MEMORANDUM OF AGREEMENT
This is a Memorandum of Agreement ("Memorandum") entered into as of the 31st day of August, 1998, by and
between Baywood International, Inc. ("Baywood") and Abacus Capital, L.L.C. ("Abacus").
The parties have previously entered into an Authorization to Proceed and Safekeeping Agreement, whereby
Baywood has deposited Ten Thousand Dollars ($10,000) (the "Deposit"), and the parties have agreed to
proceed in good faith to negotiate and finalize this Memorandum and the other agreements contemplated herein.
In consideration of the covenants set forth herein, and intending to be legally bound, the parties hereby agree as
1. STOCK PURCHASE AND CONSULTING. Baywood and Abacus are contemporaneously herewith
entering into the Stock Purchase Agreement annexed as Exhibit A (the "Stock Agreement"), for the stock of BII
Acquisition Company ("Newco"), as set forth in the Stock Agreement, and the Consulting Agreement annexed as
Exhibit B (the "Consulting Agreement"), for services as set forth in the Consulting Agreement. The Deposit shall
be applied against the purchase price under the Stock Agreement.
2. ACQUISITION OF TARGET. The parties intend that Newco shall acquire a Target, and that up to and as of
the date of acquisition thereof (the "Acquisition Date"), Baywood will own 15% of Newco. The parties' intent is
that upon the acquisition of the Target, Baywood's interest in Newco will be 15%, taking into account, or making
provision for, any interests convertible into equity of Newco.
3. RESPONSIBILITIES OF ABACUS. Upon (i) closing of the purchase and sale under the Stock Agreement
and (ii) payment to Abacus of the consideration called for in the Consulting Agreement, Abacus agrees to use its
best efforts to identify a Target and negotiate and close an associated acquisition transaction that meet the
parameters set forth on Schedule 1 hereto (the "Parameters"). Upon Baywood's acceptance of such Target,
Abacus shall use its best efforts to have Newco acquire the Target