FOR VALUE RECEIVED, The QUANTUM GROUP, INC., a Nevada corporation (“Quantum” or
the “Borrower”) promises to pay to the order of PAULSON INVESTMENT COMPANY, INC., an Oregon
corporation (“Lender”) the principal sum of Two Hundred Fifty Thousand and no/100ths Dollars ($250,000.00)
(the “Obligation”) from the date of the loan, October 23, 2007 (the “Loan Date”). Interest shall accrue on the
Obligation from the Loan Date at the rate of Ten Percent (10%) per annum, compounded monthly, until paid in
full. This Note supersedes the $250,000 Promissory Note dated October 23, 2007 previously executed and
delivered to the Lender.
December 4, 2007
Maturity Date . The Obligation and all accrued and unpaid interest shall be due and payable on
October 22, 2009.
2. Prepayment . Borrower shall prepay any or all amounts due under this Note at the closing of any public or
private financing for which the Company receives gross proceeds of at least $10,000,000.
3. Method of Payment . Any payment hereunder shall be made by certified or bank cashier’s check unless
Lender has provided Borrower with appropriate wire instructions, in which event, the payment shall be made by
wire transfer of “same day” funds.
4. Default . In the event of an occurrence of any event of default specified below, the Principal Payment shall
become immediately due and payable without notice, except as specified below:
(a) Borrower files a petition to take advantage of any insolvency act; makes an assignment for the benefit of
its creditors; commences a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself of a whole or any substantial part of its property; files a petition or answer seeking
reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable
law or statute of the United States of America or any state.
(b) A court of competent jurisdiction enters an order, judg