<PAGE>

                                                                   EXHIBIT 10.28

                        SEPARATION AND RELEASE AGREEMENT

     This Separation and Release Agreement (the "Agreement") is entered into by
and between Tamara L. MacDuff (the "Executive") and Brio Software, Inc., a
Delaware corporation (the "Company").

     WHEREAS, Ms. MacDuff is employed by the Company; and

     WHEREAS, the Company and Ms. MacDuff have mutually agreed to terminate the
employment relationship and to release each other from any claims arising from
or related to the employment relationship.

     NOW, THEREFORE, in consideration of the mutual promises made herein, the
Company and Ms. MacDuff (collectively referred to as the "Parties") hereby agree
as follows:

     1. Termination of Employment. Executive and the Company acknowledge and
agree that Executive's employment with the Company shall terminate effective on
or before January 31, 2002 (the "Termination Date"). On the Termination Date,
Executive will receive a lump sum payment for all unpaid salary, accrued but
unused vacation, accrued bonuses, and other wages (including the gross amount of
$34,500 (subject to applicable withholding and taxes) in full and complete
satisfaction of the Company's obligation to provide Executive a two (2) month
sabbatical as described in the Company's recently revised Sabbatical Policy)
earned and payable to Executive as of the Termination Date.

     2. Severance Benefits. In partial consideration for Executive's release of
claims set forth below and other obligations under this Agreement (including her
execution of the Continuing Representations Certificate following the
Termination Date within the time period set forth therein), and provided
Executive executes and returns this Agreement to the Company within twenty-one
(21) days following her receipt of this Agreement, and provided further that
Executive does not revoke either this Agreement or the Continuing
Representations Certificate, the Company agrees to provide the following
severance benefits to Executive:

          (a) Severance Payments. The Executive shall receive cash severance
benefits totaling $190,500 (the "Cash Severance Payment"), which amount shall be
payable in equal installments over the thirteen (13) month period commencing
with the first regularly scheduled payroll date in April 2002, pursuant to the
Company's standard payroll policies and schedule. If the Company effects a
Change of Control (as defined below) prior to the payment of the last
installment of the Cash Severance Payment (as set forth in this Section 2(a)),
then the balance of the Cash Severance Payment will be immediately due and
payable in full upon the effective date of the Change of Control,.

          (b) COBRA Reimbursement. Provided the Executive makes a timely and
accurate election for continuation health insurance coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), the Company
shall reimburse Executive for the applicable premiums for herself (and her
eligible dependents, as applicable) for the first nine (9) months following the
Termination Date; thereafter, the Executive shall be eligible to continue the
COBRA benefits at her own expense in accordance with the Company's policy and
applicable law.

          (c) Acceleration of Vesting. The Company shall accelerate the vesting
of Option No's. 420, 606, 697, 911, 912, 1262, 1263, 2526, and 2527
(collectively, the "Accelerated Options"), such that, for each Accelerated
Option, an additional number of shares of stock equal to the number in

                                       -1-

<PAGE>

which the Executive would have vested under such option if her service continued
for an additional twelve (12) months shall immediately vest as of the
Termination Date. The Accelerated Options may also be subject to additional
acceleration as provided by Section 3(b) below.

          (d) Extension of Exercise Period. The Company shall extend the
original post-termination exercise period listed in the Notice of Stock Option
Grant applicable to each of the Accelerated Options (in each case, the "Original
Period") by an additional twelve (12) months, such that to the extent the
Executive has not exercised the Accelerated Options on the twelve (12) month
anniversary of the end of the applicable Original Period, the Accelerated
Options shall lapse in their entirety. Notwithstanding the foregoing, in no
event may the Executive exercise the Accelerated Options later than the
respective expiration dates of such options. Executive acknowledges and agrees
that any Accelerated Option that qualified as an incentive stock option ("ISO")
at time of grant shall only retain its status as an ISO for three (3) months
following the Termination Date (to the extent such option, as modified by this
Agreement continues to qualify as an ISO) and will thereafter be treated for tax
purposes as a non-statutory stock option.

          (e) Voicemail and Email Access. The Company will continue to provide
the Executive with a voicemail box on its voicemail system and an email account
on its email system through the earlier of the six (6) month anniversary of the
Termination Date or the date upon which the Executive secures another job;
provided, however, that (A) the Executive's use of the voicemail and email
systems shall be appropriate and in accordance with the Company's stated
policies, (B) any outgoing voicemail greeting or message does not articulate a
continuing employment relationship with the Company and (C) the Company shall
issue a mutually acceptable email auto-reply created by the Executive to any
sender of email to the Executive informing the sender that Executive is no
longer employed by the Company.

          (f) Home Office Equipment. The Executive will retain possession of her
home office equipment, including facsimile machine, printer, docking station and
laptop computer once they have been reviewed and scrubbed and all proprietary
information has been removed by the IT Department.

          (g) Artwork. The Executive will retain possession of the artwork which
is displayed in her office as of the Termination Date.

          (h) Extension of Loan Repayment Period. Notwithstanding the original
terms listed in the Promissory Note and Pledge and Security Agreement (the
"Note") which the Executive executed on December 23, 1996 in connection with her
purchase of certain shares underlying Options No's 50, 51 and 130, the Company
agrees that the Note will not be due and payable on December 23, 2001 (the
"Original Maturity Date") but will instead be due and payable on the twelve (12)
month anniversary of the Original Maturity Date, with interest continuing to
accrue at a commercial rate of interest as determined as of the Original
Maturity Date, compounded annually.

     3. Equity Interests.

          (a) Current Rights. As of the Termination Date, Executive holds the
employee stock options described below, subject to the terms of either the
Company's 1992 Stock Option Plan (including any amendments pursuant to the
Company's Accelerated Option Program) or 1998 Stock Option Plan, and the
applicable form of stock option agreement entered into between Executive and the
Company (as referenced below and throughout this Agreement as "Option No.").
Except as set forth herein, Executive acknowledges that she has no right, title
or interest (other than any interests arising by operation of

                                       -2-

<PAGE>

marriage) in or to any shares of the Company's capital stock under any
arrangement or agreement (oral or written) with the Company or any other party:
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------------
                                                           Shares Purchased   Shares Vested as      Shares to be
  Option No.    Plan Year   Grant Date    Shares Granted  as of Termination    of Termination       Accelerated        ISO/NSO
                                                                 Date               Date            pursuant to
                                                                                                    Section 2(c)
---------------------------------------------------------------------------------------------------------------------------------
<S>             <C>         <C>           <C>              <C>                <C>                   <C>                <C>

      50          1992       6/30/1993        20,000            20,000                                                   ISO
---------------------------------------------------------------------------------------------------------------------------------
      51          1992        1/1/94          30,000            30,000                                                   ISO
---------------------------------------------------------------------------------------------------------------------------------
     130          1992        1/1/96          15,000            15,000                                                   ISO
---------------------------------------------------------------------------------------------------------------------------------
     420          1992       11/25/97         2,500               0                                                      ISO
---------------------------------------------------------------------------------------------------------------------------------
     606          1992        4/28/98         2,500               0                                                      ISO
---------------------------------------------------------------------------------------------------------------------------------
     697          1998        9/3/98          20,000              0                                                      ISO
---------------------------------------------------------------------------------------------------------------------------------
     911          1998        4/20/99         13,272              0                                                      ISO
---------------------------------------------------------------------------------------------------------------------------------
     912          1998        4/20/99         6,728               0                                                      NSO
---------------------------------------------------------------------------------------------------------------------------------
     1262         1998        9/2/99          7,134               0                                                      ISO
---------------------------------------------------------------------------------------------------------------------------------
     1263         1998        9/2/99          7,866               0                                                      NSO
---------------------------------------------------------------------------------------------------------------------------------
     1468         1998        2/18/00         2,656               0                                                      ISO
---------------------------------------------------------------------------------------------------------------------------------
     1469         1998        2/18/00         22,344              0                                                      NSO
---------------------------------------------------------------------------------------------------------------------------------
     2526         1998        8/3/00          8,340               0                                                      ISO
---------------------------------------------------------------------------------------------------------------------------------
     2527         1998        8/3/00          41,660              0                                                      NSO
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>


          (b) Effect of Termination of Employment in Connection with a Change of
Control. If a Change of Control (as defined below) of the Company is publicly
announced on or before May 1, 2002, then each of the Accelerated Options will
become vested and exercisable as to fifty percent (50%) of the then-unvested
shares, after giving effect to the acceleration of vesting provided for in
Section 2(c) of this Agreement, subject to such options as of the Termination
Date. A "Change of Control" shall mean a sale of all or substantially all of the
Company's assets, or any merger or consolidation of the Company with or into
another corporation other than a merger or consolidation in which the holders of
more than 50% of the shares of capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction.

     4. Business Expenses. The Company shall reimburse the Executive for all
reasonable business expenses incurred by Executive through the Termination Date
on or before February 15, 2001, provided that the Executive has delivered an
itemized account and appropriate supporting documentation to the Company on or
before February 4, 2001 for such expenses, all in accordance with the Company's
generally applicable policies.

     5. No Other Payments Due. The Executive and the Company agree that the
Company shall pay to the Executive on or before the Termination Date all salary,
accrued but unused PTO and other compensation as is then due to the Executive.
By executing this Agreement, Executive hereby acknowledges receipt of all such
payments as received, or to be received, and acknowledges that, in light of the
payment to be made by the Company of all wages due or to become due to
Executive, California Labor Code Section 206.5 is not applicable to the Parties
hereto. That section provided in pertinent part as follows:

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<PAGE>

          No employer shall require the execution of any release of any claim or
          right on account of wages due, or to become due, or made as an advance
          on wages to be earned, unless payment of such wages has been made.

     6. Mutual Release of Claims. In consideration for the obligations of both
parties set forth in this Agreement, Executive and the Company, on behalf of
themselves, and their respective heirs, executors, officers, directors,
employees, investors, stockholders, administrators and assigns, hereby fully and
forever release each other and their respective heirs, executors, officers,
directors, employees, investors, stockholders, administrators, parent and
subsidiary corporations, predecessor and successor corporations and assigns, of
and from any claim, duty, obligation or cause of action relating to any matters
of any kind, whether presently known or unknown, suspected or unsuspected, that
any of them may possess arising from any omissions, acts or facts that have
occurred up until and including the date of this Agreement including, without
limitation:

          (a) any and all claims relating to or arising from Executive's
employment relationship with the Company and the termination of that
relationship;

          (b) any and all claims relating to, or arising from, Executive's right
to purchase, or actual purchase of, shares of stock of the Company;

          (c) any and all claims relating to, or arising from, Executive's right
to receive any wages, salary, bonus, commission or other form of compensation;

          (d) any and all claims for wrongful discharge or constructive
termination of employment; breach of contract, both express and implied; breach
of a covenant of good faith and fair dealing, both express and implied;
negligent or intentional infliction of emotional distress; negligent or
intentional misrepresentation; negligent or intentional interference with
contract or prospective economic advantage; negligence; and defamation;

          (e) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Fair Labor Standards Act, the
Equal Pay Act of 1963, the Employee Retirement Income Security Act of 1974 (as
amended) as it relates to severance benefits, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, the
California Fair Employment and Housing Act, California Labor Code Section
1197.5, and any family and medical leave acts;

          (f) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and

          (g) any and all claims for attorneys' fees and costs.

     The Company and Executive agree that the release set forth in this Section
6 shall be and remain in effect in all respects as a complete general release as
to the matters released. This release does not extend to any obligations
incurred or specified under this Agreement. The Parties expressly acknowledge
and agree that they will sign the Continuing Representations Certificate,
attached hereto as Exhibit B, within twenty-one (21) days following the
Termination Date, acknowledging and agreeing that their respective obligations
and releases of claims, including but not limited to each of the waivers,
releases, warranties and representations contained in Sections 3(a), 5, 6, 7, 8,
9 and 12 of this Agreement, continue to be true and correct statements of fact
and that the Parties' rights continue to be as defined by the terms of this
Agreement as of such date.

                                       -4-

<PAGE>

     7. Acknowledgment of Waiver of Claims under ADEA. Executive acknowledges
that she is waiving and releasing any rights she may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Executive and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Agreement (as defined in Section 14(m)
below). Executive acknowledges that the consideration given for this waiver and
release is in addition to anything of value to which Executive was already
entitled. Executive further acknowledges that she has been advised by this
writing that (a) she should consult with an attorney prior to executing this
Agreement; (b) she has at least twenty-one (21) days within which to consider
this Agreement; (c) she has seven (7) days following her execution of this
Agreement to revoke the Agreement (the "Revocation Period"). This waiver and
release shall not be effective until the Revocation Period has expired, and only
then if she does not revoke it. In order to revoke this waiver and release, she
must deliver to the Company's Chief Executive Officer, by no later than seven
(7) days after she executes this Agreement, a letter stating that she is
revoking it. If she does not deliver such a letter, then this waiver and release
shall become effective upon expiration of seventh day after she executes the
Agreement. Executive understands that if she chooses to revoke this waiver and
release within seven (7) days after she signs it, Executive will not receive any
severance benefits and the Agreement will have no effect. Nothing in this
Agreement prevents or precludes Executive from challenging or seeking a
determination in good faith of the validity of this waiver and release under the
ADEA, nor does it impose any condition precedent, penalties or costs for doing
so, unless specifically authorized by federal law.

     8. Civil Code Section 1542. The Parties represent that they are not aware
of any claim by either of them other than the claims that are released by this
Agreement. Executive and the Company acknowledge that they have been advised by
legal counsel and are familiar with the provisions of California Civil Code
Section 1542, which provides as follows:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
          NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
          RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
          SETTLEMENT WITH THE DEBTOR.

     Executive and the Company, being aware of said Code section, agree to
expressly waive any rights they may have thereunder, as well as under any other
statute or common law principles of similar effect.

     9. Confidentiality Agreement. The Executive has signed a Confidential
Information and Invention Assignment Agreement (the "Confidentiality Agreement")
in the form attached hereto as Exhibit C. The Executive hereby represents and
warrants to the Company that she has at all times in the past been in compliance
with all obligations under the Confidentiality Agreement and agrees to continue
to abide by the terms of the Confidentiality Agreement and further agrees that
the provisions of the Confidentiality Agreement shall survive any termination of
Executive's employment relationship with the Company.

     10. Indemnification Agreement; D&O Insurance. The Executive has entered
into the Company's standard form of Indemnification Agreement, attached hereto
as Exhibit D, and has been registered for coverage under the terms of the
Company's directors and officers liability insurance policy with regard to acts
or events that occurred during her employment as an officer of the Company. The
Executive and the Company acknowledge and agree that the provisions of the
Indemnification Agreement shall survive any termination of Executive's
employment relationship with the Company, and that nothing in this Agreement,
including but not limited to the Release in Section 6 above, shall prevent

                                       -5-

<PAGE>
the Executive from exercising her rights under either the Indemnification
Agreement or the directors and officers liability insurance policy.

     11.  Legal Fees. In consideration for her execution of and obligations
pursuant to this Agreement (and provided she does not revoke this Agreement as
set forth in Section 7 above), the Company shall reimburse the Executive for up
to a total of $5,000 toward the cost of legal fees incurred in the negotiation
of this Agreement. Thereafter, each party to this Agreement shall be responsible
for her or its own attorneys' fees.

     12.  Covenants.

          (a)  Non-Disparagement. Executive and the Company (the "Parties")
agree that they shall continue to conduct themselves in a professional manner
and that they will refrain from any disparagement, criticism, defamation,
slander of the other Party, or tortious interference with the contracts and
relationships of the other Party.

          (b)  SEC Reporting. The Executive will cooperate with the Company in
providing information with respect to all reports required to be filed by the
Company with the Securities and Exchange Commission as they relate to required
information with respect to the Executive.

          (c)  Solicitation of Employees, Consultants and Other Parties. The
Executive agrees that for a period of twelve (12) months immediately following
the Termination Date, she shall not, either directly or indirectly, solicit,
induce, recruit or encourage any of the Company's employees or consultants to
terminate their relationship with the Company, or take away, hire, or otherwise
engage the services of such employees or consultants, or attempt to solicit,
induce, recruit, encourage or take away employees or consultants of the Company,
either for herself or for any other person or entity. Further, the Executive
agrees that she shall not, at any time following Termination Date, use any
Confidential Information (as defined in the Confidentiality Agreement) of the
Company to attempt to negatively influence any of the Company's clients or
customers from purchasing Company products or services or to solicit or
influence or to attempt to influence any client, customer or other person either
directly or indirectly, to direct his or its purchase of products and/or
services to any person, firm, corporation, institution or other entity in
competition with the business of the Company.

     13.  Successors.

          (a)  Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.

          (b)  Executive's Successors. 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, devisees and legatees.

     14.  Miscellaneous Provisions.

          (a)  No Duty to Mitigate. Executive shall not be required to mitigate
the amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other


                                       -6-

<PAGE>

manner), nor, except as otherwise provided in this Agreement, shall any such
payment be reduced by any earnings that the Executive may receive from any other
source.

          (b)  Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by overnight courier, U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Executive, mailed notices shall be addressed to her at the home address that she
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters to the
attention of the Chief Executive Officer.

          (c)  Modifications and Waivers. No provision of this Agreement shall
be modified, waived or discharged unless the modification, waiver or discharge
is agreed to in writing and signed by the Executive and by the Company's Chief
Executive Officer. No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.

          (d)  Whole Agreement. This Agreement, including the exhibits hereto,
contain the entire understanding of the Parties with respect to the subject
matter hereof. This Agreement supercedes and replaces in its entirety all prior
agreements, representations or understandings (whether oral or written) which
are not expressly set forth in this Agreement that have been made or entered
into by either Party with respect to the subject matter of this Agreement,
including, without limitation, the employment agreement executed between the
Executive and the Company in November, 1992, and the employment agreement
executed by the Executive on June 30, 1993.

          (e)  Taxes. All payments made under this Agreement shall be subject to
reduction to reflect taxes or other charges required to be withheld by law.

          (f)  Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (except provisions governing the choice of law).

          (g)  Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.

          (h)  No Assignment. This Agreement and all rights and obligations of
the Executive hereunder are personal to the Executive and may not be transferred
or assigned by the Executive at any time. The Company may assign its rights
under this Agreement to any entity that assumes the Company's obligations
hereunder in connection with any sale or transfer of all or a substantial
portion of the Company's assets to such entity.

          (i)  Arbitration. Any dispute or claim arising out of or in connection
with this Agreement will be finally settled by binding arbitration in Santa
Clara, California in accordance with the rule of the American Arbitration
Association by one arbitrator appointed in accordance with said rules. The
Executive and the Company shall split the cost of the arbitration filing and
hearing fees and the cost of the arbitrator to the extent permissible by
applicable law. Each party shall bear its own attorney fees, unless otherwise
determined by the arbitrator. The arbitrator shall apply California law, without
reference to rules of conflicts of law or rules or statutory arbitration, to the
resolution of any dispute. Judgement on the award rendered by the arbitrator may
be entered in any court having jurisdiction



                                       -7-

<PAGE>

thereof. Notwithstanding the foregoing, the parties may apply to any court of
competent jurisdiction for preliminary or interim equitable relief, or to compel
arbitration in accordance with this paragraphs, without breach of this
arbitration provision. This Section 12(i) shall not apply to any dispute or
claim relating to the Confidentiality Agreement. THE PARTIES HEREBY WAIVE ANY
RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.

          (j) Headings. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.

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

          (l) Advice of Counsel. EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS
AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT
LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF
THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY
REASON OF THE DRAFTING OR PREPARATION HEREOF.

          (m) Effective Date. This Agreement is effective upon the expiration of
the Revocation Period described in Section 7 and such date is referred to herein
as the "Effective Date." Notwithstanding the foregoing, if Executive does not
sign the Continuing Representations Certificate or revokes her execution of such
certificate within seven (7) days following her execution of the Continuing
Representations Certificate, Executive shall not be entitled to the benefits set
forth in Sections 2 or 3(b) of this Agreement, and the balance of the Agreement,
including but not limited to Sections 6 and 7, shall continue in full force and
effect.

          (n) Authority. The Company represents and warrants that the
undersigned has the authority to act on behalf of the Company and to bind the
Company and all who may claim through it to the terms and conditions of this
Agreement. Executive represents and warrants that she has the capacity to act on
her own behalf and on behalf of all who might claim through her to bind them to
the terms and conditions of this Agreement. Executive warrants and represents
that there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.

                            [Signature Page Follows]

                                       -8-

<PAGE>

Each of the parties has executed this Agreement, in the case of the Company by
its duly authorized officer, as of the date set forth below.


                                                TAMARA L. MACDUFF


                                                /s/ Tamara L. MacDuff
                                                ---------------------
                                                Tamara L. MacDuff

                                                Date:  December 31, 2001


                                                BRIO SOFTWARE, INC.

                                                By: /s/ Craig D. Brennan
                                                    ---------------------

                                                Title: President and CEO

                                                Date:  December 31, 2001


                                       -9-