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                                                                    EXHIBIT 10.7

                                                                           FINAL
                    TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
                          2004 COMMON STOCK OPTION PLAN

                                    ARTICLE I
                                 Purpose of Plan

                  The 2004 Common Stock Option Plan (the "Plan") of TOWN SPORTS
INTERNATIONAL HOLDINGS, INC., a Delaware corporation (the "Company"), adopted by
the board of directors of the Company on February 4, 2004, for executive and
other key employees of the Company and its Subsidiaries, is intended to advance
the best interests of the Company by providing those persons who have a
substantial responsibility for its management and growth with additional
incentives by allowing them to acquire an ownership interest in the Company and
thereby encouraging them to contribute to the success of the Company and to
remain in its employ. The availability and offering of stock options under the
Plan also increases the Company's ability to attract and retain individuals of
exceptional managerial talent upon whom, in large measure, the sustained
progress, growth and profitability of the Company depends. The Plan is a
compensatory benefit plan within the meaning of Rule 701 of the Securities Act
(as defined below) and, unless and until the Common Stock is publicly traded,
the issuance of the options and the Common Stock pursuant to the Plan is
intended to qualify for the exemption from registration under the Securities Act
provided by such Rule 701.

                                   ARTICLE II
                                   Definitions

                  For purposes of the Plan, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:

                  "Board" shall mean the board of directors of the Company.

                  "Business Day-" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close in New
York, New York.

                  "Cause" means any of the following with respect to the
Participant: (i) a material breach of the Participant's covenants under this
Agreement or any other agreement with the Company or its Subsidiaries
(including, without limitation, the Option Agreement, the Stockholders Agreement
and the Registration Rights Agreement) not cured within 15 days after delivery
of written notice of such breach by the Company; (ii) the commission by the
Participant of a felony, a crime involving moral turpitude or other act causing
material harm to the standing and reputation of the Company or any of its
Subsidiaries; (iii) the Participant's repeated and deliberate failure to comply
with the lawful and reasonable written directives of the Board; or (iv) theft or
embezzlement of a material amount of money or property of the Company or any of
its Subsidiaries, perpetration of fraud, or participation in a fraud, on the
Company or any of its Subsidiaries.

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                  "Certificate of Incorporation" means the Company's Certificate
of Incorporation as in effect as of the date of adoption hereof, as the same may
be amended, restated or modified from time to time.

                  "Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.

                  "Committee" shall mean the compensation committee of the Board
which may be designated by the Board to administer the Plan or, if for any
reason the Board has not designated such a committee, the Board. The Committee,
if other than the Board, shall be composed of two or more directors as appointed
from time to time by the Board.

                  "Common Stock" means the Company's Class A Common Stock, par
value $0.001 per share (the "Class A Common"), and the Company's Class B Common
Stock, par value $0.001 per share (the "Class B Common"), or if such outstanding
Common Stock is hereafter changed into or exchanged for different securities of
the Company, such other securities.

                  "Disability" means the inability, due to illness, accident,
injury, physical or mental incapacity or other disability, of the Participant to
carry out his duties and obligations to the Company or to participate actively
in the management of the Company or a Subsidiary of the Company for a period of
at least 90 consecutive days or for shorter periods aggregating at least 120
days (whether or not consecutive)during any twelve-month period, as determined
by the Board in good faith.

                  "Executive Stock Agreement" has the meaning set forth in
Section 6.2 hereof.

                  "Fair Market Value" means, as of any date of determination,
(i) for each share of Common Stock, the average of the closing per share prices
of the sales of the Common Stock on all securities exchanges on which the Common
Stock may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day the Common Stock is
not so listed, the average of the representative bid and asked per share prices
quoted in the NASDAQ National Market System as of 4:00 P.M., New York time, or,
if on any day the Common Stock is not quoted in the NASDAQ National Market
System, the average of the highest bid and lowest asked per share prices on such
day in the domestic over-the-counter market as reported by the NASDAQ National
Quotation Bureau, Incorporated, or any similar successor organization, in each
such case averaged over a period of 21 trading days consisting of the day as of
which the Fair Market Value is being determined and the 20 consecutive trading
days prior to such day. If at any time the Common Stock is not so listed on any
securities exchange or quoted in the NASDAQ National Market System or the
domestic over-the-counter market, the Fair Market Value will be the fair value
of the Common Stock as determined in good faith by the Board and set forth in a
written notice to the Participant; provided, that if the Participant objects to
such determination in writing within 10 days of receipt of such determination
from the Board, the Fair Market Value shall be determined by an independent
investment banking firm mutually selected by the Board and the Participant; and
the costs of such investment banking firm shall be borne by

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the party whose determination is farthest from the determination of such
investment banking firm.

                  "Option Agreement" has the meaning set forth in Section 6.2
hereof.

                  "Option Shares" means, collectively, (i) all shares of Class A
Common issued or issuable upon the exercise of an Option, and (ii) any shares of
the Company's capital stock issued with respect to the shares of Common Stock
set forth in clause (i) by way of merger, consolidation, reclassification, stock
split, reverse stock split, stock dividend or other recapitalization. Option
Shares shall continue to be Option Shares in the hands of any holder other than
the Participant to whom the related Options were granted (including, without
limitation, any Permitted Transferee of such Participant), except for the
Company, any Person specified in the related Option Agreement or any transferee
in an underwritten public offering registered under the Securities Act. Except
as otherwise provided herein, each other holder of Option Shares will succeed to
the rights and obligations attributable to the Participant as a holder of Option
Shares hereunder.

                  "Options" shall have the meaning set forth in Article IV
hereof.

                  "Participant" shall mean any executive or other key employee
of the Company who has been selected to participate in the Plan by the Committee
or the Board.

                  "Permitted Transferee" means, as to any Person, the "Permitted
Transferees" (as defined in the Stockholders Agreement) of such Person.

                  "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

                  "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of February 4, 2004 by and among the Company and certain
stockholders of the Company, from time to time party thereto, as the same may be
amended, restated or modified from time to time.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Stockholders Agreement" means the Stockholders Agreement
dated as of February 4, 2004 by and among the Company and certain stockholders
of the Company from time to time party thereto, as the same may be amended,
restated or modified from time to time.

                  "Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company association or other
business entity of which (i) if a corporation or a limited liability company, a
majority of the total voting power of securities entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a partnership, association or other business
entity, a majority of the partnership or other similar ownership

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interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control the managing
director or general partner of such partnership, association or other business
entity.

                                   ARTICLE III
                                 Administration

                  The Plan shall be administered by the Committee; provided,
that if for any reason the Committee shall not have been appointed by the Board,
all authority and duties of the Committee under the Plan shall be vested in and
exercised by the Board. Subject to the limitations of the Plan, the Committee
shall have the sole and complete authority to: (i) select Participants, (ii)
grant Options to Participants in such forms and amounts as it shall determine,
(iii) impose such limitations, restrictions and conditions upon such Options as
it shall deem appropriate, (iv) interpret the Plan and adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the Plan,
(v) correct any defect or omission or reconcile any inconsistency in the Plan or
in any Option granted hereunder, and (vi) make all other determinations and take
all other actions necessary or advisable for the implementation and
administration of the Plan. The Committee's determinations on matters within its
authority shall be conclusive and binding upon the Participants, the Company and
all other Persons. All expenses associated with the administration of the Plan
shall be borne by the Company. The Committee may, as approved by the Board and
to the extent permissible by law, delegate any of its authority hereunder to
such persons as it deems appropriate.

                                   ARTICLE IV
                         Limitation on Aggregate Shares

                  The number of shares of Common Stock with respect to which
options may be granted under the Plan (the "Options") and which may be issued
upon the exercise thereof shall not exceed, in the aggregate 162,759 shares;
provided, that (i) the type and the aggregate number of shares which may be
subject to Options shall be subject to adjustment in accordance with the
provisions of Section 6.9 below, and (ii) to the extent any Options expire
unexercised or are canceled, terminated or forfeited in any manner without the
issuance of Common Stock thereunder, or if any Options are exercised and the
shares of Common Stock issued thereunder are repurchased by the Company, such
shares shall again be available under the Plan. The 162,759 shares of Common
Stock available under the Plan may be either authorized and unissued shares,
treasury shares or a combination thereof, as the Committee shall determine.

                                    ARTICLE V
                                     Awards

         Section 5.1 Options. The Committee may grant Options to Participants in
accordance with this Article V.

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         Section 5.2 Form of Option. Options granted under this Plan may be
"nonqualified" stock options or "incentive stock options" within the meaning of
Section 422 of the Code or any successor provision as specified by the
Committee; provided, than no incentive stock option may be granted to any Person
who owns more than 10% of the combined voting power of all classes of capital
stock of the Company (a "Ten Percent Holder") except subject to the limitations
set forth in Sections 5.3, 5.4, and 5.7 below and such other statutory
requirements as the Committee determines may be applicable.

         Section 5.3 Exercise Price. The Option exercise price per share of
Common Stock (the "Exercise Price") shall be fixed by the Committee.

         Section 5.4 Exercisability; Vesting. Options shall be exercisable (i)
at such time or times as the Committee shall determine at or subsequent to
grant, and (ii) only to the extent such Options shall have vested; provided,
that any Option intended to be an incentive stock option shall be treated as
such only to the extent that the aggregate Fair Market Value of the Common Stock
(determined as of the date of the Option grant) with respect to which incentive
stock options (but not non-qualified options) are exercisable for the first time
by any Participant during any calendar year (under all stock option plans of the
Company and its Subsidiaries) does not exceed $100,000. Unless otherwise
specified in the Option Agreement or as determined by the Committee, Options
will vest on the ninth anniversary of the date of such grant. Any Options which
shall have so vested are referred to as "Vested Options", and any Options which
have not vested are referred to as the "Unvested Options". In addition, Options
shall vest on an accelerated or decelerated basis as the Committee shall
determine as specified in any Option Agreement.

         Section 5.5 Exercise Procedure. Options shall be exercised in whole or
in part by written notice to the Company (to the attention of the Company's
Secretary) accompanied by a statement of the Participant that the Participant
has read and has been afforded an opportunity to ask questions of management of
the Company regarding all financial and other information provided to the
participant regarding the Company together with payment in full of an amount
(the "Option Price")equal to the product of (i) the applicable Exercise Price
for the applicable Options multiplied by (ii) the number of Option Shares to be
acquired. Payment of the Exercise Price may be made (i) in cash (including
certified check, bank draft or money order or the equivalent thereof acceptable
to the Company), (ii) if approved by the Committee prior to exercise (in the
case of an incentive stock option, if approved by the Committee in the grant),
by delivery of a full recourse promissory note of the Participant bearing
interest at a rate not less than the applicable federal rate determined pursuant
to Section 1274 of the Code as of the date of purchase or exercise, (iii) by the
delivery of shares of Common Stock valued at their Fair Market Value as of the
date of exercise as provided in Section 5.6 below, or (iv) in a combination of
the foregoing. Unless otherwise specified in the Option grant or as determined
by the Committee, no Option may be exercised for a fraction of a share of Common
Stock.

         Section 5.6 Exchange of Previously Acquired Stock. The Committee, in
its discretion and subject to such conditions as the Committee may determine,
may permit the Exercise Price for the shares being acquired to be paid, in full
or in part, by the delivery to the Company of a number of shares of Common Stock
having an aggregate Fair Market Value as of the date of exercise equal to the
Exercise Price for the shares being acquired. In the case of incentive stock

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options, the Committee shall specify in the Option grant whether the option
holder may satisfy the Exercise Price with respect to shares of Common Stock
purchased upon exercise of such Option by delivering to the Company shares of
previously acquired Common Stock.

         Section 5.7 Terms of Options. The Committee shall determine the term of
each Option, which term shall in no event exceed ten (10) years from the date of
grant. Notwithstanding the foregoing, any Option granted to any Ten Percent
Holder shall expire no later than five (5) years from the date on which such
Option was granted. In addition, each Option shall be subject to early
termination in accordance with Section 6.6 below.

                                   ARTICLE VI
                               General Provisions

         Section 6.1 Conditions and Limitations on Exercise. Options may be made
exercisable in one or more installments, upon the happening of certain events,
upon the passage of a specified period of time, upon the fulfillment of certain
conditions or upon the achievement by the Company of certain performance goals,
and subject to such other terms and conditions as the Committee shall decide in
each case when the Options are granted.

         Section 6.2 Written Agreement. Each Option granted hereunder to a
Participant shall be embodied in a written agreement (an "Option Agreement")
which shall be signed by the Participant and by the Chairman, the President or
the Chief Financial Officer of the Company for and in the name and on behalf of
the Company and shall be subject to the terms and conditions of the Plan
prescribed in the Option Agreement. In addition, each Participant shall also be
required, to the extent not already a party thereto, to execute a joinder to the
Stockholders Agreement and the Registration Rights Agreement, and an executive
stock agreement (an "Executive Stock Agreement"), which shall collectively
provide, among other things, (i) the right of the Company and such other Persons
as the Committee shall designate ("Designees") to repurchase from each
Participant, and such Participant's transferees, all shares of Common Stock
issued or issuable to such Participant on the exercise of an Option in the event
of such Participant's termination of employment, (ii) rights of first refusal
granted to the Company and Designees, (iii) holdback and other registration
right restrictions in the event of a public registration of any equity
securities of the Company and (iv) any other terms and conditions which the
Committee shall deem necessary and desirable.

         Section 6.3 Listing, Registration and Compliance with Laws and
Regulations. Options shall be subject to the requirement that if at any time the
Committee shall determine, in its discretion, that the listing, registration or
qualification of the shares subject to the Options upon any securities exchange
or under any state or federal securities or other law or regulation, or the
consent or approval of any governmental regulatory body, is reasonably required
as a condition to or in connection with the granting of the Options or the
issuance or purchase of shares thereunder, no Options may be granted or
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee. The holders of such Options
shall supply the Company with such certificates, representations and information
as the Company shall request and shall otherwise cooperate with the Company in
obtaining such listing, registration,

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qualification, consent or approval. In the case of officers and other Persons
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, the
Committee may at any time impose any limitations upon the exercise of an Option
that, in the Committee's discretion, are necessary or desirable in order to
comply with such Section 16(b) and the rules and regulations thereunder. To the
extent specified in any Option Agreement, if the Company, as part of an offering
of securities or otherwise, finds it desirable because of federal or state
regulatory requirements to reduce the period during which any Options may be
exercised, the Committee, may, in its discretion and without the Participant's
consent, so reduce such period on not less than fifteen (15) days written notice
to the holders thereof.

         Section 6.4 Nontransferability. Options may not be transferred other
than by will or the laws of descent and distribution and, during the lifetime of
the Participant to whom they were granted, may be exercised only by such
Participant (or his legal guardian or legal representative). In the event of the
death of a Participant, exercise of Options granted hereunder shall be made
only: (i)by the executor or administrator of the estate of the deceased
Participant or the Person or Persons to whom the deceased Participant's rights
under the Option shall pass by will or the laws of descent and distribution
(provided that each beneficiary shall execute and deliver such instruments,
documents, agreements or undertakings as the Company shall request); and (ii)to
the extent that the deceased Participant was entitled thereto at the date of
such Participant's death, unless otherwise provided by the Committee in such
Participant's Option Agreement.

         Section 6.5 Expiration of Options.

                  (a)      Normal Expiration. In no event shall any part of any
Option be exercisable after the date of expiration thereof (the "Expiration
Date"), as determined by the Committee pursuant to Section 5.7 above.

                  (b)      Early Expiration Upon Termination of Employment.
Except as otherwise provided by the Committee in the applicable Option Agreement
pursuant to which Options are granted to any Participant, any portion of a
Participant's Option that was not vested and exercisable on the date of the
termination of such Participant's employment shall expire and be forfeited as of
such date, and any portion of a Participant's Option that was vested and
exercisable on the date of the termination of such Participant's employment
shall expire and be forfeited 90 days after such date.

         Section 6.6 Withholding Tax Requirements. It shall be a condition of
the exercise of any Option that the Participant exercising the Option make
appropriate payment or other provision acceptable to the Company with respect to
any withholding tax requirement arising from such exercise. The amount of
withholding tax required, if any, with respect to any Option exercise (the
"Withholding Amount") shall be reasonably determined by the Treasurer or other
appropriate officer of the Company, and the Participant shall furnish such
information as such officer requires to make such determination. If the Company
determines that withholding tax is required with respect to any Option exercise,
the Company shall notify the Participant of the Withholding Amount, and the
Participant shall pay to the Company an amount not less than the Withholding
Amount. In lieu of making such payment, the Participant may elect to pay the
Withholding Amount by either (i) delivering to the Company a number of Option
Shares having an aggregate Fair Market Value as of the "measurement date" (as
hereinafter defined) not less

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than the Withholding Amount or (ii) directing the Company to withhold (and not
to deliver or issue to the Participant) a number of Option Shares otherwise
issuable upon the exercise of the Option having an aggregate Fair Market Value
as of the measurement date not less than the Withholding Amount. In addition, if
the Committee approves, a Participant may elect pursuant to the prior sentence
to deliver or direct the withholding of Option Shares having an aggregate Fair
Market Value in excess of the minimum Withholding Amount but not in excess of
the Participant's applicable highest marginal combined federal income and state
income tax rate, as estimated in good faith by such Participant. Any fractional
share interests resulting from the delivery or withholding of Option Shares to
meet withholding tax requirements shall be settled in cash. All amounts paid to
or withheld by the Company and the value of all Option Shares delivered to or
withheld by the Company pursuant to this Section 6.6 shall be deposited in
accordance with applicable law by the Company as withholding tax for the
Participant's account. If the Treasurer or other appropriate officer of the
Company determines that no withholding tax is required with respect to the
exercise of any Option (because such Option is an incentive stock option or
otherwise), but subsequently it is determined that the exercise resulted in
taxable income as to which withholding is required (as a result of a disposition
of shares or otherwise), the Participant shall promptly, upon being notified of
the withholding requirement, pay to the Company by means acceptable to the
Company the amount required to be withheld; and at its election the Company may
condition any transfer of shares issued upon exercise of an incentive stock
option upon receipt of such payment. The term "measurement date" as used in this
Section 6.6 shall mean the date on which any taxable income resulting from the
exercise of an Option is determined under applicable federal income tax law.

         Section 6.7 Notification of Inquiries and Agreements. Each Participant
and each permitted transferee shall notify the Company in writing within ten
(10) days after the date such Participant or permitted transferee (i) first
obtains knowledge of any Internal Revenue Service inquiry, audit, assertion,
determination, investigation, or question relating in any manner to the value of
Options granted hereunder; (ii) includes or agrees (including, without
limitation, in any settlement, closing or other similar agreement)to include in
gross income with respect to any Option granted under this Plan (A) any amount
in excess of the amount reported on Form 1099 or Form W-2 to such Participant by
the Company, or (B) if no such Form was received, any amount; and (iii)
exercises, sells, disposes of, or otherwise transfers an Option acquired
pursuant to this Plan. Upon request, a Participant or permitted transferee shall
provide to the Company any information or document relating to any event
described in the preceding sentence which the Company (in its sole
discretion)requires in order to calculate and substantiate any change in the
Company's tax liability as a result of such event.

         Section 6.8 Adjustments. Except as otherwise provided in any Option
Agreement, in the event of a reorganization, recapitalization, stock dividend or
stock split, or combination or other change in the shares of Common Stock, the
Board or the Committee may or may not, in its discretion, make such adjustments
in the number and type of shares authorized by the Plan, the number and type of
shares covered by outstanding Options and the Exercise Prices specified therein
as may be determined to be appropriate and equitable. The issuance by the
Company of shares of stock of any class, or options or securities exercisable or
convertible into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale, or upon the exercise of rights or
warrants to subscribe therefor, or upon exercise or conversion of other

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securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock then subject to
any Options.

         Section 6.9 Employment. Nothing contained in this Plan or in any Option
Agreement shall interfere with or limit in any way the right of the Company to
terminate any Participant's employment at any time (with or without Cause), nor
confer upon any Participant any right to continue in the employ of the Company
for any period of time or to continue his present (or any other) rate of
compensation, and except as otherwise provided under this Plan or by the
Committee in the Option Agreement, in the event of any Participant's termination
of employment (including, but not limited to, the termination by the Company
without Cause) any portion of such Participant's Option that was not previously
vested and exercisable shall expire and be forfeited as of the date of such
termination. No employee shall have a right to be selected as a Participant or,
having been so selected, to be selected again as a Participant.

         Section 6.10 No Rights as Stockholder. No Participant by reason of
holding any Option shall have rights as a stockholder with respect to shares of
Common Stock subject to Options prior to the date of exercise of such Options
and payment in full of the Exercise Price.

         Section 6.11 Amendment, Suspension and Termination of Plan. The Board
or the Committee may suspend or terminate the Plan or any portion thereof at any
time and may amend it from time to time in such respects as the Board or the
Committee may deem advisable; provided that no such amendment shall be made
without stockholder approval to the extent such approval is required by law,
agreement or the rules of any exchange upon which the Common Stock is listed,
and no such amendment, suspension or termination shall impair the rights of any
Participant under outstanding Options without the consent of such Participant
unless Participants holding a majority of the aggregate number of Options (based
upon the number of Option Shares to be obtained upon exercise) granted by the
Company pursuant to this Plan consent to such amendment in writing and such
amendment affects all holders similarly. No Options shall be granted hereunder
after the tenth anniversary of the adoption of the Plan.

         Section 6.12 Amendment, Modification and Cancellation of Outstanding
Options. The Committee may amend or modify any Option in any manner to the
extent that the Committee would have had the authority under the Plan initially
to grant such Option; provided, that no such amendment or modification shall
impair the rights of any Participant under any Option without the consent of
such Participant unless Participants holding a majority of the aggregate number
of Options (based upon the number of Option Shares to be obtained upon exercise)
granted by the Company pursuant to this Plan consent to such amendment in
writing and such amendment affects all holders similarly. With the Participant's
consent, the Committee may cancel any Option and issue a new Option to such
Participant.

         Section 6.13 Indemnification. In addition to such other rights of
indemnification as they may have as members of the Board or the Committee, the
members of the Board shall be indemnified by the Company against all costs and
expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them

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in satisfaction of a judgment in any such action, suit or proceeding; provided,
that (i) any such Board member shall be entitled to the indemnification rights
set forth in this Section 6.13 only if such member has acted in good faith and
in a manner that such member reasonably believed to be in or not opposed to the
best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that such conduct was unlawful,
and (ii) upon the institution of any such action, suit or proceeding a Board
member shall give the Company written notice thereof and an opportunity, at its
own expense, to handle and defend the same before such Board member undertakes
to handle and defend it on his own behalf.

                                    * * * * *

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