Document:

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                                                                   EXHIBIT 10.78

                  Form of The Sports Club Membership Agreement
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                                                                   EXHIBIT 10.78

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                                       MEMBERSHIP VALID ONLY AT:

                                       CLUB
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                                       MEMBER SIGNATURE
                                                       -------------------------

      1835 SEPULVEDA BLVD. O LOS ANGELES, CALIFORNIA 90025 O (310) 473-1447
                              MEMBERSHIP AGREEMENT

This Membership Agreement ("Agreement") for the type of membership indicated
below, is between The Sports Club/LA ("Club") and its affiliated Clubs which
applicant may visit from time to time and utilize facilities, equipment or
services therein, pursuant to the terms of this Agreement, and the undersigned
applicant ("Applicant"). By signing this Agreement, I acknowledge that I have
received and read a copy of the Bylaws of the Club and a completed copy of this
Agreement. I agree that I will be bound by the provisions on the face of this
Agreement, the additional provisions on the reverse, the Bylaws of the Club, as
now in effect and as from time to time amended by the Club, and such rules as
may from time to time be posted at the Club, all of which are incorporated by
reference in this Agreement. I also understand that the Club in which this
Agreement is executed will hereby be considered my Home Club and the laws
governing this Agreement shall be that of the state in which my Home Club is
located.

1. INITIATION FEE PAYMENTS. You are required to pay an initiation fee or $
____________ per month for ________ months beginning on the date you join and on
the first day of each month thereafter. Each installment of the initiation fee
in non-refundable once paid, however, if you elect to cancel your membership at
any time before paying all installments of the initiation fee, you will not be
required to pay any installments which are due on or after the date you notify
us of your election to cancel your membership.

2. MONTHLY DUES. Your monthly dues are $ ____________, subject to increase as
describe in Section 7. You agree to pay on the date of this application, in
advance, membership dues for the first and last month of your membership (your
first month membership dues will be prorated for the period from the date you
join until the end of the month). Thereafter, you agree to pay dues, in advance,
on the first day of each month, until your membership is terminated in
accordance with the terms of this Agreement.

3. MEMBERSHIP. Your membership is a contractual privilege to use the facilities
from time to time offered by the Club to members of your class of membership
during the Club's hours of operation. The Club reserves the absolute right to
initiate, change or eliminate facilities, services and programs offered from
time to time; to initiate, change or eliminate fees for existing or new
facilities, services and programs; and to change its hours of operation. Your
membership does not entitle you to any interest in the Club or its property and
confers no right to participate in the management or operation of the Club.

4. CLASS OF MEMBERSHIP. Your membership class is: __________Individual
__________Add On __________Dependent __________Corporate

An individual membership is defined as a membership for one person whether
married or not. An Add On membership is defined as a membership for one person
who is the spouse or domestic partner of an existing member (primary member)
paying Individual dues rates of the Club. The Club requires documentation of
marital or domestic partnership status. A Dependent membership is defined as a
membership for one person who is the dependent, age 15 through 20, of and living
at home with two existing Club members. The initiation fee and dues of an Add On
or Dependent member are reduced. In the event the primary member terminates
his/her membership at the Club or the spousal or domestic partner relationship
between two members is terminated, the Add On dues rate will revert to the
prevailing Individual dues rate for that membership type. In the event the
primary member terminates his/her membership at the Club, Dependents will revert
to the prevailing Individual dues rate for that membership type. In the event
the primary member and Add On member terminate their memberships at the Club,
Dependents will revert to the prevailing Individual dues rate for that
membership type. At age 21 (upon 21st birthday), the Dependent dues rate will
revert to the prevailing Individual dues rate for that membership type. Dues
rates will be adjusted at the end of the prepaid term of membership for annual
members or the next Checkfree collection date for monthly dues members.

A Corporate membership is defined as a membership for one person which is
purchased in a group of a minimum of five memberships at the same time and the
initiation fee and monthly dues are paid by a corporation. The Club requires
documentation of employee status. A Corporate membership may be transferred from
one designated holder to another onetime per year by providing 30 days advance
written notice and upon payment of a transfer fee of $__________.

5. TYPE OF MEMBERSHIP. Your membership type is: ________Executive ________
Health ________Bicoastal _______ One Club

Executive members are entitled to use and enjoy the facilities and perquisites
of the Club as announced from time to time by the Club. Health members are
entitled to use and enjoy the facilities of the Club except the Executive
perquisites.

6. USE OF OTHER SPORTS CLUBS. Use of other affiliates of the Club, existing or
future, may be restricted or subject to additional fees. Bicoastal members are
entitled to use and enjoy the facilities of existing Sports Clubs subject to the
restrictions detailed in the above paragraph. One Club members are entitled to
use and enjoy the facilities only of the Club at which their membership was
purchased, subject to the restrictions detailed in the above paragraph.

7. DUES AND OTHER CHARGES. Except for your initial payment, all initiation fees
and monthly dues must be paid through Checkfree electronic funds transfer
program on the first day of each month of your membership. Dues for the month in
which you join will be prorated and are due in advance at the time of
application along with all other amounts then due. If the Club at its sole
discretion extends charge privileges to you, you agree to pay all the charges
through Checkfree. All Club invoices of any kind are considered due and payable
upon receipt. You agree to sign and deliver such further documents as may be
necessary to set up the payment of your dues and other charges through
Checkfree. You authorize the Club to utilize Checkfree for collection of past
due balances. Any change in Checkfree account information must be received by
the 10th of the current month in order to charge the new account and prevent
charges to the old account in the following month. The Club reserves the right
to replace Checkfree with other such electronic funds transfer programs for the
collection of your dues and other charges. The Club reserves the absolute right
to increase your dues.

If any payment of dues or other charges is not made on time, the Club may, but
is not obligated to, cancel your membership by giving you notice of such
cancellation. You shall immediately surrender your copy of this Agreement and
your membership card to the Club. The Club may assess late payment fees and
suspend charge privileges. If the Club has to take action to collect any amounts
due from you, you agree to pay all costs of such action including, but not
limited to, attorney fees, returned check charges, and administrative costs.

I HAVE READ, UNDERSTAND AND RECEIVED A COMPLETE COPY OF THIS AGREEMENT, THE
EXPRESS ASSUMPTION OF RISK SECTION HEREOF, AND THE BYLAWS OF THE CLUB WHICH ARE
INCORPORATED HEREIN BY REFERENCE, AND I AGREE TO BE BOUND BY THEIR TERMS AND
CONDITIONS. THE LAWS GOVERNING THIS AGREEMENT WILL BE THAT OF THE STATE WHERE
THIS AGREEMENT IS EXECUTED.

Print Name:
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Member's Signature                            Date:
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The Sports Club/LA By:                        Date:
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     THREE-DAY RIGHT TO CANCEL. You, the Buyer, may cancel this agreement at any
     time prior to midnight on the third business day (of the Club) after the
     date of this agreement, excluding Sundays and holidays. To cancel this
     agreement, mail or deliver your copy of this agreement and a signed and
     dated notice, or send a telegram which states that you, the buyer, are
     canceling this agreement, or words of similar effect. Such notice shall be
     send to The Sports Club/LA, 1835 Sepulveda Blvd., Los Angeles, CA 90025.

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8. CANCELLATION. You can cancel your membership by giving 30 days advance
written notification to the Club, surrendering your copy of this Agreement and
your membership card, and paying all unpaid dues and other charges owed the
Club. Such cancellation shall not be deemed effective until after the expiration
of the 30 day notice period, receipt of your copy of this Agreement and your
membership card, and all required payments have been made to the Club. You will
remain liable for payment of dues for periods prior to the effective
cancellation date. If your membership is cancelled and at a later date you elect
to rejoin the Club, you will be required to pay the them current initiation fee
and dues rate for your class and type of membership.

If Member moves farther than 25 miles from the Club, is unable to transfer his
or her membership to a comparable facility, and desires to terminate membership,
Member may terminate membership immediately by written notice to the Club, and
if Member has prepaid any sums for services, so much sum is allocable to periods
following termination, less any charges against Member's account, will be
promptly refunded.

If you cancel your membership in accordance with the terms of this section
during a year for which you have prepaid membership dues, the Club will refund
your prepaid dues for the membership time not used. Any such refund will not
include dues for membership time prior to the date of your cancellation or for
the notice period required by this section. No refund will be given for any
period of time granted you on a non-cash basis. Any sums due from you at the
time of cancellation may be deducted from any refund due to you. Until the Club
has been notified of the cancellation of your membership in accordance with the
terms of this section, your copy of the Agreement and your membership card have
been surrendered, and all required payments have been made in accordance with
the terms of this section, dues will continue to be charged to your account
thereby reducing any refund of prepaid dues.

The Club can cancel your membership at any time for any breach of this Agreement
or for any violation of the Bylaws of the Club by giving you notice of such
cancellation. The Club can also cancel your membership at any time without cause
by giving you notice of such cancellation. If the Club cancels your membership,
you must immediately surrender your copy of this Agreement and your membership
card. You will remain liable for all unpaid dues owed and any other charges
against your account. You will be entitled to a refund of any prepaid dues upon
compliance with the conditions described above.

No refunds shall be made for membership dues except as specifically provided for
in this Agreement. Under no circumstances will refunds of dues be made
retroactively due to failure to use the Club facilities.

9. TRANSFERABILITY. Except as provided in the case of Corporate memberships,
your membership is non-transferable, non-assignable and non-voting.

10. RELEASE, WAIVER OF LIABILITY & INDEMNIFICATION AGREEMENT. You, on behalf of
yourself and any dependent(s), represent and agree as follows: (a) that you
understand that the use of the Club's facilities, equipment, services, programs
and premises includes an inherent risk of injury to persons and property; (b)
that you are in good physical condition and have no disabilities, diseases,
illnesses or other conditions that could prevent you from exercising and using
the Club's facilities without injuring yourself or impairing your health; and
(c) that you have consulted a physician concerning an exercise program that will
not expose you to risk of injury or impairment to your health and that your
physician has approved your contemplated activities at the Club. You understand
that risk of injury includes, but is not limited to, injuries arising from or
relating to the use by you or your dependents(s) or others of exercise equipment
and machines, locker rooms, spa and other wet areas and other Club facilities;
injuries arising from or relating to participation by you or others in
supervised and unsupervised activities or programs throughout the Club; injuries
and medical disorders arising from or relating to the use of the Club's
facilities such as heart attack, stroke, death, heat stress, sprains, strains,
broken bones, and torn muscles, tendons and ligaments among others; and
accidental injuries occurring anywhere in the Club, including lobbies, hallways,
exercise areas, locker rooms, steam rooms, pool areas, Jacuzzis, sauna, and
dressing rooms or activities associated with the Club which are carried on
anywhere or while you are traveling to or from the Club. Accidental injuries
include those caused by you, those caused by other persons and those of a slip
and fall nature. If you have any special exercise requirements or limitations,
you agree to disclose them to the Club before using the Club's facilities or
when seeking help in establishing or carrying on an exercise program. You hereby
agree that all exercises and use of Club facilities, equipment and services,
programs and premises are undertaken by you at your sole risk. By your execution
hereof, you hereby waive all claims which you or any dependent may have
hereafter against the Club, and do hereby release the Club on your behalf and on
behalf of any dependents, and agree to hold the Club absolutely harmless from
all claims, demand, injuries, damages, actions, suits, or causes of action to
persons or property, arising out of or in any way connected with you or your
dependent's use of the Club facilities, premises, equipment, services or
programs, including those arising out of any active or passive negligent act or
omission of the Club, except as to such which may arise from the gross
negligence or willful misconduct of the Club. You do hereby further agree and do
hereby, on behalf or yourself and any dependents, to assume full responsibility
for all risks of bodily injury, death or property damage due to the negligent
act or omission of the club. If you agree, understand and fully appreciate this
Release, Waiver of Liability and Indemnification Agreement, Initial
here_______________.

11. LOSS OR THEFT OF MEMBER PROPERTY. The Club is not responsible or lost or
stolen articles. You should keep any valuables with you at all times while using
the facilities. Storage spaces or lockers do not always protect valuables.
Initial_______________.

12. DEATH OR DISABILITY. If, by reason of death or disability, Member is unable
to receive all services for which Member has contracted, Member and his or her
estate shall be relieved from the obligation or making payments for services
other than those received prior to death or the onset of disability. If Member
has prepaid any sums for services, so much of said sum as is allocable to
services Member has not taken shall be promptly refunded to Member, or to
Member's representative. In cases of disability where a retroactive request for
refund of dues is made, both the disability and date of onset must be verified
in writing by your physician. Requests for retroactive dues refunds due to
disability will not be honored for any time period in which your membership
account shows utilization of Club facilities.

13. LEAVE OF ABSENCE. The club may, upon your request and at its sole
discretion, grant you a leave of absence if you are going to be unable to use
the Club for a period to time. Your request must (a) be in writing, (b) be
received by the membership office of the Club at least 30 days before the
requested leave is to begin, (c) set forth the period requested for the leave of
absence (minimum of two months, maximum of six months), (d) state in detail the
reason for the requested leave of absence. You must surrender you membership
card to the Club before the start of the leave of absence. You agree to pay
reduced monthly dues during the leave period at the rate set forth by the Club.
The Club will not grant the leave of absence unless you are current on all dues
and other charges against your account, and you have not been on a leave of
absence at any time during the 24 months before the start of the requested leave
of absence.

During the leave of absence, you will not be entitled to use any of the
facilities, premises, services or programs of any Sports Club. Your membership
will be automatically reactivated by the Club at the end of the leave of absence
period granted Your card will then be available to you and your access to the
Club restored provided you are current on all dues and other charges against
your account.

In addition to the above conditions, leaves of absence for medical reasons must
be accompanied by a physician's note detailing why and for what period of time
you will not be able to utilize the Club facilities. At the end of the requested
leave period, you must provide a physician's note stating that you are capable
of resuming a program of physical exercise. Leaves of absence will not be
granted on a retroactive basis.

14. BYLAWS. The Club reserves the absolute right to change the Club's Bylaws.
All signs posted in the Club shall be considered part of the Bylaws. Members and
their guests shall be bound by the Bylaws of the Club. Bylaws may be revised,
supplemented, or amended at the sole discretion of the Club, as deemed necessary
for the proper management of the Club. THESE BYLAWS SHALL BE CONSIDERED A PART
OF THE MEMBERSHIP AGREEMENT.

15. TIME OF ESSENCE. Time is of the essence of each provision of this Agreement.

16. NOTICE. Any notice required or permitted to be given to you shall be
considered duly given when personally delivered to you or mailed to your address
as it appears on the Membership Application or as subsequently changed by
written notice to the Club. Any notice required or permitted to be given by you
to the Club shall be considered duly given only when received in writing by the
Membership Office of the Club.

17. SEVERABILITY. If any provision or any part of any provision of this
Agreement is held unenforceable, such unenforceability shall not affect the
other provisions, or the other parts of such provisions, of this Agreement.

18. STEROID USE. WARNING: USE OF STEROIDS TO INCREASE STRENGTH OR GROWTH CAN
CAUSE SERIOUS HEART PROBLEMS. STEROIDS CAN KEEP TEENAGERS FROM GROWING TO THEIR
FULL HEIGHT: THEY CAN ALSO CAUSE HEART DISEASE, STROKE, AND DAMAGE LIVER
FUNCTION. MEN AND WOMEN USING STEROIDS MAY DEVELOP FERTILITY PROBLEMS,
PERSONALITY CHANGES AND ACNE. MEN CAN ALSO EXPERIENCE PREMATURE BALDING AND
DEVELOPMENT OF BREAST TISSUE. THESE HEALTH HAZARDS ARE IN ADDITION TO THE CIVIL
AND CRIMINAL PENALTIES FOR UNAUTHORIZED SALE, USE OR EXCHANGE OF ANABOLIC
STEROIDS.

19. ENTIRE AGREEMENT AND MODIFICATION. This Agreement when accepted by the Club,
will constitute the entire agreement between you and the Club relative to your
membership. You acknowledge that no other agreement exists between you and the
Club relative to your membership and that no representations, other than those
set forth in the Agreement have been made to you to induce you to make this
Agreement. Your Agreement with the Club can be modified only in writing, prior
to the Club's acceptance of your Agreement, by the Manager of the Club, and can
be terminated only as set forth in the Agreement. You, the undersigned, further
expressly agree that the foregoing Agreement, including the Release, Waiver of
Liability and Indemnification Agreement is intended to be as broad and inclusive
as permitted by the laws of the state(s) wherein the Club operates, that it
shall apply to any period of membership or any prior or subsequent membership
period of yours and / or any dependent, and to any period during which you and /
or any dependents use Club facilities. Initial:_______________.<PAGE>   1

                                                                   EXHIBIT 10.79

        Transition Services Agreement dated December 3, 1999 by and among
                       Registrant and Spectrum Clubs, Inc.

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                          TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this "Agreement") is made as of December 3,
1999, by and among The Sports Club Company, Inc., a Delaware corporation
("Parent") and Spectrum Clubs, Inc., a Texas corporation formerly named as
Racquetball & Fitness Clubs, Inc. ("Buyer"). Parent and Buyer are referred to
herein collectively as the "Parties" and individually as a "Party."

                              W I T N E S S E T H :

WHEREAS, pursuant to that certain Stock Purchase Agreement (the "Purchase
Agreement"), dated as of September 16, 1999, as amended, by and among Buyer,
Parent, The Spectrum Club Company, Inc., ("Spectrum"), Canoga/Agoura Spectrum
Club, Inc., Spectrum Club Anaheim, El Segundo-TDC, Ltd., and TVE, Inc. (all such
entities except Buyer being collectively called the "Sellers" and individually
each a "Seller"), Buyer is purchasing from Sellers the stock of Newco (as
defined in the Purchase Agreement); and

WHEREAS, Buyer desires that, after the Closing, Parent provide to Buyer or an
Affiliate of Buyer certain administrative, corporate and other services on a
transitional basis; and

WHEREAS, capitalized terms used herein and not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement;

NOW, THEREFORE, in consideration of the premises and covenants set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties hereby agree as follows:

Transition Services. Upon the terms and subject to the conditions set forth in
this Agreement, during the term of this Agreement as set forth in Section 4
below (the "Transition Period"), Parent shall provide to Buyer or its
Affiliates, from the date of this Agreement and for a period of two hundred
seventy (270) days thereafter (subject to extension as set forth in Section 4
below), the respective services set forth on Annex A attached hereto (the
"Services"). The Services will be provided in the manner, within the time frames
and at a level of service consistent with that provided to Sellers by Parent
and/or its Affiliates with respect to the Business prior to the date hereof.
Such Services shall be provided at the cost specified beside each category of
Service on Annex A.

Billing and Payment. On the 15th and the last day of each calendar month, Buyer
shall pay half of the monthly payment for Services for the coming month. If in
connection with performing Services, Parent incurs any direct costs not included
in Annex A hereto, Parent shall deliver Buyer monthly invoices for such costs
incurred . All invoices shall be paid not later than thirty (30) days following
receipt, subject to receiving from Parent, if reasonably requested by Buyer, any
appropriate support documentation for such invoices. All payments to Parent
shall be made by wire transfer in accordance with written instructions provided
by Parent. Without limitation, examples of direct costs include (i) costs of
newsletter publication, newspaper advertising, directory listings, public
relations agency fees and related print and supplies expenses, (ii) costs for
building operations supplies and sundries not maintained at the club level, and
(iii) costs of logo wear. Direct costs also include out-of-pocket expenses paid
to third parties consistent with past practices for services outside the normal
course, which services are incurred solely for Buyer's benefit. Direct costs do
not include outsourcing of any function currently performed by personnel of
Parent or one of its affiliates. Prior to incurring direct costs in excess of
$5,000,

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Parent shall obtain written approval from Buyer.

Services requiring use of checks issued by Parent or other fund transfers by
Parent on behalf of Buyer will be provided only to the extent funded by a Buyer
account or to the extent that Buyer provides Parent with immediately available
funds prior to Parent's issuance of the check or the fund transfer, as the case
may be.

Validity of Documents. The Parties shall be entitled to rely upon the
genuineness, validity or truthfulness of any document, instrument or other
writing presented in connection with this Agreement unless such document,
instrument or other writing appears on its face to be fraudulent, false or
forged.

Term of Agreement. The term of this Agreement shall commence on the date hereof
and shall continue (unless sooner terminated pursuant to the terms hereof) for a
period of 270 days; provided that by written notice at least thirty (30)
business days prior to the 270th day, Buyer may request (on a per Service basis)
the continuation of all or any portion of the Services for up to an additional
90 days. If Buyer requests continuation of a Service for less than 90 days,
Buyer may later extend such request up to the full 90 days or any part thereof.
Any period during which Buyer requests continuation after the 270th day is
called the "Continuation Period").

Partial Termination. Any or all of the Services provided hereunder are
terminable at any time by Buyer on thirty (30) business days prior written
notice to Parent. Even if a particular Service is terminated by Buyer, Parent
will continue to interact with and provide access to Buyer to the extent that
Services still being provided are related to the terminated Service. For
example, if Buyer terminates payroll services but is still receiving human
resources services from Parent, Parent will continue to allow Buyer's payroll
department to interact with Parent's human resources department to the extent
necessary to allow both Services to function smoothly.

Access. With respect to each Service provided by Parent or any of its Affiliates
hereunder, Buyer and Parent shall provide the other Party and its personnel with
access to the equipment, office and storage space and systems relating to such
Service during normal business hours for the term of this Agreement to the
extent reasonably required in connection with the provision of such Services
hereunder; provided that such access shall be supervised by the appropriate
personnel of the Parties and shall be done in a manner so as to minimize the
interruption of the Parties' normal business operations.

Assignment. This Agreement shall not be assignable in whole or in part by any
Party hereto, nor may a Party delegate performance of its obligations hereunder,
without the prior written consent of the other Parties hereto, such consent not
to be unreasonably withheld in the case of a proposed transfer/delegation to an
Affiliate (with consideration given, in the case of a proposed
assignment/delegation by Parent, to whether the assignee/delegate has the
personnel available to perform the Services). Buyer may also assign its interest
in this Agreement to the extent that assignments of contract rights are required
by Buyer's lenders as security, to Buyer's lenders. Subject to the foregoing,
this Agreement shall be binding on, and shall inure to the benefit of and be
enforceable by, the Parties and their respective successors, permitted assigns
and legal representatives.

Confidentiality. Each Party shall cause each of its Affiliates and each of their
respective officers, directors, employees, consultants and agents to hold all
information relating to the business of the other Parties disclosed to it by
reason of this Agreement confidential and will not disclose any of such
information to any person or entity unless legally compelled to disclose such
information, provided, however, that to the extent that any of them may become
so legally

<PAGE>   4

compelled they may only disclose such information if they shall first have used
reasonable efforts to, and, if practicable, shall have afforded the other
Parties the opportunity to, obtain an appropriate protective order or other
satisfactory assurance of confidential treatment for the information required to
be so disclosed.

Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of California applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.

Indemnification. Except with respect to claims by Buyer against Parent for
breach of this Agreement, Buyer agrees to indemnify and hold harmless Parent and
each of its Affiliates and Representatives (the "Parent Indemnified Parties") to
the fullest extent lawful, harmless from and against any and all losses, claims,
damages, liabilities, costs (including without limitation reasonable attorneys'
fees) and expenses (including without limitation costs and expenses incurred in
connection with investigation, preparing, pursuing or defending against any of
the foregoing) (collectively "Losses"), as incurred, relating to, based on or
arising out of the performance by the Parent Indemnified Parties of the duties
of Parent hereunder, provided that Buyer shall not be liable to any Parent
Indemnified Party for any Losses to the extent that such Losses are caused by
the breach of this Agreement by an Indemnified Party or by the negligence or
willful misconduct of a Parent Indemnified Party.

Except with respect to claims by Parent against Buyer for breach of this
Agreement, Parent agrees to indemnify and hold harmless Buyer and each of its
Affiliates and Representatives (the "Buyer Indemnified Parties") to the fullest
extent lawful, harmless from and against any and all losses, claims, damages,
liabilities, costs (including without limitation reasonable attorneys' fees) and
expenses (including without limitation costs and expenses incurred in connection
with investigation, preparing, pursuing or defending against any of the
foregoing) (collectively "Losses"), as incurred, relating to, based on or
arising out of the breach of this Agreement by Parent or Parent's negligence or
willful misconduct, provided that Parent shall not be liable to any Buyer
Indemnified Party for any Losses to the extent that such Losses are caused by
the breach of this Agreement by any Buyer Indemnified Party or by the negligence
or willful misconduct of a Buyer Indemnified Party.

Counterparts. This Agreement may be executed in one or more counterparts
(including by means of telecopied signature pages), all of which shall be
considered one and the same Agreement, and shall become effective when one or
more counterparts have been signed by each of the Parties and delivered to the
other Parties.

Notices. Unless otherwise indicated herein, all notices, requests, demands or
other communications to Parent and Buyer shall be deemed to have been given or
made three business days after being deposited in the mails, registered or
certified mail, return receipt requested, postage prepaid, or when delivered by
means of overnight delivery service or messenger, addressed to the Party to be
notified, or by facsimile to Parent or Buyer at the following address:

                    To Parent:       The Sports Club Company, Inc.
                                     11100 Santa Monica Boulevard
                                     Suite 300
                                     Los Angeles, CA 90025-3384
                                     Attention: John Gibbons
                                     Fax No. (310) 479-5740

                   Copy to:          Kinsella, Boesch, Fujikawa & Towle, LLP
                                     1901 Avenue of the Stars
                                     Los Angeles, CA  90067

<PAGE>   5

                                     Attention: Ronald K. Fujikawa, Esq.
                                     Fax No. (310) 284-6018

                   To Buyer:         Racquetball & Fitness Clubs, Inc.
                                     c/o Brentwood Associates
                                     11150 Santa Monica Boulevard
                                     Los Angeles, CA  90025
                                     Attention: Edward McCall
                                     Fax No.:  (310) 477-1011

                   Copy to:          Latham & Watkins
                                     633 West 5th Street
                                     Los Angeles, CA  90071
                                     Attention: Elizabeth A. Blendell, Esq.
                                     Fax No.: (213) 891-8763

Modification, Nonwaiver, Severability. Neither this Agreement nor any part
hereof may be changed, altered or amended orally. Any modification must be by
written instrument signed by Parent and Buyer. Failure by any Party to exercise
promptly any right granted herein or to require strict performance of any
obligation imposed hereunder shall not be deemed a waiver of such right. If any
provision of this Agreement is held ineffective for any reason, the other
provisions shall remain effective.

Interpretation. The headings and captions contained in this Agreement and in
Annex A attached hereto are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. The use of the word
"including" herein shall mean "including without limitation."

No Strict Construction. The language used in this Agreement shall be deemed to
be the language chosen by the Parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any person or entity.

Entire Agreement. This Agreement (including Annex "A" hereto) and the Purchase
Agreement contain the entire agreement and understanding among the Parties
hereto with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements, negotiations and understandings, whether written or
oral, relating to such subject matter.

Relationship of Parties. Except as specifically provided herein, none of the
Parties shall act or represent or hold itself out as having authority to act as
an agent or partner of any other Party, or in any way bind or commit any other
Party to any obligations. Nothing contained in this Agreement shall be construed
as creating a partnership, joint venture, agency, trust or other association of
any kind, each Party being individually responsible only for its obligations as
set forth in this Agreement.

Attorneys' Fees. If either Party shall initiate any Action to enforce or
interpret any term or provisions hereof, the Party prevailing in such Action
shall be entitled to its reasonable attorneys' fees and disbursements from the
non-prevailing party.

<PAGE>   6

IN WITNESS WHEREOF, the Parties have caused this Transition Services Agreement
to be executed by their duly authorized representatives as of the date and year
first set forth above.

                                            THE SPORTS CLUB COMPANY, INC.

                                            By: /s/ John M. Gibbons
                                               ---------------------------------
                                            Title: Chief Executive Officer

                                            SPECTRUM CLUBS, INC., f/k/a
                                            RACQUETBALL & FITNESS CLUBS, INC.

                                            By: /s/ Anthony Choe
                                               ---------------------------------
                                            Title: Secretary for the buyer

<PAGE>   7

                                     ANNEX A
                        TO TRANSITION SERVICES AGREEMENT

For purposes of this Annex A, the first "month" of this Annex A shall begin on
the Closing Date and end on the day immediately preceding the next month's
anniversary of the Closing Date, and each succeeding "month" shall be determined
in like manner. (For example, if the Closing Date were September 28, 1999, the
first "month" would run from September 28, 1999 through October 27, 1999, and
the next month would run from October 28, 1999 through November 27, 1999).

With respect to all Services, the services and fees set forth below include
transfer of records and data relating to such service and transitioning of such
service to Buyer as and when reasonably requested by Buyer. The only additional
charges for transitioning will be mutually agreed on if Parent is required to
perform services outside those that would have been expected in transitioning
the Services to Buyer if all the transitioning had occurred at the closing of
the transaction or if Buyer materially changes the operation of the Business
(including without limitation by the opening of additional clubs).

All Services are to be provided to the same extent and in the same manner as
provided to the Spectrum Clubs prior to the date of this Agreement, except that
Services will also be provided in such manner to the Anaheim and Puente Hills
Spectrum Clubs as and to the extent such clubs become operational. Set forth
below are examples and illustrations of Services, but they are not intended to
be exhaustive, and any services falling within the categories below are intended
to be covered by this Agreement.

1. HUMAN RESOURCES. $10,360 per month ($14,504 per month during Continuation
Period)

-       Prepare affirmative action plans, manage Department of Labor compliance
        audits, provide on-site compliance support, investigate allegations of
        harassment and/or discrimination, establish policies on allegations,
        assist in grievance resolution, providing benefit administration.

-       Administer benefit plans for employees of Buyer, including 401(k) plan,
        dental, life and medical insurance, vacation and other similar plans;
        prepare and file (or deliver to Buyer in a timely fashion for filing)
        required government reports (including plan 5500's); maintain benefit
        plan accounting and administrative information.

-       Administer workers compensation claims of Buyer, including interface
        with insurance providers.

-       Provide services relating to labor relations, labor dispute resolution,
        employee contract negotiations, EEO compliance, and workplace issues
        management.

-       Conduct periodic human resource-related training for Buyer's employees,
        including health and safety seminars at the clubs operated by Buyer.

-       Maintain human resources systems.

-       Deliver Buyer's employee files to Buyer at any time upon Buyer's
        request, provided that Parent may retain copies of such files for its
        records.

-       Administer paperwork and processes related to hiring and termination of
        Buyer's employees, including processes required to update payroll
        accounts.

-       Maintain master file/database of employees.

-       Provide all training programs, manuals and other materials and services
        used to train employees in the same manner as prior to the date of this
        Agreement.

-       Use the same degree of care as used in Parent's business to notify Buyer
        of any changes in applicable laws and regulations relating to employees,
        including without limitation wages and hours, job posting, "right to
        know" and safety.

2.      CHILD CARE $1,498 per month ($2,097 per month during Continuation
        Period)

-       Administer and supervise child care programs and services at Spectrum
        Clubs in the same manner as prior to this Agreement.

<PAGE>   8

-       Inform Buyer as to applicable legal requirements related to child care
        and prepare and file with governmental authorities any necessary
        paperwork so that relevant employees maintain licenses, bonds and
        otherwise comply with such requirements.

3.      FITNESS $1,428 per month ($1,999 per month during Continuation Period)

-       Assist with fitness equipment purchasing programs in place.

-       Provide supervision and administration of all fitness and group exercise
        functions.

-       Assist in maintaining all staffing levels and standard in place prior to
        date of this Agreement.

4.      PAYROLL $3,300 per month ($4,620 per month during Continuation Period)

-       Provide payroll processing services for hourly and salaried employees of
        Buyer (e.g. input data, process payroll, distribute paychecks, provide
        compensation system development and support, maintain compensation
        database, process payroll taxes and reports, issue W-2 forms, submit
        required information and contributions to third-party benefit plan
        record-keeper or plan administrators, reconcile with general ledger, and
        maintain applicable supporting records and documentation).

-       Administer and update Ceridian software at the club level.

-       Provide semi-monthly summary of Ceridian payroll run to Buyer for
        approval prior to release of payroll checks. (Buyer shall be responsible
        for turnaround in time for payroll to be timely paid.)

-       Provide software updates and interfaces as necessary between Ceridian
        payroll systems and Solomon general ledger software (or other systems
        and software used by Parent).

-       Maintain interface with Kronos time-clock system as necessary.

-       Notify Buyer regarding any change in laws or regulations governing wages
        and hours, overtime and similar items with respect to employee
        compensation.

-       Reconcile payroll checkbook within 30 days after receipt of bank
        statement.

5.      ACCOUNTS PAYABLE $2,782 per month ($3,894 per month during Continuation
        Period)

-       Process vendor payments.

-       Maintain and upgrade all software and interfaces with Solomon general
        ledger system.

-       Maintain all functions necessary to interface with purchasing services.

-       Maintain payment records in accordance with GAAP.

-       Produce 1099 forms.

-       Maintain A/P Vendor information with either SSN or Employer ID for all
        contractors.

-       Deliver to Buyer the vendor files at any time upon Buyer's request.

-       Maintain check stock, signature stamps, MICR cartridges or any other
        signing device in a safe and secure environment.

-       Deliver to Buyer check stock at any time upon Buyer's request.

-       Maintain existing checks and balances with regards to Purchase Orders,
        Invoices, Payments, as well as routine audits of these controls.

-       Prepare and mail checks on Buyer's behalf of open invoices to maintain
        good credit and to take advantage of available vendor discounts (checks
        to be drawn on Buyer's account).

-       Reconcile accounts payable checkbook within 30 days after receipt of
        bank statement.

6.      PURCHASING $4,472 per month ($6,260 per month during Continuation
        Period)

-       Provide detailed accounting of purchases, costs and allocation of
        supplies.

-       Maintain all existing methods of allocating purchases in place prior to
        the date of this Agreement.

-       Provide purchasing functions on a "most favored nations" basis vis-a-vis
        Parent's Sports Club operations, including negotiation of vendor
        contracts.

-       Maintain forms inventory.

<PAGE>   9
-       Oversee mail, messenger and courier services.

-       Coordinate and arrange for purchases of office and club supplies and
        needs of building operations department.

-       Process orders and payments, maintain accurate records and obtain
        approval of Buyer for any capital purchases.

7.      MIS $6,338 per month ($8,873 per month during Continuation Period)

-       Maintain EDP hardware and software.

-       Provide membership database queries to Buyer.

-       Provide modifications and programming assistance with all software and
        hardware.

-       Process monthly EFT's.

-       Provide backup program and data files so that Facilities can properly
        backup program and data files at the Facilities.

-       Licensing fees for separate Ceridian systems is deemed an extra direct
        cost to be borne by Buyer.

8.      ACCOUNTING $11,022 per month ($15,430 per month during Continuation
        Period)

-       Assist Spectrum Club controllers in preparing monthly, quarterly and
        year-end income statements on a club-by-club basis.

-       Assist Spectrum Club controllers with general ledger maintenance and
        control (separate from Seller's ongoing business and other assets)
        including monthly general ledger closings and reconciliation of bank
        account and general ledger account balances; prepare reconciliation for
        all subsidiary systems, including but not limited to accounts
        receivable, accounts payable, inventory, fixed assets and unsettled
        liability.

-       Assist Spectrum Club controllers in preparing flash (daily) and weekly
        operating results.

-       Provide monthly fixed asset, marketing, promotions and inventory
        reporting.

-       Provide accounts payable processing in the normal course of business,
        including marketing programs and purchases.

-       Maintain capital asset records, updating for additions, retirements,
        depreciation and other transactions. Make capital asset general ledger
        entries.

-       Maintain and support all existing systems and provide systems
        programming time; provide system trouble shooting services (including
        after business hours) consistent with current practice.

-       Provide financial and management reports in formats used as of the date
        of this Agreement, including but not limited to all membership, pricing,
        and dues grid information.

-       Assist in preparation of tax returns and state annual reports; provide
        other tax consultation to the extent currently performed in-house.

-       Provide Buyer with real time access to all systems from Buyer's
        corporate headquarters, including access to all archived data or
        information on paper, as long as it doesn't disrupt normal operation.

-       Cooperate with respect to any audits of Buyer's financial records and
        other information reasonably requested by auditors, lenders or other
        persons or entities designated by Buyer, at Buyer's reasonable request.

-       Assist with conversion of and provide export files of pertinent
        accounting files, including budgets, history, payroll, human resources
        and accounts receivable.

-       Maintain EDP hardware and software.

-       Prepare financial statements in accordance with GAAP using methods as
        directed by Buyer.

-       Oversee EFT processing.

-       Provide technical support and process assistance for Buyer's budget
        preparation.

9.      DEVELOPMENT $0 per month ($0 per month during the Continuation Period)

-       Perform responsibilities customary for general contractor and real
        estate developers with respect to existing projects at Anaheim, Thousand
        Oaks, Canoga Park and Puente Hills.

-       Oversee construction projects undertaken at Manhattan Beach.

10.     MARKETING $5,438 per month ($7,613 per month during Continuation
        Period)
<PAGE>   10

-       Provide marketing, advertising, graphics, printing and production
        services.

-       Meet deadlines for placement of advertising and production of all
        collateral materials.

11.     BUILDING OPERATIONS $15,474 per month ($21,663 per month during
        Continuation Period)

-       Oversee facilities and building operations managers.

-       Repair equipment and club facilities.

-       Manage third-party service providers.

-       Maintain detailed, item-by-item inventory of equipment (provided that
        Buyer notifies personnel responsible for this if Buyer uses its own
        personnel and equipment to move inventory).

12.     RETAIL $722 per month ($1,010 per month during Continuation Period)

-       Provide oversight of the retail operations (kiosks) at Spectrum Clubs.

-       Supply logo wear on same terms as prior to the date of this Agreement
        (direct cost of such logo wear is billable to Buyer).

13.     MISCELLANEOUS (no charge unless specifically noted below)

-       Provide laundry services to the extent and expense currently provided to
        any Spectrum Club (e.g. Howard Hughes) at the same charge as existing in
        historical financial statements.

-       Provide assistance in obtaining licenses and permits necessary to
        operate the Spectrum Clubs in substantially the same manner as operated
        prior to the date of this Agreement at an hourly rate of $60 per hour.
        Provide assistance in reviewing such licenses and permits that expire
        during the term of this Agreement for no charge.

-       Implement fitness equipment purchases already included in capital
        budget.

-       Supply Buyer's requirements for PTS (Private Trainer Systems) branded
        nutritional products or any successor or replacement products offered by
        Parent or any of its subsidiaries in the operation of the Sports Clubs,
        at a pass-through (e.g. no markup) of Parent's cost for the same
        product.

-       Provide Special projects (e.g. management of "Member Appreciation Days")
        at the request of Buyer at a fee equal to the Seller's hourly wage rate
        for the individual providing the service.

-       Assist in preparing sales tax returns.

-       Transfer calls and otherwise refer inquiries and contacts from vendors,
        customers, members, etc. to Buyer.

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