<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1996
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TELULAR CORPORATION
(Exact name of Registrant as specified in its charter)
-----------------------------------------------
DELAWARE 36-3885440
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
--------------------------
920 DEERFIELD PARKWAY
BUFFALO GROVE, ILLINOIS 60089
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
----------------------------------
KENNETH E. MILLARD
CHIEF EXECUTIVE OFFICER
TELULAR CORPORATION
920 DEERFIELD PARKWAY
BUFFALO GROVE, ILLINOIS 60089
(847) 465-4500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------------
COPY TO:
MICHAEL E. CUTLER, ESQ.
COVINGTON & BURLING
1201 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
(202) 662-6000
--------------------
Approximate date of commencement of proposed sale to public:
From time to time after this Registration Statement becomes effective.
----------------------------------
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offer. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number on the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following fox. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED) PER SHARE(1) OFFERING PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE $.01
PER SHARE . . . . . . . . . . 350,000 $5.38 $1,883,000.00 $649.31
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the average of the high and low sale
prices of the shares of Common Stock as reported on the Nasdaq
National Market System on September 20, 1996.
<PAGE> 2
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION"), ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO
BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION
SEPTEMBER 25, 1996
TELULAR CORPORATION
COMMON STOCK
(par value $.01 per share)
This Prospectus relates to the resale of up to 350,000 shares
of common stock, par value $.01 per share (the "Common Stock"), of Telular
Corporation, a Delaware corporation (the "Company") issued or issuable to
TelePath Corporation, a New York Corporation ("Selling Shareholder") in
connection with the transaction described herein. All of the shares offered
hereby will be offered and sold by the Selling Shareholder. Although the
Company is a shareholder of the Selling Shareholder and may benefit from such
sales, the Company will not receive any proceeds from the sale of the shares of
Common Stock offered hereby. See "Selling Shareholder."
The Common Stock is listed on the Nasdaq National Market under
the symbol WRLS. On September 20, 1996, the last sale price of the Common
Stock, as reported on the Nasdaq National Market, was $5.25 per share.
The Common Stock may be offered from time to time by the
Selling Shareholder to or through brokers, dealers or other agents or directly
to other purchasers in one or more market transactions, in one or more private
transactions or in a combination of such methods of sale, at prices then
prevailing, at prices related to such prices, or at negotiated prices. In
effecting sales, brokers, dealers or other agents engaged by the Selling
Shareholder may arrange for other brokers, dealers or agents to participate.
Such brokers, dealers or agents may receive commissions, discounts or
concessions from the Selling Shareholder in amounts to be negotiated. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any such commissions, discounts or
concessions may be deemed to be underwriting discounts or commissions under the
Securities Act.
Certain costs, expenses and fees in connection with the
registration of the Common Stock will be borne by the Company. Commissions,
discounts and transfer taxes, if any, attributable to the sales of the Common
Stock will be borne by the Selling Shareholder.
INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" ON 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 DATE OF THIS PROSPECTUS IS ,1996
<PAGE> 3
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER MADE HEREBY. AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE SELLING SHAREHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES
OFFERED HEREBY TO ANY PERSON IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT
ANY TIME DOES NOT IMPLY THAT THIS INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
THE COMPANY IS SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), AND IN
ACCORDANCE THEREWITH FILES REPORTS, PROXY STATEMENTS AND OTHER INFORMATION WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"). SUCH REPORTS, PROXY
STATEMENTS AND OTHER INFORMATION FILED BY THE COMPANY CAN BE INSPECTED AND
COPIED AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE COMMISSION AT 450
FIFTH STREET, N.W., WASHINGTON, D.C. 20549; AND THE PUBLIC REFERENCE
FACILITIES LOCATED AT THE REGIONAL OFFICES OF THE COMMISSION AT THE FOLLOWING
ADDRESSES: NEW YORK REGIONAL OFFICE, 7 WORLD TRADE CENTER, SUITE 1300, NEW
YORK, NEW YORK 10048 AND CHICAGO REGIONAL OFFICE, CITICORP CENTER, 500 WEST
MADISON STREET, CHICAGO, ILLINOIS 60661-2511. COPIES OF SUCH MATERIAL ALSO
CAN BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION AT 450
FIFTH STREET, N.W., WASHINGTON, D.C. 20549, AT PRESCRIBED RATES.
THIS PROSPECTUS CONSTITUTES A PART OF A REGISTRATION STATEMENT
ON FORM S-3 FILED BY THE COMPANY WITH THE COMMISSION UNDER THE SECURITIES ACT
WITH RESPECT TO THE COMMON STOCK BEING OFFERED BY THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONTAIN ALL OF THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT, CERTAIN PORTIONS OF WHICH HAVE BEEN OMITTED AS
PERMITTED BY THE RULES AND REGULATIONS OF THE COMMISSION. FOR FURTHER
INFORMATION, REFERENCE IS MADE TO THE REGISTRATION STATEMENT, AND TO THE
EXHIBITS INCORPORATED THEREIN BY REFERENCE OR FILED AS A PART THEREOF. ANY
STATEMENTS CONTAINED HEREIN CONCERNING THE PROVISIONS OF ANY SUCH EXHIBITS ARE
NOT NECESSARILY COMPLETE AND, IN EACH INSTANCE, REFERENCE IS MADE TO THE COPY
OF SUCH EXHIBIT FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT OR OTHERWISE
FILED WITH THE COMMISSION. EACH SUCH STATEMENT IS QUALIFIED IN ITS ENTIRETY BY
SUCH REFERENCE.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THE FOLLOWING DOCUMENTS FILED BY THE COMPANY WITH THE
COMMISSION ARE HEREBY INCORPORATED BY REFERENCE IN THIS PROSPECTUS:
(A) THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 1995.
(B) THE QUARTERLY REPORTS OF THE COMPANY ON FORM 10-Q FOR
THE QUARTERS ENDED DECEMBER 31, 1995, MARCH 31, 1996
AND JUNE 30, 1996.
(C) THE DESCRIPTION OF THE COMPANY'S COMMON STOCK
CONTAINED IN THE COMPANY'S REGISTRATION STATEMENT ON
FORM 8-A, DATED JANUARY 13, 1994, FILED PURSUANT TO
SECTION 12 OF THE EXCHANGE ACT, WHICH INCORPORATES BY
REFERENCE THE DESCRIPTION CONTAINED IN THE COMPANY'S
REGISTRATION STATEMENT ON FORM S-1 UNDER THE
SECURITIES ACT, NO. 33-72096, AS AMENDED, AND IN ANY
AMENDMENTS OR REPORTS THAT ARE FILED FOR THE PURPOSE
OF UPDATING SUCH DESCRIPTION.
ALL DOCUMENTS FILED BY THE COMPANY PURSUANT TO SECTION 13(a),
13(c), 14 OR 15(d) OF THE EXCHANGE ACT, SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS AND PRIOR TO THE TERMINATION OF THE OFFERINGS TO WHICH THIS
PROSPECTUS RELATES SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND TO BE A PART HEREOF FROM THE DATE OF FILING OF SUCH DOCUMENTS.
ANY STATEMENT IN A DOCUMENT INCORPORATED OR DEEMED TO BE INCORPORATED BY
REFERENCE HEREIN SHALL BE DEEMED TO BE MODIFIED OR SUPERSEDED BY THIS
PROSPECTUS TO THE EXTENT THAT A STATEMENT CONTAINED HEREIN OR IN ANY OTHER
SUBSEQUENTLY FILED DOCUMENT WHICH ALSO IS OR IS DEEMED TO BE INCORPORATED BY
REFERENCE HEREIN MODIFIES OR SUPERSEDES SUCH STATEMENT. ANY SUCH STATEMENT SO
MODIFIED OR SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO MODIFIED OR
SUPERSEDED, TO CONSTITUTE A PART OF THIS PROSPECTUS.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE COPIES
OF ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS) TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY
OF THIS PROSPECTUS HAS BEEN DELIVERED ON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON TO:
FRANK J.M TEN BRINK, CHIEF FINANCIAL OFFICER
TELULAR CORPORATION
920 DEERFIELD PARKWAY
BUFFALO GROVE, ILLINOIS 60089
(847) 465-4500
<PAGE> 4
RISK FACTORS
Prospective purchasers of Common Stock of the Company should
carefully consider the following factors in conjunction with the information
contained in the materials in the Company's reports on Forms 10-K, 10-Q and 8-K
and proxy materials, as filed with the Commission (the "SEC Filings").
LIMITED OPERATING HISTORY AND EXPECTATION OF CONTINUED LOSSES
The Company commenced operations in 1986 and has not yet been
profitable. The development of the Company's business has required significant
expenditures in connection with the defense of the Company's patents, research
and development of its technology and marketing of its products. Substantial
costs related to these activities have been and will continue to be incurred by
the Company before the realization of associated revenues. The Company
anticipates that losses will continue in the near future due to its further
investment into product development, marketing, plant and equipment and
operations.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
At June 30, 1996, the Company had $16.4 million in cash and
cash equivalents with a working capital surplus of approximately $25.8 million.
Expansion of the Company's business, including the development of new products
and markets for the Company's existing products, will require significant
product development expenditures. In addition, the Company is expected at
least in the near term to continue to operate at a loss. The Company
anticipates that its cash on hand, together with the Company's other capital
sources, will be sufficient to meet the Company's capital needs at least
through the end of 1996. Management is currently exploring the possibility of
raising additional capital. Expected future uses of cash include working
capital requirements, marketing programs and product development in
anticipation of future revenues. Cash requirements may vary and are difficult
to predict given the nature of the developing markets targeted by the Company.
The amount of royalty income from the Company's licensees is unpredictable, but
could have an impact on the Company's actual cash flow. Unanticipated events
such as litigation could increase capital requirements. To the extent that
additional funds are needed subsequently, the Company may need to raise
additional funds through public or private financings. No assurance can be
given that additional financing will be available or that, if available, it
will be obtained on terms favorable to the Company.
The Company has now completed a major corporate restructuring
as part of a program to balance expenditure levels with revenues, and to
improve working capital. In connection with that restructuring, the Company
incurred approximately $11.0 million in restructuring and impairment charges,
phased out its manufacturing operations in Puerto Rico and Illinois,
consolidated its manufacturing operations at the Company's Atlanta, Georgia
facility, and reduced its workforce from approximately 250 employees in January
1996 to approximately 110 employees in June 1996. Details of the restructuring
are set forth in the Company's SEC Filings. The Company is continuing to
monitor expenditure levels in light of timing of market expansion and revenues
and anticipates taking further actions from time to time as it deems
appropriate.
MANAGEMENT TRANSITION
The Company has experienced several significant changes in
management over the past year. Richard Gerstner, who has served as Chief
Executive Officer since November 1993, resigned in November 1995. From
November 1995, until April 1996, William L. De Nicolo served as Chief Executive
Officer. (Mr. De Nicolo, the founder of the Company, served as CEO prior to
Mr. Gerstner's appointment and has served as Chairman of the Board since the
Company was founded.) Kenneth E. Millard became Chief Executive Officer in
April 1996.
The Company has experienced a number of other changes in its
executives over the past six months, and, as noted above, has substantially
reduced its workforce. These changes may have an adverse effect on the
Company's ability to implement its plans and manage its operations in a
consistent manner.
<PAGE> 5
RELATIONSHIP WITH MOTOROLA
The Company has several important relationships with Motorola,
Inc. ("Motorola"), which owns approximately 15% of the Company's outstanding
shares of Common Stock.
Sales by the Company to Motorola represented approximately 11%
of net sales by the Company during the preceding fiscal year. In addition, the
Company has entered into a substantial contract with Motorola to sell fixed
wireless terminals to Motorola for its construction of a cellular system in
Hungary, and has recently entered into a further relationship with Motorola
providing for, among other things, a commitment by Motorola to purchase $100
million of the Company's fixed wireless terminals over a three-year period.
The Company purchases cellular transceivers from Motorola. These purchases
represented approximately 40% of total cost of goods for the Company during the
preceding fiscal year.
The Company and Motorola have recently expanded their
purchase/supply relationship into a cross-OEM arrangement under which the
Company will sell additional fixed wireless terminals to Motorola and Motorola
will sell current and future cellular products to the Company.
The Company and Motorola have entered into cross-licensing
relationships under their respective intellectual property rights.
These and other aspects of the Company and Motorola's
relationship are discussed in more detail in the SEC Filings.
INTELLECTUAL PROPERTY RIGHTS
The Company's success in the United States will depend to a
considerable extent upon its ability to obtain and enforce intellectual
property protection for its technology in the United States. No assurance can
be given that the Company's existing patents or any future patents obtained by
the Company will not be challenged, invalidated or circumvented, or that the
Company's competitors will not independently develop or patent technologies
that are substantially equivalent to or superior to the Company's technology.
The nature and status of litigation that involves the Company's intellectual
property rights is set forth in the SEC Filings.
Although the Company believes that its intelligent interface
can be adapted to accommodate emerging wireless services, there can be no
assurance that these new services will fall within the boundaries of the
Company's existing patent protection.
In some countries, patent protection is not available.
Moreover, some countries that grant patents do not afford meaningful protection
or redress for violations. Neither the Company nor its competitors have
established, and both are now legally barred from establishing, patent
protection for core technology in many other countries, including the principal
countries of Western Europe. In the absence of patent protection, the Company
has relied upon other competitive factors including: (a) the quality of its
products, and (b) the desirability of using products that meet the same
specifications as those in the United States and in other countries where the
Company has obtained patent protection.
There can be no assurance that patent protection can be
obtained, in the United States or elsewhere, for new products or applications,
or that such patent protection, if obtained, will afford meaningful protection.
INTENSE COMPETITION IN INDUSTRY
Competition in the wireless telecommunications equipment
industry is intense. The industry includes major domestic and international
companies, many of which have substantially greater financial, technical,
marketing, sales, manufacturing, distribution and other resources than those of
the Company. The Company faces competition in various areas from certain of
its licensees and those customers who may purchase the licensees' products. It
has granted a non-exclusive royalty-bearing license to Motorola which enables
Motorola to produce and sell products which compete with the Company's
products.
<PAGE> 6
To the extent that expansion of the Company's product line or
the development of new uses or applications for its products are outside of the
protection provided by the Company's patents and other intellectual property
rights, the Company may encounter increased competition from a variety of
sources.
RELIANCE UPON GROWTH AND PRICING OF WIRELESS SERVICE
The market for basic telephone service in developing
countries, which at present are the Company's principal markets, is an emerging
one. The timing related to purchases of equipment for the provision of
telephone service is affected by regulatory, macroeconomic, capital
availability and competitive factors which make the timing of such awards
difficult to predict.
The success of the Company depends to a considerable extent
upon the continued growth and increased availability of cellular and other
wireless telecommunications services internationally and, to a lesser extent
at least in the short term, in the United States.
ANTI-TAKEOVER PROVISIONS; MOTOROLA PURCHASE RIGHTS
The Company's Board of Directors can, without obtaining
stockholder approval, issue shares of Preferred Stock having rights that could
adversely affect the voting power of holders of the Common Stock. The issuance
of Preferred Stock may delay, defer or prevent a change in control of the
Company. In addition, Section 203 of the Delaware General Corporation Law
restricts certain business combinations with any "interested stockholder" as
defined in such law. The current stockholders of the Company are not, by
virtue of their current holdings, deemed to be "interested stockholders" under
this statute. This statute may delay, deter or prevent a change in control of
the Company.
Under the Shareholders' Agreement among certain of the
Company's stockholders, the Company and its principal stockholders are required
to notify Motorola prior to any solicitation of purchase offers for, or the
acceptance of any unsolicited offer for, all or substantially all of the assets
of the Company or a majority of its voting stock. Motorola has the right to
submit a bid at that time, and the Company and its principal stockholders have
agreed not to make any such sale at a valuation lower than that of Motorola's
bid, if any. Motorola's rights will terminate upon any sale by Motorola of
shares of Common Stock, if after such sale Motorola owns less than 20% of the
outstanding Common Stock, on a fully diluted basis. The existence of this
contractual provision may delay, deter or prevent a change in control of the
Company.
VOLATILITY OF QUARTERLY OPERATING RESULTS
The Company's quarterly operating results may fluctuate based
on a number of factors, including variations in the Company's distribution
channels and the mix of products it sells, the timing of final product
approvals from any major distributor or end user, the timing of orders from and
shipments to major customers, the timing of new product introductions by the
Company or its competitors, changes in pricing policies by the Company's
suppliers, the availability and cost of key components, the timing of personnel
hirings and the market acceptance of new and enhanced versions of the Company's
products.
VOLATILITY OF STOCK PRICE
Factors such as announcements of the results of trials or the
introduction of new products by the Company or its competitors, market
conditions in the telecommunications, technology and emerging growth sectors
and rumors relating to the Company or its competitors may have a significant
impact on the market price of the Common Stock. Furthermore, the stock market
has experienced volatility that has particularly affected the market prices of
equity securities of many high technology and emerging growth companies such as
those in the telecommunications industry. This volatility has often been
unrelated to the operating performance of such companies. These market
fluctuations could adversely affect the price of the Common Stock.
The Company's stock price has been particularly volatile over
the past 12 months. The Company believes that this volatility is attributable
in part to the timing on conversion of the $18 million in convertible
debentures issued by the Company in December 1995. $16.25 million of those
debentures have been converted, and
<PAGE> 7
a total of 6.6 million shares of Common Stock have been issued. The conversion
of the remainder of those debentures in the future could affect the volatility
of the Company's stock price.
RAPID TECHNOLOGICAL CHANGE
The telecommunications equipment industry is characterized by
rapid technological advances, evolving industry standards, changes in end-user
requirements and frequent new product introduction and enhancements. The
wireless telecommunications industry is experiencing significant technological
change, such as the proposed transformation of cellular systems from analog to
digital. The rate at which this change occurs and the success of such new
technologies may have a material effect on the rate at which the Company
expands its business and on its ability to achieve profitability. Moreover,
there can be no assurance that continuing developments in technology will not
result in the establishment of wireless or wireline technologies for which the
Company's interface technology is not required or in the development of
equipment equal or superior to that provided by the Company.
RISK OF LITIGATION
Litigation in the telecommunications equipment and other high
technology industries has increasingly been used as a competitive tactic both
by established companies seeking to protect their existing position in the
market and by emerging companies attempting to gain access to the market. In
such litigation, complaints may be filed on a variety of grounds, including
antitrust, breach of contract, trade secret, patent or copyright infringement,
patent or copyright invalidity, and unfair business practices. If the Company
is forced to defend itself against such claims, whether or not meritorious, the
Company is likely to incur substantial expense and diversion of management
attention, and may encounter market confusion and the reluctance of licensees
and distributors to commit resources to the Company's products. In the event
that the Company's patents or other intellectual property rights were deemed
invalid or were determined not to prohibit competing technologies, the Company
could face additional competition. See "Risk Factors -- Intellectual Property
Rights."
DEPENDENCE ON ABILITY TO DEVELOP MARKETS
The Company's success depends on its ability to develop both
domestic and international markets for its products. There can be no
assurances that the Company will continue to market its products successfully
or that a larger market for its products will continue to develop.
DEPENDENCE ON ABILITY TO MANAGE GROWTH
The Company's ability to produce and market large volumes of
competitively priced quality products depends on its ability to implement and
continually expand its operational and financial systems, recruit additional
employees and train, manage and motivate both current and new employees.
Failure to effectively manage the growth of the Company or the transition in
officers of the Company would have a material adverse effect on the business of
the Company.
DEPENDENCE ON CONTRACTORS FOR MANUFACTURING
The Company uses subcontractors for the manufacture of certain
of its components and for the assembly of some of its products. In the past,
the Company has experienced delays in the receipt of interface components and
products, which have resulted in delays in product deliveries. The Company may
experience similar delays in the future.
DEPENDENCE ON MOTOROLA FOR TRANSCEIVERS
The Company currently procures most of its cellular
transceivers from Motorola, a principal stockholder of the Company. Pursuant
to the stock purchase agreement between Motorola and the Company, Motorola has
agreed to provide the Company with an opportunity to purchase transceivers
based on any transmission technology that Motorola's Cellular Subscriber Group
offers, when, as and if such products are made available to
<PAGE> 8
the public. Under this agreement, Motorola has a right of first refusal to
supply on competitive terms the Company's transceiver needs provided, among
other things, that Motorola manufactures a comparable product and that the
customer does not specifically request another manufacturer's transceiver
product. If sufficient quantities of Motorola transceivers were not available,
the Company might have to redesign its products and could experience increased
costs and shipment delays.
The inability to obtain sufficient quantities of key
components as required, or to develop alternative sources if and as required in
the future, could result in delays or reductions in product shipments. In
addition, shortages of raw materials or production capacity constraints at the
Company or its subcontractors could negatively affect the Company's ability to
meet its production obligations and result in increased prices for affected
parts. These events could have a material adverse effect on the Company's
customer relationships and operating results.
The Company uses third parties, in addition to its direct
sales force, to distribute and market some of its products. In particular, the
Company plans to use interconnect companies and cellular carriers to market,
distribute, install and service certain of its products. Although the Company
has entered into contracts with several major interconnect companies and
cellular carriers, the Company is only in the early stages of developing these
relationships. In addition, these third parties are not contractually
obligated to perform any of the activities on which the Company depends to meet
its business objectives.
QUALITY CONTROL PROBLEMS
From time to time, the Company has experienced quality control
problems with components provided by certain of its subcontractors. The
Company has instituted quality monitoring procedures for its components to
address these problems and to comply with ISO- 9001. However, there can be no
assurance that future quality control problems will not occur.
RISKS OF DOING BUSINESS IN DEVELOPING MARKETS
Among the Company's largest potential markets are developing
countries that may deploy wireless communications networks as an alternative to
the construction of wireline infrastructure. Such countries may decline to
construct wireless telecommunications systems or construction of such systems
may be delayed for a variety of reasons, in which event the development of
demand for the Company's products in those countries will be similarly limited
or delayed. In doing business in developing markets, the Company may also face
economic, political and hard currency conditions that are more volatile than
those commonly experienced in the United States and other areas.
Despite its reliance on international markets, to date, the
Company's sales have not been adversely affected by currency fluctuations.
Currently, the Company requires letters of credit or qualification for export
credit insurance underwritten by the Export-Import Bank of the United States on
a substantial portion of its international sales orders. Also, to mitigate the
effects of currency fluctuations on the Company's results of operations, the
Company endeavors to conduct all of its international transactions in U.S.
dollars. However, as the Company's international operations grow, foreign
exchange or the inflation of a foreign currency may pose greater risks for the
Company, and the Company may be required to develop and implement additional
strategies to manage these risks.
DEPENDENCE ON RESEARCH AND DEVELOPMENT
The telecommunications equipment market is characterized by
rapid technological advance and the development of increasingly sophisticated
and powerful systems. To remain competitive, the Company must dedicate
significant resources to the development and enhancement of its present and
future products. There can be no assurance that the Company's development
efforts will be successful or that the Company will have adequate capital to
fund such research and development. See "Risk Factors -- Future Capital Needs;
Uncertainty of Additional Funding."
CONFLICTS OF INTEREST
The Company's Board of Directors includes, and is expected to
continue to include, persons designated by strategic partners of the Company
and other parties that have business relationships with the Company.
<PAGE> 9
It is possible that the companies designating such directors, such as Motorola
and other companies in which a director may hold a financial interest, may be
in direct or indirect competition with the Company or among themselves,
including competition with respect to certain business activities and
transactions that the Company may propose to undertake. Although the affected
directors may abstain from voting on matters in which the interests of the
Company and those of another company with which they are affiliated are in
conflict, the presence of potential or actual conflicts could affect the
process or outcome of Board deliberations in ways that could be adverse to the
Company.
CONTROL BY EXISTING STOCKHOLDERS
The officers and directors of the Company, together with
entities affiliated with directors of the Company, beneficially own
approximately 50% of the Common Stock (assuming the exercise of immediately
available stock options to purchase Common Stock). Accordingly, these
stockholders, if acting in concert, will be able to elect all of the Company's
directors and to determine the outcome of corporate actions requiring
stockholder approval, regardless of how other stockholders of the Company may
vote. The voting power of these stockholders under certain circumstances could
have the effect of delaying or preventing a change in control of the Company.
Under a Shareholders' Agreement, Motorola has the right to nominate for
election a number of directors proportionate to their respective holdings of
outstanding shares of Common Stock in the case of Motorola, as long as it holds
at least 10% of the outstanding shares it may nominate at least one director,
and that if it holds at least 20% of the outstanding shares it may nominate at
least two directors), and the principal stockholders of the Company have agreed
to vote in favor of each such nominee.
DIVIDEND POLICY
To date, the Company has paid no cash dividends on its Common
Stock. The Company currently intends to retain all future earnings, if any, to
fund the development and growth of its business and, therefore, does not
anticipate paying any cash dividends in the foreseeable future.
THE COMPANY
OVERVIEW
The Company is in the fixed wireless telecommunications
industry. The Company designs, develops, manufactures and markets products
based on its proprietary interface technologies, which provide the capability
to bridge wireline telecommunications customer premises equipment ("CPE") with
cellular-type transceivers for use in wireless communication networks, whether
cellular, enhanced specialized mobile radio ("ESMR"), personal communications
services ("PCS"), or satellite-based. Applications of the Company's technology
include fixed wireless telecommunications as a primary service where wireline
systems are unavailable, unreliable or uneconomical and as wireless backup
systems for wireline telephone systems and wireless security alarm transmission
systems. The Company's principal product lines -- PHONECELL(R) and TELGUARD(R)
- -- allow CPE designed for traditional wireline networks to send and receive
voice, data and facsimile signals over wireless networks.
The Company was founded in June 1986 by Mr. William L. De
Nicolo, the current Chairman of the Board of the Company, when he acquired
title to the intellectual property rights of a pending patent application
dealing with a "cellular interface" concept and methodology. The patent not
only describes a simple physical circuit or device, but also the very concept
and principles underlying the use of intelligent interface device (the
"invention") in conjunction with cellular-type transceivers and systems.
In January 1994, the Company completed an initial public
offering ("IPO") of its common stock and is traded on the NASDAQ National
Market System under the ticker symbol "WRLS".
COMPANY STRATEGY
The Company's strategy is to leverage its market experience,
internationally-accepted products, and patents into a leadership position in
the rapidly developing wireless alternate access ("WAA") and WLL subscriber
terminal equipment industry. Global telecommunications equipment manufacturers
together with national and
<PAGE> 10
international service providers are increasingly sharing the Company's vision
that wireless systems in both developed and developing countries are well
suited for use as basic telephone service networks. The key trends that are
fueling the worldwide adoption of WAA/WLL programs include the following:
- Rapid acceptance of cellular mobile communications;
- An accelerating trend toward privatization of
telecommunication service in both developed and
developing countries;
- Development and adoption of digital wireless
transmission standards (e.g., Time Divisional
Multiple Access ("TDMA"), Group Special Mobile
("GSM") and Code Division Multiple Access ("CDMA"))
which enhance network capacity and service capability
while significantly reducing the effective cost per
subscriber served;
- Service network providers acceptance of wireless
network solutions as fast, cost effective answers to
their customers' unmet demand for telecommunications;
and,
- PCS licensing and the proposed telecommunications
legislation within the U.S. should intensify
competition by wireless service providers to capture
wireless minutes of usage.
Based upon its proprietary interface technology, the Company
designs, manufacturers and markets a full line of WAA/WLL products which allow
cost-effective, innovative communications solutions where wired facilities are
(1) of substandard quality, (2) unavailable on a timely basis, (3) too costly,
or, (4) in need of alternative access or backup/diverse routing capability for
local telephone service exists.
RESEARCH AND DEVELOPMENT
The Company believes that its future success depends on its
ability to adapt to the rapidly changing telecommunications environment and to
continue to meet customers' needs. The Company is currently adapting its
products to new wireless technologies and is working closely with several
companies, including long-distance carriers, cellular service providers and
telecommunications infrastructure providers and equipment manufacturers, to
develop new fixed wireless products. For example, pursuant to the terms of the
Stock Purchase Agreement, between the Selling Shareholder and the Company,
dated as of June 28, 1996 (the "Stock Purchase Agreement"), the Selling
Shareholder has undertaken to develop certain Fixed Wireless products for the
Company. See "Selling Shareholder." Additionally, Motorola has also agreed to
fund certain product development activities.
As of August 31, 1996, the Company's research and development
staff was comprised of 25 engineers and is focused on bringing new products to
market in the most advantageous and timely manner possible. Additionally, the
research staff continually investigates methods by which the Company can reduce
the costs of its products.
The Company is currently adapting its products to digital
wireless standards, including GSM, DCS1800, PCS1900, TDMA and CDMA as well as
satellite-based systems.
MANUFACTURING
Fabrication of the Company's products is accomplished through
a combination of in-house manufacturing and subcontracting. The Company
manufactures printed circuit boards and assembles finished goods at its
facility in Atlanta, Georgia. These components are used in products assembled
at this manufacturing site. The assembly of printed circuit board interfaces
for security alarm transmission products is also currently performed at the
facility in Atlanta. The Company has developed proprietary testing equipment
and procedures to conduct comprehensive quality control and quality assurance
throughout the manufacturing and assembly process. Quality programs are a high
priority at the Company; since 1994, the Company has been designated as an ISO
9001 certified Company.
The Company historically has contracted with several suppliers
for the critical components of its products. The major exception to this
policy has been transceiver units, which are principally supplied by Motorola.
The Company's interface technology is compatible with several other
manufacturers' transceivers, and the Company
<PAGE> 11
believes it could obtain transceivers from such manufacturers if sufficient
quantities were not available from Motorola, although not necessarily on
equivalent terms.
SELLING SHAREHOLDER
All of the shares offered hereby were issued or are issuable
by the Company to the Selling Shareholder. The shares were issued or are
issuable to Selling Shareholder pursuant to the Stock Purchase Agreement. The
shares constituted part of the consideration for the Selling Shareholder's
grant to the Company of a 50% equity interest in the Selling Shareholder.
Additionally, pursuant to the Stock Purchase Agreement, the Selling Shareholder
has undertaken to develop wireless local loop subscriber terminals ("Terminal
Products"). The Company will own and have the right to manufacture and sell
the Terminal Products developed by the Selling Shareholder.
Pursuant to the terms of the Stock Purchase Agreement, the
Company agreed to register the Common Stock issued to the Selling Shareholder
pursuant to the Stock Purchase Agreement under the Securities Act and to keep
such registration effective until the earlier of: (a) two years from the
effective date of the Registration Statement, or (b) the date upon which the
Selling Shareholder is able to resell all of the Common Stock registered
pursuant to the Registration Statement that covers this Prospectus.
PLAN OF DISTRIBUTION
The purpose of this Prospectus is to permit the Selling
Shareholder, if it desires, to dispose of some or all of the shares at such
times and at such prices as it may choose. Whether sales of shares will be
made, and the timing and amount of any sale made, is within the sole discretion
of the Selling Shareholder.
The Common Stock covered by this Prospectus may be offered for
sale from time to time by the Selling Shareholder to or through underwriters or
directly to other purchasers or through agents in one or more market
transactions, in one or more private transactions or in a combination of such
methods of sale, at prices then prevailing, at prices related to such prices or
at negotiated prices. Such methods of distribution may include, without
limitation: (a) a block trade in which the broker-dealer so engaged will
attempt to sell the Common Stock as agent but may position and resell a portion
of the block as a principal to facilitate the transaction; (b) purchases by a
broker-dealer as a principal and resale by such broker-dealer for its own
account pursuant to this Registration Statement; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
face-to-face transactions between sellers and purchasers without a broker or
dealer. This Prospectus may be amended and supplemented from time to time to
describe a specific plan of distribution.
In connection with distributions of the Common Stock or
otherwise, the Selling Shareholder may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in
short sales of Common Stock in the course of hedging the positions they assume
with the Selling Shareholder. The Selling Shareholder may also sell Common
Stock short and redeliver the shares to close out such short positions. The
Selling Shareholder may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or financial institution of the Common Stock offered hereby,
which Common Stock such broker-dealer or other financial institutions may
resell pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Shareholder may also pledge the shares registered
hereunder to a broker-dealer or other financial institution and, upon a
default, such broker-dealer or other financial institution may effect sales of
the pledged Common Stock pursuant to this Prospectus (as supplemented or
amended to reflect such transaction). In addition, any Common Stock covered by
this Prospectus that qualifies for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
Brokers, dealers or agents may receive compensation in the
form of commissions, discounts or concessions from the Selling Shareholder in
amounts to be negotiated in connection with sales pursuant thereto. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act, in connection
with such sales and any such commission, discount or concession may be deemed
to be underwriting discounts or commissions under the Securities Act.
<PAGE> 12
Certain costs, expenses and fees in connection with the
registration of the Common Stock will be borne by the Company. Commissions,
discounts and transfer taxes, if any, attributable to the sales of the Common
Stock will be borne by the Selling Shareholder. The Selling Shareholder has
agreed or may agree to indemnify the Company or any underwriter, as the case
may be, and any of their respective affiliates, directors, officers and
controlling persons, against certain liabilities in connection with the
offering of the Common Stock pursuant to this Registration Statement, including
liabilities arising under the Securities Act. In addition, the Company has
agreed to indemnify the Selling Shareholder or any underwriter, as the case may
be, and any of their respective affiliates, directors, officers and controlling
persons, against certain liabilities in connection with the offering of the
Common Stock pursuant to this Prospectus, including liabilities arising under
the Securities Act.
The Company has agreed to supply the Selling Shareholder with
such number of copies of this Prospectus as it may reasonably request. The
Selling Shareholder will in all cases be responsible for complying with the
prospectus delivery requirements of Section 5(b)(2) of the Securities Act in
connection with the offering and sale of the shares.
LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby
are being passed upon for the Company by Covington & Burling, Washington, D.C.
EXPERTS
The consolidated financial statements of Telular Corporation appearing
in Telular Corporation's Form 10-K for the year ended September 30, 1995, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such form as experts in
accounting and auditing.
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution*
The expenses payable by the Registrant in connection with the issuance
and distribution of the securities being registered hereby (other than
underwriting discounts and commissions) are set forth below:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee . . . . . . . $ 649.31
--------
Nasdaq Listing Fee . . . . . . . . . . . . . . . . . . . . . . . . 2,383
--------
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . 0
---------
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . 5,000
--------
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 20,000
-------
Registrar and Transfer Agent's Fees and Expenses . . . . . . . . . 0
---------
Miscellaneous Expenses . . . . . . . . . . . . . . . . . . . . . . 1,000
--------
Printing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 0
---------
Total $29,032.31
----------
</TABLE>
- ---------------------
* Except for the Securities and Exchange Commission registration fee and
the Nasdaq listing fee all expenses are estimated.
Item 15. Indemnification of Officers and Directors
Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") provides that a corporation may indemnify any person,
including any officer or director, who was or is a party or who is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation), by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise ("such Person"), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonable
incurred by such Person, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In any threatened,
pending or completed action by or in the right of the corporation, a
corporation also may indemnify any such Person for costs actually and
reasonably incurred by him in connection with that action's defense or
settlement, if he acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the corporation; however, no
indemnification shall be made with respect to any claim, issue or matter as to
which such Person shall have been adjudged to be liable to the corporation,
unless and only to the extent that a court shall determine that such indemnity
is proper. Where a director, officer, employee or agent is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses (including attorneys' fees)
that such officer or director actually and reasonably incurred.
The Registrant's Bylaws provide that the Registrant will
indemnify such Persons against all liability and expense arising out of such
Person's connection with the business of the Registrant, provided that the
Board of Directors determines that such Person acted in good faith and
reasonably believed that his actions were not opposed to the best interests of
the Registrant; and with respect to any criminal action or proceeding, that
such Person had no reasonable cause to believe his conduct was unlawful. In
the case of any action, suit or proceeding by or in the right of the Registrant
in which such Person is adjudged liable to the Registrant, the Registrant will
indemnify such Person for expenses only to the extent that the court in which
such action is brought determines, upon application, that such Person is
entitled to indemnity for reasonable expenses, and in no case shall such
indemnification extend to liability. Advances against reasonable expenses may
be made by the Registrant on terms fixed by the Board of Directors subject to
an obligation to repay if indemnification proves unwarranted.
II-1
<PAGE> 14
The Registrant's Certificate of Incorporation provides that,
to the fullest extent permitted by Delaware law, its directors shall not be
liable for monetary damages for breach of the directors' fiduciary duty to the
Registrant and its stockholders. This provision in the Certificate of
Incorporation does not eliminate the duty of care. In appropriate
circumstances, equitable remedies such as injunctive or other forms of
non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Registrant or its stockholders, for acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
Directors and officers of the Registrant are covered by a
directors' and officers' liability insurance policy of the Registrant.
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description Reference
- ------- ----------- ---------
<S> <C> <C>
Instruments defining the rights
of Common Stockholders
4.1 Certificate of Incorporation Incorporated by reference to
Exhibit 3.1 to the Registration State-
ment of Telular Corporation on Form
S-1, Registration No. 33-72096, as
amended ("Form S-1")
4.2 Amendment No. 1 to Incorporated by reference to
Certificate of Incorporation Exhibit 3.2 to Form S-1
4.3 Amendment No. 2 to Incorporated by reference to
Certificate of Incorporation Exhibit 3.3 to Form S-1
4.4 Bylaws Incorporated by reference to
Exhibit 3.4 to Form S-1
Opinion on legality of Common
Stock being registered
5.1 Opinion of Covington & Burling Filed herewith
Consents of experts and counsel
23.1 Consent of Covington & Burling Filed herewith as Exhibit 5.1
23.2 Consent of Ernst & Young Filed herewith
</TABLE>
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective
amendment to the Registration Statement:
(i) To include any prospectus required
by Section 10(a)(3) of the
Securities Act;
II-2
<PAGE> 15
(ii) To reflect in the prospectus any
facts or events arising after the
effective date of the Registration
Statement (or the most recent
post-effective amendment thereof)
which, individually or in the
aggregate, represent a fundamental
change in the information set forth
in the Registration Statement;
(iii) To include any material information
with respect to the plan of
distribution not previously
disclosed in the Registration
Statement or any material change to
such information in the Registration
Statement;
Provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) do not apply if the
information required to be included in a
post-effective amendment by those paragraphs
is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are
incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such
post-effective amendment shall be deemed to
be a new registration statement relating to
the securities offered therein, and the
offering of such securities at that time
shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the
securities registered which remain unsold at
the termination of the offering.
(b) The Registrant hereby undertakes that, for purposes
of determining any liability under the Securities
Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new
Registration Statement relating to the Common Stock
therein, and the offering of such Common Stock at
that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission
such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of
the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such
director, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Buffalo Grove, State of Illinois, on the 25th day of
September, 1996.
TELULAR CORPORATION
(Registrant)
By /s/ Kenneth E. Millard
---------------------------
Kenneth E. Millard
Chief Executive Officer
Each person whose signature appears below constitutes and appoints
William L. De Nicolo, Kenneth E. Millard and Frank J.M. ten Brink, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, and
in any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, state
securities law administrators, other governmental authorities, the Nasdaq Stock
Market, and stock exchanges, granting unto said attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Kenneth E. Millard Chief Executive Officer and Director September 25, 1996
- ---------------------- (principal executive officer)
Kenneth E. Millard
/s/ Frank J.M. ten Brink Senior Vice President, Chief September 25, 1996
- ------------------------ Financial Officer and Secretary
Frank J.M. ten Brink (principal financial officer)
/s/ Timothy L. Walsh Vice President and Controller September 25, 1996
- -------------------- (principal accounting officer)
Timothy L. Walsh
/s/ William L. De Nicolo Director and Chairman of the Board September 25, 1996
- ------------------------
William L. De Nicolo
/s/ Joel J. Bellows Director September 25, 1996
- -------------------
Joel J. Bellows
/s/ John A. Blanchard, III Director September 25, 1996
- --------------------------
John A. Blanchard, III
</TABLE>
II-4
<PAGE> 17
<TABLE>
<S> <C> <C>
/s/ Robert B. Blow Director September 25, 1996
- --------------------
Robert B. Blow
/s/ Larry J. Ford Director September 25, 1996
- -----------------
Larry J. Ford
/s/ Richard D. Haning Director September 25, 1996
- ---------------------
Richard D. Haning
/s/ David P. Mixer Director September 25, 1996
- ------------------
David P. Mixer
/s/ William E. Spencer Director September 25, 1996
- ----------------------
William E. Spencer
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5.1
[COVINGTON & BURLING LETTERHEAD]
September 25, 1996
Telular Corporation
920 Deerfield Parkway
Buffalo Grove, Illinois 60089
Gentlemen:
This opinion is being furnished to you in connection with the public
resale by TelePath Corporation ("TelePath") of up to 350,000 shares of Telular
Corporation's (the "Company") Common Stock, par value $.01 per share (the
"Shares") pursuant to a registration statement filed by the Company under the
Securities Act of 1933 on September 25, 1996, with the Securities and Exchange
Commission (the "Commission") (which registration statement, as amended by all
amendments, is hereinafter called the "Registration Statement"). The Shares
were issued to TelePath by the Company under the terms of that certain Stock
Purchase Agreement, between TelePath and the Company, dated as of June 28, 1996
(the "Stock Purchase Agreement"), and may be sold from time-to-time by TelePath
to or through brokers, dealers or other agents or directly to other purchasers
in one or more market transactions, in one or more private transactions, or in
a combination of such methods of sale, at prices then prevailing, at prices
related to such prices, or at negotiated prices.
We have acted as counsel for the Company in connection with the issue
and sale of the Shares to TelePath. We have examined signed copies of the
Registration Statement and all exhibits thereto, all as filed with the
Commission. We have also examined and relied upon certain resolutions adopted
by the Board of Directors of the Company, certified by the Secretary of the
Company, a copy of the Bylaws of the Company, and a copy of the Certificate of
Incorporation of the Company, certified by the Secretary of the State of
Delaware. We also have examined such other documents and made such other
investigations as we have deemed necessary to form a basis for the opinion
hereinafter expressed.
In examining documents, we have assumed the authenticity of documents
submitted to us as originals, the genuiness of all signatures, the conformity
to original documents of documents submitted as copies, and the accuracy of the
representations and statements included therein.
Based upon the foregoing, it is our opinion that the Shares issued to
and to be sold by TelePath pursuant to the Registration Statement are duly
authorized, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as part of the
Registration Statement, and to the use of our name therein and in the related
Prospectus under the caption "Legal Matters".
It is understood that this opinion is to be used only in connection
with the offer and sale of the Shares while the Registration Statement is in
effect.
Very truly yours,
/s/ Covington & Burling
COVINGTON & BURLING
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-00000) and related Prospectus of
Telular Corporation for the registration of 350,000 shares of its common stock
and to the incorporation by reference therein of our report dated October 27,
1995, except for Note 21 as to which the date is December 11, 1995, with
respect to the consolidated financial statements and schedules of Telular
Corporation included in its Form 10-K for the year ended September 30, 1995,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
September 24, 1996
