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PROSPECTUS SUPPLEMENT Filed pursuant to Rules 424(b) 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 Smith
Barney, Inc. ("Smith Barney") and Hambrecht & Quist LLC ("Hambrecht & Quist")
(together, the "Selling Securityholders"), each as a principal, of up to
$1,000,000 aggregate principal amount and $5,250,000 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 the 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 in conjunction 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, (i) the total principal
amount of Notes held by Smith Barney is $5,225,000, and (ii) the total amount
of Notes that may be offered by Hambrecht & Quist is $5,250,000, of which
Hambrecht & Quist will sell its entire amount pursuant to this Prospectus
Supplement. Hambrecht & Quist was an initial purchaser in the Debt Offering,
pursuant to which Hambrech & Quist received customary compensation for its
placement of the Notes. Additional selling securityholders or other
information concerning 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 (as defined) 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
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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 May 29, 1996, the
Company had 16,110,016 shares of issued and outstanding Common Stock, and the
last reported sale price of the Common Stock on the NNM was $18.75 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 and this
Supplement, as well as any additional prosectus supplements will be borne by
the Company.
SEE "RISK FACTORS" BEGINNING ON PAGE 11 OF THE PROSPECTUS 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 EVENTS THAT HAVE OCCURRED SUBSEQUENT TO THE
DATE OF THE
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PROSPECTUS, WHICH EVENTS INCLUDE A PRESS RELEASE OF THE COMPANY'S FINANCIAL
RESULTS FOR THE FISCAL YEAR AND QUARTER ENDED MARCH 31, 1996, AS PUBLICLY
ANNOUNCED ON MAY 21, 1996; THE COMPLETION OF TWO NEW UNSECURED BANK CREDIT
FACILITIES TOTALLING $120,000,000; AND A RESTATEMENT OF THE DISCUSSION IN THE
PROSPECTUS OF THE SUBORDINATION OF THE NOTES TO REFLECT THE COMPANY'S CURRENT
FINANCIAL CONDITION.
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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 June 3, 1996
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