PIPELINE DATA INC
MILLENNIUMNOTE
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>milleniumnote.txt
<DESCRIPTION>MILLENNIUMNOTE
<TEXT>

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 PIPELINE DATA INC. THAT SUCH REGISTRATION IS NOT REQUIRED.


                                SECURED TERM NOTE

     FOR  VALUE  RECEIVED,   MILLENNIUM  MERCHANT  SERVICES,   INC.  a  Delaware
corporation  and KENT  STIRITZ  (the  "Borrowers"),  hereby  promises  to pay to
PIPELINE  DATA INC., a Delaware  corporation  (the  "Holder") or its  registered
assigns or successors  in interest,  on order,  the sum of FIVE HUNDRED  DOLLARS
($500,000.00),  together with any accrued and unpaid interest hereon,  on July7,
2007 (the "Maturity Date") if not sooner paid.

     Capitalized  terms used herein without  definition  shall have the meanings
ascribed to such terms in that certain Asset Purchase  Agreement dated as of the
date hereof between the Borrower and the Holder (the "Purchase Agreement").

     The following terms shall apply to this Note:

                                    ARTICLE I
                               INTEREST & PAYMENT

     Interest  Rate and  Payment.  Interest  shall be  calculated  at the simple
interest rate of 6% per annum. This loan shall mature on July 7, 2007 but may be
repaid at any time without penalty in cash or with Residual Rights from Merchant
Accounts  valued  with a share  price of $1.20 per share as set forth in Section
2.1.3 of the Asset Purchase Agreement.  Residual Rights from Merchant Agreements
used to repay the loan shall be subject to the provisions of Section 3.1 and 3.2
of the Asset Purchase Agreement.  The loan shall be personally guaranteed by the
Sellers and collateralized by 1,000,000 Shares,  subject to calls for additional
Shares in the event of for  additional  Shares  in the event of a  reduction  in
Share value.

<PAGE>

                                   ARTICLE II
                                EVENTS OF DEFAULT

     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") or be subject to
forced sale of the Shares held as security  subject to Article I or Kent Stiritz
shall be held  personally  liable  therefor.  If,  with  respect to any Event of
Default other than a payment default described in Section 2.1 below,  within the
Default  Notice  Period the  Borrower  cures the Event of Default,  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.

     The occurrence of any of the following events is an "Event of Default":

     2.1 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,  or the Borrower fails to pay when due any amount due under
any other  promissory  note issued by Borrower and such failure  continues for a
period of ten (10) days after such payment is the due.

     2.2 Breach of  Covenant.  The Borrower  breaches  any material  covenant or
other term or condition of this Asset Purchase Agreement in any material respect
and such breach, if subject to cure,  continues for a period of thirty (30) days
after  the  occurrence  thereof,  except  where a longer  cure  period  has been
provided.

     2.3 Breach of Representations and Warranties.  Any material  representation
or warranty of the Borrower made herein, in the Asset Purchase Agreement,  or in
any Related Document (as defined in the Purchase  Agreement) shall be materially
false or  misleading  and shall not be cured for a period of  fifteen  (15) days
after the occurrence thereof.

     2.4 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.

     2.5 Judgments.  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 ninety (90) days.

     2.6  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  which
is not vacated within ninety (90) days.

<PAGE>

                                   ARTICLE III
                                  MISCELLANEOUS

     3.1 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.

     3.2 Notices.  Any notice herein  required or permitted to be given shall be
in writing and shall be deemed  effectively given: (a) upon receipt of succesful
transmission by facsimile,  with original deposited with a nationally recognized
overnight courier,  specifying next day delivery,  with written  verification of
receipt,  (b) upon personal  delivery to the party  notified,  (c) one day 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 shall be sent as sest
forth in the Asset Purchase Agreement.

     3.3 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 3.5 hereof, as it may be amended
or supplemented.

     3.4  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.

     3.5  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 action  brought by either  party  against the other
concerning the transactions contemplated by this Agreement 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 in favor of the Holder.

     3.6   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.

     3.7 Cost of Collection. If default is made in the payment of this Note, the
borrower  shall  pay  to  Holder  reasonable  costs  of  collection,   including
reasonable attorney's fees.



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



<PAGE>



     IN WITNESS WHEREOF, Borrower has caused this Secured Term Note to be signed
in its name effective as of this ____th day of May, 2004.


MILLENNIUM MERCHANT SERVICES, INC.
By:/s/ KENT STIRITZ
Name:______________________________
Title:_______________________________


WITNESS:


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


/s/ KENT STIRITZ
------------------------------------
KENT STIRITZ

WITNESS:


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





<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
[specify  applicable  Repayment Date] under the Convertible  Term Note issued by
PIPELINE DATA INC. dated February 26, 2004 by delivery of Shares of Common Stock
of PIPELINE DATA INC. on and subject to the  conditions set forth in Article III
of such Note.


1.       Date of Conversion         _______________________
2.       Shares To Be Delivered:    _______________________


By:_______________________________
Name:_____________________________
Title:______________________________



<PAGE>




                                    EXHIBIT B

                           CONVERSION ELECTION NOTICE

     (To be  executed by the Holder in order to convert all or part of a Monthly
Amount into Common Stock)

     [Name and Address of Holder]


     Holder  hereby elects to convert  $_________  of the Monthly  Amount due on
[specify  applicable  Repayment Date] under the Convertible  Term Note issued by
PIPELINE DATA INC. dated February 26, 2004 by delivery of Shares of Common Stock
of PIPELINE DATA INC. on and subject to the  conditions set forth in Article III
of such Note.


1. Fixed Conversion Price: $_______________________

2. Amount to be paid: $_______________________

3. Shares To Be Delivered (2 divided by 1): __________________

4. Cash payment to be made by Borrower : $_____________________




Date: ____________

LAURUS MASTER FUND, LTD.


By:_______________________________
Name:_____________________________
Title:______________________________




</TEXT>
</DOCUMENT>
