<PAGE>


                                                                    EXHIBIT 10.4

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

     THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into as of December 1, 1999 between GRACE DEVELOPMENT, INC., a Colorado
corporation (the "Company"), and JAMES 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 its President and Chief
Operating Officer since October, 1999 and wishes to continue to employ Executive
in such capacities, and Executive wishes to serve in such position, on the terms
and conditions set forth herein;

     WHEREAS, Executive desires to be assured of a secure minimum compensation
from Company for his services over a defined term;

     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 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.
<PAGE>

     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 have an effective
         ----
date of December 1, 1999 (the "Effective Date"). Executive shall continue as a
member of the Company's board of directors and as President and Chief Operating
Officer of the Company for a period of one (1) year from the Effective Date
(the "Initial Term"); provided, however, the Term shall be extended
                      --------- -------
automatically for an additional one-year period(each an "Additional Term") on
each anniversary of the Effective Date unless either party hereto gives written
notice to the other party not to so extend at least ninety (90) days prior
thereto, in which case no further extension shall occur; provided further,
                                                         ----------------
however, that notwithstanding any such notice by the Company not to extend, the
-------
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 and
         ---------------------
Chief Operating Officer 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 such officer, provided that
                                                               --------
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.
         -----------------------------

         (a)  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(a) 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
                                       2
<PAGE>

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.

          (b)  In consideration of the Executive's services to the Company and
NM prior to the Effective Date, and as an inducement to the Executive to
continue his employment with the Company, promptly following the execution and
delivery of this Agreement, the Company shall issue to Executive 2,000,000
shares of Common Stock (the "Stock Grant").  Executive acknowledges and agrees
that the Stock Grant is 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.

          (c)  Investment.

                 (i)   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 Company's business and other material
     factors affecting his investment in the Company Stock.

                 (ii)  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.

                 (iii) 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.

                 (iv)  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

                                       3
<PAGE>

     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.

               (v)    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.

               (vi)   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.

               (vii)  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.

               (viii) 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.

               (ix)   Executive shall indemnify and hold harmless the Company,
     its officers, directors and employees and any of its professional advisors,
     from and against

                                       4
<PAGE>

     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 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 non-technical
          data, formulas, patterns, compilations, programs, devices, methods,
          techniques, drawings, processes, financial data, financial plans,
          product plans, or

                                       5
<PAGE>

          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
          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 and 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 (ii)
          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 of
          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

                                       6
<PAGE>

          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
          the 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
          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 two-thirds (2/3) 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

                                       7
<PAGE>

          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:

               (i)   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;

               (ii)  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

               (iii) 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 of the assets of the Company (in one
               transaction or a series of transactions); or

                       (D)  the liquidation or dissolution of the Company;

                                       8
<PAGE>

          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.

            9.6.  Disability.  For purposes of 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.
                  -----------

                  9.7.1.  For purposes of this Agreement, "Good Reason" shall
          mean a good faith determination by the Executive, in the Executive's
          sole and absolute judgment, that any one or more of the following
          events has occurred, without the Executive's express written consent:

                          (i)   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;

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

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

                          (iv)  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;

                                       9
<PAGE>

                    (v)    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;

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

                    (vii)  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

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

                    9.7.2. The Executive's right to terminate his employment
          pursuant to this Section 9 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 of 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:

               (i)  If the Executive's employment with the Company shall be
          terminated by the Company for Cause or pursuant to Section 11.3
          hereof, then the Company

                                       10
<PAGE>

          shall pay to the Executive all Accrued Compensation.

               (ii)  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 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.

               (iii) 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:

                    (1) the Company shall pay the Executive all Accrued
               Compensation;

                    (2) 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;

                    (3) 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

                                       11
<PAGE>

               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;

                    (4) 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

                    (5) 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.

               (iv)   The amounts provided for in subsection 10.1(i) shall be
          payable to Executive in a lump-sum on the Termination Date.  The
          amounts provided for in subsection 10.1(iii) shall be payable to the
          Executive in substantially equal bi-weekly installments for a twelve
          (12) month period commending on the Termination Date and otherwise in
          accordance with the Company's payroll practices in effect from time to
          time.

               (iiii) 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(iii)(3).

               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.

                                       12
<PAGE>

            10.3.  Other Compensation and Benefits.  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.

     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 Executive a Notice of Termination, whereupon the
          Executive shall be entitled to

                                       13
<PAGE>

          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
<PAGE>

     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:

          If to the Executive:

          Mr. James 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:

          Rogers & Hardin, LLP
          2700 International Tower
          229 Peachtree Street NE
          Atlanta, Georgia  30303
          Attention:  Michael Rosenzweig

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

                                       15
<PAGE>

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.

          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. This Agreement constitutes the entire agreement
               ----------------
between the parties hereto and supersedes all prior agreements (if any),
understandings and arrangements (oral or written) between the parties hereto.

                                       16
<PAGE>

          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/ Lee Silverstein
                                                ----------------------------
                                                    Lee Silverstein
                                                    Chairman Compensation
                                                    Committee of the Board of
                                                     Directors



                                             /s/ James Blanchard
                                             -------------------------------
                                             JAMES BLANCHARD

                                       17