UROLOGIX, INC. May 23, 2003

                                                                    Exhibit 10.7

                                 UROLOGIX, INC.

                                  May 23, 2003

Xx. Xxxxxxx X. Xxxxxx, Xx.
000 Xxxxx Xxxx Xxxx X.
Xxxxxxxx, XX 00000

Dear Xxxx:

This letter outlines our agreement regarding the termination of your employment
with Urologix, Inc. ("Urologix") effective May 31, 2003 (the "Termination
Date"). You are resigning as Chief Executive Officer and a director as of May
23, 2003. If, after reading this letter, you feel there is any discrepancy
between our conversations and the content of this letter, please contact me.

Urologix is terminating your employment without "Cause," as that term is defined
in your Employment Agreement dated November 20, 1998 (the "Employment
Agreement"), a copy of which is attached hereto. As stipulated in the Employment
Agreement, in consideration for your voluntary release of claims, Urologix will
provide you with the following benefits in connection with the termination of
your employment:

1.   We will continue to pay you your base salary (excluding bonus) in
     accordance with Urologix' regular payroll practices for a period of up to
     twelve months (the "Severance Period") after the Termination Date. If you
     secure other employment during the Severance Period, you must notify me. As
     of the first day of the start of your new employment, Urologix' obligation
     to continue to pay your base salary during the Severance Period will
     terminate. Your last payment will be prorated through the day before the
     first day of your new employment.

2.   During the Severance Period in which Urologix is obligated to continue your
     base salary, the health, dental and life insurance benefits you are
     receiving at the time of termination will also continue. Pursuant to our
     health, dental and life insurance coverages, you may be required to sign an
     acceptance form for continuation coverage. Urologix will pay your share of
     the monthly premium payments to continue these insurance coverages during
     the Severance Period in which Urologix is obligated to continue your base
     salary by deducting the premium amount from the severance payments. Upon
     termination of the Severance Period, or earlier termination of Urologix'
     obligation as provided for in paragraph 1 above, you will have to pay the
     entire monthly premiums yourself to continue coverage. A notice detailing
     your rights to continue insurance coverage under COBRA will be sent to you.

3.   No stock options will vest after the Termination Date and you may not
     continue to participate in Urologix' Employee Stock Purchase Plan.

4.   Urologix agrees that it will not directly or indirectly make any derogatory
     comments to any person or entity about you.



In consideration for the benefits outlined above, you agree to the following:

1.   You hereby release Urologix, Inc., its past and present affiliates,
     officers, directors, agents, shareholders, employees, insurers and
     indemnitors (collectively, the "Releasees") from any and all claims and
     causes of action, known or unknown, which you may have against any and all
     of them. Through this release, you extinguish all causes of action against
     the Releasees occurring up to the date on which you sign this agreement,
     including but not limited to any contract, commission, wage or benefit
     claims; intentional infliction of emotional distress, defamation or any
     other tort claims; and all claims arising from any federal, state or
     municipal law or ordinance, including the Employee Retirement Income
     Security Act. This release extinguishes any potential claims of
     discrimination arising from your employment with Urologix, Inc. and
     termination of that relationship, including specifically any claims under
     the Minnesota Human Rights Act, the Americans With Disabilities Act, Title
     VII of the Civil Rights Act of 1964, and the Age Discrimination in
     Employment Act. This release does not extinguish any claims which arise
     against any Releasee after you sign this agreement and does not extinguish
     any statutory or contractual indemnification rights you may have. You
     certify that you (a) have not filed any claims, complaints or other actions
     against any Releasee; and (b) are hereby waiving any right to recover from
     any Releasee under any lawsuit or charge filed by you or any federal, state
     or local agency on your behalf based upon any event occurring up to the
     date on which you sign this agreement. You are advised by Urologix, Inc. to
     review your rights and responsibilities under this agreement with your own
     lawyer.

     You have 21 days to review and consider this offer. If you sign this
     agreement before 21 days have elapsed from the date on which you first
     receive it, then you will be voluntarily waiving your right to the full
     21-day review period. You have the right to rescind this agreement within
     seven calendar days of your signing this agreement to reinstate federal
     claims under the Age Discrimination in Employment Act and you have the
     right to rescind this agreement within 15 calendar days of the date upon
     which you sign this agreement with regard to the release of claims arising
     under the Minnesota Human Rights Act. You understand that if you desire to
     rescind this agreement, you must put the rescission in writing and deliver
     it to Xxxx Xxxxxxx, Urologix, Inc., 00000 Xxxxxx-Xxxxx Xxxxxx Xxxxx,
     Xxxxxxxxxxx, XX 00000 by hand or by mail within the required period. If you
     deliver the rescission by mail, it must be postmarked within the required
     period, properly addressed to Xxxx Xxxxxxx and sent by certified mail,
     return receipt requested. If you effectively exercise this rescission
     right, this agreement will be rendered null and void, and neither you nor
     Urologix, Inc. will have any further obligation to the other under this
     agreement. For this reason, you will not be entitled to start to receive
     the payments described in paragraph 1 on page 1 until the fifteen (15) day
     rescission period has expired and Urologix, Inc. has received Exhibit A,
     signed and dated by you, confirming that you have not exercised your right
     to rescind.

2.   You certify that you have returned all of Urologix' property in your
     possession.



3.   You agree that you will not directly or indirectly make any derogatory
     comments to any person or entity about Urologix, its past and present
     affiliates, officers, directors, agents, shareholders, and employees, or in
     any way interfere with or attempt to damage any of Urologix' business or
     employment relationships.

4.   You agree that, with respect to paragraph 2 of this Agreement, for each
     month in which you wish to continue your health insurance coverage after
     the Severance Period or earlier termination of Urologix' obligation as
     provided for in paragraph 1, you will send payment of the entire monthly
     premium amount to Xxxx Xxxxxxx, Urologix, Inc., 00000 Xxxxxx-Xxxxx Xxxxxx
     Xxxxx, Xxxxxxxxxxx, XX 00000, and ensure that such payment is received by
     the first day of the month.

This agreement and offer of benefits to you shall not in any way be construed as
an admission of liability by Urologix or as an admission that Urologix has acted
wrongfully with respect to you. Urologix specifically denies and disclaims any
such liability or wrongful acts.

In the event that any provision of this agreement is found to be illegal or
unenforceable, such provision will be severed or modified to the extent
necessary to make it enforceable, and as so severed or modified, the remainder
of this agreement shall remain in full force and effect. This Agreement shall be
binding upon the successors and assigns of Urologix whether pursuant to merger,
exchange or sale of all or substantially all of the assets of Urologix and such
successor shall assume Urologix' obligations hereunder.

This agreement sets forth our entire agreement and fully supersedes any prior
agreements, contracts or understandings between you and Urologix, except your
obligations under that certain Agreement Regarding Employment, Inventions,
Confidential Information and Non-Competition and your rights under that certain
Indemnification Agreement dated December 14, 1998 which shall continue as
provided therein. By signing this agreement, you agree that you have entered
into it voluntarily, without coercion, duress, or reliance on any
representations by any Urologix employee, agent or lawyer.

If this letter accurately reflects our understanding and agreement, please sign
the original and copy and return the original to me. The copy is for your file.

Sincerely,

UROLOGIX, INC.


/s/ Xxxx X. Xxxxx
--------------------------
By: Xxxx X. Xxxxx
Its: Chairman of the Board



I have read and understand and agree to the terms and conditions set forth above
and have signed this agreement dated May 23, 2003 freely, voluntarily and with
full knowledge and understanding of its meaning.


/s/ Xxxxxxx X. Xxxxxx, Xx.
--------------------------
Xxxxxxx X. Xxxxxx, Xx.
Dated: May 23, 2003



                                    EXHIBIT A
                                       TO
                                RELEASE AGREEMENT

                                 May      , 2003
                                     -----

Xx. Xxxx Xxxxxxx
Urologix, Inc.
00000 Xxxxxx-Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000

Dear Xx. Xxxxxxx:

This letter, dated more than 15 days after I signed the agreement between
Urologix, Inc. and me dated May 23, 2003, is to certify that I have taken no
steps to exercise my 15-day right of rescission, as described on page two of the
agreement.

Very truly yours,


Xxxxxxx X. Xxxxxx, Xx.