Exhibit 10.5

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT  ("Agreement") is entered into as of this 1st
day of  January,  2000,  by and  between  Robert  Cyr,  a  resident  of  Georgia
("Employee") and ENGINEERING  ANIMATION,  INC., a Delaware  corporation with its
principal offices in Ames, Iowa ("EAI" or "Company").

                                    RECITALS

     A. EAI is in the business of producing 3D visualization  software  products
and conducting various other activities associated therewith.

     B. EAI desires to employ Employee and Employee  desires to be employed by
EAI on the terms and conditions set forth herein.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

                                    AGREEMENT

         1.  Employment  Terms.  Subject to the terms and  conditions  set forth
herein,  EAI will employ  Employee for a term  commencing  as of January 1, 2000
(the  "Effective  Date") and ending on the second  anniversary  of the Effective
Date, or such earlier date as may occur  pursuant to the terms of this Agreement
(the "Employment  Term").  This Agreement may be extended by mutual agreement of
the parties.

         2. Employment Duties. During the term of this Agreement,  Employee will
serve EAI as Vice President,  Worldwide Sales and Marketing.  Employee's  duties
shall  include  those duties as assigned  from time to time by the  President of
EAI, subject to the terms of this Agreement.  Employee will,  during the term of
this  Agreement,  serve the Company  faithfully,  diligently and competently and
will  perform  assigned  duties on a full-time  basis to the best of  Employee's
ability.

          3. Compensation.   During  the  term  of  employment, EAI will pay to
Employee for services  rendered by Employee under this Agreement,  thefollowing:

         (a)      From the Effective Date of this  Agreement  through the second
                  anniversary  of the  Effective  Date,  a  salary  at a rate of
                  $230,000 per annum  ($19,166.67  per month) payable in arrears
                  monthly,   in  accordance  with  the  EAI's  ordinary  payroll
                  practices; and

          (b)     During  the last  quarter  of  each  fiscal year Employee will
                  participate  in  the planning  process  which  results  in the
                  establishment of goals and budgets for  the  following  fiscal
                  year. After the end of each fiscal year of the Company, during
                  the Employment  Term, Employee shall be eligible for an annual
                  performance bonus, the nature and  amount of  which  shall  be
                  determined  by  and  in  the  discretion  of the Company after
                  reviewing Employee's performance and the Company's results of
                  operations during  and  for  such  fiscal  year and such other
                  considerations    deemed    appropriate    by   the   Company.
                  Notwithstanding   anything   else   in  this   Agreement,  the
                  declaration and  payment  an  the  amount of  any  performance
                  bonus to  Employee  shall  be in the discretion of the Company
                  and  Employee  shall  have  no absolute right to a performance
                  bonus in any year.

Payments made  pursuant to this section  while  Employee is employed by shall be
treated as wages for withholding and employment tax purposes.

         4.  Severance  Provisions.  In the event that  Employee  is  terminated
during  the  term  of  this  Agreement  for  any  reason  whatsoever  (including
termination  for Good  Reason),  except  for cause as defined  in  Paragraph  8,
Employee  shall  receive a lump sum  severance  payment  in an  amount  equal to
Employee's  annual total  compensation at plan at the time of termination and an
amount equal to the cost of health insurance benefits for twelve months.

         5.       Benefits.

          (b)    Employee  shall be  entitled  during  the  Employment  Term  to
                 participate  in  such  employee  benefit  plans  and  programs,
                 including,  without  limitation, 401(k) plan, cafeteria, health
                 and life insurance plans, as are maintained from  time  to time
                 for employees of EAI to the extent that his  position,  tenure,
                 compensation,  age,  health  and other qualifications  make him
                 eligible to  participate.  The  Company  does  not  promise the
                 adoption  or  continuance  of any  particular  plan  or program
                 during the employment term and employee's (and his dependents')
                 participation  in any  such plan or program shall be subject to
                 the  provisions,  rules,  regulation  and  laws applicable from
                 time to time thereto.

         (c)      During the Employment Term, Employee shall be entitled to paid
                  time off in accordance  with the policies of the Company which
                  provide for  fifteen  (15) days paid time off during the first
                  year of employment,  eighteen (18) days during the second year
                  of employment,  and twenty-one (21) days during the third year
                  of employment. In addition, Employee shall be entitled to paid
                  time off on such  holidays as are observed by the Company from
                  time to time.  Accrued,  unused  vacation  may be carried over
                  from one year to the next in accordance with Company policies.

         6. Reimbursement of Expenses. To the extent consistent with the general
expense  reimbursement  policies  maintained by EAI from time to time,  Employee
shall be  entitled to  reimbursement  for  ordinary,  necessary  and  reasonable
out-of-pocket  trade or business  expenses which  Employee  incurs in connection
with performing his duties under this Agreement, including reasonable travel and
meal  expenses.  The  reimbursement  of all such  expenses  shall  be made  upon
presentation  of  evidence  reasonably  satisfactory  to EAI of the  amounts and
nature of such expenses and shall be subject to the prior approval of EAI.

         7. Employee Proprietary Information, Invention and Business\Opportunity
Agreement.  Employee agrees to be bound by the terms of the Employee Proprietary
Information,  Invention  and Business  Opportunity  Agreement  which is attached
hereto as Exhibit A.

         8. Termination.  This Agreement may be terminated for Cause or for Good
Reason.  Cause shall be defined as (i) any action by Employee  involving willful
gross misconduct having a material adverse effect on the Company;  (ii) Employee
being  convicted of a felony under the laws of state of the United States or any
state or under the laws of any other country or political  subdivision  thereof.
Good  Reason  shall be defined  as: (a) a  reduction  in the  salary,  or in the
benefits or perquisites  provided the Employee;  (b) a substantial  reduction in
the Employee's responsibilities, authorities or functions.

         9. Arbitration. Any and all disputes arising directly or indirectly out
of or  relating  in any way to this  Agreement  that  cannot  be  satisfactorily
resolved by the parties  shall be submitted to binding  arbitration  pursuant to
the  rules  then  in  effect  of the  American  Arbitration  Association  (AAA).
Arbitration shall be held in Chicago, Illinois. The arbitrator(s),  who shall be
attorneys  experienced in employment law, shall decide the matters  submitted to
them based upon the  evidence  presented  and the terms of this  Agreement.  The
arbitrator(s)  shall  issue a written  award that  shall  state the basis of the
award,  the findings of fact and the conclusions of law. The  arbitration  award
shall be final,  non-appealable and binding upon the parties.  Judgment upon the
award may be entered in any court having jurisdiction thereof.

         10.      Miscellaneous.

         a.       All notices  hereunder shall be in writing and shall be deemed
                  given  when  delivered  in  person  or when  sent by  email or
                  telecopier  followed  by hard  copy;  or  following  three (3)
                  business days after being deposited in the United States mail,
                  postage prepaid, registered or certified mail, or two (2) days
                  after  delivery to a nationally  recognized  express  courier,
                  expenses prepaid, addressed as follows:

                 If to Employee:  Addressed to the last address on the payroll
                                  records of EAI.

                 If to EAI:       Engineering Animation, Inc.
                                  2321 North Loop Drive
                                  Ames, IA  50010
                                  Attention:  Jamie A. Wade, General Counsel

         b.       This  Agreement shall be binding upon and inure to the benefit
                  of the parties hereto and their respective  heirs,  successors
                  and permitted assigns

         c.       This  Agreement  contains  all of the  agreements  between the
                  parties  with  respect to the subject  matter  hereof and this
                  Agreement  supersedes all other  agreements,  oral or written,
                  between the parties  hereto with respect to the subject matter
                  hereof.

         d.       No change or  modification  of this  Agreement  shall be valid
                  unless the same shall be in writing  and signed by the parties
                  hereto. No waiver of any provisions of this Agreement shall be
                  valid unless in writing and signed by the waiving party.

         e.       If any  provisions  of this  Agreement  (or portions  thereof)
                  shall,  for any reason,  be deemed invalid or unenforceable by
                  any  court of  competent  jurisdiction,  such  provisions  (or
                  portions  thereof) shall be ineffective  only to the extent of
                  such  invalidity  or   unenforceability,   and  the  remaining
                  provisions  of this  Agreement  (or  portions  thereof)  shall
                  nevertheless  be  valid,  enforceable  and of full  force  and
                  effect.  EAI's  rights  under  this  Agreement  shall  not  be
                  exclusive  and shall be in  addition  to all other  rights and
                  remedies available at law or in equity.

         f.       This Agreement may be executed in multiple counterparts,  each
                  of which shall be deemed to be an  original  and all of which,
                  when taken together, shall constitute a single instrument.

         g.       This  Agreement   shall  be  governed  and  controlled  as  to
                  validity, enforcement,  interpretation,  construction,  effect
                  and in all  other  respects  by the laws of the  State of Iowa
                  applicable to contracts  made in Iowa (other than any conflict
                  of laws rule which might result in the application of the laws
                  of any other jurisdiction).

         IN WITNESS  WHEREOF,  the parties have executed  this  Agreement on the
date first above written.

ENGINEERING ANIMATION, INC.                            ROBERT CYR

By: /s/ Robert M. Nierman                           /s/ Robert L. Cyr
    ---------------------------------------        --------------------------
Name:    Robert M. Nierman
Title:   President amd
         Chief Operating Officer