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                                                                    EXHIBIT 10.7



                                FREEMARKETS, INC.
                              AMENDED AND RESTATED
                          EMPLOYEE STOCK PURCHASE PLAN

         The following constitute the provisions of the FreeMarkets, Inc.
Employee Stock Purchase Plan:


                             I. Purpose and History

1.1      The purpose of the Plan is to provide employees of the Company and its
         Designated Subsidiaries with an opportunity to purchase Common Stock of
         the Company. It is the Company's intention to have the Plan qualify as
         an "Employee Stock Purchase Plan" under Code Section 423. Accordingly,
         the provisions of the Plan shall be construed so as to extend and limit
         participation in a manner consistent with the requirements of that Code
         section.

1.2      The Plan was originally adopted on September 1, 1999 and was later
         amended on October 6, 1999. Pursuant to authority reserved in the Plan
         to amend the Plan, among other things, (i) to terminate a current
         Offering Period on a Purchase Date and (ii) to change the duration
         and/or frequency of future Offering Periods, the Plan was amended and
         restated as of December 21, 1999 to provide that the initial Offering
         Period would terminate on April 30, 2000 and that future Offering
         Periods would be of six months' duration, and to make certain other
         clarifying and conforming changes to the Plan.


                                 II. Definitions

         The following words and phrases, when used in this Plan, unless their
context clearly indicates otherwise, shall have the following meanings:

2.1      "Administrator" means the individual(s), committee or entity as may be
         appointed by the Board, with such authority and power as the Board may
         determine, to administer the terms of the Plan. The Administrator may,
         in turn, delegate all or a portion of its authority to one or more
         individuals to perform administrative functions under the Plan.


2.2      "Board" means the Company's Board of Directors.

2.3      "Change in Control" means the occurrence of any of the following
         events:

         (a)      the acquisition, other than from the Company, by any
                  individual, entity or group (within the meaning of Section
                  13(d)(3) or Section 14(d)(2) of the Exchange Act), other than
                  the Company or an employee benefit plan of the Company, of
                  beneficial ownership (within the meaning of Rule 13d-3
                  promulgated under the Exchange Act) of more than 50% of the
                  combined


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                  voting power of the then outstanding voting securities of the
                  Company entitled to vote generally in the election of
                  directors (the "Voting Securities"); or

         (b)      the approval by the Company's stockholders of a
                  reorganization, merger, consolidation or recapitalization of
                  the Company (a "Business Combination"), other than a Business
                  Combination in which more than 50% of the combined voting
                  power of the outstanding voting securities of the surviving or
                  resulting entity immediately following the Business
                  Combination is held by the persons who, immediately prior to
                  the Business Combination, were the holders of the Voting
                  Securities; or

         (c)      the approval by the Company's stockholders of a complete
                  liquidation or dissolution of the Company, or a sale of all or
                  substantially all of the Company's assets; or

         (d)      individuals who, as of the effective date of the Plan,
                  constitute the Board (the "Incumbent Board") cease for any
                  reason to constitute at least a majority of the Board;
                  provided, that any individual becoming a director subsequent
                  to such date whose election or nomination for election by the
                  Company's stockholders was approved by a vote of at least a
                  majority of the directors then comprising the Incumbent Board
                  shall be considered as though such individual were a member of
                  the Incumbent Board.

2.4      "Code" means the Internal Revenue Code of 1986, as amended.

2.5      "Common Stock" means the Company's Common Stock.

2.6      "Company" means FreeMarkets, Inc., a Delaware corporation.

2.7      "Compensation" means all cash compensation paid to an Employee by the
         Company and includes commissions, bonuses, overtime, incentive
         compensation, incentive payments and other forms of cash compensation
         as determined by the Administrator.

2.8      "Continuous Status as an Employee" means the absence of any
         interruption or termination of service as an Employee. Continuous
         Status as an Employee shall not be considered interrupted in the case
         of: (i) sick leave; (ii) military leave; (iii) any other leave of
         absence approved by the Administrator; provided, that such leave is for
         a period of not more than ninety (90) days, unless reemployment upon
         the expiration of such leave is guaranteed by contract or statute, or
         unless provided otherwise pursuant to Company policy adopted from time
         to time; or (iv) in the case of transfers between locations of the
         Company or between the Company and its Designated Subsidiaries.

2.9      "Contributions" means all amounts credited to the account of a
         participant pursuant to the Plan.

2.10     "Designated Subsidiaries" means the Subsidiaries that have been
         designated by the Board from time to time in its sole discretion as
         eligible to participate in the Plan (as set


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         forth on Appendix A); provided, however, that the Board shall only have
         the discretion to designate a Subsidiary if the issuance of options to
         such Subsidiary's Employees under the Plan would not cause the Company
         to incur adverse accounting charges or cause the Plan not to qualify
         under Code Section 423.

2.11     "Employee" means any person, including an Officer, who is customarily
         employed for at least twenty (20) hours per week and more than five (5)
         months in a calendar year by the Company or one of its Designated
         Subsidiaries.

2.12     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

2.13     "Offering Date" means the first business day of each Offering Period of
         the Plan.

2.14     "Offering Period" means each six (6) month period commencing on May 1
         or November 1 during a calendar year. An Offering Period commencing on
         May 1 shall end on the next October 31 and an Offering Period
         commencing on November 1 shall end on the next April 30.
         Notwithstanding the foregoing, the first Offering Period under the Plan
         shall commence on the effective date of the Registration Statement on
         Form S-1 for the initial public offering of the Company's Common Stock
         (the "IPO Date") and continue until April 30, 2000.

2.15     "Officer" means a person who is an officer of the Company within the
         meaning of Section 16 of the Exchange Act and the rules and regulations
         promulgated thereunder.

2.16     "Plan" means the FreeMarkets, Inc. Employee Stock Purchase Plan.

2.17     "Purchase Date" means the last day of each Offering Period under the
         Plan.

2.18     "Purchase Price" means with respect to an Offering Period an amount
         equal to eighty-five percent (85%) of the Fair Market Value (as defined
         in Section 6.2 below) of a Share on the Offering Date or on the
         Purchase Date for such Offering Period, whichever is lower; provided,
         however, that in the event (i) there is any increase in the number of
         Shares available for issuance under the Plan (including without
         limitation an automatic increase pursuant to Section 11.1 below or as a
         result of a stockholder- approved amendment to the Plan), (ii) all or a
         portion of such additional Shares are to be issued with respect to an
         Offering Period that is underway at the time of such increase
         ("Additional Shares"), and (iii) the Fair Market Value of a Share on
         the date of such increase (the "Approval Date Fair Market Value") is
         higher than the Fair Market Value on the Offering Date for such
         Offering Period, then in such instance the Purchase Price with respect
         to Additional Shares shall be eighty-five percent (85%) of the Approval
         Date Fair Market Value or the Fair Market Value of a Share on the
         Purchase Date, whichever is lower.

2.19     "Share" means a share of Common Stock, as adjusted in accordance with
         Article 17 of the Plan.


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2.20     "Subsidiary" means a corporation, domestic or foreign, of which not
         less than fifty percent (50%) of the voting shares are held by the
         Company or a Subsidiary, whether or not such corporation now exists or
         is hereafter organized or acquired by the Company or a Subsidiary.


                                III. Eligibility

3.1      Eligible Employees. Any person who is an Employee as of the Offering
         Date of a given Offering Period shall be eligible to participate in
         such Offering Period under the Plan, subject to the requirements of
         Section 4.1 and the limitations imposed by Code Section 423(b).

3.2      Excluded Employees. Notwithstanding any Plan provisions to the
         contrary, no Employee shall be granted an option under the Plan if: (i)
         immediately after the grant, such Employee (or any other person whose
         stock would be attributed to such Employee pursuant to Code Section
         424(d)) would own capital stock of the Company and/or hold outstanding
         options to purchase stock possessing five percent (5%) or more of the
         total combined voting power or value of all classes of stock of the
         Company or of any subsidiary corporation (as defined in Code Section
         424(f)); or (ii) such option would permit his or her rights to purchase
         stock under all employee stock purchase plans (described in Code
         Section 423) of the Company and its Subsidiaries to accrue at a rate
         which exceeds twenty-five thousand dollars ($25,000) of the Fair Market
         Value (as defined in Section 6.2 below) of such stock (determined at
         the time such option is granted) for each calendar year in which such
         option is outstanding at any time.


                                IV. Participation

4.1      Employee Participation. An eligible Employee may become a participant
         in the Plan by completing a subscription agreement on the form provided
         by the Company and filing it with the Administrator prior to the
         applicable Offering Period, unless a later time for filing the
         subscription agreement is set by the Administrator for all eligible
         Employees with respect to a given Offering Period. The subscription
         agreement shall set forth the percentage of a participant's
         Compensation (subject to Section 5.1 below) to be paid as Contributions
         under the Plan.

4.2      Payroll Deductions. Payroll deductions shall commence as of the first
         payroll following the Offering Date for an Offering Period (or as soon
         as administratively practicable thereafter) and shall end on the last
         payroll paid on or prior to the Purchase Date for an Offering Period to
         which the subscription agreement is applicable, unless sooner
         terminated by the participant as provided in Article 9.


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                      V. Method of Payment of Contributions

5.1      Amount of Payroll Deductions. A participant shall elect to have payroll
         deductions made during an Offering Period in an amount not less than
         one percent (1%) and not more than twenty percent (20%) of such
         participant's Compensation on each applicable payday during an Offering
         Period. All payroll deductions made by a participant shall be credited
         to his or her account under the Plan. A participant may not make any
         additional payments into such account.

5.2      Change and Discontinuation of Payroll Deduction Election. A participant
         may discontinue his or her participation in the Plan as provided in
         Article 9, or on one occasion only during an Offering Period may
         increase and on one occasion only during such Offering Period may
         decrease the rate of his or her Contributions with respect to the
         Offering Period by completing and filing a new subscription agreement
         with the Administrator. Any such change in the payroll deduction rate
         shall be effective as soon as administratively practicable after the
         Administrator receives the new subscription agreement from the
         participant.

5.3      Limit on Payroll Deductions. Notwithstanding the foregoing, to the
         extent necessary to comply with Code Section 423(b)(8) and Section 3.2
         herein, a participant's payroll deductions may be decreased during any
         Offering Period scheduled to end during the current calendar year to
         zero percent (0%) at such time that the aggregate of all payroll
         deductions accumulated with respect to such Offering Period and any
         other Offering Period ending within the same calendar year equal
         $21,250. Payroll deductions shall resume at the elected rate set forth
         in such participant's subscription agreement at the beginning of the
         first Offering Period that is scheduled to end in the following
         calendar year, unless terminated by the participant as provided in
         Article 9.


                               VI. Grant of Option

6.1      Grant of Option. On each Offering Date, each eligible Employee
         participating in such Offering Period shall be granted an option to
         purchase a number of Shares as determined by dividing such Employee's
         Contributions accumulated prior to the Purchase Date for such Offering
         Period and retained in the participant's account as of such Purchase
         Date by the applicable Purchase Price. There is no limit on the number
         of Shares that a participant may purchase under the Plan; provided,
         however, that the Board may impose a limit on the number of Shares a
         participant may purchase under the Plan at any time; provided, further,
         that such purchase shall be subject to the limitations set forth in
         Section 3.2 and Article 11.

6.2      Fair Market Value of Options. For all purposes under the Plan, the term
         "Fair Market Value" shall mean, as of any applicable date: (i) if the
         principal securities market on which the Common Stock is traded is a
         national securities exchange or The Nasdaq National Market ("NNM"), the
         closing price of the Common Stock on such exchange


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         or NNM, as the case may be, or if no sale of the Common Stock shall
         have occurred on such date, on the next preceding date on which there
         was a reported sale; (ii) if the Common Stock is not traded on a
         national securities exchange or NNM, the closing price on such date as
         reported by The Nasdaq SmallCap Market, or if no sale of the Common
         Stock shall have occurred on such date, on the next preceding date on
         which there was a reported sale; (iii) if the principal securities
         market on which the Common Stock is traded is not a national securities
         exchange, NNM or The Nasdaq SmallCap Market, the average of the bid and
         asked prices reported by the National Quotation Bureau, Inc.; or (iv)
         if the price of the Common Stock is not so reported, the Fair Market
         Value of the Common Stock as determined in good faith by the Board.


                             VII. Exercise of Option

7.1      Exercise of Option. Unless a participant withdraws from the Plan as
         provided in Article 9, his or her option for the purchase of Shares
         will be exercised automatically on the Purchase Date for an Offering
         Period, and the maximum number of full Shares subject to the option
         will be purchased at the applicable Purchase Price with the accumulated
         Contributions in his or her account. No fractional Shares shall be
         issued under the Plan. The Shares purchased upon exercise of an option
         hereunder shall be deemed to be transferred to the participant on the
         Purchase Date. During his or her lifetime, a participant's option to
         purchase Shares hereunder is exercisable only by him or her.


                                 VIII. Delivery

8.1      Delivery of Shares. As soon as administratively practicable after the
         Purchase Date for an Offering Period, the Administrator shall arrange
         the delivery to each participant, as appropriate, of a certificate
         representing the Shares purchased upon exercise of his or her option.
         As an alternative, the Administrator may make arrangements with a
         brokerage firm to establish a brokerage account for each participant,
         to which Shares purchased for the participant upon exercise of his or
         her option shall be credited and held for the participant. Any payroll
         deductions accumulated in a participant's account which are not
         sufficient to purchase a full Share shall be retained in the
         participant's account for the subsequent Offering Period, subject to
         earlier withdrawal by the participant as provided in Article 9 below.
         Any other amounts left over in a participant's account after a Purchase
         Date shall be returned to the participant.


                  IX. Withdrawal and Termination of Employment

9.1      Voluntary Withdrawal of Participation. A participant may withdraw all
         Contributions credited to his or her account under the Plan at any time
         prior to a Purchase Date by giving written notice to the Administrator
         (partial withdrawals are not permitted). All of the participant's
         Contributions credited to his or her account will be paid to him or her
         as soon as administratively practicable after receipt of his or her
         withdrawal notice


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         and his or her option for the current period will be automatically
         terminated. In addition, no further Contributions for the purchase of
         Shares will be made during the Offering Period on the participant's
         behalf.

9.2      Withdrawal Upon Termination of Employment. Upon termination of the
         participant's Continuous Status as an Employee prior to the Purchase
         Date of an Offering Period for any reason, including retirement or
         death, the Contributions credited to his or her account will be
         returned to him or her or, in the case of his or her death, to the
         person or persons entitled thereto under Article 13, and his or her
         option will terminate automatically.

9.3      Involuntary Withdrawal of Participation. In the event an Employee fails
         to remain in Continuous Status as an Employee of the Company
         customarily employed for at least twenty (20) hours per week and more
         than five (5) months in a calendar year during an Offering Period in
         which the Employee is a participant, he or she will be deemed to have
         elected to withdraw from the Plan and the Contributions credited to his
         or her account will be returned to him or her and his or her option
         will be terminated.

9.4      Effect of Withdrawal. A participant's withdrawal from an Offering
         Period will not have any effect upon his or her eligibility to
         participate in a succeeding Offering Period or in any similar plan
         which may hereafter be adopted by the Company.


                                   X. Interest

10.1     Interest Accrual. No interest shall accrue on the Contributions of a
         Plan participant.


                                   XI. Shares

11.1     Shares Available Under the Plan. Subject to adjustment as provided in
         Article 17, the maximum number of Shares that initially shall be made
         available for sale under the Plan shall be 500,000 Shares. In addition,
         on the first day of each of the Company's fiscal years, the aggregate
         number of Shares reserved for issuance under the Plan shall be
         increased automatically by the number of Shares purchased under the
         Plan in the preceding fiscal year; provided, that the aggregate number
         of Shares reserved under the Plan shall not exceed 2,000,000 Shares. If
         the Board determines that, on a given Purchase Date, the number of
         Shares with respect to which options are to be exercised may exceed the
         number of Shares available for sale under the Plan on such Purchase
         Date, the Board may in its sole discretion provide: (x) that the
         Company shall make a pro rata allocation of the Shares available for
         purchase on the Purchase Date, in as uniform a manner as shall be
         practicable and as it shall determine in its sole discretion to be
         equitable among all participants exercising options to purchase Shares
         on such Purchase Date, and continue subsequent Offering Periods; or (y)
         that the Company shall make a pro rata allocation of the Shares
         available for purchase on the Purchase Date in as uniform a manner as
         shall be practicable and as it shall determine in its sole


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         discretion to be equitable among all participants exercising options to
         purchase Shares on such Purchase Date, and thereafter terminate the
         Plan pursuant to Article 18 below.

11.2     Voting of Shares. The participant shall have no interest or voting
         right in Shares covered by his or her option until such option has been
         exercised.

11.3     Registration of Shares. Shares to be delivered to a participant under
         the Plan will be registered in the name of the participant or in the
         name of the participant and his or her spouse (or, where applicable, in
         the name of a broker or other nominee or custodian for the benefit of
         the participant or the participant and his or her spouse).


                              XII. Administration

12.1     Plan Administration. The Board shall supervise and administer the Plan
         and shall have full power to adopt, amend and rescind any rules deemed
         desirable and appropriate for the administration of the Plan and not
         inconsistent with the Plan, to construe and interpret the Plan, and to
         make all other determinations necessary or advisable for the
         administration of the Plan. In its sole discretion, the Board may
         appoint an Administrator and delegate all or a portion of its authority
         to such Administrator to administer the Plan.


                        XIII. Designation of Beneficiary

13.1     Beneficiary Designation. A participant may file a written beneficiary
         designation with the Administrator designating the beneficiary who is
         to receive any Shares and cash, if any, from the participant's account
         under the Plan in the event of such participant's death subsequent to
         the end of an Offering Period but prior to delivery to him or her of
         such Shares and cash. In addition, a participant may file a beneficiary
         designation with the Administrator designating the beneficiary who is
         to receive any cash from the participant's account under the Plan in
         the event of such participant's death prior to the Purchase Date of an
         Offering Period.

13.2     Change of Beneficiary Designation. A beneficiary designation filed
         under Section 13.1 may be changed by the participant at any time by
         written notice to the Administrator. In the event of the death of a
         participant and in the absence of a valid designated beneficiary who is
         living at the time of such participant's death, the Administrator shall
         deliver such Shares and/or cash to the executor or administrator of the
         estate of the participant, or if no such executor or administrator has
         been appointed (to the knowledge of the Administrator), the
         Administrator, in its discretion, may deliver such Shares and/or cash
         to the spouse or to any one or more dependents or relatives of the
         participant, or if no spouse, dependent or relative is known to the
         Administrator, then to such other person as the Administrator may
         designate.


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                              XIV. Transferability

14.1     Transfer of Plan Benefits. Neither Contributions credited to a
         participant's account nor any rights with regard to the exercise of an
         option or to receive Shares under the Plan may be assigned,
         transferred, pledged or otherwise disposed of in any way (other than by
         will, the laws of descent and distribution, or as provided in Article
         13) by the participant. Any such attempt at assignment, transfer,
         pledge or other disposition shall be without effect, except that the
         Company may treat such act as a voluntary election to withdraw funds in
         accordance with Article 9.


                            XV. Use of Contributions

15.1     Use of Contributions. All Contributions received or held by the Company
         under the Plan may be used by the Company for any corporate purpose,
         and the Company shall not be obligated to segregate such Contributions
         from other Company assets.


                           XVI. Reporting of Accounts

16.1     Reporting of Accounts. Individual accounts will be maintained for each
         participant in the Plan. Statements of account will be given to
         participating Employees at least annually, which statements will set
         forth the amounts of Contributions, the per Share Purchase Price, the
         number of Shares purchased and the remaining cash balance, if any.


                XVII. Adjustments Upon Changes in Capitalization;
                                Change in Control

17.1     Adjustment. Subject to any required action by the Company's
         stockholders, the number of Shares covered by each option under the
         Plan that has not yet been exercised and the number of Shares which
         have been authorized for issuance under the Plan but have not yet been
         placed under option (collectively, the "Reserves"), as well as the
         maximum number of Shares which may be purchased by a participant in an
         Offering Period, the number of Shares set forth in Section 11.1 above,
         and the price per Share covered by each option under the Plan that has
         not yet been exercised, shall be appropriately adjusted to reflect any
         stock dividend, stock split, combination or exchange of shares or other
         change in capitalization with a similar substantive effect upon the
         Plan or the awards granted under the Plan. The Board shall have the
         power and sole discretion to determine the nature and amount of the
         adjustment to be made in each case. The adjustment so made shall be
         final and binding on all participants.

17.2     Change in Control. Upon a Change of Control, each outstanding option
         shall be assumed by the "Acquiring Corporation" (as defined below) or
         parent thereof or replaced with a comparable option or right to
         purchase shares of the capital stock, or equity equivalent instrument,
         of the Acquiring Corporation or parent thereof, or other


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         comparable rights (such assumed and comparable options and rights,
         together, the "Replacement Options"); provided, however, that if the
         Acquiring Corporation or parent thereof does not agree to grant
         Replacement Options, then all outstanding Options which have been
         granted under the Plan and which are not exercisable as of the
         effective date of the Change of Control shall automatically accelerate
         and become exercisable immediately prior to the effective date of the
         Change of Control as described below. The term "Acquiring Corporation"
         means the surviving, continuing, successor or purchasing corporation,
         as the case may be. In the event that the successor corporation refuses
         to grant Replacement Options, the Offering Period then in progress
         shall be shortened and a new Purchase Date shall be set (the "New
         Purchase Date"), as of which date the Offering Period then in progress
         will terminate. The New Purchase Date shall be on or before the date of
         consummation of the Change in Control and the Board shall notify each
         participant in writing, at least ten (10) days prior to the New
         Purchase Date, that the Purchase Date for his or her option has been
         changed to the New Purchase Date and that his or her option will be
         exercised automatically on the New Purchase Date, unless prior to such
         date he or she has withdrawn from the Offering Period as provided in
         Article 9. For purposes of this Article 17, an option granted under the
         Plan shall be deemed to be assumed, without limitation, if, at the time
         of issuance of the stock or other consideration upon a Change in
         Control, each holder of an option under the Plan would be entitled to
         receive upon exercise of the option the same number and kind of shares
         of stock or the same amount of property, cash or securities as such
         holder would have been entitled to receive upon the occurrence of the
         Change in Control if the holder had been, immediately prior to the
         transaction, the holder of the number of Shares covered by the option
         at such time (after giving effect to any adjustments in the number of
         Shares covered by the option as provided for in this Article 17);
         provided, however, that if the consideration received in the
         transaction is not solely common stock of the Acquiring Corporation,
         the Board may, with the consent of the Acquiring Corporation, provide
         for the consideration to be received upon exercise of the option to be
         solely common stock of the Acquiring Corporation or its parent equal in
         Fair Market Value to the per Share consideration received by holders of
         Common Stock in the transaction. Notwithstanding any other provision of
         this Section, the Board may determine, in its discretion, to terminate
         any Offering Period in progress immediately prior to the effective date
         of a Change of Control and to return all unused Contributions to
         Participants.

17.3     Liquidation and Dissolution. In the event of a dissolution or
         liquidation of the Company, the Offering Period then in progress will
         terminate immediately prior to the consummation of such action, unless
         otherwise provided by the Board.


                         XVIII. Amendment or Termination

18.1     Authority to Amend or Terminate Plan. The Board may at any time and for
         any reason terminate or amend the Plan. Except as provided in Article
         17, no such termination of the Plan may affect options previously
         granted; provided, that the Plan or an Offering Period may be
         terminated by the Board on a Purchase Date or by the Board's setting a
         new Purchase Date with respect to an Offering Period then in progress
         if the Board


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         determines that termination of the Plan and/or the Offering Period is
         in the Company's best interests and the stockholders' or if
         continuation of the Plan and/or the Offering Period would cause the
         Company to incur adverse accounting charges as a result of a change
         after the effective date of the Plan in the generally accepted
         accounting rules applicable to the Plan. Except as provided in Article
         17 and in this Article 18, no amendment to the Plan shall make any
         change in any option previously granted which adversely affects the
         rights of any participant. In addition, to the extent necessary to
         comply with Rule 16b-3 under the Exchange Act, or under Code Section
         423 (or any successor rule or provision or any applicable law or
         regulation), the Company shall obtain stockholder approval in such a
         manner and to such a degree as so required.

18.2     Amendment of Plan Provisions. Without stockholder consent and without
         regard to whether any participant rights may be considered to have been
         adversely affected, the Board shall be entitled to change Offering
         Periods in any way, limit the frequency and/or number of changes in the
         amount withheld during an Offering Period, establish the exchange ratio
         applicable to amounts withheld in a currency other than U.S. dollars,
         permit payroll withholding in excess of the amount designated by a
         participant in order to adjust for delays or mistakes in the Company's
         processing of properly completed withholding elections, establish
         reasonable waiting and adjustment periods and/or accounting and
         crediting procedures to ensure that amounts applied toward the purchase
         of Common Stock for each participant properly correspond with amounts
         withheld from the participant's Compensation, and establish such other
         limitations or procedures as the Board, in its sole discretion,
         determines to be advisable.


                                  XIX. Notices

19.1     Notices. All notices or other communications by a participant to the
         Company under or in connection with the Plan shall be deemed to have
         been duly given when received in the form specified by the Company at
         the location, or by the person, designated by the Company for the
         receipt thereof.


                       XX. Conditions Upon Share Issuance

20.1     Conditions Upon Share Issuance. Shares shall not be issued with respect
         to an option unless the exercise of such option and the issuance and
         delivery of such Shares pursuant thereto shall comply with all
         applicable provisions of law, domestic or foreign, including, without
         limitation, the Securities Act of 1933, as amended, the Exchange Act,
         the rules and regulations promulgated thereunder, applicable state
         securities laws and the requirements of any stock exchange upon which
         the Shares may then be listed, and shall be further subject to the
         approval of counsel for the Company with respect to such compliance. As
         a condition to the exercise of an option, the Company may require the
         person exercising such option to represent and warrant at the time of
         any such exercise that the Shares are being purchased only for
         investment and without any present intention to sell or distribute such
         Shares if, in the opinion of


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         counsel for the Company, such a representation is required by any of
         the aforementioned applicable provisions of law.


                               XXI. Miscellaneous

21.1     Term of Plan and Effective Date. The Plan shall become effective upon
         the IPO Date. It shall continue in effect for a term of twenty (20)
         years unless sooner terminated under Article 18.

21.2     Additional Restrictions. The terms and conditions of options granted
         hereunder to, and the purchase of Shares by, persons subject to Section
         16 of the Exchange Act shall comply with the applicable provisions of
         Rule 16b-3. This Plan shall be deemed to contain, and such options
         shall contain, and the Shares issued upon exercise thereof shall be
         subject to, such additional conditions and restrictions as may be
         required by Rule 16b-3 to qualify for the maximum exemption from
         Section 16 of the Exchange Act with respect to Plan transactions.

21.3     Withholding. The Company shall have the right to deduct from all
         amounts paid to a participant in cash as salary, bonus or other
         compensation any taxes required by law to be withheld in respect of
         awards granted under the Plan. In the Administrator's discretion, a
         participant may be permitted to elect to have withheld from the Shares
         otherwise issuable to the participant, or to tender to the Company, the
         number of Shares whose Fair Market Value equals the minimum amount
         required to be withheld.

21.4     Construction of the Plan. The validity, construction, interpretation,
         administration and effect of the Plan and of its rules and regulations,
         and rights relating to the Plan, shall be determined solely by the
         Board. Any determination by the Board shall be final and binding on all
         participants. The Plan shall be governed in accordance with the laws of
         the State of Delaware, without regard to the conflict of law provisions
         of such laws.

21.5     No Right to Option; No Right to Employment. No person shall have any
         claim of right to be granted an option under the Plan. Neither the Plan
         nor any action taken hereunder shall be construed as giving any
         employee any right to be retained in the Company's employ or any of its
         subsidiaries or as giving any consultant, advisor or director any right
         to continue to serve in such capacity.

21.6     Awards Not Includable for Benefit Purposes. Income recognized by a
         participant pursuant to the provisions of the Plan shall not be
         included in the determination of benefits under any "employee benefit
         plan" (as such term is defined in Section 3(3) of the Employee
         Retirement Income Security Act of 1974) or such other benefit plan,
         policy or arrangement applicable to the participant that are maintained
         by the Company or any of its subsidiaries, except as may be provided
         under the terms of such plans or determined by resolution of the Board.

21.7     No Strict Construction. No rule of strict construction shall be implied
         against the Company, the Board, or any other person in the
         interpretation of any of the terms of


                                       12

<PAGE>   13


         the Plan, any award granted under the Plan or any rule or procedure
         established by the Board.

21.8     Captions. All Section headings used in the Plan are for convenience
         only, do not constitute a part of the Plan, and shall not be deemed to
         limit, characterize or affect in any way any provisions of the Plan,
         and all provisions of the Plan shall be construed as if no captions
         have been used in the Plan.

21.9     Severability. Whenever possible, each provision in the Plan and every
         option at any time granted under the Plan shall be interpreted in such
         manner as to be effective and valid under applicable law, but if any
         provision of the Plan or any option at any time granted under the Plan
         shall be held to be prohibited by or invalid under applicable law, then
         such provision shall be deemed amended to accomplish the objectives of
         the provision as originally written to the fullest extent permitted by
         law, and all other provisions of the Plan and every other option at any
         time granted under the Plan shall remain in full force and effect.

21.10    Legends. All certificates for Shares delivered under the Plan shall be
         subject to such transfer and other restrictions as the Board may deem
         advisable under the rules, regulations and other requirements of the
         Securities and Exchange Commission, any stock exchange or quotation
         system upon which the Common Stock is then listed or quoted and any
         applicable federal or state securities law, and the Board may cause a
         legend or legends to be put on any such certificates to make
         appropriate references to such restrictions.


                                       13

<PAGE>   14


                                   APPENDIX A

              DESIGNATED SUBSIDIARIES PARTICIPATING UNDER THE PLAN



                          FreeMarkets OnLine S.A./N.V.


                                       14

<PAGE>   15


                                FREEMARKETS, INC.
                              AMENDED AND RESTATED
                          EMPLOYEE STOCK PURCHASE PLAN

                             SUBSCRIPTION AGREEMENT


New Election ______
Change of Election ______

         1. I, ________________________, hereby elect to participate in the
FreeMarkets, Inc. Amended and Restated Employee Stock Purchase Plan (the "Plan")
for the Offering Period from __________________, ____ to _______________, ____,
and subscribe to purchase shares of the Company's Common Stock in accordance
with this Subscription Agreement and the Plan.

         2. I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 20% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).

         3. I hereby authorize payroll deductions during the Offering Period at
the rate stated in Item 2 of this Subscription Agreement. I understand that all
payroll deductions made by me shall be credited to my account under the Plan and
that I may not make any additional payments into such account. I understand that
all payments made by me shall be accumulated for the purchase of Shares at the
applicable purchase price determined in accordance with the Plan. I further
understand that, except as otherwise set forth in the Plan, Shares will be
purchased for me automatically on the Purchase Date of the Offering Period
unless I otherwise withdraw from the Plan by giving written notice to the
Company for such purpose.

         4. I understand that I may discontinue my participation in accordance
with the Plan's terms at any time prior to a Purchase Date. I also understand
that I can increase or decrease the rate of my Contributions on one occasion
only with respect to any increase and one occasion only with respect to any
decrease during any Offering Period by completing and filing a new Subscription
Agreement, such Subscription Agreement to take effect as soon as
administratively practicable after the date it is filed with the Administrator.
Further, I may change the rate of deductions for future Offering Periods by
filing a new Subscription Agreement, and any such change will be effective as of
the beginning of the next Offering Period. In addition, I acknowledge that,
unless I discontinue my participation in the Plan, my election will continue to
be effective for each successive Offering Period.

         5. I have received a copy of the complete "FreeMarkets, Inc. Amended
and Restated Employee Stock Purchase Plan" and a prospectus describing the
Plan's terms. I understand that my participation in the Plan is in all respects
subject to the terms of the Plan.


<PAGE>   16


         6. Shares purchased for me under the Plan should be issued in the
name(s) of (name of employee or employee and spouse only):


                        ________________________________


                        ________________________________


         7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:


NAME:    (Please print)_________________________________________________________
                      (First)                  (Middle)                   (Last)


         (Relationship)_________________________________________________________


         (Address)     _________________________________________________________


                       _________________________________________________________


                       _________________________________________________________


         8. I understand that if I dispose of any shares acquired by me pursuant
to the Plan within 2 years after the Offering Date of an Offering Period during
which such shares were purchased on my behalf or within 1 year after the
Purchase Date for such Offering Period, I will be treated for federal income tax
purposes as having received ordinary compensation income at the time of such
disposition in an amount equal to the excess of the fair market value of the
shares on the Purchase Date over the price which I paid for the shares,
regardless of whether I disposed of the shares at a price less than their fair
market value at the Purchase Date. The remainder of the gain or loss, if any,
recognized on such disposition will be treated as capital gain or loss.

         I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER
THE DATE OF ANY SUCH DISPOSITION, AND I WILL MAKE ADEQUATE PROVISION FOR
FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON
THE DISPOSITION OF THE COMMON STOCK. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to the sale or early
disposition of Common Stock by me.

         9. If I dispose of such shares at any time after expiration of the
2-year and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received compensation income only to the
extent of an amount equal to the lesser of (1) the excess of the fair market
value of the shares at the time of such disposition over the purchase


                                        2

<PAGE>   17



price which I paid for the shares under the option, or (2) 15% of the fair
market value of the shares on the Offering Date or the Purchase Date for a
particular Offering Period, whichever is lower. The remainder of the gain or
loss, if any, recognized on such disposition will be treated as capital gain or
loss.

         I UNDERSTAND THAT THIS TAX SUMMARY IS ONLY A SUMMARY AND IS SUBJECT TO
CHANGE. I further understand that I should consult a tax advisor concerning the
tax implications of the purchase and sale of stock under the Plan.

         10. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.

SIGNATURE:


________________________________


SOCIAL SECURITY #


________________________________


DATE:


________________________________


                                        3

<PAGE>   18



                                FREEMARKETS, INC.
                              AMENDED AND RESTATED
                          EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

         I, __________________________, hereby elect to withdraw my
participation in the FreeMarkets, Inc. Amended and Restated Employee Stock
Purchase Plan (the "Plan") for the Offering Period that began on ____________,
_____. This withdrawal covers all Contributions currently credited to my account
and is effective on the date designated below.

         I understand that all Contributions credited to my account will be paid
to me as soon as administratively practicable following receipt by the
Administrator of this Notice of Withdrawal and that my option for the current
period will automatically terminate, and that no further Contributions for the
purchase of shares can be made by me during the Offering Period.

         The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.



Dated:__________                            __________________________________
                                            Signature of Employee


                                            __________________________________
                                            Social Security Number