Limited or any affiliate thereof.

5. DUTIES OF THE CALCULATION AGENT

(A) The duties of the Calculation Agent on each Basket Valuation Date include the following:

(i) monitoring the composition of the Dynamic Basket, readjusting the allocations in the Dynamic Basket between Reference Index Units, Cash and Swap Units, as the case may be, all in accordance with the Allocation Mechanism;

(ii) calculating the Basket Value in accordance with the above provisions;

(iii) determining whether a Restructuring Event has occurred and effecting any necessary adjustments as a result of such Restructuring Event; and

(B) On each Basket Valuation Date, the Calculation Agent shall, if necessary, adjust the allocation of the Dynamic Basket in order for the percentage allocation of the Dynamic Basket to the Reference Index to remain within the Index Exposure Boundaries.

(C) The Calculation Agent will, on behalf of the Issuer, cause the Final Redemption Amount to be notified to the Issuer and the Agent.

(D) All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Prospectus and the Conditions by the Calculation Agent shall be made in the Calculation Agent's sole and absolute discretion and (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Agent and the Noteholders and (in the absence as aforesaid) no liability to the Issuer or the Noteholders shall attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.

 

ANNEX 1

ALLOCATION MECHANISM

History, Development and Organisational Structure

JPMorgan Chase is a leading global financial services firm and one of the largest banking institutions in the United States, with $2.1 trillion in assets, $164.7 billion in total stockholders' equity and operations in more than 60 countries as of 31 March 2010. JPMorgan Chase is a leader in investment banking, financial services for consumers and businesses, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, JPMorgan Chase serves millions of customers in the United States and many of the world's most prominent corporate, institutional and government clients.

JPMorgan Chase & Co. is a financial holding company and was incorporated under Delaware law on 28 October 1968 with file number 0691011. JPMorgan Chase & Co.'s principal bank subsidiaries are JPMorgan Chase Bank, National Association, a national bank with branches in 23 states in the United States, and Chase Bank USA, National Association, a national bank that is JPMorgan Chase's credit card issuing bank. JPMorgan Chase & Co.'s principal non-bank subsidiary is J.P. Morgan Securities Inc., its U.S. investment banking firm.

Under Article Four of its Restated Certificate of Incorporation, JPMorgan Chase & Co. may engage in any lawful act or activity for which a corporation may be organised under the General Corporation Law of the State of Delaware.

The principal executive office of JPMorgan Chase & Co. is located at 270 Park Avenue, New York, New York 10017, U.S.A. and its telephone number is +1 212 270-6000.

Principal Activities and Principal Markets

JPMorgan Chase's activities are organised, for management reporting purposes, into six business segments, as well as a Corporate/Private Equity segment. The wholesale businesses are the Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management segments, and the consumer businesses are the Retail Financial Services and Card Services segments. A description of these business segments, and the products and services they provide to their respective client bases, follows.

Investment Bank

J.P. Morgan is one of the world's leading investment banks, with deep client relationships and broad product capabilities. The Investment Bank's clients are corporations, financial institutions, governments and institutional investors. JPMorgan Chase offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, sophisticated risk management, market-making in cash securities and derivative instruments, prime brokerage and research. The Investment Bank also commits JPMorgan Chase's own capital to principal investing and trading activities on a limited basis.

Retail Financial Services

Retail Financial Services serves consumers and businesses through personal service at bank branches and through ATMs, online banking and telephone banking as well as through auto dealerships and school financial-aid offices. Customers can use more than 5,100 bank branches and 15,500 ATMs in the United States as well as online and mobile banking around the clock. More than 25,300 branch salespeople assist customers with checking and savings accounts, mortgages, home equity and business loans, and investments across the 23-state footprint from New York and Florida to California. Consumers also can obtain loans through more than 15,800 auto dealerships and nearly 2,200 schools and universities throughout the United States.

Card Services

Chase Card Services is one of the largest credit card issuers in the United States, with nearly $150 billion in managed loans and nearly 90 million open accounts. Customers used Chase cards to meet more than $328 billion worth of their spending needs in 2009. Through its merchant acquiring business, Chase Paymentech Solutions, Chase is a global leader in payment processing and merchant acquiring.

Commercial Banking

Commercial Banking serves nearly 25,000 clients in the United States, including corporations, municipalities, financial institutions and not-for-profit entities with annual revenue generally ranging from $10 million to $2 billion, and more than 30,000 real estate investors/owners. Delivering extensive industry knowledge, local expertise and dedicated service, Commercial Banking partners with JPMorgan Chase's other businesses to provide comprehensive solutions, including lending, treasury services, investment banking and asset management to meet its clients' U.S. domestic and international financial needs.

Treasury & Securities Services

Treasury & Securities Services is a global leader in transaction, investment and information services. Treasury & Securities Services is one of the world's largest cash management providers and a leading global custodian. Treasury Services provides cash management, trade, wholesale card and liquidity products and services to small and mid-sized companies, multinational corporations, financial institutions and government entities. Treasury Services partners with the Commercial Banking, Retail Financial Services and Asset Management businesses to serve clients firm-wide. As a result, certain Treasury Services revenue is included in other segments' results. Worldwide Securities Services holds, values, clears and services securities, cash and alternative investments for investors and broker-dealers, and it manages depositary receipt programs globally.

Asset Management

Asset Management, with assets under supervision of $1.7 trillion, is a global leader in investment and wealth management. Asset Management clients include institutions, retail investors and high-net-worth individuals in every major market throughout the world. Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity products, including money-market instruments and bank deposits. Asset Management also provides trust and estate, banking and brokerage services to high-net-worth clients, and retirement services for corporations and individuals. The majority of Asset Management's client assets are in actively managed portfolios.

Trend Information

The following forward-looking statements are based on the current beliefs and expectations of JPMorgan Chase's management and are subject to significant risks and uncertainties. These risks and uncertainties could cause JPMorgan Chase's actual results to differ materially from those set forth in such forward-looking statements.

JPMorgan Chase's outlook for the second quarter of 2010 should be viewed against the backdrop of the global and U.S. economies, financial markets activity, the geopolitical environment, the competitive environment and client activity levels. Each of these linked factors will affect the performance of JPMorgan Chase and its lines of business.

As noted in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the JPMorgan Chase & Co. March 2010 Form 10-Q, some normalisation of the financial markets has occurred, and there are early indications of broad-based improvements in underlying economic trends. Specifically, JPMorgan Chase began to see credit delinquencies stabilise and, in certain portfolios, improve. However, economic pressures on consumers continued to drive losses in the consumer loan portfolios in the first quarter of 2010. Further declines in U.S. housing prices in certain markets and increases in the unemployment rate remain possible; if this were to occur, it would adversely affect JPMorgan Chase's results. At the same time, the U.S. Congress and regulators (as well as legislative and regulatory bodies in other countries) continue to intensify their focus on the regulation of financial institutions; any legislation or regulations that may be adopted as a result could limit or restrict JPMorgan Chase's operations, impose additional costs on JPMorgan Chase in order to comply with such new laws or regulations, or significantly and adversely affect the revenues of certain lines of business. Accordingly, JPMorgan Chase continues to monitor closely U.S. and international economies and political environments.

In the Retail Banking business within Retail Financial Services, management expects continued strong revenue over the next several quarters, despite continued economic pressure on consumers and consumer spending levels. Additionally, JPMorgan Chase has made changes consistent with and, in certain respects, beyond the requirements of newly-enacted legislation, in its policies relating to non-sufficient funds and overdraft fees.

Although management estimates are subject to change, such changes may result in an annualised reduction in net income in Retail Banking of approximately $500 million by the fourth quarter of 2010.

In the Mortgage Banking & Other Consumer Lending business within Retail Financial Services, management expects revenue to continue to be negatively affected by continued elevated levels of repurchases of mortgages previously sold to, for example, government-sponsored entities. In the Real Estate Portfolios business within Retail Financial Services, management has not changed prior loss guidance, that quarterly net charge-offs could reach $1.4 billion for the home equity portfolio, $600 million for the prime mortgage portfolio and $500 million for the subprime mortgage portfolio over the next several quarters. However, if the initial improvements in delinquency and other loss trends currently being observed continue, net charge-offs may not reach these levels. Given current origination and production levels, combined with management's current estimate of portfolio run-off levels, the residential real estate portfolio is expected to decline by approximately 10-15 per cent. annually for the foreseeable future. Based on management's preliminary estimate, the effect of such a reduction in the residential real estate portfolio is expected to reduce 2010 net interest income in the portfolio by more than $1.0 billion from the 2009 level, excluding any impact from changes in the interest rate environment.

Finally, management expects noninterest expense in Retail Financial Services to remain modestly above 2009 levels, reflecting investments in new branch builds and sales force hires, as well as continued elevated servicing-, default- and foreclosed asset-related costs.

Management expects average outstandings in Card Services to decline by approximately 10-15 per cent. in 2010 due to run-off of both the Washington Mutual portfolio and lower-yielding promotional balances. In addition, management estimates Card Services' annual net income may be adversely affected by approximately $500 million to $750 million as a result of the recently enacted credit card legislation; this estimate is subject to change as components of the new legislation are finalised. The net charge-off rate for Card Services (excluding the Washington Mutual credit card portfolio) is anticipated to be approximately 9.5 per cent. in the second quarter of 2010, with the potential for improvement in the second half of 2010. The net charge-off rate for the Washington Mutual credit card portfolio is expected to remain at or above 20 per cent. over the next several quarters. Excluding the effect of any potential reserve actions, management currently expects Card Services to report a net loss in the second quarter of 2010; however, the loss will likely improve from the level reported in the first quarter of 2010. Results in the second half of 2010 will depend on the economic environment and potential reserve actions.

Revenue in the Investment Bank, Treasury & Securities Services and Asset Management will be affected by market levels, volumes and volatility, which will influence client flows and assets under management, supervision and custody. In addition, Investment Bank and Commercial Banking results will continue to be affected by the credit environment, which will influence levels of charge-offs, repayments and reserving actions with regard to credit loss allowances.

Earnings in Private Equity (within the Corporate/Private Equity segment) will likely continue to be volatile and be influenced by capital markets activity, market levels, the performance of the broader economy and investment-specific issues. The Corporate segment's net interest income levels and securities gains will generally trend with the size and duration of the investment securities portfolio in Corporate; however, the high level of trading and securities gains in the first quarter of 2010 is not likely to continue throughout 2010. While management currently anticipates that Corporate will realise additional securities gains in the second quarter of 2010, it is not anticipated that such gains will be of the same magnitude as those reported in the first quarter. Over the next several quarters, Corporate quarterly net income (excluding Private Equity, merger-related items and any significant non-recurring items) is expected to decline to approximately $300 million.

Lastly, with regard to any decision by JPMorgan Chase & Co.'s Board of Directors concerning any increase in the level of the common stock dividend, their determination will be subject to their judgement that the likelihood of another severe economic downturn has sufficiently diminished; that there is evidence of sustained underlying growth in employment for at least several months; that overall business performance and credit have stabilised or improved; and that such action is warranted, taking into consideration JPMorgan Chase's earnings outlook, need to maintain adequate capital levels (in light of business needs and regulatory requirements), alternative investment opportunities and appropriate dividend payout ratios. Ultimately, the Board would seek to return to JPMorgan Chase & Co.'s historical dividend ratio of approximately 30 per cent. to 40 per cent. of normalised earnings over time, though it would consider moving to that level in stages.

Save as disclosed in this Amended and Restated Prospectus, including the information incorporated by reference into this Amended and Restated Prospectus, there has been no material adverse change in the prospects of JPMorgan Chase & Co. since 31 December 2009.

Save as disclosed in this Amended and Restated Prospectus, including the information incorporated by reference into this Amended and Restated Prospectus, there has been no significant change in the financial or trading position of JPMorgan Chase & Co. and its subsidiaries taken as a whole since 31 March 2010.

Executive Officers and Directors

Executive Officers

The following persons are the Executive Officers of JPMorgan Chase & Co. as at the date of this Amended and Restated Prospectus. The business address of each Executive Officer is 270 Park Avenue, New York, New York 10017, U.S.A.

Name	Title
James Dimon	Chairman of the Board, President and Chief Executive Officer
Frank J. Bisignano	Chief Administrative Officer
Douglas L. Braunstein	Chief Financial Officer
Steven D. Black	Vice Chairman
Michael J. Cavanagh	Chief Executive Officer, Treasury & Securities Services
Stephen M. Cutler	General Counsel
William M. Daley	Head, Corporate Responsibility
John L. Donnelly	Director, Human Resources
Ina R. Drew	Chief Investment Officer
Mary Callahan Erdoes	Chief Executive Officer, Asset Management
Samuel Todd Maclin	Chief Executive Officer, Commercial Banking
Jay Mandelbaum	Head, Strategy and Business Development
Heidi Miller	President, International
Charles W. Scharf	Chief Executive Officer, Retail Financial Services
Gordon A. Smith	Chief Executive Officer, Card Services
James E. Staley	Chief Executive Officer, Investment Bank
Barry L. Zubrow	Chief Risk Officer

 

Directors

The following persons are the members of the Board of Directors of JPMorgan Chase & Co. as at the date of this Amended and Restated Prospectus. The business address of each Director is JPMorgan Chase & Co., 270 Park Avenue, New York, New York 10017, U.S.A.

Name Principal Occupation

Crandall C. Bowles Chairman of Springs Industries, Inc.

Stephen B. Burke Chief Operating Officer of Comcast Corporation

David M. Cote Chairman and Chief Executive Officer of Honeywell International Inc.

James S. Crown President of Henry Crown and Company

James Dimon Chairman of the Board, Chief Executive Officer and President of JPMorgan Chase & Co.

Ellen V. Futter President and Trustee of the American Museum of Natural History

William H. Gray, III Co-Chairman of GrayLoeffler, LLC

Laban P. Jackson, Jr. Chairman and Chief Executive Officer of Clear Creek Properties, Inc.

David C. Novak Chairman and Chief Executive Officer of Yum! Brands, Inc.

Lee R. Raymond Retired Chairman and Chief Executive Officer of Exxon Mobil Corporation

William C. Weldon Chairman and Chief Executive Officer of Johnson & Johnson

Conflicts of Interest

There are no material potential conflicts of interest between the duties to JPMorgan Chase & Co. of each of the Executive Officers and Directors named above and his/her private interests and/or other duties.

Corporate governance

Governance is a continuing focus at JPMorgan Chase, starting with the Board of Directors and extending throughout the firm. Several of JPMorgan Chase & Co.'s key governance practices are summarised below. In addition to the practices discussed below, JPMorgan Chase & Co. solicits periodic feedback from its shareholders on governance matters and on shareholder proposals, and engages in discussion with many of the proponents of shareholder proposals. Additional information concerning key corporate governance practices of JPMorgan Chase is contained in the Proxy Statement on Schedule 14A of JPMorgan & Co. dated 31 March 2010 (the "JPMorgan Chase & Co. 2010 Proxy Statement") filed with the SEC.

Corporate Governance Principles of the Board

The Board of Directors of JPMorgan Chase & Co. (the "Board") first adopted Corporate Governance Principles in 1997, and has revised them periodically since then to reflect evolving best practices and regulatory requirements, including the corporate governance listing standards of the New York Stock Exchange (the "NYSE"). The Corporate Governance Principles establish a framework for the governance of JPMorgan Chase & Co.

2009 and 2010 Initiatives

Actions taken during 2009 and 2010 include:

Special shareholder meetings - The Board amended the By-laws of JPMorgan Chase & Co. in January 2010 to permit shareholders holding at least 20 per cent. of the outstanding common shares (net of hedges) to call special meetings of shareholders. This action reduced the ownership threshold required to call special meetings from 33 1/3 per cent. of outstanding common shares, and was taken in response to a shareholder proposal presented at the 2009 annual shareholder meeting calling for a 10 per cent. threshold. That proposal did not pass but received a substantial favourable vote.

Say on Pay - JPMorgan Chase & Co.'s proxy statement for 2009 contained an advisory vote on executive compensation as required for participants in the U.S. Department of the Treasury's Capital Purchase Program under the Troubled Asset Relief Program, or TARP. JPMorgan Chase & Co.'s shareholders approved the compensation of executives named in the Summary compensation table in the 2009 proxy statement, as disclosed pursuant to the compensation disclosure rules of the SEC. JPMorgan Chase & Co. repaid the TARP funds as soon as it was permitted to do so, on June 17 June 2009. Although JPMorgan Chase & Co. is no longer required to do so, because of the current level of interest in executive compensation, JPMorgan Chase & Co. is submitting to its shareholders an advisory vote at the 2010 annual shareholders meeting on both JPMorgan Chase & Co.'s compensation principles and practices and their implementation for 2009.

Compensation recovery policies - JPMorgan Chase & Co.'s compensation recovery policies go beyond the Sarbanes-Oxley Act and other minimum requirements. In addition to JPMorgan Chase & Co.'s longstanding Board policy on recoupment in the event of a material restatement of its financial results or a termination for cause, JPMorgan Chase & Co. has implemented provisions in 2009 and 2010 that enable cancellation or recovery if the award was based on materially inaccurate performance metrics or a misrepresentation by an employee, the employee engaged in conduct that causes material financial or reputational harm to JPMorgan Chase or its business activities, or, for certain senior employees, the employee failed to properly identify, raise or assess risks material to JPMorgan Chase or its business activities.

Majority voting for directors

In 2007, the Board amended JPMorgan Chase & Co.'s By-laws to provide a majority voting standard for election of directors in uncontested elections (resignation by any incumbent director who is not re-elected) and plurality voting in any election that is contested.

Board leadership structure

JPMorgan Chase & Co. is governed by a Board of Directors. Directors discharge their duties at Board and committee meetings and also through telephone contact and other communications with the Chairman and Chief Executive Officer, management and others regarding matters of concern and interest to JPMorgan Chase & Co. Key elements of the Board leadership structure include:

• Chairman of the Board - While the Board has no set policy on whether or not to have a non-executive chairman, it has determined that the most effective leadership model for JPMorgan Chase & Co. currently is that Mr. Dimon serve as both Chairman and Chief Executive Officer.

• Independent oversight - Independent directors comprise more than 90 per cent. of the Board and 100 per cent. of the Audit Committee, Compensation & Management Development Committee, Corporate Governance & Nominating Committee, Public Responsibility Committee and Risk Policy Committee.

• Presiding Director - The Presiding Director presides at executive sessions of non-management directors and at Board meetings at which the Chairman is not present, and has the authority to call meetings of non-management directors. The position rotates semi-annually, between two independent directors, with the chair of the Compensation & Management Development Committee, currently Mr. Raymond, serving from January through June, and the chair of the Corporate Governance & Nominating Committee, currently Mr. Novak, serving from July through December.

• Committee Chairs - all are independent and are annually appointed by the Board, approve agendas and material for respective committee meetings, and act as liaison between committee members and the Board and between committee members and senior management.

Board's role in risk oversight

JPMorgan Chase's risk management is described in the "Management's discussion and analysis" section of the JPMorgan Chase & Co. 2009 Form 10-K.

Risk is an inherent part of JPMorgan Chase's business activities and JPMorgan Chase's overall risk tolerance is established in the context of its earnings power, capital, and diversified business model. JPMorgan Chase's risk management framework and governance structure are intended to provide comprehensive controls and ongoing management of the major risks inherent in its business activities. JPMorgan Chase's risk governance structure starts with each line of business being responsible for managing its own risks, with its own risk committee and a chief risk officer to manage its risk. Overlaying the line of business risk management are four corporate functions with risk management-related responsibilities. Risk Management is responsible for providing an independent firm-wide function of risk management and controls and is headed by JPMorgan Chase & Co.'s Chief Risk Officer, who is a member of JPMorgan Chase & Co.'s Operating Committee and reports to the Chief Executive Officer and the Board, primarily through the Board's Risk Policy Committee. The Chief Investment Office and Corporate Treasury are responsible for managing JPMorgan Chase's liquidity, interest rate and foreign exchange risk. Legal and Compliance has oversight for legal and fiduciary risk.

The Board exercises its oversight of risk management principally through the Board's Risk Policy Committee and Audit Committee. The Risk Policy Committee oversees senior management risk-related responsibilities, including reviewing management policies and performance against these policies and related benchmarks. The Audit Committee reviews with management the system of internal controls and financial reporting that is relied upon to provide reasonable assurance of compliance with JPMorgan Chase's operational risk management processes. In addition, the Compensation & Management Development Committee is responsible for reviewing JPMorgan Chase's compensation practices and the relationship among risk, risk management and compensation in light of JPMorgan Chase's objectives. Each of the committees oversees reputation risk issues within their scope of responsibility. The Board also reviews selected risk topics directly as circumstances warrant.

Non-management director meetings

Non-management directors generally meet in executive session as part of each regularly scheduled Board meeting, with discussion led by the Presiding Director.

Code of Conduct and Code of Ethics for Finance Professionals

The JPMorgan Chase Code of Conduct is a collection of rules and policy statements governing employees' conduct in relation to JPMorgan Chase's business. In addition, JPMorgan Chase has a Code of Ethics for Finance Professionals that applies to the Chairman and Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer of JPMorgan Chase & Co. and to all other professionals serving in a finance, accounting, corporate treasury, tax or investor relations role. The purpose of the Code of Ethics for Finance Professionals is to promote honest and ethical conduct and compliance with the law, particularly as related to the maintenance of JPMorgan Chase's financial books and records and the preparation of its financial statements.

Director independence

Pursuant to the corporate governance listing standards of the NYSE, a majority of the Board (and each member of the Audit Committee, Compensation & Management Development Committee and Corporate Governance & Nominating Committee) must be independent. The Board may determine a director to be independent if the director has no disqualifying relationship as defined in the NYSE corporate governance rules and if the Board has affirmatively determined that the director has no material relationship with JPMorgan Chase & Co., either directly or as a partner, shareholder, officer or employee of an organization that has a relationship with JPMorgan Chase & Co.

The Board reviewed the relationships between JPMorgan Chase & Co. and each director and determined that in accordance with the NYSE corporate governance listing standards and JPMorgan Chase & Co.'s independence standards, each non-management director (Crandall C. Bowles, Stephen B. Burke, David M. Cote, James S. Crown, Ellen V. Futter, William H. Gray, III, Laban P. Jackson, Jr., David C. Novak, Lee R. Raymond and William C. Weldon) has only immaterial relationships with JPMorgan Chase & Co. and accordingly each is an independent director under these standards. There are additional objective tests for independence in the NYSE rules and each of the named directors meets these objective tests for independence as well. Under the NYSE rules, a director employed by JPMorgan Chase & Co. cannot be deemed to be an independent director, and consequently, James Dimon is not an independent director of JPMorgan Chase & Co.

Committees of the Board

The Board has five principal committees. Each member of the Audit Committee, the Compensation & Management Development Committee and the Corporate Governance & Nominating Committee has been determined by the Board to be independent for purposes of the NYSE corporate governance listing standards and within the meaning of regulations of the SEC.

Audit Committee - provides oversight of the independent registered public accounting firm's qualifications and independence; the performance of the internal audit function and that of the independent registered public accounting firm; and management's responsibilities to assure that there is in place an effective system of controls reasonably designed to safeguard the assets and income of JPMorgan Chase & Co., assure the integrity of its financial statements, assure compliance with its operational risk management processes, and maintain compliance with its ethical standards, policies, plans and procedures, and with laws and regulations.

Compensation & Management Development Committee - reviews and approves JPMorgan Chase & Co.'s compensation and benefit programs; ensures the competitiveness of these programs; and advises the Board on the development of and succession for key executives. The Compensation & Management Development Committee periodically reviews and approves a statement of JPMorgan Chase & Co.'s compensation practices and principles and also reviews the relationship among risk, risk management and compensation in light of JPMorgan Chase & Co.'s objectives, including its safety and soundness and the avoidance of practices that would encourage excessive risk.

Corporate Governance & Nominating Committee - exercises general oversight with respect to the governance of the Board, including reviewing the qualifications of nominees for election to the Board and making recommendations to the Board regarding director compensation.

Public Responsibility Committee - reviews and considers JPMorgan Chase & Co.'s position and practices on charitable contributions, community development, legislation, protection of the environment, shareholder proposals involving issues of public interest and public responsibility and other similar issues as to which JPMorgan Chase relates to the community at large, and provides guidance to management and the Board as appropriate.

Risk Policy Committee - provides oversight of the responsibilities of the Chief Executive Officer and senior management to assess and manage JPMorgan Chase & Co.'s credit risk, market risk, interest rate risk, investment risk, liquidity risk, reputational risk, and fiduciary risk.

Committee Membership

The following table summarises the membership of each of the Board's principal committees:

Director	Audit	Compensation & Management Development	Corporate Governance & Nominating	Public Responsibility	Risk Policy
Crandall C. Bowles	Member
Stephen B Burke		Member	Member
David M. Cote				Member	Member
James S. Crown				Member	Chair
James Dimon
Ellen V. Futter				Member	Member
William H. Gray, III	Member			Chair
Laban P. Jackson, Jr.	Chair
David C. Novak		Member	Chair
Lee R. Raymond		Chair	Member
William C. Weldon		Member	Member

Copies of the Corporate Governance Principles, Code of Conduct, Code of Ethics for Finance Professionals, and the JPMorgan Chase & Co. Political Contributions Statement, as well as JPMorgan Chase & Co.'s By-laws and charters of JPMorgan Chase & Co. principal Board committees, can be found on JPMorgan Chase & Co.'s website at www.jpmorganchase.com.

Financial information

Selected financial information

The selected consolidated financial data set forth in the below table have been extracted from the audited consolidated financial statements of JPMorgan Chase & Co. for the year ended 31 December 2009 contained in the JPMorgan Chase & Co. 2009 Form 10-K and from the unaudited consolidated financial statements of JPMorgan Chase & Co. for the quarter ended 31 March 2010 contained in the JPMorgan Chase & Co. March 2010 Form 10-Q. This information should be read in conjunction with the notes to the consolidated financial statements and the other detailed financial information concerning JPMorgan Chase & Co. The financial data as of and for each of the quarters presented in the table are unaudited and do not necessarily indicate the results that may be expected for the entire year.

Selected income statement data

(in millions) Three months ended Year ended 31 March (unaudited) 31 December

2010 2009 2009 2008

Total net revenue $ 27,671 $ 25,025 $ 100,434 $ 67,252

Total noninterest expense 16,124 13,373 52,352 43,500

Pre-provision profit (a) 11,547 11,652 48,082 23,752

Provision for credit losses 7,010 8,596 32,015 19,445

Provision for credit losses - accounting

conformity (b) -- -- -- 1,534

Income before income tax expense/(benefit) 4,537 3,056 16,067 2,773

Income tax expense/(benefit) 1,211 915 4,415 (926)

Income before extraordinary gain 3,326 2,141 11,652 3,699

Extraordinary gain (c) -- -- 76 1,906

Net income $ 3,326 $ 2,141 $.11,728 $ 5,605

 

1.1 Allocation Mechanism Procedures

(A) The Calculation Agent shall, at any Basket Valuation Date in the period from and including the Issue Date to and including the Final Reallocation Date (such period, the "Allocation Period"):

(1) calculate the Target Index Exposure, (as defined below) and;

(2) make such adjustments to the allocation of the Dynamic Basket between Reference Index Units, Cash Balance and Swap Units in order for the percentage allocation of the Dynamic Basket between the Reference Index Units and cash on that Basket Valuation Date (such allocation, the: "Index Exposure" or "lEt" to remain within the Index Exposure Boundaries if such adjustment is required, provided that no Clean-Up Call or Restructuring Event has occurred.

(B) In the event that, on any Business Day in the Allocation Period, the Index Exposure is less than IEmin (as defined in "Index Exposure Boundaries" below), the Calculation Agent may increase the percentage allocation of the Reference Index Units in the Dynamic Basket so that the lEt reaches a level which would be equal to the Target Index Exposuret, all other factors remaining constant (such event, a "Releveraging Event").

In the event that the Target Index Exposure is greater than 100 per cent. the Calculation Agent may make such adjustments to the Dynamic Basket to reduce the amount of the Cash Balance and increase the exposure to the Reference Index provided that at all times the Cash Balance shall not be reduced below the Minimum Cash Amount. For the avoidance of doubt, under such circumstances, the Cash Balance shall be negative and the Dynamic Basket shall be leveraged.

(C) In the event that, on any Business Day in the Allocation Period, the Index Exposure is greater than IEmax (as defined in "Index Exposure Boundaries"), the Calculation Agent may reduce the percentage allocation of the Dynamic Basket to Reference Index Units so that the Index Exposure reaches a level which would be equal to the Target Index Exposuret, all other factors remaining constant (such event, a "Deleveraging Event"). Following a Deleveraging Event, the Cash Balance shall be increased by the same amount the value of Reference Index Units is reduced by.

1.2 Clean Up Call

If the Calculation Agent determines that the percentage allocation of Reference Index Units in the Dynamic Basket on any Basket Valuation Date has fallen below 5 per cent. of the Basket Value, the Dynamic Basket will be allocated entirely to one Swap Unit (the "Clean-Up Call") and the Calculation Agent shall no longer make adjustments under the Allocation Mechanism and shall no longer be required to determine the Index Exposure following such Clean-Up Call.

1.3 Additional Definitions

"Index Exposure Boundaries" means:

(i) The higher level of Index Exposure Boundaries is an amount determined in accordance with the following formula:

IEmax = 115% x Target Index Exposuret;

(ii) The lower level of Index Exposure Boundaries is an amount determined in accordance with the following formula:

IEmin = 85% x Target Index Exposure.

"Target Index Exposuret" (TIEt) means, with respect to each Basket Valuation Date in the Allocation Period, a percentage determined by the Calculation Agent in its sole and absolute discretion in accordance with the following formula:

TIEt = Max( 0,5 x Distance)

where for the purpose of this formula:

"Distance" means an amount determined in accordance with the following formula:

"NAVt" - Swap Unitt - Spreadt

NAVt

"NAVt" means, with respect to any Basket Valuation Date, the Basket Value on such Basket Valuation Date (if it is not a Reference Index Business Day, such amount will be calculated using the most recently available net asset value of the Reference Index. For the avoidance of doubt, the Calculation Agent may use estimated net asset values for such calculation);

"Reference Index Business Day" A date on which the Reference Index Calculation Agent calculates and publishes the value of the Reference Index in accordance with the rules of the Reference Index.

"Spreadt" means:

(i) in respect of the Issue Date only, the product of 3 per cent. and the Specified Denomination; and

(ii) respect of each Basket Valuation Date falling after the Issue Date, an amount determined by the Calculation Agent in accordance with the following formula:

Spreadt = 3 per cent. *SD*

Where:

"SD" means the Specified Denomination of EUR 100,000;

'"T" means the Maturity Date;

"t" means the relevant Basket Valuation Date; and

"to" means the Issue Date.

"Swap Unit" means, with respect to any Basket Valuation Date, the value of a Swap Unit on such Basket Valuation Date as determined by the Calculation based upon the swap rates on such Basket Valuation Date.

Selected balance sheet data

31 March 2010 31 December

(in millions) (unaudited) 2009 2008

Trading assets $ 426,128 $ 411,128 $ 509,983

Securities 344,376 360,390 205,943

Loans 713,799 633,458 744,898

Total assets 2,135,796 2,031,989 2,175,052

Deposits 925,303 938,367 1,009,277

Long-term debt 262,857 266,318 252,094

Common stockholders' equity (d) 156,569 157,213 134,945

Total stockholders' equity (d) 164,721 165,365 166,884

Notes:

(a) Pre-provision profit is total net revenue less noninterest expense. JPMorgan Chase & Co. believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses.

(b) Results for 2008 included an accounting conformity loan loss reserve provision related to the acquisition of Washington Mutual Bank's banking operations.

(c) On 25 September 2008, JPMorgan Chase acquired the banking operations of Washington Mutual. On 30 May 2008, a wholly-owned subsidiary of JPMorgan Chase merged with and into The Bear Stearns Companies Inc., which became a wholly-owned subsidiary of JPMorgan Chase. The Washington Mutual acquisition resulted in negative goodwill, and accordingly, JPMorgan Chase & Co. recorded an extraordinary gain. For additional information on these transactions, see Note 2 on pages 151 to 156 of the JPMorgan Chase & Co. 2009 Form 10-K.

(d) Effective 1 January 2010, JPMorgan Chase & Co. adopted new FASB guidance which amended the accounting for the transfer of financial assets and the consolidation of variable interest entities. Upon adoption of the new guidance, JPMorgan Chase & Co. consolidated its firm-sponsored credit card securitisation trusts, firm-administered multi-seller conduits and certain other consumer loan securitisation entities, primarily mortgage-related, by adding approximately $87.6 billion and $92.1 billion of assets and liabilities, respectively, and decreasing stockholders' equity by approximately $4.5 billion.

Auditors

The consolidated financial statements of JPMorgan Chase & Co. as at and for the years ended 31 December 2009 and 2008 and for each of the three years in the period ended 31 December 2009 and management's assessment of the effectiveness of internal control over financial reporting (which is included in Management's Report on Internal Control over Financial Reporting) as of 31 December 2009 and 31 December 2008, which are contained respectively in the JPMorgan Chase & Co. 2009 Form 10-K and the JPMorgan Chase & Co. 2008 Form 10-K, were audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their reports appearing therein. Copies of those reports can be found on page 137 of the JPMorgan Chase & Co. 2009 Form 10-K and on page 117 of the JPMorgan Chase & Co. 2008 Form 10-K. PricewaterhouseCoopers LLP have not resigned and were not removed during the periods covered by those reports.

PricewaterhouseCoopers LLP is an independent registered public accounting firm within the meaning of the applicable rules and regulations adopted by the SEC and the U.S. Public Company Accounting Oversight Board. PricewaterhouseCoopers LLP is a member of the American Institute of Certified Public Accountants and is registered with the Public Company Accounting Oversight Board. The address of PricewaterhouseCoopers LLP is 300 Madison Avenue, New York, NY 10017, United States of America.

Net Revenue

JPMorgan Chase & Co.'s total net revenue was $100.4 billion and $67.3 billion for the years ended 31 December 2009 and 2008, respectively.

Dividends

The following cash dividends per share of common stock of JPMorgan Chase & Co. were paid for each of the five consecutive fiscal years ended 31 December 2009:

Fiscal Year Dividend per share

2009 $0.20

2008 $1.52

2007 $1.48

2006 $1.36

2005 $1.36

Capital Structure

Stockholder's Equity

The following table provides information concerning the stockholder's equity of JPMorgan Chase & Co. as at 31 March 2010, and has been extracted from the unaudited consolidated financial statements of JPMorgan Chase & Co. for the quarter ended 31 March 2010 contained in the JPMorgan Chase & Co. March 2010 Form 10-Q. This information should be read in conjunction with the notes to the consolidated financial statements and the other detailed financial information concerning JPMorgan Chase & Co.

 (in millions, except share data) 31 March 2010

(unaudited)

Stockholders' equity

Preferred stock ($1 par value; authorised 200,000,000 shares) $ 8,152

Common stock ($1 par value; authorised 9,000,000,000 shares; issued

2,538,107 shares) 4,105

Capital surplus 96,450

Retained earnings 61,043

Accumulated other comprehensive income/(loss) 761

Shares held in RSU Trust, at cost (1,524,785 shares) (68)

Treasury stock, at cost (129,577,403 shares) (5,722)

_______

Total stockholders' equity $ 164,721

Common Stock

As of 31 March 2010, JPMorgan Chase & Co. had 3.98 billion shares of its common stock outstanding with a par value of $1.00 each and held 129.6 million shares of its common stock as treasury shares.

Convertible Securities and Warrants, Bonds, Borrowings and Contingent Liabilities

Refer to the notes to the audited consolidated financial statements of JPMorgan Chase & Co. for the year ended 31 December 2009 contained in the JPMorgan Chase & Co. 2009 Form 10-K and the unaudited consolidated financial statements of JPMorgan Chase & Co. for the quarter ended 31 March 2010 contained in the JPMorgan Chase & Co. March 2010 Form 10-Q, for information regarding warrants, bonds, borrowings and contingent liabilities outstanding as at 31 December 2009 and 31 March 2010.

Principal Subsidiaries

JPMorgan Chase & Co.'s principal bank subsidiaries are JPMorgan Chase Bank, National Association, a national bank with its registered office in Ohio and its principal place of business in New York; and Chase Bank USA, National Association, a national bank with its registered office and principal place of business in Delaware. JPMorgan Chase & Co.'s principal non-bank subsidiary is J.P. Morgan Securities Inc., a Delaware corporation with its principal place of business in New York. These subsidiaries are wholly owned by JPMorgan Chase & Co. and their accounts are included in the consolidated financial statements of JPMorgan Chase & Co. Exhibit 21.1 to the JPMorgan Chase & Co. 2009 Form 10-K contains a list of JPMorgan Chase & Co.'s subsidiaries which has been prepared in accordance with SEC rules.

Properties

At 31 December 2009, JPMorgan Chase owned or leased approximately 72.5 million total square feet of space, including offices, retail space and administrative and operational facilities, in the United States; approximately 3.7 million total square feet of space, including offices and an operations centre, in Europe, Middle East and Africa; and approximately 4.4 million total square feet of space, including offices and administrative and operational facilities, in the Asia Pacific region, Latin America and Canada. The properties occupied by JPMorgan Chase are used across all of the firm's business segments and for corporate purposes.

Litigation

The following summary of certain significant legal proceedings has been extracted from the JPMorgan Chase & Co. March 2010 Form 10-Q.

Bear Stearns Shareholder Litigation and Related Matters. Various shareholders of Bear Stearns have commenced purported class actions against Bear Stearns and certain of its former officers and/or directors on behalf of all persons who purchased or otherwise acquired common stock of Bear Stearns between 14 December 2006 and 14 March 2008 (the "Class Period"). During the Class Period, Bear Stearns had between 115 and 120 million common shares outstanding, and the price of those securities declined from a high of $172.61 to low of $30 at the end of the period. The actions, originally commenced in several U.S. federal courts, allege that the defendants issued materially false and misleading statements regarding Bear Stearns' business and financial results and that, as a result of those false statements, Bear Stearns' common stock traded at artificially inflated prices during the Class Period. In connection with these allegations, the complaints assert claims for violations of Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). Separately, several individual shareholders of Bear Stearns have commenced or threatened to commence arbitration proceedings and lawsuits asserting claims similar to those in the putative class actions.

In addition, Bear Stearns and certain of its former officers and/or directors have also been named as defendants in a number of purported class actions commenced in the U.S. District Court for the Southern District of New York seeking to represent the interests of participants in the Bear Stearns Employee Stock Ownership Plan ("ESOP") during the time period of December 2006 to March 2008. These actions allege that defendants breached their fiduciary duties to plaintiffs and to the other participants and beneficiaries of the ESOP by (a) failing to manage prudently the ESOP's investment in Bear Stearns securities; (b) failing to communicate fully and accurately about the risks of the ESOP's investment in Bear Stearns stock; (c) failing to avoid or address alleged conflicts of interest; and (d) failing to monitor those who managed and administered the ESOP. In connection with these allegations, each plaintiff asserts claims for violations under various sections of the U.S. Employee Retirement Income Security Act ("ERISA") and seeks reimbursement to the ESOP for all losses, an unspecified amount of monetary damages and imposition of a constructive trust.

Bear Stearns, former members of Bear Stearns' Board of Directors and certain of Bear Stearns' former executive officers have also been named as defendants in two purported shareholder derivative suits, subsequently consolidated into one action, pending in the U.S. District Court for the Southern District of New York. Plaintiffs are asserting claims for breach of fiduciary duty, violations of U.S. federal securities laws, waste of corporate assets and gross mismanagement, unjust enrichment, abuse of control and indemnification and contribution in connection with the losses sustained by Bear Stearns as a result of its purchases of sub-prime loans and certain repurchases of its own common stock. Certain individual defendants are also alleged to have sold their holdings of Bear Stearns common stock while in possession of material non-public information. Plaintiffs seek compensatory damages in an unspecified amount and an order directing Bear Stearns to improve its corporate governance procedures. Plaintiffs later filed a second amended complaint asserting, for the first time, purported class action claims for violation of Section 10(b) of the Exchange Act, as well as new allegations concerning events that took place in March 2008.

All of the above-described actions filed in U.S. federal courts were ordered transferred and joined for pre-trial purposes before the U.S. District Court for the Southern District of New York. Motions to dismiss have been filed in the purported securities class action, the shareholders' derivative action and the ERISA action.

Bear Stearns Merger Litigation. Seven putative class actions (five that were commenced in New York and two that were commenced in Delaware) were consolidated in New York State Court in Manhattan under the caption In re Bear Stearns Litigation. Bear Stearns, as well as its former directors and certain of its former executive officers, were named as defendants. JPMorgan Chase & Co. was also named as a defendant. The actions allege, among other things, that the individual defendants breached their fiduciary duties and obligations to Bear Stearns' shareholders by agreeing to the proposed merger. JPMorgan Chase was alleged to have aided and abetted the alleged breaches of fiduciary duty; breached its fiduciary duty as controlling shareholder/controlling entity; tortiously interfered with the Bear Stearns shareholders' voting rights; and to have been unjustly enriched. In December 2008, the court granted summary judgment in favour of all the defendants. Plaintiffs did not file an appeal and the matter is concluded.

Bear Stearns Hedge Fund Matters. Bear Stearns, certain current or former subsidiaries of Bear Stearns, including Bear Stearns Asset Management, Inc. ("BSAM") and Bear Stearns & Co. Inc., and certain current or former Bear Stearns employees are named defendants (collectively the "Bear Stearns defendants") in multiple civil actions and arbitrations relating to alleged losses of more than $1 billion resulting from the failure of the Bear Stearns High Grade Structured Credit Strategies Master Fund, Ltd. (the "High Grade Fund") and the Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage Master Fund, Ltd. (the "Enhanced Leverage Fund") (collectively, the "Funds"). BSAM served as investment manager for both of the Funds, which were organised such that there were U.S. and Cayman Islands "feeder funds" that invested substantially all their assets, directly or indirectly, in the Funds. The Funds are in liquidation.

There are five civil actions pending in the U.S. District Court for the Southern District of New York relating to the Funds. Three of these actions involve derivative lawsuits brought on behalf of purchasers of partnership interests in the two U.S. feeder funds. Plaintiffs in these actions allege that the Bear Stearns defendants mismanaged the Funds and made material misrepresentations to and/or withheld information from investors in the funds. These actions seek, among other things, unspecified compensatory damages based on alleged investor losses. A fourth action, brought by the Joint Voluntary Liquidators of the Cayman Islands feeder funds, makes allegations similar to those asserted in the derivative lawsuits related to the U.S. feeder funds, and seeks compensatory and punitive damages. A motion to dismiss or alternatively to stay is pending in one of the derivative suits relating to one of the U.S. feeder funds. In the remaining three cases, motions to dismiss have been granted in part and denied in part, and discovery is ongoing. The fifth action was brought by Bank of America and Banc of America Securities LLC (together "BofA") alleging breach of contract and fraud in connection with a May 2007 $4 billion securitisation, known as a "CDO-squared", for which BSAM served as collateral manager. This securitisation was composed of certain collateralised debt obligation ("CDO") holdings that were purchased by BofA from the High Grade Fund and the Enhanced Leverage Fund. Defendants' motion to dismiss in this action was largely denied; an amended complaint was filed; and discovery is ongoing in this case as well.

Ralph Cioffi and Matthew Tannin, the portfolio managers for the Funds, were tried on criminal charges of securities fraud and conspiracy to commit securities and wire fraud brought by the U.S. Attorney's Office for the Eastern District of New York. The U.S. Attorney's Office contended, among other things, that Cioffi and Tannin made misrepresentations concerning the Funds' performance, prospects and liquidity, as well as their personal investments in the Funds. On 10 November 2009, after a five-week trial, the jury found Cioffi and Tannin not guilty of all charges submitted to the jury. The SEC is proceeding with its action against Cioffi and Tannin.

Municipal Derivatives Investigations and Litigation. The U.S. Department of Justice's Antitrust Division and the SEC have been investigating JPMorgan Chase and Bear Stearns for possible antitrust and securities violations in connection with the bidding or sale of guaranteed investment contracts and derivatives to municipal issuers. A group of state attorneys general and the U.S. Office of the Comptroller of the Currency (the "OCC") have opened investigations into the same underlying conduct. JPMorgan Chase has been cooperating with all of these investigations. The Philadelphia Office of the SEC provided notice to J.P. Morgan Securities Inc. ("JPMSI") that it intends to recommend that the SEC bring civil charges in connection with its investigations. JPMSI has responded to that notice, as well as to a separate notice that that Philadelphia Office provided to Bear, Stearns & Co. Inc.

Purported class action lawsuits and individual actions (the "Municipal Derivatives Actions") have been filed against JPMorgan Chase and Bear Stearns, as well as numerous other providers and brokers, alleging antitrust violations in the reportedly $100 billion to $300 billion annual market for financial instruments related to municipal bond offerings referred to collectively as "municipal derivatives." The Municipal Derivatives Actions have been consolidated in the U.S. District Court for the Southern District of New York. The court denied in part and granted in part defendants' motions to dismiss the purported class and individual actions, permitting certain claims to proceed against JPMorgan Chase and others under U.S. federal and California state antitrust laws and under the California false claims act.

As previously reported, following public reports of JPMSI's settlement with the SEC in connection with certain Jefferson County, Alabama (the "County") warrant underwritings and related swap transactions, the County filed a complaint against JPMorgan Chase and several other defendants in the Circuit Court of Jefferson County, Alabama. The suit alleges that JPMorgan Chase made payments to certain third parties in exchange for which it was chosen to underwrite more than $3 billion in warrants issued by the County and chosen as the counterparty for certain swaps executed by the County. In its complaint, Jefferson County alleges that JPMorgan Chase concealed these third party payments and that, but for this concealment, the County would not have entered into the transactions. The County further alleges that the transactions increased the risks of its capital structure and that, following the downgrade of certain insurers that insured the warrants, the County's interest obligations increased and the principal due on a portion of its outstanding warrants was accelerated. JPMorgan Chase moved to dismiss.

A putative class action was filed on behalf of sewer ratepayers against JPMorgan Chase and Bear Stearns and numerous other defendants, based on substantially the same conduct described above (the "Wilson Action"). Defendants moved to dismiss the claims. The plaintiff in the Wilson Action recently filed a sixth amended complaint. The court has ordered that defendants file briefs in support of their motion to dismiss.

An insurance company that guaranteed the payment of principal and interest on warrants issued by the County has also filed an action against JPMorgan Chase and others in New York state court asserting that defendants fraudulently misled it into issuing the insurance coverage, based upon substantially the same alleged conduct described above and other alleged non-disclosures. Plaintiff claims that it insured an aggregate principal amount of nearly $1.2 billion in warrants, and seeks unspecified damages in excess of $400 million, as well as unspecified punitive damages.

The Alabama Public Schools and College Authority ("APSCA") brought a declaratory judgment action in the U.S. District Court for the Northern District of Alabama claiming that certain interest rate swaption transactions entered into with JPMorgan Chase Bank, N.A. are void on the grounds that the APSCA purportedly did not have the authority to enter into transactions or, alternatively, are voidable at the APSCA's option because of its alleged inability to issue refunding bonds in relation to the swaption. Following the denial of its motion to dismiss the action, JPMorgan Chase Bank, N.A. answered the complaint and filed a counterclaim seeking the amounts due under the swaption transactions. Discovery is under way.

Interchange Litigation. A group of merchants have filed a series of putative class action complaints in several U.S. federal courts. The complaints allege that Visa and MasterCard, as well as certain other banks and their respective bank holding companies, conspired to set the price of credit card interchange fees, enacted respective association rules in violation of Section 1 of the Sherman Antitrust Act (the "Sherman Act"), and engaged in tying/bundling and exclusive dealing. The complaint seeks unspecified damages and injunctive relief based on the theory that interchange would be lower or eliminated but for the challenged conduct. Based on publicly available estimates, Visa and MasterCard branded payment cards generated approximately $40 billion of interchange industry-wide in 2009. All cases have been consolidated in the U.S. District Court for the Eastern District of New York for pretrial proceedings. The amended consolidated class action complaint extended the claims beyond credit to debit cards. Defendants filed a motion to dismiss all claims that predated January 2004. The Court granted the motion to dismiss those claims.

Plaintiffs then filed a second amended consolidated class action complaint. The basic theories of the complaint remain the same, and defendants again filed motions to dismiss. The Court has not yet ruled on the motions. Fact discovery has closed, and expert discovery in the case is ongoing. The plaintiffs have filed a motion seeking class certification, and the defendants have opposed that motion. The Court has not yet ruled on the class certification motion.

In addition to the consolidated class action complaint, plaintiffs filed supplemental complaints challenging the MasterCard and Visa initial public offerings (the "IPO Complaints"). With respect to MasterCard, plaintiffs allege that the offering violated Section 7 of the U.S. Clayton Antitrust Act and Section 1 of the Sherman Act and that the offering was a fraudulent conveyance. With respect to the Visa IPO, plaintiffs are challenging the Visa IPO on antitrust theories parallel to those articulated in the MasterCard IPO pleading. Defendants have filed motions to dismiss the IPO Complaints. The Court has not yet ruled on those motions.

Mortgage-Backed Securities Litigation. JPMorgan Chase and affiliates, heritage-Bear Stearns and affiliates and heritage-Washington Mutual affiliates have been named as defendants in a number of cases relating to various roles they played in mortgage-backed securities ("MBS") offerings. These cases are generally purported class action suits, actions by individual purchasers of securities, or actions by insurance companies that guaranteed payments of principal and interest for particular tranches. Although the allegations vary by lawsuit, these cases generally allege that the offering documents for dozens of securitisation trusts in the aggregate more than $140 billion of securities contained material misrepresentations and omissions, including statements regarding the underwriting standards pursuant to which the underlying mortgage loans were issued, the ratings given to the tranches by rating agencies, and the appraisal standards that were used.

Purported class actions are pending against JPMorgan Chase, heritage-Bear Stearns, and certain of their affiliates and current and former employees in the U.S. District Courts for the Eastern and Southern Districts of New York. Defendants have moved to dismiss the action pending against heritage Bear Stearns entities and certain of their former employees. Heritage Washington Mutual affiliates, Washington Mutual.

Asset Acceptance Corp. and Washington Mutual Capital Corp., are defendants, along with certain former officers or directors of Washington Mutual Asset Acceptance Corp., in two now-consolidated purported class action cases pending in the Western District of Washington. In addition to allegations as to mortgage underwriting standards and ratings, plaintiffs in these cases allege that defendants failed to disclose Washington Mutual Bank's alleged coercion of or collusion with appraisal vendors to inflate appraisal valuations of the loans in the pools. Defendants have moved to dismiss. In addition to the purported class actions, certain JPMorgan Chase entities and several heritage Bear Stearns entities are defendants in actions filed in state courts in Pennsylvania and Washington brought by the Federal Home Loan Banks ("FHLB") of Pittsburgh and Seattle, respectively. These actions relate to each Federal Home Loan Bank's purchases of certificates in MBS offerings. Defendants moved to dismiss the complaint brought by the FHLB of Pittsburgh. Defendants removed the action by FHLB Seattle to federal court, where it was consolidated with 10 other identical lawsuits by that FHLB against other financial services firms. FHLB of Seattle has moved to remand the consolidated cases back to state court. Two additional and virtually identical suits have been filed in California state court by the Federal Home Loan Bank of San Francisco against various financial services firms, including certain heritage Bear Stearns entities.

EMC Mortgage Corporation ("EMC"), a subsidiary of JPMorgan Chase, is a defendant in four pending actions commenced by bond insurers that guaranteed payment on certain classes of MBS offerings sponsored by EMC. Two of the actions, commenced respectively by Ambac Assurance Corporation and Syncora Guarantee, Inc. ("Syncora"), are pending in the U.S. District Court for the Southern District of New York and involve five securitisations sponsored by EMC. The third action was commenced by Syncora, seeking access to certain loan files. The fourth was filed by CIFG Assurance North America, Inc. in state court in Texas, and involves one securitisation sponsored by EMC. In each action, plaintiffs claim the underlying mortgage loans had origination defects that purportedly violate certain representations and warranties given by EMC to plaintiffs and that EMC has breached the relevant agreements between the parties by failing to repurchase allegedly defective mortgage loans. Each action seeks unspecified damages and an order compelling EMC to repurchase those loans.

An action is pending in the U.S. District Court for the Southern District of New York brought on behalf of purchasers of certificates issued by various MBS securitisations sponsored by affiliates of IndyMac Bancorp ("IndyMac Trusts"). JPMSI, along with numerous other underwriters and individuals, is named as a defendant, both in its own capacity and as successor to Bear Stearns & Co. Inc. The defendants have moved to dismiss. JPMorgan Chase and JPMSI are defendants in an action pending in state court in Pennsylvania brought by FHLB-Pittsburgh, relating to its purchase of a certificate issued by one IndyMac Trust. Defendants have moved to dismiss. JPMorgan Chase, as alleged successor to Bear Stearns & Co. Inc., and other underwriters, along with certain individuals, are defendants in an action pending in state court in California brought by MBIA Insurance Corp. ("MBIA") relating to certain certificates issued by three IndyMac trusts, as to two of which Bear Stearns was an underwriter, and as to which MBIA provided guaranty insurance policies. MBIA purports to be subrogated to the rights of the certificate holders, and seeks recovery of sums it has paid and will pay pursuant to those policies.

A heritage-Bear Stearns subsidiary is a defendant in a purported class action that is pending in U.S. federal court in New Mexico against a number of financial institutions that served as depositors and/or underwriters for ten MBS offerings issued by Thornburg Mortgage, a bankrupt mortgage originator.

JPMorgan Chase and certain other heritage entities have been sued in other purported class actions for their roles an underwriter or depositor of third party MBS offerings but, other than the matters described in the above two paragraphs, JPMorgan Chase is indemnified in these other litigations.

Auction-Rate Securities Investigations and Litigation. Beginning in March 2008, several regulatory authorities initiated investigations of a number of industry participants, including JPMorgan Chase, concerning possible state and federal securities law violations in connection with the sale of auction-rate securities. The market for many such securities had frozen and a significant number of auctions for those securities began to fail in February 2008.

JPMorgan Chase, on behalf of itself and affiliates, agreed to a settlement in principle with the New York Attorney General's Office which provided, among other things, that JPMorgan Chase would offer to purchase at par certain auction-rate securities purchased from JPMSI, Chase Investment Services Corp. and Bear, Stearns & Co. Inc. by individual investors, charities, and small- to medium-sized businesses. JPMorgan Chase also agreed to a substantively similar settlement in principle with the Office of Financial Regulation for the State of Florida and the North American Securities Administrator Association ("NASAA") Task Force, which agreed to recommend approval of the settlement to all remaining states, Puerto Rico and the U.S. Virgin Islands. JPMorgan Chase finalised the settlement agreements with the New York Attorney General's Office and the Office of Financial Regulation for the State of Florida. The settlement agreements provide for the payment of penalties totalling $25 million to all states. JPMorgan Chase is currently in the process of finalising consent agreements with NASAA's member states. More than 30 of these consent agreements have been finalised to date.

JPMorgan Chase is also the subject of a putative securities class action in the U.S. District Court for the Southern District of New York and a number of individual arbitrations and lawsuits in various forums, brought by institutional and individual investors that together allege damages of more than $200 million, relating to JPMorgan Chase's sales of auction-rate securities. One action is brought by an issuer of auction-rate securities. The actions generally allege that JPMorgan Chase and other firms manipulated the market for auction-rate securities by placing bids at auctions that affected these securities' clearing rates or otherwise supported the auctions without properly disclosing these activities. Some actions also allege that JPMorgan Chase misrepresented that auction-rate securities were short-term instruments. Plaintiffs filed an amended consolidated complaint, which JPMorgan Chase moved to dismiss. JPMorgan Chase also filed a motion to transfer and coordinate before the Southern District five other purported auction-rate securities class actions. The Southern District subsequently denied the motion to dismiss the purported securities class action with leave to re-file upon resolution of the transfer motion.

Additionally, JPMorgan Chase was named in two putative antitrust class actions in the U.S. District Court for the Southern District of New York, which actions allege that JPMorgan Chase, in collusion with numerous other financial institution defendants, entered into an unlawful conspiracy in violation of Section 1 of the Sherman Act. Specifically, the complaints allege that defendants acted collusively to maintain and stabilise the auction-rate securities market and similarly acted collusively in withdrawing their support for the auction-rate securities market in February 2008. On 26 January 2010, the District Court dismissed both actions. The appeal is currently pending in the Second Circuit Court of Appeals.

City of Milan Litigation and Criminal Investigation. In January 2009, the City of Milan, Italy (the "City") issued civil proceedings against (among others) JPMorgan Chase Bank, N.A. and J.P. Morgan Securities Ltd. in the District Court of Milan. The proceedings relate to (a) a bond issue by the City in June 2005 (the "Bond") and (b) an associated swap transaction, which was subsequently restructured on a number of occasions between 2005 and 2007 (the "Swap"). The City seeks damages and/or other remedies against JPMorgan Chase (among others) on the grounds of alleged "fraudulent and deceitful acts" and alleged breach of advisory obligations by JPMorgan Chase (among others) in connection with the Swap and the Bond, together with related swap transactions with other counterparties. The civil proceedings continue and no trial date has been set as yet. JPMorgan Chase Bank, N.A. filed a challenge to the Italian Supreme Court's jurisdiction over it. In January 2009, JPMorgan Chase Bank, N.A. also received a notice from the Prosecutor at the Court of Milan placing it and certain current and former JPMorgan Chase personnel under investigation in connection with the above transactions. Since April 2009, JPMorgan Chase Bank, N.A. has been contesting an attachment order obtained by the Prosecutor, purportedly to freeze assets potentially subject to confiscation in the event of a conviction. The original Euro 92 million attachment has been reduced to Euro 44.9 million, and JPMorgan Chase Bank, N.A.'s application for a further reduction remains pending. The judge has directed four current and former JPMorgan Chase personnel and JPMorgan Chase Bank, N.A. (as well as other individuals and three other banks) to go forward to a full trial starting in May 2010. Although JPMorgan Chase is not charged with any crime and does not face criminal liability, if one or more of its employees were found guilty, JPMorgan Chase could be subject to administrative sanctions, including restrictions on its ability to conduct business in Italy and monetary penalties.

Physical Segregation of Assets in U.K. Affiliate. JPMorgan Chase discovered in July 2009 that one of its U.K. affiliates was not holding certain client money in a segregated trust status account with JPMorgan Chase Bank, N.A. as required by the rules of the U.K. Financial Services Authority (the "FSA"). JPMorgan Chase took immediate action to rectify the error and to notify the FSA. The matter is being reviewed by the FSA's Enforcement Division.

Washington Mutual Litigations. Subsequent to JPMorgan Chase's acquisition from the U.S. Federal Deposit Insurance Corporation ("FDIC") of substantially all of the assets and certain specified liabilities of Washington Mutual Bank, Henderson Nevada ("Washington Mutual Bank"), in September 2008, Washington Mutual Bank's parent holding company, Washington Mutual, Inc. ("WMI") and its wholly-owned subsidiary, WMI Investment Corp. (together, the "Debtors") both commenced voluntary cases under Chapter 11 of Title 11 of the U.S. Code in the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Case"). In the Bankruptcy Case, the Debtors have asserted rights and interests in certain assets. The assets in dispute include principally the following: (a) approximately $4 billion in securities contributed by WMI to Washington Mutual Bank; (b) the right to tax refunds arising from overpayments attributable to operations of Washington Mutual Bank and its subsidiaries; (c) ownership of and other rights in approximately $4 billion that WMI contends are deposit accounts at Washington Mutual Bank and one of its subsidiaries; and (d) ownership of and rights in various other contracts and other assets (collectively, the "Disputed Assets").

JPMorgan Chase commenced an adversary proceeding in the Bankruptcy Case against the Debtors and (for interpleader purposes only) the FDIC seeking a declaratory judgment and other relief determining JPMorgan Chase's legal title to and beneficial interest in the Disputed Assets. Discovery is underway in the JPMorgan Chase adversary proceeding.

The Debtors commenced a separate adversary proceeding in the Bankruptcy Case against JPMorgan Chase, seeking turnover of the same $4 billion in purported deposit funds and recovery for alleged unjust enrichment for failure to turn over the funds. The Debtors have moved for summary judgment in the turnover proceeding. Discovery is under way in the turnover proceeding.

In both JPMorgan Chase's adversary proceeding and the Debtors' turnover proceeding, JPMorgan Chase and the FDIC have argued that the Bankruptcy Court lacks jurisdiction to adjudicate certain claims. JPMorgan Chase moved to have the adversary proceedings transferred to U.S. District Court for the District of Columbia and to withdraw jurisdiction from the Bankruptcy Court to the District Court. That motion is fully briefed. In addition, JPMorgan Chase and the FDIC filed papers with the U.S. District Court for the District of Delaware appealing the Bankruptcy Court's rulings rejecting the jurisdictional arguments, and that appeal is fully briefed. JPMorgan Chase is also appealing a separate Bankruptcy Court decision holding, in part, that the Bankruptcy Court could proceed with certain matters while the first appeal is pending. Briefing on that appeal is under way.

The Debtors submitted claims substantially similar to those submitted in the Bankruptcy Court in the FDIC receivership for, among other things, ownership of certain Disputed Assets, as well as claims challenging the terms of the agreement pursuant to which substantially all of the assets of Washington Mutual Bank were sold by the FDIC to JPMorgan Chase. The FDIC, as receiver, disallowed the Debtors' claims and the Debtors filed an action against the FDIC in the U.S. District Court for the District of Columbia challenging the FDIC's disallowance of the Debtors' claims, claiming ownership of the Disputed Assets, and seeking money damages from the FDIC. JPMorgan Chase has intervened in the action. In January 2010, the District Court stayed the action pending developments in the Bankruptcy Court and ordered the parties to submit a joint status report every 120 days. In connection with the stay, the District Court denied WMI's and the FDIC's motions to dismiss without prejudice.

In addition, the Debtors moved in the Bankruptcy Court to take discovery from JPMorgan Chase purportedly related to a litigation originally filed in the 122nd State District Court of Galveston County, Texas (the "Texas Action"). JPMorgan Chase opposed the motion, but the Bankruptcy Court ordered that the discovery proceed. Debtors are also seeking related discovery from various third parties, including several government agencies. Plaintiffs in the Texas Action are certain holders of WMI common stock and the debt of WMI and Washington Mutual Bank who have sued JPMorgan Chase for unspecified damages alleging that JPMorgan Chase acquired substantially all of the assets of Washington Mutual Bank from the FDIC at an allegedly too low price. The FDIC intervened in the Texas Action, had it removed to the U.S. District Court for the Southern District of Texas, and then the FDIC and JPMorgan Chase moved to have the Texas Action dismissed or transferred. The Court transferred the Texas Action to the District of Columbia. Plaintiffs have moved to have the FDIC dismissed as a party and to remand the action to the state court, or, in the alternative, dismissed for lack of subject matter jurisdiction. JPMorgan Chase and the FDIC have moved to have the entire action dismissed. In April 2010, in the previously disclosed Texas Action, the U.S. District Court for the District of Columbia granted JPMorgan Chase's motion to dismiss the complaint, granted the FDIC's parallel motion to dismiss the complaint and denied plaintiffs' motion to dismiss the FDIC as a party and to remand the case to Texas state court.

Other proceedings related to Washington Mutual's failure also pending before the U.S. District Court for the District of Columbia include a lawsuit brought by Deutsche Bank National Trust Company against the FDIC alleging breach of various mortgage securitisation agreements and alleged violation of certain representations and warranties given by certain WMI subsidiaries in connection with those securitisation agreements. JPMorgan Chase has not been named a party to the Deutsche Bank litigation, but the complaint includes assertions that JPMorgan Chase may have assumed certain liabilities.

On 12 March 2010, at a hearing for the previously disclosed Bankruptcy Case, the Debtors announced on the record that they had reached a settlement with JPMorgan Chase and FDIC that, subject to documentation, would resolve the previously disclosed disputes. On 26 March 2010, the Debtors filed a Plan and Proposed Disclosure Statement, together with a proposed global settlement agreement (the "Proposed Global Settlement Agreement"), by and among Debtors, JPMorgan Chase, and the FDIC, which incorporated the terms of the announced settlement. Debtors disclosed that while the provisions of the Proposed Global Settlement Agreement were agreed to by WMI, JPMorgan Chase and significant creditor groups of WMI, the FDIC has not agreed to all of the provisions contained in the Proposed Global Settlement Agreement. Settlement discussions are ongoing among the parties. It is unclear if those discussions will result in adherence to the terms contained in the Proposed Global Settlement Agreement or any settlement at all. While these discussions are ongoing, the previously disclosed appeals and motion to withdraw the reference pending before the U.S. District Court for the District of Delaware have been stayed. Likewise, the stay of the action Debtors commenced against the FDIC in the U.S. District Court for the District of Columbia also remains in place.

Securities Lending Litigation. JPMorgan Chase Bank N.A. has been named as a defendant in four putative class actions asserting ERISA and non-ERISA claims pending in the U.S. District Court for the Southern District of New York related to JPMorgan Chase's securities lending business. Three of the pending actions relate to losses of plaintiffs' money (i.e., cash collateral for securities loan transactions) in medium-term notes of a structured investment vehicle known as Sigma Finance Inc. ("Sigma"). The fourth action concerns losses of money invested in Lehman Brothers medium-term notes, as well as asset-backed securities offered by nine other issuers. JPMorgan Chase has moved to dismiss the claims regarding Lehman Brothers medium-term notes and the asset-backed securities.

Investment Management Litigation. Four cases have been filed claiming that investment portfolios managed by JPMorgan Investment Management Inc. ("JPMIM") were inappropriately invested in securities backed by subprime residential real estate collateral. Plaintiffs claim that JPMIM and related defendants are liable for the loss in market value of these securities. The first case was filed by NM Homes One, Inc. in U.S. federal court in New York. The Southern District Court granted JPMIM's motion to dismiss nine of plaintiff's ten causes of action. Five of the claims were dismissed without prejudice to plaintiff's right to replead. The remaining four claims were dismissed with prejudice. The second case, filed by Assured Guaranty (U.K.) in New York state court, was dismissed and Assured has appealed the court's decision. In the third case, filed by Ambac Assurance UK Limited in New York state court, the Court granted JPMIM's motion to dismiss in March 2010, and plaintiff has filed a notice of appeal. The fourth case was filed by CMMF LLP in New York state court in December 2009; the Court granted JPMIM's motion to dismiss the claims, other than claims for breach of contract and misrepresentation. Both CMMF and JPMIM have filed notices of appeal.

Lehman Brothers Bankruptcy Proceedings. In March 2010, the Examiner appointed by the Bankruptcy Court presiding over the Chapter 11 bankruptcy proceedings of Lehman Brothers Holdings Inc ("LBHI") and several of its subsidiaries (collectively, "Lehman") released a report as to his investigation into Lehman's failure and related matters. The Examiner concluded that one common law claim potentially could be asserted against JPMorgan Chase for contributing to Lehman's failure, though he characterised the claim as "not strong." The Examiner also opined that certain cash and securities collateral provided by LBHI to JPMorgan Chase in the weeks and days preceding LBHI's demise potentially could be challenged under the Bankruptcy Code's fraudulent conveyance or preference provisions, though JPMorgan Chase is of the view that its right to such collateral is protected by the Bankruptcy Code's safe harbor provisions. In addition, JPMorgan Chase may also face claims in the liquidation proceeding pending before the same Bankruptcy Court under the U.S. Securities Investor Protection Act ("SIPA") for LBHI's U.S. broker-dealer subsidiary, Lehman Brothers Inc. ("LBI"). The SIPA Trustee has advised JPMorgan Chase that certain of the securities and cash pledged as collateral for JPMorgan Chase's claims against LBI may be customer property free from any security interest in favour of JPMorgan Chase.

Enron Litigation. JPMorgan Chase and certain of its officers and directors are involved in several lawsuits that together seek damages of more than $1.6 billion arising out of its banking relationships with Enron Corp. and its subsidiaries ("Enron"). A number of actions and other proceedings against JPMorgan Chase have been resolved, including a class action lawsuit captioned Newby v. Enron Corp. and adversary proceedings brought by Enron's bankruptcy estate. The remaining Enron-related actions include individual actions by Enron investors, creditors and counterparties.

The remaining litigation also includes a suit against JPMorgan Chase alleging, in relevant part, breach of contract and breach of fiduciary duty based upon JPMorgan Chase's role as Indenture Trustee in connection with an indenture agreement between JPMorgan Chase and Enron. The case has been dismissed. In April 2010, the New York Court of Appeals affirmed the order dismissing the action.

A putative class action on behalf of JPMorgan Chase employees who participated in JPMorgan Chase's 401(k) plan asserted claims under ERISA for alleged breaches of fiduciary duties and negligence by JPMorgan Chase, its directors and named officers. JPMorgan Chase moved for judgment on the pleadings and the district court granted the motion in March 2010. Plaintiffs have appealed.

IPO Allocation Litigation. JPMorgan Chase and certain of its securities subsidiaries, including Bear Stearns, were named, along with numerous other firms in the securities industry, as defendants in a large number of putative class action lawsuits filed in the U.S. District Court for the Southern District of New York alleging improprieties in connection with the allocation of securities in various public offerings, including some offerings for which a JPMorgan Chase entity served as an underwriter. They also claim violations of securities laws arising from alleged material misstatements and omissions in registration statements and prospectuses for the initial public offerings ("IPOs") and alleged market manipulation with respect to aftermarket transactions in the offered securities. Antitrust lawsuits based on similar allegations have been dismissed with prejudice. A settlement was reached in the securities cases, which the District Court approved; JPMorgan Chase's share of the settlement is approximately $62 million. Appeals have been filed in the U.S. Court of Appeals for the Second Circuit seeking reversal of the decision approving the settlement.

In addition to the various cases, proceedings and investigations discussed above, JPMorgan Chase & Co. and its subsidiaries are named as defendants or otherwise involved in a number of other legal actions and governmental proceedings arising in connection with their businesses. JPMorgan Chase believes it has meritorious defences to the claims asserted against it in its currently outstanding litigations, investigations and proceedings and it intends to defend itself vigorously in all such matters. Additional actions, investigations or proceedings may be initiated from time to time in the future.

In view of the inherent difficulty of predicting the outcome of legal matters, particularly where the claimants seek very large or indeterminate damages, or where the cases present novel legal theories, involve a large number of parties or are in early stages of discovery, JPMorgan Chase cannot state with confidence what the eventual outcome of these pending matters will be, what the timing of the ultimate resolution of these matters will be or what the eventual loss, fines, penalties or impact related to each pending matter may be. JPMorgan Chase believes, based upon its current knowledge, after consultation with counsel and after taking into account its current litigation reserves, that the legal actions, proceedings and investigations currently pending against it should not have a material adverse effect on JPMorgan Chase's consolidated financial condition. However, in light of the uncertainties involved in such proceedings, actions and investigations, there is no assurance that the ultimate resolution of these matters will not significantly exceed the reserves currently accrued by JPMorgan Chase; as a result, the outcome of a particular matter may be material to JPMorgan Chase's operating results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of JPMorgan Chase's income for that period.

Save as disclosed above, JPMorgan Chase & Co. is not and has not been involved in any governmental, legal or arbitration proceedings relating to claims or amounts that are material during the 12 month period ending on the date of this Amended and Restated Prospectus which may have, or have had in the recent past, significant effects on the financial position or profitability of JPMorgan Chase & Co. nor, so far as JPMorgan Chase & Co. is aware, are any such governmental, legal or arbitration proceedings pending or threatened.

Additional Information

The periodic reports that JPMorgan Chase & Co. files with the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as they become available, can be viewed on the SEC's website at www.sec.gov. Those reports and additional information concerning JPMorgan Chase & Co. can also be viewed on JPMorgan Chase & Co.'s investor relations website at http://investor.shareholder.com/jpmorganchase/.

 

 

ANNEX 2

RESTRUCTURING EVENTS

A Restructuring Event shall be determined to have taken place in the event that the Calculation Agent determines that one of the following events has occurred (each a "Restructuring Event") in respect of the relevant Reference Index:

 

(A) The Reference Index or Reference Index Calculation Agent is wound-up; or

(B) The Reference Index ceases to be calculated or published on a daily basis; or

(C) There is a significant modification of the conditions of the Reference Index and/or the possibility or the cost of entering into a hedge transaction with respect to the Reference Index or any of its constituents.

 

ANNEX 3

INDEX DISCLAIMER

The Bear Steams Institutional Adagio Index is the exclusive property of Bear Steams which has contracted with Standard & Poor's to maintain and calculate the Bear Steams Institutional Adagio Index. Standard & Poor's shall have no liability for any errors or omissions in calculating the Bear Steams Institutional Adagio Index.

STANDARD AND POOR'S DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN. STANDARD AND POOR'S MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY THE ISSUER, HOLDERS OF THE NOTES OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED THEREIN. STANDARD AND POOR'S MAKES NO EXPRESS OR IMPLIED WARRANTIES, AN HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL STANDARD AND POOR'S HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVENT IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

 

 

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