Cook bacon in a large skillet until crisp; remove bacon, and drain on paper towels, reserving 1 tablespoon drippings in skillet. Crumble bacon, and set aside.
Cook ham in reserved drippings in skillet over medium heat until browned.
Cook grits according to package directions. Remove from heat; stir in cheese and butter until melted. Stir in bacon, ham, eggs, and remaining ingredients. Pour into a lightly greased 13- x 9-inch baking dish.
Bake at 350° for 45 minutes or until set.
NOTE: Casserole may be prepared a day ahead; cover and chill. Remove from refrigerator the following day, and let stand at room temperature 30 minutes. Bake as directed.