EXHIBIT 10.17



October 2, 1997


James Iuliano
c/o Molecular Devices Corporation
1311 Orleans Drive
Sunnyvale, CA  94089

Dear Jim:

On behalf of the Board of Directors,  I wish to express our disappointment  over
your decision to resign. We understand, however, your desire to be close to your
family.  Accordingly,  this letter sets forth the  substance  of the  separation
agreement (the "Agreement")  that Molecular Devices  Corporation (the "Company")
is offering to you to aid in your employment transition.

         1. Resignation. Your last day of work as an employee and officer of the
Company will be October 13, 1997 (the "Separation Date"). In addition,  you have
agreed to provide  transition  support through October 31, 1997 to Andre Marion,
the Company's interim Chief Executive Officer, at the level of several hours per
week.

         2.  Accrued  Salary  and Paid Time Off.  On the  Separation  Date,  the
Company  will pay you all accrued  salary,  and all accrued and unused  vacation
earned through the Separation Date,  subject to standard payroll  deductions and
withholdings.  You are entitled to these  payments  regardless of whether or not
you sign this Agreement.

         3. Severance  Benefits.  In recognition of your  leadership to date and
your  extraordinary  efforts  over the last few months,  the  Company  will make
severance  payments  to you in the form of  continuation  of your base salary in
effect on the  Separation  Date through March 31, 1998.  These  payments will be
made on the Company's  ordinary  payroll dates,  and will be subject to standard
payroll deductions and withholdings.

         4. Health  Insurance.  To the extent permitted by the federal COBRA law
and by the  Company's  current  group  health  insurance  policies,  you will be
eligible to continue your health insurance benefits at your own expense.  Later,
you may be able to convert to an individual  policy. You will be provided with a
separate  notice of your COBRA rights.  If you elect  continued  coverage  under
COBRA,  the Company,  as part of this  Agreement,  will pay your COBRA  premiums
through March 31, 1998, and will provide additional compensation,  if necessary,
to avoid any tax consequences from the payment of these premiums.  If you become
eligible for other health  insurance  benefits at the expense of a new employer,
however,  the Company's  obligation  to make these  payments will cease upon the
date of  coverage by the new  employer.  Prior to March 31,  1998,  you agree to
notify a duly authorized  officer of the Company,  in writing,  immediately upon
your acceptance of any employment that provides health insurance benefits.

         5. Stock Options.  The Company and you each acknowledge that,  pursuant
to the terms of your outstanding stock options (the "Options"), the Options will
cease vesting and terminate in accordance with their terms on November 1, 1997.

         6.  Bonus.  You will be eligible to receive a bonus for 1997 of $60,000
(the "Bonus") in accordance with the Company's Executive  Compensation Plan (the
"Plan"),  attached  as  Exhibit  C,  provided  that any one of the  following  3
conditions  is met: (a) the Company meets its 1997  financial  goal of $0.52 per
share before  extraordinary  items,  including,  but not limited to the expenses
related to the Company's search and hiring of a new Chief Executive Officer; (b)
the Board of Directors  (the "Board")  approves any bonus under the Plan; or (c)
the Board  approves  your Bonus.  The Bonus,  if any, will be paid in accordance
with the Company's normal business practice.

         7.  Indemnification.  The Company acknowledges that its indemnification
obligations,  if any, will continue after the Separation Date in accordance with
the terms of any applicable directors and officers indemnity agreement.

<PAGE>


         8. 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 the Separation Date.

         9.  Expense  Reimbursements.  You  agree  that,  within  10 days of the
Separation  Date, you will submit your final  documented  expense  reimbursement
statement  reflecting all business  expenses you incurred through the Separation
Date, if any, for which you seek  reimbursement.  The Company will reimburse you
for these expenses pursuant to its regular business practice.

         10. Return of Company  Property.  By the Separation  Date, you agree to
return the following to the Company:  (a) all confidential  Company  information
(and all copies thereof),  including,  but not limited to, confidential  Company
documents,  files,  notes,  drawings,  records,  business  plans and  forecasts,
financial information,  specifications,  and computer-recorded  information; (b)
all nondocumentary Company property that you have in your possession, including,
but  not  limited  to,  tangible  property  (including,   but  not  limited  to,
computers),  credit cards, entry cards, and identification badges and keys; and,
(c) any  materials  of any kind  that  contain  or  embody  any  proprietary  or
confidential  information  of  the  Company  (and  all  reproductions  thereof).
Notwithstanding  the  above,  the  Company  agrees to give you its IBM  ThinkPad
currently in your  possession,  provided  that you return all  computer-recorded
confidential  Company  information  contained in the ThinkPad by the  Separation
Date.

         11.  Proprietary  Information  Obligations.  Both during and after your
employment,  you acknowledge your continuing  obligations under your Proprietary
Information and Inventions  Agreement not to use or disclose any confidential or
proprietary  information of the Company without prior written authorization from
a duly  authorized  representative  of the Company.  A copy of your  Proprietary
Information and Inventions Agreement is attached hereto as Exhibit B.

         12.  Confidentiality.  Until such time as the  Company is  required  to
publicly file this  Agreement,  the provisions of this Agreement will be held in
strictest  confidence  by you and the  Company  and  will not be  publicized  or
disclosed  in any  manner  whatsoever;  provided,  however,  that:  (a)  you may
disclose this Agreement to your immediate  family;  (b) the parties may disclose
this  Agreement  in  confidence  to  their  respective  attorneys,  accountants,
auditors,  tax preparers,  and financial advisors;  (c) the Company may disclose
this Agreement as necessary to fulfill  standard or legally  required  corporate
reporting or  disclosure  requirements;  and (d) the parties may  disclose  this
Agreement insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law. In particular,  and without limitation, you agree not
to discuss  this  Agreement  with present or former  Company  employees or other
personnel.  Notwithstanding  the above,  this  paragraph 12 will no longer apply
after December 1, 1997.

         13. Release. In exchange for the payments and other consideration under
this  Agreement  to which you  would not  otherwise  be  entitled,  you agree to
execute the Employee Agreement and Release attached hereto as Exhibit A.

         14.  Miscellaneous.  This  Agreement,  including  Exhibits  A, B and C,
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  will 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 will be modified by the court so as to be rendered
enforceable.  This  Agreement  is deemed to have been  entered  into and will 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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<PAGE>


If this  Agreement is acceptable  to you,  please sign below and on the attached
Employee Agreement and Release, which is part of this Agreement,  and return the
originals of both to me.

I wish you luck in your future endeavors.

Sincerely,

MOLECULAR DEVICES CORPORATION



By:               J. Allan Waitz//
   --------------------------------------------
         J. Allan Waitz
         Chairman of the Compensation Committee


Exhibit A - Employee Agreement and Release
Exhibit B - Proprietary Information and Inventions Agreement
Exhibit C - Executive Compensation Plan

AGREED:


         James P. Iuliano//
-----------------------------------------------
James Iuliano

                                       3
<PAGE>



                                    EXHIBIT A

         Except as  otherwise  set forth in this  Agreement,  I hereby  release,
acquit and forever  discharge  the Company,  its parents and  subsidiaries,  and
their officers, directors, agents, servants, employees, attorneys, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature,  in law, equity,  or otherwise,  known
and unknown, suspected and unsuspected,  disclosed and undisclosed,  arising out
of or in any way  related  to  agreements,  events,  acts or conduct at any time
prior to and including the execution date of this  Agreement,  including but not
limited to: all such claims and demands directly or indirectly arising out of or
in any way connected with my employment  with the Company or the  termination of
that  employment;  claims or demands  related to salary,  bonuses,  commissions,
stock, stock options, or any other ownership interests in the Company,  vacation
pay, fringe benefits,  expense reimbursements,  severance pay, or any other form
of compensation; claims pursuant to any federal, state or local law, statute, or
cause of action  including,  but not limited to, the federal Civil Rights Act of
1964, as amended;  the federal  Americans  with  Disabilities  Act of 1990;  the
federal Age Discrimination in Employment Act of 1967, as amended; the California
Fair Employment and Housing Act, as amended;  tort law;  contract law;  wrongful
discharge;  discrimination;  harassment; fraud; defamation;  emotional distress;
and breach of the implied covenant of good faith and fair dealing.

         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
materially  affected his settlement  with the debtor." I hereby  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 claims I may
have against the company.

                                                     By:  James P. Iuliano//

                                               Date: 04 October 1997

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<PAGE>


                                    EXHIBIT B
                EMPLOYEE CONFIDENTIALITY AND INVENTIONS AGREEMENT


MOLECULAR DEVICES CORPORATION                                     June 28, 1990
1311 Orleans Drive
Sunnyvale, California  94089

Gentlemen:

         The following  confirms an agreement  between me and MOLECULAR  DEVICES
CORPORATION, a California corporation (the "Company"),  which is a material part
of the consideration for my employment by the Company.

         1. I recognize:

                  (a) that the  Company is engaged  in a  continuous  program of
research,  development  and  production  respecting  its  business,  present and
future, including fields generally related to its business, and

                  (b) that the Company  possesses  and will  continue to possess
information that has been created,  discovered,  developed or otherwise  becomes
known to the Company  (including,  without  limitation,  information created by,
discovered  or developed by, or made known to me during the period of or arising
out of my  employment  by the Company)  and/or which  property  rights have been
assigned or otherwise  conveyed to the Company which  information and commercial
value in the  business in which the Company is engaged.  With respect to some of
such information,  the Company is under an express obligation of confidentiality
to third parties.  All of the  aforementioned  information is hereinafter called
"Proprietary   Information."  By  way  of  illustration,   but  not  limitation,
Proprietary  Information includes trade secrets,  processes,  formulas,  circuit
designs,  improvements,  inventions,  techniques,  marketing plans,  strategies,
forecasts, computer programs and copyrightable materials and customer lists.

         2. I understand that:

                  (a) As part of my employment I will be exposed to  Proprietary
Information  and may  make  new  contributions  and  inventions  of value to the
Company; and

                  (b) My employment  creates a  relationship  of confidence  and
trust  between me and the Company with respect to any  information  which is not
generally available to the public or in the public domain and which is either:

                           (i)  applicable to the business of the Company; or

                           (ii  applicable  to the  business  of any  client  or
customer  of the  Company or third  party with which the  Company has a business
relationship, which may be

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<PAGE>

known to me by the Company or by any such client,  customer or third  party,  or
learned by me during the period of my employment.

         3.  In   consideration   of  my  employment  by  the  Company  and  the
compensation received by me from the Company, I hereby agree as follows:

                  (a) All Proprietary  Information shall be the sole property of
the Company and its assigns,  and the Company and its assigns  shall be the sole
owner of all patents,  copyrights and other rights in connection  therewith.  At
all times, both during my employment by the Company and after its termination, I
will keep in confidence and trust all  Proprietary  Information,  and I will not
use or disclose any Proprietary  Information or anything  relating to it without
the written  consent of the Company,  except as may be necessary in the ordinary
course of performing my duties to the Company.

                  (b) All  documents,  records,  apparatus,  equipment and other
physical  property,  whether  or  not  pertaining  to  Proprietary  Information,
furnished  to me by the Company or  produced  by myself or others in  connection
with my  employment  shall be and remain the sole  property  of the  Company and
shall be returned to it immediately  as and when requested by the Company.  Even
if the Company does not so request, I shall return and deliver all such property
upon  termination  of my employment by me or by the Company for any reason and I
will not take with me any such  property or any  reproduction  of such  property
upon such termination.

                  (c) I will  promptly  disclose to the Company,  or any persons
designated by it, all  improvements,  inventions,  formulas,  ideas,  processes,
techniques,  know-how and data, whether or not patentable,  made or conceived or
reduced to  practice  or learned by me,  either  alone or jointly  with  others,
during the term of my employment (all such improvements,  inventions,  formulas,
ideas, processes,  techniques,  know-how and data shall hereinafter collectively
be called "Inventions").

                  (d) I agree  that  all  Inventions  which I  develop,  or have
developed,  in whole or in part, either alone or jointly with others, during the
period of my employment by the Company;

                           (i) for and during the  development of which I use or
used any  equipment,  supplies,  facilities or trade secret  information  of the
Company; or

                           (ii) which results from work  performed by me for the
Company  shall  be the sole  property  of the  Company  and its  successors  and
assigns,  and the Company and its successors and assigns shall be the sole owner
of all patents,  copyrights and other rights in connection with such Inventions.
I  hereby  assign  to the  Company  any  rights I may  have or  acquire  in such
Inventions.

                  (e) At all times,  both during the period of my  employment by
the Company and after the  termination  thereof,  I will keep in confidence  and
trust all information  which is not generally  available to the public or in the
public domain,  and I will not use or disclose any such  information or anything
relating  to it without  the written  consent of the  Company,  except as may be
necessary in the ordinary course of performing my duties for the Company.

                                       6
<PAGE>

                  (f) I represent  that my  performance of all the terms of this
Agreement  will not  breach  any  agreement  to keep in  confidence  proprietary
information  acquired by me in  confidence or in trust prior to my employment by
the  Company.  I have not entered  into,  and agree I will not enter  into,  any
agreement, either written or oral, in conflict herewith.

                  (g)  I  represent  that  execution  of  this   Agreement,   my
employment  with the Company  and my  performance  of my proposed  duties to the
Company in the  development  of its business will not violate any  obligations I
may have to any current or former employer.

                  (h)  This  Agreement  does  not  require   assignment  of  any
inventions which an employee cannot be obligated to assign under Section 2870 of
the California Labor Code (hereinafter  called "Section 2870").  However, I will
disclose any Inventions as required by Section 3(c) hereof regardless of whether
I believe the  Invention is protected  by Section  2870,  in order to permit the
Company to engage in a review  process to  determine  such  issues as may arise.
Such  disclosure  shall be received in confidence  by the Company.  Section 2870
provides as follows:

         "Any  Provision  in an  employment  agreement  which  provides  that an
         employee shall assign or offer to assign any of his or her rights in an
         invention  to his or her employer  shall not apply to an invention  for
         which no equipment,  supplies, facility, or trade secret information of
         the  employer  was  used  and  which  was  developed  entirely  on  the
         employee's  time,  and (a) which does not relate (1) to the business of
         the  employer  or  (2)  to  the  employer's   actual  or   demonstrably
         anticipated research or development, (b) which does not result from any
         work  performed by the employee for the employer.  Any provision  which
         purports to apply to such an  invention  is to that extent  against the
         public   policy  of  this  state  and  is  to  that   extent  void  and
         unenforceable."

         4.  This  Agreement  shall  be  effective  as of  the  first  day of my
employment by the Company.

         5. If any term,  provision,  covenant or  condition  of this  Agreement
shall  for any  reason  be held  invalid,  void or  unenforceable  by a court of
competent  jurisdiction,  the rest of this Agreement  shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.

         6. This  Agreement  shall be governed and construed in accordance  with
the laws of the State of California.

         7. This Agreement  represents my entire  understanding with the Company
with  respect  to  the  subject   matter  hereof  and  supersedes  all  previous
understandings,  written or oral. This Agreement may be amended or modified only
with the written  consent of both the Company and me. No oral waiver,  amendment
or modification shall be effective under any circumstances whatsoever.

                                       7
<PAGE>

         8.  This  Agreement   shall  be  binding  upon  my  heirs,   executors,
administrators and assigns, and me and shall inure to the benefit of the Company
and its successors and assigns.

Dated: June 28, 1990

Accepted and Agreed to:  James P. Iuliano//

MOLECULAR DEVICES CORPORATION

By: Greg Sessler//

                                       8

<PAGE>


                                    EXHIBIT C
                          1997 EXECUTIVE BONUS FORMULA



       1997 Product Revenue        - 1 x         1997 Actual Operating Income
    ---------------------------               ----------------------------------
       1996 Product Revenue                      1997 Budget Operating Income

                                     x                Executive Salaries


                                       9