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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
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This Prospectus Supplement ("Supplement") covers the resales by the
selling securityholders named in the table below (the "Selling
Securityholders") of the respective principal amounts there indicated 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 by Froley-Revy Investment
Company Inc. as agent for the Selling Securityholders, the Selling
Securityholders hold the respective principal amounts of Notes set forth below
and, as indicated, each is selling, as principal, all of the Notes it currently
holds pursuant to this Supplement:
<TABLE>
<S> <C> <C>
TOTAL AMOUNT
SELLING SECURITYHOLDER HOLDINGS BEING SOLD
ICI American Holdings 100,000 100,000
Pension Fund
Zeneca Holdings Pension Fund 100,000 100,000
</TABLE>
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<TABLE>
<S> <C> <C>
Delaware State Retirement 250,000 250,000
Fund - Froley, Revy
Mass. Pension Reserves 760,000 760,000
Investment Mgmt. Board
WAFRA/Discretionary 150,000 150,000
State Accident Insurance 950,000 950,000
Fund Corp.
Oregon Equity Fund 1,730,000 1,730,000
NALCO Chemical Co. 60,000 60,000
Kapiolani Medical Center 80,000 80,000
Queen's Health Systems 80,000 80,000
</TABLE>
Each of the sales by the Selling Securityholders is being effected
through Froley - Revy Investment Company Inc. their common registered
investment advisor. 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 June 30,
1996, the Company had approximately $18.0 million of outstanding indebtedness
constituting Senior Indebtedness and the subsidiaries of the Company had
approximately $33.3 million of outstanding indebtedness and other liabilities
(excluding intercompany liabilities and approximately $3.0 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 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.
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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 July 15, 1996, the
Company had 16,049,923 shares of issued and outstanding Common Stock, and on
August 1, 1996, the last reported sale price of the Common Stock on the NNM
was $11.86 per share.
Selling securityholders may offer 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.
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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.
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The date of this Prospectus Supplement is August 2, 1996
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