Exhibit 10.3

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Security Agreement”), dated as of July 25, 2007,
is made by TUCOWS INC., a Pennsylvania corporation (the “Grantor”), in favor of
BANK OF MONTREAL, as lender (the “Secured Party”).

W I T N E S S E T H:

WHEREAS, Tucows.com Co., a company organized under the laws of Nova Scotia (the
“Borrower”), the Secured Party and the Other Loan Parties (defined below)
executed that certain Bank of Montreal Loan Authorization Agreement, dated as of
the date hereof (as amended, supplemented, amended and restated or otherwise
modified from time to time, the “BMO Loan Agreement”);

WHEREAS, in connection with the execution of the BMO Loan Agreement, the Grantor
executed that certain Guaranty, dated as of the date hereof (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
“Guaranty”), guaranteeing in full the obligations of the Borrower under the BMO
Loan Agreement;

WHEREAS, the Borrower is a subsidiary of Grantor, and the Grantor provides the
Borrower with financial, management, administrative support which enables each
Borrower to conduct its business in an orderly and efficient manner in the
ordinary course;

WHEREAS, the Grantor will benefit, directly or indirectly from credit and other
financial accommodations extended by the Secured Party to the Borrower;

WHEREAS, the Grantor has duly authorized the execution, delivery and performance
of this Security Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in order to induce the Secured Party to
enter into the BMO Loan Agreement with the Borrower, the Grantor agrees with the
Secured Party as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1.                                   CERTAIN TERMS.  THE FOLLOWING
TERMS (WHETHER OR NOT UNDERSCORED) WHEN USED IN THIS SECURITY AGREEMENT,
INCLUDING ITS PREAMBLE AND RECITALS, SHALL HAVE THE FOLLOWING MEANINGS (SUCH
DEFINITIONS TO BE EQUALLY APPLICABLE TO THE SINGULAR AND PLURAL FORMS THEREOF):

“Accounts” shall have the meaning assigned to it in Section 9-102(a)(2) of the
U.C.C.

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“Secured Party” is defined in the preamble.

“Collateral” is defined in Section 2.1.

“Equipment” is defined in clause (a) of Section 2.1.

“Filings” shall mean the filing or recording of the Financing Statements
relating to the Collateral existing on the Effective Date, in the places
specified in Item A of Schedule 1 hereto.

“Financing Statements” shall mean the financing statements delivered to the
Secured Party by the Grantor on the date hereof for filing in the jurisdictions
listed in Item A of Schedule I hereto.

“General Intangibles” shall have the meaning assigned to it in Section
9-102(a)(42) of the U.C.C.

“Goods” shall have the meaning assigned to it in Section 9-102(a)(44) of the
U.C.C.

“Grantor” is defined in the preamble.

“Inventory” is defined in clause (a) of Section 2.1.

“Investment Property” shall have the meaning assigned to it in Section
9-102(a)(49) of the U.C.C.

“Lien” means, any security interest, mortgage, pledge, hypothecation,
assignment, deposit, arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or any filing or recording of any
instrument or document in respect of the foregoing, to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.

“Other Loan Parties” means Tucows (Delaware) Inc., a Delaware corporation,
Innerwise, Inc., an Illinois corporation, Mailbank Nova Scotia Co., a company
organized under the laws of Nova Scotia and Tucows Domain Holdings Co., a
company organized under the laws of Nova Scotia.

“Receivables” is defined in clause (b) of Section 2.1.

“Related Contracts” is defined in clause (b) of Section 2.1.

“Security Agreement” is defined in the preamble.

“Secured Party” is defined in the preamble.

“Specified Assets” shall mean the following property and assets of the Grantor:
(1) Equipment constituting fixtures; (2) uncertificated securities; (3)
Collateral for which the perfection of Liens thereon requires filings in or
other actions under the laws of

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jurisdictions outside the United States of America, any State, territory or
dependency thereof or the District of Columbia; (4) Receivables or Related
Contracts on which the United States of America or any department, agency or
instrumentality thereof is the obligor, and property or assets subject to any
rights reserved in favor of the United States government as required under law;
and (5) goods included in Collateral received by any Person for “sale or return”
within the meaning of Section 2-326 of the Uniform Commercial Code of the
applicable jurisdiction, to the extent of claims of creditors of such Person.

“Subsequent Filings”:  any filings after the date hereof in any jurisdiction as
may be necessary under any requirement of law to perfect a Lien on the
Collateral in favor of the Secured Party.

“U.C.C.” means the Uniform Commercial Code as in effect in the State of
Delaware, as it may be amended from time to time.

SECTION 1.2.                                   U.C.C. DEFINITIONS.  UNLESS
OTHERWISE DEFINED HEREIN OR THE CONTEXT OTHERWISE REQUIRES, TERMS FOR WHICH
MEANINGS ARE PROVIDED IN THE U.C.C. ARE USED IN THIS SECURITY AGREEMENT,
INCLUDING ITS PREAMBLE AND RECITALS, WITH SUCH MEANINGS.

ARTICLE II

SECURITY INTEREST

SECTION 2.1.                                   GRANT OF SECURITY.  THE GRANTOR
HEREBY PLEDGES TO THE SECURED PARTY, AND HEREBY GRANTS TO THE SECURED PARTY, ALL
OF THE GRANTOR’S RIGHT, TITLE AND INTEREST IN AND TO ALL PERSONAL AND REAL
PROPERTY OF THE GRANTOR OF WHATEVER TYPE OR DESCRIPTION, WHEREVER LOCATED,
WHETHER NOW OR HEREAFTER EXISTING OR ACQUIRED BY THE GRANTOR, INCLUDING, WITHOUT
LIMITATION, THE FOLLOWING (THE “COLLATERAL”):

(A)                                  ALL GOODS, INCLUDING (I) ALL EQUIPMENT IN
ALL OF ITS FORMS OF THE GRANTOR, WHEREVER LOCATED, INCLUDING ALL PARTS THEREOF
AND ALL ACCESSIONS, ADDITIONS, ATTACHMENTS, IMPROVEMENTS, SUBSTITUTIONS AND
REPLACEMENTS THERETO AND THEREFOR (ANY AND ALL OF THE FOREGOING BEING THE
“EQUIPMENT”) AND (II) ALL INVENTORY ALL OF ITS FORMS OF THE GRANTOR, WHEREVER
LOCATED, INCLUDING

(I)                                     ALL RAW MATERIALS AND WORK IN PROCESS
THEREFOR, FINISHED GOODS THEREOF, AND MATERIALS USED OR CONSUMED IN THE
MANUFACTURE OR PRODUCTION THEREOF,

(II)                                  ALL GOODS IN WHICH THE GRANTOR HAS AN
INTEREST IN MASS OR A JOINT OR OTHER INTEREST OR RIGHT OF ANY KIND (INCLUDING
GOODS IN WHICH THE GRANTOR HAS AN INTEREST OR RIGHT AS CONSIGNEE), AND

(III)                               ALL GOODS WHICH ARE RETURNED TO OR
REPOSSESSED BY THE GRANTOR,

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and all accessions thereto, products thereof and documents therefor (any and all
such inventory, materials, goods, accessions, products and documents being the
“Inventory”);

(B)                                 ALL ACCOUNTS (INCLUDING
HEALTH-CARE-INSURANCE RECEIVABLES), CONTRACTS, CONTRACT RIGHTS, CHATTEL PAPER
(WHETHER TANGIBLE OR ELECTRONIC), DOCUMENTS, INSTRUMENTS AND GENERAL INTANGIBLES
(INCLUDING PAYMENT INTANGIBLES AND SOFTWARE), RENTAL AGREEMENT, OR ANY PART
THEREOF, INCLUDING, BUT NOT LIMITED TO GRANTOR’S RIGHT TO RECEIVE, EITHER
DIRECTLY OR INDIRECTLY, FROM ANY PERSON, ANY RENTS OR OTHER PAYMENTS DUE AND
PAYABLE UNDER SUCH AGREEMENTS) OF THE GRANTOR, WHETHER OR NOT ARISING OUT OF OR
IN CONNECTION WITH THE SALE OR LEASE OF GOODS OR THE RENDERING OF SERVICES, AND
ALL RIGHTS OF THE GRANTOR NOW OR HEREAFTER EXISTING IN AND TO ALL SECURITY
AGREEMENTS, GUARANTIES, LEASES AND OTHER CONTRACTS SECURING OR OTHERWISE
RELATING TO ANY SUCH ACCOUNTS, CONTRACTS, CONTRACT RIGHTS, CHATTEL PAPER,
DOCUMENTS, INSTRUMENTS AND GENERAL INTANGIBLES (ANY AND ALL SUCH ACCOUNTS,
CONTRACTS, CONTRACT RIGHTS, CHATTEL PAPER, DOCUMENTS, INSTRUMENTS AND GENERAL
INTANGIBLES BEING THE “RECEIVABLES”, AND ANY AND ALL SUCH SECURITY AGREEMENTS,
GUARANTIES, LEASES AND OTHER CONTRACTS BEING THE “RELATED CONTRACTS”);

(C)                                  ALL BOOKS AND RECORDS RELATING TO, USED OR
USEFUL IN CONNECTION WITH, EVIDENCING, EMBODYING, INCORPORATING OR REFERRING TO,
ANY OF THE FOREGOING IN THIS SECTION 2.1;

(D)                                 ALL GENERAL INTANGIBLES;

(E)                                  ALL INVESTMENT PROPERTY; AND

(F)                                    ALL PRODUCTS, RENTS, ISSUES, PROFITS,
RETURNS, INCOME AND PROCEEDS OF AND FROM ANY AND ALL OF THE FOREGOING COLLATERAL
(INCLUDING PROCEEDS WHICH CONSTITUTE PROPERTY OF THE TYPES DESCRIBED IN CLAUSES
(A), (B), (C), (D) AND (E).

Notwithstanding anything herein to the contrary, the Collateral shall exclude
(i) the Grantor’s rights under contracts and agreements which by their terms
prohibit the granting of a security interest therein or assignment thereof
(except to the extent such prohibitions are ineffective under Sections 9-406,
9-407, 9-408 and 9-409 of the U.C.C. or other applicable law) and (ii) Equipment
which is the subject of a capitalized lease or purchase money financing.

SECTION 2.2.                                   SECURITY FOR OBLIGATIONS.  THE
SECURITY INTERESTS GRANTED HEREIN SECURE THE PAYMENT OF ALL OBLIGATIONS NOW OR
HEREAFTER EXISTING UNDER THE BMO LOAN AGREEMENT (THE “OBLIGATIONS”), WHETHER FOR
PRINCIPAL, INTEREST, REIMBURSEMENT OBLIGATIONS WITH RESPECT TO LETTERS OF
CREDIT, COSTS, FEES, EXPENSES, INDEMNITIES OR OTHERWISE.

SECTION 2.3.                                   CONTINUING SECURITY INTEREST;
TRANSFER OF LOAN.  THIS SECURITY AGREEMENT SHALL CREATE A SECURITY INTEREST IN
THE COLLATERAL AND SHALL:

(A)                                  REMAIN IN FULL FORCE AND EFFECT UNTIL THE
PAYMENT IN FULL OF ALL OBLIGATIONS (OTHER THAN CONTINGENT INDEMNIFICATION
OBLIGATIONS);

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(B)                                 BE BINDING UPON THE GRANTOR, ITS SUCCESSORS,
TRANSFEREES AND ASSIGNS; AND

(C)                                  INURE, TOGETHER WITH THE RIGHTS AND
REMEDIES OF THE SECURED PARTY HEREUNDER, TO THE BENEFIT OF THE SECURED PARTY.

Without limiting the generality of the foregoing clause (c), to the extent
permitted under the terms of the BMO Loan Agreement, the Secured Party may
assign or otherwise transfer (in whole or in part) its rights in the BMO Loan
Agreement to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the rights and benefits in respect thereof
granted to Secured Party under this Security Agreement.  Upon (i) the sale,
transfer or other disposition of Collateral in the ordinary course of business
(other than a sale of all or substantially all of the Collateral) or (ii) the
payment in full of all Obligations, the security interest granted herein shall
automatically terminate with respect to (x) such Collateral (in the case of
clause (i)) or (y) all Collateral (in the case of clause (ii)).  Upon any such
termination, the Secured Party will, at the Grantor’s sole expense, deliver any
Collateral (or portion thereof) to the extent held by the Secured Party
hereunder and to the extent the termination relates to such Collateral, and at
the Grantor’s sole expense execute and deliver to the Grantor such documents as
the Grantor shall reasonably request to evidence termination of the security
interest hereunder relating to such portion or all of the Collateral, as the
case may be.

SECTION 2.4.                                   GRANTOR REMAINS LIABLE.  ANYTHING
HEREIN TO THE CONTRARY NOTWITHSTANDING:

(A)                                  THE GRANTOR SHALL REMAIN LIABLE UNDER THE
CONTRACTS AND AGREEMENTS INCLUDED IN THE COLLATERAL TO THE EXTENT SET FORTH
THEREIN, AND SHALL PERFORM ALL OF ITS DUTIES AND OBLIGATIONS UNDER SUCH
CONTRACTS AND AGREEMENTS TO THE SAME EXTENT AS IF THIS SECURITY AGREEMENT HAD
NOT BEEN EXECUTED, UNLESS (I) SUCH PERFORMANCE IS EXCUSED BY BREACH OF THE OTHER
PARTY OR PARTIES THERETO OR (II) SUCH FAILURE TO PERFORM WOULD NOT OTHERWISE
CONSTITUTE AN EVENT OF DEFAULT;

(B)                                 THE EXERCISE BY THE SECURED PARTY OF ANY OF
ITS RIGHTS HEREUNDER SHALL NOT RELEASE THE GRANTOR FROM ANY OF ITS DUTIES OR
OBLIGATIONS UNDER ANY SUCH CONTRACTS OR AGREEMENTS INCLUDED IN THE COLLATERAL;

(C)                                  THE SECURED PARTY SHALL HAVE NO OBLIGATION
OR LIABILITY UNDER ANY SUCH CONTRACTS OR AGREEMENTS INCLUDED IN THE COLLATERAL
BY REASON OF THIS SECURITY AGREEMENT, NOR SHALL THE SECURED PARTY BE OBLIGATED
TO PERFORM ANY OF THE OBLIGATIONS OR DUTIES OF THE GRANTOR THEREUNDER OR TO TAKE
ANY ACTION TO COLLECT OR ENFORCE ANY CLAIM FOR PAYMENT ASSIGNED HEREUNDER, NOR
SHALL THE SECURED PARTY HAVE ANY OBLIGATION TO PRESERVE RIGHTS AGAINST PRIOR
PARTIES WITH RESPECT TO ANY PART OF THE COLLATERAL; AND

(D)                                 EXCEPT FOR REASONABLE CARE OF ANY COLLATERAL
IN ITS POSSESSION AND THE ACCOUNTING FOR MONEYS ACTUALLY RECEIVED BY IT
HEREUNDER, THE SECURED PARTY SHALL HAVE NO DUTY AS TO ANY COLLATERAL OR
RESPONSIBILITY FOR (A) ASCERTAINING OR TAKING ACTION WITH RESPECT TO CALLS,
CONVERSIONS, EXCHANGES, MATURITIES, TENDERS OR

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OTHER MATTERS RELATIVE TO ANY COLLATERAL, WHETHER OR NOT THE SECURED PARTY HAS
OR IS DEEMED TO HAVE KNOWLEDGE OF SUCH MATTERS, (B) TAKING ANY NECESSARY STEPS
TO PRESERVE RIGHTS AGAINST PRIOR PARTIES OR ANY OTHER RIGHTS PERTAINING TO ANY
COLLATERAL OR (C) EXERCISING ANY RIGHTS TO CLOSE OUT ANY OPTION OR EXERCISING
ANY PUT OPTION RELATIVE TO ANY COLLATERAL, WHETHER OR NOT THE SECURED PARTY HAS
OR IS DEEMED TO HAVE KNOWLEDGE OF IT AND REGARDLESS OF ANY EXPIRATION OR
TERMINATION DATE.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

SECTION 3.1.                                   REPRESENTATIONS AND WARRANTIES. 
THE GRANTOR REPRESENTS AND WARRANTS UNTO EACH LENDER PARTY AS SET FORTH IN THIS
ARTICLE.

SECTION 3.1.1.                          LOCATION OF COLLATERAL, ETC.  THE
PLACE(S) OF BUSINESS AND CHIEF EXECUTIVE OFFICE OF THE GRANTOR AND THE OFFICE(S)
WHERE THE GRANTOR KEEPS ITS RECORDS CONCERNING THE RECEIVABLES, ARE LOCATED AT
THE ADDRESSES AS SET FORTH IN ITEM A OF SCHEDULE I HERETO, AND AT SUCH OTHER
LOCATIONS AS ARE NOTIFIED TO THE SECURED PARTY PURSUANT TO CLAUSE (A) OF SECTION
4.1.2.

SECTION 3.1.2.                          VALIDITY, ETC.

(A)                                  THIS SECURITY AGREEMENT IS EFFECTIVE TO
CREATE, AS COLLATERAL SECURITY FOR THE OBLIGATIONS OF THE GRANTOR, VALID AND
ENFORCEABLE LIENS ON THE COLLATERAL IN FAVOR OF THE SECURED PARTY, EXCEPT AS
ENFORCEABILITY MAY BE AFFECTED BY BANKRUPTCY, INSOLVENCY, FRAUDULENT CONVEYANCE,
REORGANIZATION, MORATORIUM AND OTHER SIMILAR LAWS RELATING TO OR AFFECTING
CREDITOR’S RIGHTS GENERALLY, GENERAL EQUITABLE PRINCIPLES (WHETHER CONSIDERED IN
A PROCEEDING IN EQUITY OR AT LAW) AND AN IMPLIED COVENANT OF GOOD FAITH AND FAIR
DEALING.

(B)                                 EXCEPT WITH REGARD TO LIENS (IF ANY) ON
SPECIFIED ASSETS, UPON THE COMPLETION OF THE FILINGS (WITH RESPECT TO COLLATERAL
EXISTING ON THE EFFECTIVE DATE) AND SUBSEQUENT FILINGS (WITH RESPECT TO
COLLATERAL ACQUIRED FOLLOWING THE EFFECTIVE DATE FOR WHICH THE FILINGS ARE NOT
EFFECTIVE TO PERFECT THE LIEN ON SUCH AFTER-ACQUIRED COLLATERAL), THE LIENS
CREATED PURSUANT TO THIS SECURITY AGREEMENT WILL CONSTITUTE VALID LIENS ON AND
(TO THE EXTENT PROVIDED HEREIN) PERFECTED SECURITY INTERESTS IN THE COLLATERAL
IN FAVOR OF THE SECURED PARTY, AND WILL BE PRIOR TO ALL OTHER LIENS OF ALL OTHER
PERSONS, EXCEPT (I) TO THE EXTENT THAT THE RECORDING OF AN ASSIGNMENT OR OTHER
TRANSFER OF TITLE TO THE SECURED PARTY, OR THE RECORDING OF OTHER APPLICABLE
DOCUMENTS IN THE UNITED STATES PATENT AND TRADEMARK OFFICE OR UNITED STATES
COPYRIGHT OFFICE MAY BE NECESSARY FOR PERFECTION OR ENFORCEABILITY, AND (II) AS
ENFORCEABILITY MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM OR SIMILAR LAWS AFFECTING THE ENFORCEMENT OF
CREDITORS’ RIGHTS GENERALLY AND BY GENERAL EQUITABLE PRINCIPLES (WHETHER
ENFORCEMENT IS SOUGHT BY PROCEEDINGS IN EQUITY OR AT LAW) OR BY AN IMPLIED
COVENANT OF GOOD FAITH AND FAIR DEALING.  NOTWITHSTANDING THE FOREGOING, THE
REPRESENTATION SET FORTH ABOVE SHALL BE DEEMED TRUE AND CORRECT FOR ALL PURPOSES
SO LONG AS THE GRANTOR HAS

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COMPLIED WITH ITS COVENANTS SET FORTH UNDER SECTION 4.1.1, CLAUSE (A) OF SECTION
4.1.2, AND SECTION 4.1.4 OF THIS SECURITY AGREEMENT, INCLUDING THE DELIVERY TO
THE SECURED PARTY OF EXECUTED FINANCING STATEMENTS FOR SUBSEQUENT FILINGS,
WHETHER OR NOT THE SECURED PARTY HAS CAUSED SUCH FINANCING STATEMENTS TO BE
FILED IN THE APPLICABLE FILING OFFICES.  TO THE EXTENT PERMITTED AT ANY TIME BY
THE U.C.C., THE GRANTOR HEREBY IRREVOCABLY AUTHORIZES THE SECURED PARTY TO
SUPPLEMENT THIS SECURITY AGREEMENT WITH A MORE ITEMIZED LIST OF COLLATERAL AND
COMPLETE AND FILE ON BEHALF OF THE GRANTOR U.C.C. FINANCING STATEMENTS OR
SIMILAR DOCUMENTS NECESSARY IN THE GOOD FAITH JUDGMENT OF THE SECURED PARTY TO
PERFECT THE SECURITY INTERESTS PURPORTED TO BE CREATED HEREBY.

ARTICLE IV

COVENANTS

SECTION 4.1.                                   CERTAIN COVENANTS.  THE GRANTOR
COVENANTS AND AGREES THAT, SO LONG AS ANY PORTION OF THE OBLIGATIONS SHALL
REMAIN UNPAID, THE GRANTOR WILL PERFORM THE OBLIGATIONS SET FORTH IN THIS
ARTICLE IV.

SECTION 4.1.1.                          AS TO EQUIPMENT AND INVENTORY.  THE
GRANTOR HEREBY AGREES THAT IT SHALL KEEP ALL EQUIPMENT AND INVENTORY (EXCEPT FOR
THE OBSOLETE EQUIPMENT AND INVENTORY SOLD OR OTHERWISE DISPOSED OF, INVENTORY IN
TRANSIT, EQUIPMENT SENT TO THIRD PARTIES FOR REPAIR AND MOBILE ITEMS) AT THE
PLACES THEREFOR SPECIFIED IN SECTION 3.1.1 OR AT SUCH OTHER PLACES IN A
JURISDICTION WHERE ALL REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE III
(INCLUDING SECTION 3.1.3) SHALL BE TRUE AND CORRECT.

SECTION 4.1.2.                          AS TO RECEIVABLES.

(A)                                  THE GRANTOR SHALL GIVE THE SECURED PARTY A
SUPPLEMENT TO SCHEDULE I AT THE END OF EACH QUARTER, WHICH SHALL SET FORTH ANY
CHANGES AS OF SUCH DATE TO THE INFORMATION SET FORTH IN SECTION 3.1.L, CLAUSE
(B) OF SECTION 4.1.2 OR SCHEDULE I.  THE GRANTOR SHALL BE ENTITLED TO DELIVER
SUCH A SUPPLEMENT AT OTHER TIMES IN ADDITION TO THE TIMES SET FORTH IN THE
PRECEDING SENTENCE.

(B)                                 THE GRANTOR SHALL KEEP ITS PLACE(S) OF
BUSINESS AND CHIEF EXECUTIVE OFFICE AND THE OFFICE(S) WHERE IT KEEPS ITS RECORDS
CONCERNING THE RECEIVABLES LOCATED AT THE ADDRESSES SET FORTH IN ITEM B OF
SCHEDULE I HERETO, AND SHALL NOT CHANGE ITS LEGAL NAME AFTER THE DATE HEREOF
EXCEPT UPON 30 DAYS’ PRIOR WRITTEN NOTICE TO THE SECURED PARTY.

SECTION 4.1.3.                          FURTHER ASSURANCES, ETC.  THE GRANTOR
AGREES THAT, FROM TIME TO TIME AT ITS OWN EXPENSE, THE GRANTOR WILL PROMPTLY
EXECUTE AND DELIVER ALL FURTHER INSTRUMENTS AND DOCUMENTS, AND TAKE ALL FURTHER
ACTION, THAT MAY BE NECESSARY OR THAT THE SECURED PARTY MAY REASONABLY REQUEST,
IN ORDER TO PERFECT, PRESERVE AND PROTECT ANY SECURITY INTEREST GRANTED OR
PURPORTED TO BE GRANTED HEREBY IN COLLATERAL LOCATED IN THE UNITED STATES OR TO
ENABLE THE SECURED PARTY TO EXERCISE AND ENFORCE ITS RIGHTS AND REMEDIES
HEREUNDER WITH RESPECT TO ANY COLLATERAL.

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(A)                                  WITH RESPECT TO THE FOREGOING AND THE GRANT
OF THE SECURITY INTEREST HEREUNDER, THE GRANTOR HEREBY AUTHORIZES THE SECURED
PARTY TO FILE ONE OR MORE FINANCING OR CONTINUATION STATEMENTS, AND AMENDMENTS
THERETO, RELATIVE TO ALL OR ANY PART OF THE COLLATERAL WITHOUT THE SIGNATURE OF
THE GRANTOR WHERE PERMITTED BY LAW.  A CARBON, PHOTOGRAPHIC OR OTHER
REPRODUCTION OF THIS SECURITY AGREEMENT OR ANY FINANCING STATEMENT COVERING THE
COLLATERAL OR ANY PART THEREOF SHALL BE SUFFICIENT AS A FINANCING STATEMENT
WHERE PERMITTED BY LAW.

(B)                                 THE SECURED PARTY MAY AT ANY TIME AND FROM
TIME TO TIME FILE FINANCING STATEMENTS AND AMENDMENTS THERETO THAT DESCRIBE THE
COLLATERAL AS ALL ASSETS OF ANY GRANTOR OR WORDS OF SIMILAR EFFECT AND WHICH
CONTAIN ANY OTHER INFORMATION REQUIRED BY PART 5 OF ARTICLE 9 OF THE U.C.C. FOR
THE SUFFICIENCY OR FILING OFFICE ACCEPTANCE OF ANY FINANCING STATEMENT OR
AMENDMENT, INCLUDING WHETHER SUCH GRANTOR IS AN ORGANIZATION, THE TYPE OF
ORGANIZATION AND ANY ORGANIZATION IDENTIFICATION NUMBER ISSUED TO SUCH GRANTOR. 
EACH GRANTOR AGREES TO FURNISH SUCH INFORMATION TO THE SECURED PARTY PROMPTLY
UPON REQUEST THEREFOR.

ARTICLE V

THE SECURED PARTY

SECTION 5.1.                                   SECURED PARTY APPOINTED
ATTORNEY-IN-FACT.  THE GRANTOR HEREBY IRREVOCABLY APPOINTS THE SECURED PARTY THE
GRANTOR’S ATTORNEY-IN-FACT, WITH FULL AUTHORITY IN THE PLACE AND STEAD OF THE
GRANTOR AND IN THE NAME OF THE GRANTOR OR OTHERWISE, FROM TIME TO TIME IN THE
SECURED PARTY’S DISCRETION FOLLOWING A DEMAND UNDER THE BMO LOAN AGREEMENT AND
NOTICE TO THE GRANTOR, TO TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT WHICH
THE SECURED PARTY MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF
THIS SECURITY AGREEMENT, INCLUDING, WITHOUT LIMITATION:

(A)                                  TO ASK, DEMAND, COLLECT, SUE FOR, RECOVER,
COMPROMISE, RECEIVE AND GIVE ACQUITTANCE AND RECEIPTS FOR MONEYS DUE AND TO
BECOME DUE UNDER OR IN RESPECT OF ANY OF THE COLLATERAL;

(B)                                 TO RECEIVE, ENDORSE, AND COLLECT ANY DRAFTS
OR OTHER INSTRUMENTS, DOCUMENTS IN CONNECTION WITH CLAUSE (A) ABOVE; AND

(C)                                  TO FILE ANY CLAIMS OR TAKE ANY ACTION OR
INSTITUTE ANY PROCEEDINGS WHICH THE SECURED PARTY MAY DEEM NECESSARY OR
DESIRABLE FOR THE COLLECTION OF ANY OF THE COLLATERAL OR OTHERWISE TO ENFORCE
THE RIGHTS OF THE SECURED PARTY WITH RESPECT TO ANY OF THE COLLATERAL.

The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest;
provided, however, that the foregoing power of attorney shall terminate upon the
payment in full of all Obligations.

SECTION 5.2.                                   SECURED PARTY MAY PERFORM.  IF
THE GRANTOR FAILS TO PERFORM ANY AGREEMENT CONTAINED HEREIN WITHIN 30 DAYS AFTER
WRITTEN NOTICE FROM THE SECURED PARTY, THE SECURED PARTY MAY ITSELF PERFORM, OR
CAUSE PERFORMANCE OF, SUCH AGREEMENT, AND THE EXPENSES OF

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THE SECURED PARTY INCURRED IN CONNECTION THEREWITH SHALL BE PAYABLE BY THE
GRANTOR PURSUANT TO SECTION 6.2.

SECTION 5.3.                                   SECURED PARTY HAS NO DUTY.  IN
ADDITION TO, AND NOT IN LIMITATION OF, SECTION 2.4, THE POWERS CONFERRED ON THE
SECURED PARTY HEREUNDER ARE SOLELY TO PROTECT ITS INTEREST IN THE COLLATERAL AND
SHALL NOT IMPOSE ANY DUTY ON IT TO EXERCISE ANY SUCH POWERS.  EXCEPT FOR
REASONABLE CARE OF ANY COLLATERAL IN ITS POSSESSION AND THE ACCOUNTING FOR
MONEYS ACTUALLY RECEIVED BY IT HEREUNDER, THE SECURED PARTY SHALL HAVE NO DUTY
AS TO ANY COLLATERAL OR AS TO THE TAKING OF ANY NECESSARY STEPS TO PRESERVE
RIGHTS AGAINST PRIOR PARTIES OR ANY OTHER RIGHTS PERTAINING TO ANY COLLATERAL.

SECTION 5.4.                                   REASONABLE CARE.  THE SECURED
PARTY IS REQUIRED TO EXERCISE REASONABLE CARE IN THE CUSTODY AND PRESERVATION OF
ANY OF THE COLLATERAL IN ITS POSSESSION; PROVIDED, HOWEVER, THAT THE SECURED
PARTY SHALL BE DEEMED TO HAVE EXERCISED REASONABLE CARE IN THE CUSTODY AND
PRESERVATION OF ANY OF THE COLLATERAL, IF IT TAKES SUCH ACTION FOR THAT PURPOSE
AS THE GRANTOR REASONABLY REQUESTS IN WRITING AT TIMES OTHER THAN UPON A DEMAND
FOR REPAYMENT OF ALL THE OBLIGATIONS, BUT FAILURE OF THE SECURED PARTY TO COMPLY
WITH ANY SUCH REQUEST AT ANY TIME SHALL NOT IN ITSELF BE DEEMED A FAILURE TO
EXERCISE REASONABLE CARE.  IN NO EVENT SHALL THE SECURED PARTY HAVE ANY
OBLIGATION TO PRESERVE RIGHTS AGAINST PRIOR PARTIES WITH RESPECT TO ANY OF THE
COLLATERAL.

ARTICLE VI

REMEDIES

SECTION 6.1.                                   CERTAIN REMEDIES.  IF A DEMAND
FOR REPAYMENT OF ALL OF THE OBLIGATIONS HAS BEEN MADE, AND SUCH PAYMENT HAS NOT
BEEN MADE:

(A)                                  THE SECURED PARTY MAY EXERCISE IN RESPECT
OF THE COLLATERAL, IN ADDITION TO OTHER RIGHTS AND REMEDIES PROVIDED FOR HEREIN
OR OTHERWISE AVAILABLE TO IT, ALL THE RIGHTS AND REMEDIES OF A SECURED PARTY ON
DEFAULT UNDER THE U.C.C. (WHETHER OR NOT THE U.C.C. APPLIES TO THE AFFECTED
COLLATERAL) AND ALSO MAY:

(I)                                     REQUIRE THE GRANTOR TO, AND THE GRANTOR
HEREBY AGREES THAT IT WILL, AT ITS EXPENSE AND UPON REQUEST OF THE SECURED PARTY
FORTHWITH, ASSEMBLE ALL OR PART OF THE COLLATERAL AS DIRECTED BY THE SECURED
PARTY AND MAKE IT AVAILABLE TO THE SECURED PARTY AT A PLACE TO BE DESIGNATED BY
THE SECURED PARTY WHICH IS REASONABLY CONVENIENT TO BOTH PARTIES; AND

(II)                                  WITHOUT NOTICE EXCEPT AS SPECIFIED BELOW,
SELL THE COLLATERAL OR ANY PART THEREOF IN ONE OR MORE PARCELS AT PUBLIC OR
PRIVATE SALE, AT ANY OF THE SECURED PARTY’S OFFICES OR ELSEWHERE, FOR CASH, ON
CREDIT OR FOR FUTURE DELIVERY, AND UPON SUCH OTHER TERMS AS THE SECURED PARTY
MAY DEEM COMMERCIALLY REASONABLE.  THE GRANTOR AGREES THAT, TO THE EXTENT NOTICE
OF SALE SHALL BE REQUIRED BY LAW, AT LEAST TEN DAYS’ PRIOR NOTICE TO THE GRANTOR
OF THE TIME AND PLACE OF ANY PUBLIC SALE OR THE TIME AFTER WHICH ANY PRIVATE
SALE IS TO BE MADE SHALL CONSTITUTE REASONABLE NOTIFICATION.  THE SECURED

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PARTY SHALL NOT BE OBLIGATED TO MAKE ANY SALE OF COLLATERAL REGARDLESS OF NOTICE
OF SALE HAVING BEEN GIVEN.  THE SECURED PARTY MAY ADJOURN ANY PUBLIC OR PRIVATE
SALE FROM TIME TO TIME BY ANNOUNCEMENT AT THE TIME AND PLACE FIXED THEREFOR, AND
SUCH SALE MAY, WITHOUT FURTHER NOTICE, BE MADE AT THE TIME AND PLACE TO WHICH IT
WAS SO ADJOURNED;

(B)                                 ALL CASH PROCEEDS RECEIVED BY THE SECURED
PARTY IN RESPECT OF ANY SALE OF, COLLECTION FROM OR OTHER REALIZATION UPON ALL
OR ANY PART OF THE COLLATERAL MAY, IN THE DISCRETION OF THE SECURED PARTY, BE
HELD BY THE SECURED PARTY AS COLLATERAL FOR, AND/OR THEN OR AT ANY TIME
THEREAFTER APPLIED AGAINST, ALL OR ANY PART OF THE OBLIGATIONS AS FOLLOWS:  (I)
FIRST, TO THE REASONABLE OUT-OF-POCKET COSTS AND EXPENSES OF THE SECURED PARTY
IN CONNECTION WITH THE RETAKING, HOLDING, PREPARING FOR SALE, SELLING OR OTHER
DISPOSITION OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ALL COURT COSTS
AND THE REASONABLE FEES AND EXPENSES OF ITS AGENTS AND LEGAL COUNSEL; (II)
SECOND, TO THE PAYMENT IN FULL OF THE OBLIGATIONS; AND (II) THIRD, TO THE
GRANTOR, OR ITS SUCCESSORS AND ASSIGNS, OR WHOMEVER MAY BE LAWFULLY ENTITLED TO
RECEIVE THE SAME, OF ANY SURPLUS THEN REMAINING.

SECTION 6.2.                                   INDEMNITY AND EXPENSES.

(A)                                  THE GRANTOR AGREES TO INDEMNIFY THE SECURED
PARTY FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES AND LIABILITIES ARISING OUT OF
OR RESULTING FROM THIS SECURITY AGREEMENT (INCLUDING, WITHOUT LIMITATION,
ENFORCEMENT OF THIS SECURITY AGREEMENT), EXCEPT CLAIMS, LOSSES OR LIABILITIES
RESULTING FROM THE SECURED PARTY’S GROSS NEGLIGENCE, BAD FAITH OR WILLFUL
MISCONDUCT.

(B)                                 THE GRANTOR WILL UPON DEMAND PAY TO THE
SECURED PARTY THE AMOUNT OF ANY AND ALL REASONABLE EXPENSES, INCLUDING THE
REASONABLE FEES AND DISBURSEMENTS OF ITS COUNSEL (BUT NOT MORE THAN ONE FIRM AND
ALL LOCAL OR SPECIAL EXPERT COUNSEL, IF ANY, WHO MAY BE RETAINED BY COUNSEL TO
THE SECURED PARTY) AND OF ANY EXPERTS AND AGENTS, WHICH THE SECURED PARTY MAY
INCUR IN CONNECTION WITH:

(I)                                     THE ADMINISTRATION OF THIS SECURITY
AGREEMENT;

(II)                                  THE CUSTODY, PRESERVATION, USE OR
OPERATION OF, OR THE SALE OF, COLLECTION FROM, OR OTHER REALIZATION UPON, ANY OF
THE COLLATERAL;

(III)                               THE EXERCISE OR ENFORCEMENT OF ANY OF THE
RIGHTS OF THE SECURED PARTY HEREUNDER; OR

(IV)                              THE FAILURE BY THE GRANTOR TO PERFORM OR
OBSERVE ANY OF THE PROVISIONS HEREOF.

10

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ARTICLE VII

MISCELLANEOUS PROVISIONS

SECTION 7.1.                                   AMENDMENTS; ETC.  NO AMENDMENT TO
OR WAIVER OF ANY PROVISION OF THIS SECURITY AGREEMENT NOR CONSENT TO ANY
DEPARTURE BY THE GRANTOR HEREFROM, SHALL IN ANY EVENT BE EFFECTIVE UNLESS THE
SAME SHALL BE IN WRITING AND SIGNED BY THE SECURED PARTY AND THEN SUCH WAIVER OR
CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC
PURPOSE FOR WHICH GIVEN.

SECTION 7.2.                                   ADDRESSES FOR NOTICES.  ALL
NOTICES AND OTHER COMMUNICATIONS PROVIDED TO THE GRANTOR UNDER THIS SECURITY
AGREEMENT SHALL BE IN WRITING OR BY FACSIMILE AND ADDRESSED, DELIVERED OR
TRANSMITTED TO THE GRANTOR AT ITS ADDRESS OR FACSIMILE NUMBER AS SET FORTH IN
THE BMO LOAN AGREEMENT, OR AT SUCH OTHER ADDRESS OR FACSIMILE NUMBER AS MAY BE
DESIGNATED BY THE GRANTOR IN A NOTICE TO THE OTHER PARTIES.  ANY NOTICE, IF
MAILED AND PROPERLY ADDRESSED WITH POSTAGE PREPAID OR IF PROPERLY ADDRESSED AND
SENT BY PRE-PAID COURIER SERVICE, SHALL BE DEEMED GIVEN WHEN RECEIVED.  ANY
NOTICE, IF TRANSMITTED BY FACSIMILE, SHALL BE DEEMED GIVEN WHEN TRANSMITTED.

SECTION 7.3.                                   SECTION CAPTIONS.  SECTION
CAPTIONS USED IN THIS SECURITY AGREEMENT ARE FOR CONVENIENCE OF REFERENCE ONLY,
AND SHALL NOT AFFECT THE CONSTRUCTION OF THIS SECURITY AGREEMENT.

SECTION 7.4.                                   SEVERABILITY.  WHEREVER POSSIBLE
EACH PROVISION OF THIS SECURITY AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS
TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS
SECURITY AGREEMENT SHALL BE PROHIBITED BY OR INVALID UNDER SUCH LAW, SUCH
PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY,
WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS
OF THIS SECURITY AGREEMENT.

SECTION 7.5.                                   GOVERNING LAW, ENTIRE AGREEMENT,
ETC.  THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE COMMONWEALTH OF PENNSYLVANIA.  THIS SECURITY
AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

SECTION 7.6.                                   COUNTERPARTS.  THIS SECURITY
AGREEMENT MAY BE EXECUTED BY THE PARTIES HERETO IN ANY NUMBER OF COUNTERPARTS,
EACH OF WHICH SHALL BE DEEMED AN ORIGINAL AND ALL OF WHICH SHALL CONSTITUTE
TOGETHER BUT ONE AND THE SAME AGREEMENT.

11

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IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

TUCOWS INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Elliot Noss

 

Name:

 

Elliot Noss

 

Title:

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

BANK OF MONTREAL

 

 

 

 

 

 

 

 

 

By:

/s/ Neil dobbie

 

Name:

Neil Dobbie

 

Title:

Commercial Account Manager

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Schedule I

Locations

 

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