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                                                                   EXHIBIT 10.58

July 2, 2003

James Knighton
c/o Caliper Technologies Corp.
605 Fairchild Dr.
Mountain View, CA 94043-2234

Dear Jim:

This letter constitutes the agreement (the "Agreement") that Caliper
Technologies Corp. (the "Company") is offering to you in connection with the
Company's acquisition of Zymark Corporation (the "Acquisition"). This offer is
contingent upon the Closing of the Acquisition, anticipated to occur on
_____________. If the Acquisition does not close, this offer, even if accepted,
shall be null and void.

         1.       SEPARATION. Subject to the terms and condition contained
herein, your employment with the Company will continue until December 31, 2003
(the "Separation Date"), at which time your employment with the Company will
terminate. On the Separation Date, the Company will pay you all accrued salary
and all accrued and unused vacation and flex time earned through the Separation
Date, subject to standard payroll deductions and withholdings.

         2.       TRANSITION PERIOD.

                  (a)      DUTIES. Between now and the Separation Date (the
"Transition Period"), you will work for the Company in a senior management role
in the Mountain View facility. Specifically, you will serve as the Company's
Chief Financial Officer, unless that position is otherwise filled before the
Separation Date, in which event you will serve as Senior Executive. You will be
expected to perform such tasks as the Company's Chief Executive Officer ("CEO"),
or his designee, may request. During the Transition Period, you are expected to
comply with the Company's policies, the terms of your Employee Proprietary
Information and Inventions Agreement (which is attached hereto as Exhibit A),
and the terms of this Agreement. Your employment during the Transition Period
will be at will, meaning that either you or the Company may terminate your
employment at any time, with or without cause, and with or without advance
notice.

                  (b)      COMPENSATION. During the Transition Period, the
Company will continue to compensate you for your services based on your current
full-time monthly base salary of $29,167 (or annual base salary of $350,004).
These payments will be made on the Company's ordinary payroll dates, and will be
subject to standard payroll deductions and withholdings.

                  (c)      BENEFITS. During the Transition Period, you will be
eligible to continue your current Company benefits subject to the terms and
limitations of the applicable plans. You will not, however, be eligible for
benefits under the Company's Change of Control, Sr. Mgmt. Severance/Equity
Acceleration Plan.

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James Knighton
Page 2

                  (d)      STOCK OPTIONS. During the Transition Period, your
stock option(s) granted by the Company will continue to vest according to the
terms of the applicable plan document(s) and stock option agreement(s).

                  (e)      OTHER ACTIVITIES. During the Transition Period, you
agree not to undertake or engage in any other employment, occupation or business
enterprise, other than ones in which you are a passive investor. You may engage
in civic and not-for-profit activities so long as such activities do not
materially interfere with the performance of your duties hereunder.

                  (f)      EMPLOYMENT AGREEMENT. During the Transition Period,
the terms and conditions of your employment will be as described herein.
Accordingly, the terms set forth in this Agreement shall supersede the terms and
conditions set forth in your Key Employee Agreement with the Company dated July
1, 2002 (the "Employment Agreement").

                  (g)      RETENTION BONUS. Provided you perform your Transition
Period obligations through the Separation Date (except as otherwise provided
herein for termination without Cause, for Good Reason, or Constructive
Termination), execute the Employment Termination Release attached hereto as
Exhibit B (the "Release") on or after your last day of employment with the
Company, allow the Release to become effective, and have not breached this
Agreement or your Proprietary Information and Inventions Agreement, then the
Company will pay you a retention bonus of $175,000, less standard payroll
deductions and withholdings ("Retention Bonus"). The Retention Bonus will be
paid in a lump sum within ten (10) days of the Employment Termination Release
Effective Date (as defined in the Release).

                  (h)      SEVERANCE BENEFITS. Provided you perform your
Transition Period obligations through the Separation Date (except as otherwise
provided herein for termination without Cause, for Good Reason, or Constructive
Termination), execute the Release on or after your last day of employment with
the Company, allow the Release to become effective, and have not breached this
Agreement or your Proprietary Information and Inventions Agreement, then the
Company will provide you with the following severance benefits:

                           (i)      SEVERANCE PAYMENT. The Company will pay you,
as Severance, the equivalent of twelve (12) months of your base salary
($350,004), subject to standard payroll deductions and withholdings. The
Severance will be paid in a lump sum within ten (10) days of the Employment
Termination Release Effective Date (as defined in the Release).

                           (ii)     ACCELERATED VESTING. The Company will
accelerate the vesting of any stock options that you have received from the
Company, with the exception of any stock options granted during the Transition
Period (including the Option described in Section 3(c) of this Agreement), such
that all unvested shares will be immediately vested and exercisable as of your
employment termination date ("Accelerated Vesting").

                  (i)      TERMINATION DURING TRANSITION PERIOD.

                           (i)      TERMINATION WITH CAUSE OR RESIGNATION. If,
during the Transition Period, your employment with the Company is terminated
with Cause, or you resign from your employment with the Company (unless for Good
Reason or upon Constructive Termination after a

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James Knighton
Page 3

Change in Control), then you will not be eligible for any severance benefits,
including the Retention Bonus, Severance, Accelerated Vesting, or Consultancy.

                           (ii)     DEFINITION OF CAUSE. "Cause" for termination
shall mean: (1) conduct that constitutes willful gross neglect or willful gross
misconduct in carrying out your duties, resulting, in either case, in material
economic harm to the Company, unless you believed in good faith that such
conduct was in, or not opposed to, the best interest of the Company; (2) any
unjustified refusal to follow reasonable directives by the CEO or by the Board;
or (3) conviction of a felony crime involving moral turpitude; provided,
however, that the Board shall provide written notice of its intent to terminate
you under (1) or (2) above and you shall have a 30-day period to correct your
actions, if such actions can be corrected, and the termination of your
employment for Cause shall require a majority vote by the Board in favor of the
termination.

                           (iii)    TERMINATION WITHOUT CAUSE. If your
employment with the Company is terminated without Cause, and provided that you
sign the Release on or after the last day of your employment with the Company,
and allow the Release to become effective, then you will be eligible to receive
the Retention Bonus, Severance, Accelerated Vesting and Consultancy, except,
however, that the Option shall not vest during the Consultancy or thereafter.
You will not be eligible to receive any other severance benefits or other
compensation, including the Change in Control Severance Benefits.

                           (iv)     RESIGNATION AFTER CHANGE IN CONTROL. If
following a Change in Control, you resign your employment with the Company upon
a Constructive Termination, or for Good Reason, and provided that you sign the
Release on or after the last day of your employment with the Company, and allow
that Release to become effective, then you will be eligible to receive the
Retention Bonus, Severance, Accelerated Vesting, and Consultancy except,
however, that the Option shall not vest during the Consultancy or thereafter.

                                    (1)      DEFINITION OF CHANGE IN CONTROL.
For purposes of this Agreement, Change in Control means the occurrence of any of
the following:

                                             a. a sale of substantially all of
the assets of the Company;

                                             b. a merger or consolidation in
which the Company is not the surviving corporation (other than a merger or
consolidation in which the Company's stockholders immediately before the merger
or consolidation have, immediately after the merger or consolidation, more than
fifty percent (50%) of the voting power of the surviving corporation);

                                             c. a reverse merger in which the
Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are either not converted or
by virtue of the merger are converted into other property, whether in the form
of securities, cash or otherwise, in each case (in which the Company's
stockholders immediately before the merger do not have, immediately after the
merger more than fifty percent (50%) of the voting power of the Company); or

                                             d. any transaction or series of
related transactions in which in excess of fifty percent (50%) of the Company's
voting power is transferred.

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James Knighton
Page 4

                                    (2)      DEFINITION OF CONSTRUCTIVE
TERMINATION. "Constructive Termination" shall occur if you resign your
employment with the Company following a Change in Control and within thirty (30)
days after any of the following: (a) a material reduction in your duties,
responsibilities or position; (b) a material reduction in your compensation or
benefits, except for reductions in compensation and benefits that are concurrent
with and consistent with reductions for all executives of the acquiring or
surviving corporation; or (c) you do not maintain the exact position in the
parent company including title and reporting structure. Constructive Termination
is triggered by your effective resignation within thirty (30) days after the
above change, and absent a termination by the Company with Cause.

                                    (3)      DEFINITION OF GOOD REASON. Your
resignation of employment with the Company shall be for "Good Reason" if it
occurs after a Change in Control, and takes effect within thirty (30) days after
the occurrence of any one of the following events without your consent and in
the absence of a termination with Cause: (a) a substantial reduction of your
then existing annual base salary; (b) a substantial reduction in the package of
benefits and incentives, taken as a whole, provided to you (although employee
contributions may be raised to the extent of any cost increases imposed by third
parties), except to the extent that such benefits and incentives of all other
executive officers of the Company are similarly reduced; (c) any substantial
diminution of your duties, responsibilities, authority, or reporting structure;
or (d) you are required to relocate to a working location such distance that a
relocation from current residence would be required.

         3.       CONSULTANCY. Provided you perform your Transition Period
obligations through the Separation Date (except as otherwise provided herein),
execute the Release on or after your last day of employment with the Company,
allow the Release to become effective, and have not breached this Agreement or
your Proprietary Information and Inventions Agreement, then the Company agrees
to retain you to provide consulting services under the terms specified below.

                  (a)      CONSULTING PERIOD. The consulting relationship
("Consultancy") shall commence on the day following your last day of employment
with the Company and continue for twenty-one (21) months thereafter, unless the
Company terminates the Consultancy earlier due to your breach of obligations
under this Agreement or your engagement in any activity that is competitive with
the interests of the Company (the "Consulting Period").

                  (b)      CONSULTING DUTIES. You agree to make yourself
available during the Consulting Period, upon the Company's reasonable request,
to provide consulting services in any area of your experience or expertise, for
a minimum of ten (10) hours per month ("Consulting Duties"). You shall perform
your Consulting Duties at the request and direction of the CEO, exercising the
highest degree of professionalism and utilizing your expertise and creative
talents.

                  (c)      CONSULTING FEES. During the first three months of the
Consulting Period, the Company will pay you $150 per hour for your services.
Thereafter during the Consulting Period, the Company will pay you $400 per hour
for your services. (These hourly amounts are the "Consulting Fees"). These
payments will be made based on invoices submitted by you and approved by the CEO
on terms of net 30. Additionally, upon the Closing of the Acquisition, the
Company will grant you an option to purchase 75,000 shares of the Company's
common stock (the "Option"). Provided that you have performed your Transition
Period obligations through the Separation Date, then the Option will vest
monthly in equal installments over eighteen (18) months starting January 1,
2004, and will be governed in

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James Knighton
Page 5

all respects by the applicable stock option plan documents and stock option
agreement. The Company will also pay the premiums necessary to continue your
health care coverage through the Consulting Period if you timely elect COBRA
continuation coverage; provided, however, that this payment obligation will
cease if you become eligible for comparable benefits under another employer's
medical benefit plan. You agree to notify the Company within three (3) days of
such eligibility.

                  (d)      TAXES AND WITHHOLDING. Because you will perform the
Consulting Duties as an independent contractor, the Company will not withhold
from the Consulting Fees any amount for taxes, social security or other payroll
deductions. The Company will report your Consulting Fees on an IRS Form 1099.
You acknowledge that you will be entirely responsible for payment of any taxes
which may be due with regard to the Consulting Fees, and you hereby indemnify
and save harmless the Company from any liability for any taxes, penalties or
interest that may be assessed by any taxing authority with respect to the
Consulting Fees, with the exception of the employer's share of social security,
if any.

                  (e)      PROTECTION OF INFORMATION. You agree that, during the
Consulting Period and thereafter, you will not use or disclose any confidential
or proprietary information or materials of the Company that you obtain or
develop in the course of performing the Consulting Duties, except with the
written permission of the Company's CEO. Any and all work product you create
directly in the course of performing the Consulting Duties will be the sole and
exclusive property of the Company. You hereby assign to the Company all right,
title, and interest in all inventions, techniques, processes, materials, and
other intellectual property developed directly in the course of performing the
Consulting Duties.

                  (f)      AUTHORITY DURING CONSULTING PERIOD. After the
Separation Date, you will have no authority, in the absence of the express
written consent of the Board and CEO, to bind the Company (or to represent that
you have authority to bind the Company) to any contractual obligations, whether
written, oral or implied. You agree that after the Separation Date, you will not
represent or purport to represent the Company in any manner whatsoever to any
third party unless authorized to do so in writing by the CEO.

                  (g)      FACILITIES USAGE DURING CONSULTING PERIOD. During the
Consulting Period, you will have access to the Company's facilities to the
extent authorized in advance by the Company's CEO in connection with the
Consulting Duties. In connection with any use of the Company's facilities, you
agree to abide by all Company policies and procedures.

                  (h)      OTHER ACTIVITIES. You acknowledge that in performing
the Consulting Duties, you will be an independent contractor to the Company and
not an employee, partner, or joint venturer of the Company. You may engage in
other employment or consulting relationships in addition to your work for the
Company during the Consulting Period, provided that such relationships do not
involve providing services to any competitor of the Company or unreasonably
interfere with your provision of consulting services to the Company.

         4.       HEALTH INSURANCE. To the extent provided by the federal COBRA
law and by the Company's current group health insurance policies, you will be
eligible to continue your group health insurance benefits at your own expense
after the Separation Date. Later, you may be able to convert to an individual
policy at your own expense, if you wish.

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James Knighton
Page 6

         5.       EXPENSE REIMBURSEMENTS. You agree that, within thirty (30)
days of the Separation Date, or your actual employment termination date,
whichever is earlier, you will submit your final documented expense
reimbursement statement reflecting all business expenses you incurred through
your last date of employment, if any, for which you seek reimbursement. The
Company will reimburse you for these expenses pursuant to its regular business
practice.

         6.       OTHER COMPENSATION OR BENEFITS. You acknowledge that, except
as expressly provided in this Agreement, you will not receive any additional
compensation, severance or benefits after your employment terminates.

         7.       RETURN OF COMPANY PROPERTY. On the Separation Date or your
actual employment termination date, whichever is earlier, you agree to return to
the Company all Company documents (and all copies thereof) and other Company
property which you have had in your possession at any time, including, but not
limited to, all Company files, notes, drawings, records, business plans and
forecasts, financial information, specifications, computer-recorded information,
tangible property (including, but not limited to, computers), credit cards,
entry cards, identification badges and keys; and, any materials of any kind
which contain or embody any proprietary or confidential information of the
Company (and all reproductions thereof).

         8.       PROPRIETARY INFORMATION OBLIGATIONS. You hereby acknowledge
and agree to abide by your continuing obligations under your Proprietary
Information and Inventions Agreement.

         9.       NONDISPARAGEMENT. You agree not to disparage the Company and
the Company's officers, directors, employees, shareholders and agents, in any
manner likely to be harmful to them or their business, business reputation or
personal reputation; provided that you may respond accurately and fully to any
question, inquiry or request for information consistent with your obligations
under this Agreement.

         10.      NONINTERFERENCE. During the Transition Period and Consulting
Period, and for a one (1) year period following the conclusion of the Consulting
Period, you agree not to interfere with the business of the Company by
soliciting or attempting to solicit any employee or consultant of the Company to
terminate his or her employment or relationship with the Company in order to
become an employee, consultant or independent contractor to or for any other
entity.

         11.      MISCELLANEOUS. This Agreement, including Exhibits A and B,
constitutes the complete, final and exclusive embodiment of the entire agreement
between you and the Company with regard to this subject matter. It is entered
into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and it supersedes any other such
promises, warranties or representations. This Agreement may not be modified or
amended except in a writing signed by both you and a duly authorized officer of
the Company. This Agreement shall bind the heirs, personal representatives,
successors and assigns of both you and the Company, and inure to the benefit of
both you and the Company, their heirs, successors and assigns. If any provision
of this Agreement is determined to be invalid or unenforceable, in whole or in
part, this determination will not affect any other provision of this Agreement
and the provision in question shall be modified by the court so as to be
rendered enforceable. This Agreement shall be deemed to have been entered into
and shall be construed and enforced in accordance with the laws of the State of
California as applied to contracts made and to be performed entirely within
California.

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James Knighton
Page 7

If this Agreement is acceptable to you, please sign below and return the
original to me. Additionally, if you sign the Release attached hereto as Exhibit
B on or after your final date of employment with the Company, please return the
signed original of the Release to me.

Sincerely,

CALIPER TECHNOLOGIES CORP.

By: /s/ Daniel L. Kisner
    -----------------------------------------
    Daniel L. Kisner, M.D.
    Chairman of the Board of Directors

Exhibit A - Proprietary Information and Inventions Agreement
Exhibit B - Employment Termination Release

AGREED:

/s/ James Knighton
---------------------------------
JAMES KNIGHTON

Dated: 7/2/2003

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                                    EXHIBIT A

                PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

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                           CALIPER TECHNOLOGIES CORP.

                        EMPLOYEE PROPRIETARY INFORMATION
                            AND INVENTIONS AGREEMENT

         In consideration of my employment or continued employment by CALIPER
TECHNOLOGIES CORP. (the "COMPANY"), and the compensation now and hereafter paid
to me, I hereby agree as follows:

I.       NONDISCLOSURE

         1.1      RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times
during my employment and thereafter, I will hold in strictest confidence and
will not disclose, use, lecture upon or publish any of the Company's Proprietary
Information (defined below), except as such disclosure, use or publication may
be required in connection with my work for the Company, or unless an officer of
the Company expressly authorizes such in writing. I will obtain Company's
written approval before publishing or submitting for publication any material
(written, verbal, or otherwise) that relates to my work at Company and/or
incorporates any Proprietary Information. I hereby assign to the Company any
rights I may have or acquire in such Proprietary Information and recognize that
all Proprietary Information shall be the sole property of the Company and its
assigns.

         1.2      PROPRIETARY INFORMATION. The term "PROPRIETARY INFORMATION"
shall mean any and all confidential and/or proprietary knowledge, data or
information of the Company. By way of illustration but not limitation,
"PROPRIETARY INFORMATION" includes (a) trade secrets, inventions, ideas,
processes, formulas, products, formulations, developmental or experimental work,
publications, clinical data, test data, methods, samples, media and/or call
lines, other works of authorship, know-how, improvements, discoveries,
developments, designs and techniques (hereinafter collectively referred to as
"INVENTIONS"); and (b) information regarding plans for research, development,
new products, marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers and customers; and
(c) information regarding the skills and compensation of other employees of the
Company. Notwithstanding the foregoing, it is understood that, at all such
times, I am free to use information which is generally known in the trade or
industry, which is not gained as result of a breach of this Agreement, and my
own, skill, knowledge, know-how and experience to whatever extent and in
whichever way I wish.

         1.3      THIRD PARTY INFORMATION. I understand, in addition, that the
Company has received and in the future will receive from third parties
confidential or proprietary information ("THIRD PARTY INFORMATION") subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. During the term of my
employment and thereafter, I will hold Third Party Information in the strictest
confidence and will not disclose to anyone (other than Company personnel who
need to know such information in connection with their work for the Company) or
use, except in connection with my work for the Company, Third Party Information
unless expressly authorized by an officer of the Company in writing.

         1.4      NO IMPROPER USE OF INFORMATION OF PRIOR EMPLOYERS AND OTHERS.
During my employment by the Company I will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employer or any
other person to whom I have an obligation of confidentiality, and I will not
bring onto the premises of the Company any unpublished documents or any property
belonging to any former employer or any other person to whom I have an
obligation of confidentiality unless consented to in writing by that former
employer or person. I will use in the performance of my duties only information
which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise
legally in the public domain, or which is otherwise provided or developed by the
Company.

2.       ASSIGNMENT OF INVENTIONS.

         2.1      PROPRIETARY RIGHTS. The term "PROPRIETARY RIGHTS" shall mean
all trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.

         2.2      PRIOR INVENTIONS. Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. To preclude any possible uncertainty,
I have set forth on Exhibit B (Previous Inventions) attached hereto a complete
list of all Inventions that I have, alone or jointly with others, conceived,
developed or reduced to practice or caused to be conceived, developed or reduced
to practice prior to the commencement of my employment with the Company, that I
consider to be my property or the property of third parties and that I wish to
have excluded from the scope of this Agreement (collectively referred to as
"PRIOR INVENTIONS"). If disclosure of any such Prior Invention would cause me to
violate any prior confidentiality agreement, I understand that

                                        1

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I am not to list such Prior Inventions in Exhibit B but am only to disclose a
cursory name for each such invention, a listing of the party(ies) to whom it
belongs and the fact that full disclosure as to such inventions has not been
made for that reason. A space is provided on Exhibit B for such purpose. If no
such disclosure is attached, I represent that there are no Prior Inventions. If,
in the course of my employment with the Company, I incorporate a Prior Invention
into a Company product, process or machine, the Company is hereby granted and
shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide
license (with rights to sublicense through multiple tiers of sublicensees) to
make, have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company's prior written
consent.

         2.3      ASSIGNMENT OF INVENTIONS. Subject to Sections 2.4, and 2.6, I
hereby assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and to
any and all Inventions (and all Proprietary Rights with respect thereto) whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by me, either alone or jointly with
others, during the period of my employment with the Company. Inventions assigned
to the Company, or to a third party as directed by the Company pursuant to this
Section 2, are hereinafter referred to as "COMPANY INVENTIONS."

         2.4      NONASSIGNABLE INVENTIONS. This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention under Section 2870
of the California Labor Code (hereinafter "SECTION 2870"). I have reviewed the
notification on Exhibit A (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.

         2.5      OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, I will promptly disclose to the Company all
patent applications filed by me or on my behalf within a year after termination
of employment. At the time of each such disclosure, I will advise the Company in
writing of any Inventions that I believe fully qualify for protection under
Section 2870; and I will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. The Company will keep in
confidence and will not use for any purpose or disclose to third parties without
my consent any confidential information disclosed in writing to the Company
pursuant to this Agreement relating to Inventions that qualify fully for
protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection
under Section 2870.

         2.6      GOVERNMENT OR THIRD PARTY. I also agree to assign all my
right, title and interest in and to any particular Invention to a third party,
including without limitation the United States, as directed by the Company.

         2.7      WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the scope
of my employment and which are protectable by copyright are "works made for
hire," pursuant to United States Copyright Act (17 U.S.C., Section 101).

         2.8      ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company
in every proper way to obtain, and from time to time enforce, United States and
foreign Proprietary Rights relating to Company Inventions in any and all
countries. To that end I will execute, verify and deliver such documents and
perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the
Company shall compensate me at a reasonable rate after my termination for the
time actually spent by me at the Company's request on such assistance.

         In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, which appointment is coupled with an interest, to act for and
in my behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph with
the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Company any and all claims, of any nature whatsoever, which I
now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Company.

                                        2

<PAGE>

3.       RECORDS. I agree to keep and maintain adequate and current records (in
the form of notes, sketches, drawings and in any other form that may be required
by the Company) of all Proprietary Information developed by me and all
Inventions made by me during the period of my employment at the Company, which
records shall be available to and remain the sole property of the Company at all
times.

4.       ADDITIONAL ACTIVITIES. I agree that during the period of my employment
by the Company I will not, without the Company's express written consent, engage
in any employment or business activity which is competitive with, or would
otherwise conflict with, my employment by the Company. I agree further that for
the period of my employment by the Company and for one (l) year after the date
of termination of my employment by the Company I will not induce any employee of
the Company to leave the employ of the Company.

5.       NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any agreement either written or oral in
conflict herewith.

6.       RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company, I
will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Company Inventions,
Third Party Information or Proprietary Information of the Company. I further
agree that any property situated on the Company's premises and owned by the
Company, including disks and other storage media, filing cabinets or other work
areas, is subject to inspection by Company personnel at any time with or without
notice. Prior to leaving, I will cooperate with the Company in completing and
signing the Company's termination statement.

7.       LEGAL AND EQUITABLE REMEDIES. Because my services are personal and
unique and because I may have access to and become acquainted with the
Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to any
other rights and remedies that the Company may have for a breach of this
Agreement.

8.       NOTICES. Any notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address as
the party shall specify in writing. Such notice shall be deemed given upon
personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.

9.       NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby consent to the notification of my new employer of my
rights and obligations under this Agreement.

10.      GENERAL PROVISIONS.

         10.1     GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by and construed according to the laws of the State
of California, as such laws are applied to agreements entered into and to be
performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in San Diego County, California for any lawsuit filed there against me
by Company arising from or related to this Agreement.

         10.2     SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. If moreover, any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.

         10.3     SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Company, its successors, and its assigns.

         10.4     SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the Company
to any successor in interest or other assignee.

         10.5     EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with my right or the Company's
right to terminate my employment at any time, with or without cause.

         10.6     WAIVER. No waiver by the Company of any breach of this
Agreement shall be a waiver of any

                                        3

<PAGE>

preceding or succeeding breach. No waiver by the Company of any right under this
Agreement shall be construed as a waiver of any other right. The Company shall
not be required to give notice to enforce strict adherence to all terms of this
Agreement.

         10.7     ENTIRE AGREEMENT. The obligations pursuant to Sections 1 and 2
of this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as a consultant if no
other agreement governs nondisclosure and assignment of inventions during such
period. This Agreement is the final, complete and exclusive agreement of the
parties with respect to the subject matter hereof and supersedes and merges all
prior discussions between us. No modification of or amendment to this Agreement,
nor any waiver of any rights under this Agreement, will be effective unless in
writing and signed by the party to be charged. Any subsequent change or changes
in my duties, salary or compensation will not affect the validity or scope of
this Agreement.

         This Agreement shall be effective as of the first day of my employment
with the Company, namely: September 30, 1999.

         I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.

Dated: 9/24/99
       ----------------------------

/s/ James L. Knighton
-----------------------------------
SIGNATURE

James L. Knighton
-----------------------------------
(PRINTED NAME)

ACCEPTED AND AGREED TO:

CALIPER TECHNOLOGIES CORP.

By: /s/ John Wallace Parce
    --------------------------------
Title: VP Research
       -----------------------------


------------------------------------
(Address)


------------------------------------
                                        4

<PAGE>

                                    EXHIBIT A

                         LIMITED EXCLUSION NOTIFICATION

         THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:

         (1)      Relate at the time of conception or reduction to practice of
the invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company;

         (2)      Result from any work performed by you for the Company.

         To the extent a provision in the foregoing Agreement purports to
require you to assign an invention otherwise excluded from the preceding
paragraph, the provision is against the public policy of this state and is
unenforceable.

         This limited exclusion does not apply to any patent or invention
covered by a contract between the Company and the United States or any of its
agencies requiring full title to such patent or invention to be in the United
States.

         I ACKNOWLEDGE RECEIPT of a copy of this notification.

                                       By: /s/ James Knighton
                                           -------------------------------------
                                           James Knighton
                                                      (Printed Name of Employee)

                                       Date: 9/29/1999
                                             -----------------------------------
WITNESSED BY:

/s/ Richard Butts
---------------------------------------
(Printed Name of Representative)

Dated: 9/29/1999
       --------------------------------
                                      A-1.

<PAGE>

                                    EXHIBIT B

     TO:    CALIPER TECHNOLOGIES CORP.

     FROM:  James Knighton

     DATE:  9/29/1999

SUBJECT:          PREVIOUS INVENTIONS

         1.       Except as listed in Section 2 below, the following is a
complete list of all inventions or improvements relevant to the subject matter
of my employment by Caliper Technologies Corp. (the "COMPANY") that have been
made or conceived or first reduced to practice by me alone or jointly with
others prior to my engagement by the Company:

         [X]      No inventions or improvements.

         [ ]      See below:

                  __________

                  __________

                  __________

[ ]      Additional sheets attached.

         2.       Due to a prior confidentiality agreement, I cannot complete
the disclosure under Section 1 above with respect to inventions or improvements
generally listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following party(ies):

<TABLE>
<CAPTION>
         INVENTION OR IMPROVEMENT      PARTY(IES)             RELATIONSHIP
<S>      <C>                           <C>                    <C>
1.       ________________________      __________________     __________________

2.       ________________________      __________________     __________________

3.       ________________________      __________________     __________________
</TABLE>

[ ]      Additional sheets attached.

                                      B-1.

<PAGE>

                                    EXHIBIT B

                         EMPLOYMENT TERMINATION RELEASE
           (to be signed on or after the employment termination date)

I understand that my employment with Caliper Technologies Corp. (the "Company")
terminated effective ____________, 200_. I also understand that, pursuant to the
separation letter agreement between me and the Company, which I signed on
________________________, 2003 (the "Agreement"), I am required to sign this
Employment Termination Release ("Release") in exchange for certain benefits
under the Agreement. I further understand that, regardless of whether I sign
this Release, the Company will pay me all accrued salary and vacation earned
through my termination date, to which I am entitled by law.

I hereby generally and completely release the Company and its directors,
officers, employees, shareholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, affiliates, and assigns
from any and all claims, liabilities and obligations, both known and unknown,
that arise out of or are in any way related to events, acts, conduct, or
omissions occurring prior to my signing this Release. This general release
includes, but is not limited to: (1) all claims arising out of or in any way
related to my employment with the Company or the termination of that employment;
(2) all claims related to my compensation or benefits from the Company,
including salary, bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership
interests in the Company; (3) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing,
including claims arising under the Employment Agreement or the Company's Change
of Control, Sr. Mgmt. Severance/Equity Acceleration Plan; (4) all tort claims,
including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (5) all federal, state, and local statutory
claims, including claims for discrimination, harassment, retaliation, attorneys'
fees, or other claims arising under the federal Civil Rights Act of 1964 (as
amended), the federal Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967 ("ADEA"), and the California Fair
Employment and Housing Act (as amended).

I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under the ADEA, as amended. I also acknowledge that the
consideration given for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) my waiver and release do not apply to any rights or claims that may
arise after the execution date of this Release; (b) I have been advised hereby
that I have the right to consult with an attorney prior to executing this
Release (although I may choose not to do so); (c) I have forty-five (45) days to
consider this Release (although I may choose to voluntarily execute this Release
earlier); (d) I have seven (7) days following the execution of this Release to
revoke the Release in a writing to the Company; (e) this Release will not be
effective until the date upon which the revocation period has expired, which
will be the eighth day after this Release is executed by me ("Employment
Termination Release Effective Date"); and (f) the Company has provided to me,
pursuant to 29 U.S.C. Section 626(f)(1)(H), a disclosure concerning the
availability of this employment termination program to other employees.

I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS. In giving this release, which includes claims that may be unknown to me
at present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads 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

<PAGE>

MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any unknown or
unsuspected claims I may have against the Company.

HAVING READ AND UNDERSTOOD THE FOREGOING, I HEREBY AGREE TO THE TERMS AND
CONDITIONS STATED ABOVE.

____________________________________      ______________________________________
James Knighton                            Date