Document:

<PAGE>   1
                                                                     EXHIBIT 4.1

                        SECURITIES SUBSCRIPTION AGREEMENT

        AGREEMENT dated as of April 12, 2001, among Condor Systems Inc., a
California corporation (the "COMPANY"), Behrman Capital II L.P. and Strategic
Entrepreneur Fund II, L.P. (collectively, "BEHRMAN"), and DLJ Merchant Banking
Partners II, L.P. and each of its affiliates listed on Exhibit A hereto
(collectively, "DLJMB") (Behrman and DLJMB each an "INVESTOR" and collectively,
the "INVESTORS"). Capitalized terms used herein and not otherwise defined herein
shall have the meaning ascribed to such terms in the Investor's Agreement dated
as of April 15, 1999 among the Company, Behrman, DLJMB and the other signatories
thereto (as may hereafter be amended, the "INVESTORS AGREEMENT").

                              W I T N E S S E T H :

        WHEREAS, the Company desires to obtain funds to refinance certain debt
of the Company; and

        WHEREAS, the Investors desire to subscribe for, and the Company desires
to issue to the Investors, (i) 15% Senior Discount Notes due 2011 of the Company
on the terms set forth in Exhibit B hereto (the "NOTES") for aggregate cash
proceeds of $10,052,763.00 and (ii) Warrants to purchase shares of Class C
Common Stock, par value $0.001 per share ("CLASS C COMMON STOCK"), of the
Company in the form attached hereto as Exhibit C hereto (the "WARRANTS" and,
together with the Notes, the "SECURITIES");

        WHEREAS, as set forth in Section 1.04, on or prior to June 11, 2001
certain Management Shareholders (as such term is defined in the Investors'
Agreement) may elect to purchase additional Notes for aggregate cash proceeds
not to exceed $1,200,000 (the "ADDITIONAL PROCEEDS AMOUNT") and Warrants.

        NOW, THEREFORE, IT IS AGREED:

                                    ARTICLE 1
                                PURCHASE AND SALE

        SECTION 1.01. Purchase and Sale. (a) Upon the terms and subject to the
conditions of this Agreement, the Company agrees to issue and sell to each
Investor and each Investor agrees, severally and not jointly, to purchase from
the Company at the Closing (as defined herein), (x) a Note in the principal
amount at maturity set forth opposite such Investor's name on Exhibit A hereto
and (y) Warrants to purchase the number of shares of Class C Common Stock of the

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Company set forth opposite such Investor's name on Exhibit D hereto (the
Investor's "WARRANT AMOUNT"). The purchase price for the Securities (the
"PURCHASE PRICE") for each Investor is the amount in cash specified on Exhibit A
hereto. The Purchase Price shall be paid as provided in Section 1.02.

        SECTION 1.02. Closing. The closing (the "CLOSING") of the purchase and
sale of the Securities hereunder shall take place simultaneously with the
execution of this Agreement at noon on April 12, 2001 (the "CLOSING DATE") at
the offices of Davis Polk & Wardwell, New York, New York or at such other time
and/or place as DLJMB and the Company may agree. At the Closing:

        (a)    Each Investor shall deliver to the Company, in immediately
available funds, the amount of the Purchase Price set forth opposite such
Investor's name on Exhibit A hereto by wire transfer (or other means acceptable
to the Company) to an account of the Company with a bank designated by Company,
by notice to such Investor.

        (b)    The Company shall deliver, or cause to be delivered, to each
Investor (x) a Note in the principal amount at maturity set forth opposite such
Investor's name on Exhibit A hereto and (y) a Warrant to purchase such
Investor's Warrant Amount duly registered in the name of such Investor.

        SECTION 1.03. Designation of Registrable Securities; Transfer
Restrictions. (a) The parties hereto acknowledge that the Notes and the Warrants
to be purchased by the Investors pursuant to this Agreement and the shares of
Series C Common Stock to be issuable upon exercise of the Warrant shall be
deemed to be Registrable Securities under the Investors' Agreement and agree to
take any and all actions necessary to carry out this intent, including without
limitation, to approve and effect an amendment to the Investors' Agreement or to
enter into a new registration rights agreement, in either case granting the
Investors registration rights in respect of the Notes which are substantially
similar to the registration rights such Investors have been granted in respect
of Registrable Securities pursuant to the Investor's Agreement.

        (b)    The parties hereto acknowledge and agree that the Warrants and
shares of Series C Common Stock to be issuable upon the exercise of the Warrants
shall be subject to the restrictions on transfer set forth in Article 3 of the
Investor's Agreement.

        Section 1.04. Subsequent Sale of Notes and Warrants. On or prior to
June 11, 2001, the Company may sell additional Notes and Warrants for aggregate
proceeds of up to the Additional Proceeds Amount on terms and conditions
substantially identical to those set forth herein. Such sale shall only be to
Management Shareholders who must purchase both Notes and Warrants and shall be
evidenced by documentation satisfactory to the Investors. If pursuant to certain
preemptive rights granted pursuant to Article 5 of the Investors' Agreement,
Management Shareholders desire to purchase Notes and Warrants for

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aggregate proceeds in excess of the Additional Proceeds Amount, each Investor
agrees to sell its pro rata share (based on the principal amount at maturity of
Notes purchased by each Investor) of Notes and Warrants to such Management
Shareholders on terms and conditions satisfactory to such Investor and any
Management Shareholders wishing to make any such purchase, subject to compliance
with all applicable laws.

        SECTION 1.05. No Adjustment to Outstanding Warrants. The Company and
each Investor holding any warrants to purchase shares of Class C Common Stock
issued prior to the date hereof ("OUTSTANDING SERIES C WARRANTS") acknowledges
and agrees that the issuance of the Warrants pursuant to this Agreement shall
not cause the Exercise Price (as such term is defined in the Outstanding Series
C Warrants) and the number of shares of Class C Common Stock for which the
Outstanding Series C Warrants may be exercised to be adjusted pursuant to
Section (h) of the Outstanding Series C Warrants.

        SECTION 1.06. Use of Proceeds. The Company shall use the proceeds of the
Notes solely to repay the principal amount of loans outstanding under that
certain Credit Agreement dated as of April 15, 1999, as amended, between the
Company, the lenders identified on the signature pages thereto, WJCS, Inc.,
Airwave Technology, Inc. and Airwave Capital, Inc., Bank of America, N.A., as
administrative agent and Antares Capital Corporation as documentation agent.

                                   ARTICLE 2
                         REPRESENTATIONS OF THE COMPANY

        The Company represents and warrants to each Investor as of the date
hereof that:

        SECTION 2.01. Corporate Existence and Power. The Company is a
corporation duly incorporated or organized, validly existing and in good
standing under the laws of the State of California and has all corporate powers
and all material governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted and as proposed to
be conducted.

        Section 2.02. Corporate Authorization; Noncontravention. The execution,
delivery and performance by the Company of this Agreement and the documents
attached as Exhibits B and C hereto and the consummation of the transactions
contemplated hereby and thereby (including the issuance and sale of the
Securities by the Company) are within its powers, and have been duly authorized
by all necessary action. Each of this Agreement, the Notes and the Warrants
constitute a valid and binding agreement of the Company, enforceable in
accordance with its terms. On or prior to the Closing Date, an amendment to the
Amended and Restated Articles of Incorporation of the Company (which, as
currently in effect are attached hereto as Exhibit E) (the "ARTICLES" and as

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amended pursuant to this subsection, the "AMENDED ARTICLES") in the form
attached hereto as Exhibit F (the "AMENDMENT") will have been duly filed with
the Secretary of State of California and will be valid and in effect.

        (b)    The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby does not
and will not (i) violate the Amended Articles or the bylaws of the Company, (ii)
violate any material applicable law, rule, regulation, judgment, injunction,
order or decree, (iii) other than any waiver granted pursuant to the Company's
Credit Agreement dated as of April 15, 1999, require any material consent or
other action by any Person under, constitute a material default under, or give
rise to any material right of termination, cancellation or acceleration of any
right or obligation of the Company or to a loss of any material benefit to which
the Company is entitled under any provision of any agreement or other instrument
binding upon the Company or any of the Company's assets or properties or (iv)
result in the creation or imposition of any material lien on any property or
asset of the Company.

        (c)    Assuming the representations set forth in Section 3.05 are true
and correct, upon the filing of the Amendment pursuant to Section 2.02(a), the
103,777 shares of Series A Senior Preferred Stock of the Company (and the
redemption thereof) will qualify under an exemption from the State of California
constitutional usury provisions pursuant to the Section 25113(b)(1) of the
California Corporations Code.

        SECTION 2.03. Capitalization. (a) As of the Closing Date, the authorized
capital stock of the Corporation consists of 60,000,000 shares of Class A Common
Stock, 10,000,000 shares of Class B Common Stock, 60,000,000 shares of Class C
Common Stock and 10,000,000 shares of Preferred Stock (of which 103,777 shares
have been designated as Series A1 Senior Preferred Stock.

        (b)    Immediately following the Closing Date, there will be outstanding
21,365,892 shares of Class A Common Stock, 2,551,053 shares of Class B Common
Stock, 26,966,721 shares of Class C Common Stock, 103,777 shares of Series A1
Senior Preferred Stock, employee stock options to purchase 1,885,587 shares of
Class A Common Stock, options to purchase 1,831,776 shares of Class A Common
Stock granted to the GTP stockholders pursuant to Stock Option Agreements dated
August 4, 2000, options to purchase 4,599,972 shares of Class A Common Stock
granted to certain management stockholders pursuant to the Company's 1999
Management Stock Incentive Plan, and Warrants to purchase 24,752,126 shares of
Class C Common Stock. In addition, the Company will be authorized to issue
employee stock options to purchase an additional 740,000 shares of Class A
Common Stock and options to purchase an additional 1,825,600 shares of Class A
Common Stock for certain management stockholders pursuant to the Company's 1999
Management Stock Incentive Plan.

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<PAGE>   5

        (c)    Each of the Securities which are being issued to the Investors
hereunder have been duly and validly authorized and, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be fully paid and nonassessable and the issuance of such Securities
shall be free of any pre-emptive rights (including without limitation any rights
of any party to the Investors Agreement pursuant to Section 5.01 thereof). The
shares of Series C Common Stock issuable upon exercise of the Warrants have been
duly and validly reserved for issuance and, when issued upon exercise in
accordance with terms thereof, will be duly and validly issued, fully paid and
nonassessable. Such shares of Series C Common Stock will be free of restrictions
on transfer other than restrictions on transfer under this Agreement, the
Investors Agreement and under applicable state and federal securities laws.

        (d)    Except as set forth in this Section 2.03, there are, and
immediately after the Closing there will be, no outstanding (i) shares of
capital stock or voting securities of the Corporation, (ii) securities of the
Company convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of the Company, (iii) options or other rights to
acquire from the Company, or other obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of the Company and (iv) no
obligation of the Company to repurchase or otherwise acquire or retire any
shares of capital stock or other securities, rights or obligations referred to
in (i), (ii), or (iii).

                                   ARTICLE 3
                         REPRESENTATION OF THE INVESTORS

        Each Investor represents and warrants to the Company, severally as to
itself only and not jointly as to any other Investor, as of the date hereof
that:

        Section 3.01. Corporate Existence And Power. Such Investor is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.

        Section 3.02. Corporate Authorization. The execution, delivery and
performance by such Investor of this Agreement and the consummation of the
transactions contemplated hereby are within the powers (corporate, partnership
or otherwise) of such Investor and have been duly authorized by all necessary
action on the part of such Investor. This Agreement constitutes a valid and
binding agreement of such Investor.

        Section 3.03. Purchase For Investment. Such Investor is purchasing the
relevant Securities for investment for its own account and not with a view to,
or for sale in connection with, any distribution thereof other than in
compliance with the Securities Act of 1933 as amended (the "1933 ACT") and other
applicable regulations.

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        Section 3.04. Private Placement. (a) Such Investor understands that (i)
the offering and sale of the Securities hereby is intended to be exempt from
registration under the 1933 Act and (ii) there is only a limited market for the
Securities, and there can be no assurance that any Investor will be able to sell
or dispose of any Securities to be purchased by such Investor.

        (b)    Such Investor's financial situation is such that such Investor
can afford to bear the economic risk of holding the Securities acquired by such
Investor hereunder for an indefinite period of time, and such Investor can
afford to suffer the complete loss of the investment in such Securities.

        (c)    Such Investor's knowledge and experience in financial and
business matters are such that it is capable of evaluating the merits and risks
of the investment in the Securities, or such Investor has been advised by a
representative possessing such knowledge and experience.

        (d)    Such Investor understands that the Securities acquired hereunder
are a speculative investment which involves a high degree of risk of loss of the
entire investment therein, that there are substantial restrictions on the
transferability of the Securities as set forth in the Investors' Agreement, and
that for an indefinite period there will be no public market for the Securities.

        (e)    Such Investor and its representatives have been given the
opportunity to examine all documents and to ask questions of, and to receive
answers from, Seller and its representatives concerning the terms and conditions
of the acquisition of the Securities and related matters and to obtain all
additional information which such Investor or its representatives deem
necessary.

        (f)    Such Investor is an "ACCREDITED INVESTOR" defined in Regulation D
under the 1933 Act.

        Section 3.05. Pre-existing Relationship; Business And Financial
Experience. Each Investor has either a pre-existing personal or business
relationship with the Company or, by reason of such Investor's own business and
financial experience or that of such Investor's professional advisers, such
Investor has the capacity to protect its own interests in the offering and
purchase of the Securities.

                                   ARTICLE 4
                            SURVIVAL; INDEMNIFICATION

        Section 4.01. Survival. The representations and warranties of the
parties hereto contained in this Agreement shall remain in full force and effect
following the Closing. A breach of any representation or warranty made in this
Agreement shall not affect in any manner whatsoever the relative rights and
obligations of the parties to and under the Investors' Agreement.

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<PAGE>   7

        Section 4.02. Indemnification. (a) The Company hereby indemnifies each
Investor and its Affiliates, limited partners, general partners, directors,
officers and employees against and agrees to hold each of them harmless from any
and all damage, loss, liability and expense (including, without limitation,
reasonable expenses of investigation and reasonable attorneys' fees and expenses
in connection with any action, suit or proceeding) ("DAMAGES") incurred or
suffered by any such party arising out of any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by the Company pursuant
to this Agreement.

        (b)    Each Investor hereby indemnifies, severally and not jointly, the
Company and its Affiliates, directors, officers and employees against and agrees
to hold each of them harmless from any and all Damages incurred or suffered by
any such party arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by such Investor pursuant to this
Agreement; provided that such Investor's maximum liability under this Section
4.02(b) shall not exceed the amount of the consideration paid by such Investor
to the Company pursuant to this Agreement.

                                    ARTICLE 5
                                  MISCELLANEOUS

        Section 5.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission to the
recipient's then current facsimile number) and shall be given,

        if to the Company, to:

               Condor Systems, Inc.
               2133 Samaritan Drive
               San Jose, CA 95124
               Attention: Frederic Bassett
               Fax: (408) 377-4421

        with a copy to:

               Orrick, Herrington & Sutcliffe LLP
               400 Sansome Street
               San Francisco, CA 94111
               Attention: Lawrence T. Kane
               Fax: (415) 773-5759

        if to DLJMB or any of its Affiliates listed on Exhibit A hereto, to:

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               DLJ Merchant Banking Partners II, L.P.
               277 Park Avenue
               New York, New York 10172
               Attention: Kirk Wortman
               Fax: (212) 892-7551

        with a copy to:

               Davis Polk & Wardwell
               450 Lexington Avenue
               New York, New York 10017
               Attention: Tiziana Tabucchi
               Fax: (212) 450-4800

        if to Behrman, to:

               Behrman Capital II L.P.
               4 Embarcadero Center
               Suite 3640
               San Francisco, CA 94111
               Attention: William Mathes
               Fax: (415) 434-7310

        with a copy to:

               Latham & Watkins
               135 Commonwealth Drive
               Menlo Park, CA 94025
               Attention: Peter Kerman
               Fax: (650) 463-2600

        Section 5.02. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver is to be
effective.

        Section 5.03. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense;
provided that the Company shall pay all reasonable out-of-pocket costs, expenses
and other payments, including without limitation legal fees and disbursements,
incurred by DLJMB and Behrman in connection with the transactions contemplated
by this Agreement.

        Section 5.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or

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<PAGE>   9

otherwise transfer any of its rights or obligations under this Agreement without
the consent of each other party hereto; provided further, that each Investor may
assign or delegate its rights and obligations under this Agreement to one or
more transferees of the Notes or Warrants.

        Section 5.05. Counterparts; Third Party Beneficiaries. This Agreement
may be executed in any number of counterparts, each of which shall be an
original and all of which together shall be deemed to be one and the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.

        Section 5.06. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may only be brought
in the United States District Court for the Southern District of New York or any
New York State court sitting in New York City, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party as
provided in Section 5.01 shall be deemed effective service of process on such
party.

        Section 5.07. Specific Enforcement. Each party hereto acknowledges that
the remedies at law of the other parties for a breach or threatened breach of
this Agreement would be inadequate and, in recognition of this fact, any party
to this Agreement, without posting any bond, and in addition to all other
remedies which may be available, shall be entitled to obtain equitable relief in
the form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then be available.

        Section 5.08. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto and supersedes all prior agreements and
understandings, oral and written, among the parties with respect to the subject
matter hereof.

        Section 5.09. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.

        Section 5.10. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH LAWS

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<PAGE>   10

OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF SUCH
STATE.

        Section 5.11. Waiver of Pre-emptive Rights. Each Investor hereby waives
any pre-emptive rights to which such Investor may be entitled pursuant to
Section 5.01 of the Investors Agreement in connection with the purchase of
Securities hereunder and the transactions contemplated hereby.

                                       10
<PAGE>   11

        IN WITNESS WHEREOF, the Investor has executed this Securities
Subscription Agreement and the Company has caused its corporate name to be
hereunto subscribed by its officers thereunto duly authorized, all as of the day
and year first above written.

                                     CONDOR SYSTEMS, INC.

                                     By: ___________________________
                                         Name:
                                         Title:

                                     DLJ MERCHANT BANKING PARTNERS
                                     II, L.P., a Delaware Limited Partnership

                                     By: DLJ Merchant Banking II, Inc.,
                                         as managing general partner

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                                       11
<PAGE>   12

                                     DLJ MERCHANT BANKING
                                     PARTNERS II-A L.P., a Delaware Limited
                                     Partnership

                                     By: DLJ Merchant Banking II, Inc.,
                                         as managing general partner

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                                     DLJ OFFSHORE PARTNERS II, C.V., a
                                     Netherlands Antilles Limited Partnership

                                     By: DLJ Merchant Banking II, Inc.,
                                         as advisory general partner

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                       [Securities Subscription Agreement]
                                       12
<PAGE>   13

                                     DLJ DIVERSIFIED PARTNERS, L.P., a
                                     Delaware Limited Partnership

                                     By: DLJ Diversified Partners, Inc.,
                                         as managing general partner

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                                     DLJ DIVERSIFIED PARTNERS-A, L.P., a
                                     Delaware Limited Partnership

                                     By: DLJ Diversified Partners, Inc.,
                                         as managing general partner

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                       [Securities Subscription Agreement]
                                       13
<PAGE>   14

                                     DLJ MILLENIUM PARTNERS, L.P., a
                                     Delaware Limited Partnership

                                     By: DLJ Merchant Banking II, Inc., as
                                         managing general partner

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                                     DLJ MILLENIUM PARTNERS-A, L.P.

                                     By: DLJ Merchant Banking II, Inc. as
                                         managing general partner

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                                     DLJMB FUNDING II, INC., a Delaware
                                     corporation

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                       [Securities Subscription Agreement]
                                       14
<PAGE>   15

                                     DLJ FIRST ESC, L.P.

                                     By: DLJ LBO Plans Management
                                         Corporation, as manager

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                                     DLJ EAB PARTNERS, L.P.

                                     By: DLJ LBO Plans Management
                                         Corporation, as managing general
                                         partner

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                       [Securities Subscription Agreement]
                                       15
<PAGE>   16

                                     DLJ ESC II, L.P.

                                     By: DLJ LBO Plans Management
                                         Corporation, as manager

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: c/o DLJ Merchant Banking II, Inc.
                                              277 Park Avenue
                                              New York, NY 10172
                                              Fax: 212-892-7272

                                     BEHRMAN CAPITAL II L.P.

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: 4 Embarcadero Center
                                              Suite 3640
                                              San Francisco, CA 94111
                                              Fax: 212-892-7272

                                     STRATEGIC ENTREPRENEUR FUND II, L.P.

                                     By: ___________________________
                                         Name:
                                         Title:

                                     Address: 4 Embarcadero Center
                                              Suite 3640
                                              San Francisco, CA 94111

                       [Securities Subscription Agreement]
                                       16
<PAGE>   17

                                    EXHIBIT A

<TABLE>
<CAPTION>
                                                   AGGREGATE
                                                 PRINCIPAL AMOUNT            AGGREGATE
INVESTOR                                       AT MATURITY OF NOTE         PURCHASE PRICE
--------                                       -------------------         --------------
<S>                                            <C>                         <C>
DLJMB

DLJ Merchant Banking Partners II, L.P.             $ 7,223,000             $4,067,849.14

DLJ Merchant Banking Partners II-A, L.P.           $   288,000             $  162,195.84

DLJ Offshore Partners II, C.V.                     $   355,000             $  199,928.90

DLJ Diversified Partners, L.P.                     $   422,000             $  237,661.96

DLJ Diversified Partners-A, L.P.                   $   157,000             $   88,419.26

DLJMB Funding II, Inc.                             $ 1,474,000             $  830,127.32

DLJ Millennium Partners, L.P.                      $   117,000             $   65,892.06

DLJ Millennium Partners-A, L.P.                    $    23,000             $   12,953.14

DLJ EAB Partners, L.P.                             $    32,000             $   18,021.76

DLJ ESC II, L.P.                                   $ 1,362,000             $  767,051.16

DLJ First ESC, L.P.                                $    14,000             $    7,884.52

       TOTAL FOR DLJMB:                            $11,467,000             $6,457,985.06

BEHRMAN

Behrman Capital II L.P.                            $ 6,298,000             $3,546,907.64

Strategic Entrepreneur Fund II, L.P.               $    85,000             $   47,870.30

        TOTAL FOR BEHRMAN:                         $ 6,383,000             $3,594,777.94
</TABLE>

<PAGE>   18

EXHIBIT B

[Form of Note: see attached]

<PAGE>   19

EXHIBIT C

[Form of Warrant to come]

<PAGE>   20

                                    EXHIBIT D

<TABLE>
<CAPTION>
                                                             NUMBER OF SHARES OF
                                                            CLASS C COMMON STOCK
                                                             TO BE PURCHASED ON
                                                             EXERCISE OF WARRANT
INVESTOR                                                     ("WARRANT AMOUNT")
--------                                                     ------------------
<S>                                                          <C>
DLJMB

DLJ Merchant Banking Partners II, L.P.                            8,768,722

DLJ Merchant Banking Partners II-A, L.P.                            349,632

DLJ Offshore Partners II, C.V.                                      430,970

DLJ Diversified Partners, L.P.                                      512,308

DLJ Diversified Partners-A, L.P.                                    190,598

DLJMB Funding II, Inc.                                            1,789,436

DLJ Millennium Partners, L.P.                                       142,038

DLJ Millennium Partners-A, L.P.                                      27,922

DLJ EAB Partners, L.P.                                               38,848

DLJ ESC II, L.P.                                                  1,653,468

DLJ First ESC, L.P.                                                  16,996

       TOTAL FOR DLJMB:                                          13,920,938

BEHRMAN

Behrman Capital II L.P.                                           7,645,772

Strategic Entrepreneur Fund II, L.P.                                103,190

        TOTAL FOR BEHRMAN:                                        7,748,962
</TABLE>

<PAGE>   21

EXHIBIT E

[Amended and Restated Articles]<PAGE>   1
                                                                    EXHIBIT 4.2

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.

FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT.

<PAGE>   2

                              CONDOR SYSTEMS, INC.

                       15% Senior Discount Notes due 2011

No. ______

Issue Date:  April 12, 2001

Issue Price:  $563.18  (for each $1,000 Principal Amount at Maturity)

Principal Amount at Maturity:  $______________

CONDOR SYSTEMS, INC. (the "COMPANY") promises to pay to _______________, or
registered assigns, the principal amount of this Note at maturity in Dollars on
April 1, 2011.

        Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

                                        Dated: April 12, 2001

                                        CONDOR SYSTEMS, INC.

                                        By: ___________________________________

                                        Name: _________________________________

                                        Title: ________________________________

<PAGE>   3

                                 (Back of Note)
                       15% Senior Discount Notes due 2011

        This Note is one of a duly authorized issue of Notes of the Company
consisting of other Senior Discount Notes due 2011 of the Company issued on
April 12, 2001 and any replacement Notes issued in exchange for, or in lieu of,
the foregoing in accordance with the terms hereof. The Notes are limited in
aggregate principal amount at maturity to $20,000,000. All of such Notes shall
be treated as a single issue and vote together as one class for all purposes of
this Note as described herein.

        1. Incorporation by Reference of Provisions of the Indenture.
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Indenture (as amended in accordance herewith, the "INDENTURE")
attached hereto as Exhibit A. At all times during which an indenture is not
required to be qualified under the Trust Indenture Act of 1939 (U.S. Code
Sections 77aaa-77bbbb), as amended from time to time (the "TIA") with respect to
the Notes or the Indenture has not otherwise been executed and delivered, to the
extent not inconsistent with any other terms of the Notes set forth herein, all
of the terms and conditions of the Indenture shall be and are hereby
incorporated by this reference in the Notes as if fully set forth herein, and
shall be binding upon the Company and, by accepting a Note, each Holder, and
inure to the benefit of the Holders of the Notes, except that, to the extent
that the Indenture requires (i) any notices, certificates or other items to be
delivered by the Company to the Trustee or any Paying Agent, such notices,
certificates or other items shall be delivered instead to each Holder, (ii) any
notices, certificates or other items to be delivered to the Trustee shall be
delivered instead to the Company (and shall be delivered by the Company to each
Holder), (iii) any notices, certificates or other items to be delivered by the
Trustee to the Holders, such notices, certificates or other items shall be
delivered instead by the Company to the Holders, (iv) any payments to be made by
the Company to the Trustee or Paying Agent for payment to Holders, such payments
shall instead be paid directly by the Company to the applicable Holder in the
same manner as set forth in Section 3 below, (v) approval of the form of Notes
or notations, legends or endorsements thereon by the Trustee, the Holders of a
majority in outstanding principal amount of the Notes shall instead approve such
form and notations, legends or endorsements (the form of Notes delivered to the
initial Holders on the date of original issuance of the Notes and notations,
legends and endorsements thereon being deemed to have been so approved), (vi)
any Note to be authenticated by the Trustee or an Authenticating Agent, the
Notes shall instead be authenticated by the Company (the execution and delivery
of any Note by manual signature of the Company to be deemed to constitute such
authentication for all purposes), (vii) that a Person other than the Company or
any Affiliate thereof act as Paying Agent for presentation or surrender of Notes
for payment, the Company or any Affiliate thereof may nonetheless so act, (viii)
the Company to initially appoint the Trustee as Registrar or Paying Agent (to
the extent of acting as agent for receiving surrender or presentations of, but
not deposits of payments on, Notes) and agents for service of demands and
notices in connection with the Notes, the Company instead hereby appoints its
office at 2133 Samaritan Drive, San Jose, California, 95124, for such purpose
(with Section 4.02 of the Indenture not to apply thereto), (ix) Notes to be
canceled by the Trustee, such Notes shall instead be canceled by the Company,
(x) the Opinions of Counsel to be delivered to the Trustee pursuant to the
Indenture shall instead be delivered to the Holders, (xi) any Notes to be
surrendered or forwarded to the Trustee or any Paying Agent or Registrar, such
Notes shall be surrendered or forwarded instead

                                       1
<PAGE>   4

to the Company, (xii) any notices, certificates or other items to be delivered
by the Holders to the Registrar or Paying Agent, such notices, certificates or
other items shall be delivered instead to the Company, (xiii) Notes to be
redeemed upon a partial redemption to be selected by the Trustee, such Notes
shall be selected instead by the Company, (xiv) any direction to be given to the
Trustee in order to declare all the Notes to be due and payable immediately,
such direction shall not be required to be given and the Notes shall instead be
so declared upon the affirmative vote of the number of Holders required to give
such direction (the "REQUISITE HOLDERS"), (xv) any pursuit of remedies at the
option or discretion of the Trustee shall instead be made at the option or
discretion of the Requisite Holders and (xvi) any Notes owned by any Person
directly or indirectly controlling or controlled by or under common control with
the Company shall be considered not outstanding, except for Notes owned by any
Investors or their assigns and successors which shall nonetheless be considered
outstanding.

        2. Principal. The Company shall pay the principal of this Note at
maturity on April 1, 2011.

        3. Accreted Value; Interest. No interest will accrue on this Note prior
to April 1, 2005. The Company promises to pay interest on the Principal Amount
at Maturity of this Note at 15% per annum from April 1, 2005 until the principal
hereof is paid or duly provided for. The Company shall pay interest in cash
semiannually in arrears on April 1 and October 1 (each an "INTEREST PAYMENT
DATE") in each year commencing on October 1, 2005. Interest on the Notes shall
accrue from the most recent day to which interest has been paid or provided for,
or if no interest has been paid, from April 1, 2005. Interest shall be
compounded on the basis of a 360 day year of twelve 30 day months. The Company
shall pay interest (including without limitation, post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at the rate of 17% per annum to the extent lawful
and shall pay interest (including, without limitation, post-petition interest in
any proceeding under Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) from time to time on demand at
the same rate to the extent lawful.

        "ACCRETED VALUE" means (i) as of any date of determination prior to
April 1, 2005, the sum of (a) the Issue Price and (b) the portion of the excess
of the principal amount at maturity of this Note over the Issue Price which
shall have been accreted thereon through such date, such amount to be so
accreted on a daily basis at a rate of 15% per annum of the Issue Price,
compounded semiannually on each April 1 and October 1 from April 1, 2001 through
the date of determination, computed on the basis of a 360 day year of twelve 30
day months and (ii) on or after April 1, 2005, the principal amount at maturity
of this Note.

        "ISSUE PRICE" means $563.18 (for each $1,000 Principal Amount).

        4. Method Of Payment. The Company will pay the principal (or Accreted
Value) of, premium and interest, if any, on the Notes to the Persons who are
registered Holders of Notes on the applicable payment date. The Notes will be
payable as to principal (or Accreted Value), premium and interest, if any, by
wire transfer of immediately available funds to the accounts specified in
writing by the Holder hereof, or, if no such account is specified, by mailing a
check to the Holder's registered address. Holders of Notes must surrender their
Notes to the Paying Agent to collect principal (or Accreted Value) payments.
Such payment shall be in such coin or currency of the United

                                       2
<PAGE>   5

States of America as at the time of payment is legal tender for payment of
public and private debts.

        5. Paying Agent And Registrar. Initially, the Company will act as Paying
Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries may act in
any such capacity.

        6. Indenture. In the event an indenture is required to be qualified
under the TIA, or at any time after the date hereof, upon the request of Holders
of in excess of 25% in aggregate principal amount at maturity of outstanding
Notes, the Company shall appoint a Trustee (the "TRUSTEE") who satisfies the
eligibility requirements set forth in Section 7.10 of the Indenture and, in any
such event, the Company shall take whatever actions are necessary to cause an
Indenture substantially in the form of Exhibit A attached hereto to be executed
and delivered by the Company, the Guarantor and the Trustee and to be qualified
under the TIA. In such event, (i) this Note shall be deemed to be one of an
issue of Notes of the Company issued under the Indenture; (ii) the terms of the
Notes shall be deemed to include those stated in the Indenture and those made
part of the Indenture by reference to the TIA, as amended from time to time; and
(iii) the Notes shall be subject to all such terms. Holders of Notes are
referred to the Indenture and the TIA for a statement of all such terms.

        7. Optional Redemption.

               (a)    Subject to Section 3.10 of the Indenture and Sections 8
        and 10 hereof, the Notes will be subject to redemption at any time on or
        after April 1, 2005 at the option of the Company, in whole or in part,
        upon not less than 30 nor more than 60 days' notice, in cash at the
        redemption prices (expressed as percentages of the Accreted Value or
        principal amount thereof, as the case may be, at the applicable
        redemption date) set forth below, if redeemed during the twelve-month
        period beginning on April 1 of the years indicated below:

<TABLE>
<CAPTION>
        YEAR                                                 PERCENTAGE
        ----                                                 ----------
<S>                                                          <C>
        Prior to 2006.....................................     107.5%
        2007..............................................     105%
        2008..............................................     102.5%
        2008 and thereafter...............................     100%
</TABLE>

               (b)    Any redemption pursuant to this Section 7 shall be made
        pursuant to the provisions of Section 3.01 through 3.06 of the Indenture
        and is subject to the restrictions in Section 8 hereof.

        8. Restrictions on Redemption. Subject to Section 3.10 of the Indenture,
by its acceptance of this Note, each Holder of such Note acknowledges that the
New Credit Facility prohibits the Company from voluntarily redeeming all or any
portion of the Notes pursuant to Section 7 hereof, or from mandatorily redeeming
all or any portion of the Notes pursuant to Sections 9 and 10 hereof, and each
Holder hereby agrees that it

                                       3
<PAGE>   6

shall not accept the redemption price in respect of any voluntary redemption or
any mandatory redemption pursuant to Section 10 hereof at any time prior to
April 1, 2005.

        9. Mandatory Redemption. Except as set forth in Section 10 hereof and
Section 3.10 of the Indenture, the Company shall not be required to make
mandatory redemption payments with respect to the Notes.

        10. Repurchase At Option Of Holder.

               (a)    Subject to Section 3.10 of the Indenture and Section 8
        hereof, upon the occurrence of a Change of Control, each Holder of Notes
        will have the right to require the Company to repurchase all or any part
        (equal to a minimum of $1,000 principal amount at maturity) of such
        Holder's Notes pursuant to the offer described in Section 4.14 of the
        Indenture (the "CHANGE OF CONTROL OFFER") at an offer price in cash
        equal to 101% of the Accreted Value or principal amount thereof, as the
        case may be, at the date of repurchase, plus accrued but unpaid
        interest, if any, there on to the date of repurchase (the "CHANGE OF
        CONTROL PAYMENT"). Within 60 days following any Change of Control, the
        Company will (or will cause the Trustee to) mail a notice to each Holder
        describing the transaction or transactions that constitute the Change of
        Control and offering to repurchase Notes on the date specified in such
        notice, which date shall be no earlier than 30 days and no later than 60
        days from the date such notice is mailed, pursuant to the procedures
        required by the Indenture and described in such notice.

               (b)    Within 365 days after the receipt of any Net Proceeds from
        an Asset Sale, the Company or a Restricted Subsidiary of the Company, as
        the case may be, shall apply such Net Proceeds, at its option (unless
        the Company is required to apply such Net Proceeds pursuant to the terms
        of the New Credit Facility), to (a) (i) repay Indebtedness under the New
        Credit Facility or (ii) repay or repurchase Pari Passu Indebtedness of
        the Company or any Indebtedness of any Restricted Subsidiary of the
        Company that is not the Guarantor, as the case may be, provided that, if
        the Company shall so repay or purchase Pari Passu Indebtedness of the
        Company or the Guarantor, it will equally and ratably reduce
        Indebtedness under the Notes if the Notes are then redeemable or, if the
        Notes may not then be redeemed, the Company shall make an offer (in
        accordance with the procedures set forth below for an Asset Sale Offer)
        to all Holders of Notes to purchase at a purchase price equal to 100% of
        the Accreted Value, plus accrued but unpaid interest, or principal
        amount of the Notes, as the case may be, at the date of purchase, the
        Notes that would otherwise be redeemed, or (b) an investment in
        property, the making of a capital expenditure or the acquisition of
        assets that are used or useful in a Permitted Business, or Capital Stock
        of any Person primarily engaged in a Permitted Business if (i) as a
        result of the acquisition by the Company or any Restricted Subsidiary
        thereof, such Person becomes a Restricted Subsidiary or (ii) the
        Investment in such Capital Stock is permitted by clause (f) of the
        definition of Permitted Investments. Pending the final application of
        any such Net Proceeds, the Company and its Restricted Subsidiaries may
        temporarily reduce Indebtedness or otherwise invest such Net Proceeds in
        any manner that is not prohibited by the Indenture. Any Net Proceeds
        from Asset Sales that are not applied or invested as provided in the
        first

                                       4
<PAGE>   7

        sentence of this paragraph will be deemed to constitute "EXCESS
        PROCEEDS". Subject to Section 3.10 of the Indenture and Section 8
        hereof, when the aggregate amount of Excess Proceeds exceeds $10
        million, the Company will be required to make an offer to all Holders of
        Notes (an "ASSET SALE OFFER") to purchase the maximum principal amount
        of Notes that may be purchased out of the Excess Proceeds at an offer
        price in cash in an amount equal to 100% of the Accreted Value, plus
        accrued but unpaid interest, principal amount thereof, as the case may
        be, at the date of purchase, in accordance with the procedures set forth
        in the Indenture. To the extent that any Excess Proceeds remain after
        consummation of an Asset Sale Offer, the Company may use any remaining
        Excess Proceeds for any purpose not otherwise prohibited by the
        Indenture. If the aggregate principal amount of Notes surrendered by
        Holders thereof in connection with an Asset Sale Offer exceeds the
        amount of Excess Proceeds, the Trustee, if any, or the Company shall
        select the Notes to be purchased as set forth in Sections 3.02 and 3.03
        of the Indenture. Upon completion of such offer to purchase, the amount
        of Excess Proceeds shall be reset at zero. Holders of Notes that are the
        subject of an offer to purchase may elect to have such Notes purchased
        by completing the form entitled "Option of Holder to Elect Purchase" on
        the reverse of the Notes.

        11. Notice Of Redemption. Notice of redemption will be mailed by first
class mail at least 30 days but not more than 60 days before the redemption date
to each Holder of Notes to be redeemed at its registered address. Only Notes in
denominations larger than $1,000 Principal Amount at Maturity may be redeemed in
part, unless all of the Notes held by a Holder are to be redeemed. On and after
the redemption date further principal ceases to accrete/interest ceases to
accrue on Notes or portions thereof called for redemption.

        12. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in minimum denominations of $1,000 principal amount at maturity.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.

        13. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

        14. Amendment, Supplement And Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least 75% in Principal Amount at Maturity of the then outstanding
Notes and any existing Default or compliance with any provision of the Indenture
or the Notes may be waived with the consent of the Holders of 75% in Principal
Amount at Maturity of the then outstanding Notes. Without the consent of any
Holder of a Note, the Indenture or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for the assumption of
the Company's or Guarantor's obligations

                                       5
<PAGE>   8

to Holders of the Notes by a successor to the Company or the Guarantor in case
of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act, or to provide
for additional guarantees of the Notes.

        15. Defaults And Remedies. Each of the following constitutes an "EVENT
OF DEFAULT": (a) default for 30 days in the payment of interest, if any, on the
Notes; (b) default in payment when due of the principal (or Accreted Value) of
or premium, if any, on the Notes; (c) failure by the Company or any of its
Restricted Subsidiaries for 30 days after receipt of notice from the Trustee or
Holders of at least 25% in Principal Amount at Maturity of the Notes then
outstanding to comply with Sections 4.07, 4.09, 4.10 or 4.14 or Article 5 of the
Indenture; (d) failure by the Company for 60 days after notice from the Trustee,
if any, or the Holders of at least 25% in Principal Amount at Maturity of the
Notes then outstanding to comply with any of its other agreements in the
Indenture or the Notes; (e) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the date hereof, which default (i) is caused by a failure to
pay Indebtedness at its stated final maturity (after giving effect to any
applicable grace period provided in such Indebtedness) (a "PAYMENT DEFAULT") or
(ii) results in the acceleration of such Indebtedness prior to its stated final
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10 million or more; (f) failure by the Company or any
of its Restricted Subsidiaries to pay final judgments aggregating in excess of
$10 million (net of any amounts with respect to which a reputable and
creditworthy insurance company has acknowledged liability in writing), which
judgments are not paid, discharged or stayed for a period of 60 days; (g) except
as permitted by the Indenture, the Note Guarantee shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or the Guarantor, or any Person acting on behalf of the
Guarantor, shall deny or disaffirm its obligations under the Note Guarantee; and
(h) certain events of bankruptcy or insolvency as described in Section 6.01(h)
of the Indenture.

        16. If any Event of Default (other than certain events of bankruptcy or
insolvency) occurs and is continuing, the Holders of at least 25% in Principal
Amount at Maturity of the then outstanding Notes may direct the Trustee to,
declare all the Notes to be due and payable immediately. Upon any such
declaration, the Accreted Value or Principal Amount at Maturity, as the case may
be, of the Notes shall become due and payable immediately. However, so long as
any Indebtedness permitted to be incurred pursuant to the New Credit Facility
shall be outstanding or any commitments under the New Credit Facility to make
loans or issue letters of credit thereunder shall be outstanding such
acceleration shall not be effective until the earlier of (i) an acceleration of
any such Indebtedness under the New Credit Facility or a termination of any of
the commitments under the New Credit Facility or (ii) five Business Days after
receipt by the Company and the administrative agent under the New Credit
Facility of written notice of such acceleration or termination. Notwithstanding
the foregoing, in the case of an Event

                                       6
<PAGE>   9

of Default arising from certain events of bankruptcy or insolvency described in
Section 6.01(h) of the Indenture, the Accreted Value or Principal Amount at
Maturity, as the case may be, of all outstanding Notes shall be due and payable
immediately without further action or notice. The Holders of a majority in
aggregate Principal Amount at Maturity, of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal (or Accreted Value), interest or premium, if any, that has become due
solely because of the acceleration) have been cured or waived; provided that in
the event of a declaration of acceleration of the Notes because an Event of
Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (e) of Section 6.01 of the Indenture, the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of any Indebtedness described in clause (e) of Section 6.01 of the
Indenture have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (i) the
annulment of the acceleration of the Notes would not conflict with any judgment
or decree of a court of competent jurisdiction and (ii) all existing Events of
Default, except non-payment of principal (or Accreted Value) or interest on the
Notes that became due solely because of the acceleration of the Notes, have been
cured or waived. The Company is required to deliver to the Trustee, if any, or
the Holders annually a statement regarding compliance with the Indenture, and
the Company is required upon becoming aware of any Default or Event of Default
to deliver to the Trustee, if any, or the Holders a statement specifying such
Default or Event of Default.

        17. Trustee Dealings With Company. The Trustee, if any, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.

        18. No Recourse Against Others. No member, director, officer, employee
or incorporator of the Company or the Guarantor, as such, shall have any
liability for any obligations of the Company or the Guarantor under the Notes or
the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

        19. Authentication. This Note shall not be valid until authenticated by
the manual signature of the authenticating agent.

        20. Additional Rights of Holders of Restricted Notes. In addition to the
rights provided to Holders of Notes under the Indenture, Holders of Restricted
Notes shall have all the rights set forth in the Investors Agreement.

        21. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company may cause
CUSIP numbers to be printed on the Notes and the Company or the Trustee as
appropriate may use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.

                                       7
<PAGE>   10

        The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:

               CONDOR SYSTEMS, INC.
               2133 Samaritan Drive
               San Jose, California 95124
               Telecopier No.: (408) 371-9589
               Attention: Chief Financial Officer

                                       8
<PAGE>   11

                                 ASSIGNMENT FORM

To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to

________________________________________________________________________________
                 (Insert assignee's soc. sec. or tax. I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
             (Print or type assignee's name, address, and zip code)

and irrevocably appoint ____________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

                                       9
<PAGE>   12

                       OPTION OF HOLDER TO ELECT PURCHASE

        If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.14 of the Indenture, check the box below:

        [ ] Section 4.10                     [ ] Section 4.14

        If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
Principal Amount at Maturity you elect to have purchased: $________

Date:                            Your Signature: _______________________________
                                 (Sign exactly as your name appears on the Note)

                                 Tax Identification No: ________________________

Signature Guarantee.

                                       10
<PAGE>   13

                                 NOTE GUARANTEE

        CEI Systems, Inc. (the "GUARANTOR") hereby unconditionally guarantees,
to the fullest extent permitted by law, (i) the due and punctual payment of the
principal of the Notes, whether at the maturity, by acceleration, call for
redemption or otherwise, and of interest on the overdue principal of the Notes
and all other obligations of the Issuer to the Holders or the Trustee under the
Indenture or the Notes and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at maturity, by acceleration or otherwise.

        The obligations of the Guarantor to the Holders and to the Trustee
pursuant to this Note Guarantee and the Indenture are as expressly set forth in
Article 10 of the Indenture and in such other provisions of the Indenture as are
applicable to the Guarantor, and reference is hereby made to such Indenture for
the precise terms of this Note Guarantee. The terms of Article 10 of the
Indenture (including, without limitation, Section 10.02 of the Indenture) and
such other provisions of the Indenture as are applicable to the Guarantor are
incorporated herein by reference.

        This is a continuing guarantee and shall remain in full force and effect
and shall be binding upon the Guarantor and its successors and assigns until
full and final payment of all of the Company's obligations under the Notes and
the Indenture and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a guarantee
of payment and not a guarantee of collection.

        This Note Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Note
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.

        In case any provision in this Note Guarantee shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

                                       11
<PAGE>   14

        THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE
THIS NOTE GUARANTEE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS
OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF OTHER JURISDICTION
WOULD BE REQUIRED THEREBY.

                                    CEI SYSTEMS, INC.

                                    By: ____________________________________
                                    Name:
                                    Title: Attorney-in-Fact

                                       12

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