Document:

EXHIBIT 10.07

                           COMMON SECURITY CERTIFICATE

         THIS COMMON SECURITY HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT
OF  1933,  AS  AMENDED,  AND MAY NOT BE  OFFERED,  SOLD,  PLEDGED  OR  OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

         THIS CERTIFICATE IS NOT TRANSFERABLE  EXCEPT IN COMPLIANCE WITH SECTION
8.1 OF THE DECLARATION (DEFINED HEREIN).

         THIS  COMMON  SECURITY  IS IN  REGISTERED  FORM  WITHIN THE  MEANING OF
TREASURY  REGULATIONS  SECTION  1.871-14(c)(1)(i)  FOR U.S.  FEDERAL  INCOME AND
WITHHOLDING TAX PURPOSES.

                  Certificate Number C-1     403 Common Securities

                                December 15, 2004

          Certificate Evidencing Fixed/Floating Rate Common Securities

                                       of

                         Tower Group Statutory Trust III

         Tower Group  Statutory  Trust III, a statutory  trust created under the
laws of the State of Delaware (the "Trust"),  hereby certifies that Tower Group,
Inc. (the  "Holder") is the registered  owner of common  securities of the Trust
representing  undivided  beneficial  interests  in the  assets of the Trust (the
"Common Securities").  Subject to the Declaration (as defined below), the Common
Securities are  transferable  on the books and records of the Trust in person or
by a duly authorized attorney,  upon surrender of this Certificate duly endorsed
and in proper form for transfer.  The Common Securities  represented  hereby are
issued  pursuant  to, and the  designation,  rights,  privileges,  restrictions,
preferences and other terms and provisions of the Common Securities shall in all
respects be subject to, the  provisions of the Amended and Restated  Declaration
of Trust of the Trust  dated as of  December  15,  2004,  among  Michael H. Lee,
Francis M. Colalucci and Steven G. Fauth, as  Administrators,  Wilmington  Trust
Company,  as  Delaware  Trustee,  Wilmington  Trust  Company,  as  Institutional
Trustee,  Tower Group,  Inc.,  as Sponsor,  and the holders from time to time of
undivided  beneficial  interest  in  the  assets  of  the  Trust  including  the
designation  of the terms of the  Common  Securities  as set forth in Annex I to
such amended and restated  declaration,  as the same may be amended from time to
time (the  "Declaration").  Capitalized  terms used herein but not defined shall
have the meaning  given them in the  Declaration.  The Holder is entitled to the
benefits of the Guarantee and the Indenture to the extent provided therein.  The
Sponsor will provide a copy of the Declaration,  the Guarantee and the Indenture
to the  Holder  without  charge  upon  written  request  to the  Sponsor  at its
principal place of business.

         As set forth in the Declaration,  when an Event of Default has occurred
and is  continuing,  the rights of Holders  of Common  Securities  to payment in
respect of Distributions and payments upon Liquidation,  redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.
<PAGE>

         Upon  receipt  of  this  Certificate,   the  Holder  is  bound  by  the
Declaration and is entitled to the benefits thereunder.

         By acceptance  of this  Certificate,  the Holder  agrees to treat,  for
United States federal income tax purposes, the Floating Rate Junior Subordinated
Deferrable  Interest  Debentures  ("Debentures")  as indebtedness and the Common
Securities as evidence of undivided beneficial ownership in the Debentures.

         This  Common  Security  is  governed  by,  and  shall be  construed  in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.

<PAGE>

         IN WITNESS WHEREOF, the Trust has duly executed this certificate.

                                   Tower Group STATUTORY TRUST III

                                   By:
                                      ----------------------------
                                        Name:
                                        Title: Administrator

<PAGE>

                          [REVERSE OF COMMON SECURITY]

         Distributions  payable on each  Common  Security  will be payable at an
annual rate equal to 7.40%  beginning  on (and  including)  the date of original
issuance and ending on (but  excluding) the  Distribution  Payment Date (defined
herein)  in  December  2009 and at an  annual  rate for each  successive  period
beginning on (and including) the Distribution Payment Date in December 2009, and
each  succeeding  Distribution  Payment  Date,  commencing  on the  Distribution
Payment Date in March 2005, and ending on (but  excluding)  the next  succeeding
Distribution Payment Date (each such period, a "Distribution Period"),  equal to
3-Month LIBOR,  determined as described  below,  plus 3.40% (the "Coupon Rate"),
applied to the stated liquidation amount of $1,000.00 per Common Security,  such
rate  being the rate of  interest  payable on the  Debentures  to be held by the
Institutional  Trustee.  Distributions  in arrears  will bear  interest  thereon
compounded  quarterly  at the  Distribution  Rate (to the  extent  permitted  by
applicable  law).  The  term   "Distributions"  as  used  herein  includes  cash
distributions  and any such  compounded  distributions  and any Additional  Sums
payable on the Debentures unless otherwise noted. A Distribution is payable only
to the extent that  payments are made in respect of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. As used herein,  "Determination Date" means the date that is
two London  Banking Days (i.e.,  a business day in which dealings in deposits in
U.S.  dollars are  transacted  in the London  interbank  market)  preceding  the
commencement of the relevant Distribution Period. The amount of the Distribution
payable  (i) for any  Distribution  Period  commencing  on or after  the date of
original issuance but before the Distribution Payment Date in December 2009 will
be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for
the Distribution Period commencing on or after the Distribution  Payment Date in
December  2009 and each  succeeding  Distribution  Period will be  calculated by
applying the Distribution Rate to the stated  liquidation  amount outstanding at
the commencement of the Distribution  Period and multiplying each such amount by
the actual number of days in the Distribution Period concerned divided by 360.

         "3-Month  LIBOR" as used  herein,  means the London  interbank  offered
interest rate for three-month  U.S. dollar deposits  determined by the Debenture
Trustee  in the  following  order  of  priority:  (i) the rate  (expressed  as a
percentage per annum) for U.S.  dollar  deposits  having a three-month  maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination  Date ("Telerate Page 3750" means the display  designated as "Page
3750" on the Dow Jones  Telerate  Service or such other page as may replace Page
3750 on that  service or such other  service or services as may be  nominated by
the British  Bankers'  Association as the information  vendor for the purpose of
displaying  London interbank  offered rates for U.S. dollar  deposits);  (ii) if
such rate cannot be identified on the related  Determination Date, the Debenture
Trustee will request the principal  London  offices of four leading banks in the
London interbank market to provide such banks' offered quotations  (expressed as
percentages  per annum) to prime banks in the London  interbank  market for U.S.
dollar deposits having a three-month  maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided,  3-Month LIBOR
will be the  arithmetic  mean of such  quotations;  (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will  request  four  major New York City banks to provide  such  banks'  offered
quotations  (expressed as percentages  per annum) to leading  European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at  least  two  such  quotations  are  provided,  3-Month  LIBOR  will be the
arithmetic mean of such  quotations;  and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution  Period immediately  preceding
such current  Distribution Period. If the rate for U.S. dollar deposits having a
three-month  maturity that  initially  appears on Telerate Page 3750 as of 11:00
a.m.  (London  time) on the  related  Determination  Date is  superseded  on the
Telerate  Page 3750 by a  corrected  rate by 12:00  noon  (London  time) on such
Determination  Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.
<PAGE>

         "Interest  Rate" means for the period  beginning on (and including) the
date of original issuance and ending on (but excluding) the Distribution Payment
Date in  December  2009 the rate per  annum of 7.40%  and for each  Distribution
Period thereafter, the Coupon Rate.

         The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.

         All  percentages   resulting  from  any   calculations  on  the  Common
Securities will be rounded, if necessary,  to the nearest one hundred-thousandth
of a percentage  point,  with five  one-millionths of a percentage point rounded
upward (e.g.,  9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all  dollar  amounts  used in or  resulting  from such  calculation  will be
rounded to the nearest cent (with one-half cent being rounded upward)).

         Except  as  otherwise  described  below,  Distributions  on the  Common
Securities  will be cumulative,  will accrue from the date of original  issuance
and will be payable  quarterly in arrears on March 15, June 15, September 15 and
December  15 of each year or if such day is not a  Business  Day,  then the next
succeeding  Business  Day (each  such  date,  a  "Distribution  Payment  Date"),
commencing on the Distribution  Payment Date in March 2005. The Debenture Issuer
has the  right  under  the  Indenture  to  defer  payments  of  interest  on the
Debentures,  so long as no  Indenture  Event  of  Default  has  occurred  and is
continuing,  by extending the interest  payment  period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the  Debentures,  subject to the  conditions  described  below,  during which
Extension  Period no interest  shall be due and  payable.  During any  Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period,  compounded  quarterly from the date such
interest  would have been payable were it not for the Extension  Period,  to the
extent  permitted  by law (such  interest  referred  to  herein  as  "Additional
Interest").  No  Extension  Period may end on a date  other than a  Distribution
Payment  Date. At the end of any such  Extension  Period,  the Debenture  Issuer
shall pay all interest then accrued and unpaid on the Debentures  (together with
Additional Interest thereon);  PROVIDED,  HOWEVER,  that no Extension Period may
extend  beyond the Maturity  Date.  Prior to the  termination  of any  Extension
Period, the Debenture Issuer may further extend such period,  provided that such
period  together  with all such  previous  and  further  consecutive  extensions
thereof shall not exceed 20 consecutive  quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing  requirements.  No
interest or  Additional  Interest  shall be due and payable  during an Extension
Period,  except at the end thereof,  but each installment of interest that would
otherwise  have been due and payable  during such  Extension  Period  shall bear
Additional  Interest.  During any Extension Period,  Distributions on the Common
Securities  shall be deferred for a period  equal to the  Extension  Period.  If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates,  to Holders of the Common Securities as
they appear on the books and records of the Trust on the record date immediately
preceding such date.  Distributions on the Common Securities must be paid on the
dates payable  (after giving effect to any Extension  Period) to the extent that
the Trust has funds  available  for the  payment  of such  distributions  in the
Property  Account of the Trust.  The Trust's funds available for Distribution to
the Holders of the Common  Securities will be limited to payments  received from
the Debenture Issuer.
<PAGE>

         The  Common   Securities   shall  be  redeemable  as  provided  in  the
Declaration.

<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED,  the undersigned  assigns and transfers this Common
Security Certificate to:

         ----------------------------------------------------------------

        (Insert assignee's social security or tax identification number)

         ----------------------------------------------------------------

         ----------------------------------------------------------------

         ----------------------------------------------------------------

         (Insert address and zip code of assignee) and irrevocably appoints

         agent to transfer this Common Security  Certificate on the books of the
         Trust. The agent may substitute another to act for him or her.

                  Date:
                       ------------------------------------------------

                  Signature:
                            -------------------------------------------

         (Sign  exactly as your name  appears  on the other side of this  Common
         Security Certificate)

Signature Guarantee(1)

--------

(1)      Signature  must be  guaranteed by an "eligible  guarantor  institution"
         that is a bank,  stockbroker,  savings and loan  association  or credit
         union,  meeting  the  requirements  of the  Security  registrar,  which
         requirements  include  membership or  participation  in the  Securities
         Transfer Agents  Medallion  Program  ("STAMP") or such other "signature
         guarantee  program" as may be determined  by the Security  registrar in
         addition to, or in substitution  for, STAMP, all in accordance with the
         Securities Exchange Act of 1934, as amended.EXHIBIT 10.08

                         TOWER GROUP STATUTORY TRUST III

                                TOWER GROUP, INC.

                             SUBSCRIPTION AGREEMENT

                                DECEMBER 15, 2004

         THIS SUBSCRIPTION  AGREEMENT (this  "Agreement") made among Tower Group
Statutory Trust III (the "Trust"),  a statutory trust created under the Delaware
Statutory  Trust Act  (Chapter 38 of Title 12 of the Delaware  Code,  12 Del. C.
ss.ss.  3801,  ET SEQ.),  Tower Group,  Inc., a Delaware  corporation,  with its
principal  offices  located at 120  Broadway,  14th  Floor,  New York,  New York
10271-1699 (the "Company," and collectively with the Trust, the "Offerors"), and
Preferred Term Securities XVI, Ltd. (the "Purchaser").

                                    RECITALS:

         1.       The Trust desires to issue 13,000 of its  Fixed/Floating  Rate
                  Capital  Securities  (the "Capital  Securities"),  liquidation
                  amount  $1,000.00  per  Capital   Security,   representing  an
                  undivided  beneficial interest in the assets of the Trust (the
                  "Offering"),  to be issued pursuant to an Amended and Restated
                  Declaration  of Trust  (the  "Declaration")  by and  among the
                  Company,  Wilmington Trust Company ("WTC"), the administrators
                  named  therein,  and the holders (as defined  therein),  which
                  Capital  Securities  are to be  guaranteed by the Company with
                  respect  to  distributions   and  payments  upon  liquidation,
                  redemption and otherwise  pursuant to the terms of a Guarantee
                  Agreement  between  the  Company  and  WTC,  as  trustee  (the
                  "Guarantee"); and

         2.       The proceeds from the sale of the Capital  Securities  will be
                  combined  with the proceeds  from the sale by the Trust to the
                  Company  of its  common  securities,  and  will be used by the
                  Trust to purchase an equivalent amount of Fixed/Floating  Rate
                  Junior  Subordinated  Deferrable  Interest  Debentures  of the
                  Company  (the  "Debentures")  to  be  issued  by  the  Company
                  pursuant  to an  indenture  to be  executed by the Company and
                  WTC, as trustee (the "Indenture"); and

         3.       In    consideration   of   the   premises   and   the   mutual
                  representations  and  covenants  hereinafter  set  forth,  the
                  parties hereto agree as follows:

<PAGE>

                                   ARTICLE I
                     PURCHASE AND SALE OF CAPITAL SECURITIES

         1.1.  Upon  the  execution  of this  Agreement,  the  Purchaser  hereby
subscribes for and agrees to purchase from the Trust 13,000  Capital  Securities
at a price equal to $1,000.00 per Capital  Security (the  "Purchase  Price") and
the Trust  agrees to sell such  Capital  Securities  to the  Purchaser  for said
Purchase  Price.  The rights and  preferences of the Capital  Securities are set
forth in the Declaration. The Purchase Price is payable in immediately available
funds on December 15, 2004,  or such other  business day as may be designated by
the  Purchaser,  but in no event  later than  December  22,  2004 (the  "Closing
Date").  The Offerors shall provide the Purchaser wire transfer  instructions no
later than 1 day following the date hereof.

         1.2. The certificate for the Capital  Securities  shall be delivered by
the Trust on the Closing Date to the Purchaser or its designee.

         1.3. The Placement  Agreement,  dated December 7, 2004 (the  "Placement
Agreement"),  among the Offerors and the  Placement  Agents  identified  therein
includes  certain  representations  and warranties,  covenants and conditions to
closing  and  certain  other  matters  governing  the  Offering.  The  Placement
Agreement  is hereby  incorporated  by  reference  into this  Agreement  and the
Purchaser shall be entitled to each of the benefits of the Placement  Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce the
obligations of the Offerors  under such  Placement  Agreement as fully as if the
Purchaser were a party to such Placement Agreement.

                                   ARTICLE II
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         2.1.  The  Purchaser  understands  and  acknowledges  that  neither the
Capital Securities,  the Debentures nor the Guarantee have been registered under
the  Securities  Act of 1933, as amended (the  "Securities  Act"),  or any other
applicable  securities  law,  are  being  offered  for  sale  by  the  Trust  in
transactions not requiring registration under the Securities Act, and may not be
offered,  sold,  pledged or otherwise  transferred  by the  Purchaser  except in
compliance with the registration requirements of the Securities Act or any other
applicable  securities  laws,  pursuant  to  an  exemption  therefrom  or  in  a
transaction not subject thereto.

         2.2. The Purchaser  represents,  warrants and certifies  that (i) it is
not a "U.S.  person" as such term is  defined  in Rule 902 under the  Securities
Act, (ii) it is not acquiring the Capital  Securities for the account or benefit
of any such U.S. person,  (iii) the offer and sale of Capital  Securities to the
Purchaser  constitutes  an  "offshore  transaction"  under  Regulation  S of the
Securities Act, and (iv) it will not engage in hedging  transactions with regard
to the Capital  Securities  unless such transactions are conducted in compliance
with the  Securities  Act and the  Purchaser  agrees to the legends and transfer
restrictions set forth on the Capital Securities certificate.

         2.3. The Purchaser  represents  and warrants that it is purchasing  the
Capital Securities for its own account, for investment,  and not with a view to,
or for offer or sale in connection with, any  distribution  thereof in violation
of the  Securities  Act or other  applicable  securities  laws,  subject  to any
requirement  of law that the  disposition of its property be at all times within
its  control  and  subject to its  ability  to resell  such  Capital  Securities
pursuant to an effective  registration  statement  under the  Securities  Act or
under Rule 144A or any other  exemption from  registration  available  under the
Securities Act or any other applicable securities law.
<PAGE>

         2.4. The Purchaser  represents  and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties  specified  herein,  and to consummate the transactions  contemplated
herein and it has full right and power to subscribe for Capital  Securities  and
perform its obligations pursuant to this Agreement.

         2.5. The Purchaser,  a Cayman Islands  company whose business  includes
issuance of certain notes and acquiring the Capital Securities and other similar
securities, represents and warrants that it has such knowledge and experience in
financial and business  matters that it is capable of evaluating  the merits and
risks of  purchasing  the Capital  Securities,  has had the  opportunity  to ask
questions of, and receive answers and request  additional  information from, the
Offerors  and is aware that it may be required to bear the  economic  risk of an
investment in the Capital Securities.

         2.6. The  Purchaser  represents  and warrants  that no filing with,  or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental  body, agency or court having  jurisdiction over the
Purchaser,  other than those that have been made or  obtained,  is  necessary or
required for the  performance  by the  Purchaser of its  obligations  under this
Agreement or to consummate the transactions contemplated herein.

         2.7. The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.

         2.8. The  Purchaser  represents  and warrants that (i) the Purchaser is
not in  violation or default of any term of its  Memorandum  of  Association  or
Articles of Association, of any provision of any mortgage, indenture, agreement,
instrument  or contract to which it is a party or by which it is bound or of any
judgment,  decree,  order,  writ or,  to its  knowledge,  any  statute,  rule or
regulation  applicable to the Purchaser  which would prevent the Purchaser  from
performing  any material  obligation set forth in this  Agreement;  and (ii) the
execution,  delivery and performance of and compliance with this Agreement,  and
the  consummation of the  transactions  contemplated  herein,  will not, with or
without  the  passage of time or giving of notice,  result in any such  material
violation,  or be in conflict  with or constitute a default under any such term,
or the  suspension,  revocation,  impairment,  forfeiture or  non-renewal of any
permit,  license,  authorization  or approval  applicable to the Purchaser,  its
business or operations  or any of its assets or  properties  which would prevent
the  Purchaser  from  performing  any  material  obligations  set  forth in this
Agreement.

         2.9. The  Purchaser  represents  and warrants  that the Purchaser is an
exempted company with limited liability duly incorporated,  validly existing and
in good  standing  under the laws of the  Cayman  Islands,  with full  power and
authority to perform its obligations under this Agreement.

         2.10. The Purchaser  understands and acknowledges that the Company will
rely  upon  the   truth  and   accuracy   of  the   foregoing   acknowledgments,
representations,  warranties  and  agreements  and  agrees  that,  if any of the
acknowledgments,  representations,  warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate,  it
shall promptly notify the Company.
<PAGE>

         2.11. The Purchaser understands that no public market exists for any of
the Capital  Securities,  and that it is unlikely that a public market will ever
exist for the Capital Securities.

                                  ARTICLE III
                                  MISCELLANEOUS

3.1.  Any  notice  or  other  communication  given  hereunder  shall  be  deemed
sufficient  if in writing  and sent by  registered  or  certified  mail,  return
receipt  requested,  international  courier or delivered by hand against written
receipt therefor,  or by facsimile  transmission and confirmed by telephone,  to
the following addresses,  or such other address as may be furnished to the other
parties as herein provided:

         To the Offerors:           Tower Group, Inc.
                                    120 Broadway, 14th Floor
                                    New York, New York 10271-1699
                                    Attention:  Francis M. Colalucci
                                    Telecopier:  212-271-5492

         To the Purchaser:          Preferred Term Securities XVI, Ltd.
                                    c/o Maples Finance Limited
                                    P.O. Box 1093 GT
                                    Queensgate House
                                    South Church Street
                                    George Town, Grand Cayman
                                    Cayman Islands
                                    Attention:  The Directors
                                    Telecopier  345-945-7100

         Unless otherwise expressly provided herein,  notices shall be deemed to
have been  given on the date of  mailing,  except  notice of change of  address,
which shall be deemed to have been given when received.

         3.2. This Agreement shall not be changed, modified or amended except by
a writing  signed by the parties to be charged,  and this  Agreement  may not be
discharged  except by performance  in accordance  with its terms or by a writing
signed by the party to be charged.

         3.3.  Upon  the  execution  and  delivery  of  this  Agreement  by  the
Purchaser,  this  Agreement  shall become a binding  obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.

         3.4.  Notwithstanding  anything  expressed or implied to the  contrary,
each  Purchaser of Capital  Securities  (and each employee,  representative,  or
other  agent  of a  Purchaser)  may  disclose  to any and all  persons,  without
limitation  of any kind,  the U.S. tax  treatment  and U.S. tax structure of the
transactions  contemplated  by this  Agreement  and all  materials  of any  kind
(including  opinions or other tax  analyses)  that are provided to the Purchaser
relating to such U.S. tax  treatment  and U.S.  tax  structure as such terms are
defined  in  Treasury  Regulation  Section  1.6011-4;  provided,  that  any such
disclosure  of the U.S. tax  treatment  and U.S.  tax  structure  and  materials
related  thereto may not be made (i) in a manner that would  constitute an offer
to sell or the  solicitation of an offer to buy the Capital  Securities  offered
herein under applicable securities laws or (ii) when nondisclosure is reasonably
necessary to comply with applicable  securities laws. This  authorization of tax
disclosure  is  retroactively   effective  to  the  commencement  of  the  first
discussions between the parties regarding the transactions contemplated herein.
<PAGE>

         3.5.  PURSUANT TO SECTION 5-1401 OF THE GENERAL  OBLIGATIONS LAW OF THE
STATE OF NEW YORK,  THIS  AGREEMENT  SHALL BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE  WITH,  THE LAWS OF THE STATE OF NEW  YORK.  EACH OF THE  TRUST,  THE
PURCHASER AND THE COMPANY, ON BEHALF OF ITSELF AND ITS SUBSIDIARIES  (INCLUDING,
WITHOUT  LIMITATION,  THE TRUST),  HEREBY  IRREVOCABLY  SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW
YORK IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING RELATED TO THIS AGREEMENT
OR ANY OF THE MATTERS  CONTEMPLATED  HEREBY,  IRREVOCABLY  WAIVES ANY DEFENSE OF
LACK OF PERSONAL  JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT.
EACH OF THE TRUST,  THE PURCHASER  AND THE COMPANY,  ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES (INCLUDING,  WITHOUT LIMITATION, THE TRUST), IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER  APPLICABLE LAW, ANY OBJECTION
WHICH IT MAY NOW OR  HEREAFTER  HAVE TO THE  LAYING  OF VENUE OF ANY SUCH  SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION  OR  PROCEEDING  BROUGHT  IN  ANY  SUCH  COURT  HAS  BEEN  BROUGHT  IN AN
INCONVENIENT FORUM.

         3.6.  The  parties  agree to  execute  and  deliver  all  such  further
documents,  agreements and instruments and take such other and further action as
may be  necessary  or  appropriate  to carry out the purposes and intent of this
Agreement.

         3.7. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original,  but all of which shall  together  constitute
one and the same instrument.

         3.8.  In the  event  that any one or more of the  provisions  contained
herein,  or the  application  thereof  in any  circumstances,  is held  invalid,
illegal or unenforceable in any respect for any reason,  the validity,  legality
and  enforceability  of any such  provision  in every  other  respect and of the
remaining  provisions  hereof shall not be in any way  impaired or affected,  it
being  intended  that  all of the  Offerors'  and  the  Purchaser's  rights  and
privileges shall be enforceable to the fullest extent permitted by law.

                     SIGNATURES APPEAR ON THE FOLLOWING PAGE

<PAGE>

         IN WITNESS  WHEREOF,  the  undersigned  has caused this Agreement to be
duly executed as of the day and year first written above.

PREFERRED TERM SECURITIES XVI, LTD.

By:      /s/ Phillip Hinds
   ---------------------------------
Name:        Phillip Hinds
     -------------------------------
Title:       Director
      ------------------------------

         IN WITNESS WHEREOF,  this Agreement is agreed to and accepted as of the
day and year first written above.

                                    TOWER GROUP, INC.

                                    By:    /s/  Michael H. Lee
                                       --------------------------------
                                    Name:       Michael H. Lee
                                    Title:      President and CEO

                                    TOWER GROUP STATUTORY TRUST III

                                    By:     /s/ Francis M. Colalucci
                                       --------------------------------
                                    Name:       Francis M. Colalucci
                                    Title:      Administrator

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