<PAGE>

                                                                   Exhibit 10.26

                                November 22, 2000

Mr. Shawn P. McGhee
953 East Riverwalk
Memphis TN 38120

Dear Mr. McGhee:

This letter agreement (the "Agreement") sets forth the terms and conditions of
your employment with PurchasePro.com, Inc. (the "Company"). In consideration of
the mutual covenants and promises made in this Agreement, you and the Company
agree as follows:

1.  Employment. Commencing as of the date hereof (the "Effective Date"), you
will serve as the Chief Operating Officer of PurchasePro.com, or in any other
position assigned by the Company, provided that, during the term of your
employment, you shall not be required to serve in any positions, or take any
title or duties, subordinate to that or those of Chief Operating Officer of
the Company or any equivalent. As Chief Operating Officer, you will have such
duties, responsibilities and authority as are appropriate to such position.
Throughout the term of your employment, you will devote such business time
and energies to the business and affairs of the Company as needed to carry
out your duties and responsibilities, subject to the overall supervision of
the company's Chief Executive Officer and/or President of the Company.

2.  Term. The initial term of this Agreement will commence on the Effective
Date and shall continue for two (2) years thereafter. The term of this
Agreement shall be automatically renewed for up to two additional one-year
periods unless either party gives the other party at least 120 days' prior
written notice of its intention to terminate this Agreement at the end of
either the initial term hereof or the first such renewal period. During the
term of this Agreement, your employment with the Company will be "at-will."
Either you or the Company can terminate your employment at any time and for
any reason, with or without cause and with or without notice, in each case
subject to the terms and provisions of paragraph 7 below.

3.  Salary. For your services to the Company, you will be paid a base salary,
payable in accordance with the Company's usual payroll practices during your
employment, at an annualized rate of at least $200,000 per year, subject to
adjustment upon the agreement of the parties. In addition, you will be
eligible to receive a discretionary bonus in respect of each calendar year or
portion thereof during which you are employed hereunder, to be determined
solely by the Company.

4.  Employee Benefit Programs. During your employment, you will be entitled
to participate in all Company employee benefit plans and compensation and
perquisite programs made available to the Company's executives or salaried
employees generally. You will be entitled to four weeks of personal time off
per year, provided that you will not accrue unused vacation of more than five
weeks.

5.  Stock Options. On the Effective Date, the Company will issue to you an
option (collectively, "Stock Options") to acquire up to 500,000 shares of the
Company's Common Stock ("Shares") in accordance herewith and otherwise under
the Company's stock-based incentive plan (the "Plan"), at a price per share
equal to the Fair Market Value (as such term is defined in the Plan) on the
Effective Date (subject to SEC rules and restrictions imposed upon the
officers and major shareholders of the Corporation), as set forth in an
option agreement between you and the Company in the form attached hereto as
Exhibit A.

6.  Performance-Based Stock Option Bonus Grants in 2001. In addition to those
options set forth in paragraph 5, if the Company achieves certain total
revenue targets during the fiscal year ended December 31, 2001, the Company
will issue to you additional Stock Options, in accordance herewith and
otherwise under the Plan, as follows: If the Company records total revenue
exceeding $100 million for the six months ended June 30, 2001 as reported in
the Company's Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission ("SEC") for the period ended on such date, the Company
will, as of that date, issue to you Stock Options to purchase an additional
100,000 Shares ("Initial Performance-Based Options") at a price per share
equal to the Fair Market Value on the date of such grant ("Initial
Performance Grant Date"). The Initial Performance-Based Options will have a
term of 10 years measured from the Initial Performance Grant Date, subject to
earlier termination following termination of your employment as set forth in
the form of options attached hereto as Exhibit A, and shall vest and become
exercisable as follows: (i) Stock Options on 50,000 Shares shall vest six
months after the Initial Performance Grant Date and (ii) Stock Options on
50,000 Shares shall vest 12 months after the Initial Performance Grant Date,
and otherwise in accordance with the form of options attached hereto as
Exhibit A. Further, if the Company achieves

<PAGE>


total revenue exceeding $250 million for the twelve months ended December 31,
2001 as reported in the Company's Annual Report on Form 10-K filed with the SEC
for the fiscal year ended on such date, the Company will issue to you Stock
Options to purchase an additional 200,000 Shares ("Subsequent Performance-Based
Options") at a price per share equal to the Fair Market Value on the date of
such grant (the "Subsequent Performance Grant Date"). The Subsequent
Performance-Based Options will have a maximum term of 10 years measured from the
Subsequent Performance Grant Date, subject to earlier termination following
termination of your employment as set forth in the form of options attached
hereto as Exhibit A, and will vest and become exercisable as follows: (i) Stock
Options on 50,000 Shares shall vest six months after the Subsequent Performance
Grant Date, (ii) Stock Options on 50,000 Shares shall vest 12 months after the
Subsequent Performance Grant Date, (iii) Stock Options on 50,000 Shares shall
vest 18 months after the Subsequent Performance Grant Date and (iv) Stock
Options on 50,000 Shares shall vest 24 months after the Subsequent Performance
Grant Date, and otherwise in accordance with the form of options attached hereto
as Exhibit A. Notwithstanding the foregoing, the Company shall not be obligated
to make any grant of Initial Performance-Based Options or Subsequent
Performance-Based Options in the event your employment was terminated for any
reason prior to commencement of the Company's last fiscal quarter included in
determining whether the total revenue target was met for the applicable period.
In addition to the foregoing, other relevant terms and conditions related to the
grant of Stock Options will be set forth in an option agreement between you and
the Company substantially in the form attached hereto as Exhibit A, adjusted as
necessary to reflect the terms of the foregoing.

7.  Consequences of Termination of Employment.

      (a) For Cause. If the Company terminates your employment for Cause you
will be entitled to any unpaid salary, bonus and paid time off due you pursuant
to paragraphs 3, 4 and 7 above through the date of termination, and you will be
entitled to no other compensation from the Company. "Cause" will exist in the
event you: (i) willfully breach this Agreement, which breach is not cured within
30 days following written notice from the Company; (ii) engage in conduct
constituting willful dishonesty toward, fraud upon, or deliberate or attempted
injury to the Company; or (iii) are negligent in the performance of your duties,
which negligence is not cured within 30 days following written notice from the
Company.

      (b) Other than for Cause. If the Company terminates your employment for
reasons other than Cause, or if you terminate your employment because the
Company breaches any of its obligations under this Agreement, which breach is
not cured within 30 days following written notice from you, you will be entitled
to any unpaid salary, bonus and paid time off due you pursuant to paragraphs 3,
4 and 7 above through the date of termination, plus twelve months of your base
salary in effect at the date of your termination of employment. You will not be
entitled to any other compensation from the Company.

      (c) Voluntary Termination. If you terminate your employment with the
Company of your own volition, other than as set forth in paragraph 7(b), such
termination will have the same consequences as a termination for Cause under
subparagraph (a) above.

            (d) Change in Control. You will vest immediately in all unvested
options theretofore issued to you, hereunder or otherwise, and will be entitled
to twelve months of your base salary in effect at the date of a Change in
Control of the Company (as such term is defined in the Plan) in the event within
one year after such Change of Control (i) the Company terminates your employment
for any reason other than for Cause, or (ii) you resign from the Company for any
one of the following reasons: (A) the Company breaches any of its obligations to
you under this Agreement and such a breach is not cured within 30 days' written
notice by you; (B) the Company changes your title, working conditions or duties
such that your powers, duties or working conditions are diminished, reduced or
otherwise changed to include powers,


<PAGE>


duties, or working conditions which are not generally consistent with your
title, continuing after written notice and 30 days to cure; or (C) the Company
relocates your primary place of employment outside of the Las Vegas metropolitan
area.

            (e) Death or Disability. If your employment with the Company
terminates as a result of your death or Total and Permanent Disability (as
defined in Section 2(x) of the Plan, such termination will have the same
consequences as a termination by the Company other than for Cause under
subparagraph (b) above.

            (f) Release of Claims. As a condition to the receipt of the payments
described in this paragraph 7, you shall be required to execute a release of all
claims arising out of your employment or the termination thereof including, but
not limited to, any claim of discrimination under state or federal law, but
excluding claims for contribution and indemnification from the Company under any
indemnification agreement with the Company, its certificate of incorporation and
by-laws or applicable law or claims for directors and officers' insurance
coverage.

            (g) Conditions to Receipt of Payments and Benefits. In view of your
position and access to proprietary information, as a condition to the receipt of
payments described in this paragraph 7, you shall not, without the Company's
written consent, directly or indirectly, alone or as a partner, joint venturer,
officer, director, employee, consultant, agent or stockholder (other than a less
than 5% stockholder of a publicly traded company), within one year of your date
of termination from the Company (i) engage in any activity which is in
competition with the business, the products or services of the Company, (ii)
solicit any of the Company's employees or consultants, or customers (with
respect to such business, products and services), (iii) hire any of the
Company's employees or consultants in an unlawful manner or actively encourage
employees or consultants to leave the Company, or (iv) otherwise breach your
proprietary information obligations. You agree to execute and comply with the
form of proprietary information agreement adopted by the Company.

8.  Assignability; Binding Nature. Commencing on the Effective Date, this
Agreement will be binding upon you and the Company and your respective
successors, heirs, and assigns. This Agreement may not be assigned by you
except that your rights to compensation and benefits hereunder, subject to
the limitations of this Agreement, may be transferred by will or operation of
law. No rights or obligations of the Company under this Agreement may be
assigned or transferred except by operation of law in the event of a merger
or consolidation in which the Company is not the continuing entity, or the
sale or liquidation of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and assumes the Company's
obligations under this Agreement contractually or as a matter of law.

9.  Governing Law. This Agreement will be deemed a contract made under, and
for all purposes shall be construed in accordance with, the laws of Nevada
applicable to agreements made and fully to be performed therein by residents
thereof.

10.  Arbitration. The parties agree that any disputes arising out of or
related to the Agreement shall be resolved by using the following procedures:

      (a) The party claiming to be aggrieved shall furnish to the other party a
written statement of the grievance and the relief requested or proposed.

      (b) If the other party does not agree within 30 days after receipt of the
written statement referred to in paragraph 10(a) to furnish the relief requested
or proposed, or otherwise


<PAGE>


does not satisfy the demand of the party claiming to be aggrieved, the parties
shall submit the dispute to non-binding mediation before a mediator to be
jointly selected by the parties, provided that, if a single mediator cannot be
chosen jointly by the parties within 10 days after the expiration of the 30-day
period referred to above, each party shall designate a mediator and the two
mediators shall choose a third to conduct the mediation.

      (c) If the mediation does not produce a resolution of the dispute, the
parties agree that the dispute shall be resolved by final and binding
arbitration in Las Vegas, Nevada. The parties shall attempt to agree to the
identity of an arbitrator, and, if they are unable to do so, they will obtain a
list of arbitrators from the Judicial Arbitration and Mediation Service and
select an arbitrator by striking names from that list. The arbitrator shall have
the authority to determine whether the conduct complained of violates the rights
of the complaining party and, if so, to grant any relief authorized by law. The
arbitrator shall not have the authority to modify, change or refuse to enforce
the terms of this Agreement.

      (d) Arbitration shall be the exclusive final remedy for any dispute
between the parties, and the parties agree that no dispute shall be submitted to
arbitration where the party claiming to be aggrieved has not complied with the
preliminary steps provided for above, provided however, that this Section 10
shall not be construed to eliminate or reduce any right the Company or the
Executive may otherwise have to seek and obtain from a court a temporary
restraining order or a preliminary or permanent injunction to enforce the
restrictions of subparagraph 5(f) of this Agreement. The parties agree that the
arbitration award shall be enforceable in Clark County Superior Court so long as
the arbitrator's findings of fact are supported by substantial evidence on the
whole and the arbitrator has not made errors of law.

11.  Withholding. Anything to the contrary notwithstanding, following the
Effective Date all payments made by the Company hereunder to you or your
estate or beneficiaries will be subject to tax withholding pursuant to any
applicable laws or regulations. In lieu of withholding, the Company may, in
its sole discretion, accept other provision for payment of taxes as required
by law, provided it is satisfied that all requirements of law affecting its
responsibilities to withhold such taxes have been satisfied.

12.  Entire Agreement. This Agreement contains all the legally binding
understandings and agreements between you and the Company pertaining to the
subject matter of this Agreement and supersedes all other agreements, whether
oral or in writing, previously entered into between the parties.

13.  Miscellaneous. No provision of this Agreement may be amended or waived
unless such amendment or waiver is agreed to by you and the Chief Executive
Officer or President of the Company in writing. No waiver by you or the
Company of the breach of any condition or provision of this Agreement will be
deemed a waiver of a similar or dissimilar provision or condition at the same
or any prior or subsequent time. In the event any portion of this Agreement
is determined to be invalid or unenforceable for any reason, the remaining
portions shall be unaffected thereby and will remain in full force and effect
to the fullest extent permitted by law.

<PAGE>


Please indicate your acceptance and understanding of the terms of this Agreement
by signing and dating below.

                                                Sincerely,

                                                PURCHASEPRO.COM, INC.


                                                By
                                                   -----------------------------

                                                Its
                                                   -----------------------------

ACKNOWLEDGED AND AGREED:


-------------------------------
Dated: November 22, 2000