A model of the interacting medial temporal lobe and neocortical association areas is formulated and applied to memory consolidation and working memory. A simplified connectivity in terms of superassemblies and assemblies of neurons representing types and values, respectively, of object features is underlying the model. Realistic low-dimensional model neurons, developed in particular to take neuronal adaptation into account, are employed. Observed short- and long-term potentiation and depression of plastic synaptic couplings are incorporated. It is shown that memory consolidation by long-term potentiation, based on repeated activations of neocortical patterns, may be guided by neuromodulated dynamics of the medial temporal lobe via short-term couplings acting as pointers. Bifurcations, i.e. transitions between different modes of network dynamics, with respect to developing synaptic couplings are shown to depend on the adaptivity of excitatory neurons in the medial temporal lobe and thus to be under neuromodulatory control. At weak adaptivity, after an initial temporal segmentation of several objects accounting for the capacity of working memory to resolve several items, attention is selectively focused on a single object according to the model. At intermediate adaptivity, reactivations may persist and long-term synaptic couplings gradually develop. At strong adaptivity, the model predicts attention and memory consolidation to be subsequently terminated. The neuromodulatory control of the interacting medial temporal lobe and neocortical system via the adaptivity of excitatory neurons may account for several observations on the influence of neuromodulators on various cognitive processes and brain disorders.