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 Pete Chandler (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  provided  fee  services to the  Company,  as  evidenced by a
          Consulting  Agreement (the "Consulting  Agreement").  The total amount
          outstanding  on  the  Consulting   Agreement,   including   principal,
          interest,   as  well  as  any  other  related  fees  and  charges,  is
          $251,250.00.

     B.   The  Investor  purchased  from the  Company,  in  connection  with the
          Company's recent public offering, 335,000 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 $251,250.00.

     D.   The  Parties  now desire to cancel and offset the mutual  debts of the
          Company  and the  Investor,  by setting off the  Consulting  Agreement
          against the Investor Note, and to further  release each other from any
          remaining  obligations under the Consulting Agreement 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 Consulting  Agreement 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 Consulting Agreement to the Company,
          marked  "Canceled" or "Paid in Full" or otherwise  indicating that the
          Company has no further obligation to pay on the Consulting Agreement


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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 Consulting
     Agreement,  the Company shall have no further obligation to the Investor to
     pay or  otherwise  service the  Consulting  Agreement.  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. 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 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  Consulting  Agreement  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. 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 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
          Consulting  Agreement 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
     Consulting  Agreement,  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: Pete Chandler


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