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                                                 EXHIBIT  10.26



                             ENGINEERING ANIMATION, INC.
                         1997 NON-QUALIFIED STOCK OPTION PLAN
                                           
                      (ESTABLISHED EFFECTIVE SEPTEMBER 1, 1997)
                                           

    1.   PURPOSE.  The purpose of the Engineering Animation, Inc. 1997
Non-Qualified Stock Option Plan (the "Plan"), as hereinafter set forth, is to
enable Engineering Animation, Inc., a Delaware corporation (the "Company"), to
attract, retain and reward employees of the Company or its subsidiaries and
selected non-employees who have an ongoing consulting or independent contractor
relationship with the Company or its subsidiaries, by offering them an
opportunity to have a greater proprietary interest in and closer identity with
the Company and with its financial success.

    Options granted under the Plan shall be non-qualified stock options
(hereinafter "Options").  Proceeds of cash or stock received by the Company from
the sale of Common Stock of the Company pursuant to Options granted under the
Plan will be used for general corporate purposes.

    2.   ADMINISTRATION.  The Plan shall be administered by the Board of
Directors of the Company (the "Board").  Subject to the express provisions of
the Plan, the Board shall have the power to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, to determine the
terms and provisions of Participants' individual option agreements (which need
not be identical) and to make such other determinations as it deems necessary or
advisable in carrying out the administration of the Plan.  All decisions of the
Board on matters within its jurisdiction shall be conclusive and binding.  No
member of the Board shall be liable for any action taken or determination made
in good faith.

    3.   DEFINITIONS.  Whenever used in this Agreement, the following terms
shall have the meanings set forth below:

         (a)  "Beneficial Owner" shall have the meaning ascribed to such term
    in Rule 13d-3 of the General Rules and Regulations under the Securities
    Exchange Act of 1934.
         
         (b)  "Change in Control" of the Company shall be deemed to have
    occurred if the conditions set forth in any one or more of the following
    paragraphs shall have been satisfied:
    
              (i)     Any Person (other than a trustee or other fiduciary
         holding securities under an employee benefit plan of the Company, or a
         corporation owned directly or indirectly by the stockholders of the
         Company in substantially 

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         the same proportions as their ownership of Shares of the Company, or
         other than a Person whose stock ownership is approved by a vote of 
         two-thirds (2/3) of the Directors who are not affiliated with such 
         Person) becomes the Beneficial Owner, directly or indirectly, of 
         securities of the Company representing 50% or more of the combined 
         voting power of the Company's then outstanding securities; or
    
              (ii)    During any period of two consecutive fiscal years,
         individuals who at the beginning of such period constitute the Board
         (and any new Director whose election to the Board was approved by a
         vote of at least two-thirds (2/3) of the Directors then still in
         office who either were Directors at the beginning of the period or
         whose election was previously so approved), cease for any reason to
         constitute a majority thereof; or
    
              (iii)   The stockholders of the Company approve (a) a plan of
         complete liquidation of the Company; or (b) an agreement for the sale
         or disposition of all or substantially all the Company's assets; or
         (c) a merger or consolidation of the Company with any other
         corporation, other than a merger or consolidation which would result
         in the voting securities of the Company outstanding immediately prior
         thereto continuing to represent (either by remaining outstanding or by
         being converted into voting securities of the surviving entity), at
         least 50% of the combined voting securities of the Company (or such
         surviving entity) outstanding immediately after such merger or
         consolidation;
    
              (iv)    The Board agrees by a two-thirds (2/3) vote, that a
         Change in Control of the Company has occurred.
    
    However, in no event shall a Change in Control be deemed to have occurred,
    with respect to a Participant, if that Participant is part of a purchasing
    group which consummates the Change in Control transaction.  A Participant
    shall be deemed "part of a purchasing group" for purposes of the preceding
    sentence if the Participant is an equity participant or has agreed to
    become an equity participant in the purchasing company or group (except for
    (i) passive ownership of less than 3% of the shares of the purchasing
    company; or (ii) ownership or equity participation in the purchasing
    company or group which is otherwise not deemed to be significant, as
    determined prior to the Change in Control by a majority of the
    disinterested Directors of the Company).
         
         (c)  "Common Stock" shall mean the Company's $0.01 par value common
    stock.
    
         (d)  "Person" shall have the meaning ascribed to such term in Section
    3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d)
    and 14(d) thereof, including a group defined in Section 13(d).
    
    4.   ELIGIBILITY.  Options may be granted under this Plan to any employee
of the Company or its subsidiaries whose participation the Board determines is
in the best interest of 

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the Company and to any non-employee who is a consultant or independent 
contractor to the Company or its subsidiaries whose participation the Board 
determines is in the best interests of the Company ("Participants"). The 
Board shall have absolute discretion to determine, within the limits of the 
express provisions of the Plan, those Participants to whom and the time or 
times at which Options shall be granted.  The Board shall also determine the 
number of shares to be subject to each Option, the duration of each Option, 
the exercise price (Option price) under each Option, the time or times within 
which (during the term of the Option) all or portions of each Option may be 
exercised, and whether cash or Common Stock may be accepted in full or 
partial payment upon exercise of an Option.  In making such determination, 
the Board may take into account the nature of the services rendered by the 
Participant, his or her present and potential contributions to the Company's 
success and such other factors as the Board in its discretion shall deem 
relevant.

    5.   COMMON STOCK.  Options may be granted for a number of shares not to
exceed, in the aggregate, 400,000 shares of Common Stock, except as such number
of shares shall be adjusted in accordance with the provisions of Section 11 of
the Plan.

    In the event that any Option granted under the Plan expires unexercised, is
surrendered by a Participant for cancellation or is terminated or ceases to be
exercisable for any other reason without having been fully exercised prior to
the end of the period during which Options may be granted under the Plan, the
shares subject to such Option, or to the unexercised portion thereof, shall
again become available for new Options to be granted under the Plan to any
eligible Participant (including the holder of such former Option) at an Option
price determined in accordance with Section 6(a) hereof, which price may then be
greater or less than the Option price of such former Option.  Any shares of
Common Stock that are surrendered or withheld in payment of the exercise price
of an Option or that are surrendered or withheld in satisfaction of any tax
liabilities resulting from the exercise of an Option will be added to the
aggregate number of shares of Common Stock available for new Option grants
hereunder.

    6.   REQUIRED TERMS AND CONDITIONS OF OPTIONS.  The Options granted under
the Plan shall be in such form and upon such terms and conditions, including
provisions as to the treatment of outstanding Options upon the occurrence of a
Change in Control, as the Board shall from time to time determine, subject to
the general provisions of the Plan, and the following specific rules:

         (a)  OPTION PRICE.  The option price of each Option to purchase Common
    Stock shall, unless the Board determines otherwise, be 100% of the Fair
    Market Value per share of Common Stock at the date the option is granted.

         (b)  MAXIMUM TERM.  No Option shall be exercisable after the
    expiration of fifteen (15) years from the date it is granted, except as
    provided in Section 9(b), (c), (d) or (e).

         (c)  TIME OF EXERCISE.  The Board shall determine the duration of each
    Option and the time or times within which (during the term of Option) all
    or portions of each 

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    Option may be exercised, except to the extent that other terms of exercise
    are specifically provided by other provisions of the Plan.

    7.   FAIR MARKET VALUE.  "Fair Market Value" shall be the amount determined
by the Board from time to time, using such good faith valuation methods as it
deems appropriate, except that as long as the Common Stock is traded on NASDAQ
or a recognized stock exchange, it shall mean the average of the highest and
lowest quoted selling prices for the Shares on the relevant date, or (if there
were no sales on such date) the weighted average of the means between the
highest and the lowest quoted selling prices on the nearest day before and the
nearest day after the relevant date, as prescribed by Treasury Regulation
20.2031-2(b)(2), as reported in the Wall Street Journal or a similar publication
selected by the Board.

    8.   MODIFICATION.  The Company may modify grants of options to
Participants who are foreign nationals or employed outside the United States to
fulfill Plan purposes and recognize differences in local law, tax policy and
custom.

    9.   EXPIRATION OF OPTION.

         (a)  GENERAL RULE.  Except with respect to Options expiring pursuant
    to Section 9(b), (c), (d) or (e), each Option shall expire on the first to
    occur of:  (i) the fifteenth anniversary of the date of grant thereof, or
    (ii) the expiration date or dates set forth in the applicable Option
    agreement.

         (b)  EXPIRATION UPON TERMINATION.  Except with respect to Options
    expiring pursuant to Section 9(c), (d) or (e), an Option shall expire on
    the first to occur of the applicable date or dates determined pursuant to
    Section 9(a) or the date that the employment or relationship of the
    Participant with the Company terminates.  Notwithstanding the preceding
    provisions of this Section 9(b), the Board, in its sole discretion, may
    permit such a Participant to exercise an Option during a period following
    his or her termination of employment, which period shall not exceed three
    months.  In no event, however, may the Board permit such Participant to
    exercise an Option under this Section 9(b) after the expiration date
    computed under Section 9(a).

         (c)  EXPIRATION UPON DISABILITY OR DEATH.  If the employment or
    relationship of a Participant with the Company terminates by reason of
    disability (as determined in the discretion of the Board) or by reason of
    death, his or her Options, if any, shall expire after the first to occur of
    the expiration date computed under Section 9(a) or the one-year anniversary
    of termination of employment or relationship by reason of disability or
    death.

         (d)  EXPIRATION UPON RETIREMENT.  If the employment of a Participant
    with the Company terminates due to "retirement," as defined below, with the
    consent of the Board, his or her Options, if any, shall expire on the first
    to occur of the applicable date or dates determined pursuant to Section
    9(b).  If a Participant who has so retired dies prior to exercising in full
    an Option which has not expired pursuant to the preceding sentence, then,
    notwithstanding the preceding sentence, his or her Options shall 

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    expire after the first to occur of the expiration date computed under 
    Section 9(a) or the one-year anniversary of the date of the Participant's
    death. "Retirement" for purposes of this Plan shall mean the termination of
    employment of a Participant with the Company on or after the date a
    Participant attains age 65.

         (e)  EXPIRATION UPON TERMINATION FOR CAUSE.  If the employment or
    relationship of a Participant is terminated by the Company for substantial
    cause, the Participant's right to exercise his or her Options shall
    terminate at the time notice of termination of employment, or cancellation
    of relationship is given by the Company to such Participant.  For purposes
    of this provision, substantial cause shall include:

              (i)     The commission of an action against or in derogation of
         the interests of the Company which, if proven in a court of law, would
         constitute a violation of a criminal code or similar law;
    
              (ii)    Divulging the Company's confidential information; or
    
              (iii)   The performance of any similar action that the Board, in
         its sole discretion, may deem to be sufficiently injurious to the
         interest of the Company to constitute substantial cause for
         termination.
    
    10.  METHOD OF EXERCISE.  Options may be exercised by giving written notice
to the Corporate Secretary of the Company, stating the number of shares of
Common Stock with respect to which the Option is being exercised and tendering
payment therefor.  The exercise price of an Option shall be paid in full at the
time that the Option, or any part thereof, is exercised.  Subject to the
approval of the Board, payment may be made (i) in cash, (ii) through the
surrender of previously acquired shares of Common Stock having a Fair Market
Value equal to the exercise price of the Option or the withholding of shares of
Common Stock having a Fair Market Value equal to the exercise price of the
Option, or (iii) a combination of (i) and (ii).

    11.  ADJUSTMENTS.

         (a)  The aggregate number of shares of Common Stock with respect to
    which Options may be granted hereunder, the number of shares of Common
    Stock subject to each outstanding Option and the Option price per share for
    each such Option may all be appropriately adjusted, as the Board may
    determine, for any increase or decrease in the number of shares of issued
    Common Stock of the Company resulting from a subdivision or consolidation
    of shares whether through reorganization, payment of a share dividend or
    other increase or decrease in the number of such shares outstanding
    effected without receipt of consideration by the Company, distribution of
    assets to stockholders, or the assumption and conversion of outstanding
    Options in an acquisition of the Company; provided, however, that no
    adjustment in the number of shares with respect to which Options may be
    granted under the Plan or in the number of shares subject to outstanding
    Options shall be made except in the event that such adjustment, together
    with all 

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    respective prior adjustments which were not made as a result of this 
    provision, involve a net change of more than 10%.
    
         (b)  Subject to any required action by the stockholders, if the
    Company shall be a party to a transaction involving a sale of substantially
    all its assets, a merger or a consolidation, any Option granted hereunder
    shall pertain to and apply to the securities to which a holder of the
    number of shares of Common Stock subject to the Option would have been
    entitled if the Participant actually owned the stock subject to the Option
    immediately prior to the time any such transaction became effective;
    provided, however, that all unexercised Options under the Plan may be
    canceled by the Company as of the effective date of any such transaction by
    giving notice to the holders thereof of its intention to do so and by
    permitting the exercise, during the 30-day period preceding the effective
    date of such transaction, of all partly or wholly unexercised Options in
    full (without regard to installment exercise limitations).  This provision
    shall apply provided that the Participant is not terminated for cause.
    
         (c)  In the case of dissolution of the Company, every Option
    outstanding hereunder shall terminate; provided, however, that each
    Participant shall have 30 days' prior written notice of such event, during
    which time the holder shall have a right to exercise the partly or wholly
    unexercised Option (without regard to installment exercise limitations).
    
         (d)  On the basis of information known to the Company, the Board shall
    make all determinations under this Section 11, including whether a
    transaction involves a sale of substantially all the Company's assets, and
    all such determinations shall be conclusive and binding.
    
    12.  OPTION AGREEMENTS.  Each Participant shall agree to such terms and
conditions in connection with the exercise of an Option, including restrictions
on the disposition of the Common Stock acquired upon the exercise thereof, as
the Board may deem appropriate.  Option agreements need not be identical.  The
certificates evidencing the shares of Common Stock acquired upon exercise of an
Option may bear a legend referring to the terms and conditions contained in the
respective Option agreement and the Plan, and the Company may place a stop
transfer order with its transfer agent against the transfer of such shares.  If
requested to do so by the Board at the time of exercise of an Option, each
Participant shall execute a certificate indicating that he or she is purchasing
the Common Stock under such Option for investment and not with any present
intention to sell the same.

    13.  WITHHOLDING OF TAXES.  Upon the exercise of an Option, the Company may
deduct any federal, state or local taxes required by law to be withheld with
respect to such exercise.  Any holder of an Option may elect to surrender shares
of Common Stock previously acquired by the holder or to have the Company
withhold shares that would have otherwise been issued to the holder pursuant to
the exercise of an Option, the number of such withheld or surrendered shares to
be sufficient to satisfy all or a portion of the income tax liability that
arises upon such exercise.

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    14.  LEGAL AND OTHER REQUIREMENTS.  The obligation of the Company to sell
and deliver Common Stock under Options granted under the Plan shall be subject
to all applicable federal and state laws, regulations, rules and approvals.  A
Participant shall have no rights as a stockholder with respect to any shares
covered by an Option granted to or exercised by him or her until the date of
delivery of a stock certificate to him or her for such shares.  No adjustment
other than pursuant to Section 11 hereof shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
delivered.

    15.  NONTRANSFERABILITY.  Subject to the discretion of the Board to permit
transfers of Options to a Participant's immediate family members, to one or more
trusts for the benefit of such family members or to partnerships in which such
family members are the only partners (in which case (i) the applicable Option
agreement, as approved by the Board, must expressly so permit such transfer,
(ii) the Participant must not receive any consideration for such transfer and
(iii) the Participant must provide such documentation and information regarding
such transfer or transferees as the Board may reasonably request), during the
lifetime of a Participant, any Option granted to him or her shall be exercisable
only by him or her or by his or her guardian or legal representative, and no
Option shall be assignable or transferable, except by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code or the Employee Retirement Income Security
Act.  The granting of an Option shall impose no obligation upon the Participant
to exercise such Option.

    16.  INDEMNIFICATION OF BOARD.  In addition to such other rights of
indemnification as they may have as members of the Board, the members of the
Board shall be indemnified by the Company against the reasonable expenses,
including attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding (or in connection with any appeal
therein), to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding that such Board member is liable for gross negligence or
misconduct in the performance of his or her duties; provided, that within 60
days after institution of any such action, suit or proceeding, Board members
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same.
    
    17.  NO CONTRACT OF EMPLOYMENT.  Neither the adoption of this Plan nor the
grant of any Option shall be deemed to obligate the Company to continue the
employment or relationship of any Participant for any particular period, nor
shall the granting of an Option constitute a request or consent to postpone the
retirement date of any Participant.

    18.  TERMINATION AND AMENDMENT OF PLAN.  The Board, acting by a majority of
its members may from time to time alter, amend or suspend the Plan or any Option
granted hereunder or may at any time terminate the Plan; provided, however, that
no such action shall materially and adversely affect any outstanding Options
without the consent of the respective Participants.

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    19.  EFFECTIVE DATE OF PLAN.  The Plan is hereby adopted, effective
September 1, 1997, by action of the Board.


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