<PAGE>   1
INFORMATION DENOTED BY [*] HEREIN HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THIS INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.


                                                                    Exhibit 10.1



  SERVICE AND MARKET ACCESS AGREEMENT BETWEEN UNITED TECHNOLOGIES CORPORATION
                             AND FREEMARKETS, INC.


         This Service and Market Access Agreement ("Agreement") is made this
19th day of October, 2000, effective as of January 1, 2001 ("Effective Date"),
by and between United Technologies Corporation, a corporation organized and
existing under the laws of the State of Delaware with an office and place of
business at Hartford, Connecticut (hereinafter referred to as "United") and
FreeMarkets Inc., a corporation organized and existing under the laws of the
State of Delaware with an office and place of business at FreeMarkets Center,
210 Sixth Avenue, Pittsburgh, Pennsylvania 15222 (hereinafter referred to as
"FreeMarkets" or "Seller"), and shall govern the relationship of the parties for
services to be provided by FreeMarkets beginning as of January 1, 2001. For
purposes of this Agreement, the rights granted to United under this Agreement
shall also be deemed granted to any United "Affiliate," which shall mean any
entity in which United owns more than 50% of the outstanding voting ownership
interests (except as otherwise agreed to by the parties in writing), and shall
also mean International Aero Engines, Inc.


         United wishes to be provided with, and FreeMarkets wishes to provide,
use of the FreeMarkets business-to-business eMarketplace and eSourcing
capabilities which shall include access to the following services and
technologies: (i) access to FreeMarkets' proprietary BidWare(R), BidServer(R),
FreeMarkets(R) Desktop(TM) software, QuickSource(TM) software, and computer and
networking hardware (the "System"), (ii) technical hosting of the foregoing
Web-deployed software applications, (iii) market operations support to United's
buyers as well as current and potential United suppliers, (iv) access to
FreeMarkets' Web-deployed supplier information, (v) Market Making Services, and
(vi) eSourcing program management. The parties intend that FreeMarkets will
provide the services and technologies described herein to assist United to
achieve savings and supplier consolidation for purchased components and
materials used in United's products as well as other purchased goods and
services. This Agreement is intended to address the specific understanding of
the parties related to such projects and the provision of access to the System,
including without limitation, provisions regarding confidentiality.

         In consideration of the premises and of the mutual promises of each
party to the other herein contained, it is hereby mutually agreed as follows:

ARTICLE I - STATEMENT OF BUSINESS SERVICES, SYSTEM ACCESS, SCOPE OF WORK AND
RESOURCE COMMITMENTS

a)   TERM OF SERVICES. FreeMarkets agrees that during the period commencing on
     the 1st day of January, 2001 and ending on December 31, 2003 (the "Term"),
     FreeMarkets will make available to United, to the extent, and in the manner
     hereinafter provided, its business services with respect to industrial
     market making and purchasing and access to the System.

b)   FREEMARKETS ESOURCING SOLUTIONS. FreeMarkets will conduct a series of
     online and offline project(s) (also known as sourcing project(s)), or
     provide technology and information for United to conduct such project(s),
     for the purposes of assisting United to achieve savings and supplier
     consolidation for purchased components and materials used in United's
     products as well as other purchased goods and services, as identified by
     United from time to time. Each sourcing project shall be conducted
     utilizing, FreeMarkets "DirectSource(TM) eSourcing Solution",
     "FullSource(TM) eSourcing Solution" or "QuickSource(TM) eSourcing Solution"
     as each is generally described in Exhibit A, and as more fully described in
     Exhibits B, C and D respectively, each attached hereto.

     The DirectSource(TM) eSourcing Solution is designed to give United's buyers
     access to FreeMarkets' System (exclusive of

<PAGE>   2

     QuickSource(TM) software) in situations requiring less Market Making
     Service and less complex bid situations. The DirectSource(TM) eSourcing
     Solution may apply where:

         (i)      The buyer has experience with online markets;

         (ii)     The desired suppliers to compete in the market is known;

         (iii)    An Opportunity Assessment (as set forth in Exhibit C) is not
                  required; or

         (iv)     The RFQ already exists or can be created by United without
                  assistance from FreeMarkets.

     The FullSource(TM) eSourcing Solution gives buyers access to FreeMarkets'
     entire suite of eSourcing solutions described in this Agreement, exclusive
     of QuickSource(TM) software. The FullSource(TM) eSourcing Solution may be
     used over the DirectSource(TM) eSourcing Solution in more complex market
     making situations where:

         (i)      United desires that FreeMarkets provide assistance in writing
                  the Request For Quotation ("RFQ");

         (ii)     United desires that FreeMarkets researches and recruits new
                  suppliers;

         (iii)    The buyer is less experienced in online market making; or

         (iv)     Several United buying locations participate in the sourcing
                  project requiring significant communication and process
                  management.

     In addition to receiving the DirectSource(TM) eSourcing Solution and the
     FullSource(TM) eSourcing Solution, United may elect to procure products
     without the assistance of FreeMarkets pursuant to the QuickSource(TM)
     eSourcing Solution as set forth on Exhibit A and more fully set forth on
     Exhibit D. Throughout the Term, in consideration of the fees set forth in
     Article II a) (ii), FreeMarkets will provide United and its Affiliates with
     a license to access FreeMarkets(R) QuickSource(TM) software pursuant to the
     terms of this Agreement and the Amended and Restated Software License
     Agreement effective as of January 1, 2001 between United and FreeMarkets
     attached hereto as Exhibit H ("Software License Agreement"), solely for the
     purpose of allowing United buyers to conduct self-service online bidding
     events as set forth in Exhibit A and as more fully set forth in Exhibit E.

     The parties acknowledge and agree that before any services are provided by
     FreeMarkets for a particular sourcing project, United shall inform
     FreeMarkets whether United desires FreeMarkets to provide its
     FullSource(TM) eSourcing Solution or the DirectSource(TM) eSourcing
     Solution for such sourcing project. The parties further agree that any
     sourcing project(s) begun prior to January 1, 2001 which have not been
     completed by January 31, 2001 shall be deemed to be FullSource Project(s)
     (as defined below), unless otherwise agreed to by the parties.

 c)  FREEMARKETS SOURCING PROJECTS. For purposes of this Agreement, a
     "FreeMarkets Sourcing Project" shall include any United sourcing project
     commenced during the Term where FreeMarkets provides one or more of the
     services or technologies described in the FullSource eSourcing Solution or
     the DirectSource eSourcing Solution or QuickSource eSourcing Solution.

     A Sourcing Project where FreeMarkets provides its DirectSource(TM)
     eSourcing Solution shall be referred to herein as a "DirectSource Project."
     A Sourcing Project where FreeMarkets provides its FullSource(TM) eSourcing
     Solution shall be referred to as a "FullSource Project." A Sourcing Project
     where FreeMarkets provides its QuickSource(TM) eSourcing Solution shall be
     referred to as a "QuickSource Project." Within [*] of receipt of the
     schedule identifying the type of Sourcing Project begun during a prior
     month


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<PAGE>   3

     as set forth in Section 6.4 of Exhibits A, B and C, United will notify
     FreeMarkets of any objection to such schedule and the parties will
     work to mutually resolve any such objections. No project will be designated
     as a FreeMarkets Sourcing Project and a FullSource Project, DirectSource
     Project or QuickSource Project, unless the parties mutually agree to such
     designation, provided that if United fails to object to a designation
     within thirty (30) days of receipt of the schedule containing such
     designation, United will be deemed to have accepted such designation. In
     addition, if a Sourcing Project is initially designated as a DirectSource
     Project but FreeMarkets is asked by United to perform services or provide
     technology within the FullSource(TM) eSourcing Solution which are not
     offered as part of the DirectSource(TM) eSourcing Solution under this
     Agreement, such DirectSource Project shall automatically be deemed to be a
     FullSource Project. FreeMarkets shall provide written notice to United of
     any such upgrade in service level prior to FreeMarkets commencement of
     upgraded work on such project. Similarly, upgrade in project designation
     will also apply to QuickSource Projects where United requests that
     FreeMarkets provide service or technology offerings from the
     DirectSource(TM) and/or FullSource(TM) eSourcing Solutions. In the event
     that United downgrades the sourcing level of a Sourcing Project (e.g. from
     FullSource to DirectSource or QuickSource, or Direct Source to
     QuickSource), the Sourcing Project will be deemed to be provided at the
     higher sourcing level for purposes of calculating the fees due thereon,
     provided that FreeMarkets has provided any services or technology provided
     in the higher service level that are not a part of the lower service level.

 d)  FTES. The FullSource(TM) eSourcing Solution and DirectSource(TM) eSourcing
     Solution services shall be provided as reasonably requested by United.
     FreeMarkets shall provide the dedicated full time equivalent resources
     ("FTEs") set forth in Exhibit E, attached hereto to provide such services.

 e)  COOPERATION REQUIRED BY UNITED. The results of the FreeMarkets Sourcing
     Projects and Overall Project Management Services (as described in Exhibits
     A, B and C) for United will be highly dependent upon the support
     FreeMarkets receives from United staff. FreeMarkets and United staff will
     cooperate in the performance under this Agreement to deliver savings to
     United.

 f)  ADDITIONAL SERVICES. If requested by United, FreeMarkets shall provide to
     United the following additional services (not related to specific
     FreeMarkets Sourcing Projects conducted by FreeMarkets under this
     Agreement) at a cost to be mutually agreed to by FreeMarkets and United:
     (1) supply chain and/or logistics consulting services; (2) broad based
     sourcing opportunity and spend assessment services; (3) advanced sourcing
     analysis regarding shared cost models and/or make versus buy decisions; (4)
     sourcing process design and re-engineering; (5) general e-commerce strategy
     consulting; (6) outsourcing analysis, strategy and execution; (7) commodity
     strategies and market studies and (8) sourcing organization structure and
     change management services. The parties will execute a statement of work
     regarding any additional services to be provided under this Agreement.

 g)  BIDWARE(R)/BIDSERVER(R) SOFTWARE. Subject to the terms of Article III e),
     throughout the Term, in consideration of the fees set forth in Article II
     a) (i), FreeMarkets will provide United and its Affiliates with any
     necessary license to use its proprietary BidWare(R)/BidServer(R) software
     pursuant to the terms of this Agreement and the Software License Agreement
     and will provide suppliers with any necessary license to use its
     proprietary BidWare(R)/BidServer(R) software pursuant to the terms of the
     standard FreeMarkets' supplier license agreement. These licenses are for
     any usage necessary to conduct FullSource(TM) and DirectSource(TM) CBEs(R)
     under this Agreement, but do not extend beyond these projects or the Term.


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<PAGE>   4



 h)  FREEMARKETS(R)DESKTOP(TM)SOFTWARE. Throughout the Term, in consideration of
     the fees set forth in Article II a) i), FreeMarkets will provide United and
     its Affiliates with a license to access FreeMarkets(R)Desktop(TM)software
     pursuant to the terms of this Agreement and the Software License Agreement,
     solely for the following purposes: writing, approving and publishing online
     RFQs (requests for quotation), reviewing supplier and business capability
     profiles, inviting qualified bidders to participate in a CBE(R), tracking
     supplier progress and lot interest, viewing real-time bidding and printing
     post-bid reports, matching bidding opportunities to supplier profiles and
     managing multiple projects. This access is only for usage necessary to
     conduct FullSource(TM)and DirectSource(TM)CBEs(R)under this Agreement, but
     does not extend beyond the Sourcing Projects conducted under this Agreement
     or the Term.

 i)  QUICKSOURCE(TM) SOFTWARE. Access to QuickSource Projects and the
     QuickSource(TM) software will be provided to United on a [*] day
     initial trial basis when QuickSource is made available by FreeMarkets
     ("Trial Period"). If during such Trial Period United determines that it
     does not desire to use QuickSource, it shall so notify FreeMarkets in
     writing prior to the expiration of the Trial Period and shall not be
     charged for QuickSource. Upon such notification, United's right to conduct
     QuickSource Projects and access the QuickSource(TM) software shall
     terminate. In the event that United does not provide such notice to
     FreeMarkets prior to the expiration of the Trial Period, United shall pay
     to FreeMarkets the fees set forth in Article II a) (ii), provided that the
     fees for QuickSource for the first Contract Year shall be pro-rated for
     that portion of the Contract Year from the beginning of the Trial Period to
     the end of the Contract Year. Thereafter, United's right to conduct
     QuickSource Projects and access the QuickSource software shall
     automatically renew at the conclusion of the then present Contract Year
     unless United provides notice of its intention not to renew its rights to
     QuickSource by providing notice thereof at least [*] days prior to the end
     of the then current Contract Year or fails to pay the yearly fee for
     QuickSource(TM) as set forth in this Agreement. United and its Affiliates
     access to the QuickSource(TM) software shall be pursuant to the terms of
     this Agreement and the Software License Agreement and shall be solely for
     the purposes of conducting self-service reverse and upward auctions,
     including access to generic RFQ Builder(TM). The access to the
     QuickSource(TM) software is only for usage necessary to conduct
     QuickSource(TM) auctions under this Agreement.

 j)  SERVICE STANDARDS. FreeMarkets represents and warrants that during the
     Term, the System will perform in a manner necessary to carry out its
     obligations under this Agreement. FreeMarkets' sole obligation under this
     performance warranty for the System shall be to remedy any nonconformance
     of the System. EXCEPT AS EXPRESSLY SET FORTH HEREIN OR THE SOFTWARE LICENSE
     AGREEMENT, FREEMARKETS MAKES NO OTHER WARRANTIES REGARDING THE SYSTEM, ANY
     COMPETITIVE BIDDING EVENT, ANY SUPPLIER, OR UNITED'S PARTICIPATION IN ANY
     COMPETITIVE BIDDING EVENT, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
     TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
     PURPOSE.

 k)  SUPPLIER SELECTION. In no event shall United be obligated hereunder to
     accept the lowest bid in a CBE(R)or any other project hereunder.

 l)  By [*], FreeMarkets and United will establish mutually agreed to
     performance metrics to be used by each party to evaluate FreeMarkets' and
     United's performance under this Agreement. The metrics will be applied to
     each DirectSource and FullSource Sourcing Project and each party's general
     performance in accordance with the metrics will be reviewed [*]. Issues
     discovered by use of the metrics may be raised with the


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<PAGE>   5

     management of each party to identify actions to improve the performance of
     the parties under this Agreement.

ARTICLE II - COMPENSATION


 a)  FEES.

     (i)  In consideration of the business services, supplier market information
          and System access (exclusive of access to the QuickSource(TM)
          software), technical hosting, market operations, access to supplier
          information, Market Making Services, and eSourcing program management
          provided by FreeMarkets hereunder, United agrees to pay FreeMarkets
          the fees set forth in Section 1 (a) of Exhibit E attached hereto.

     (ii) In consideration of the access to FreeMarkets(R) QuickSource(TM)
          eSourcing Solution, United agrees to pay FreeMarkets the fees for
          QuickSource(TM) eSourcing Solution set forth in Section 1(b) of
          Exhibit E attached hereto.

 b)  EXPENSE REIMBURSEMENT. In addition to the fees set forth in Exhibit E
     attached hereto and the fees for additional services described in Article I
     f), United shall reimburse FreeMarkets for the cost of all reasonable and
     necessary traveling expenses, clerical expenses, telecommunications
     expenses, mailing, courier, blueprinting, printing, copying or stenographic
     services, in connection with the performance of the services hereunder
     including without limitation, the services provided under Article I f). The
     monthly expenses set forth on Exhibit E will be payable as set forth in
     Article II c).

 c)  PAYMENT. Amounts that are due under Article II a) and b) and Article I f)
     will be invoiced to United by FreeMarkets at the end of each calendar month
     (except for the fees for QuickSource under Article II a) ii) which shall be
     invoiced at the end of the first month of each Contract Year (as defined in
     Exhibit E), but at the end of the Trial Period for the first Contract
     Year); provided that the estimated amounts due under Article II b) will be
     invoiced to United for each month during the Term and within [*] days after
     each calendar quarter, FreeMarkets will provide a schedule that reconciles
     actual expenses under Article II b) for such calendar quarter with the
     estimated payments and will provide United with an invoice for any amount
     by which actual expenses exceeded estimated expenses. If actual expenses
     were less than estimated expenses, FreeMarkets will either credit United
     with the difference or, if no further invoices are to be sent to United
     hereunder, will pay such difference to United. United acknowledges that it
     shall be responsible for all amounts invoiced and due under this Agreement.
     FreeMarkets will submit invoices for the services and related expenses as
     described herein directly to Vice President Worldwide Sourcing or another
     designated member of the Vice President of Supply Management's staff. Upon
     presentation of such invoices in form and detail satisfactory to United,
     United will [*]. Each invoice shall fairly and accurately describe in
     sufficient detail the actual services performed, the period of performance
     and the fees and expenses that are payable to FreeMarkets under the
     provisions of this Agreement.

ARTICLE III - TERMS AND CONDITIONS OF SOURCING PROJECTS

United acknowledges and agrees as follows:

 a)  CBE(R) RULES. With respect to any CBE(R) conducted hereunder, to abide by
     the attached Rules and Procedures Governing Competitive Bidding Events
     (Exhibit G), which contain marketplace ground rules for United, suppliers,
     and FreeMarkets. These Rules and Procedures are designed to ensure ethical
     participation. In the event that FreeMarkets and/or United postpones,
     cancels or otherwise modifies any CBE(R) in accordance with Exhibit G, to
     the extent possible, each party agrees to provide advance notice to the
     other party of such modification.


                                       5
<PAGE>   6

 b)  NDA. United and FreeMarkets have entered into the attached Non-Disclosure
     Agreement ("NDA") as of October 1, 1997 (Exhibit H), under which each party
     mutually agrees to keep confidential information which either party shall
     designate to the other as confidential, including but not limited to
     engineering data and prints. The parties hereby agree that the terms of
     such Non-Disclosure Agreement apply to this Agreement and that the terms
     and conditions of this Agreement shall be designated confidential
     information under such Non-Disclosure Agreement.

 c)  RFQ COPIES. United retains all copyright ownership rights in any RFQ
     completed for United hereunder provided that United acknowledges that
     FreeMarkets has the right to include in RFQs all information it receives
     from United for purposes of inclusion in the RFQs and to copy RFQs for
     distribution to suppliers selected by United for procurement by United
     only. United will provide FreeMarkets for inclusion in such RFQs any
     non-disclosure agreement forms required by United or its Affiliates to be
     executed by such suppliers.

 d)  USE OF DATA. FreeMarkets shall have the right to use all data generated in
     connection with FreeMarkets Sourcing Projects, including data that United
     provides to FreeMarkets, to do the following: (i) perform such general
     analyses to track the performance of the BidWare(R)/BidServer(R),
     FreeMarkets(R) Desktop(TM) and QuickSource(TM) software; (ii) determine
     general price trends in various supply industries; and (iii) create
     predictive analyses useful for estimating the price of a Component before
     such Component has been the subject of a FreeMarkets Sourcing Project. For
     purposes of this subsection, "Component" shall mean a distinct part or
     material described by a United technical drawing or part number; provided,
     however, that such drawings or part numbers shall be considered the
     Confidential Information of United as described in the NDA but may be
     distributed by FreeMarkets as part of an RFQ as set forth in the preceding
     paragraph. FreeMarkets will use such data and perform such analyses and
     publish the same in such a way as to be reasonably untraceable to United.
     FreeMarkets shall have the right to publish general results of FreeMarkets
     Sourcing Projects to suppliers through FreeMarkets provided United is
     anonymous and reasonably untraceable. These results may include: specific
     results for supplier participants in each FreeMarkets Sourcing Project; and
     general results for all supplier members of the service.

 e)  SOFTWARE OWNERSHIP AND LICENSE. United acknowledges that FreeMarkets
     retains full ownership rights to the BidWare(R)/BidServer(R) software,
     FreeMarkets(R) Desktop(TM) software, and the QuickSource(TM) software, and
     that United is not acquiring any ownership interest in such technology. The
     terms under which FreeMarkets will supply the BidWare(R)/BidServer(R),
     FreeMarkets(R) Desktop(TM) software, the QuickSource(TM) software and STARS
     technology (collectively "Software") under this Agreement are further
     described in the Software License Agreement (Exhibit I). Unless otherwise
     agreed in writing by the parties, United also acknowledges that FreeMarkets
     will retain full ownership rights to any software, including STARS,
     developed by FreeMarkets during the Term.

 f)  NEW TECHNOLOGY. In the event that FreeMarkets develops any new software or
     other technology related to sourcing during the term of this Agreement,
     except for software or other technology, if any, specifically developed by
     FreeMarkets for United, FreeMarkets will offer such software and other
     technology to United no later than the time it offers such software and
     other technology to its other customers. In addition, [*].

ARTICLE IV - INDEMNITIES

 a)  FREEMARKETS. FreeMarkets agrees to protect, defend, indemnify, and hold
     harmless United from and against all claims, demands, causes of action of
     every type and character, arising out of or related to negligent or willful
     acts or omissions of


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<PAGE>   7


     FreeMarkets or its subcontractors, officers, directors, assigns or
     employees in connection with the performance of the work under this
     Agreement.

 b)  UNITED. United agrees to protect, defend, indemnify and hold harmless
     FreeMarkets from and against all claims, demands, causes of action of every
     type and character arising out of or related to any negligent or willful
     act or omission of United or its subcontractors, officers, directors,
     assigns, or employees in connection with the performance of its obligations
     under this Agreement.

 c)  [*]. In the event that a claim is made hereunder, at law or otherwise,
     alleging damage as a result of any error, omission or other act arising out
     of or relating to this Agreement, [*].

ARTICLE V - INTELLECTUAL PROPERTY INDEMNIFICATION

 a)  GENERAL. FreeMarkets shall protect, defend, indemnify and hold harmless
     United from any suit or proceeding brought against United based on a claim
     that (1) the Software furnished by FreeMarkets hereunder, (2) the use of
     the Software by United consistent with FreeMarkets' specifications and
     instructions, or (3) the copying by United of any Software or documentation
     as permitted herein constitutes an infringement of any United States or
     foreign patent, United States or foreign copyright or other intellectual
     property rights asserted under the laws of the United States or other
     countries.

 b)  LIMITATIONS. FreeMarkets shall have no liability for any claim based upon:
     (i) the combination, operation or use of the Software with equipment,
     devices or software not supplied or specified by FreeMarkets; (ii) the
     alteration or modification of the Software which alteration or modification
     was not made by FreeMarkets, or (iii) the failure by United to use the most
     current version of the Software (other than STARS).

ARTICLE VI - NOTICES

     Whenever any notice is required or authorized to be given hereunder, such
notice shall be given in writing and sent by certified mail, return receipt
requested, or overnight delivery by a national reputable service. Any such
notice, if sent by United to the Seller, shall be addressed as follows:

         Glen T. Meakem
         Chairman and CEO
         FreeMarkets, Inc.
         FreeMarkets Center
         210 Sixth Avenue
         Pittsburgh, PA 15222

and if sent by FreeMarkets to United, shall be addressed as follows:

         United Technologies Corporation
         One Financial Plaza
         Hartford, CT 06101
         Attention: Vice President Worldwide Sourcing

ARTICLE VII - ADDITIONAL PROVISIONS

 a)  UNITED GENERAL TERMS. This Agreement is subject to and governed by the
     following additional provisions: (1) "United Technologies Corporation
     Service Agreement Provisions, dated February 1998" (attached hereto as
     Exhibit J) except provisions 3, 4, 9(a), 13 and 14 which shall not apply;
     (ii) United's "Code of Ethics"; and (iii) United's Policy Statement on
     Business Ethics and Contracting With the United States Government, as they
     may be amended from time to time.

 b)  REGULATORY COMPLIANCE. FreeMarkets represents and warrants to United that
     FreeMarkets shall comply strictly with all of the covenants, agreements,
     and undertakings made by FreeMarkets in, or furnished under or as part of
     this Agreement, including without limitation, compliance with all
     applicable laws or regulations, whether or not specifically referenced in
     this Agreement.

                                       7
<PAGE>   8

 c)  INSURANCE COVERAGE. The coverage amounts set forth in Provision 18 (2)-(6)
     of United's Service Agreement Provisions set forth in Exhibit J attached
     hereto shall [*], and in addition to such coverages, FreeMarkets shall
     obtain Employer's Liability Insurance for [*]. Notwithstanding anything to
     the contrary in Provision 18, such insurance shall contain a provision
     prohibiting cancellation or reduction in coverage [*]. FreeMarkets
     represents that, as of the date of execution of this Agreement, it has
     obtained all such insurance coverage.

 d)  NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY DIRECT DAMAGES, ARISING
     FROM THIS AGREEMENT OR THE SOFTWARE LICENSING AGREEMENT, UNDER ANY THEORY
     OF LIABILITY IN EXCESS OF [*]. IN NO EVENT WILL EITHER PARTY BE LIABLE TO
     THE OTHER FOR CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES OR LOST PROFITS
     OF ANY NATURE WHATSOEVER UNDER ANY THEORY OF LIABILITY, ARISING FROM THIS
     AGREEMENT OR THE SOFTWARE LICENSING AGREEMENT, EVEN IF THE PARTY HAS BEEN
     ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 e)  TERMINATION. This Agreement will remain in full force and effect during the
     Term, and may be terminated prior to the end of the Term only as follows:

       (i)   By either party if the other party has materially breached this
             Agreement and has failed to correct such breach within [*] days
             after receiving written notice from the other party specifying the
             nature of such breach;

       (ii)  By either party if the other party (1) becomes the subject of a
             voluntary or involuntary petition in bankruptcy or any proceeding
             relating to insolvency, receivership, liquidation, or composition
             for the benefit of creditors, if that petition or proceeding is not
             dismissed within thirty (30) days after filing, (ii) suspends the
             operation of its present business or liquidates its business
             assets, or (iii) generally fails to pay its debts as such debts
             become due or admits in writing its inability to pay its debts.

       (iii) By United, provided it gives FreeMarkets 30 days prior written
             notice of termination, and pays to FreeMarkets the following:

             (A) all fees and reimbursements that have accrued under Article I
             f), II a) and II b) through the date of termination; and

             (B) a fee (the "Termination Fee") equal to [*]. The parties agree
             that the Termination Fee will compensate FreeMarkets for the
             resources it is committing to United hereunder, and is not in the
             nature of liquidated damages or a penalty.

       (iv)  In the event that this Agreement expires under Article I (a) in
             accordance with the terms thereof or is terminated by United under
             Article VII (e) (i) or (ii), United shall not be obligated to pay
             FreeMarkets the Termination Fee; provided that such expiration or
             termination shall not affect United's obligations to pay
             compensation that has accrued under the terms of this Agreement
             prior to the date of expiration or termination.

       (v)   In the event that this Agreement is terminated for any reason,
             FreeMarkets will provide United with a schedule of all FreeMarkets
             Sourcing Projects commenced prior to the date of termination and
             the parties will reasonably cooperate to transition the FreeMarkets
             Sourcing Projects to United provided that termination of this
             Agreement shall not relieve either party of any obligation incurred
             prior to the termination.

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<PAGE>   9

ARTICLE VIII - MISCELLANEOUS

a)   MODIFICATION. This Agreement can only be modified by a written agreement
     duly signed by the persons authorized to sign agreements on behalf of the
     parties and any other variance from the terms and conditions of this
     Agreement will be of no effect.

b)   SEVERABILITY OF PROVISIONS. If any provision or provisions of this
     Agreement shall be held to be invalid, illegal or unenforceable, the
     validity, legality and enforceability of the remaining provisions shall not
     in any way be affected or be impaired thereby.

c)   GOVERNING LAW. This Agreement shall be governed by and construed in
     accordance with the laws of the State of Connecticut (other than the laws
     on the conflict of laws). Unless the parties otherwise agree, any action or
     proceedings by United against FreeMarkets shall be brought in the federal
     or state courts located in Pittsburgh, Pennsylvania, and any action brought
     by FreeMarkets against United shall be brought in federal or state courts
     in Hartford, Connecticut.

d)   ENTIRE AGREEMENT. This Agreement, including all exhibits and schedules
     hereto, the Non-Disclosure Agreement and the Software License Agreement
     referenced herein and attached hereto, are the complete and exclusive
     statement of the agreement between the parties as to the subject matter
     herein, and they supersede all prior and contemporaneous proposals or
     agreements, oral or written, and all other communications between the
     parties related to the subject matter of this Agreement, provided, however,
     that the provisions of the certain Service and System Access Agreement
     between the parties effective as of January 1, 1999 shall remain in effect
     until and through December 31, 2000 and shall apply to all Sourcing
     Projects completed as of such date.

e)   WAIVERS. A waiver of a breach or default under this Agreement shall not be
     a waiver of any other or subsequent breach or default. The failure or delay
     by either party in enforcing compliance with any term or condition of this
     Agreement shall not constitute a waiver of such term or condition unless
     such term or condition is expressly waived in writing.

f)   AGREEMENT BINDING. This Agreement shall be binding upon and inure to the
     benefit of the parties hereto, their successors and permitted assigns.

g)   ASSIGNMENT. Neither party may assign this Agreement without the prior
     written consent of the other party, which consent shall not be unreasonably
     withheld or delayed.

h)   AUTHORITY. Each party represents that it has full power and authority to
     enter into and perform this Agreement, and the person signing this
     Agreement on behalf of it has been properly authorized and empowered to
     enter into this Agreement.

i)   COUNTERPARTS. This Agreement may be executed in several counterparts, all
     of which taken together shall constitute one agreement between the parties.

j)   MINORITY-AND WOMEN-OWNED BUSINESS ENTERPRISES CLAUSE. During each year of
     the term of this Agreement, FreeMarkets shall purchase goods or services
     in the amount of 10% of the annual payments made by United under this
     Agreement from Minority and/or Women-Owned Business Enterprises. To assist
     in satisfying this requirement, FreeMarkets shall endeavor to purchase
     goods or services from such enterprises where such goods or services are
     utilized to supply United with the goods or services specified under this
     Agreement. FreeMarkets shall submit an implementation plan to UTC no later
     than sixty (60) days after entering into this Agreement. The plan shall be
     in accordance with UTC's Implementation Plan for Minority and Women-Owned
     Business Enterprises, attached hereto as Exhibit K.

     "Minority Owned Business Enterprise", or "MBE", is a business that is owned
     and controlled by racial and/or ethnic


                                       9
<PAGE>   10

     minorities including, but not limited to, African Americans, Hispanic
     Americans, Native Americans, Asian Pacific Americans, Asian Indian
     Americans, or any other group classified as a minority group by the United
     States Small Business Administration. A "Women Owned Business Enterprise"
     or "WBE" is a business that is owned and controlled by a woman or women.

k)   SUPPLIER DATA BASE. In the event that FreeMarkets (i) becomes the subject
     of a voluntary or involuntary petition in bankruptcy, if that petition is
     not dismissed within thirty (30) days after filing (each of the above a
     "Bankruptcy Event"), and (ii) fails in a material respect to provide its
     services hereunder, United shall continue to have the right to access
     FreeMarkets database through the earlier of December 31, 2003 or the
     termination of this Agreement (other than by a rejection of FreeMarkets as
     the debtor in possession or the Bankruptcy trustee). Such access to
     FreeMarkets database shall be subject to the terms and conditions generally
     applicable to such access hereunder. FreeMarkets acknowledges that if
     FreeMarkets as a debtor in possession or a trustee in Bankruptcy in a case
     under the Bankruptcy Code rejects this Agreement, United may elect to
     retain its rights under this Section k) as provided in Section 365 (n) of
     the Bankruptcy Code. Upon written request of United to FreeMarkets or the
     Bankruptcy Trustee, FreeMarkets or such Bankruptcy Trustee shall not
     interfere with the rights of United as provided in this Section l).

l)   SOURCE CODE ESCROW. Upon the execution of this Agreement by the parties,
     FreeMarkets and United shall execute the Software Escrow Agreement set
     forth on Exhibit L, attached hereto, which provides for the placement of
     the Software (as defined in Article III e)) and its source code in escrow
     according to the terms and conditions set forth therein.


                                       10
<PAGE>   11

    IN WITNESS WHEREOF, the parties hereto have executed or caused these
presents to be executed in duplicate (each of which shall be deemed to be an
original) effective as of the date first written above.

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

UNITED TECHNOLOGIES                            FREEMARKETS, INC.
  CORPORATION


By: /s/ KENT L. BRITTAN                        By: /s/ GLEN T. MEAKEM
    ----------------------                         ----------------------
Name:   Kent L. Brittan                        Name:   Glen T. Meakem
Title:  Vice President -                       Title:  Chairman and CEO
        Supply Management


                                                         Federal ID # 04326548



                                       1
<PAGE>   12


                                    Exhibit E

                          UNITED'S SCHEDULE OF PAYMENTS
                         TO FREEMARKETS DURING THE TERM


1.   FEES.

     (a)  FEES (EXCLUSIVE OF FEES FOR QUICKSOURCE(TM)eSOURCING SOLUTIONS):

          (i) FIXED MONTHLY ACCESS FEE. Pursuant to Article II a) i) of the
     Agreement, in consideration of the business services (including the
     FreeMarkets FTEs provided in the Agreement), supplier market information
     and System access (exclusive of access to the QuickSource(TM) eSourcing
     solution) provided by FreeMarkets under the Agreement, , United shall pay
     FreeMarkets each calendar month of each Contract Year a "Fixed Monthly
     Access Fee" as set forth in Table 1 below. Fixed Monthly Access Fees for a
     month shall be paid according to Article II c).

          (ii) VOLUME BASED MONTHLY FEE. Pursuant to Article II a) i) of the
     Agreement, in consideration of additional business services, supplier
     market information and System access (exclusive of access to the
     QuickSource(TM) eSourcing Solution) provided by FreeMarkets to support
     higher volumes run through FreeMarkets(R) DirectSource(TM) and
     FullSource(TM) eSourcing Solutions than are paid for by the Fixed Monthly
     Access Fee, during each Contract Year, United shall pay FreeMarkets, with
     respect to each month during such Contract Year, a "Volume Based Monthly
     Fee" that is based upon the type of Sourcing Project and the amount by
     which the sum of the Cumulative FullSource Adjusted Fee and the Cumulative
     DirectSource Adjusted Fee for such Contract Year has exceeded the Yearly
     Committed Access Fee for such Contract Year by the end of the applicable
     month. The Volume Based Monthly Fees are in addition to the Fixed Monthly
     Access Fees set forth above. The Volume Based Monthly fee with respect to
     each month during a Contract Year shall equal (i) the amount by which the
     sum of the Cumulative FullSource Adjusted Fee and the Cumulative
     DirectSource Adjusted Fee, for the portion of the Contract Year ending on
     the last day of the applicable month, exceeds the Yearly Committed Fee for
     such Contract Year, minus (ii) the sum of the Volume Based Monthly Fees
     paid or payable by with respect to each month of the applicable Contract
     Year which ended prior to the applicable month. Volume Based Monthly Fees
     for a month shall be paid according to Article II c). Volume of Sourcing
     Projects begun prior to January 1, 2001 which are completed prior to
     January 31, 2001 shall not be included in the calculation of the Volume
     Based Monthly Fee.

     Volume run as a QuickSource Project will not be included for purposes of
     the preceding paragraph, provided however, that if a FullSource Project or
     DirectSource Project is converted into a QuickSource Project, in whole or
     in part, then the QuickSource Project will be deemed to be a completed
     CBE(R) of the type of project from which it was converted and shall be
     included in the calculation of fees set forth in the proceeding paragraph.

                                             TABLE 1
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                     2001 CONTRACT YEAR              2002 CONTRACT YEAR              2003 CONTRACT YEAR
-------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                             <C>                             <C>
FIXED MONTHLY ACCESS FEE                    [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
FULLSOURCE VOLUME RATE                      [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
DIRECTSOURCE VOLUME RATE                    [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
YEARLY COMMITTED ACCESS FEE                 [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
MONTHLY ESTIMATED EXPENSES                  [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>   13


     (b)  FEES FOR QUICKSOURCE(TM) eSOURCING SOLUTION:

               Pursuant to Article II a) ii) and Article I i) of the Agreement,
          United shall pay FreeMarkets [*] per Contract Year for the
          QuickSource(TM) eSourcing Solution which shall include a license to
          access the QuickSource(TM) software, hosting of the QuickSource(TM)
          software, and access to the Technical Help Line services provided as
          part of the QuickSource(TM) eSourcing Solution as set forth in
          Exhibits A and D.

2.   EXPENSES.

     MONTHLY ESTIMATED EXPENSES. The Monthly Estimated Expenses set forth in
     Table 1 represent a monthly estimated expense amount. Exact expense amounts
     will depend upon actual expenses incurred by FreeMarkets when performing
     services under this Agreement as reconciled quarterly in accordance with
     Article II c) of the Agreement.

3.   DEFINITIONS.

     (a)  "BID VOLUME" means (i) for each completed CBE(R), the product of the
          Historic Price for each good or service included in a completed CBE(R)
          multiplied by the volume of such good or service included in the
          completed CBE(R) and (ii) for all goods or services that are the
          subject of an Off-Line Sourcing Project, the product of the Historic
          Price for each good or service that is the subject of an Off-Line
          Sourcing Project multiplied by the volume of such good or service so
          awarded by United.

     (b)  "CONTRACT YEAR" means each twelve (12) month period commencing on
          January 1, 2001 or any anniversary thereof during the Term.

     (c)  "CUMULATIVE DIRECTSOURCE ADJUSTED FEE" means the DirectSource Volume
          Rate set forth in Table 1 above for the applicable Contract Year
          multiplied by the sum of (a) the Bid Volume for all CBEs(R) completed
          utilizing FreeMarkets DirectSource(TM) eSourcing Solution during the
          Contract Year, plus (b) the Bid Volume for all Off-Line Sourcing
          Projects utilizing FreeMarkets DirectSource(TM) eSourcing Solution
          conducted during the Contract Year. The Cumulative DirectSource
          Adjusted Fee shall be reset to zero at the commencement of each
          Contract Year.

     (d)  "CUMULATIVE FULLSOURCE ADJUSTED FEE" means the FullSource Volume Rate
          set forth in Table 1 above for the applicable Contract Year multiplied
          by the sum of (a) the Bid Volume for all CBEs(R) completed utilizing
          FreeMarkets FullSource(TM) eSourcing Solution during a Contract Year,
          plus (b) the Bid Volume for all Off-Line Sourcing Projects utilizing
          FreeMarkets FullSource(TM) eSourcing Solution conducted during the
          Contract Year. The Cumulative FullSource Adjusted Fee shall be reset
          to zero at the commencement of each Contract Year.

     (e)  "HISTORIC PRICE" means the price of a good or service that is: [*]. If
          the Historic Price is difficult to determine and/or the parties are
          unable to agree on a Historic Price, the Historic Price shall be, in
          the case of a CBE [*] and, in the case of an Off-Line Sourcing
          Project, [*].

     (f)  "OFF-LINE SOURCING PROJECT" means a Sourcing Project where the good or
          service comprising a FullSource or DirectSource Sourcing Project is
          procured by United without the use of a CBE(R). In the event that a
          CBE(R) is completed for only a portion of the goods or services in a
          Sourcing Project, that portion so completed will be deemed to be part
          of a completed CBE(R) and the remainder of the goods and services will
          be deemed to be included in an Off-Line Sourcing Project.
<PAGE>   14

                                        Exhibit F

                                      DEDICATED FTES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                   2001 CONTRACT YEAR DEDICATED         2002 CONTRACT YEAR              2003 CONTRACT YEAR
                                              FTES*                      DEDICATED FTES*                  DEDICATED FTES*
-------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>                                  <C>                             <C>
PROGRAM MANAGEMENT**,***                       [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
MARKET MAKING COMMODITY TEAMS***               [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
MARKET OPERATIONS                              [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
TOTAL                                          [*]                             [*]                              [*]
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

 1.  Full Time Equivalent Resources dedicated to United by FreeMarkets.

 **  Program Management FTEs are named individuals who are approved by the VP of
     Global Supply Management at United, which approval will not be unreasonably
     withheld. FreeMarkets will not remove a named individual without providing
     at least [*] business days prior notice, which notice will contain the name
     of the individual's replacement. United will be deemed to accept such
     replacement individual if United does not object to the replacement within
     such [*] business day period.
***  The FreeMarkets Market Making Commodity Team and Program Management
     personnel will perform their work at [*].