SET-OFF AND RELEASE AGREEMENT

         THIS SET-OFF AND RELEASE AGREEMENT (the "Agreement") is entered into as
of the 28th day of December, 2001, by and between NEBO Products, Inc. (the
"Company") and Rodger Smith (the "Investor"). Both the Company and the Investor
may be referred to herein as a "Party" and collectively as the "Parties."

                                    RECITALS

A.   The Investor and the Company entered into an agreement whereby the Investor
     lent funds to the Company,  as evidenced by a promissory note (the "Company
     Note").  The  total  amount  outstanding  on the  Company  Note,  including
     principal,  interest,  as well as any other  related fees and  charges,  is
     $52,000.00.

B.   The Investor  purchased from the Company,  in connection with the Company's
     recent  public  offering,  69,334  shares (the  "Shares") of the  Company's
     Common Stock.

C.   The  Investor  paid for the Shares by tendering to the Company a promissory
     note (the "Investor  Note").  The total amount  outstanding on the Investor
     Note, including principal,  interest, as well as any other related fees and
     charges, is $52,000.00.

D.   The Parties now desire to cancel and offset the mutual debts of the Company
     and the  Investor,  by setting off the Company  Note  against the  Investor
     Note,  and to further  release  each other from any  remaining  obligations
     under the Company Note and the Investor Note.

         NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

                                    AGREEMENT

1.   Set-off and  Cancellation of Notes.  The Company and the Investor  mutually
     agree that the Company Note and the Investor Note shall be set-off  against
     each other and canceled.

2.   Return of Notes. At the time of execution of this Agreement:


     A.   The Investor agrees to return the Company Note to the Company,  marked
          "Canceled" or "Paid in Full" or otherwise  indicating that the Company
          has no further obligation to pay on the Company Note


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     B.   The Company agrees to return the Investor Note to the Investor, marked
          "Canceled" or "Paid in Full" or otherwise indicating that the Investor
          has no further obligation to pay on the Investor Note.

3.   No  Further  Obligation  of  Company  or  Investor.   The  Investor  hereby
     acknowledges  and agrees  that upon  return by the  Investor of the Company
     Note,  the Company shall have no further  obligation to the Investor to pay
     or otherwise service the Company Note. The Company hereby  acknowledges and
     agrees that upon return by the Company of the Investor  Note,  the Investor
     shall have no further obligation to the Company to pay or otherwise service
     the Investor Note.

4.   Mutual Release.


     A.   In  connection  with the sale of the  Interests,  the Investor  hereby
          releases,  acquits,  waives and forever  discharges and agrees to hold
          harmless  the Company,  and each of its  respective  owners,  members,
          managers,  parents,  subsidiaries,  affiliates,  successors,  assigns,
          agents, directors, officers, employees, shareholders, representatives,
          attorneys and all persons acting by, through, under or in concert with
          any of them (the  "Company  Releasees"),  from any and all Claims.  As
          used herein,  "Claims"  means all  liabilities,  obligations,  duties,
          undertakings,    agreements,   contracts,    compensation,    bonuses,
          commissions,  employee  benefit plans,  policies,  practices,  claims,
          charges,  grievances,  demands,  charges of discrimination,  accounts,
          costs, attorney's fees, expenses,  liens and causes of action of every
          kind and nature whatsoever.  The Claims include,  without  limitation,
          breach of  implied  or  express  contract,  libel,  slander,  wrongful
          discharge or  termination,  discrimination  claims arising under Title
          VII of the Civil Rights Act of 1964 (as amended),  the Americans  with
          Disabilities  Act of 1990 (as  amended),  the  Worker  Adjustment  and
          Retraining  Notification Act, 29 U.S.C. ss 2101-2109 (as amended), any
          other federal,  state, or local laws prohibiting age, race,  religion,
          sex, national origin, disability and other forms of discrimination, or
          any  other  federal  or state  laws  that may be  applicable  thereto,
          whether now known or unknown,  suspected  or  unsuspected,  accrued or
          unaccrued,  and whether now had,  possessed  or held or at any time in
          the past had, possessed or held. The Investor  specifically waives any
          and  all  claims   arising   out  of  or   related  to  any   asserted
          misrepresentations  or omissions made or omitted in the set-off of the
          Company Note and the Investor  Note.  The Investor  hereby  waives any
          right to recover damages, costs, attorneys' fees, and any other relief
          in any proceeding or action brought  against the Company  Releasees by
          any other party,  including  without  limitation the SEC, the NASD, or
          other  governmental  or  regulatory  agency on the  Investor's  behalf
          asserting any claim,  charge,  demand,  grievance,  or cause of action
          released by the  Investor  as stated  above.  This  release and waiver
          shall be binding on the Investor and his heirs, legal representatives,
          and assigns,  and shall inure to the benefit of the Company  Releasees
          and their successors-in-interest and assigns.


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<PAGE>


     B.   In  connection  with the sale of the  Interests,  the  Company  hereby
          releases,  acquits,  waives and forever  discharges and agrees to hold
          harmless the Investor,  and each of its  respective  owners,  members,
          managers,  parents,  subsidiaries,  affiliates,  successors,  assigns,
          agents, directors, officers, employees, shareholders, representatives,
          attorneys and all persons acting by, through, under or in concert with
          any of them (the "Investor  Releasees"),  from any and all Claims.  As
          used herein,  "Claims"  means all  liabilities,  obligations,  duties,
          undertakings,    agreements,   contracts,    compensation,    bonuses,
          commissions,  employee  benefit plans,  policies,  practices,  claims,
          charges,  grievances,  demands,  charges of discrimination,  accounts,
          costs, attorney's fees, expenses,  liens and causes of action of every
          kind and nature whatsoever.  The Claims include,  without  limitation,
          breach of  implied  or  express  contract,  libel,  slander,  wrongful
          discharge or  termination,  discrimination  claims arising under Title
          VII of the Civil Rights Act of 1964 (as amended),  the Americans  with
          Disabilities  Act of 1990 (as  amended),  the  Worker  Adjustment  and
          Retraining Notification Act, 29 U.S.C. i+/-i+/-2101-2109 (as amended),
          any  other  federal,  state,  or local  laws  prohibiting  age,  race,
          religion,  sex,  national  origin,   disability  and  other  forms  of
          discrimination,  or any  other  federal  or  state  laws  that  may be
          applicable  thereto,  whether  now  known  or  unknown,  suspected  or
          unsuspected,  accrued or unaccrued,  and whether now had, possessed or
          held or at any time in the past had,  possessed  or held.  The Company
          specifically  waives any and all claims  arising  out of or related to
          any asserted  misrepresentations  or omissions  made or omitted in the
          set-off of the Company Note and the Investor  Note. The Company hereby
          waives any right to recover damages,  costs,  attorneys' fees, and any
          other relief in any proceeding or action brought  against the Investor
          Releasees by any other party,  including  without  limitation the SEC,
          the NASD, or other  governmental or regulatory agency on the Company's
          behalf asserting any claim,  charge,  demand,  grievance,  or cause of
          action  released  by the  Company as stated  above.  This  release and
          waiver  shall  be  binding  on  the  Company  and  its  heirs,   legal
          representatives,  and  assigns,  and shall inure to the benefit of the
          Investor Releasees and their successors-in-interest and assigns.

5.   Choice of Laws. The Company and the Investor agree that this Agreement, and
     any claims  related to this  Agreement,  and/or  the  Investor  Note or the
     Company Note, whether such claims are in the nature of tort,  contract,  or
     otherwise,  shall be construed in accordance  with the laws of the State of
     Utah.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
                            SIGNATURE PAGES FOLLOW.]


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DATED as of the date first written above.

NEBO PRODUCTS, INC.                      INVESTOR: Rodger Smith


/s/                                      /s/
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By:_________________________________
Its:_________________________________