Tower Group, Inc.
SUBSCRIPTION AGREEMENT
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>9
<FILENAME>a4789898ex108.txt
<DESCRIPTION>SUBSCRIPTION AGREEMENT
<TEXT>
                                                                   EXHIBIT 10.08


                         TOWER GROUP STATUTORY TRUST IV


                                TOWER GROUP, INC.


                             SUBSCRIPTION AGREEMENT


                                DECEMBER 21, 2004

         THIS SUBSCRIPTION  AGREEMENT (this  "Agreement") made among Tower Group
Statutory  Trust IV (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
Merrill Lynch International (the "Purchaser").


                                    RECITALS:

         1.       The Trust desires to issue 13,000 of its 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,   JPMorgan  Chase  Bank,  as  Institutional   Trustee
                  National  Association and Chase  Manhattan Bank USA,  National
                  Association,   as  a  Delaware   Trustee,   ("Trustees")   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 the Trustees, 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 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 the Trustees  (the
                  "Indenture"); and

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


                                   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 21, 2004,  or such other  business day as may be designated by
the  Purchaser,  but in no event  later than  December  29,  2004 (the  "Closing
Date").  The Offerors shall provide the Purchaser wire transfer  instructions no
later than 1 day following the date hereof.


<PAGE>

         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 17, 2004 (the "Placement
Agreement"),  among the  Offerors and the  Placement  Agent  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  Agent 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.



                                        2
<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  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.

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

         2.7. 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.

         2.8. 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.

         2.9. 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:


                                       3
<PAGE>

    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:   Merrill Lynch International
                        c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
                        250 Vesey Street
                        New York, New York 10080
                        Attention:  Phil Kostrowicki
                        Telephone:  (212) 449-5113
                        Fax:  (212) 449-3695



         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.

         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.

                                       4

<PAGE>

         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



                                       5
<PAGE>



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

                                MERRILL LYNCH INTERNATIONAL


                                By: /s/ William Berry
                                ----------------------------------------------
                                Name:   William Berry
                                Title:  Managing 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 Chief Executive Officer


                                TOWER GROUP STATUTORY TRUST IV


                                By: /s/ MICHAEL H. LEE
                                ---------------------------------------------
                                Name:   Michael H. Lee
                                Title:  Administrator



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