<PAGE>

                                                                   EXHIBIT 10.19

                             AMENDED AND RESTATED

                        EXECUTIVE EMPLOYMENT AGREEMENT
                        ------------------------------

     THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement"), dated as of April
14, 2000, between GRACE DEVELOPMENT, INC., a Colorado corporation (the
"Company"), and JAMES M. BLANCHARD (the "Executive"), an individual resident of
the State of Georgia.

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

     WHEREAS, Company has employed Executive as President and Chief Operating
Officer since October, 1999 and wishes to continue to employ Executive in the
capacity of President but not as Chief Operating Officer, and Executive wishes
to serve in such position, on the terms and conditions set forth herein;

     WHEREAS, the Company and Executive previously entered into an Executive
Employment Agreement, dated as of December 1, 1999 (the "Old Agreement");

     WHEREAS, the Company and Executive acknowledge that the Old Agreement did
not accurately reflect the intent of the parties with respect to certain
agreements set forth therein;

     WHEREAS, the Company and Executive now desire to enter into this Agreement
which serves to amend, restate, supersede and replace the Old Agreement to
reflect the actual intent of the parties;

     WHEREAS, Company desires to assure the continued services of Executive on
behalf of Company on an objective and impartial basis and without distraction or
conflict of interest in the event of an attempt by any person to obtain control
of Company;

     WHEREAS, the Company recognizes that when faced with a proposal for a
change of control of the Company, Executive will have a significant role in
helping the Company's Board of Directors (the "Board") assess the options and
advising the Board on what is in the best interests of the Company and its
stockholders, and it is necessary for Executive to be able to provide this
advice and counsel without being influenced by the uncertainties of his own
situation;

     WHEREAS, Company desires reasonable protection of its confidential business
and customer information which it has developed at substantial expense and
assurance that Executive will not compete with Company for a reasonable period
of time after termination of his employment with Company, except as otherwise
provided herein:

     WHEREAS, Company desires to provide fair and reasonable benefits to
Executive on the terms and subject to the conditions set forth in this
Agreement;

     WHEREAS, prior to his election as President and Chief Operating Officer of
Company, and since June, 1999, Executive served as a consultant and executive
officer of New Millenium
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Multimedia, Inc., a Georgia corporation and, since September 28, 1999, a wholly-
owned subsidiary of the Company ("NM");

     WHEREAS, in connection with the services rendered by Executive to NM, and
as an inducement to Executive to become employed by NM, Executive was promised
the award of shares of NM and, following the merger of a wholly-owned subsidiary
of the Company with and into NM, shares of the common stock, no par value, of
the Company (the "Common Stock"); and

     WHEREAS, the Company desires to preserve the economic benefit to Executive
of such promises and agreements made by NM.

     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:

     1.  Term.  The term (the "Term") of this Agreement shall be effective as of
         ----
December 1, 1999 (the "Effective Date"), except with respect to those provisions
herein that by their express terms become effective on the date hereof.
Executive shall continue as a member of the Company's board of directors and as
President of the Company for a period expiring on December 31, 2001 (the
"Initial Term"); provided, however, the Term may be extended for an additional
                 --------  -------
one-year period (each an "Additional Term") on each anniversary of the Effective
Date if both parties hereto agree to so extend the Agreement at least ninety
(90) days prior thereto; provided further, however, that the Term or an
                         ----------------  -------
Additional Term shall not expire prior to the expiration of twelve (12) months
after the occurrence of a Change in Control (as hereinafter defined).

     2.  Employment and Duties.  The Executive shall serve as the President of
         ---------------------
the Company, reporting only to Chairman of the Board and Chief Executive Officer
of the Company, and shall have such powers and duties as may from time to time
be prescribed by the Chief Executive Officer of the Company from and after the
date hereof, provided such duties are consistent with the Executive's position
as a senior executive of the Company.  The Company shall provide the Executive
with a private office, secretarial and administrative assistance, office
equipment, supplies and other facilities and services suitable to the
Executive's position.

     3.  Salary.  For all services to be rendered by the Executive pursuant to
         ------
this Agreement, the Company hereby agrees to pay the Executive a base salary
(the "Base Salary") at an annual rate of $180,000.00 per year during the first
year of the Initial Term, payable in accordance with the Company's payroll
practices in effect from time to time, and at a rate set by the Compensation
Committee of the Company's board of directors for any Additional Term.  Any
increase in Base Salary or other compensation granted by the Compensation
Committee of the Company's board of directors shall in no way limit or reduce
any other obligation of the Company hereunder.  Once established at an increased
specified rate, the Base Salary hereunder shall not thereafter be reduced, and
the term Base Salary used in this Agreement shall refer to the Base Salary as so
increased.

     4.  Bonus and Special Stock Award.
         -----------------------------

                                       2
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     4.1  In addition to his Base Salary, upon completion of the first year of
     the Initial Term, Executive shall receive a special bonus equal to
     $180,000.00, payable within ten days following the end of the Company's
     2000 fiscal year if Executive achieves each of the performance objectives
     set forth in Exhibit A attached hereto.  During the Initial Term, the bonus
                  ---------
     payments to Executive as set forth in this Section 4.1 shall be in lieu of
     his participation in any other incentive bonus programs that have been or
     may be established for other executive officers of the Company.
     Thereafter, in the discretion of the Company's board of directors, the
     Executive may be awarded for each calendar year during any subsequent
     Additional Term, an annual bonus (an "Annual Bonus") either pursuant to a
     bonus or incentive plan of the Company or otherwise on terms no less
     favorable than those awarded to other executive officers of the Company.

     4.2  In consideration of the Executive's past services to the Company and
     NM prior to the Effective Date, promptly following the execution and
     delivery of this Agreement, the Company shall issue to Executive 1,000,000
     shares of Common Stock (the "Stock Grant").  The Stock Grant shall be
     valued at $0.40 per share for an aggregate value of $400,000, based on the
     Common Stock's per share value as of January 31, 2000, that being the date
     on which the Company most recently obtained an independent valuation of the
     Common Stock.  The Company shall make a loan to Executive in an amount
     equal to $141,800 (the "Loan"), that being an amount sufficient to pay the
     income tax withholding payable with respect to the Stock Grant, calculated
     using a 28% Federal income tax rate, a 6% state income tax rate and the
     applicable Medicare tax.  The loan shall be evidenced by a promissory note
     in form and substance reasonably satisfactory to the Company to be executed
     and delivered by Executive to the Company as a condition to issuance of the
     Stock Grant (the "Note") and shall mature and be payable in full, subject
     to the provisions of Section 10.4 hereof, upon the earlier to occur of (i)
     termination of Executive's employment hereunder and (ii) December 31, 2000.
     In addition, as an inducement to the Executive to remain an employee of the
     Company, promptly following the execution and delivery of this Agreement,
     the Company shall grant to Executive 1,000,000 shares of Common Stock (the
     "Contingent Stock Grant"), which shares shall become vested automatically
     upon expiration of the Initial Term, unless Executive's employment with the
     Company is terminated for Cause (as defined below) or as a result of a
     voluntary resignation by Executive without Good Reason prior to expiration
     of the Initial Term in accordance with the provisions of this Agreement, in
     which case the Contingent Stock Grant shall be canceled and Executive shall
     have no claim or right with respect thereto.  The Executive acknowledges
     and agrees that the Stock Grant and Contingent Stock Grant are in lieu of
     any other stock option or stock incentive plans or programs that may be
     granted or extended to other executive officers of the Company during the
     Initial Term.

     4.3  Investment.

          (1)  Executive understands that no prospectus, offering circular or
               other offering statement containing information with respect to
               the Company and the Common Stock or with respect to the Company's
               business is being issued and has made his own inquiry and
               analysis with respect to the Company, the Common Stock, the

                                       3
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               Company's business and other material factors affecting his
               investment in the Company Stock.

          (2)  The Common Stock was not offered to Executive by means of
               publicly disseminated advertisements or sales literature, or as a
               part of a general solicitation, nor is he aware of any offers
               made to other persons by such means.

          (3)  Executive acknowledges that he has either been supplied with or
               has had access to information to which a reasonable investor
               would attach significance in making investment decisions, and has
               had the opportunity to ask questions and receive answers from
               knowledgeable individuals concerning the Company, its business
               and the Common Stock so that as a reasonable investor, he has
               been able to make an informed decision to receive the Common
               Stock hereunder. In determining to proceed with this investment,
               Executive has relied solely on the results of his own independent
               investigation with respect to the Common Stock, the Company and
               upon the representations and statements of the Company set forth
               herein. Such representations and statements by the Company
               constitute the sole and exclusive representations, warranties,
               covenants and statements of the Company or any of its officers,
               directors, shareholders or other affiliates to Executive in
               connection with this investment, and Executive understands,
               acknowledges and agrees that all other representations,
               warranties, covenants and statements of any kind or nature,
               whether oral or contained in any writing other than this
               Separation Agreement are specifically disclaimed by the Company.

          (4)  Executive understands that the Common Stock (a) is not being
               registered (or, with respect to state securities or Blue Sky
               laws, otherwise qualified for sale) under the Securities Act of
               1933, as amended (the "Act"), or under the securities or Blue Sky
               laws and regulations of any state including, without limitation,
               Section 10-5-5 of the Georgia Securities Act of 1973, in reliance
               upon exemptions from registration, (b) will not be traded in any
               securities market, (c) will not be readily marketable, and (d)
               cannot be sold, transferred or otherwise disposed of unless
               subsequently registered under the Act and applicable state
               securities or Blue Sky laws or pursuant to an exemption from such
               registration which is available at the time of desired sale, and
               will bear a legend to that effect.

                                       4
<PAGE>

          (5)  Executive is taking the Common Stock for his own account and not
               with a view to resale or other distribution thereof inconsistent
               with or in violation of the federal securities laws or the
               securities or Blue Sky laws of any state. Executive is taking the
               Common Stock for his own account and not for the account of any
               other person or entity. No other person or entity will have any
               interest, beneficial or otherwise, in the Common Stock except for
               Executive. Executive is not obligated to transfer the Common
               Stock or any portion thereof to any other person or entity nor
               does Executive have any agreement or understanding to do so.

          (6)  Executive is aware that the Company will be under no obligation
               to register the Common Stock, or any portion thereof, or to
               comply with any exemption available for the offer or sale of the
               Common Stock, or any portion thereof, without registration.

          (7)  Executive acknowledges and agrees that he may not, directly or
               indirectly, sell, assign, pledge, give, subject to lien or
               security interest or otherwise dispose of or encumber
               (collectively, "Transfer") any of the Common Stock unless, prior
               to making any Transfer of any Common Stock (other than a Transfer
               to the Company), (a) he gives written notice to the Company
               describing the manner of such proposed disposition in reasonable
               detail and (b) he delivers to the Company an opinion of counsel
               acceptable to the Company to the effect that neither the sale nor
               the proposed transfer will result in any violation of applicable
               state securities laws, the Act or the securities law of any other
               jurisdiction.

          (8)  Executive confirms that he has been advised that he should rely
               on his own professional accounting, tax, legal and financial
               advisors with respect to an investment in the Company and the
               Common Stock, and obtain, to the extent Executive deems
               necessary, such professional advice with respect to the risks
               inherent in an investment in the Common Stock and the suitability
               of an investment in the Common Stock in light of his financial
               condition and investment needs. Executive further represents and
               warrants that he is an Accredited Investor as such term is
               defined in Regulation D under the Securities Act.

          (9)  Executive shall indemnify and hold harmless the Company, its
               officers, directors and employees and any of its professional
               advisors, from and against any and all loss, damage, liability or
               expense, including costs and reasonable attorneys' fees, to which
               they may become subject or which they may incur by reason of or

                                       5
<PAGE>

               in connection with any misrepresentation Executive has made
               herein, any breach of any of his representations or warranties
               made in this Section 4, or his failure to fulfill any of my
               covenants or agreements herein.

     5.  Benefits.  The Executive shall be entitled to all benefits and
         --------
conditions of employment provided by the Company to its executive officers,
including, without limitation, insurance, participation in the Company's
vacation policy, and participation in (except during the Initial terms as
described in Section 4 hereof) any stock option or incentive compensation plans,
pension, profit sharing or other retirement plans, subject (in each case) to the
terms of such plans and any provisions, rules, regulations and laws applicable
to such plans.

     6.  Reimbursement for Business Expenses.  The Executive shall be reimbursed
         -----------------------------------
for all reasonable out-of-pocket business expenses incurred by him in the direct
performance of his duties during his employment with the Company pursuant to the
terms of this Agreement and in accordance with the Company's policies in effect
from time to time.  All requests for reimbursement shall be substantiated by
invoices and other pertinent data reasonably satisfactory to the Company.

     7.  Performance.  The Executive shall devote all of his working time and
         -----------
efforts to the business and affairs of the Company and to the diligent, faithful
and competent performance of the duties and responsibilities assigned to him
pursuant to this Agreement, except for vacations, weekends and holidays.
Notwithstanding the foregoing, the Executive may render charitable, civic and
outside board services so long as such services do not materially interfere with
the Executive's ability to discharge his duties, including, without limitation,
such outside services as the Executive is currently performing.

     8.  Non-Disclosure of Proprietary Information; Non-Competition; Non-
         ---------------------------------------------------------------
Solicitation.
------------

         8.1.  Confidential Information; Trade Secrets.  As used in this
               ---------------------------------------
     Agreement, the term "Confidential Information" shall mean valuable, non-
     public, competitively sensitive data and information relating to the
     Company's business or the business of any entity affiliated with the
     Company, other than Trade Secrets (as defined below). "Confidential
     Information" shall include, among other things, information specifically
     designated as a Trade Secret that is, notwithstanding the designation,
     determined by a court of competent jurisdiction not to be a "trade secret"
     under applicable law. As used in this Agreement, the term "Trade Secrets"
     shall mean information or data of or about the Company or any entity
     affiliated with the Company, including, without limitation, technical or
     nontechnical data, formulas, patterns, compilations, programs, devices,
     methods, techniques, drawings, processes, financial data, financial plans,
     product plans, or lists of actual or potential customers or suppliers, that
     (i) derive economic value, actual or potential, from not being generally
     known to, and not being readily ascertainable by proper means by, other
     persons who can obtain economic value from their disclosure or use; and
     (ii) are subject of efforts that are reasonable under the circumstances to
     maintain their secrecy. To the extent that the foregoing definition is
     inconsistent with a definition of "trade

                                       6
<PAGE>

     secret" under applicable law, the foregoing definition shall be deemed
     amended to the extent necessary to render it consistent with applicable
     law.

          8.2. Non-Disclosure.  The Executive will be exposed to Trade Secrets
               --------------
     Confidential Information as a result of his employment by the Company as
     provided in this Agreement.  The Executive acknowledges and agrees that any
     unauthorized disclosure or use of any of the Trade Secrets or Confidential
     Information of the Company would be wrongful and would likely result in
     immediate and irreparable injury to the Company.  In consideration of the
     Executive's right to employment (or continued employment) under the terms
     of this Agreement, except as appropriate in connection with the performance
     of his obligations under this Agreement, the Executive shall not, without
     the express prior written consent of an officer of the Company other than
     the Executive, redistribute, market, publish, disclose or divulge to any
     other person or entity, or use or modify for use, directly or indirectly,
     in any way for any person or entity (i) any Confidential Information during
     the Term of this Agreement and for a period of two (2) years after the
     final date of the Term of this Agreement; and (it) any Trade Secrets at any
     time (during or after the Term of this Agreement) during which such
     information or data shall continue to constitute a "trade secret" under
     applicable law.  The Executive agrees to cooperate with any reasonable
     confidentiality requirements of the Company.  The Executive shall
     immediately notify the Company or any unauthorized disclosure or use of any
     Trade Secrets or Confidential Information of which the Executive becomes
     aware.

          8.3. Non-Competition.  The Executive shall not, either directly or
               ---------------
     indirectly, alone or in partnership, be connected or concerned with or
     participate in any other competing business or pursuit during any
     employment by the Company, except that the Executive may own up to three
     percent of the outstanding securities of a competing business the
     securities of which are registered with the Securities and Exchange
     Commission if such company is subject to the periodic reporting
     requirements of the Securities Exchange Act of 1934, as amended (the "1934
     Act").

          8.4. Non-Solicitation. For a period of one (1) year immediately
               ----------------
     following any termination of the Executive's employment, the Executive will
     not solicit, or participate in any solicitation of, the customers,
     suppliers, Executives or representatives of the Company (or any of its
     subsidiaries or affiliated companies) to breach any contract with the
     Company, terminate any relationship with the Company or leave the Company.
     For purposes of this Agreement, Customers shall be limited to actual
     customers or actively-sought prospective customers of the Company or any
     subsidiary or affiliate of the Company with whom the Executive has had
     substantial contact during thc Term of this Agreement.

     9.   Certain Definitions.
          -------------------

          9.1  Accrued Compensation.  For purposes of this Agreement, "Accrued
               --------------------
     Compensation" shall mean an amount which shall include all amounts earned
     or accrued through the "Termination Date" (as hereinafter defined) but not
     paid as of the Termination Date, including, without limitation, (i) Base
     Salary, (ii) reimbursement for

                                       7
<PAGE>

     reasonable and necessary expenses incurred by the Executive on behalf of
     the Company during the period ending on the Termination Date, (iii)
     vacation pay, (iv) bonuses, including, without limitation, any Annual
     Bonus, and incentive compensation, and (v) all other amounts to which the
     Executive is entitled under any compensation plan of the Company at the
     times such payments are due.

          9.2  Base Amount. For purposes of this Agreement, "Base Amount" shall
               -----------
     mean the Executive's annual Base Salary at the highest rate in effect on,
     or at any time during the ninety (90) day period prior to, the Termination
     Date and shall include all amounts of the Executive's Base Salary that are
     deferred under any qualified and non-qualified Executive benefit plans of
     the Company or any other agreement or arrangement.

          9.3  Cause. For purposes of this Agreement, a termination of
               -----
     employment is for "Cause" if the Executive has been convicted of a felony
     or a felony prosecution has been brought against the Executive or if the
     termination is evidenced by a resolution adopted in good faith by a
     majority of the Company's board of directors that the Executive (i)
     intentionally and continually failed substantially to perform his
     reasonably assigned duties with the Company (other than a failure resulting
     from the Executive's incapacity due to physical or mental illness or from
     the Executive's assignment of duties that would constitute "Good Reason"
     (as hereinafter defined)) which failure continued for a period of at least
     thirty (30) days after a written notice of demand for substantial
     performance has been delivered to the Executive specifying the manner in
     which the Executive has failed substantially to perform, or (ii)
     intentionally engaged in illegal conduct or gross misconduct which results
     in material economic harm to the Company; provided, however, that no
                                               --------  -------
     termination of the Executive's employment shall be for Cause as set forth
     in clause (ii) above until (x) there shall have been delivered to the
     Executive a copy of a written notice setting forth that the Executive was
     guilty of the conduct set forth in clause (ii) and specifying the
     particulars thereof in detail, and (y) the Executive shall have been
     provided an opportunity to be heard in person by the Company's board of
     directors (with the assistance of the Executive's counsel if the Executive
     so desires). Any termination of the Executive's employment by the Company
     hereunder shall be deemed to be a termination other than for Cause unless
     it meets all requirements of this Section 9.3.

          9.4  Change in Control.  For purposes of this Agreement, a "Change in
               -----------------
     Control" shall have occurred if:

               (1)  a majority of the directors of the Company shall be persons
                    other than persons:  (A) for whose election proxies shall
                    have been solicited by the Company's board of directors, or
                    (B) who are then serving as directors appointed by the
                    Company's board of directors to fill vacancies on the board
                    of directors caused by death or resignation (but not by
                    removal) or to fill newly-created directorships;

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<PAGE>

               (2)  a majority of the outstanding voting power of the Company
                    shall have been acquired or beneficially owned (as defined
                    in Rule 13d-3 under the 1934 Act or any successor rule
                    thereto) by any person (other than the Company, a subsidiary
                    of the Company, an affiliate of the Company or the
                    Executive) or Group (as defined below), which Group does not
                    include the Executive; or

               (3)  there shall have occurred:

                    (a)  a merger or consolidation of the Company with or into
                         another corporation (other than (1) a merger or
                         consolidation with a subsidiary of the Company or (2) a
                         merger or consolidation in which (a) the holders of
                         voting stock of the Company immediately prior to the
                         merger as a class continue to hold immediately after
                         the merger at least a majority of all outstanding
                         voting power of the surviving or resulting corporation
                         or its parent and (b) all holders of each outstanding
                         class or series of voting stock of the Company
                         immediately prior to the merger or consolidation have
                         the right to receive substantially the same cash,
                         securities or other property in exchange for their
                         voting stock of the Company as all other holders of
                         such class or series);

                    (b)  a statutory exchange of shares of one or more classes
                         or series of outstanding voting stock of the Company
                         for cash, securities or other property;

                    (c)  the sale or other disposition of all or substantially
                         all or the assets of the Company (in one transaction or
                         a series of transactions); or

                    (d)  the liquidation or dissolution of the Company;

          unless more than twenty-five percent (25%) of the voting stock (or the
          voting equity interest) of the surviving corporation or the
          corporation or other entity acquiring all or substantially all of the
          assets of the Company (in the case of a merger, consolidation or
          disposition of assets) or of the Company or its resulting parent
          corporation (in the case of a statutory share exchange) is
          beneficially owned by the Executive or a Group that includes the
          Executive.

          9.5  Group. For purposes of this Agreement, "Group" shall mean any two
               -----
     or more persons acting as a partnership, limited partnership, syndicate, or
     other group acting in concert for the purpose of acquiring, holding or
     disposing of voting stock of the Company.

                                       9
<PAGE>

          9.6  Disability. For purposes or this Agreement, "Disability" shall
               ----------
     mean a physical or mental infirmity which impairs the Executive's ability
     to substantially perform his duties with the Company for a period of one
     hundred eighty (180) consecutive days and the Executive has not returned to
     his full time employment prior to the Termination Date as stated in the
     "Notice of Termination" (as hereinafter defined).

          9.7  Good Reason. For purposes of this Agreement, "Good Reason" shall
               -----------
     mean a good faith determination by the Executive, in the Executive's
     reasonable judgment, that any one or more of the following events has
     occurred after the date hereof, without the Executive's express written
     consent:

               (1)  the assignment to the Executive of any duties inconsistent
                    with the Executive's position (including, without
                    limitation, status, titles and reporting requirements),
                    authority, duties or responsibilities as in effect
                    immediately prior to the date hereof, or any other action by
                    the Company that results in a material diminution in such
                    position, authority, duties or responsibilities, excluding
                    for this purpose isolated and inadvertent action not taken
                    in bad faith and remedied by the Company promptly after
                    receipt of notice thereof given by the Executive;

               (2)  a reduction by the Company in the Executive's Base Salary,
                    as the same may be increased from time to time;

               (3)  any failure to pay the Executive any compensation or
                    benefits to which he is entitled within five (5) days of the
                    date due;

               (4)  the Company's requiring the Executive to be based anywhere
                    other than within fifty (50) miles of the Executive's job
                    location as of the date hereof, except for reasonably
                    required travel on the Company's business which is not
                    greater than such travel requirements prior to the date
                    hereof;

               (5)  the taking of any action by the Company that would
                    materially adversely affect the physical conditions existing
                    in or under which the Executive performs his employment
                    duties;

               (6)  the insolvency or the filing (by any party, including the
                    Company) of a petition for bankruptcy by the Company;

               (7)  any purported termination of the Executive's employment for
                    Cause by the Company which does not comply with the terms of
                    Section 9.3 hereof; or

               (8)  any breach by the Company of any provision of this
                    Agreement.

                                       10
<PAGE>

          The Executive's right to terminate his employment pursuant to this
     Section 9.7 shall not be affected by his incapacity due to physical or
     mental illness.

          9.8  Notice of Termination. For purposes of this Agreement, "Notice of
               ---------------------
     Termination" shall mean a written notice or termination from the Company of
     the Executive's employment which indicates the specific termination
     provision in this Agreement relied upon and which sets forth in reasonable
     detail the facts and circumstances claimed to provide a basis for
     termination of the Executive's employment under the provision so indicated.

          9.9  Termination Date. For purposes of this Agreement, "Termination
               ----------------
     Date" shall mean, in the case of the Executive's death, his date of death,
     in the case of the Executive's voluntary termination, the last day of
     employment, and in all other cases (other than in the case of a successor
     or an assignee, which is provided for in Section 12.1 hereof), the date
     specified in the Notice of Termination; provided, however, that if the
                                             --------  -------
     Executive's employment is terminated by the Company for Cause or due to
     Disability, the date specified in the Notice of Termination shall be at
     least thirty (30) days from the date the Notice of Termination is given to
     the Executive; and provided further that in the case of Disability the
                        -------- -------
     Executive shall not have returned to the full-time performance of his
     duties during such period of at least thirty (30) days.

     10.  Benefits and Payments Upon Termination of Employment.
          ----------------------------------------------------

          10.1 Compensation and Benefits. If, during the term of this Agreement,
               -------------------------
the Executive's employment with the Company shall be terminated, the Executive
shall be entitled to the following compensation and benefits in the following
circumstances:

               (1)  If the Executive's employment with the Company shall be
                    terminated by the Company for Cause pursuant to Section 11.1
                    or by Executive pursuant to Section 11.3 hereof, then the
                    Company shall pay to the Executive all Accrued Compensation
                    and the Contingent Stock Grant and any other then non-vested
                    restricted stock or stock options shall be canceled and any
                    rights of Executive with respect thereto shall be
                    terminated.

               (2)  If the Executive's employment with the Company shall be
                    terminated by the Company due to Disability or by reason of
                    the Executive's death, then the Company shall pay to the
                    Executive all Accrued Compensation and the restrictions on
                    any outstanding incentive awards (including, without
                    limitation, restricted stock and granted performance shares
                    or units) under any incentive plan or arrangement shall
                    lapse and such incentive award shall become 100% vested, all
                    stock options, warrants and stock appreciation rights
                    granted to the Executive on or prior to the date of this
                    Agreement shall become immediately exercisable and 100%
                    vested

                                       11
<PAGE>

                    and, notwithstanding anything to the contrary contained in
                    the plan, agreement or other instrument relating to such
                    stock option, warrant or stock appreciation rights with
                    regard to the period of time within which such stock option,
                    warrant or stock appreciation rights must be exercised
                    following the Executive's termination of employment or
                    provision of services to the Company, all such stock
                    options, warrants and stock appreciation rights may be
                    exercised at any time and from time to time until the one
                    (1) year anniversary of the Termination Date, and all
                    performance units granted to the Executive shall become 100%
                    vested.

               (3)  If the Executive's employment with the Company shall be
                    terminated (A) by the Company pursuant to Section 11.2
                    hereof or (B) by the Executive pursuant to Section 11.4
                    hereof, then the Executive shall be entitled to the
                    following:

                    i)   the Company shall pay the Executive all Accrued
                         Compensation;

                    ii)  the Company shall pay the Executive as severance pay
                         and in lieu of any further compensation for periods
                         subsequent to the Termination Date an amount in cash
                         equal to one (1) times the Base Amount;

                    iii) for twelve (12) months or such longer period as may be
                         provided by the terms of the appropriate program,
                         practice or policy, the Company shall, at its expense,
                         continue on behalf of the Executive and his dependents
                         and beneficiaries the life insurance, disability,
                         medical, dental and hospitalization benefits generally
                         made available to the Company's executive officers at
                         any time during the 90-day period prior to the
                         Termination Date or at any time thereafter, provided
                                                                     --------
                         that the Company's obligation hereunder with respect to
                         the foregoing benefits shall be limited to the extent
                         that the Executive obtains any such benefits pursuant
                         to a subsequent employer's benefit plans, in which case
                         the Company may reduce the coverage of any benefits it
                         is required to provide the Executive hereunder as long
                         as the aggregate coverages and benefits of the combined
                         benefit plans are no less favorable to the Executive
                         than the coverages and benefits required to be provided
                         hereunder;

                                       12
<PAGE>

                    iv)  the restrictions on any outstanding incentive awards
                         (including, without limitation, restricted stock and
                         granted performance shares or units) under any
                         incentive plan or arrangement shall lapse and such
                         incentive award shall become 100% vested, all stock
                         options, warrants and stock appreciation rights granted
                         to the Executive on or prior to the date of this
                         Agreement shall become immediately exercisable and 100%
                         vested and, notwithstanding anything to the contrary
                         contained in the plan, agreement or other instrument
                         relating to such stock option, warrant or stock
                         appreciation rights with regard to the period of time
                         within which such stock option, warrant or stock
                         appreciation rights must be exercised following the
                         Executive's termination of employment or provision of
                         services to the Company, all such stock options,
                         warrants and stock appreciation rights may be exercised
                         at any time and from time to time until the one (1)
                         year anniversary of the Termination Date, and all
                         performance units granted to the Executive shall become
                         100% vested; and

                    v)   the Company shall, at its sole expense as incurred,
                         provide for a twelve (12) month period following the
                         Termination Date the Executive with office space and
                         secretarial assistance the same as or comparable to
                         that provided to the Executive immediately prior to the
                         Termination Date.

               (4)  The amounts provided for in subsection 10.1(1) shall be
                    payable to Executive in a lump-sum on the Termination Date.
                    The amounts provided for in subsection 10.1(3) shall be
                    payable to the Executive in substantially equal biweekly
                    installments for a twelve (12) month period commencing on
                    the Termination Date and otherwise in accordance with the
                    Company's payroll practices in effect from time to time.

               (5)  The Executive shall not be required to mitigate the amount
                    of any payment provided for in this Agreement by seeking
                    other employment or otherwise, and no such payment shall be
                    offset or reduced by the amount of any compensation or
                    benefits provided to the Executive in any subsequent
                    employment, except as provided in subsection 10.1(3)(iii).

          10.2 No Severance. The severance pay and benefits provided for in this
               ------------
Section 10 shall be in lieu of any other severance or termination pay to which
the Executive may be entitled under any Company severance or termination plan,
program, practice or arrangement.

                                       13
<PAGE>

          10.3  Other Compensation and Benefit. The Executive's entitlement to
                ------------------------------
any other compensation or benefits shall be determined in accordance with the
Company's Executive benefit plans and other applicable programs, policies and
practices then in effect.

          10.4  Payment of Loan. If the Executive has not been terminated for
                ---------------
Cause or voluntarily resigned without Good Reason as of December 31, 2000, then
the Company will forgive 50% of the principal and accrued interest then payable
under the Note. Executive will be obligated to pay off the remaining 50% of
principal and accrued interest then payable under the Note.

     11.  Termination.  The Executive's employment hereunder may be terminated
          -----------
without any breach of this Agreement only in accordance with this Section 11.

          11.1  Termination by the Company for Cause.  The Company may terminate
                ------------------------------------
     the Executive's employment at any time for Cause by providing to the
     Executive a Notice of Termination, whereupon the Executive shall be
     entitled to all of the benefits and payments provided for under Section 10
     hereof.

          11.2  Termination by the Company without Cause.  The Company may
                ----------------------------------------
     terminate the Executive's employment at any time without Cause by providing
     to the Executive a Notice of Termination, whereupon the Executive shall be
     entitled to all of the benefits and payments provided for under Section 10
     hereof.

          11.3  Termination by the Executive.  The Executive's employment may be
                ----------------------------
     terminated by the Executive at any time by providing the Company with
     notice of such termination and specifying in the notice the effective date
     of such termination, which shall not be less than one hundred twenty (120)
     days after giving such notice, whereupon the Executive's employment shall
     terminate on the date specified in such notice and the Executive shall be
     entitled to all of the benefits and payments provided for under Section 10
     hereof; provided, however, that following receipt of such notice, the
             --------  -------
     Company may specify, in its discretion, the date on which the Executive's
     employment shall terminate so long as the date so specified is not more
     than one hundred twenty (120) days after the date on which the Executive
     shall have given notice, in which case the Executive's employment shall
     terminate on the date so specified by the Company.

          11.4  Termination by the Executive for Good Reason following a Change
                ---------------------------------------------------------------
     of Control.  For a one (1) year period following a Change of Control, the
     ----------
     Executive's employment may be terminated by Executive for Good Reason at
     any time during such one (1) year period by providing the Company with a
     notice of such termination and specifying in the notice the effective date
     of such termination, whereupon the Executive's employment shall terminate
     on the date specified in such notice and the Executive shall be entitled to
     all of the benefits and payments provided for under Section 10 hereof.

          11.5  Termination Upon Disability.  The Company may terminate the
                ---------------------------
     Executive's employment upon the Disability of the Executive by providing to
     the

                                       14
<PAGE>

     Executive a Notice of Termination, whereupon the Executive shall be
     entitled to all of the benefits and payments provided for under Section 10
     hereof.

          11.6 Death.  In the event of the Executive's death during his
               -----
     employment hereunder, the Executive's employment shall be automatically
     terminated, whereupon the Executive shall be entitled to all of the
     benefits and payments provided under Section 10 hereof.

     12.  Successors and Assigns.
          ----------------------

          12.1 Assumption and Agreement. This Agreement shall be binding upon
               ------------------------
and shall inure to the benefit of the Company, its successors and assigns, and
the Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) or assign, by agreement in form and
substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession or assignment shall be a
breach of this Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as he would be entitled to
hereunder if his employment had been terminated pursuant to Section 11.2 hereof,
except that for purposes of implementing the foregoing, the date on which any
such succession or assignment becomes effective shall be deemed the Termination
Date hereunder. As used in the Agreement, Company shall mean the Company as
hereinbefore defined and any successor or assign that executes and delivers the
agreement provided for in this Section 12.1 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.

          12.2 Rights of Executive. This Agreement and all rights of the
               -------------------
Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If the Executive 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 the Executive's devise,
legatee or other designee or, if there be no such designee, to the Executive's
estate.

     13.  Injunctive Relief.  The Company and the Executive agree that damages
          -----------------
are an inadequate remedy for, and that the Company or any successor to the
business of the Company would be irreparably harmed by, any breach of Section 8
of this Agreement, and that the Company, any successor to the business of the
Company or any permitted assignee of the Company shall be entitled to equitable
relief in the form of a preliminary or permanent injunction upon any breach of
Section 8 hereof.

     14.  Notices.  For the purpose of this Agreement, notices and all other
          -------
communications to either party hereunder provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when delivered in person
or mailed by first-class mail or airmail, postage prepaid, addressed:

                                       15
<PAGE>

          If to the Executive:

          Mr. James M. Blanchard
          9010-2 Nesbitt Ferry Road
          Alpharetta, GA 30022

          If to the Company:

          Grace Development, Inc.
          1690 Chantilly Drive
          Atlanta, Georgia 30324

          with a copy to:

          Hunton & Williams
          Riverfront Plaza, East Tower
          951 East Byrd Street
          Richmond, Virginia 23219
          Attention:  Gary E. Thompson, Esq.

or to such other address(es) as either party may have furnished to the other
party in writing in accordance with this Section.

     15.  Miscellaneous.  No provision of this Agreement may be amended,
          -------------
modified or waived unless such amendment, modification or waiver (i) is agreed
to in writing and is signed by the Executive and a representative of the
Company, its successor or permitted assignee and (ii) has been approved by the
board of directors of the Company, its successor or any permitted assignee of
the Company.  No waiver by either party to this Agreement at any time of breach
by the other party of, or compliance by the other party with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
to be a waiver of similar or dissimilar provisions or conditions at the same or
any prior or subsequent time.  No agreements or representations, oral or
otherwise, expressed or implied, with respect to the subject matter of this
Agreement have been made by either party that are not expressly set forth in
this Agreement.

     16.  Validity.  The invalidity or unenforceability of any provision or
          --------
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which other provisions shall remain in
full force and effect, nor shall the invalidity or unenforceability of a portion
of any provision of this Agreement affect the validity or enforceability of the
balance of such provision.

     17.  Counterparts.  This document may be executed in two or more
          ------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.

                                       16
<PAGE>

     18.  Headings.  The headings of the paragraphs contained in this document
          --------
are for reference purposes only and shall not, in any way, affect the meaning or
interpretation of any provision of this Agreement.

     19.  Applicable Law.  This Agreement shall be governed by and construed in
          --------------
accordance with the internal substantive laws, and not the choice of law rules,
of the State of Georgia.

     20.  Arbitration.  Any controversy or claim arising out of or relating to
          -----------
this Agreement or the breach thereof, other than the provisions of Section 9
hereof, shall, on the written request of one party served upon the other, be
settled by binding arbitration in Fulton County, Georgia in accordance with the
commercial arbitration rules then recognized by the American Arbitration
Association, and judgment upon the award rendered may be entered and enforced in
any court having jurisdiction thereof.

     21.  Entire Agreement; Return and Cancellation of Stock Certificate Issued
          ---------------------------------------------------------------------
in Error.  This Agreement constitutes the entire agreement between the parties
--------
hereto and supersedes all prior agreements, understandings and arrangements
(oral or written) between the parties hereto, including without limitation the
Old Agreement and the letter agreement between the parties dated October 5,
1999.  Simultaneously with the execution and delivery of this Agreement by the
parties, and as a condition to the effectiveness of this Agreement and the
issuance to the Executive of 1,000,000 shares of the Common provided for under
Section 4.2 hereof, Executive shall deliver into the possession of the Company
the original stock certificate for 2,000,000 shares of the Company's common
stock which was previously issued in error and the Company shall cancel such
certificate as if it had never been issued.  Simultaneously, the Company will
deliver to the Executive a stock certificate for 1,000,000 shares of the
Company's common stock in accordance with Section 4.2.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and delivered by its duly authorized officer, and the Executive has executed and
delivered this Agreement, all as of the date first written above.

                                       GRACE DEVELOPMENT, INC.


                                       By: /s/ Benjamin F. Holcomb
                                           -------------------------------------
                                           Benjamin F. Holcomb,
                                           Chairman and Chief Executive Officer

                                       /s/ James M. Blanchard
                                       -----------------------------------------
                                       JAMES M. BLANCHARD

                                       17