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                                                                    EXHIBIT 10.4

                             STOCKHOLDERS AGREEMENT

                  STOCKHOLDERS AGREEMENT ("Agreement"), dated as of February 4,
2004, by and among TOWN SPORTS INTERNATIONAL HOLDINGS, INC., a Delaware
corporation (the "Company"), TOWN SPORTS INTERNATIONAL, INC., a New York
corporation ("TSI"), BRUCKMANN, ROSSER, SHERRILL & CO., L.P., a Delaware limited
partnership ("BRS"), the individuals and entities listed on the BRS Investor
Signature Pages hereto (each, a "BRS Investor", and collectively, the "BRS
Investors"), FARALLON CAPITAL PARTNERS, L.P., a California limited partnership
("FCP"), FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P., a California limited
partnership ("FCIP"), RR CAPITAL PARTNERS, L.P., a Delaware limited partnership
("RRC"), and FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P., a California
limited partnership ("FII" and, together with FCP, FCIP, and RRC, the "Farallon
Investors", and individually, a "Farallon Investor"), CANTERBURY DETROIT
PARTNERS, L.P., a Delaware limited partnership ("Canterbury Detroit"),
CANTERBURY MEZZANINE CAPITAL, L.P., a Delaware limited partnership ("Canterbury
Mezzanine" and, together with Canterbury Detroit, the "Canterbury Investors",
and individually, a "Canterbury Investor"), ROSEWOOD CAPITAL, L.P., a Delaware
limited partnership ("Rosewood"), ROSEWOOD CAPITAL IV, L.P., a Delaware limited
partnership ("Rosewood IV"), ROSEWOOD CAPITAL IV ASSOCIATES, L.P., a Delaware
limited partnership ("Rosewood Associates" and, collectively with Rosewood and
Rosewood IV, the "Rosewood Investors", and individually, a "Rosewood Investor"),
CAPITALSOURCE HOLDINGS LLC, a Delaware limited liability company
("CapitalSource"), KEITH ALESSI ("Alessi"), PAUL ARNOLD ("Arnold"), and certain
stockholders of the Company listed on the Executive Signature Page hereto,
including those Persons who have executed joinders to the Original Shareholders
Agreement (each, an "Executive", collectively, the "Executives") (BRS, the BRS
Investors, the Farallon Investors, the Canterbury Investors, the Rosewood
Investors, CapitalSource, Alessi, Arnold and the Executives are referred to
collectively herein, together with each of their respective Permitted
Transferees (as defined herein), as the "Stockholders" and, individually as a
"Stockholder"). Capitalized terms used herein but not otherwise defined shall
have the meanings assigned to such terms in Section 1.

                  WHEREAS, the Stockholders currently own all of the issued and
outstanding capital stock of TSI consisting of Class A Common Stock, par value
$.001 per share (the "TSI Class A Common"), Series A Preferred Stock, par value
$1.00 per share (the "TSI Series A Preferred"), and Series B Preferred Stock,
par value $1.00 per share (the "TSI Series B Preferred"), as specified for each
Stockholder on Schedule A attached hereto;

                  WHEREAS, the Stockholders are currently parties to that
certain Amended and Restated Shareholders Agreement, dated as of November 13,
1998, by and among TSI and the Stockholders (the "Existing TSI Shareholders
Agreement");

                  WHEREAS, TSI, the Company and the Stockholders have entered
into a Restructuring Agreement, dated as of the date hereof (the "Restructuring
Agreement"), pursuant to which TSI shall be reorganized as a wholly-owned
subsidiary of the Company by having (a) each of the Stockholders contribute and
deliver to the Company the shares of TSI Class A Common, TSI Series A Preferred
and TSI Series B Preferred owned by each Stockholder as specified for such
Stockholder on Schedule A attached hereto in exchange for all of the issued

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and outstanding capital stock of the Company consisting of Class A Common Stock,
par value $.001 per share (the "Class A Common"), Series A Preferred Stock, par
value $1.00 per share (the "Series A Preferred"), and Series B Preferred Stock,
par value $1.00 per share (the "Series B Preferred"), as specified for each
Stockholder on Schedule A attached hereto, and (b) immediately following the
initial Stockholder contribution, the Company contribute and deliver to TSI for
cancellation the shares of TSI Class A Common, TSI Series A Preferred and TSI
Series B Preferred held by it in exchange for 1,000 shares of TSI Class A
Common, representing all of the issued and outstanding capital stock of TSI
(collectively, the "Restructuring");

                  WHEREAS, in conjunction with the Restructuring, TSI and the
Stockholders desire to cancel and terminate the Existing TSI Shareholders
Agreement; and

                  WHEREAS, the Company and the Stockholders desire to enter into
this Agreement for the purposes, among others, of (a) establishing the
composition of the Company's Board of Directors (as in effect from time to time,
the "Board"), (b) assuring continuity in the management and ownership of the
Company and (c) limiting the manner and terms by which the Stockholder Shares
may be transferred.

                  NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:

                  1.       DEFINITIONS. As used herein, the following terms
shall have the following meanings:

                  "Affiliate" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).

                  "Approved Sale" means the sale of the Company, in a single
transaction or a series of related transactions, to an Unaffiliated Third Party
(a) pursuant to which such Unaffiliated Third Party proposes to acquire all of
the outstanding Common Stock (whether by merger, consolidation,
recapitalization, reorganization, purchase of the outstanding Common Stock or
otherwise) or all or substantially all of the consolidated assets of the
Company, (b) which has been approved by the Board and holders of a majority of
the outstanding BRS Shares, voting together as a single class, and (c) pursuant
to which all holders of Stockholder Shares and Preferred Shares receive at the
same time (whether in such transaction or, with respect to an asset sale, upon a
subsequent liquidation) the same form and amount of consideration (x) per share
of Common Stock (as adjusted for any consideration payable by such holders in
connection with the exercise of any Common Options) with respect to holders of
Stockholder Shares, (y) per share of Preferred Stock (which shall in no event be
less than the Liquidation Value (plus accrued and unpaid dividends)) with
respect to holders of Preferred Shares, or if any holders of Stockholder Shares
or Preferred Shares are given an option as to the form and amount of
consideration received, all such holders of Stockholder Shares or Preferred
Shares, as the case

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may be, are given the same option; provided, that such consideration shall be
deemed to include any other consideration paid or payable by such Unaffiliated
Third Party to any holder of Stockholder Shares in connection with such
transaction, or otherwise directly or indirectly related to such transaction,
which is not in exchange for or attributable to securities of the Company held
by such holder.

                  "Approved TSI Sale" means the sale of TSI, in a single
transaction or a series of related transactions, to an Unaffiliated Third Party
(a) pursuant to which such Unaffiliated Third Party proposes to acquire all of
the outstanding TSI Common Stock (whether by merger, consolidation,
recapitalization, reorganization, purchase of the outstanding Common Stock or
otherwise) or all or substantially all of the consolidated assets of TSI, (b)
which has been approved by the Board of Directors of TSI and holders of a
majority of the outstanding BRS Shares, voting together as a single class, and
(c) pursuant to which all holders of Stockholder Shares and Preferred Shares
receive at the same time (whether in such transaction or upon a subsequent
liquidation of TSI or the Company) the same form and amount of consideration (x)
per share of Common Stock (as adjusted for any consideration payable by such
holders in connection with the exercise of any Common Options) with respect to
holders of Stockholder Shares, (y) per share of Preferred Stock (which shall in
no event be less than the Liquidation Value (plus accrued and unpaid dividends))
with respect to holders of Preferred Shares, or if any holders of Stockholder
Shares or Preferred Shares are given an option as to the form and amount of
consideration received, all such holders of Stockholder Shares or Preferred
Shares, as the case may be, are given the same option; provided, that such
consideration shall be deemed to include any other consideration paid or payable
by such Unaffiliated Third Party to any holder of Stockholder Shares in
connection with such transaction, or otherwise directly or indirectly related to
such transaction.

                  "BRS Shares" means Stockholder Shares owned by BRS and the BRS
Investors, or any of their respective Permitted Transferees.

                  "CapitalSource Shares" means Stockholder Shares owned by
CapitalSource or any of its Permitted Transferees.

                  "Common Options" means, collectively, the options to purchase
Class A Common (a) prior to the date hereof, granted to certain Executives
pursuant to the Town Sports International, Inc. Fourth Amended and Restated 1996
Stock Option Plan and the Common Stock Option Agreements, by and between TSI and
each of the Executives and transferred to Holdings pursuant to the Restructuring
and the documents related thereto, and (b) on or after the date hereof, granted
to certain Executives pursuant to the Town Sports International Holdings, Inc.
2004 Stock Option Plan and the Common Stock Option Agreements, by and between
the Company and each of the Executives.

                  "Common Stock" means, collectively, the Class A Common, the
Class B Common Stock, par value $.001 per share (the "Class B Common"), and any
other class of common stock of the Company, or if such outstanding Common Stock
is hereafter changed into or exchanged for different securities of the Company,
such other securities.

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                  "Executive Shares" means Stockholder Shares owned by the
Executives or any of their respective Permitted Transferees.

                  "Family Group" means, with respect to an individual
Stockholder, (i) such Stockholder's spouse, former spouse and descendants
(whether natural or adopted), parents and their descendants, descendants of such
brothers and sisters and any spouse of the foregoing individuals or (ii) any
trust solely for the benefit of any of the individuals listed in clause (i)
above.

                  "Farallon Shares" means Stockholder Shares owned by the
Farallon Investors or their respective Permitted Transferees.

                  "Initial Public Offering" means the sale, in the initial
underwritten public offering registered under the Securities Act, of shares of
the Company's Common Stock where, after such offering, the Common Stock sold in
such offering is subject to being traded on the NASDAQ National Market or a
national securities exchange.

                  "Investors" means, collectively, BRS and the Farallon
Investors.

                  "Liquidation Value" means, with respect to any share of any
series of Preferred Stock, the "Liquidation Value" for such shares or series as
defined and determined in accordance with the Company's Certificate of
Incorporation, as in effect from time to time.

                  "Other Stockholders" means, with respect to a Stockholder, all
Stockholders other than such Stockholder.

                  "Ownership Ratio" means, as to a Stockholder at the time of
determination, the percentage obtained by dividing the amount of shares of
Common Stock held by such Stockholder on a fully diluted basis at such time by
the aggregate amount of shares of Common Stock outstanding on a fully diluted
basis at such time.

                  "Permitted Transferees" has the meaning set forth in Section
4(c).

                  "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, any other entity or a
governmental entity (or any department, agency or political subdivision
thereof).

                  "Preferred Shares" means, (i) any Preferred Stock now held or
hereafter acquired by the Stockholders, and (ii) any securities issued or
issuable directly or indirectly with respect to the securities described in
clause (i) above by way of stock dividend, stock split, or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular shares constituting Preferred Shares, such
shares will cease to be Preferred Shares when they have been sold in an Approved
Sale, transferred pursuant to Section 4(a) or 4(b) hereof, or upon the
consummation of an Initial Public Offering. For purposes of this Agreement, a
Person will be deemed a holder of Preferred Shares whenever such Person has the
rights to acquire directly or indirectly such Preferred Shares (upon conversion
or exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or

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limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.

                  "Preferred Stock" means, collectively, the Series A Preferred,
the Series B Preferred and any other class of preferred stock of the Company, or
if such outstanding Preferred Stock is hereafter changed into or exchanged for
different securities of the Company, such other securities.

                  "Public Sale" means any sale of Stockholder Shares to the
public pursuant to an offering registered under the Securities Act or to the
public effected through a broker, dealer or market maker pursuant to the
provisions of Rule 144 under the Securities Act.

                  "Rosewood Shares" means Stockholder Shares owned by the
Rosewood Investors or any of its Permitted Transferees.

                  "Securities Act" means the Securities Act of 1933, as amended
from time to time.

                  "Stockholder Shares" means (i) any Common Stock now held or
hereafter acquired by the Stockholders, including upon conversion of any shares
of Series B Preferred, (ii) Common Stock issued or issuable upon exercise of the
Common Options, and (iii) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in clauses (i) and (ii)
above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular shares constituting Stockholder Shares,
such shares will cease to be Stockholder Shares when they have been sold or
acquired in a Public Sale or in an Approved Sale, transferred pursuant to
Section 4(a) or 4(b) hereof or upon the consummation of an Initial Public
Offering. For purposes of this Agreement, a Person will be deemed to be a holder
of Stockholder Shares whenever such Person has the right to acquire directly or
indirectly such Stockholder Shares (upon conversion or exercise in connection
with a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.

                  "Subsidiary" means, with respect to any Person, any
corporation, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock 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 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 a general partner of such partnership,
association or other business entity.

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                  "Transaction Documents" means, collectively, (i) this
Agreement, (ii) the Registration Rights Agreement, dated as of the date hereof,
by and among the parties hereto, (iii) the Restructuring Agreement, (iv) the Tax
Sharing Agreement, dated the date hereof, by and between the Company, TSI and
each of TSI's subsidiaries party thereto, and (v) the Professional Services
Agreement, dated as of December 10, 1996, by and among TSI and an Affiliate of
BRS, in each case, as the same may be amended, restated or modified from time to
time.

                  "TSI Common Stock" means, collectively, the TSI Class A
Common, the Class B Common Stock, par value $.001 per share, of TSI, and any
other class of common stock of TSI, or if such outstanding TSI Common Stock is
hereafter changed into or exchanged for different securities of TSI, such other
securities.

                  "Unaffiliated Third Party" means any Person who, immediately
prior to the contemplated transaction (i) does not own in excess of 5% of the
Common Stock on a fully diluted basis (a "5% Owner"), (ii) is not controlling,
controlled by or under common control with any such 5% Owner and (iii) is not
the spouse or descendent (by birth or adoption) of any such 5% Owner or a trust
for the benefit of such 5% Owner and/or such other Persons.

                  2.       BOARD OF DIRECTORS.

                  (a)      Until the provisions of this Section 2 cease to be
effective, to the extent permitted by law, each Stockholder shall vote all
voting securities of the Company over which such Stockholder has voting control,
and shall take all other necessary or desirable actions within such
Stockholder's control (whether in such Stockholder's capacity as a Stockholder,
director, member of a board committee or officer of the Company or otherwise,
and including, without limitation, attendance at meetings in Person or by proxy
for purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all necessary and desirable actions within
its control (including, without limitation, calling special board and
Stockholder meetings), so that:

                  (i)      the authorized number of directors on the Board shall
         be established at six directors;

                  (ii)     the following Persons shall be elected to the Board:

                           (A)      for so long as BRS holds at least 10% of the
                  Stockholder Shares held by it as of the date hereof, two (2)
                  representatives designated by BRS determined by a vote or
                  consent of the holders of a majority of the BRS Shares (the
                  "BRS Directors");

                           (B)      Mark Smith, for so long as he is then acting
                  and duly elected Chief Executive Officer of the Company and
                  willing and capable to serve as a director, and after such
                  time, one individual determined by the vote or consent of
                  Stockholders owning a majority of the Executive Shares, voting
                  together as a single class (the "Executive Director");

                           (C)      for so long as the Farallon Investors hold,
                  in the aggregate, at least 10% of the aggregate number of
                  Stockholder Shares held by them as of the date

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                  hereof, one (1) representative designated by the Farallon
                  Investors determined by a vote or consent of the holders of a
                  majority of the Farallon Shares (the "Farallon Director"); and

                           (D)      two (2) representatives designated by the
                  holders of the Class A Common, determined by the vote or
                  consent of the holders of a majority of the Class A Common,
                  who shall initially be Paul N. Arnold and Keith Alessi (each,
                  an "Independent Director").

                  (iii)    the composition of the board of directors of TSI
         shall be the same as the composition of the Board and the composition
         of the board of directors of each of the Company's other direct or
         indirect Subsidiaries (a "Sub Board") shall be as determined by the
         Board;

                  (iv)     the Board shall create a Compensation Committee,
         which shall consist of two BRS Directors and the Executive Director,
         which shall have the duties and functions set forth in the Company's
         by-laws;

                  (v)      any committees of the Board or a Sub Board (other
         than the Compensation Committee) shall be created only upon the
         approval of a majority of the members of the Board and the composition
         of each such committee (if any) shall consist of at least one BRS
         Director;

                  (vi)     any BRS Director, Executive Director, Farallon
         Director or Independent Director shall be removed from the Board, a Sub
         Board or any committee thereof (with or without cause) at the written
         request of the Stockholder or Stockholders which have the right to
         designate such director hereunder, but only upon such written request
         and under no other circumstances (in each case, determined on the basis
         of a vote or consent of the Stockholders referred to in clause (ii)(A),
         (ii)(B), (ii)(C) or (ii)(D) as the case may be);

                  (vii)    in the event that any representative designated
         hereunder for any reason ceases to serve as a member of the Board or a
         Sub Board or any committee thereof during such representative's term of
         office, the resulting vacancy on the Board or such Sub Board or
         committee shall be filled by a representative designated by the
         Stockholders referred to in clause (ii)(A), (ii)(B), (ii)(C), or
         (ii)(D), as the case may be; and

                  (b)      The Company shall pay the reasonable out-of-pocket
expenses incurred by each director or observer in connection with attending the
meetings of the Board or any Sub Board and any committee thereof. In addition,
the Company shall pay such additional compensation to directors who are not
employees of the Company or any of its Subsidiaries as the Board so determines.

                  (c)      The provisions of this Section 2 shall terminate
automatically and be of no further force and effect upon the consummation of an
Initial Public Offering.

                  (d)      If any party fails to designate a representative to
fill a directorship pursuant to the terms of this Section 2, the election of a
Person to such directorship shall be accomplished in accordance with the
Company's bylaws and applicable law (provided that such

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party may subsequently remove and replace such Person). In the event that any
provision of the Company's bylaws or articles of incorporation is inconsistent
with any provision of this Section 2, the Stockholders shall take such action as
may be necessary to amend any such provision in the Company's bylaws or
certificate of incorporation to remedy such inconsistency.

                  (e)      The Company shall give (i) each of Robert Giardina,
Alexander Alimanestianu, and Richard Pyle (all of whom are Executives, each, an
"Observer") (for so long as each such Observer owns at least 10% of the
Stockholder Shares held by him as of the date hereof) and (ii) Canterbury
Mezzanine and Canterbury Detroit (so long as each of Canterbury Mezzanine and
Canterbury Detroit owns at least 10% of the Stockholder Shares held by it)
written notice of each meeting of the Board, at the same time and in the same
manner as notice is given to the directors, and the Company shall permit each
Observer and a representative of Canterbury Mezzanine and Canterbury Detroit,
taken as a group, to attend, as an observer, all such meetings unless attendance
at such meeting, in the Board's reasonable judgment, would create a conflict of
interest for such representative or Observer; provided, that in the case of
telephonic meetings, such representative or Observer need receive only actual
notice thereof at the same time and in the same manner as notice is given to the
directors, and such representative or Observer shall be given the opportunity to
listen to such telephonic meetings. The representative of Canterbury Mezzanine
and Canterbury Detroit and each Observer shall be entitled to receive all
written materials and other information (including, without limitation, copies
of meeting minutes) given to directors of the Company in connection with such
meetings at the same time such materials and information are given to such
directors unless, in the Board's reasonable judgment, receipt of such materials
would create a conflict of interest by such representative or Observer. The
Company shall give written notice of any action by written consent in lieu of a
meeting of directors to such representative or Observer prior to the effective
date of such consent describing in reasonable detail the nature and substance of
such action.

                  3.       REPRESENTATIONS AND WARRANTIES. Each Stockholder
represents and warrants that (a) effective as of the date hereof such
Stockholder is the record owner of the number of Stockholder Shares and
Preferred Shares set forth opposite its name on Schedule A attached hereto
(assuming all such shares and options therefor have become fully vested), (b)
this Agreement has been duly authorized, executed and delivered by such
Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, and (c) such Stockholder
has not granted and is not a party to any proxy, voting trust or other agreement
which is inconsistent with, conflicts with or violates any provision of this
Agreement. No holder of Stockholder Shares shall grant any such proxy or become
party to any such voting trust or other agreement which is inconsistent with,
conflicts with or violates any provision of this Agreement.

                  4.       RESTRICTIONS ON TRANSFER.

                  (a)      Tag Along Rights. Subject to Sections 4(c) and 4(d)
and other than in connection with a Public Sale or Approved Sale, at least 30
days prior to any sale, transfer, assignment, pledge or other disposal (a
"Transfer") of Stockholder Shares or Preferred Shares by BRS, BRS shall deliver
a written notice (the "Sale Notice") to the Company and the Other Stockholders,
specifying in reasonable detail the identity of the prospective transferee(s)
and the terms and conditions of the Transfer. The Other Stockholders may elect
to participate in the

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contemplated Transfer by delivering written notice to BRS within 15 days after
delivery of the Sale Notice. If any Other Stockholders have elected to
participate in such Transfer, BRS and such Other Stockholders shall be entitled
to sell in the contemplated Transfer, at the same price (provided that the price
of any share of Series B Preferred Transferred by any such Stockholder pursuant
to this Section 4(a) shall equal 35% of the price of any share of Series A
Preferred specified in the Sale Notice) and on the same terms:

                           (x) with respect to Stockholder Shares, a number of
Stockholder Shares equal to the product of (i) the quotient determined by
dividing the number of Stockholder Shares owned by such Person by the aggregate
number of Stockholder Shares owned by all Stockholders participating in such
Transfer and (ii) the aggregate number of Stockholder Shares to be sold in the
contemplated Transfer; and

                           (y)      (A)      with respect to shares of Series A
Preferred to be so transferred by all such Stockholders, a number of shares of
Series A Preferred equal to the product of (i) the quotient determined by
dividing (1) the number of shares of Series A Preferred owned by such Person by
(2) the sum of the aggregate number of shares of Series A Preferred plus .35
times the number of shares of Series B Preferred (the "Preferred Base Amount"),
in each case owned by all Stockholders participating in such Transfer and (ii)
the aggregate number of Preferred Shares to be sold in the contemplated
Transfer;

                                    (B)      with respect to shares of Series B
Preferred, a number of shares of Series B Preferred to be so Transferred by all
such Stockholders if such Stockholders do not hold any share of Series A
Preferred equal to the product of (1) the quotient determined by dividing (A)
the number of shares of Series B Preferred owned by such Person by (2) the
Preferred Base Amount and (ii) the aggregate number of Preferred Shares to be
sold in the contemplated Transfer;

provided, that (1) if the Sale Notice includes a Transfer of both Stockholder
Shares and Preferred Shares and any Other Stockholder elects to participate in
such Transfer, such Other Stockholder must sell the number of Preferred Shares
calculated in accordance with clause (y) (or if such Stockholder holds a lesser
number of Preferred Shares, all Preferred Shares held by such Stockholder) and
(2) it being understood that if holders of Series B Preferred participated in
any Transfer of Preferred Shares as a result of the formulae set forth in clause
(y) above, the aggregate number of Preferred Shares so Transferred will not
equal the number of Preferred Shares specified in the Sale Notice.

                  (b)      First Offer Rights.

                  (i)      Subject to Sections 4(c) and 4(d) and other than in
         connection with a Public Sale or Approved Sale, at least thirty (30)
         days prior to any Transfer of Stockholder Shares by any Stockholder
         (other than holders of BRS Shares, Farallon Shares, or Rosewood
         Shares), the Stockholder making such Transfer (the "Transferring
         Stockholder") shall deliver a written notice (the "Transfer Notice") to
         the Company and the Investors specifying in reasonable detail the
         number of shares proposed to be transferred (the "Transfer Shares"),
         the proposed purchase price and the other terms and conditions of the
         Transfer. The Company may elect to purchase all (but not less than all)

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         of the Transfer Shares upon the same terms and conditions as those set
         forth in the Transfer Notice, by delivering a written notice of such
         election to the Transferring Stockholder within fifteen (15) days after
         the Transfer Notice has been delivered to the Company. If the Company
         has not elected to purchase all of the Transfer Shares, the Investors
         (or their designees) may elect to purchase all (but not less than all)
         of the Transfer Shares, upon the same terms and conditions as those set
         forth in the Transfer Notice, by giving written notice of such election
         to the Transferring Stockholder within 15 days after the Transfer
         Notice has been given to the Investors. If each of the Investors elects
         to purchase the Transfer Shares, the Transfer Shares to be purchased by
         each Investor shall be allocated among the Investors based upon the
         relative number of Stockholder Shares then held by each such Investor
         unless otherwise agreed upon by the Investors. If neither the Company
         nor the Investors elects to purchase all of the Transfer Shares
         specified in the Transfer Notice, then the Transferring Stockholder may
         transfer the Transfer Shares specified in the Transfer Notice at a
         price and on terms in the aggregate not materially more favorable to
         the transferee(s) thereof than specified in the Transfer Notice during
         the 90-day period immediately following the date on which the Transfer
         Notice has been given to the Company and the Investors. Any Transfer
         Shares not transferred within such 90-day period will continue to be
         subject to the provisions of this Section 4(b)(i) upon any subsequent
         proposed Transfer.

                  (ii)     Subject to Sections 4(c) and 4(d) and other than in
         connection with a Public Sale or Approved Sale, at least thirty (30)
         days prior to Transfer of any Stockholder Shares by any Rosewood
         Investor or any Farallon Investor, such Rosewood Investor or such
         Farallon Investor shall deliver written notice (any such notice, the
         "Farallon/Rosewood Sale Notice") to BRS specifying in reasonable detail
         the number of shares proposed to be transferred (the "Proposed
         Shares"). Upon receipt of the Farallon/Rosewood Sale Notice, BRS shall
         within thirty (30) days deliver a written offer to such Rosewood
         Investor or such Farallon Investor, as the case may be, to purchase the
         Proposed Shares specifying in reasonable detail the amount and type of
         consideration to be offered for the Proposed Shares and the other terms
         and conditions of such offer (the "BRS Repurchase Notice"). Upon
         receipt of the BRS Repurchase Notice, such Rosewood Investor or such
         Farallon Investor, as the case may be, shall within ten (10) days
         deliver to BRS a written acceptance or rejection of the offer contained
         in the Repurchase Notice. If such Rosewood Investor or such Farallon
         Investor, as the case may be, rejects the offer contained in the BRS
         Repurchase Notice, such Rosewood Investor or such Farallon Investor, as
         the case may be, may transfer the Proposed Shares specified in the
         applicable Farallon/Rosewood Sale Notice at a price and on terms in the
         aggregate materially not more favorable to the transferee(s) thereof
         than specified in the BRS Repurchase Notice during the 90-day period
         immediately following the date on which the Farallon/Rosewood Sale
         Notice has been given to BRS. Any Proposed Shares not transferred
         within such 90-day period will continue to be subject to the provisions
         of this Section 4(b)(ii) upon any subsequent proposed Transfer.

                  (iii)    Any purchase by the Company and/or the Investors
         pursuant to this Section 4(b) shall be closed at the Company's
         executive offices within (x) 45 days after the Transfer Notice (in the
         case of purchase pursuant to Section 4(b)(i)) or (y) 30 days after the
         acceptance by the applicable Rosewood Investor or the applicable
         Farallon

                                       10

<PAGE>

         Investor, as the case may be, of the offer set forth in the BRS
         Repurchase Notice pursuant to Section 4(b)(ii). At the closing, the
         purchaser or purchasers shall pay the purchase price by certified check
         or wire transfer of immediately available funds, and the seller or
         sellers shall deliver the certificate or certificates (or duly executed
         affidavits of lost certificates in accordance with the Certificate of
         Incorporation) representing the Stockholder Shares and/or Preferred
         Shares, as the case may be, to such purchaser or purchaser or their
         nominees, accompanied by duly executed stock powers.

                  (c)      Permitted Transfers. The restrictions contained in
this Section 4 shall not apply with respect to any Transfer of Stockholder
Shares (or Preferred Shares, to the extent this Section 4 applies to Preferred
Shares) by any Stockholder (i) in the case of an individual Stockholder,
pursuant to applicable laws of descent and distribution or among such
Stockholder's Family Group, (ii) in the case of holders of the BRS Shares and
its Permitted Transferees, (A) among their Affiliates, partners and employees
(provided that in the case of a distribution to BRS' partners, such distribution
shall be made pro rata to all such partners in accordance with the terms of its
agreement of limited partnership), (B) to any employee, prospective employee,
director or prospective director of the Company or any Subsidiary of the Company
as incentive compensation, (C) to any former or prospective employee, director
or prospective director of BRS or any Affiliate of BRS or (D) to any BRS
Investor or BRS, (iii) in the case of any Canterbury Investor, any Rosewood
Investor, any Farallon Investor or CapitalSource and their respective Permitted
Transferees, (A) among their respective Affiliates, members and partners
(provided that in the case of a distribution to any Farallon Investor's, any
Rosewood Investor's, any Canterbury Investor's or any CapitalSource's members or
partners, such distribution shall be made pro rata to all such partners in
accordance with the terms of their respective agreements of limited partnership
or limited liability operating agreements) and (B) to any employee, director or
prospective director of the Company or any Subsidiary of the Company as
incentive compensation, (iv) in the case any Canterbury Investor or
CapitalSource, in the ordinary course of its business and in accordance with
applicable law, to an Affiliate of such Person or to one or more banks or other
financial institutions or entities which are not then in direct competition with
the Company only if such Canterbury Investor or CapitalSource is required to do
so pursuant to its applicable agreement of limited partnership or limited
liability operating agreement or in connection with any dissolution of such
Person pursuant to its agreement of limited partnership or limited liability
operating agreement, or (v) in the case of any Farallon Investor, to another
Farallon Investor; provided, that in each case set forth above, the rights and
restrictions contained in this Section 4 shall continue to be applicable to such
Stockholder Shares or Preferred Shares, as the case may be, after any such
Transfer as if such Stockholder Shares or Preferred Shares, as the case may be,
were held by the transferor; and provided further, that the transferees of such
Stockholder Shares or Preferred Shares, as the case may be, shall have agreed in
writing to be bound by the provisions of this Agreement which affect the
Stockholder Shares or Preferred Shares, as the case may be, so transferred by
executing a joinder in substantially the form attached hereto as Exhibit A. All
transferees permitted under this Section 4(c) are collectively referred to
herein as "Permitted Transferees."

                  (d)      Termination of Restrictions. The restrictions set
forth in this Section 4 shall continue with respect to each Stockholder Share or
Preferred Share until the earlier of (i) the Transfer of such Stockholder Share
or Preferred Share in a Public Sale or an Approved Sale, (ii) the consummation
of a an Initial Public Offering or (iii) the Transfer of such Stockholder

                                       11

<PAGE>

Share or Preferred Share (other than to another Stockholder or the Company)
pursuant to Section 4(a) or 4(b) hereof. In addition, the provisions of this
Section 4 shall terminate on the date on which BRS holds less than 10% of the
Stockholder Shares held by it as of the date hereof

                  5.       SALE OF THE COMPANY.

                  (a)      In the event of an Approved Sale, each Stockholder
will (i) consent to and raise no objections against the Approved Sale or the
process pursuant to which the Approved Sale was arranged, (ii) waive any
dissenter's rights and other similar rights, and (iii) if the Approved Sale is
structured as a sale of stock, each Stockholder will agree to sell its
Stockholder Shares and Preferred Shares on the terms and conditions of the
Approved Sale. Each Stockholder will take all reasonably necessary and desirable
actions as directed by the Board and the holders of a majority of the BRS Shares
in connection with the consummation of any Approved Sale, including, without
limitation, executing the applicable purchase agreements, which shall include
customary and reasonable representations, warranties, indemnities and
contribution rights (provided that any such indemnification or contribution
obligations of any Stockholder shall be limited to the total consideration
received by such Stockholder in connection with such Approved Sale).

                  (b)      If the Company or the holders of the Company's
securities enter into any negotiation or transaction for which Rule 506 (or any
similar rule then in effect) under the Securities Act may be available with
respect to such negotiation or transaction (including a merger, consolidation or
other reorganization), the Other Stockholders (other than the Canterbury
Investors, the Farallon Investors, the Rosewood Investors and CapitalSource, who
shall act on their own behalf) will, at the request of the Company, appoint a
purchaser representative (as such term is defined in Rule 501) reasonably
acceptable to the Company. If any Other Stockholder appoints a purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Other Stockholder declines to appoint the
purchaser representative designated by the Company such holder will appoint
another purchaser representative (reasonably acceptable to the Company), and
such holder will be responsible for the fees of the purchaser representative so
appointed.

                  (c)      All Stockholders will bear their pro rata share
(based upon the number of shares sold) of the reasonable costs of any sale of
Stockholder Shares and Preferred Shares pursuant to an Approved Sale to the
extent such costs are incurred for the benefit of all selling Stockholders and
are not otherwise paid by the Company or the acquiring party. Costs incurred by
any Stockholder on its own behalf will not be considered costs of the
transaction hereunder.

                  (d)      This Section 5 shall automatically terminate upon the
earlier of (i) the consummation of a Initial Public Offering or (ii) the date on
which BRS hold less than 20% of the Common Stock on a fully diluted basis.

                  6.       PREEMPTIVE RIGHTS. Except for issuances of Common
Stock upon exercise of any Common Options or upon conversion of the Series B
Preferred, if the Company issues any equity securities or any securities
containing options or rights to acquire any equity securities or any securities
convertible or exchangeable for equity securities in each case, after the date
hereof to any Person (other than the Executives) (the "Offeree"), the Company
will offer to sell

                                       12

<PAGE>

to each Stockholder, a number of such securities ("Offered Shares") so that the
Ownership Ratio immediately after the issuance of such securities for each
Stockholder would be equal to the Ownership Ratio for such Stockholder
immediately prior to such issuance of securities. The Company shall give each
Stockholder at least 30 days prior written notice of any proposed issuance,
which notice shall disclose in reasonable detail the proposed terms and
conditions of such issuance (the "Issuance Notice"). Each Stockholder will be
entitled to purchase such securities at the same price, on the same terms, and
at the same time as the securities are issued to the Offeree by delivery of
written notice to the Company of such election within 15 days after delivery of
the Issuance Notice (the "Election Notice"); provided, that if more than one
type of security was issued, each Stockholder shall, if it exercises its rights
pursuant to this Section 6, purchase such securities in the same ratio as
issued. If any of the Stockholders have elected to purchase any Offered Shares,
the sale of such shares shall be consummated as soon as practical (but in any
event within 10 days) after the delivery of the Election Notice. In the event
any Stockholder elects not to exercise its rights pursuant to this Section 6, no
other Stockholder shall have the right to purchase the securities offered to
such Stockholder. This Section 6 will terminate automatically, and be of no
further force and effect, upon the consummation of a Initial Public Offering.
The parties hereto that were party to the Existing TSI Shareholders Agreement
hereby waive any and all rights to which such parties were entitled under
Section 6 of the Existing TSI Shareholders Agreement with respect to the
issuance of TSI Class A Common to the Company on the date hereof as part of the
Restructuring.

                  7.       LEGEND. In addition to any legend required by any
other Transaction Document, each certificate evidencing Stockholder Shares or
Preferred Shares and each certificate issued in exchange for or upon the
transfer of any Stockholder Shares or Preferred Shares (if such shares remain
Stockholder Shares or Preferred Shares, as the case may be, as defined herein
after such transfer) shall be stamped or otherwise imprinted with a legend in
substantially the following form:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
                  ORIGINALLY ISSUED ON [DATE], AND HAVE NOT BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
                  REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS
                  AGREEMENT DATED AS OF FEBRUARY 4, 2004 BY AND AMONG THE ISSUER
                  OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN OF THE
                  COMPANY'S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT
                  WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER
                  HEREOF UPON WRITTEN REQUEST."

The Company shall imprint such legend on certificates evidencing Stockholder
Shares or Preferred Shares outstanding prior to the date hereof. The legend set
forth above shall be removed from the certificates evidencing any shares which
cease to be Stockholder Shares or Preferred Shares, as the case may be.

                                       13

<PAGE>

                  8.       TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be null and void, and the Company shall not record such
Transfer on its books or treat any purported transferee of such Stockholder
Shares as the owner of such shares for any purpose.

                  9.       TRANSFER OF STOCKHOLDER SHARES.

                  (a)      Stockholder Shares are transferable only pursuant to
(i) public offerings registered under the Securities Act, (ii) subject to the
provisions of Section 4 above, Rule 144, Rule 144A or Rule 701 (or any similar
rule or rules then in effect) of the Securities and Exchange Commission if such
rule is available, (iii) Section 4(c), and (iv) subject to Section 4 and Section
9(b) below, any other legally available means of Transfer.

                  (b)      In connection with the Transfer of any Stockholder
Shares other than a Transfer described in clause (i) or (ii) of Section 9(a)
above, the holder thereof shall deliver written notice to the Company describing
in reasonable detail the Transfer or proposed Transfer, together with an opinion
of counsel reasonably acceptable to the Company to the effect that such Transfer
of Stockholder Shares may be effected without registration of such Stockholder
Shares under the Securities Act. In addition, if the holder of the Stockholder
Shares delivers to the Company an opinion of counsel that no subsequent Transfer
of such Stockholder Shares shall require registration under the Securities Act,
the Company shall promptly upon such contemplated Transfer deliver new
certificates for such Stockholder Shares which do not bear the legend set forth
in Section 6 above. If the Company is not required to deliver new certificates
for such Stockholder Shares not bearing such legend, the holder thereof shall
not Transfer the same until the prospective transferee has confirmed to the
Company in writing its agreement to be bound by the conditions contained in this
Section 9 and Section 7 above.

                  (c)      Upon the request of a holder of Stockholder Shares,
the Company shall promptly supply to such Person or its prospective transferees
all information regarding the Company required to be delivered in connection
with a Transfer pursuant to Rule 144A (or any similar rule or rules then in
effect) of the Securities and Exchange Commission.

                  (d)      Upon the request of any holder of Stockholder Shares,
the Company shall remove the legend set forth in Section 7 above from the
certificates for such holder's Stockholder Shares (or the eligible portion
thereof); provided, that such Stockholder Shares have been either registered
under the Securities Act or are eligible for sale pursuant to Rule 144 (or any
similar rule or rules then in effect) of the Securities and Exchange Commission.

                  10.      AMENDMENT AND WAIVER. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
shall be effective against the Company or the Stockholders unless such
modification, amendment or waiver is approved in writing by the Company or the
holders of not less than 70% of the Stockholder Shares, respectively; provided,
that no such amendment or action which materially adversely affects any one or
more Stockholder(s) (whether as holders of Stockholder Shares or Preferred
Shares) shall be effective against such Stockholder(s) without the prior written
consent of each such Stockholder. For avoidance of doubt, an amendment to add
another party to this Agreement is not an action which, in and of itself,
affects any Stockholder materially adversely. The failure of

                                       14

<PAGE>

any party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.

                  11.      AFFILIATE TRANSACTIONS. The Company will not, and
will not permit any of its Subsidiaries, to enter into any transaction or series
of transactions after the date hereof, whether or not in the ordinary course of
business with any Affiliate or 5% Owner (or any Affiliate of such 5% Owner);
provided, that the foregoing shall not apply to (i) the declaration and payment
of dividends approved by the Board, (ii) employment arrangements with any
Executive or employees of the Company entered into in the ordinary course of
business, (iii) any transactions expressly permitted or contemplated by any
Transaction Document, or (iv) any transaction consented to by not less than 70%
of the Stockholder Shares excluding for purposes of this clause (iv) Stockholder
Shares held by such Affiliate or 5% Owner).

                  12.      OWNERSHIP OF TSI. The Company will at all times own
100% of the issued and outstanding common voting capital stock of TSI.

                  13.      STOCKHOLDER VOTING AT TSI. On any occasion that the
Company, as stockholder of TSI, would be required to vote the TSI Common Stock
owned by the Company to approve or not to approve any action to be taken by TSI
as recommended by the board of directors of TSI (other than in connection with
any amendment of the certificate of incorporation or bylaws of TSI (provided,
that no such amendment shall change the applicable percentage stockholder vote
under the Business Corporation Law of the State of New York (the "NYBCL")) or,
subject to subsection 2(a)(iii) above, with respect to the election of the
directors of TSI), the Board shall cause such vote to be presented to the
Stockholders for their determination and the Company shall vote the TSI Common
Stock in accordance with the outcome of such vote of the Stockholders, with the
determination of whether such vote passes or fails to pass made in accordance
with the provisions of the NYBCL; provided, that if any such vote is to consider
an Approved TSI Sale, the Board shall determine how the Company shall vote the
TSI Common Stock and shall not be required to present such vote to the
Stockholders.

                  14.      MISCELLANEOUS.

                  (a)      Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

                  (b)      Entire Agreement. Except as otherwise expressly set
forth herein, this Agreement and the other Transaction Documents embody the
complete agreement and understanding among the parties hereto with respect to
the subject matter hereof and supersede and preempt any prior understandings,
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way, including,

                                       15

<PAGE>

without limitation, the Existing TSI Shareholders Agreement which is hereby
terminated in its entirety by the parties hereto and shall have no further force
and effect as of the date hereof.

                  (c)      Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Stockholders and any
subsequent holders of Stockholder Shares and the respective successors and
assigns of each of them, so long as they hold Stockholder Shares; it being
understood that any transferee of Stockholder Shares or Preferred Shares
pursuant to Section 4(a) or 4(b) (other than Stockholders) shall not succeed to
the rights or obligations of the transferor hereunder.

                  (d)      Counterparts. This Agreement may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.

                  (e)      Remedies. The parties hereto shall be entitled to
enforce their rights under this Agreement specifically to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that the Company and any Stockholder may in
his/her/its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.

                  (f)      Notices. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, mailed by certified or registered mail, return receipt requested and
postage prepaid, or sent via a nationally recognized overnight courier, or sent
via facsimile to the recipient. Such notices, demands and other communications
will be sent to the address indicated below:

                  To the Company:

                           Town Sports International Holdings, Inc.
                           888 Seventh Avenue, 25th Floor
                           New York, New York 10106
                           Attention: Alex Alimanestianu
                           Facsimile No.: (212) 664-8906

                           With copies to (which shall not constitute notice to
the Company):

                           Bruckmann, Rosser, Sherrill & Co., Inc.
                           126 East 56th Street, 29th Floor
                           New York, New York  10022
                           Attention: Rice Edmonds
                           Facsimile No.: (212) 521-3799

                                       16

<PAGE>

                           Kirkland & Ellis LLP
                           Citigroup Center
                           153 East 53rd Street
                           New York, New York 10022-4611
                           Attention: Eunu Chun, Esq.
                           Facsimile No.: (212) 446-4900

                  To BRS or any BRS Investor:

                           Bruckmann, Rosser, Sherrill & Co., Inc.
                           126 East 56th Street, 29th Floor
                           New York, New York 10022
                           Attention: Rice Edmonds
                           Facsimile No.: (212) 521-3799

                           With a copy to (which shall not constitute notice to
BRS or any BRS Investor):

                           Kirkland & Ellis LLP
                           Citigroup Center
                           153 East 53rd Street
                           New York, New York 10022-4611
                           Attention: Eunu Chun, Esq.
                           Facsimile No.: (212) 446-4900

                  To any Farallon Investor:

                           Farallon Capital Management, L.L.C.
                           One Maritime Plaza, Suite 1325
                           San Francisco, California 94111
                           Attention: Mark Wehrly
                           Facsimile No.: (415) 421-2133

                           With a copy to (which shall not constitute notice to
any Farallon Investor):

                           Richards Spears Kibbe & Orbe LLP
                           World Financial Center, 29th Floor
                           New York, New York 10281
                           Attention: Jahangier Sharifi, Esq.
                           Facsimile No.: (212) 530-1801

                                       17

<PAGE>

                  To any Rosewood Investor:

                           Rosewood Capital Partners, L.P.
                           One Maritime Plaza
                           Suite 1330
                           San Francisco, California 94111
                           Attention: Kyle A. Anderson
                           Facsimile No.: (415) 362-1192

                           With a copy to (which shall not constitute notice to
any Rosewood Investor):

                           Preston Gates & Ellis, LLP
                           One Maritime Plaza
                           Suite 2400
                           San Francisco, California 94111
                           Attention: Lawrence B. Low, Esq.
                           Facsimile No.: (415) 788-8819

                  To Canterbury Mezzanine:

                           Canterbury Mezzanine Capital, L.P.
                           600 Fifth Avenue, 23rd Floor
                           New York, New York 10020
                           Attention: Patrick N. W. Turner
                           Facsimile No.: (212) 332-1584

                           With a copy to (which shall not constitute notice to
Canterbury Mezzanine):

                           Loeb & Loeb LLP
                           345 Park Avenue
                           New York, New York 10154
                           Attention: Stan Johnson, Esq.
                           Facsimile No.: (212) 407-4990

                  To Canterbury Detroit:

                           Canterbury Detroit Partners, L.P.
                           600 Fifth Avenue, 23rd Floor
                           New York, New York 10020
                           Attention: Patrick N. W. Turner
                           Facsimile No.: (212)332-1584

                           With a copy to (which shall not constitute notice to
Canterbury Detroit):

                           Loeb & Loeb LLP

                                       18

<PAGE>

                           345 Park Avenue
                           New York, New York 10154
                           Attention: Stan Johnson, Esq.
                           Facsimile No.: (212) 407-4990

                  To CapitalSource:

                           CapitalSource Holdings LLC
                           4445 Willard Avenue, 12th Floor
                           Chevy Chase, Maryland 20815
                           Attention: Corporate Finance Group, Managing Director
                                      Corporate Finance Group, General Counsel

                           Facsimile No.: (301) 841-2360 and (301) 841-2380

                  To any of the Executives, Alessi or Arnold:

                           c/o Town Sports International, Inc.
                           888 Seventh Avenue, 25th Floor
                           New York, New York 10106
                           Facsimile No.: (212) 664-8906

or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party.

                  (g)      Waiver of Jury Trial. Each of the parties hereto
waives any right it may have to trial by jury in respect of any litigation based
on, arising out of, under or in connection with this agreement or any course of
conduct, course of dealing, verbal or written statement or action of any party
hereto.

                  (h)      Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.

                  (i)      Time is of the Essence; Computation of Time. Time is
of the essence for each and every provision of this Agreement. Whenever the last
day for the exercise of any privilege or the discharge of any duty hereunder
shall fall upon a Saturday, Sunday, or any date on which banks in New York, New
York are authorized to be closed, the party having such privilege or duty may
exercise such privilege or discharge such duty on the next succeeding day which
is a regular business day.

                  (j)      Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.

                                    * * * * *

                                       19

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                   TOWN SPORTS INTERNATIONAL, INC.

                                   By: /s/ Richard Pyle
                                       ----------------------------
                                       Name: Richard Pyle
                                       Title: Chief Financial Officer

                                   TOWN SPORTS INTERNATIONAL HOLDINGS, INC.

                                   By: /s/ Richard Pyle
                                       ----------------------------
                                       Name: Richard Pyle
                                       Title: Chief Financial Officer

                                   BRUCKMANN, ROSSER, SHERRILL & CO., L.P.

                                   By: BRS Partners, Limited Partnership
                                   Its: General Partner

                                   By:  BRSE Associates, Inc.
                                   Its: General Partner

                                   By: /s/ Paul R. Kaminski
                                       ----------------------------
                                       Name: Paul R. Kaminski
                                       Title: Secretary

                                   FARALLON CAPITAL PARTNERS, L.P.

                                   By:  Farallon Partners, L.L.C.
                                   Its: General Partner

                                   By: /s/ Monica R. Landry
                                       ----------------------------
                                       Name: Monica R. Landry
                                       Title: Managing Member

<PAGE>

                                   FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P.

                                   By:  Farallon Partners, L.L.C.
                                   Its: General Partner

                                   By: /s/ Monica R. Landry
                                       ------------------------------
                                       Name: Monica R. Landry
                                       Title: Managing Member

                                   RR CAPITAL PARTNERS, L.P.

                                   By:  Farallon Partners, L.L.C.
                                   Its: General Partner

                                   By: /s/ Monica R. Landry
                                       ------------------------------
                                       Name: Monica R. Landry
                                       Title: Managing Member

                                   FARALLON CAPITAL INSTITUTIONAL PARTNERS II,
                                   L.P.

                                   By:  Farallon Partners, L.L.C.
                                   Its: General Partner

                                   By: /s/ Monica R. Landry
                                       ------------------------------
                                       Name: Monica R. Landry
                                       Title: Managing Member

                                   CANTERBURY DETROIT PARTNERS, L.P.

                                   By:  Canterbury Detroit, LLC
                                   Its: General Partner

                                   By: /s/ Patrick Turner
                                       ------------------------------
                                       Name: Patrick Turner
                                       Title: Manager

<PAGE>

                                   CANTERBURY MEZZANINE CAPITAL, L.P.

                                   By:  Canterbury Capital, LLC
                                   Its: General Partner

                                   By: /s/ Patrick Turner
                                       -----------------------------
                                       Name: Patrick Turner
                                       Title: Manager

                                   ROSEWOOD CAPITAL, L.P.

                                   By: /s/ Kevin Reilly
                                       -----------------------------
                                       Name: Kevin Reilly
                                       Title: Principal

                                   ROSEWOOD CAPITAL IV, L.P.

                                   By: /s/ Kevin Reilly
                                       -----------------------------
                                       Name: Kevin Reilly
                                       Title: Principal

                                   ROSEWOOD CAPITAL IV ASSOCIATES, L.P.

                                   By: /s/ Kevin Reilly
                                       ------------------------------
                                       Name: Kevin Reilly
                                       Title: Principal

                                   CAPITALSOURCE HOLDINGS LLC

                                   By: /s/ Joseph Turitz
                                       ------------------------------
                                       Name: Joseph Turitz
                                       Title: General Counsel

                                   /s/ Keith Alessi
                                   ----------------------------------
                                   KEITH ALESSI

<PAGE>

                                   /s/ Paul Arnold
                                   ---------------------------------
                                   PAUL ARNOLD

<PAGE>

                          [BRS INVESTOR SIGNATURE PAGE]

                                   /s/ Stephen Sherrill
                                   -----------------------------------------
                                   Stephen Sherrill, as Attorney-in-Fact for
                                   each of the following Investors:

                                   Bruce Bruckmann
                                   Elizabeth McShane
                                   Beverly Place
                                   D. Bruckmann
                                   BCB Partnership
                                   NAZ Partnership
                                   Harold O. Rosser
                                   Virgil Sherrill
                                   Stephen Sherrill
                                   Nancy Zweng
                                   Paul D. Kaminski

                                   Merrill Lynch Pearce Fenner & Smith,
                                   Custodian for the Benefit of Paul D. Kaminski
                                   IRA

<PAGE>

                           [EXECUTIVE SIGNATURE PAGE]
                                   /s/ Mark Smith
                                   --------------------------------------------
                                   Mark Smith

                                   /s/ Robert Giardina
                                   --------------------------------------------
                                   Robert Giardina

                                   /s/ Richard Pyle
                                   --------------------------------------------
                                   Richard Pyle

                                   /s/ A. Alimanestianu
                                   --------------------------------------------
                                   A. Alimanestianu

                                   /s/ Debbie Smith
                                   --------------------------------------------
                                   Debbie Smith

                                   /s/ Carol Cornbill
                                   --------------------------------------------
                                   Carol Cornbill

                                   /s/ Edward Trainor
                                   --------------------------------------------
                                   Edward Trainor

                                   /s/ Robert Calvo
                                   --------------------------------------------
                                   Robert Calvo

                                   /s/ Maggie Stevens
                                   ------------------------------------------
                                   Maggie Stevens

                                   /s/ Ray Dewhirst
                                   --------------------------------------------
                                   Ray Dewhirst

                                   /s/ Nina Duchaine
                                   --------------------------------------------
                                   Nina Duchaine

<PAGE>

                           [EXECUTIVE SIGNATURE PAGE]

                                   /s/ Heinz Ritschard
                                   --------------------------------------------
                                   Heinz Ritschard

                                   /s/ Peter Bazzell
                                   --------------------------------------------
                                   Peter Bazzell

                                   /s/ Felicia Bachiccio
                                   --------------------------------------------
                                   Felicia Bachiccio

<PAGE>

                                   SCHEDULE A

                             STOCKHOLDER SECURITIES

<TABLE>
<CAPTION>
                                                        STOCKHOLDER                    STOCKHOLDER
                 STOCKHOLDER                           TSI SECURITIES               COMPANY SECURITIES
---------------------------------------------    ---------------------------    -------------------------
<S>                                              <C>                            <C>
Bruckmann, Rosser, Sherrill & Co., L.P.          104,330.35 TSI Series A        104,330.35 Company
                                                 Preferred                      Series A Preferred

                                                 504,456.01 TSI Class A         504,456.01 Company
                                                 Common                         Class A Common

Bruce Bruckmann                                  2,112.63 TSI Series A          2,112.63 Company Series A
                                                 Preferred                      Preferred

                                                 10,214.93 TSI Class A          10,214.93 Company Class A
                                                 Common                         Common

Elizabeth McShane                                33.08 TSI Series A             33.08 Company Series A
                                                 Preferred                      Preferred

                                                 159.97 TSI Class A             159.97 Company Class A
                                                 Common                         Common

Beverly Place                                    33.08 TSI Series A             33.08 Company Series A
                                                 Preferred                      Preferred

                                                 159.97 TSI Class A             159.97 Company Class A
                                                 Common                         Common

D. Bruckmann                                     282.92 TSI Series A            282.92 Company Series A
                                                 Preferred                      Preferred

                                                 1,367.96 TSI Class A           1,367.96 Company Class A
                                                 Common                         Common

BCB Partnership                                  121.71 TSI Series A            121.71 Company Series A
                                                 Preferred                      Preferred

                                                 588.48 TSI Class A             588.48 Company Class A
                                                 Common                         Common

NAZ Partnership                                  58.73 TSI Series A             58.73 Company Series A
                                                 Preferred                      Preferred

                                                 283.97 TSI Class A             283.97 Company Class A
                                                 Common                         Common

Harold O. Rosser                                 424.44 TSI Series A            424.44 Company Series A
                                                 Preferred                      Preferred

                                                 2,052.23 TSI Class A           2,052.23 Company Class A
                                                 Common                         Common

Virgil Sherrill                                  1,414.59 TSI Series A          1,414.59 Company Series A
                                                 Preferred                      Preferred

                                                 6,839.79 TSI Class A           6,839.79 Company Class A
                                                 Common                         Common

Stephen Sherrill                                 2,178.79 TSI Series A          2,178.79 Company Series A
                                                 Preferred                      Preferred

                                                 10,534.87 TSI Class A          10,534.97 Company Class A
                                                 Common                         Common

Nancy Zweng                                      84.91 TSI Series A             84.91 Company Series A
                                                 Preferred                      Preferred
</TABLE>

                               Schedule A, Page 1

<PAGE>

<TABLE>
<CAPTION>
                                                        STOCKHOLDER                    STOCKHOLDER
                 STOCKHOLDER                           TSI SECURITIES               COMPANY SECURITIES
---------------------------------------------    ---------------------------    -------------------------
<S>                                              <C>                            <C>
                                                 410.56 TSI Class A             410.56 Company Class A
                                                 Common                         Common

Paul D. Kaminski                                 238.47 TSI Series A            238.47 Company Series A
                                                 Preferred                      Preferred

                                                 1,153.04 TSI Class A           1,153.04 Company Class A
                                                 Common                         Common

Merrill Lynch Pearce Fenner & Smith Custodian    95.39 TSI Series A             95.39 Company Series A
for the Benefit of Paul D. Kaminski IRA          Preferred                      Preferred

                                                 461.22 TSI Class A             461.22 Company Class A
                                                 Common                         Common

Farallon Capital Partners, L.P.                  14,365.91 TSI Series A         14,365.91 Company Series
                                                 Preferred                      A Preferred

                                                 94,532.02 TSI Class A          94,532.02 Company Class A
                                                 Common                         Common

Farallon Capital Institutional Partners, L.P.    16,418.18 TSI Series A         16,418.18 Company Series
                                                 Preferred                      A Preferred

                                                 108,036.59 TSI Class A         108,036.59 Company
                                                 Common                         Class A Common

RR Capital Partners, L.P.                        2,052.27 TSI Series A          2,052.27 Company Series A
                                                 Preferred                      Preferred

                                                 13,504.57 TSI Class A          13,504.57 Company Class A
                                                 Common                         Common

Farallon Capital Institutional Partners II,      8,209.09 TSI Series A          8,209.09 Company Series A
L.P.                                             Preferred                      Preferred

                                                 54,018.30 TSI Class A          54,018.30 Company Class A
                                                 Common                         Common

Keith Alessi                                     591.00 TSI Series A            591.00 Company Series A
                                                 Preferred                      Preferred

                                                 2,857.00 TSI Class A           2,857.00 Company Class A
                                                 Common                         Common

Paul Arnold                                      591.00 TSI Series A            591.00 Company Series A
                                                 Preferred                      Preferred

                                                 2,857.00 TSI Class A           2,857.00 Company Class A
                                                 Common                         Common

Canterbury Mezzanine Capital, L.P.               121,529.24 TSI Class A         121,529.24 Company
                                                 Common                         Class A Common

Canterbury Detroit Partners, L.P.                17,907.62 TSI Class A          17,907.62 Company Class A
                                                 Common                         Common

Rosewood Capital, L.P.                           17,907.62 TSI Class A          17,907.62 Company Class A
                                                 Common                         Common

Rosewood Capital IV, L.P.                        101,890.82 TSI Series B        101,890.82 Company Series
                                                 Preferred                      B Preferred

Rosewood Capital IV Associates, L.P.             7,649.86 TSI Series B          7,649.86 Company Series B
                                                 Preferred                      Preferred

CapitalSource Holdings, LLC                      23,000.00 TSI Class A          23,000.00 Company Class A
                                                 Common                         Common
</TABLE>

                               Schedule A, Page 2

<PAGE>

<TABLE>
<CAPTION>
                                                        STOCKHOLDER                    STOCKHOLDER
                 STOCKHOLDER                           TSI SECURITIES               COMPANY SECURITIES
---------------------------------------------    ---------------------------    -------------------------
<S>                                              <C>                            <C>
Mark Smith                                       66,125.00 TSI Class A          66,125.00 Company Class A
                                                 Common                         Common

Robert Giardina                                  50,651.00 TSI Class A          50,651.00 Company Class A
                                                 Common                         Common

Richard Pyle                                     42,582.00 TSI Class A          42,582.00 Company Class A
                                                 Common                         Common

Alexander Alimanestianu                          42,011.00 TSI Class A          42,011.00 Company Class A
                                                 Common                         Common

Debbie Smith                                     15,908.00 TSI Class A          15,908.00 Company Class A
                                                 Common                         Common

Carol Cornbill                                   13,428.00 TSI Class A          13,428.00 Company Class A
                                                 Common                         Common

Edward Trainor                                   8,091.00 TSI Class A           8,091.00 Company Class A
                                                 Common                         Common

Robert Calvo                                     2,857.00 TSI Class A           2,857.00 Company Class A
                                                 Common                         Common

Maggie Stevens                                   2,274.00 TSI Class A           2,274.00 Company Class A
                                                 Common                         Common

Ray Dewhirst                                     1,749.00 TSI Class A           1,749.00 Company Class A
                                                 Common                         Common

Nina Duchaine                                    3,603.00 TSI Class A           3,603.00 Company Class A
                                                 Common                         Common

Heinz Ritschard                                  2,332.00 TSI Class A           2,332.00 Company Class A
                                                 Common                         Common

Peter Bazzell                                    1,166.00 TSI Class A           1,166.00 Company Class A
                                                 Common                         Common

Felicia Bochiccio                                63.33 TSI Class A              63.33 Company Class A
                                                 Common                         Common
</TABLE>

                               Schedule A, Page 3

<PAGE>

                                    EXHIBIT A

                               FORM OF JOINDER TO
                             STOCKHOLDERS AGREEMENT

                  THIS JOINDER to the Stockholders Agreement, dated as of
[________], 2004, by and among TOWN SPORTS INTERNATIONAL HOLDINGS, INC., a
Delaware corporation (the "Company"), and certain stockholders of the Company
(the "Agreement"), is made and entered into as of _____________, ____ by and
between the Company and ____________ ("Holder"). Capitalized terms used herein
but not otherwise defined shall have the meanings set forth in the Agreement.

                  WHEREAS, Holder has acquired certain shares of Common Stock
("Holder Stock"), and the Agreement and the Company requires Holder, as a holder
of Common Stock, to become a party to the Agreement, and Holder agrees to do so
in accordance with the terms hereof.

                  NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Joinder hereby
agree as follows:

                  1.       Agreement to be Bound. Holder hereby agrees that upon
execution of this Joinder, it shall become a party to the Agreement and shall be
fully bound by, and subject to, all of the covenants, terms and conditions of
the Agreement as though an original party thereto and shall be deemed a
Stockholder [AND ______] for all purposes thereof. In addition, Holder hereby
agrees that all Common Stock held by Holder shall be deemed Stockholder Shares
for all purposes of the Agreement.

                  2.       Successors and Assigns. Except as otherwise provided
herein, this Joinder shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and Holder and any subsequent
holders of Holder Stock and the respective successors and assigns of each of
them, so long as they hold any shares of Holder Stock.

                  3.       Counterparts. This Joinder may be executed in
separate counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.

                  4.       Notices. For purposes of Section 12(f) of the
Agreement, all notices, demands or other communications to the Holder shall be
directed to:

                                    [Name]
                                    [Address]
                                    [Facsimile Number]

                  5.       GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS JOINDER SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH

<PAGE>

THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE
OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.

                  6.       Descriptive Headings. The descriptive headings of
this Joinder are inserted for convenience only and do not constitute a part of
this Joinder.

                                    * * * * *

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Joinder as of the date first above written.

                                    TOWN SPORTS INTERNATIONAL HOLDINGS, INC.

                                    By: ______________________________
                                    Name:
                                    Title:

                                    TOWN SPORTS INTERNATIONAL, INC.

                                    By: ______________________________
                                    Name:
                                    Title:

                                    [HOLDER]

                                    By: ______________________________<PAGE>

                                                                    EXHIBIT 10.5

                                                             EXECUTION AGREEMENT

                          REGISTRATION RIGHTS AGREEMENT

                  REGISTRATION RIGHTS AGREEMENT, dated as of February 4, 2004,
by and among TOWN SPORTS INTERNATIONAL HOLDINGS, INC., a Delaware corporation
(the "Company"), TOWN SPORTS INTERNATIONAL, INC., a New York corporation
("TSI"), BRUCKMANN, ROSSER, SHERRILL & CO., L.P., a Delaware limited partnership
("BRS"), the individuals and entities listed on the BRS Co-Investor Signature
Pages hereto (each, a "BRS Investor", and collectively, the "BRS Investors"),
FARALLON CAPITAL PARTNERS, L.P., a California limited partnership ("FCP"),
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P., a California limited partnership
("FCIP"), RR CAPITAL PARTNERS, L.P., a Delaware limited partnership ("RRC"), and
FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P., a California limited
partnership (together with FCP, FCIP and RRC, "Farallon"), CANTERBURY DETROIT
PARTNERS, L.P., a Delaware limited partnership ("Canterbury Detroit"),
CANTERBURY MEZZANINE CAPITAL, L.P., a Delaware limited partnership ("Canterbury
Mezzanine" and, together with Canterbury Detroit the "Canterbury Investors", and
individually, a "Canterbury Investor") ROSEWOOD CAPITAL, L.P., a Delaware
limited partnership ("Rosewood"), ROSEWOOD CAPITAL IV, L.P., a Delaware limited
partnership ("Rosewood IV"), ROSEWOOD CAPITAL IV ASSOCIATES, L.P., a Delaware
limited partnership ("Rosewood Associates" and, collectively with Rosewood and
Rosewood IV, the "Rosewood Investors", and individually, a "Rosewood Investor"),
CAPITALSOURCE HOLDINGS LLC, a Delaware limited liability company
("CapitalSource"), KEITH ALESSI ("Alessi"), PAUL ARNOLD ("Arnold"), and certain
stockholders of the Company listed on the Executive Signature Pages hereto
(each, an "Executive", collectively, the "Executives"). (BRS, the BRS Investors,
the Farallon Investors, the Canterbury Investors, the Rosewood Investors,
CapitalSource, Alessi, Arnold and the Executives are referred to collectively
herein as the "Stockholders" and, individually as a "Stockholder"). Capitalized
terms used herein but not otherwise defined shall have the meanings assigned to
such terms in Section 1.

                  WHEREAS, the Stockholders currently own all of the issued and
outstanding capital stock of TSI consisting of Class A Common Stock, par value
$.001 per share (the "TSI Class A Common"), Series A Preferred Stock, par value
$1.00 per share (the "TSI Series A Preferred"), and Series B Preferred Stock,
par value $1.00 per share (the "TSI Series B Preferred");

                  WHEREAS, the Stockholders are currently parties to that
certain Registration Rights Agreement, dated as of December 10, 1996, as amended
by the First Amendment to Registration Rights Agreement, dated as of November
13, 1998, and the Second Amendment to the Registration Rights Agreement, dated
as of December 27, 2001 (collectively, the "Existing TSI Registration Rights
Agreement");

                  WHEREAS, TSI, the Company and the Stockholders have entered
into a Restructuring Agreement, dated as of the date hereof (the "Restructuring
Agreement"), pursuant to which TSI shall be reorganized as a wholly-owned
subsidiary of the Company by having (a) each of the Stockholders contribute and
deliver to the Company the shares of TSI Class A Common, TSI Series A Preferred
and TSI Series B Preferred owned by each Stockholder in exchange for all of the
issued and outstanding capital stock of the Company consisting of Class

<PAGE>

A Common Stock, par value $.001 per share (the "Class A Common"), Series A
Preferred Stock, par value $1.00 per share (the "Series A Preferred"), and
Series B Preferred Stock, par value $1.00 per share (the "Series B Preferred"),
as applicable for each Stockholder, and (b) immediately following the initial
stockholder contribution, the Company contribute and deliver to TSI for
cancellation the shares of TSI Class A Common, TSI Series A Preferred and TSI
Series B Preferred held by it in exchange for 1,000 shares of TSI Class A
Common, representing all of the issued and outstanding capital stock of TSI
(collectively, the "Restructuring"); and

                  WHEREAS, in conjunction with the Restructuring, TSI and the
Stockholders desire to cancel and terminate the Existing TSI Registration Rights
Agreement and enter into this Agreement.

                  NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:

                  1.       DEFINITIONS. As used herein, the following terms
shall have the following meanings.

                  "BRS Registrable Securities" means (i) any Common Stock issued
or issuable, whether upon conversion of any shares of Series B Preferred or
otherwise, to BRS and the BRS Investors on the date hereof or acquired by BRS,
the BRS Investors or any of their respective affiliates or partners after the
date hereof, and (ii) any shares of capital stock of the Company issued or
issuable with respect to the securities referred to in clause (i) by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, a Person will be deemed to be a holder of BRS Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such BRS Registrable Securities (upon conversion or exercise in connection with
a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected. Such securities will cease to be BRS Registrable
Securities when sold pursuant to Rule 144 or any offering registered under the
Securities Act.

                  "Canterbury Registrable Securities" means (i) any shares of
Common Stock held by a Canterbury Investor or issued or issuable, whether upon
conversion of any shares of Series B Preferred or otherwise, to a Canterbury
Investor, or their respective affiliates or partners on or after December 10,
1996 and (ii) any shares of capital stock of the Company issued or issuable with
respect to the securities referred to in clause (i) by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. For purposes of this Agreement, a
Person will be deemed to be a holder of Canterbury Registrable Securities
whenever such Person has the right to acquire directly or indirectly such
Canterbury Registrable Securities (upon conversion or exercise in connection
with a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected. Such securities will cease to be Canterbury
Registrable Securities when sold pursuant to Rule 144 or any offering registered
under the Securities Act.

                                       2

<PAGE>

                  "CapitalSource Registrable Securities" means (i) any shares of
Common Stock issued or issuable to CapitalSource or its affiliates or members on
or after the date hereof and (ii) any shares of capital stock of the Company
issued or issuable with respect to the securities referred to in clause (i) by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. For
purposes of this Agreement, a Person will be deemed to be a holder of
CapitalSource Registrable Securities whenever such Person has the right to
acquire directly or indirectly such CapitalSource Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected. Such
securities will cease to be CapitalSource Registrable Securities when sold
pursuant to Rule 144 or any offering registered under the Securities Act.

                  "Common Stock" means, collectively, the Class A Common, the
Class B Common Stock, par value $.001 per share (the "Class B Common") of the
Company, and any other class of Common Stock, or if such outstanding Common
Stock is hereafter changed into or exchanged for different securities of the
Company, such other securities.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Executive Registrable Securities" means (i) the Common Stock
issued or issuable to the Executives, whether upon exercise of the Options
granted to the Executives or otherwise, on the date hereof, or acquired by any
Executive after the date hereof, in each case to the extent vested pursuant to
the terms of the applicable Executive Stock Agreement and (ii) any shares of
capital stock of the Company issued or issuable with respect to the securities
referred to in clause (i) by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. For purposes of this Agreement, a Person will be deemed
to be a holder of Executive Registrable Securities whenever such Person has the
right to acquire directly or indirectly such Executive Registrable Securities
(upon conversion or exercise in connection with a transfer of securities or
otherwise, but disregarding any restrictions or limitations upon the exercise of
such right), whether or not such acquisition has actually been effected. Such
securities will cease to be Executive Registrable Securities when sold pursuant
to Rule 144 or any offering registered under the Securities Act.

                  "Farallon Registrable Securities" means (i) any shares of
Common Stock held by the Farallon Investors or issued or issuable to the
Farallon Investors or their respective affiliates or partners on or after
December 10, 1996 and (ii) any shares of capital stock of the Company issued or
issuable with respect to the securities referred to in clause (i) by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, a Person will be deemed to be a holder of Farallon Registrable
Securities whenever such Person has the right to acquire directly or indirectly
such Farallon Registrable Securities (upon conversion or exercise in connection
with a transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected. Such securities will cease to be Farallon
Registrable Securities when sold pursuant to Rule 144 or any offering registered
under the Securities Act.

                                       3

<PAGE>

                  "IPO" means the underwritten initial public offering of Common
Stock registered under the Securities Act.

                  "Options" means, collectively, the options to purchase Class A
Common (a) prior to the date hereof, granted to certain Executives pursuant to
the Town Sports International, Inc. Fourth Amended and Restated 1996 Stock
Option Plan and the Common Stock Option Agreements, by and between TSI and each
of the Executives and transferred to Holdings pursuant to the Restructuring and
the documents related thereto, and (b) on or after the date hereof, granted to
certain Executives pursuant to the Town Sports International Holdings, Inc. 2004
Stock Option Plan and the Common Stock Option Agreements, by and between the
Company and each of the Executives.

                  "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 or other entity, or a governmental
entity (or any department, agency or political subdivision thereof).

                  "Qualified Public Offering" means the sale, in an underwritten
primary public offering of Common Stock requested under the Securities Act, of
shares of Common Stock which is expected to result in net cash proceeds to the
Company in an aggregate amount of not less than $30.0 million.

                  "Registrable Securities" means the BRS Registrable Securities,
the Farallon Registrable Securities, the Rosewood Registrable Securities, the
Canterbury Registrable Securities, the Executive Registrable Securities and the
CapitalSource Registrable Securities.

                  "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company.

                  "Rosewood Registrable Securities" means (i) any shares of
Common Stock issued or issuable, whether upon conversion of any shares of Series
B Preferred or otherwise, to the Rosewood Investor or its affiliates or partners
on or after the date hereof and (ii) any shares of capital stock of the Company
issued or issuable with respect to the securities referred to in clause (i) by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. For
purposes of this Agreement, a Person will be deemed to be a holder of Rosewood
Registrable Securities whenever such Person has the right to acquire directly or
indirectly such Rosewood Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected. Such securities will cease to be
Rosewood Registrable Securities when sold pursuant to Rule 144 or any offering
registered under the Securities Act.

                                       4

<PAGE>

                  "Rule 144" means Rule 144 under the Securities Act (or any
similar rule then in force).

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

                  "Unit Offering Registration" means a registration by the
Company of any of its Common Stock in connection with a registration the primary
purpose of which is to register debt securities (i.e., in connection with a
so-called "equity kicker").

                  2.       DEMAND REGISTRATIONS.

                  (a)      Requests for Registration. Subject to this Section 2,
(i) the holders of a majority of the BRS Registrable Securities may request
registration under the Securities Act of all or part of their Registrable
Securities on Form S-1 or any similar long-form registration ("Long-Form
Registrations") or on Form S-2 or S-3 or any similar short-form registration
("Short-Form Registrations"), if available, (ii) the holders of a majority of
the Farallon Registrable Securities may request Long-Form Registrations and
Short-Form Registrations, if available, and (iii) the holders of a majority of
Canterbury Registrable Securities may request Short-Form Registrations, if
available. Each request for a Demand Registration (as defined in Section 2(c))
shall specify the approximate number of Registrable Securities requested to be
registered and the anticipated per share price range for such offering. Within
ten days after receipt of any such request, the Company will give written notice
of such requested registration to all other holders of Registrable Securities
and will include (subject to the provisions of this Agreement) in such
registration, all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after the receipt
of the Company's notice.

                  (b)      Long-Form Registrations. The holders of a majority of
BRS Registrable Securities will be entitled to request, at any time and from
time to time, three (3) Long-Form Registrations in which the Company will pay
all Registration Expenses. In addition, the holders of a majority of the
Farallon Registrable Securities will be entitled to request one (1) Long Form
Registration, if and only if, after the end of the fourth fiscal quarter
following the date on which the Company consummates an IPO, the Company is not
permitted under the Securities Act to use any applicable Short-Form
Registration. A registration will not count as the permitted Long-Form
Registration until it has become effective and unless the holders of Registrable
Securities are able to register and sell at least 90% of the Registrable
Securities requested to be included in such registration; it being understood
and agreed that the requisite holders of Registrable Securities making a request
for a Demand Registration hereunder may withdraw from such registration at any
time prior to the effective date of such Demand Registration, in which case such
request will not count as one of the permitted Demand Registrations for such
holders, irrespective of whether or not such registration is effected.

                  (c)      Short-Form Registrations. In addition to the
Long-Form Registrations provided pursuant to Section 2(b), (i) the holders of
BRS Registrable Securities will be entitled to request an unlimited number of
Short-Form Registrations, (ii) the holders of Farallon Registrable Securities
will be entitled to request up to three (3) Short-Form Registrations, (iii) the
holders of Canterbury Registrable Securities will be entitled to request up to
two (2) Short-

                                       5

<PAGE>

Form Registrations and (iv) the holders of CapitalSource Registrable Securities
will be entitled to request up to one (1) Short-Form Registration, in each case,
in which the Company will pay all Registration Expenses. A registration will not
count as the permitted Short-Form Registration until it has become effective and
unless the holder of Registrable Securities are able to register and sell 90% of
the Registrable Securities requested to be included in such registration; it
being understood and agreed that the requisite holders of Registrable Securities
making a request for a Demand Registration hereunder may withdraw from such
registration at any time prior to the effective date of such Demand
Registration, in which case such request will not count as one of the permitted
Demand Registrations for such holders, irrespective of whether or not such
registration is effected. Demand Registrations will be Short-Form Registrations
whenever the Company is permitted to use any applicable short form. After the
Company has become subject to the reporting requirements of the Exchange Act,
the Company will use its best efforts to make Short-Form Registrations available
for the sale of Registrable Securities. All registrations requested pursuant to
Sections 2(b) and 2(c) are referred to herein as "Demand Registrations."

                  (d)      Priority on Demand Registrations. The Company will
not include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the holders of at least a
majority of the Registrable Securities included in such registration. If a
Demand Registration is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering exceeds the number of Registrable Securities and other
securities, if any, which can be sold therein without adversely affecting the
marketability of the offering, the Company will include in such registration,
(i)first, the number of Registrable Securities requested to be included in such
registration pro rata, if necessary, among the holders of Registrable Securities
based on the number of shares of Registrable Securities requested to be included
therein by each such holder and (ii) second, any other securities of the Company
requested to be included in such registration pro rata, if necessary, on the
basis of the number of shares of such other securities requested to be included
therein by each such holder. Any Persons other than holders of Registrable
Securities who participate in Demand Registrations which are not at the
Company's expense must pay their share of the Registration Expenses as provided
in Section 6 hereof.

                  (e)      Restrictions on Demand Registrations. The Company
will not be obligated to effect any Demand Registration within six months after
the effective date of a previous Demand Registration.

                  (f)      Selection of Underwriters. In the case of a Demand
Registration, the holders of a majority of the Registrable Securities to be
included in such Demand Registration will have the right to select the
investment banker(s) and manager(s) to administer the offering, which investment
banker(s) and manager(s) will be nationally recognized, subject to the Company's
approval which will not be unreasonably withheld.

                  (g)      Other Registration Rights. Except as provided in this
Agreement, the Company will not grant to any Persons the right to request the
Company to register any equity securities of the Company, or any securities
convertible or exchangeable into or exercisable for such securities, whether on
a "demand" or "piggyback" basis, without the prior written consent of the
holders of a majority of the BRS Registrable Securities; provided, that no such
registration

                                       6

<PAGE>

rights which are senior to those granted to the holders of the Farallon
Registrable Securities, the holders of the Canterbury Registrable Securities or
the holders of the Executive Registrable Securities may be granted without the
prior written consent of (i) a majority of the holders of the Farallon
Registrable Securities in the case of the holders of Farallon Registrable
Securities, (ii) a majority of the holders of Canterbury Registrable Securities
in the case of the holders of Canterbury Registrable Securities, or (iii) a
majority of the holders of Executive Registrable Securities in the case of the
holders of Executive Registrable Securities, respectively. For the avoidance of
doubt, the granting of registration rights pari passu within any other
registration rights shall not be considered "senior."

                  3.       PIGGYBACK REGISTRATIONS.

                  (a)      Right to Piggyback. Whenever the Company proposes to
register any of its Common Stock under the Securities Act other than pursuant to
a Demand Registration, and other than a pursuant to a registration statement on
Form S-8 or S-4 or any similar or successor form or in connection with a Unit
Offering Registration and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and will include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 20 days after the receipt of the
Company's notice. Notwithstanding the foregoing, in connection only with an IPO
which is not a Qualified Public Offering, no Registrable Securities shall be
included in such registration without the prior written consent of the Company
(provided that any such consent shall permit all holders of Registrable
Securities to be included in such registration in a manner consistent with
Section 3(c)(ii) below).

                  (b)      Piggyback Expenses. The Registration Expenses of the
holders of Registrable Securities will be paid by the Company in all Piggyback
Registrations.

                  (c)      Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
the Company will include in such registration all securities requested to be
included in such registration; provided, that if the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company will include in such registration first, the securities
the Company proposes to sell, and then (i) in the case of an IPO which is a
Qualified Public Offering (x) second, the Canterbury Registrable Securities
requested to be included in such registration, (y) third the other Registrable
Securities requested to be included in such registration pro rata among the
holders of such Registrable Securities on the basis of the number of shares
requested to be included therein by each such holder, and (z) fourth, other
securities, if any, requested to be included is such registration, or (ii)in all
other instances, (x) second, the Registrable Securities requested to be included
in such registration, pro rata among the holders of such Registrable Securities
on the basis of the number of shares of Registrable Securities requested to be
included therein by each such holder, and (y)third, other securities, if any,
requested to be included in such registration.

                                       7

<PAGE>

                  (d)      Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities (which registration was consented to pursuant to
Section 2(g) above), the Company will include in such registration all
securities requested to be included in such registration; provided, that if the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company will include in such registration (i)
first, the securities (other than Registrable Securities) requested to be
included therein by the holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares of Registrable Securities requested to be included therein by each such
holder, and (iii) third, other securities requested to be included in such
registration.

                  (e)      Selection of Underwriters. If any Piggyback
Registration is an underwritten offering, the investment banker(s) and
manager(s) for the offering will be selected by the Company.

                  (f)      Other Registrations. If the Company has previously
filed a registration statement with respect to Registrable Securities pursuant
to this Section 3, and if such previous registration has not been withdrawn or
abandoned, the Company will not file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Forms S-4 or S-8 or any similar or successor forms or in
connection with a Unit Offering Registration), whether on its own behalf or at
the request of any holder or holders of such securities, until a period of at
least six months has elapsed from the effective date of such previous
registration.

                  (g)      If requested by a majority of the holders of
Executive Registrable Securities, the Company hereby agrees that, in connection
with an IPO, it shall use its commercially reasonable efforts to prepare and
file a registration statement on Form S-8 or any successor form (and any
required reoffer prospectus in connection therewith) covering the Executive
Registrable Securities eligible to be registered on such form, and use its
commercially reasonable efforts to maintain the effectiveness of such
registration statement.

                  4.       HOLDBACK AGREEMENTS.

                  (a)      Each holder of Registrable Securities (other than the
BRS Investors) agrees not to effect any public sale or distribution (including
sales pursuant to Rule 144) of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and the 90-day period beginning on the effective
date of any Demand Registration or Piggyback Registration for a public offering
to be underwritten on a firm commitment basis in which Registrable Securities
are included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering request otherwise, in which
case, each holder of Registrable Securities (other than the BRS Investors)
agrees to be bound by a holdback of up to a 180 day period beginning the
effective date of any such Demand Registration or Piggyback Registration.

                                       8

<PAGE>

                  (b)      The Company agrees (i) not to effect any public sale
or distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration or Piggyback Registration (except as part of
such underwritten registration, or pursuant to registrations on Forms S-4 or S-8
or any similar or successor forms or in connection with a Unit Offering
Registration), unless the underwriters managing the registered public offering
otherwise agree, and (ii) to cause each holder of at least 5% (on a fully
diluted basis) of its Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock, purchased from the Company at any
time after the date of this Agreement (other than in a registered public
offering) to agree not to effect any public sale or distribution (including
sales pursuant to Rule 144) of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.

                  5.       REGISTRATION PROCEDURES. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:

                  (a)      prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best efforts to cause such registration statement to become
effective (provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to the counsel
selected by the holders of a majority of the Registrable Securities covered by
such registration statement copies of all such documents proposed to be filed);

                  (b)      prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than nine months and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;

                  (c)      if requested by the holders of a majority of the BRS
Registrable Securities in connection with any Demand Registration requested by
such holders, use its commercially reasonable efforts to cause to be included in
such registration Common Stock having an aggregate value (based on the mid-point
of the proposed offering price range specified in the registration statement
used to offer such securities) of up to $30 million, to be offered in a primary
offering of the Company's securities contemporaneously with such offering of
Registrable Securities;

                  (d)      furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as

                                       9

<PAGE>

such seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;

                  (e)      use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection, (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of process
(i.e., service of process which is not limited solely to securities law
violations) in any such jurisdiction);

                  (f)      notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will
promptly prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;

                  (g)      cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Company are
then listed and, if not so listed, to be listed on the National Association of
Securities Dealers Automated Quotations National Market System ("NASDAQ") and,
if listed on the NASDAQ, use its best efforts to secure designation of all such
Registrable Securities covered by such registration statement as a NASDAQ
"national market system security" within the meaning of Rule 11Aa2-1 of the
Securities and Exchange Commission or, failing that, to secure NASDAQ
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the National
Association of Securities Dealers;

                  (h)      provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;

                  (i)      enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);

                  (j)      make available for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent accountants to
supply all information

                                       10

<PAGE>

reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;

                  (k)      otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earning statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earning statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

                  (l)      permit any holder of Registrable Securities which
holder, in its sole and exclusive judgment, might be deemed to be an underwriter
or a controlling person of the Company, to participate in the preparation of
such registration or comparable statement and to require the insertion therein
of material, furnished to the Company in writing, which in the reasonable
judgment of such holder and its counsel should be included;

                  (m)      in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any common stock included in such registration statement for
sale in any jurisdiction, the Company will use its reasonable best efforts
promptly to obtain the withdrawal of such order;

                  (n)      use its best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the sellers thereof to consummate the disposition of such Registrable
Securities; and

                  (o)      obtain a "cold comfort" letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by "cold comfort" letters as the holders of a
majority of the Registrable Securities being sold reasonably request.

If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if, in its sole and
exclusive judgment, such holder is or might be deemed to be a controlling person
of the Company, such holder shall have the right to require (i)the insertion
therein of language, in form and substance satisfactory to such holder and
presented to the Company in writing, to the effect that the holding by such
holder of such securities is not to be construed as a recommendation by such
holder of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such holder will assist in meeting any
future financial requirements of the Company, or (ii)in the event that such
reference to such holder by name or otherwise is not required by the Securities
Act or any similar Federal statute then in force, the deletion of the reference
to such holder; provided, that with respect to this clause (ii) such holder
shall furnish to the Company an opinion of counsel to such effect, which opinion
and counsel shall be reasonably satisfactory to the Company.

                  6.       REGISTRATION EXPENSES.

                  (a)      All Registration Expenses will be borne by the
Company.

                                       11

<PAGE>

                  (b)      Unless otherwise agreed to in writing by the Company,
in connection with each Demand Registration and each Piggyback Registration, the
Company will reimburse the holders of Registrable Securities covered by such
registration for the reasonable fees and disbursements of one counsel chosen by
the holders of a majority of the Registrable Securities.

                  7.       INDEMNIFICATION.

                  (a)      The Company agrees to indemnify, to the extent
permitted by law, each holder of Registrable Securities, its partners, members,
officers and directors and each Person who controls such holder (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities
and expenses arising out of or based upon any untrue or alleged untrue statement
of material fact contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
such holder, partners, members, director, officer or controlling person for any
legal or other expenses reasonably incurred by such holder, partner, member,
director, officer or controlling person in connection with the investigation or
defense of such loss, claim, damage, liability or expense, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by such holder expressly for use therein or by such holder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.

                  (b)      In connection with any registration statement in
which a holder of Registrable Securities is participating, each such holder will
furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will indemnify the Company,
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact relating to such holder and provided by such holder to the Company or the
Company's agent contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such holder; provided, that the obligation
to indemnify will be individual to each holder and will be limited to the net
amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.

                  (c)      Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that failure to give such
notice shall not affect the right of such Person to indemnification hereunder)
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to

                                       12

<PAGE>

such claim, permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. If such defense
is assumed, the indemnifying party will not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.

                  (d)      The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of securities.
The Company also agrees to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.

                  8.       PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No
Person may participate in any registration hereunder which is underwritten
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person or Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all customary questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements; provided, that no holder of Registrable Securities
included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters other than
representations and warranties regarding such holder and such holder's intended
method of distribution.

                  9.       RULE 144 REPORTING. With a view to making available
to the holders of Registrable Securities the benefits of certain rules and
regulations of the Securities and Exchange Commission which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:

                  (a)      make and keep current public information available,
within the meaning of Rule 144 or any similar or analogous rule promulgated
under the Securities Act, at all times after it has become subject to the
reporting requirements of the Exchange Act;

                  (b)      file with the Securities and Exchange Commission, in
a timely manner, all reports and other documents required of the Company under
the Securities Act and Exchange Act (after it has become subject to such
reporting requirements); and

                  (c)      so long as any party hereto owns any Registrable
Securities, furnish to such Person forthwith upon request, a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 (at any time commencing 90 days after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements); a copy of the most recent
annual or quarterly report of the

                                       13

<PAGE>

Company; and such other reports and documents as such Person may reasonably
request in availing itself of any rule or regulation of the Securities and
Exchange Commission allowing it to sell any such securities without
registration.

                  10.      NOTICES. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, mailed by certified or registered mail, return receipt requested and
postage prepaid, or sent via a nationally recognized overnight courier, or sent
via facsimile to the recipient. Such notices, demands and other communications
will be sent to the address indicated below:

                  To the Company:

                           Town Sports International Holdings, Inc.
                           888 Seventh Avenue, Suite 1801
                           New York, New York 10106
                           Attention: Alex Alimanestianu
                           Facsimile No.: (212) 664-8906

                  With copies to:

                           Bruckmann, Rosser, Sherrill & Co., Inc.
                           126 East 56th Street, 29th Floor
                           New York, New York  10022
                           Attention: Rice Edmonds
                           Facsimile No.: (212) 521-3799

                           Kirkland & Ellis LLP
                           Citigroup Center
                           153 East 53rd Street
                           New York, New York 10022-4611
                           Attention: Eunu Chun, Esq.
                           Facsimile No.: (212) 446-4900

                  To BRS or any BRS Investor:

                           c/o Bruckmann, Rosser, Sherrill & Co., Inc.
                           126 East 56th Street, 29th Floor
                           New York, New York  10022
                           Attention: Rice Edmonds
                           Facsimile No.: (212) 521-3799

                                       14

<PAGE>

                  With a copy to (which shall not constitute notice to BRS or
any BRS Investor):

                           Kirkland & Ellis LLP
                           Citigroup Center
                           153 East 53rd Street
                           New York, New York  10022-4611
                           Attention: Eunu Chun, Esq.
                           Facsimile No.: (212) 446-4900

                  To any Farallon Investor:

                           c/o Farallon Capital Management, L.L.C.
                           One Maritime Plaza, Suite 1325
                           San Francisco, California 94111
                           Attention: Mark Wehrly
                           Facsimile No.: (415)421-2133

                  With a copy to (which shall not constitute notice to any
Farallon Investor):

                           Richards Spears Kibbe & Orbe LLP
                           World Financial Center, 29th Floor
                           New York, New York  10281
                           Attention: Jahangier Sharifi, Esq.
                           Facsimile No.: (212) 530-1801

                  To any Rosewood Investor:

                           Rosewood Capital Partners, L.P.
                           One Maritime Plaza
                           Suite 1330
                           San Francisco, California 94111
                           Attention: Kyle A. Anderson
                           Facsimile No.: (415) 362-1192

                  With a copy to (which shall not constitute notice to any
Rosewood Investor):

                           Preston Gates & Ellis, LLP
                           One Maritime Plaza
                           Suite 2400
                           San Francisco, California 94111
                           Attention: Lawrence B. Low, Esq.
                           Facsimile No.: (415) 788-8819

                                       15

<PAGE>

                  To Canterbury Mezzanine:

                           Canterbury Mezzanine Capital, L.P.
                           600 Fifth Avenue, 23rd Floor
                           New York, New York 10020
                           Attention: Patrick N.W. Turner
                           Facsimile No.: (212)332-1584

                  With a copy to (which shall not constitute notice to
Canterbury Mezzanine:

                           Loeb & Loeb LLP
                           345 Park Avenue
                           New York, New York  10154
                           Attention: Stan Johnson, Esq.
                           Facsimile No.: (212) 407-4990

                  To Canterbury Detroit:

                           Canterbury Detroit Partners, L.P.
                           600 Fifth Avenue, 23rd Floor
                           New York, New York 10020
                           Attention: Patrick N.W. Turner
                           Facsimile No.: (212)332-1584

                  With a copy to (which shall not constitute notice to
Canterbury Detroit):

                           Loeb & Loeb LLP
                           345 Park Avenue
                           New York, New York  10154
                           Attention:  Stan Johnson, Esq.
                           Facsimile No.:  (212) 407-4990

                  To CapitalSource:

                           CapitalSource Holdings LLC
                           4445 Willard Avenue, 12th Floor
                           Chevy Chase, Maryland 20815
                           Attention: Corporate Finance Group, Managing Director
                                      Corporate Finance Group, General Counsel
                           Facsimile No.: (301) 841-2360 and (301) 841-2380

                  To any of the Executives Alessi, or Arnold:

                           c/o Town Sports International, Inc.
                           888 Seventh Avenue, 25th Floor
                           New York, New York 10106
                           Facsimile No.: (212) 664-8906

                                       16

<PAGE>

or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party.

                  11.      MISCELLANEOUS.

                  (a)      No Inconsistent Agreements. The Company will not
enter into any agreement which is inconsistent with or violates the rights
granted to the holders of Registrable Securities in this Agreement.

                  (b)      Remedies. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights specifically
to recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.

                  (c)      Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the Company and holders of at least 70% of the
Registrable Securities; provided, no amendment or waiver which materially and
adversely affects the holders of (i) BRS Registrable Securities, (ii) Farallon
Registrable Securities, (iii) Canterbury Registrable Securities, (iv)
CapitalSource Registrable Securities or (v) Executive Registrable Securities,
shall be effective against such holders of (i) BRS Registrable Securities, (ii)
Farallon Registrable Securities, (iii) Canterbury Registrable Securities, (iv)
CapitalSource Registrable Securities or (v) Executive Registrable Securities
unless such amendment is approved by the holders of a majority of (i) BRS
Registrable Securities, (ii) Farallon Registrable Securities, (iii) Canterbury
Registrable Securities, (iv) CapitalSource Registrable Securities or (iv)
Executive Registrable Securities, respectively, so affected. The amendment of
this Agreement to add a party hereto and to grant such party registration rights
pro rata with the existing parties to this Agreement shall not be deemed an
amendment that "materially and adversely affects" any class of Registrable
Securities.

                  (d)      Successors and Assigns. All covenants and agreements
in this Agreement by or on behalf of any of the parties hereto will bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. In addition, whether or not any express
assignment has been made, the provisions of this Agreement which are for the
benefit of purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of Registrable Securities.

                  (e)      Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

                                       17

<PAGE>

                  (f)      Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.

                  (g)      Waiver of Jury Trial. Each of the parties hereto
waives any right it may have to trial by jury in respect of any litigation based
on, arising out of, under or in connection with this Agreement or any course of
conduct, course of dealing, verbal or written statement or action of any party
hereto.

                  (h)      Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.

                  (i)      Time is of the Essence; Computation of Time. Time is
of the essence for each and every provision of this Agreement. Whenever the last
day for the exercise of any privilege or the discharge of any duty hereunder
shall fall upon a Saturday, Sunday, or any date on which banks in New York, New
York are authorized to be closed, the party having such privilege or duty may
exercise such privilege or discharge such duty on the next succeeding day which
is a regular business day.

                  (j)      Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.

                  (k)      Entire Agreement. This Agreement embodies the
complete agreement and understanding among the parties hereto with respect to
the subject matter hereof and supercedes and preempts any prior understandings,
agreements, or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way including, without
limitation, the Existing TSI Registration Rights Agreement which is hereby
terminated in its entirety by the parties hereto and shall have no further force
and effect as of the date hereof.

                                    * * * * *

                                       18

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                                      TOWN SPORTS INTERNATIONAL, INC.

                                      By: /s/ Richard Pyle
                                          ------------------------------------
                                          Name:  Richard Pyle
                                          Title: Chief Financial Officer

                                      TOWN SPORTS INTERNATIONAL HOLDINGS, INC.

                                      By: /s/ Richard Pyle
                                          ------------------------------------
                                          Name:  Richard Pyle
                                          Title: Chief Financial Officer

                                      BRUCKMANN, ROSSER, SHERRILL & CO., L.P.

                                      By: BRS Partners, Limited Partnership
                                      Its: General Partner

                                      By: BRSE Associates, Inc.
                                      Its: General Partner

                                      By: /s/ Paul Kaminski
                                          ------------------------------------
                                          Name:  Paul Kaminski
                                          Title: Secretary

                                      FARALLON CAPITAL PARTNERS, L.P.

                                      By: Farallon Partners, L.L.C.
                                      Its: General Partner

                                      By: /s/ Monica R. Landry
                                          ------------------------------------
                                          Name:  Monica R. Landry
                                          Title: Manager

<PAGE>

                                      FARALLON CAPITAL INSTITUTIONAL
                                      PARTNERS, L.P.

                                      By: Farallon Partners, L.L.C.
                                      Its: General Partner

                                      By:  /s/ Monica R. Landry
                                          ------------------------------------
                                          Name:  Monica R. Landry
                                          Title: Managing Member

                                      RR CAPITAL PARTNERS, L.P.

                                      By: Farallon Partners, L.L.C.
                                      Its: General Partner

                                      By:  /s/ Monica R. Landry
                                          ------------------------------------
                                          Name:  Monica R. Landry
                                          Title: Managing Member

                                      FARALLON CAPITAL INSTITUTIONAL
                                      PARTNERS II, L.P.

                                      By: Farallon Partners, L.L.C.
                                      Its: General Partner

                                      By:  /s/ Monica R. Landry
                                          ------------------------------------
                                          Name:  Monica R. Landry
                                          Title: Managing Member

                                      CANTERBURY DETROIT PARTNERS, L.P.

                                      By: Canterbury Detroit, LLC
                                      Its: General Partner

                                      By: /s/ Patrick Turner
                                          ------------------------------------
                                          Name:  Patrick Turner
                                          Title: Manager

<PAGE>

                                      CANTERBURY MEZZANINE CAPITAL, L.P.

                                      By: Canterbury Capital, LLC
                                      Its: General Partner

                                      By: /s/ Patrick Turner
                                          ------------------------------------
                                          Name:  Patrick Turner
                                          Title: Manager

                                      ROSEWOOD CAPITAL, L.P.

                                      By: /s/ Kevin Reilly
                                          ------------------------------------
                                          Name:  Kevin Reilly
                                          Title: Principal

                                      ROSEWOOD CAPITAL IV, L.P.

                                      By: /s/ Kevin Reilly
                                          ------------------------------------
                                          Name:  Kevin Reilly
                                          Title: Principal

                                      ROSEWOOD CAPITAL IV ASSOCIATES, L.P.

                                      By: /s/ Kevin Reilly
                                          ------------------------------------
                                          Name:  Kevin Reilly
                                          Title: Principal

                                      CAPITALSOURCE HOLDINGS LLC

                                      By: /s/ Joseph Turitz
                                          ------------------------------------
                                          Name:  Joseph Turitz
                                          Title: General Counsel

                                      /s/ Keith Alessi
                                      ----------------------------------------
                                      Keith Alessi

<PAGE>

                                      /s/ Paul Arnold
                                      ----------------------------------------
                                      Paul Arnold

<PAGE>

                          [BRS INVESTOR SIGNATURE PAGE]

                                      /s/ Stephen Sherrill
                                      ----------------------------------------
                                      STEPHEN SHERRILL, as Attorney-in-Fact for
                                      each of the following Investors:

                                      Bruce Bruckmann
                                      Elizabeth McShane
                                      Beverly Place
                                      D. Bruckmann
                                      BCB Partnership
                                      NAZ Partnership
                                      Harold O. Rosser
                                      Virgil Sherrill
                                      Stephen Sherrill
                                      Nancy Zweng
                                      Paul D. Kaminski

                                      Merrill Lynch Pearce Fenner & Smith,
                                      Custodian for the Benefit of Paul D.
                                      Kaminski IRA

<PAGE>

                           [EXECUTIVE SIGNATURE PAGE]

                                      /s/ Mark Smith
                                      -----------------------------------------
                                      MARK SMITH

                                      /s/ Robert Giardina
                                      -----------------------------------------
                                      ROBERT GIARDINA

                                      /s/ Richard Pyle
                                      -----------------------------------------
                                      RICHARD PYLE

                                      /s/ Alexander Alimanestianu
                                      -----------------------------------------
                                      ALEXANDER ALIMANESTIANU

                                      /s/ Debbie Smith
                                      -----------------------------------------
                                      DEBBIE SMITH

                                      /s/ Carol Cornbill
                                      -----------------------------------------
                                      CAROL CORNBILL

                                      /s/ Edward Trainor
                                      -----------------------------------------
                                      EDWARD TRAINOR

                                      /s/ Robert Calvo
                                      -----------------------------------------
                                      ROBERT CALVO

                                      /s/ Maggie Stevens
                                      -----------------------------------------
                                      MAGGIE STEVENS

                                      /s/ Ray Dewhirst
                                      -----------------------------------------
                                      RAY DEWHIRST

                                      /s/ Nina Duchaine
                                      -----------------------------------------
                                      NINA DUCHAINE

<PAGE>

                           [EXECUTIVE SIGNATURE PAGE]

                                      /s/ Heinz Ritschard
                                      ------------------------------------------
                                      HEINZ RITSCHARD

                                      /s/ Peter Bazzell
                                      ------------------------------------------
                                      PETER BAZZELL

                                      /s/ Felicia Bachiccio
                                      ------------------------------------------
                                      FELICIA BACHICCIO

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