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                                                                   EXHIBIT 10.16


                              EMPLOYMENT AGREEMENT

                  AGREEMENT, made as of August 4, 2001 by and between Retek
Inc., a Delaware corporation (the "Company"), and John Buchanan (the
"Executive") and effective thereof upon approval of the Board of Directors of
the Company.

                  WHEREAS, the Executive was the founder of Retek Inc., the
predecessor entity to the Company and has acted as the Chairman of the Board of
Directors of the Company and served as its Chief Executive Officer; and

                  WHEREAS, the Company has been in active search for a Chief
Executive Officer and has entered into a successor for the Executive but desires
to retain the services of the Executive to assure a smooth transition and
further recognizes that the Executive's talents and abilities are unique, and
have been integral to the success of Retek and thus wishes to secure the ongoing
services of the Executive on the terms and conditions set forth herein;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants set forth below, the parties hereby agree as follows:

         1. Employment. The Company hereby agrees to employ the Executive as an
advisor to the Company and as Chairman of the Board of the Company, and the
Executive hereby accepts such employment, on the terms and conditions set forth
below.

         2. Term. The Executive's employment by the Company hereunder (the
"Employment Period") shall begin on August 4, 2001 (the "Effective Date") and
end on December 15, 2002 ("End Date"). This Agreement shall automatically renew
for an additional one (1) year term on the same terms and conditions as set
forth herein at the sole option of the Board of Directors of the Company, said
option to be exercised by written Notice; provided however, that if this
Agreement is not so renewed, the Executive shall receive all compensation and
related consideration under Section 5 hereof, and shall further immediately vest
one hundred (100%) percent of the then outstanding unvested stock options held
by the Executive effective as of the End Date.

         3. Position and Duties. During the Employment Period, the Executive
shall serve as Executive Advisor and the Chairman of the Board of Directors of
the Company (the "Board"), with such duties, authority and responsibilities as
are normally associated with and appropriate for such positions. The Executive
shall report directly to the Board. The Executive shall allot a reasonable
amount of his working time, attention and energies during normal business hours
on a part time basis (other than absences due to illness or vacation) to the
performance of his duties for the Company. Notwithstanding the above, the
Executive shall be permitted, to the extent such activities do not substantially
interfere with his performance of his duties and responsibilities

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hereunder or violate Section 9(a) or (b) of this Agreement, to (i) manage his
personal, financial and legal affairs, (ii) serve on civic or charitable boards
or committees (it being expressly understood and agreed that the Executive's
continuing to serve on any such board and/or committees on which he is serving,
or with which he is otherwise associated, as of the Effective Date, shall be
deemed not to interfere with his performance of his duties and responsibilities
under this Agreement), (iii) serve on boards of other companies (iv) make
personal appearances and lectures, and (v) engage in other activities which do
not materially conflict or compete with the Company, and the Executive shall be
entitled to receive and retain all remuneration received by him from the items
listed in clauses (i) through (iv) of this paragraph.

         4. Place of Performance. The Executive shall not be required to
relocate to any location other than that of his permanent residence. During the
Employment Period, the Company shall provide the Executive with an office and
staff in Minneapolis consistent with the practices of the Company immediately
prior to the Effective Date.

         5. Compensation and Related Matters.

         (a) Base Salary. During the Employment Period, the Company shall pay
the Executive an annualized base salary at the rate of not less than $100,000
per year and prorated for period of less than a full year ("Base Salary"). The
Executive's Base Salary shall be paid in approximately equal installments in
accordance with the Company's customary payroll practices. If the Executive's
Base Salary is increased by the Company, such increased Base Salary shall then
constitute the Base Salary for all purposes of this Agreement.

         (b) Fiscal Year 2001 Bonus. During the Employment Period affected by
the Company's fiscal year 2001 (Fiscal Year 2001"), but not with respect to the
portion of the Employment Period for the Company's fiscal year 2002 ("Fiscal
Year 2002"), the Executive shall be eligible to earn an annual target cash bonus
equal to $220,500 (the "Annual Bonus"). The Compensation Committee of the Board
(the "Compensation Committee") shall base the actual amount of the Annual Bonus
on the achievement by the Company of performance goals previously established by
the Compensation Committee for Fiscal Year 2001. The Compensation Committee
shall use good faith in such determination and shall establish objective
criteria to be used to determine the extent to which performance goals have been
satisfied. No Annual Bonus shall be made for Fiscal Year 2002 or to the extent
this Agreement is renewed pursuant to Section 1 hereof, for any other subsequent
fiscal year.

         (c) Stock Options. The Executive shall continue to vest in all stock
options according to the terms and conditions of the agreements granting such
stock options.

         (d) Business, Travel and Entertainment Expenses. The Company shall
promptly reimburse the Executive for all reasonable business, travel and
entertainment expenses consistent with the Executive's titles and the practices
of the Company in effect immediately prior to the Effective Date, including,
without limitation, first class air transportation.


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         (e) Welfare, Pension and Incentive Benefit Plans. During the Employment
Period, the Executive shall be entitled to participate in all the welfare
benefit plans and programs maintained by the Company from time to time for the
benefit of its senior executives including, without limitation, all medical,
hospitalization, dental, disability, accidental death and dismemberment and
travel accident insurance plans and programs. In addition, provided the
Executive is legally permitted to participate, during the Employment Period, the
Executive shall be eligible to participate in all pension, retirement, savings
and other employee benefit plans and programs maintained from time to time by
the Company for the benefit of its senior executives, other than any annual cash
incentive plan.

         6. Termination. The Executive's employment hereunder may be terminated
during the Employment Period under the following circumstances:

         (a) Death. The Executive's employment hereunder shall terminate upon
his death.

         (b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness as determined by a physician selected by the
Executive, and reasonably acceptable to the Compensation Committee, (i) the
Executive shall have been substantially unable to perform his duties hereunder
for four consecutive months, or for an aggregate of 120 days during any period
of twelve consecutive months and (ii) within thirty days after written Notice of
Termination is given to the Executive after such four- or twelve- month period,
the Executive shall not have returned to the substantial performance of his
duties on a pre-incapacity basis, the Company shall have the right to terminate
the Executive's employment hereunder for "Disability".

         (c) Cause. The Company shall have the right to terminate the
Executive's employment for "Cause." For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment only upon the
Executive's:

                  (i) conviction of a felony or willful gross misconduct that,
in either case, results in material and demonstrable damage to the business or
reputation of the Company; or

                  (ii) willful and continued failure to perform his duties
hereunder (other than such failure resulting from the Executive's incapacity due
to physical or mental illness or after the issuance of a Notice of Termination
by the Executive for Good Reason) within ten business days after the Company
delivers to him a written demand for performance that specifically identifies
the actions to be performed.

For purposes of this Section 6(c), no act or failure to act by the Executive
shall be considered "willful" if such act is done by the Executive in the good
faith belief that such act is or was to be beneficial to the Company or one or
more of its businesses, or such failure to act is due to the Executive's good
faith belief that such action would be materially harmful to the Company or one
of its businesses. Cause shall not exist unless and until the Company has
delivered to the

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Executive a copy of a resolution duly adopted by a majority of the Board
(excluding the Executive for purposes of determining such majority) at a meeting
of the Board called and held for such purpose after reasonable (but in no event
less than thirty days') notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board, finding that
in the good faith opinion of the Board that "Cause" exists, and specifying the
particulars thereof in detail. This Section 6(c) shall not prevent the Executive
from challenging in any court of competent jurisdiction the Board's
determination that Cause exists or that the Executive has failed to cure any act
(or failure to act) that purportedly formed the basis for the Board's
determination.

         (d) Good Reason. The Executive may terminate his employment for "Good
Reason" after giving the Board of Directors detailed written notice thereof, if
the Company shall have failed to cure the event or circumstance constituting
"Good Reason" within thirty days after receiving such notice. Good Reason shall
mean the occurrence of any of the following without the written consent of the
Executive or his approval in his capacity as the Chairman of the Board:

         (i) the assignment to the Executive of duties materially inconsistent
with this Agreement or a material change in his titles or authority;

         (ii) any failure by the Company to comply with Section 5 hereof in any
material way;

         (iii) the requirement of the Executive to relocate to locations other
than that provided in Section 4 hereof;

         (iv) the failure of the Company to comply with any indemnification or
like protections provided to all other members of the Board of Directors of the
Company, whether by insurance, pursuant to statute, or the articles of
incorporation or by laws of the Company

         (v) any material breach of this Agreement by the Company.

The Executive's right to terminate his employment hereunder for Good Reason
shall not be affected by his incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any act or failure to act constituting Good Reason
hereunder.

         (e) Without Cause. The Company shall have the right to terminate the
Executive's employment hereunder without Cause by providing the Executive with a
Notice of Termination.

         (f) Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason by providing the Company
with a Notice of Termination.

         7. Termination Procedure.



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         (a) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive during the Employment Period
(other than pursuant to Section 6(a) -- Death of the Executive) shall be
communicated by written Notice of Termination to the other party. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice indicating the
specific termination provision in this Agreement relied upon and setting forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under that provision.

         (b) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his death, (ii)
if the Executive's employment is terminated pursuant to Section 6(b) --
Disability of the Executive, thirty (30) days after the date of receipt of the
Notice of Termination (provided that the Executive does not return to the
substantial performance of his duties on a pre-incapacity basis during such
thirty (30) day period), and (iii) if the Executive's employment is terminated
for any other reason, the date on which a Notice of Termination is given or any
later date (within thirty (30) days after the giving of such notice) set forth
in such Notice of Termination.

         8. Compensation Upon Termination or During Disability. In the event the
Executive is disabled or his employment terminates during the Employment Period,
the Company shall provide the Executive with the payments and benefits set forth
below. The Executive acknowledges and agrees that the payments set forth in this
Section 8 constitute liquidated damages for termination of his employment during
the Employment Period.

         (a) Termination By Company without Cause, by Executive for Good Reason
or by Reason of Disability or Death. If the Executive's employment is terminated
by the Company without Cause, by the Executive for Good Reason by Reason of
Disability or Death:

                  (i) the Company shall pay to the Executive, within thirty days
of the Date of Termination, a lump sum payment equal to the sum of (A)
annualized Base Salary through the End Date, (B) the Annual Bonus for Fiscal
Year 2001, which may have otherwise earned paid with respect to such Fiscal Year
2001 and (C) shall vest as of the Date of Termination one hundred (100%) percent
of his then unvested stock options as reflected in the records of the employee
stock option plan administrator for the Company;

                  (ii) the Company shall continue to provide the Executive for a
period equal to the remaining term of the Employment Period, following the Date
of Termination, the medical, hospitalization, dental and life insurance programs
provided for in Section 5(f), to the extent the Executive was a participant
therein prior to the Date of Termination as if he had remained employed;
provided, that if the Executive cannot legally continue to participate in the
Company programs providing such benefits, the Company shall arrange to provide
the Executive with the economic equivalent of the benefits they otherwise would
have been entitled to receive under such plans and programs; and provided,
further, that such benefits shall terminate on the date or dates the Executive
becomes eligible to receive equivalent coverage and benefits under the plans

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and programs of a subsequent employer at an equivalent cost to the Executive
(such coverage and benefits to be determined on a coverage-by-coverage, or
benefit-by-benefit, basis);

                  (iii) the Company shall, consistent with past practice,
reimburse the Executive pursuant to Section 5(d) for business expenses incurred
but not paid prior to such termination of employment;

                  (iv) the Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to the Executive in accordance with
the terms and provisions of any agreements, plans or programs of the Company
(other than any severance-based plan or program).

         (b) Cause or By Executive Without Good Reason. If the Executive's
employment is terminated by the Company for Cause or by the Executive other than
for Good Reason, then the Company shall provide the Executive with his Base
Salary through the Date of Termination and for the reimbursement of expenses
under Section 5(c) hereof and shall have no further obligation to the Executive
hereunder.

         (c) Mitigation. The Executive shall not be required to mitigate damages
with respect to the termination of his employment under this Agreement by
seeking other employment or otherwise, and there shall be no offset against
amounts due the Executive under this Agreement on account of subsequent
employment except as specifically provided in this Section 8. Additionally,
amounts owed to the Executive under this Agreement shall not be offset by any
claims the Company may have against the Executive, and the Company's obligation
to make the payments provided for in this Agreement, and otherwise to perform
its obligations hereunder, shall not be affected by any other circumstances,
including, without limitation, any counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others except for
claims arising from Termination for Cause.

         9. Confidential Information; Non-Competition; Nonsolicitation.

         (a) Confidential Information. Except as may be required or appropriate
in connection with his carrying out his duties under this Agreement, the
Executive shall not, without the prior written consent of the Company or as may
otherwise be required by law or any legal process, or as is necessary in
connection with any adversarial proceeding against the Company (in which case
the Executive shall cooperate with the Company in obtaining a protective order
at the Company's expense against disclosure by a court of competent
jurisdiction), communicate, to anyone other than the Company and those
designated by the Company or on behalf of the Company in the furtherance of its
business or to perform his duties hereunder, any trade secrets, confidential
information, knowledge or data relating to the Company and its businesses and
investments, obtained by the Executive during the Executive's employment by the
Company that is not generally available public knowledge (other than by acts by
the Executive in violation of this Agreement). In consideration of this
Agreement, the Executive hereby agrees to the Retek Inc.


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Employee Invention Assignment and Confidentiality Agreement attached hereto and
incorporated herein by this reference.

         (b) Injunctive Relief. In the event of a breach or threatened breach of
this Section 9, the Executive agrees that the Company shall be entitled to the
remedy of injunctive relief in a court of appropriate jurisdiction to remedy any
such breach or threatened breach, the Executive acknowledging that damages would
be inadequate and insufficient.

         10. Legal Fees and Expenses. If any contest or dispute shall arise
between the Company and the Executive regarding any provision of this Agreement,
the prevailing party shall be reimbursed for all costs of litigation. Such
reimbursement shall be made as soon as practicable following the resolution of
such contest or dispute (whether or not appealed) to the extent the
non-prevailing party receives reasonable written evidence of such fees and
expenses.

         11. Successors; Binding Agreement.

         (a) Company's Successors. No rights or obligations of the Company under
this Agreement may be assigned or transferred, except that the Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company 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 had taken place. As used in this Agreement,
"Company" shall include any successor to its business and/or assets (by merger,
purchase or otherwise) which executes and delivers the agreement provided for in
this Section 11 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.

         (b) Executive's Successors. No rights or obligations of the Executive
under this Agreement may be assigned or transferred by the Executive other than
his rights to payments or benefits hereunder, which may be transferred only by
will or the laws of descent and distribution. Upon the Executive's death, this
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive's beneficiary or beneficiaries, personal
or legal representatives, or estate, to the extent any such person succeeds to
the Executive's interests under this Agreement. If the Executive should die
following his Date of Termination 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
such person or persons so appointed in writing by the Executive, or otherwise to
his legal representatives or estate.

         12. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered either personally or by
United States certified or registered mail, return receipt requested, postage
prepaid, or by international courier with proof of receipt, addressed as
follows:


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         If to the Executive:
            39 Harbour Road
            Warwick Bermuda WK04

         Or at his residence address most recently filed with the Company.

         If to the Company:
         Retek Inc.
         801 Nicollet Avenue
         Minneapolis, MN  55402
         Attention: Chief Financial Officer

         or to such other address as any party may have furnished to the others
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

         13. Miscellaneous. No provisions of this Agreement may be amended,
modified, or waived unless such amendment or modification is agreed to in
writing signed by the Executive and by a duly authorized officer of the Company,
and such waiver is set forth in writing and signed by the party to be charged.
No waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party, which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive the Executive's termination of
employment and the termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Minnesota without regard to its conflicts of law principles.

         14. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

         15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         16. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of such
subject matter.

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Any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and canceled.

         17. Withholding. All payments hereunder shall be subject to any
required withholding of Federal, state and local taxes pursuant to any
applicable law or regulation consistent with the Company's practices relative to
the Executive in effect prior to the Effective Date.

         18. Section Headings. The section headings in this Employment Agreement
are for convenience of reference only, and they form no part of this Agreement
and shall not affect its interpretation.


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



                       RETEK INC.


                       By:
                           ------------------------------------

                       EXECUTIVE

                            /s/ John Buchanan
                           ------------------------------------
                           John Buchanan