<PAGE>


                                                                    EXHIBIT 10.8

                             EMPLOYMENT AGREEMENT
                             --------------------

     THIS EMPLOYMENT AGREEMENT ("Agreement") is dated as of January 31, 2000,
between and among R. KENNETH MERKY, a resident of the State of Connecticut
("Employee"), and AVANA DEVELOPMENT GROUP, INC., a Georgia corporation (the
"Company").

                             W I T N E S S E T H:
                             -------------------

     WHEREAS, the Company is engaged in the business of providing internet
access, internet provider services, e-commerce application and hosting services,
telecommunications and wireless telecommunications services, and integrated
voice, video and data communications products and services (collectively, the
"Scope of Business"); and

     WHEREAS, the Company and Employee each desire to enter into this Agreement,
pursuant to which Employee will be employed by the Company on the terms and
conditions hereinafter set forth, and to make certain other agreements;

     NOW, THEREFORE, in consideration of the premises and of the promises and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, do hereby agree as follows:

     SECTION 1.  Employment.  Subject to the terms hereof, the Company hereby
                 ----------
employs Employee, and Employee hereby accepts such employment.  Employee shall
devote his Full Time and best efforts to rendering services on behalf of the
Company.  As used herein, "Full Time" shall mean working during normal business
hours to accomplish his duties and responsibilities with appropriate timeliness,
and such term shall not preclude Employee's devoting incidental time to the
management of his personal affairs, during normal business hours nor shall it
preclude his participating in other affairs during non-business hours.

     SECTION 2.  Position, Authority and Duties.
                 ------------------------------

          (a)  Position.  Employee shall serve as Senior Vice President -
               --------
Business Development of the Company and, as such, Employee shall report directly
to the Company's Executive Vice President - Business Development. Employee shall
be responsible for the development and implementation of strategic licensing and
acquisition-related relationships for the Company and its affiliated companies
and such additional duties and responsibilities as the Executive Vice President
- Business Development may determine and direct.
<PAGE>

          (b)  Location.  Employee's office shall be located in the metropolitan
               --------
Atlanta, Georgia area, and Employee shall be required to relocate as a condition
of his continued employment by the Company. Provided that Employee shall have
relocated his principal residence to Atlanta, Georgia no later than August 1,
2000, the Company shall reimburse the Employee for any reasonable moving
expenses actually incurred by the Employee to the extent that the Employee can
show to the satisfaction of the Company that a corresponding deduction is
allowable to the Employee pursuant to Section 217 of the Internal Revenue Code
of 1986, as amended (the "Code"), thereby resulting in such payment not being
characterized as "wages" for purposes of the payroll and FICA withholding
requirements pursuant to sections 3401(a)(15) and 3121(a)(11) of the Code,
respectively, provided, however, that in no event shall the Company be obligated
              -----------------
to reimburse Employee for such expenses in excess of Twenty Thousand Dollars
($20,000).  No reimbursement of relocations expenses hereunder shall be paid if
Employee does not relocate his principal residence to Atlanta, Georgia by August
1, 2000.

     SECTION 3.  Term.  The term of this Agreement shall begin on the date
                 ----
hereof (the "Effective Date") and shall continue until the earlier of (a) the
date that is one (1) year following the Effective Date (the "Term") or (b) the
occurrence of a Terminating Event.

     As used herein, "Terminating Event" shall mean:

          (i)   the death or Total Disability of Employee ("Total Disability"
     meaning the failure of Employee to perform his normal required services
     hereunder at his office for a period of three (3) consecutive months, by
     reason of Employee's mental or physical disability as so determined by a
     licensed physician selected by the Company reasonably satisfactory to
     Employee);

          (ii)  the mutual written agreement of the parties hereto to terminate
     Employee's employment hereunder; or

          (iii) the Company's termination of Employee's employment hereunder,
     upon thirty (30) days' prior written notice to Employee, for "Cause." For
     the purposes of this Agreement, "Cause" for termination of Employee's
     employment shall exist (a) if Employee is convicted of (from which no
     appeal may be taken), or pleads guilty to, any act of fraud,
     misappropriation or embezzlement, or any felony, (b) if, in the sole
     determination of the Board of Directors of the Company, Employee has
     engaged in conduct or activities materially damaging to the business of the
     Company (it being understood, however, that neither conduct nor activities
     pursuant to Employee's exercise of his good faith business judgment nor
     unintentional physical damage to any property of the Company by Employee
     shall be a ground for such a determination by the Board of Directors of the
     Company) after written notice with specificity as to the conduct or
     activities complained of and a reasonable opportunity is given to Employee
     to cure the same, or (c) if Employee has failed without reasonable cause to
     devote his Full Time and best efforts to the business of the

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     Company and, after notice from the Company of such failure, Employee at any
     time thereafter again so fails; or,

          (iv) the Employee terminates this Agreement for "Good Reason." For the
purposes of this agreement "Good Reason" for the Employee's termination of this
Agreement shall exist if (a) the Company breaches a material provision of this
agreement and such breach is not remedied within thirty (30) days following
receipt by the Company of notice given by the Employee of such breach, or (b)
the Company materially alters the title, duties or responsibilities of Employee
without obtaining prior written consent to such change.

     SECTION 4.  Compensation and Benefits.
                 -------------------------

               (a)  Salary.  Employee shall be paid a salary by the Company at
the annual rate of Eighty-Two Thousand Five Hundred Dollars ($82,500), which
salary shall be payable bi-weekly in accordance with the payroll payment
practices from time to time adopted by the Company ("Base Salary"). Thereafter,
Employee's salary shall be as determined by the Chief Executive Officer of the
Company.

               (b)  Bonuses.  Employee shall be eligible to participate in the
                    -------
Company's incentive and bonus programs, including, without limitation, any stock
option programs, to the same extent as other senior executive officers of the
Company.

               (c)  Stock Options.  In addition, as an inducement to Employee to
                    -------------
remain in the employ of the Company during the Term, the Company shall issue to
Employee options to purchase an additional One Hundred Thousand (100,000) shares
of Common Stock at an exercise price of One Dollar ($1.00) per share. The
options to be issued pursuant to this Section 4.1(c) shall be issued pursuant to
a stock option plan to be approved by the Board of Directors as promptly as
practicable.

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<PAGE>

          4.2  Insurance.
               ---------

               (a)  Life and Other Insurance.  The Company shall, at its
                    ------------------------
expense, provide or arrange for and keep in effect, during the term of
Employee's employment hereunder, so long as he is insurable, such group term
life insurance, travel accident, accidental death and dismemberment insurance
and long-and short-term disability insurance, or their equivalents, as is
provided from time to time for other senior executive officers of the Company.

               (b)  Medical Insurance.  During the term of Employee's employment
                    -----------------
hereunder, the Company shall, at its expense, provide or arrange for and keep in
effect, hospitalization, major medical and similar medical and health insurance
for Employee and his family, to the same extent as is provided from time to time
for other senior executive officers of the Company.

          4.3  Vacation.  Employee shall be entitled to the same number of days
               --------
of paid vacation during each year of his employment hereunder as is allowed to
other senior executive officers of the Company, but in no event less than two
(2) weeks of paid vacation per year.

          4.4  Retirement Benefits.  During the term of his employment
               -------------------
hereunder, Employee shall have the same right as other senior executive officers
of the Company to participate in all profit-sharing, pension and other
retirement plans as are now, or as may hereafter be, established by the Company.

          4.5  Out-of-Pocket Expenses.  The Company shall reimburse Employee for
               ----------------------
all reasonable out-of-pocket expenses incurred by Employee in connection with
the performance of his duties hereunder upon presentation of appropriate
vouchers therefor.

     SECTION 5.  Termination.
                 -----------

          (a)  Notice of Termination.  Any termination of Employee's employment
               ---------------------
by the Company or by Employee (other than termination for death pursuant to
subparagraph (i) of Section 3) shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment under the provision so indicated.

          (c)  Date of Termination. "Date of Termination" shall mean (i) if
               -------------------
Employee's employment is terminated by his death, the date of his death, (ii) if
Employee's employment is terminated for Total Disability pursuant to
subparagraph (i) of Section 3 hereof, thirty (30) days after Notice of
Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period), (iii) if Employee's employment is terminated for Cause pursuant to

                                       4
<PAGE>

subparagraph (iii) of Section 3 hereof, the date specified in the Notice of
Termination, and (iv) if Employee's employment is terminated for any other
reason, the date on which a Notice of Termination is given; provided, however,
that, in all instances, if within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a final judgment order or decree
of a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).

          (d)  Exclusive Provisions.  Employee may not be terminated by the
               --------------------
Company and Employee may not terminate his employment hereunder except as
provided in this Section 5.

     SECTION 6.  Compensation Upon Termination or During Disability.
                 --------------------------------------------------

          (a)  In the Event of Death.  If Employee's employment shall be
               ---------------------
terminated by reason of his death, the Company shall pay to such person as he
shall designate in a notice filed with the Company, or, if no such person shall
be designated, to his estate as a lump sum death benefit, the amount of his
accrued but unpaid full Base Salary to the date of his death in addition to any
payments Employee's spouse, beneficiaries or estate may be entitled to receive
pursuant to any pension or employee benefit plan or life insurance policy
presently maintained by the Company, and such payments shall fully discharge the
Company's obligations hereunder. All stock options granted to the employee from
and after the date hereof shall become vested and immediately exercisable as of
the date of Employee's death in accordance with the plan or plans pursuant to
which such options are to be issued.

          (b)  In the Event of Physical or Mental Illness.  During any period
               ------------------------------------------
that Employee fails to perform his duties hereunder as a result of incapacity
due to physical or mental illness, Employee shall continue to receive his full
Base Salary and bonus payments until Employee's employment is terminated for
Total Disability pursuant to subparagraph (i) of Section 3 hereof. After
termination, Employee shall be paid his Base Salary at the rate in effect at the
time Notice of Termination is given less, in each case, any disability payments
otherwise payable by or pursuant to plans provided by the Company and actually
paid to Employee in substantially equal monthly installments over the remaining
term hereof, and the Company shall have no further obligations to Employee under
this Agreement.  All stock options granted to the employee from and after the
date hereof shall become vested and immediately exercisable as of the date of
the Notice of Termination given in respect of Total Disability in accordance
with the plan or plans pursuant to which such options are to be issued.

          (c)  Cause.  If Employee's employment shall be terminated for Cause,
               -----
the Company shall pay Employee the amount of his accrued but unpaid Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to
Employee under this Agreement.

          (d)  Wrongful Termination.  If in breach of this Agreement, the
               --------------------
Company shall terminate Employee's employment other than in the manner allowed
pursuant to Section 3

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<PAGE>

hereof (a purported termination pursuant to Section 3 hereof which is disputed
and finally determined not to have been proper shall be a termination by the
Company in breach of this Agreement), then:

          (i)   the Company shall pay Employee his full Base Salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given;

          (ii)  in lieu of any further salary payments to Employee for periods
subsequent to the Date of Termination, the Company shall pay as severance pay to
Employee an amount equal to twenty-five percent (25%) of the sum of (i) the
annual Base Salary at the highest rate in effect during the twelve (12) months
immediately preceding the Date of Termination and (ii) the highest annual bonus
payments paid or accrued pursuant to this Agreement, with such amount being paid
to Employee in substantially equal monthly installments for a three (3) month
period following the Date of Termination; and

          (iii) all stock options granted to the Employee from and after the
date hereof shall become vested and immediately exercisable in accordance with
the plans or plans pursuant to which such options are to be issued.

          (e)   Voluntary Termination by Employee.  If Employee terminates his
                ---------------------------------
employment with the Company voluntarily, then:

          (i)   the Company shall pay Employee his full Base Salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given;

          (ii)  all unvested options granted shall terminate and vested options
may be exercised in accordance with the terms of the plan or plans pursuant to
which such options are to be issued.

          (f)   Mitigation.  Employee shall not be required to mitigate the
                ----------
amount of any payment provided for in this Section 6 by seeking other employment
or otherwise, nor shall the amount of any payment provided for in this Section 6
be reduced by any compensation earned by Employee as the result of employment by
another employer after the Date of Termination.

     SECTION 7.  Successors; Binding Agreement.
                 -----------------------------

          (a)  Successor Companies.  The Company shall require any successor
               -------------------
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
agreement in form and substance reasonably satisfactory to Employee, to
expressly assume and agree to perform

                                       6
<PAGE>

this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Employee to
compensation from the Company in the same amount and on the same terms as he
would be entitled to hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which executes and
delivers the Agreement provided for in this Section 7(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.

          (b)  Executive's Estate and Heirs.  This Agreement and all rights of
               ----------------------------
Employee hereunder shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Employee should die
while any amounts would still be payable to him hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's devisee, legatee, or
other designee or, if there be no such designee, to Employee's estate.

SECTION 8.  Restrictive Covenants.
            ---------------------

          (a)  The Employee acknowledges that (i) the covenants herein are
necessary to protect the goodwill and other value of the Company; (iii) at the
Effective Date the Company will have bargained and paid adequate and sufficient
consideration for the restrictive covenants herein; and (iv) the Company is
employing the Employee in reliance on the covenants of this Section 8 in view of
the unique and essential nature of the services the Employee is to perform
hereunder and the irreparable injury that would befall the Company should the
Employee breach such covenants.

          (b)  The Employee further acknowledges that his services hereunder are
of a special, unique and extraordinary character and that his position with the
Company will place him in a position of confidence and trust with the customers
and employees of the Company and allow his access to Confidential Information
(as hereinafter defined).

          (c)  The Employee further acknowledges that the type and periods of
restrictions imposed by the covenants in this Section 8 are fair and reasonable
and that such restrictions will not prevent the Employee from earning a
livelihood.

          (d)  The Employee further acknowledges that, as of the Effective Date
(i) the Company is engaged in the Scope of Business; (ii) the Company conducts
its business activity in and throughout the Area (as hereinafter defined); and
(iii) Competing Businesses (as hereinafter defined) are engaged in businesses
like and similar to the business of the Company.

                                       7
<PAGE>

          (e)  Having acknowledged the foregoing, the Employee covenants and
agrees with the Company that he will not, directly or indirectly:

          (i)   while he is in the Company's employ and after the termination of
          his employment for any reason whatsoever (whether voluntarily or
          involuntarily), disclose, use or otherwise exploit, except as may be
          necessary in the performance of his duties hereunder, any Confidential
          Information disclosed to the Employee or of which the Employee became
          aware by reason of his employment with the Company;

          (ii)  while he is in the Company's employ and through the period
          ending one (1) year after the termination of his employment for any
          reason whatsoever (whether voluntarily or involuntarily), employ or
          attempt to employ or assist anyone else in employing in any Competing
          Business in the Area any managerial or employee of the Company
          (whether or not such employment is full time or is pursuant to a
          written contract with the Company); and

          (iii) while he is in the Company's employ and through the period
          ending one (1) year after the termination of his employment (whether
          voluntarily or involuntarily) for any reason whatsoever, except for
          (a) termination by the Company without cause or (b) termination by the
          Employee for "good reason" or (c) expiration of the Term without
          renewal pursuant to Section 3 hereof by virtue of notice of nonrenewal
          given by the Company to the Employee pursuant to Section 3 hereof,
          engage in or render any services to or be employed by any Competing
          Business in the Area in a capacity substantially similar to the
          capacity in which Employee is employed by the Company hereunder,
          whether as a director, officer, shareholder, owner, employee or as a
          consultant (other than as the owner of less than five (5%) percent of
          the shares of a publicly-owned corporation whose shares are traded on
          a national securities exchange or on the NASDAQ National Market
          System).

          (f)  The Employee agrees that upon the termination of his employment
for any reason whatsoever (whether voluntarily or involuntarily), he will not
take with him or retain without written authorization, and he will promptly
deliver to the Company, originals and all copies of all papers, files or other
documents containing any Confidential Information and all other property
belonging to the Company and in his possession or under his control.

          (g)  For purposes of this Section 8, the term (a) "Area" means the
United States of America; (b) "Competing Business" means the Scope of Business
or such other

                                       8
<PAGE>

line of business in which the Company is actively engaged at the Date of
Termination; and (c) "Confidential Information" means any and all data,
knowledge and information relating to the business of the Company (whether or
not constituting a trade secret) that is, has been or will be obtained by or
disclosed to the Employee or of which the Employee became or becomes aware as a
consequence of or through his relationship with the Company and that has value
to the Company and is not generally known by its competitors, provided, however,
that no information will be deemed confidential unless it is known to the
Employee to be confidential information or has been reduced to writing and
marked clearly and conspicuously as confidential information. Confidential
Information shall not include any data or information that has been voluntarily
disclosed to the public by the Company (except where such public disclosure has
been made without authorization by the Company), or that has been independently
developed and disclosed by others, or that otherwise enters the public domain
through lawful means. Confidential Information includes, but is not limited to,
information relating to the Company's financial affairs, processes, services,
customers, Employee or employees, compensation, research, development,
purchasing, accounting or marketing.

          (h)  The Employee acknowledges that irreparable loss and injury would
result to the Company upon the breach of any of the covenants contained in this
Section 8 and that damages arising out of such breach would be difficult to
ascertain. The Employee hereby agrees that, in addition to all other remedies
provided at law or in equity, the Company may petition and obtain from a court
of law or equity both temporary and permanent injunctive relief to prevent a
breach by the Employee of any covenant contained in this Section 8. The parties
hereto agree that all references to the Company in this Section 8 shall include,
unless the context otherwise requires, all subsidiaries (if any) of the Company.

     SECTION 9.  Miscellaneous.
                 -------------

     9.1  Confidentiality.
          ---------------

          (a)  Employee recognizes and acknowledges that in the course of his
employment with the Company, as contemplated by this Agreement, and as a result
of the position of trust that he will hold under this Agreement, he will obtain
private and confidential information and proprietary data relating to the
Company, including, without limitation, financial information, product and
design information, marketing information, customer lists and other data that
are valuable assets and property rights of the Company (collectively referred to
as "Confidential Information"). Employee agrees that he will not, during the
term of this Agreement or any time after the termination of this Agreement,
either directly or indirectly, disclose or use any Confidential Information
acquired during his employment with the Company, unless (i) the Confidential
Information has been made public through no action or fault of the Employee, or
(ii) its disclosure is requested or compelled by applicable law or regulatory
agency. Employee further agrees that after the

                                       9
<PAGE>

termination of this Agreement, or at such other time as the Company requests,
Employee will return to the Company all documents, papers and records
constituting Confidential Information, and all copies of same in Employee's
possession and control.

          (b)  Employee acknowledges that irreparable loss and injury would
result to the Company upon the breach of any of the covenants contained in this
Section 9.1 and that damages arising out of such breach would be difficult to
ascertain. Employee agrees that, in addition to all other remedies provided at
law or at equity, the Company may petition and obtain from a court of law or
equity both temporary and permanent injunctive relief to prevent a breach by
Employee of any covenant contained in this Section 9.1.

          9.2  Binding Effect.  This Agreement shall inure to the benefit of and
               --------------
shall be binding upon Employee, his executor, administrator, heirs, personal
representatives and assigns, and upon the Company and its successors and
assigns; provided, however, that the obligations and duties of Employee may not
         --------  -------
be assigned or delegated.

          9.3  Governing Law.  This Agreement shall be deemed to be made in, and
               -------------
in all respects shall be interpreted, construed and governed by and in
accordance with, the laws of the State of Georgia, without giving effect to
principles of conflicts of laws.

          9.4  Invalid Provisions.  The parties herein hereby agree that the
               ------------------
agreements, provisions and covenants contained in this Agreement are severable
and divisible, that none of such agreements, provisions or covenants depends
upon any other provision, agreement or covenant for its enforceability, and that
each such agreement, provision and covenants constitutes an enforceable
obligation between the Company and Employee. Consequently, the parties hereto
agree that neither the invalidity nor the unenforceability of any agreement,
provision or covenant of this Agreement shall affect the other agreements,
provisions or covenants hereof, and this Agreement shall remain in full force
and effect and be construed in all respects as if such invalid or unenforceable
agreement, provision or covenant were omitted.

          9.5  Headings.  The section and paragraph headings contained in this
               --------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

          9.6  Notices.  All communications provided for hereunder shall be in
               -------
writing and shall be deemed to be given when delivered in person or deposited in
the United States mail, first class, registered mail, return receipt requested,
with proper postage prepaid, and

               (a)  If to Employee, addressed to:

                    R. Kenneth Merkey
                    40 Samp Mortar Drive
                    Fairfield, Connecticut 06430



                                       10
<PAGE>

               (b)  If to the Company, addressed to:

                    Grace Development, Inc.
                    1690 Chantilly Drive
                    Atlanta, Georgia  30327
                    Attention:  Chief Executive Officer

or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.

          9.7  Counterparts.  This Agreement may be executed in one or more
               ------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

          9.8  Waiver of Breach.  The waiver by the Company of a breach of any
               ----------------
provision, agreement or covenant of this Agreement by Employee shall not operate
or be construed as a waiver of any prior or subsequent breach of the same or any
other provision, agreement or covenant by Employee.

          9.9  Entire Agreement.  This Agreement is intended by the parties
               ----------------
hereto to be the final expression of their agreement with respect to the subject
matter hereof and is the complete and exclusive statement thereof
notwithstanding any representation or statements to the contrary heretofore
made. This Agreement may be modified only by a written instrument signed by each
of the parties hereto.


     IN WITNESS WHEREOF, Employee has executed this Agreement, and the Company
has caused this Agreement to be duly executed by its duly authorized officers
and has caused its proper corporate seal to be affixed hereto, and the parties
have caused this Agreement to be delivered, all on the day and year first
written above.


                                        /s/ R. Kenneth Merkey
                                        --------------------------------
                                        R. KENNETH MERKEY


                                        AVANA DEVELOPMENT GROUP, INC.


                                        By: /s/ James Blanchard
                                           -----------------------------
                                             Its: President
                                                 -----------------------

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