Document:

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                                                                    EXHIBIT 4.37

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO TIDEL TECHNOLOGIES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

                                                                        $100,000

                              CONVERTIBLE TERM NOTE

                                NOVEMBER 25, 2003

      FOR VALUE RECEIVED, TIDEL TECHNOLOGIES, INC., a Delaware corporation (the
"BORROWER"), hereby promises to pay to Laidlaw Southwest, LLC, a Texas limited
liability company with an address at 2900 Wilcrest, Ste. 205, Houston, Texas
77042 (the "HOLDER") or its registered assigns or successors in interest, on
order, the aggregate principal sum of ONE HUNDRED THOUSAND DOLLARS ($100,000),
or such lesser amount as shall equal the outstanding principal amount hereof
(the "PRINCIPAL AMOUNT"), together with any accrued and unpaid interest hereon,
on November 24, 2004 (the "MATURITY DATE") if not sooner paid.

      Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof between the Borrower and Laurus Master Fund, Ltd., c/o Ironshore
Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church
Street, Grand Cayman, Cayman Islands, Fax: 345-949-9877 (the "PURCHASE
AGREEMENT").

      The following terms shall apply to this Note:

                                   ARTICLE I
                                    INTEREST

      1.1. Interest Rate and Payment. Subject to Section 5.1 hereof, interest
payable on the unpaid principal balance of this Note shall accrue at a rate per
annum (the "CONTRACT RATE") equal to the "prime rate" published in The Wall
Street Journal from time to time, plus two percent (2%), computed on the basis
of the actual number of days elapsed and a year of 360 days. Interest shall be
payable on the Maturity Date, whether by acceleration or otherwise. The prime
rate shall be increased or decreased as the case may be for each increase or
decrease in the prime rate in an amount equal to such increase or decrease in
the prime rate; each change to be effective as of the day of the change in such
rate. In no event shall the Contract Rate be less than six percent (6.00%).

      1.2. Mandatory Prepayment. Upon receipt by the Borrower of $1,800,000 or
more in the aggregate in additional funds from a financing as contemplated
pursuant to Section 6.15 of

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the Purchase Agreement prior to December 1, 2004, the Borrower shall make a
mandatory prepayment of the entire outstanding Principal Amount and all accrued
and unpaid interest thereon and obligations relating thereto; provided, however,
that the Borrower shall not have to pay any premium, as set forth in Section
2.1, at the time of such mandatory prepayment.

                                   ARTICLE II
                            BORROWER PAYMENT OPTIONS

      2.1. Optional Redemption in Cash. Subject to satisfaction of the
Prepayment Conditions (as hereafter defined) and Section 2.2 hereof, the
Borrower will have the option of prepaying this Note in full ("OPTIONAL
REDEMPTION") by paying to the Holder a sum of money equal to one hundred and one
percent (101%) of the principal amount outstanding at such time of this Note
together with accrued but unpaid interest thereon and any and all other sums
due, accrued or payable to the Holder arising under this Note or the Purchase
Agreement or any Related Document (as defined in the Purchase Agreement) (the
"REDEMPTION AMOUNT") outstanding on the day written notice of redemption (the
"NOTICE OF REDEMPTION") is given to the Holder, which Notice of Redemption shall
specify the date for such Optional Redemption (the "REDEMPTION PAYMENT DATE"). A
Notice of Redemption shall not be effective with respect to any portion of this
Note for which the Holder has a pending election to convert pursuant to Section
3.1 and the Redemption Amount shall be determined as if such election to convert
had been completed immediately prior to the date of the Notice of Redemption.
The Redemption Payment Date shall not be earlier than the day after the date of
the Notice of Redemption and not later than seven (7) days after the date of the
Notice of Redemption. On the Redemption Payment Date, the Redemption Amount must
be paid in immediately available funds to the Holder. In the event the Borrower
fails to pay the Redemption Amount by the Redemption Payment Date, then such
Redemption Notice will be null and void. For purposes hereof, the term
"PREPAYMENT CONDITIONS" means satisfaction of each of the following: (a) the
average closing bid price of the Common Stock on the Principal Market (as
hereafter defined) during the twenty (20) consecutive trading days immediately
prior to the Redemption Payment Date shall exceed an amount equal to three (3)
times the Fixed Conversion Price (as hereafter defined), (b) the market price of
the Common Stock on the Principal Market (as hereafter defined) on the
Redemption Payment Date shall be supported by a price-to-earnings ratio with
respect to the Common Stock and the Borrower, respectively, of not greater than
twenty (20) times fully diluted earnings per share of the Common Stock,
excluding extraordinary gains, (c) the average daily trading volume of the
Common Stock for a period of twenty (20) consecutive trading days immediately
prior to the Redemption Payment Date shall not be less than 100,000 shares, (d)
the conditions set forth in 2.3(i) and 2.3(ii) hereof shall have been satisfied,
and (e) the Holder shall have determined that no shareholder derivative lawsuits
are then outstanding against the Borrower. For purposes hereof, the "FIXED
CONVERSION PRICE" means $0.40, subject to adjustment in accordance with the
terms of this Note. The Fixed Conversion Price shall also be adjusted downward
immediately following the occurrence of a Specified Event (as defined below) to
an amount equal to the lesser of (1) $0.40 or (2) the volume weighted average
closing prices for the Common Stock on the Principal Exchange, or on any
securities exchange or other securities market on which the Common Stock is then
being listed or traded, for the ten (10) trading days immediately following the
Borrower's public press release of its 2004 fiscal year results of operations.
For purposes hereof, the term "SPECIFIED EVENT" means the occurrence of the
following: (1) the Borrower's failure to attain earnings before interest, taxes,
depreciation

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and amortization for the Borrower's fiscal year ended September 30, 2004 of more
than $2,000,000 and (2) at the time of the aforementioned press release, the
market price of Borrower's Common Stock shall be less than $0.40.

      2.2. Occurrence of a Fundamental Event.

      (a) "FUNDAMENTAL EVENT" shall be deemed to have occurred if, within 90
days of the Redemption Payment Date, the Company announces any of the following
transaction(s) (each, a "TRANSACTION") and all components of such Transaction
are consummated within two hundred seventy (270) days of such announcement:

      (i) its intention to merge or consolidate, or effect any merger or
consolidation of, the Company with or into another entity;

      (ii) its intention to effect any sale of all or substantially all of its
assets in one or a series of related transactions;

      (iii) its intention to effect any tender offer or exchange offer (whether
by the Company or another entity) pursuant to which holders of Common Stock are
permitted to tender their shares for other securities, cash or property; or

      (iv) its intention to effect any reclassification of the Common Stock or
any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property.

      (b) If a Fundamental Event occurs, then the Company shall pay to the
Holder, simultaneously with the closing of the Transaction to which such
Fundamental Event relates, an amount equal to the Fundamental Event Payment (as
defined below), calculated as follows:

      (i) The "FUNDAMENTAL EVENT PAYMENT" shall be equal to (i) the Per Share
Consideration, multiplied by the Holder Share Amount, minus (ii) the Redemption
Amount.

      (ii) The "PER SHARE CONSIDERATION" shall be the quotient of:

           (A) The Consideration; divided by

           (B) The number of shares of Common Stock outstanding immediately
prior to the consummation of the Transaction, plus the Holder Share Amount.

      (III) THE "CONSIDERATION" shall mean (i) if the consideration paid in the
Transaction is paid to the shareholders, the aggregate value of all such
payments received by the shareholders of the Borrower in the Transaction; (ii)
if the consideration paid in the Transaction is paid to the Borrower, the
aggregate value of all consideration received by the Borrower in the
Transaction. The value of any consideration not paid in cash shall be determined
by an independent valuation firm as appointed by the Holder in its reasonable
discretion.

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      (iv) The "HOLDER SHARE AMOUNT" shall mean (A) the principal and interest
outstanding under this Note on the Redemption Payment Date, divided by (B) the
Fixed Conversion Price as of the Redemption Payment Date.

      2.3. No Effective Registration. Notwithstanding anything to the contrary
herein, the Borrower shall not repay any part of its obligations to the Holder
hereunder if (i) there fails to exist an effective current Registration
Statement (as defined in the Registration Rights Agreement) covering the shares
of Common Stock to be issued in connection with such payment, or (ii) an Event
of Default hereunder exists and is continuing, unless such Event of Default is
cured within any applicable cure period or is otherwise waived in writing by the
Holder in whole or in part at the Holder's option.

                                  ARTICLE III
                                CONVERSION RIGHTS

      3.1. Holder's Conversion Rights. While any amounts are owed under this
Note, including accrued interest, the Holder shall have the right, but not the
obligation, to convert all or any portion of the then aggregate outstanding
principal amount of this Note, together with all accrued but unpaid interest and
fees due thereon, into shares of Common Stock subject to the terms and
conditions set forth in this Article III (a "CONVERSION"). The Holder may
exercise such right by delivery to the Borrower of a written, executed and
completed notice of conversion in the form of Exhibit A hereto (a "NOTICE OF
CONVERSION") not less than three (3) days prior to the date upon which such
conversion shall occur.

      3.2. Conversion Limitation. Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant to the terms
of this Note an amount that would be convertible into that number of Conversion
Shares (as hereafter defined) which would exceed the difference between the
number of shares of Common Stock beneficially owned by such Holder or issuable
upon exercise of warrants held by such Holder and 4.99% of the outstanding
shares of Common Stock of the Borrower. For the purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended and Regulation
13d-3 thereunder. The Holder may void the Conversion Share limitation described
in this Section 3.2 upon 75 days prior notice to the Borrower or without any
notice requirement upon an Event of Default. In addition, notwithstanding
anything contained herein to the contrary, unless an Event of Default shall then
exist, the Holder shall not be entitled to effect a Conversion and/or sell the
Common Stock pursuant to the terms of this Note during the period commencing on
December 23, 2003 and ending on December 31, 2003.

      3.3. Procedure for Conversion. (a) In the event that the Holder elects to
convert this Note into Common Stock, the Holder shall give notice of such
election by delivering a Notice of Conversion to the Borrower and such Notice of
Conversion shall provide a breakdown in reasonable detail of the Principal
Amount, accrued interest and fees being converted. On each Conversion Date (as
hereinafter defined) and in accordance with its Notice of Conversion, the Holder
shall make the appropriate reduction to the Principal Amount, accrued interest
and fees as entered in its records and shall provide written notice thereof to
the Borrower within two (2)

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business days after the Conversion Date. Each date on which a Notice of
Conversion is delivered or telecopied to the Borrower in accordance with the
provisions hereof shall be deemed a Conversion Date (the "CONVERSION DATE").

      (b) Pursuant to the terms of the Notice of Conversion, the Borrower shall
cause the transfer agent to transmit the certificates representing the
Conversion Shares to the Holder by crediting the account of the Holder's
designated broker with the Depository Trust Corporation ("DTC") through its
Deposit Withdrawal Agent Commission ("DWAC") system within three (3) business
days after receipt by the Borrower of the Notice of Conversion (the "DELIVERY
DATE"). To the extent the Borrower is not eligible to use the DWAC system, the
Borrower shall give instructions to the Borrower's transfer agent to deliver the
certificates representing the Conversion Shares to the Holder promptly, and in
no event later than the Delivery Date. In the case of the exercise of the
Conversion rights set forth herein the Conversion privilege shall be deemed to
have been exercised and the Conversion Shares issuable upon such Conversion
shall be deemed to have been issued upon the date of receipt by the Borrower of
the Notice of Conversion. The Holder shall be treated for all purposes as the
record holder of such Common Stock, unless the Holder provides the Borrower
written instructions to the contrary.

      3.4. Conversion Mechanics.

      (a) Except as otherwise provided herein, the number of shares of Common
Stock to be issued upon each Conversion of this Note shall be such whole number
of shares of Common Stock as is equal to the quotient of that portion of the
principal and interest and fees to be converted, if any, divided by the Fixed
Conversion Price, subject to adjustment as provided herein (such Common Stock,
the "CONVERSION SHARES").

      (b) Fractional Shares. No fractional shares of Conversion Shares shall be
issued upon any Conversion of this Note. In lieu of any fractional share to
which Holder would otherwise be entitled, the Borrower shall pay Holder cash
equal to the product of such fraction multiplied by the fair market value as of
the date of Conversion of a share of Conversion Shares, as determined in good
faith by the Board of Directors of the Borrower (the "BOARD").

      (c) Adjustment. The Fixed Conversion Price and number and kind of shares
or other securities to be issued upon conversion is subject to adjustment from
time to time upon the occurrence of certain events, as follows:

      (i) Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such reclassification or other
change.

      (ii) Stock Splits, Combinations and Dividends. If the shares of Common
Stock outstanding at any time after the date hereof are subdivided or combined
into a greater or smaller number of shares of Common Stock (other than a change
in par value, from par value to no par value or from no par value to par value),
or if a dividend is paid on the Common Stock in

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shares of Common Stock, the Fixed Conversion Price or the Conversion Price, as
the case may be, shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of combination
of shares, in each such case by the ratio which the total number of shares of
Common Stock outstanding immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such event.

      (iii) Share Issuances. If the Borrower shall at any time prior to the
conversion or repayment in full of the Principal Amount issue any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock ("EQUIVALENTS") to a person other than the Holder (except (A)
pursuant to Sections 3.4(c) (i) or (ii) hereof; or (B) pursuant to options,
warrants, or other obligations to issue shares outstanding on the date hereof as
set forth in the Schedules to the Purchase Agreement (the "NEW SHARES") for a
consideration per share or having an exercise, conversion or exchange price (the
"OFFER PRICE") less than the Fixed Conversion Price in effect at the time of
such issuance), then the Fixed Conversion Price shall be immediately reset to
such lower Offer Price. For purposes hereof, the issuance of any security of the
Borrower convertible into or exercisable or exchangeable for Common Stock shall
result in an adjustment to the Fixed Conversion Price only upon the conversion,
exercise or exchange of such securities.

            (A) In the case of the issuance of New Shares for a consideration in
whole or in part for cash, the consideration received by the Borrower upon such
issuance will be deemed to be the amount of cash paid therefor plus the value of
any property other than cash received by the Borrower, determined as provided in
subsection 3.4 (c) (iv)(B) hereof.

            (B) In the case of the issuance of New Shares for a consideration in
whole or in part in property other than cash, the value of such property other
than cash will be deemed to be the fair market value of such property as
determined in good faith by the Board, irrespective of any accounting treatment.

            (C) In the case of the issuance of Equivalents, the aggregate
maximum number of shares of New Stock deliverable upon exercise, exchange or
conversion, as the case may be, of such Equivalents will be deemed to have been
issued at the time such Equivalents were issued and for a consideration equal to
the consideration, if any, received by the Borrower upon the issuance of such
Equivalents plus the maximum purchase price provided in such Equivalents (the
consideration in each case to be determined in the manner provided in
subsections 3.4(c)(iv)(A) and 3.4(c)(iv)(B) hereof);

            (D) During the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note shall constitute full authority to its officers, agents,
and transfer agents who are charged with the duty of executing and issuing stock

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certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.

      3.5. Reorganizations, Consolidations, etc.

            In the event, at any time after the date hereof, of any capital
reorganization, or any reclassification of the capital stock of the Borrower
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Borrower with or into another person (other than a consolidation or merger in
which the Borrower is the continuing corporation and which does not result in
any change in the powers, designations, preferences and rights (or the
qualifications, limitations or restrictions, if any) of the capital stock of the
Borrower as amended from time to time) (any such transaction, an "EXTRAORDINARY
TRANSACTION"), then all of the amounts owed under this Note shall be exercisable
for the kind and number of shares of stock or other securities or property of
the Borrower, or of the corporation resulting from or surviving such
Extraordinary Transaction, that a holder of the number of shares of Conversion
Shares deliverable (immediately prior to the effectiveness of the Extraordinary
Transaction) upon conversion of the amounts owed under this Note would have been
entitled to receive upon such Extraordinary Transaction. The provisions of
Section 3.4(c)(iii) shall similarly apply to successive Extraordinary
Transactions. The provisions of this Section 3.5 shall not be deemed Holder's
consent to any transaction otherwise prohibited by the terms of the Purchase
Agreement or any Related Agreement (as defined in the Purchase Agreement).

                                   ARTICLE IV
                                EVENTS OF DEFAULT

      If an Event of Default (as defined below) occurs and is continuing, the
Borrower's rights under Section 2.1 shall immediately cease and be of no further
effect until such time as the Event of Default has been cured, or has been
waived by the Holder. Upon the occurrence and continuance of an Event of Default
beyond any applicable grace period, the Holder may make all sums of principal,
interest and other fees then remaining unpaid hereon and all other amounts
payable hereunder due and payable within five (5) days after written notice from
Holder to Borrower (each occurrence being a "DEFAULT NOTICE PERIOD"). If, with
respect to any Event of Default other than a payment default described in
Section 4.1 below, within the Default Notice Period the Borrower cures the Event
of Default in a manner acceptable to the Holder, the Event of Default will be
deemed to no longer exist and any rights and remedies of Holder pertaining to
such Event of Default will be of no further force or effect. After the
occurrence and during the continuance of an Event of Default which has not been
cured during any applicable grace period, the term "CONTRACT RATE" shall mean
the greater of (a) 18% per annum or (b) the per annum rate set forth in Section
1.1 hereof.

      The occurrence of any of the following events is an "EVENT OF DEFAULT":

      4.1. Failure to Pay Principal, Interest or other Fees. The Borrower fails
to pay when due any installment of principal, interest or other fees hereon in
accordance herewith, within the grace period set forth in Section 5.1 hereof or
the Borrower fails to pay when due any amount

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due under any other promissory note issued by the Borrower, within ten (10)
business days following the due date for such amount.

      4.2. Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of this Note, the Convertible Note (as defined in the
Purchase Agreement) or the Purchase Agreement in any material respect.

      4.3. Breach of Representations and Warranties. Any material representation
or warranty of the Borrower made herein, in the Purchase Agreement, or in any
Related Agreement (as defined in the Purchase Agreement) shall be materially
false or misleading and shall not be cured for a period of ten (10) days after
the occurrence thereof.

      4.4. Receiver or Trustee. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.

      4.5. Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower.

      4.6. Judgments. Except as set forth on Schedule 4.5 hereto, any money
judgment, writ or similar final process shall be entered or filed against the
Borrower or any of its property or other assets for more than $250,000, and
shall remain unvacated, unbonded or unstayed for a period of thirty (30) days.

      4.7. Stop Trade. An SEC stop trade order or Principal Exchange trading
suspension of the Common Stock shall be in effect for 5 consecutive days or 5
days during a period of 10 consecutive days, excluding in all cases a suspension
of all trading on a Principal Exchange (as defined below), provided that the
Borrower shall not have been able to cure such trading suspension within 30 days
of the notice thereof or list the Common Stock on another Principal Market
within 60 days of such notice. The "Principal Exchange" for the Common Stock
shall include the National Quotation Bureau's Pink Sheets (so long as the Common
Stock is permitted to be listed thereon in accordance with the terms of Section
6.2 of the Purchase Agreement), NASD OTC Bulletin Board, NASDAQ SmallCap Market,
NASDAQ National Market System, American Stock Exchange, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock), or any securities exchange or other
securities market on which the Common Stock is then being listed or traded.

      4.8. Failure to Deliver Common Stock or Replacement Note. The Borrower's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note, or if required, a replacement Note if such failure to
timely deliver Common Stock shall not be cured within two (2) Business Days or
such failure to deliver a replacement Note is not cured within seven (7)
Business Days.

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                                   ARTICLE V
                           DEFAULT RELATED PROVISIONS

      5.1. Payment Grace Period. The Borrower shall have a three (3) business
day grace period to pay any monetary amounts due under this Note or the Purchase
Agreement or any Related Document, after which grace period the default Contract
Rate set forth in the first paragraph of Article IV hereof shall apply to the
monetary amounts due.

      5.2. Conversion Privileges. The Conversion privileges set forth in Article
III shall remain in full force and effect immediately from the date hereof and
until this Note is paid in full.

                                   ARTICLE VI
                                  MISCELLANEOUS

      6.1. Failure or Indulgence Not Waiver. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

      6.2. Notices. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at the address provided in the Purchase Agreement executed in
connection herewith, with a copy to Olshan Grundman Frome Rosenzweig & Wolosky
LLP, 505 Park Avenue, New York, New York 10022, Attn: Adam W. Finerman, Esq.,
facsimile number (212) 755-1787 and to the Holder at the address provided in the
Purchase Agreement for such Holder, or at such other address as the Borrower or
the Holder may designate by ten days advance written notice to the other parties
hereto. A Notice of Conversion shall be deemed given when made to the Borrower
pursuant to the Purchase Agreement.

      6.3. Amendment Provision. The term "NOTE" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.3
hereof, as it may be amended or supplemented.

      6.4. Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement.

      6.5. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any

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action brought by either party against the other concerning the transactions
contemplated by this Note shall be brought only in the state courts of New York
or in the federal courts located in the state of New York. Both parties and the
individual signing this Note on behalf of the Borrower agree to submit to the
jurisdiction of such courts. The prevailing party shall be entitled to recover
from the other party its reasonable attorney's fees and costs. In the event that
any provision of this Note is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or unenforceability of
any other provision of this Note. Nothing contained herein shall be deemed or
operate to preclude the Holder from bringing suit or taking other legal action
against the Borrower in any other jurisdiction to collect on the Borrower's
obligations to Holder, to realize on any collateral or any other security for
such obligations, or to enforce a judgment or other court order in favor of
Holder.

      6.6. Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and the remainder, if any,
refunded to the Borrower.

      6.7. Subordination. To induce Laurus to enter into the Purchase Agreement
and the Related Agreements and to extend financial accommodations in accordance
with the terms thereof, the Borrower and Holder hereby acknowledge that the debt
created hereunder is and shall be expressly junior and subordinated in right of
payment to all indebtedness evidenced by the Convertible Note and any other
Purchaser Debt (as defined in the Purchase Agreement, excluding, however, from
the definition of Purchaser Debt the convertible term note, dated as of the date
hereof, made by the Borrower (as Payor) in favor of Laurus (as Payee) (the
"Additional Note")) that remains outstanding or payable (the "Senior Debt"). The
Borrower and Holder hereby acknowledge that the debt evidenced hereby shall be
pari passu in right of payment to the indebtedness evidenced by the Additional
Note. Neither the Borrower nor the Holder shall, as applicable, make any payment
in respect of the debt created hereunder, accelerate the maturity thereof or
exercise any rights or remedies to recover any amounts due in respect thereof
until such time as the Senior Debt shall have been paid in full. To enable
Laurus, as holder of the Senior Debt, to assert and enforce its rights
hereunder, Laurus is hereby appointed attorney in fact for Holder with full
power to act in place and stead of Holder, including the right to make, present,
file and vote such proofs of claim against the Borrower on account of all or any
part of the debt created hereunder as Laurus may deem advisable and to receive
and collect any and all dividends and/or other payments thereon and to apply the
same on account of the Senior Debt. Each of the Borrower and Holder shall
execute and deliver such instruments as may be requested by Laurus to enforce
any and all of the Senior Debt and effectuate the aforesaid power of attorney.
Notwithstanding the foregoing, nothing contained in this Section 6.7 shall
prohibit (a) the Holder from exercising its conversion rights under Article III
hereof or (b) the Borrower from making the mandatory prepayment under Section
1.2 hereof.

                                       10

<PAGE>

      6.8. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.

       [Balance of page intentionally left blank; signature page follows.]

                                       11

<PAGE>

            IN WITNESS WHEREOF, each Borrower has caused this Convertible Term
Note to be signed in its name effective as of this 25th day of November, 2003.

                                               TIDEL TECHNOLOGIES, INC.

                                               By: /s/ James T. Rash
                                                   -----------------------------
                                               Name: James T. Rash
                                               Title: CEO

WITNESS:

/s/ Leonard L. Carr
--------------------------

ACCEPTED & AGREED:

LAIDLAW SOUTHWEST, LLC

By: /s/ James T. Rash
    ----------------------
Name:  James T. Rash
Title:  Managing Director

WITNESS:

/s/ Leonard L. Carr
--------------------------

                                       12

<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To be executed by the Holder in order to convert all or part of the Note into
Common Stock

[Name and Address of Holder]

The Undersigned hereby elects to convert $_________ of the principal due on the
Maturity Date under the Convertible Term Note issued by TIDEL TECHNOLOGIES, INC.
dated _________ __, 2003 by delivery of Shares of Common Stock of TIDEL
TECHNOLOGIES, INC. on and subject to the conditions set forth in Article III of
such Note.

                       (A)      Date of Conversion:     _______________________

                       (B)      Shares To Be Delivered: _______________________

Date: ____________

                                               By:______________________________
                                               Name:____________________________
                                               Title:___________________________

                                       13<PAGE>

                                                                    EXHIBIT 4.38

                               SECURITY AGREEMENT

To:                Laurus Master Fund, Ltd.
                   c/o Onshore Corporate Services, Ltd.
                   P.O. Box 1234 G.T
                   Queensgate House
                   South Church Street
                   Grand Cayman, Cayman Islands

Gentlemen:

      1. To secure the payment of all Obligations (as hereafter defined), we
hereby grant to you a continuing security interest in all of the following
property now owned or at any time hereafter acquired by us, or in which we now
have or at any time in the future may acquire any right, title or interest (the
"Collateral"): all accounts, inventory, equipment, goods, documents, instruments
(including, without limitation, promissory notes), contract rights, general
intangibles (including, without limitation, payment intangibles), chattel paper,
supporting obligations, investment property, letter-of-credit rights, trademarks
and tradestyles in which we now have or hereafter may acquire any right, title
or interest, all proceeds and products thereof (including, without limitation,
proceeds of insurance) and all additions, accessions and substitutions thereto
or therefor.

      2. The term "Obligations" as used herein shall mean and include all debts,
liabilities and obligations owing by us to you no matter how or when arising,
direct or indirect, absolute or contingent, liquidated or unliquidated,
including, without limitation, (i) all obligations owing by us to you under any
and all guaranty agreements; (ii) all obligations owing by Tidel Technologies,
Inc. ("Tidel") to you under the Convertible Term Note dated as of the date
hereof in the original principal amount of $6,450,000, as amended, modified and
supplemented from time to time or otherwise (the "Convertible Note ") and (iii)
all obligations owing by Tidel to you under the promissory note dated as of the
date hereof in the original principal amount of $400,000, as amended, modified
and supplemented from time to time or otherwise (the "Term Note," and, together
with the Convertible Note, the "Purchaser Notes").

      3. The term "Permitted Liens" as used herein shall mean (a) liens of
carriers, warehousemen, artisans, bailees, mechanics and materialmen incurred in
the ordinary course of business securing sums not overdue; (b) liens incurred in
the ordinary course of business in connection with worker's compensation,
unemployment insurance or other forms of governmental insurance or benefits,
relating to employees, securing sums (i) not overdue or (ii) being diligently
contested in good faith provided that adequate reserves with respect thereto are
maintained on our books in conformity with generally accepted accounting
principles ("GAAP"), (c) liens in your favor, (d) liens for taxes (i) not yet
due or (ii) being diligently contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on the books
of the company in conformity with GAAP provided, that, the lien shall have no
effect on the priority of your liens or the value of the assets in which you
have a lien and

<PAGE>

(e) zoning restrictions, easements, licenses, or other restrictions on the use
of real property or other minor irregularities in title thereto, so long as the
same do not materially impair the use, value or marketability of such real
estate.

      4. We hereby represent, warrant and covenant to you that:

            a. Tidel is a company validly existing, in good standing and formed
under the laws of the State of Delaware with an organization identification
number of 2142972, Tidel Engineering, L.P. ("Tidel Engineering") is a limited
partnership validly existing, in good standing and formed under the laws of the
State of Delaware with an organization identification number of 3020956, Tidel
Cash Systems, Inc. ("Tidel Cash Systems") is a company validly existing, in good
standing and formed under the laws of the State of Delaware with an organization
identification number of 2310971, AnyCard International Inc. ("AnyCard") is a
company validly existing, in good standing and formed under the laws of the
State of Delaware with an organization identification number of 2387909, and
Tidel Services, Inc. ("Tidel Services") is a company validly existing, in good
standing and formed under the laws of the State of Delaware with an organization
identification number of 3018673, and we will provide you thirty (30) days'
prior written notice of any change in the state of formation of Tidel, Tidel
Engineering, Tidel Cash Systems, AnyCard and/or Tidel Services;

            b. our legal names are as set forth on the signature page hereto and
are identical to those which are set forth in the public records of our
respective jurisdictions of organization, as amended through the date hereof;

            c. we are the lawful owner of the Collateral and have the sole right
to grant a security interest therein and will defend the Collateral against all
claims and demands of all persons and entities;

            d. we will keep the Collateral free and clear of all attachments,
levies, taxes, liens, security interests and encumbrances of every kind and
nature ("Encumbrances"), except (i) to the extent said Encumbrance does not
secure indebtedness in excess of $100,000 in the aggregate and such Encumbrance
is removed or otherwise released within 10 days of the creation thereof or (ii)
for Permitted Liens;

            e. we will at our own cost and expense keep the Collateral in good
state of repair (ordinary wear and tear excepted) and will not waste or destroy
the same or any part thereof other than in the ordinary course discarding of
items no longer used or useful in our business;

            f. we will not without your prior written consent, (1) sell,
exchange, lease or otherwise dispose of the Collateral or any of our rights
therein, whether by sale, lease or otherwise, except for (x) the sale of
inventory in the ordinary course of business and (y) for the disposition or
transfer in the ordinary course of business during any fiscal year of obsolete
and worn-out equipment having an aggregate fair market value of not more than
$25,000 and only to the extent that (i) the proceeds of any such disposition
pursuant to clause (y) above are used to acquire replacement equipment which is
subject to your first priority security interest or are used to repay
Obligations or to pay general corporate expenses, or (ii) in the case of a
disposition

                                        2

<PAGE>

pursuant to clause (y) above following the occurrence of an Event of Default (as
hereafter defined) which continues to exist, the proceeds are remitted to you to
be held as cash collateral for the Obligations and/or (2) enter into any merger,
consolidation or other reorganization with or into any person or entity or
acquire all or a portion of the assets or capital stock of any person or entity
or permit any other person or entity to merge or consolidate with it.

            g. we will insure the Collateral against loss or damage by fire,
theft, burglary, pilferage, loss in transit and such other hazards as you shall
reasonably specify in amounts and under policies by insurers reasonably
acceptable to you and all premiums thereon shall be paid by us and the policies
delivered to you, and cause appropriate loss payable endorsements naming you as
lender's loss payee and additional insured. If we fail to do so, you may procure
such insurance and the cost thereof shall constitute Obligations;

            h. we will at all reasonable times allow you or your representatives
free access to and the right of inspection of the Collateral;

            i. we hereby indemnify and save you harmless from all loss, costs,
damage, liability and/or expense, including reasonable attorneys' fees, that you
may sustain or incur to enforce payment, performance or fulfillment of any of
the Obligations and/or in the enforcement of this Agreement or in the
prosecution or defense of any action or proceeding either against you or us
concerning any matter growing out of or in connection with this Agreement,
and/or any of the Obligations and/or any of the Collateral, except to the extent
caused by your own gross negligence or willful misconduct as determined by a
final, nonappealable judgment of a court of competent jurisdiction;

            j. with respect to all accounts arising out of contracts between us
and the United States of America, or any state, or any department, agency or
instrumentality of any of them (each, a "Government Contract"), we will so
notify you in writing and comply with any governmental notice or approval
requirements, including, without limitation, compliance with the Federal
Assignment of Claims Act,

            k. each of our accounts shall be a good and valid account
representing an undisputed bona fide indebtedness incurred by the account debtor
liable therefor, for a fixed sum as set forth in the invoice relating thereto
with respect to an unconditional sale and delivery upon the stated terms of
goods sold by us, or work, labor and/or services rendered by us, as applicable;

            l. the proceeds of all accounts shall be remitted by the applicable
account debtor to and be on deposit in the Pledged Account (as hereafter
defined). In the event we shall at any time receive any such proceeds, we shall
promptly deposit the same in the Pledged Account, and in any event, within three
(3) business days from receipt thereof; and

            m. we shall have no access to any funds on deposit in any Pledged
Account (as hereafter defined), except to the extent expressly set forth in the
Control Agreement (as hereafter defined) and we shall comply with the terms and
provisions of the Control Agreement. For purposes hereof, the following terms
shall have the following meanings: (1) "Control Agreement" shall mean the Multi
Party Blocked Account Agreement dated as of the date hereof

                                        3

<PAGE>

among us, you and JPMorgan Bank, as amended, modified and supplemented from time
to time, and (2) "Pledged Account" shall mean any separate deposit account in
which you have been granted by us a first priority perfected security interest.

      5. Following the occurrence and during the continuance of an Event of
Default, you shall have the right to instruct all of our account debtors to
remit payments on all accounts in accordance with your express written
instructions; provided, however, any account debtor liable under a Government
Contract shall be instructed on or prior to the date hereof to remit payments on
all accounts arising under the Government Contract to a Pledged Account or such
other address and/or deposit account as you shall direct in writing. With
respect to accounts arising from the Government Contract, we shall execute all
such documentation as you shall require so as to comply with the Federal
Assignment of Claims Act and to instruct the governmental agency party to the
Government Contract to remit all accounts arising thereunder to the Pledged
Account or such other address and/or deposit account as you shall direct in
writing. If, despite such instructions, we shall receive any payments with
respect to accounts, we shall receive such payments in trust for your benefit,
shall segregate such payments from our other funds and shall deliver or cause to
be deposited in the Pledged Account or delivered to you, in the same form as so
received with all necessary endorsements, all such payments as soon as
practicable, but in no event later than two (2) business days after our receipt
thereof. You shall have full power and authority to collect each account,
through legal action or otherwise, and may settle, compromise, or assign (in
whole or in part) the claim for any account, or otherwise exercise any other
right now existing or hereafter arising with respect to any account if such
action will facilitate collection.

      6. We shall be in default under this Agreement upon the happening and
during the continuation of any of the following events or conditions, each such
event or condition an "Event of Default":

            a. we shall fail to pay when due or punctually perform any of the
Obligations after expiration of any cure periods;

            b. any covenant, warranty, representation or statement made or
furnished to you by us or on our behalf was false in any material respect when
made or furnished;

            c. we shall breach any provision of this Agreement or any other
document, instrument or agreement delivered to you in connection with the
transactions contemplated hereby, as the same may be amended, modified and
supplemented from time to time, and such breach shall not have been cured during
any applicable cure or grace period;

            d. the loss, theft, damage, destruction, sale (other than the sale
of inventory in the ordinary course of business and/or the sale of obsolete or
worn out equipment having a sale value of not greater than $5,000 for any
individual item of equipment or $25,000 in the aggregate for all such items of
equipment sold during any fiscal year, so long as the proceeds of all such sales
are promptly (but in any event within three (3) business days following receipt
thereof) deposited in the Pledged Account) or encumbrance to or of any of the
Collateral or the making of any levy, seizure or attachment thereof or thereon
except to the extent, as applicable (a) any such

                                        4

<PAGE>

loss, theft, damage or destruction relates to Collateral having a value of less
than $50,000 in the aggregate during any fiscal year, (b) any such loss, theft,
damage or destruction relates to Collateral having a value of $50,000 or more in
the aggregate during any fiscal year, but only to the extent Laurus shall have
received insurance proceeds covering the value of such Collateral within
forty-five (45) days following the occurrence of any such event; provided,
however, in the event Laurus determines in the good faith exercise of its
reasonable discretion that any such loss, theft, damage or destruction relates
to a substantial portion of the Collateral, then, at Laurus's option, an Event
of Default shall be deemed to automatically result from such occurrence; and (d)
any such levy, seizure or attachment relates to Collateral having an aggregate
value of not greater than $100,000, but only to the extent such levy, seizure or
attachment has been removed or otherwise released within 10 days of the creation
or the assertion thereof;

            e. we shall become insolvent, cease operations, dissolve, terminate
our business existence, make an assignment for the benefit of creditors, suffer
the appointment of a receiver, trustee, liquidator or custodian of all or any
part of our property;

            f. any proceedings under any bankruptcy or insolvency law shall be
commenced by or against us and if commenced against us shall not be dismissed
within 30 days;

            g. we shall repudiate, purport to revoke or fail to perform any of
our obligations under the Note or any guaranty agreement made by us in favor of
you; or

            h. an Event of Default shall have occurred under and as defined in
the Note.

      7. Upon the occurrence and continuation of any Event of Default, you may
declare all Obligations immediately due and payable and you shall have the
remedies of a secured party provided in the Uniform Commercial Code (the "UCC")
as in effect in the State of New York, this Agreement and other applicable law.
Upon the occurrence and continuation of any Event of Default, you will have the
right to take possession of the Collateral and to maintain such possession on
our premises or to remove the Collateral or any part thereof to such other
premises as you may desire. Upon your request, we shall assemble the Collateral
and make the Collateral available to you at a place designated by you which is
reasonably convenient to both parties. If any notification of intended
disposition of any Collateral is required by law, such notification, if mailed,
shall be deemed properly and reasonably given if mailed at least ten (10) days
before such disposition, postage prepaid, addressed to us either at our address
shown herein or at any address appearing on your records for us. Any proceeds of
any disposition of any of the Collateral shall be applied by you to the payment
of all expenses in connection with the sale of the Collateral, including
reasonable attorneys' fees and other legal expenses and disbursements and the
reasonable expense of retaking, holding, preparing for sale, selling, and the
like, and any balance of such proceeds may be applied by you toward the payment
of the Obligations in such order of application as you may elect, and we shall
be liable for any deficiency.

      8. If we default in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on our part to be
performed or fulfilled under or pursuant to this Agreement, you may, at your
option without waiving your right to enforce this Agreement according to its
terms, immediately or at any time thereafter and without notice to us,

                                        5

<PAGE>

perform or fulfill the same or cause the performance or fulfillment of the same
for our account and at our sole cost and expense, and the cost and expense
thereof (including reasonable attorneys' fees) shall be added to the Obligations
and shall be payable on demand with interest thereon at the highest rate
permitted by law or, at your option, debited by you from the Pledged Account.

      9. We appoint you, any of your officers, employees or any other person or
entity whom you may designate as our attorney, with power to execute such
documents in connection with this Agreement on our behalf and to supply any
omitted information and correct patent errors in any documents executed by us or
on our behalf; to file financing statements against us covering the Collateral;
to sign our name on public records in connection with this Agreement; and to do
all other things you deem necessary to carry out this Agreement. We hereby
ratify and approve all acts of the attorney and, so long as the power of
attorney is used in connection with this Agreement, neither you nor the attorney
will be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law other than gross negligence or willful
misconduct. This power being coupled with an interest, is irrevocable so long as
any Obligations remains unpaid.

      10. No delay or failure on your part in exercising any right, privilege or
option hereunder shall operate as a waiver of such or of any other right,
privilege, remedy or option, and no waiver whatever shall be valid unless in
writing, signed by you and then only to the extent therein set forth, and no
waiver by you of any default shall operate as a waiver of any other default or
of the same default on a future occasion. Your books and records containing
entries with respect to the Obligations shall be admissible in evidence in any
action or proceeding, shall be binding upon us for the purpose of establishing
the items therein set forth and shall constitute prima facie proof thereof. You
shall have the right to enforce any one or more of the remedies available to
you, successively, alternately or concurrently. We agree to join with you in
executing financing statements or other instruments to the extent required by
the Uniform Commercial Code in form satisfactory to you and in executing such
other documents or instruments as may be required or deemed necessary by you for
purposes of effecting or continuing your security interest in the Collateral.

      11. By your countersignature below, you hereby agree that, upon our
payment and performance in full of the Obligations, (a) you shall, in accordance
with Section 9-513 of the UCC, terminate all financing statements naming any of
us as a debtor which were made pursuant to this Agreement, and (b) with the
exception of this Section 11 and any other rights hereunder and under applicable
law which survive termination, this Agreement shall terminate.

      12. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and cannot be terminated orally. All of the
rights, remedies, options, privileges and elections given to you hereunder shall
enure to the benefit of your successors and assigns. The term "you" as herein
used shall include your company, any parent of your company, any of your
subsidiaries and any co-subsidiaries of your parent, whether now existing or
hereafter created or acquired, and all of the terms, conditions, promises,
covenants, provisions and warranties of this Agreement shall enure to the
benefit of and shall bind the representatives, successors and assigns of each of
us and them. You and we hereby (a) waive any and all right to

                                        6

<PAGE>

trial by jury in litigation relating to this Agreement and the transactions
contemplated hereby and we agree not to assert any counterclaim in such
litigation, (b) submit to the nonexclusive jurisdiction of any New York State
court sitting in the borough of Manhattan, the city of New York; provided that
nothing contained in this Agreement shall be deemed to preclude you from
bringing suit or taking other legal action in any other jurisdiction and (c)
waive any objection you or we may have as to the bringing or maintaining of such
action with any such court. We hereby waive personal service of process in any
such action and agree that service of such process may be made by registered or
certified mail addressed to us at the address set forth below.

      13. All notices from you to us shall be sufficiently given if mailed or
delivered to us at our address set forth below.

                       [SIGNATURE LINES ON FOLLOWING PAGE]

                                        7

<PAGE>

                     [SIGNATURE PAGE TO SECURITY AGREEMENT]

                                    Very truly yours,

                                    TIDEL TECHNOLOGIES, INC.

                                    By: /s/ James T. Rash
                                    Name: James T. Rash
                                    Title: President and Chief Executive Officer

                                    Address:

                                    TIDEL ENGINEERING, LP

                                    By: /s/ Mark K. Levenick
                                    Name: Mark K. Levenick
                                    Title: President & CEO

                                    Address:

                                    TIDEL CASH SYSTEMS, INC.

                                    By: /s/ Mark K. Levenick
                                    Name: Mark K. Levenick
                                    Title: President

                                    Address:

                                    ANYCARD INTERNATIONAL, INC.

                                    By: /s/ Mark K. Levenick
                                    Name: Mark K. Levenick
                                    Title: President

                                    Address:

                                    TIDEL SERVICES, INC.

                                    By: /s/ Mark K. Levenick
                                    Name: Mark K. Levenick
                                    Title: President

                                    Address:

                                    Dated as of:  November 21, 2003

                                        8

<PAGE>

ACKNOWLEDGED:

LAURUS MASTER FUND, LTD.

By: /s/ Eugene Grin
    --------------------------------
Name: Eugene Grin
Title: Director

Dated as of:  November 25, 2003

                                        9

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