<PAGE> 1
PROSPECTUS SUPPLEMENT Filed pursuant to Rules 424(b)(5) and (c)
To Prospectus Dated February 23, 1996 Registration No. 333-1189
$82,500,000
TELXON CORPORATION
5 3/4% Convertible Subordinated Notes Due 2003
and
Shares of
Common Stock
Issuable Upon Conversion Thereof
------------
This Prospectus Supplement ("Supplement") covers the resales by BT
Securities Corporation ("BTS"), Smith Barney, Inc. ("SB") and Jefferies &
Company, Inc. ("JC") (the "Selling Securityholders"), each as a principal, of up
to $1,200,000 aggregate principal amount, $5,915,000 aggregate principal amount
and $1,500,000 aggregate principal amount respectively, of 5 3/4% Convertible
Subordinated Notes due 2003 (the "Notes") of Telxon Corporation, a Delaware
corporation (the "Company"). The Notes were issued in a private placement on
December 12, 1995 (the "Debt Offering") and subsequently registered, together
with up to 3,000,000 shares of the Common Stock, par value $.O1 per share (the
"Common Stock"), of the Company which are initially issuable upon the conversion
of the Notes (the "Conversion Shares"), for resale from time to time by the
holders thereof pursuant to Registration No. 333-1189 (the "Registration
Statement"). This Supplement should be read in conjunction with the Prospectus,
dated February 23, 1996 (the "Prospectus"), to be delivered with this
Supplement. All capitalized terms used but not defined in this Supplement shall
have the meanings given them in the Prospectus.
Based on information provided to the Company, the total principal amount of
Notes held by BTS is $1,200,000, by SB is $9,500,000 and by JC is $1,500,000,
of which BTS will sell its entire principal amount of the Notes, SB will sell
$5,915,000 principal amount of the Notes and JC will its entire principal amount
of the Notes, all pursuant to this Supplement. Additional selling
securityholders or other information concerning the Selling Securityholders may
be set forth from time to time in additional prospectus supplements. The total
outstanding aggregate principal amount of Notes is $82,500,000,
The Notes are unsecured and subordinated to all existing and future Senior
Indebtedness and are effectively subordinated to all existing and future
indebtedness and other liabilities of subsidiaries of the Company. At March 31,
1996, the Company had approximately $5.7 million of outstanding indebtedness
constituting Senior Indebtedness and the subsidiaries of the Company had
approximately $42.8 million of outstanding indebtedness and other liabilities
(excluding intercompany liabilities and approximately $3.1 million in
subsidiaries' notes and letters of credit guaranteed by the Company which are
included in the amount of Senior Indebtedness) to which the Notes were
effectively subordinated. The Indenture contains no limitations on the
incurrence of additional indebtedness or other liabilities by the Company and
its subsidiaries, See "Description
<PAGE> 2
of Notes-Subordination of Notes" in the Prospectus. The Notes are convertible
into Common Stock at the option of the holder at any time after February 10,
1996 and at or before maturity, unless previously redeemed, at a conversion
price of $27.50 per share (equivalent to a conversion rate of approximately
36.36 shares per $1,000 principal amount of Notes), subject to adjustment in
certain events. See "Description of Notes-Conversion of Notes" in the
Prospectus. The Notes are redeemable at the Company's option at any time on or
after January 5, 1999, as a whole or, from time to time, in part, at prices
(expressed as percentages of the principal amount), together with accrued
interest at prices ranging from 103.2857% during 1999 to 100.8214% during 2002.
Additionally, in the event any Repurchase Event (as defined) occurs, each holder
of Notes may require the Company to repurchase all or any part of the holder's
Notes at 100% of the principal amount thereof plus accrued interest to the
repurchase date. See "Description of Notes-Repurchase at Option of Holders Upon
Repurchase Event" in the Prospectus. Interest is payable semiannually on January
1 and July 1 of each year at 5 3/4% per annum commencing July 1, 1996. See
"Description of Notes-General" in the Prospectus.
Following their original issuance by the Company, the Notes have been
resold by the initial and subsequent purchasers thereof to qualified
institutional buyers in transactions exempt from registration under Rule 144A
under the Securities Act. Prior to this offering, there has been no public
market for the Notes. However, the Notes are eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market.
Notes sold pursuant to the Registration Statement (including those covered by
this Supplement) will no longer be eligible for trading in the PORTAL Market.
The Conversion Shares have been authorized for listing on the NASDAQ National
Market ("NNM") upon official notice of issuance. The Company's Common Stock is
traded on the NNM under the symbol TLXN. On June 30, 1996, the Company had
16,042,894 shares of issued and outstanding Common Stock, and on July 5, 1996,
the last reported sale price of the Common Stock on the NNM was $12.125 per
share.
Selling Securityholders mayoffer Notes or Conversion Shares from time to
time to purchasers directly or through underwriters, dealers or agents. Such
Notes or Conversion Shares may be sold at market prices prevailing at the time
of sale or at negotiated prices. Each Selling Securityholder will be responsible
for payment of any and all commissions to brokers, which will be negotiated on
an individual basis.
The Company will not receive any of the proceeds from the sale of any of
the Notes or Conversion Shares by the Selling Securityholders. Expenses of
preparing and filing the Registration Statement, the Prospectus, this Supplement
and all other prospectus supplements are borne by the Company.
SEE "RISK FACTORS" BEGINNING ON PAGE 11 OF THE PROSPECTUS AND THE
COMPANY'S FILINGS MADE WITH THE SECURITIES AND EXCHANGE COMMISSION SUBSEQUENT TO
THE DATE OF THE PROSPECTUS AND INCORPORATED BY REFERENCE THEREIN FOR A
DISCUSSION OF CERTAIN FACTORS WHICH PROSPECTIVE INVESTORS SHOULD CONSIDER PRIOR
TO AN INVESTMENT IN THE NOTES OR CONVERSION SHARES. ALSO, SEE THE COMPANY'S
CURRENT REPORT ON FORM 8-K OF EVEN DATE HEREWITH FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WHICH IS INCORPORATED HEREIN BY REFERENCE, FOR A DISCUSSION
OF RECENT DEVELOPMENTS RELATING TO THE AUTHORIZATION BY THE COMPANY'S BOARD OF
DIRECTORS OF THE REPURCHASE BY THE COMPANY OF UP TO 3 MILLION SHARES OF ITS
OUTSTANDING COMMON STOCK AND THE INITIAL REPURCHASES MADE UNDER THE REPURCHASE
PROGRAM.
---------------
S-2
<PAGE> 3
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
---------------------
The date of this Prospectus Supplement is July 8, 1996
S-3
