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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
Oppenheimer Funds, Inc. ("Oppenheimer") (the "Selling Securityholder"), as
principal, of up to $1,000,000 aggregate principal amount 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 $.01 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 amount of Notes
that are owned and may be offered by Oppenheimer is $9,000,000, of which
Oppenheimer will sell $1,000,000 pursuant to this Supplement. Additional selling
securityholders or other information concerning the Selling Securityholder 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 September
30, 1996, the Company had approximately $32.0 million of outstanding
indebtedness constituting Senior Indebtedness and the subsidiaries of the
Company had approximately $33.4 million of outstanding indebtedness and other
liabilities (excluding intercompany liabilities and approximately $1.0 million
in subsidiaries'
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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.
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 September 30, 1996, the Company had
16,099,952 shares of issued and outstanding Common Stock, and on October 22,
1996, the last reported sale price of the Common Stock on the NNM was $12.88 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
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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 REPORTS ON FORM 8-K, DATED AUGUST 5, 1996 ("FIRST REPORT"), AUGUST 16,
1996 ("SECOND REPORT") AND OCTOBER 18 , 1996 ("THIRD REPORT") FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1996, OCTOBER 15, 1996 AND
OCTOBER 23, 1996, RESPECTIVELY, WHICH ARE INCORPORATED HEREIN BY REFERENCE FOR
(I) RELATIVE TO THE FIRST REPORT, A DISCUSSION RELATING TO THE AMENDMENT AND
RESTATEMENT OF THE COMPANY'S STOCKHOLDER'S RIGHTS AGREEMENT ORIGINALLY ADOPTED
BY THE BOARD OF DIRECTORS ON AUGUST 25, 1987 AND AMENDED AND RESTATED AS OF JULY
31, 1996; (II) RELATIVE TO THE SECOND REPORT, A DISCUSSION RELATING TO
AMENDMENTS TO THE COMPANY'S (A) PRIMARY CREDIT FACILITY WITH THE BANK OF NEW
YORK, AS AGENT FOR AN EIGHT-BANK LENDING GROUP, AND (B) SUPPLEMENTAL CREDIT
FACILITY WITH BANK ONE, AKRON, NA; AND (III) RELATIVE TO THE THIRD REPORT, A
DISCUSSION RELATING TO THE COMPANY'S FINANCIAL RESULTS FOR ITS FISCAL QUARTER
ENDED SEPTEMBER 30, 1996 AND ONGOING COST REDUCTION AND EFFICIENCY IMPROVEMENT
STRATEGIES.
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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 October 23, 1996
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