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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 $.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 by Pecks Management Partners
Ltd. 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>
<CAPTION>
TOTAL AMOUNT
SELLING SECURITYHOLDER HOLDINGS BEING SOLD
---------------------- -------- ----------
<S> <C> <C>
Delaware State Employees Retirement Fund 1,500,00 500,000
Declaration of Trust for the Defined Benefit Plan of 450,000 150,000
ICI American Holdings Inc.
Declaration of Trust for the Defined Benefit Plan of 300,000 100,000
ZENCA Holdings Inc.
Thermo Electron Balanced Investment Fund 320,000 200,000
General Motors Employees Domestic Group Trust 3,350,000 1,595,000
Christian Science Trustees for Gifts & Endowments 140,000 65,000
First Church of Christ, Scientist-Endowment 140,000 65,000
</TABLE>
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Each of the sales by the Selling Securityholders is being effected through Pecks
Management Partners Ltd. 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 December
31, 1997, the Company had approximately $10.3 million of outstanding
indebtedness constituting Senior Indebtedness and the subsidiaries of the
Company had approximately $18.1 million of outstanding indebtedness and other
liabilities (excluding intercompany liabilities and approximately $0.5 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. 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 April 23, 1998, the Company had
16,067,086 shares of issued and outstanding Common Stock, and on April 23, 1998,
the last reported sale price of the Common Stock on the NNM was $33.50 per
share.
S-2
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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 Securityholder. 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 DATED APRIL 21, 1998 AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ON THE DATE HEREOF, AND WHICH IS INCORPORATED HEREIN BY
REFERENCE, FOR A DISCUSSION OF RECENT DEVELOPMENTS RELATING TO EVENTS THAT HAVE
OCCURRED SUBSEQUENT TO THE DATE OF THE PROSPECTUS. THE 8-K REPORT REFERS TO: (I)
AN ARTICLE PUBLISHED IN THE WALL STREET JOURNAL REPORTING A LETTER FROM SYMBOL
TECHNOLOGIES, INC. ("SYMBOL") TO THE COMPANY IN WHICH SYMBOL OFFERED TO PURCHASE
THE COMPANY; AND (II) THE COMPANY'S PRESS RELEASE ISSUED IN RESPONSE TO
SYMBOL'S EXPRESSION OF INTEREST IN A BUSINESS COMBINATION WITH THE COMPANY.
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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 April 27, 1998
S-3
