V I TECHNOLOGIES INC, S-1, 1998-02-26

V I TECHNOLOGIES INC
S-1, 1998-02-26

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1998

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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V.I. TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 2836 11-3238476
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL
JURISDICTION (I.R.S. EMPLOYER
CLASSIFICATION CODE NUMBER)
IDENTIFICATION NUMBER)
OF INCORPORATION OR
ORGANIZATION)

155 DURYEA ROAD
MELVILLE, NEW YORK 11747
(516) 752-7314
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

JOHN R. BARR
PRESIDENT AND CHIEF EXECUTIVE OFFICER
V.I. TECHNOLOGIES, INC.
155 DURYEA ROAD
MELVILLE, NEW YORK 11747
(516) 752-7314
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

WILLIAM T. WHELAN, ESQ. ALAN L. JAKIMO, ESQ.
MARC A. RUBENSTEIN, ESQ. BROWN & WOOD LLP
PALMER & DODGE LLP ONE WORLD TRADE CENTER
ONE BEACON STREET NEW YORK, NEW YORK 10048-0557
BOSTON, MASSACHUSETTS 02108 (212) 839-5300
(617) 573-0100

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

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If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(1)(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share....... 3,450,000 $15.00 $51,750,000 $15,267
</TABLE>
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(1) Includes 450,000 shares which the Underwriters may purchase to cover over-
allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (SUBJECT TO COMPLETION)
DATED FEBRUARY 26, 1998

3,000,000 SHARES

[V.I. TECHNOLOGIES LOGO]

COMMON STOCK

------------

All of the shares of common stock, $0.01 par value per share (the "Common
Stock"), offered are being sold by V.I. Technologies, Inc. ("VITEX" or the
"Company").

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently anticipated that the initial public offering
price of the Common Stock will be between $13.00 and $15.00 per share. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. The Company has applied for quotation of the
Common Stock on the Nasdaq National Market under the symbol "VITX."

Contemporaneously with this offering, subject to certain conditions, Pall
Corporation ("Pall") has agreed to purchase 384,024 shares of Common Stock
directly from the Company in a private placement at an assumed initial public
offering price of $14.00 per share, net of underwriting discounts and
commissions, for an aggregate purchase price of $5,000,000 (the "Pall Private
Placement"). See "Business--Strategic Collaborations."

------------

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
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<S> <C> <C> <C>
Per Share.......................... $ $ $
Total(3)........................... $ $ $
</TABLE>
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated to be $850,000.
(3) The Company has granted the Underwriters an option, exercisable within 30
days of the date hereof, to purchase an aggregate of up to 450,000
additional shares at the Price to Public less Underwriting Discounts and
Commissions to cover over-allotments, if any. If all such additional shares
are purchased, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."

------------

The Common Stock is offered by the several Underwriters named herein when, as
and if received and accepted by them, and subject to their right to reject
orders in whole or in part and subject to certain other conditions. It is
expected that delivery of certificates for the shares will be made at the
offices of Cowen & Company, New York, New York on or about , 1998.

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COWEN & COMPANY SBC WARBURG DILLON READ INC.

, 1998
<PAGE>

VITEX PRODUCTS AND PRODUCTS UNDER DEVELOPMENT

<TABLE>
<CAPTION>
VIRAL
VITEX INACTIVATION DEVELOPMENT
MARKET PRODUCT TECHNOLOGY COLLABORATOR STATUS
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Plasma Deriv- VITEX Plasma S/D(1) Bayer Commercialization
atives Fractions commenced
November 1995

- ---------------------------------------------------------------------------------------

Transfusion VIPLAS/SD S/D Red Cross(2) PLA recommended
Plasma for approval by
FDA advisory panel;
approval anticipated
first half 1998
Universal VIPLAS/SD S/D Red Cross(3) Research and
development;
IND filing
anticipated
first half 1999
Universal VIPLAS/SD S/D; UVC; Red Cross(3) Research and
UVC Quenchers development

- ---------------------------------------------------------------------------------------

Wound Care VIGuard S/D; UVC; U.S. Surgical Phase III clinical
Fibrin Sealant Quenchers trials; BLA filing
anticipated
first half 1999
VIGuard UVC; Quenchers; Unpartnered Pre-clinical studies
Albumin Solder Pasteurization

- ---------------------------------------------------------------------------------------

Red Blood VIGuard RBCC LAC; Quenchers Pall Pre-clinical studies
Cell
Concentrates/
Platelet
Concentrates
VIGuard PC LAC; Quenchers Pall Research and
development
</TABLE>
(1) S/D technology is used by the Company's customers under non-exclusive
licenses from the NYBC to virally inactivate certain plasma derivatives
manufactured from fractions supplied to them by the Company.
(2) Subject to FDA approval, the Red Cross intends to distribute this product
under the name PLAS+(R)SD.
(3) The Red Cross has a right of first refusal to distribute these products.

VIPLAS/SD, VIGUARD FIBRIN SEALANT, VIGUARD ALBUMIN SOLDER, VIGUARD RBCC AND
VIGUARD PC ARE UNDER DEVELOPMENT AND HAVE NOT BEEN APPROVED BY THE UNITED
STATES FOOD AND DRUG ADMINISTRATION (THE "FDA") FOR MARKETING IN THE UNITED
STATES OR BY REGULATORY AUTHORITIES IN OTHER COUNTRIES. THERE CAN BE NO
ASSURANCE THAT ANY OF THESE PRODUCTS WILL BE APPROVED FOR MARKETING BY THE FDA
OR NON-U.S. REGULATORY AUTHORITIES.

The Company's logo, VITEX, VIPLAS/SD and VIGuard are trademarks of the
Company. Trade names and trademarks of other companies appearing in the
Prospectus are the property of their respective holders.

----------------

Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock,
including stabilizing, the purchase of Common Stock to cover syndicate short
positions and the imposition of penalty bids. For a description of these
activities, see "Underwriting."
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and Financial Statements and
notes thereto appearing elsewhere in this Prospectus. Except as set forth in
the Financial Statements or as otherwise indicated herein, information in this
Prospectus: (i) reflects a 1-for-2.795 reverse split of the Company's
outstanding Common Stock effected in February 1998; (ii) reflects the purchase
of 384,024 shares of Common Stock by Pall in the Pall Private Placement at an
assumed initial public offering price of $14.00 per share net of underwriting
discounts and commissions; and (iii) assumes that the Underwriters' over-
allotment option is not exercised.

THE COMPANY

VITEX is a leading developer of a broad portfolio of blood products and
systems using its proprietary viral inactivation technologies. The Company's
technologies are intended to address the risks of viral contamination in blood
products, including plasma, plasma derivatives, red blood cells and platelets.
Viral inactivation processes have the potential to eliminate viruses that are
enveloped by lipid membranes such as hepatitis B virus ("HBV"), hepatitis C
virus ("HCV") and HIV and non-enveloped viruses such as hepatitis A virus and
parvovirus and other known and unknown pathogens. The first of the Company's
virally inactivated products, VIPLAS/SD, has been recommended for marketing
approval by the Blood Products Advisory Committee to the FDA. VIPLAS/SD uses
the Company's proprietary solvent/detergent ("S/D") viral inactivation
technology to inactivate enveloped viruses. If approved for marketing by the
FDA, VIPLAS/SD, a transfusion plasma, would be the first virally inactivated
blood component introduced in the United States. The Company's other virally
inactivated blood products under development include: (i) Universal VIPLAS/SD,
a product intended to provide the same benefits as VIPLAS/SD without the need
for matching donor and recipient blood types; (ii) Universal VIPLAS/SD UVC, a
product intended to inactivate enveloped and non-enveloped viruses; (iii)
VIGuard Fibrin Sealant, a wound care product that is currently in Phase III
clinical trials for two indications; (iv) VIGuard Albumin Solder, a wound care
product with superior bonding strength for certain applications as compared to
fibrin sealants; and (v) VIGuard RBCC and PC systems designed to broadly
inactivate viruses and other pathogens in red blood cell and platelet
concentrates. Plasma fractions, which the Company has produced since 1995, are
sold principally to Bayer Corporation under a multi-year agreement.

VITEX's predecessor was formed more than 15 years ago by New York Blood
Center, Inc. (the "NYBC"), a world leader in hematology and transfusion
medicine. The S/D viral inactivation process was developed by a scientific team
led by the Company's Executive Vice President and Chief Scientific Officer
while they were at the NYBC. The first plasma derivative product using the
patented S/D process was commercialized in 1985, and, since then, the S/D
process has been adopted by most plasma fractionators worldwide. The Company
has an exclusive license to use the S/D process for producing its VIPLAS/SD
line of products in North America. A Swiss blood products manufacturer, which
had exclusive rights from the NYBC to the S/D process for transfusion plasma in
Europe, has sold virally inactivated transfusion plasma since 1991 without a
single reported incidence of viral transmission. In addition to the S/D
process, VITEX is developing other proprietary viral inactivation technologies,
including ultraviolet light and light-activated compounds and quenchers, which
are intended to inactivate both enveloped and non-enveloped viruses while
maintaining the viability of blood components.

VITEX's mission is to enable the global availability of safe blood products
using the Company's proprietary viral inactivation systems. To achieve this
objective, the Company intends to: (i) expand its technological leadership;
(ii) build a broad product portfolio; (iii) leverage existing manufacturing
capabilities and regulatory expertise; and (iv) establish strategic
collaborations for sales, marketing, distribution and development.

VITEX believes that establishing sales, marketing and distribution
collaborations can accelerate the commercialization of the Company's products.
The Company's strategic collaborations include agreements with: (i) Bayer
Corporation to supply blood plasma fractions, which Bayer further processes
into virally inactivated plasma derivatives; (ii) the American National Red
Cross to distribute VIPLAS/SD, intended to be marketed under the brand name
PLAS+(R)SD; (iii) United States Surgical Corporation to develop and distribute
VIGuard Fibrin Sealant; and (iv) Pall Corporation to develop and distribute
systems for viral inactivation of red blood cell and platelet concentrates.

3
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered hereby........................ 3,000,000 shares
Common Stock to be outstanding after the offering.. 11,874,614 shares(1)
Use of proceeds.................................... For costs associated with
the expected
commercialization of
VIPLAS/SD, clinical
trials, research and
development, capital
investments and other
general corporate
purposes.
Proposed Nasdaq National Market symbol............. VITX
</TABLE>

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Processing and products....................... $ 438 $14,899 $15,843
Licensing fee................................. -- 3,000 --
Research and development funding.............. -- 954 1,224
-------- -------- --------
Total revenues............................... 438 18,853 17,067
-------- -------- --------
Costs and expenses:
Costs related to processing and products...... 284 8,139 10,346
Facility costs................................ 6,740 1,449 5,980
Research and development...................... 2,777 5,321 7,136
Marketing and sales........................... -- -- 1,075
General and administrative.................... 1,330 2,478 3,278
Non-recurring charge.......................... -- 5,100 --
-------- -------- --------
Total operating costs and expenses........... 11,131 22,487 27,815
-------- -------- --------
Loss from operations........................... (10,693) (3,634) (10,748)
Interest expense, net.......................... (146) (491) (952)
-------- -------- --------
Net loss....................................... ($10,839) ($ 4,125) ($11,700)
======== ======== ========
Basic and diluted net loss per share(2)........ ($3.64) ($0.84) ($ 1.62)
Weighted average common shares used in
computing
basic and diluted net loss per share(2)....... 2,982 4,897 7,241
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------
ACTUAL AS ADJUSTED(3)
------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 5,250 $52,460
Working capital (deficit)......................... (2,775) 44,435
Total assets...................................... 38,167 85,377
Long-term obligations, less current portion....... 15,318 15,318
Accumulated deficit............................... (26,664) (26,664)
Total stockholders' equity........................ 11,678 59,188
</TABLE>
- --------
(1) Includes 384,024 shares of Common Stock purchased by Pall in the Pall
Private Placement. Excludes 1,373,300 shares of Common Stock issuable upon
exercise of outstanding options as of December 31, 1997 at a weighted
average exercise price of $5.05 per share and 35,939 shares of Common
Stock issuable upon exercise of outstanding warrants at a weighted average
exercise price of $0.30 per share. See "Capitalization," "Dilution" and
"Description of Capital Stock."
(2) See note 2 to the Company's Financial Statements.
(3) As adjusted to give effect to the issuance of 35,778 shares of Common
Stock to the NYBC in satisfaction of royalty payment obligations, the sale
of 477,042 shares of Common Stock to Pall pursuant to a private placement
in February 1998, the sale of 3,000,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $14.00 per share,
the sale of 384,024 shares of Common Stock pursuant to the Pall Private
Placement and the application of the net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."

4
<PAGE>

RISK FACTORS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in this Prospectus. In evaluating the Company's business, prospective
investors should carefully consider the following factors in addition to the
other information presented in this Prospectus.

DEPENDENCE ON NEW PRODUCTS AND SYSTEMS IN DEVELOPMENT STAGE

The success of the Company's business will depend on the development and
commercialization of its virally inactivated products and viral inactivation
systems, all of which are at various stages of development. There can be no
assurance that these products and systems will be successfully developed and,
if developed, that they will generate revenues and profits. Successful
commercialization of the Company's products and systems under development
depends, in significant part, on the Company's ability to: (i) complete their
development in a timely fashion; (ii) obtain and maintain patents or other
proprietary protections; (iii) obtain required regulatory approvals; (iv)
implement efficient, commercial-scale manufacturing processes; (v) gain early
entry into relevant markets; (vi) establish sales, marketing, distribution and
development collaborations; and (vii) demonstrate the competitiveness of the
Company's products and systems.

DEPENDENCE ON MARKET ACCEPTANCE

Market acceptance of the Company's products and systems will largely depend
on the Company's ability to demonstrate their safety, efficacy and cost-
effectiveness. In the event that the Company succeeds in developing and
obtaining regulatory approval for any virally inactivated plasma, red blood
cell, platelet or wound care product, the Company will need to convince
patients, doctors, health care providers, blood centers and other participants
in the blood products market to pay for the incremental cost of these
products, as compared to widely used corresponding blood products that have
not been virally inactivated. There are few blood product distribution
channels in the United States; the American National Red Cross (the "Red
Cross") collects and distributes approximately 45% of donated blood, another
45% is collected and distributed by various blood centers and the remaining
10% is collected by hospitals. The exclusive Distribution Agreement between
the Company and the Red Cross provides that the Red Cross will use its best
efforts to ensure availability of the Company's virally inactivated plasma
products to all potential customers, including Red Cross blood centers and
non-Red Cross blood centers. During discussions with the Company following the
execution by the Company of a letter of intent with the Red Cross relating to
the proposed Distribution Agreement, a blood center trade organization
threatened to assert claims against the Company, relating to the exclusive
nature of the proposed agreement. The Company had signed a letter of intent
with this trade organization relating to a potential agreement covering the
Company's virally inactivated plasma products. This letter of intent expired
prior to the execution of the Distribution Agreement with the Red Cross. The
Company has reviewed the merits of the threatened claims and, upon the advice
of its legal counsel, believes that these claims are without merit.
Notwithstanding the foregoing, there can be no assurance that this trade
organization or other third parties would not commence litigation based on
such claims or prevail on the merits of such claims in any litigation. The
successful assertion of such claims or the failure of the Red Cross for any
reason to successfully market the Company's virally inactivated plasma to
hospitals and blood centers could delay the commercialization of the Company's
virally inactivated plasma, which could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
has also entered into mutually exclusive distribution agreements with U.S.
Surgical for its VIGuard Fibrin Sealant and with Pall for systems
incorporating the Company's viral inactivation technology for red blood cells
and platelets. Any failure of these collaborators to successfully market and
sell the Company's products could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Strategic Collaborations--American National Red Cross" and "--
Sales, Marketing and Distribution."

5
<PAGE>

LIMITED PRODUCT REVENUES; UNCERTAINTY OF FUTURE PROFITABILITY

Since its inception, all of the Company's processing and product revenues
have been attributable to sales of plasma fractions, substantially all of
which are virally inactivated by the Company's customers. In 1997,
approximately 85% of the Company's processing and product revenues were
realized under the Company's Processing Agreement with Bayer. There can be no
assurance that the Company will be able to complete the development of its
virally inactivated products and related systems, market these products and
systems, fund operating expenses, including increasing research and
development expenses, with future product revenues or achieve profitability.
Moreover, the Company's results may fluctuate from quarter to quarter due to
manufacturing constraints, market demand, timing of research and development
expenses, regulatory approvals, upfront fees and milestone payments from
strategic collaborators, and new products introduced by the Company. As of
December 31, 1997, the Company had an accumulated deficit of $26.7 million.
See "--Reliance on Strategic Collaborators" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

NEED FOR ADDITIONAL FUNDS

Since its inception, the Company's sources of funds have included private
placements of equity and debt securities, capital lease financings, payments
from collaborators and revenues from its plasma fractionation business. The
Company's cash requirements may vary materially from those now anticipated as
a result of additional research and development expenditures, results of pre-
clinical studies and clinical trials, regulatory requirements, competitive
pressures and technological advances. In addition, the Company may require
substantial funds for its long-term product development, manufacturing and
operating expenses. Currently, the Company receives a substantial amount of
revenue from its strategic collaborators to fund research and development and
other expenses related to building its product portfolio. There can be no
assurance that the Company will be able to maintain these strategic
collaborators or secure new collaborators to help fund research and
development and to commercialize the Company's products. Under existing
agreements with various lenders, the Company has granted mortgages on its
manufacturing facility and security interests in substantially all of its
machinery, equipment and other tangible assets. The existence of these
encumbrances could impair the Company's ability to obtain debt financing in
the future. The Company may seek to raise funds in the public or private
equity or debt capital markets. In the event that the Company is unable to
generate sufficient income from operations or obtain additional financing as
required, its operations and research and development efforts will need to be
curtailed or discontinued. Such an event would limit the Company's ability to
develop its products and systems and achieve regulatory milestones with its
collaborators and would have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

GOVERNMENT REGULATION

All of the Company's products are subject to extensive regulations by the
federal government, principally the FDA, and state, local and non-U.S.
governments. Such regulations govern, among other things, the development,
testing, manufacturing, labeling, storage, pre-market clearance or approval,
advertising, promotion, sale and distribution of such products. The process of
obtaining regulatory approvals is generally lengthy, expensive and uncertain.
Satisfaction of pre-market approval or other regulatory requirements of the
FDA, or similar requirements of non-U.S. regulatory agencies, typically takes
several years, depending upon the type, complexity, novelty and intended
purpose of the product. Moreover, although the FDA's Blood Products Advisory
Committee ("BPAC") unanimously recommended to the FDA that the Company's
VIPLAS/SD product receive regulatory approval, the FDA is not bound by such
recommendation. Such plasma product has not yet received FDA approval, and
while the Company has had discussions with the FDA regarding such approval, it
is uncertain if or when the Company will gain approval for the
commercialization of this product. There can be no assurance that the FDA or
any other regulatory agency will grant approval for any of the Company's
products on a timely basis, if at all.

6
<PAGE>

The regulatory process includes pre-clinical studies and clinical trials of
each product to establish its safety and efficacy, and may include post-
marketing studies requiring expenditure of substantial resources. The results
from pre-clinical studies and early clinical trials conducted by the Company
may not be predictive of results obtained in later clinical trials, and there
can be no assurance that clinical trials conducted by the Company will
demonstrate sufficient safety and efficacy to obtain the requisite marketing
approvals. The rate of completion of the Company's clinical trials may be
delayed by many factors, including slower than anticipated patient enrollment
or adverse events occurring during the clinical trials. Data obtained from
pre-clinical and clinical activities are susceptible to varying
interpretations, which could delay, limit or prevent regulatory approval. In
addition, delays or rejections may be encountered based upon many factors,
including changes in regulatory policy during the period of product
development. The Company's clinical development plan for its transfusion
plasma and cellular products assumes that only data from in vitro studies, not
from clinical trials, will be required to demonstrate efficacy in inactivating
viruses and that clinical trials for these products will instead focus on
demonstrating therapeutic efficacy, safety and tolerability of blood
components treated with the system. Although the Company has had discussions
with the FDA concerning the Company's proposed clinical plan for these
products, there can be no assurance that this plan of demonstrating safety and
efficacy will ultimately be acceptable to the FDA or that the FDA will
continue to believe that this clinical plan is appropriate. No assurance can
be given that any of the Company's development programs will be successfully
completed or that any further investigational new drug ("IND") applications
will become effective, that clinical trials will commence as planned, that
required United States or non-U.S. regulatory approvals will be obtained on a
timely basis, if at all, or that any products for which approval is obtained
will be commercially successful. As a result of FDA reviews or complications
that may arise in any phase of the clinical trial program, there can be no
assurance that the proposed schedules for IND and clinical protocol
submissions to the FDA, initiations of studies and completions of clinical
trials can be maintained. Any delays in the Company's clinical trials or
failures to obtain required regulatory approvals would have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business--Products and Product Development" and "--Government
Regulation."

If regulatory approval of a product is granted, such approval may impose
limitations on the indicated uses for which the product may be marketed.
Although the Company believes that the S/D process can inactivate unknown, as
well as known, enveloped viruses, the Company would be unable to make any
label claims for inactivating an unknown virus in the absence of specific data
for that virus. Further, even if regulatory approval is obtained, later
discovery of previously unknown problems with a product may result in
restrictions on the product, including withdrawal of the product from the
market. The policies of the FDA and non-U.S. regulatory authorities may
change, and additional regulations may be promulgated, which could prevent or
delay regulatory approval of the Company's products and systems under
development or result in restrictions on the marketing of such products and
systems. If the Company fails to comply with FDA requirements following
marketing approval, the FDA can mandate product recalls, impose fines, suspend
or withdraw regulatory approvals or pursue criminal prosecution. The
occurrence of any of these FDA actions could have a material adverse effect on
the Company's business, financial condition and results of operations. "See
"Business--Manufacturing and Supply."

Among the conditions for FDA approval of a pharmaceutical, biologic or
device is the requirement that the manufacturer's quality control and
manufacturing procedures conform to current Good Manufacturing Practices
("cGMP"), which must be followed at all times. The FDA enforces cGMP
requirements through periodic inspections. There can be no assurance that the
FDA will determine that the facilities and manufacturing procedures of the
Company or any third-party manufacturer of the Company's existing or future
products will conform to cGMP requirements.

Interstate commerce of blood and blood products may require FDA approval of
license supplements by the Company's customers. To the extent license
supplements are required, FDA delays in approving such supplements may deter
some blood centers from using the Company's products. The regulatory impact on
potential customers could have a material adverse effect on the Company's
business, financial condition and results of operations.

7
<PAGE>

RISK OF RELIANCE ON MANUFACTURING FACILITY AND EQUIPMENT

The Company has a single manufacturing facility. Any catastrophic event that
interrupts production at this facility would have a material adverse effect on
the Company's business, financial condition and results of operations. To
achieve the level of production of VIPLAS/SD required under the Company's
agreement with the Red Cross, the Company will have to operate its single,
highly customized filling machine at full capacity for an extended period
without interruption. Any significant damage to, or malfunction of, this
filling machine that cannot be repaired would require the Company to replace
the machine. The construction of a replacement machine could take as long as
18 months. While the Company has casualty insurance which it believes to be
consistent with industry standards, any extended interruption in the
production of plasma fractions or VIPLAS/SD, when and if approved for
marketing by the FDA, would have a material adverse effect on the Company's
business, financial condition and results of operations.

RELIANCE ON STRATEGIC COLLABORATORS

The Company is dependent on strategic collaborators for sales, marketing and
distribution support and for the development of certain products and product
candidates. The Company has entered into: (i) an agreement with Bayer to
process plasma fractions from plasma supplied by Bayer; (ii) an agreement with
the Red Cross for the distribution of the Company's virally inactivated
plasma, if and when such product is approved for marketing; (iii) an agreement
with U.S. Surgical for the sale, marketing and distribution of the Company's
virally inactivated fibrin sealant, if and when approved for marketing; and
(iv) an agreement with Pall for the development, sale, marketing and
distribution of any system incorporating the Company's viral inactivation
technology for red blood cell and platelet concentrates. Among its various
obligations under these agreements, the Company has granted Bayer a second
mortgage on its manufacturing facility and a security interest in
fractionation machinery and equipment as a means of securing the performance
of the Company's obligations under the agreement. The Company does not plan on
building its own sales force and, therefore, the success of the Company
depends upon its ability to develop and deliver products to Bayer, the Red
Cross, U.S. Surgical, Pall and, potentially other strategic collaborators. The
Company's collaborators may be unable to satisfy minimum purchase requirements
or achieve projected sales levels under the Company's collaborative agreements
which could result in the termination of such agreements, causing a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, the Company may need to seek new collaborators or
alliances to sell and distribute future products or to establish its own
direct commercialization capabilities. Securing new corporate collaborators is
a time-consuming process, and there is no guarantee that the negotiations with
new collaborators will yield positive results. There can be no assurance that
if the Company finds additional corporate collaborators to assist in the
commercialization of existing or new product candidates, the terms of the
arrangements will be favorable to the Company. In addition, there can be no
assurance that the Company's strategic collaborators will not decide to
distribute other products that compete directly with the Company's products or
new products developed by competitors that may prove to be more effective,
cost-efficient alternatives to the Company's products. Each of the Company's
collaborative agreements require the Company to meet certain research and
development and commercialization milestones. In the case of each of these
agreements, failure of the Company to achieve one or more of these milestones
on a timely basis, could have a material adverse effect on the Company's
receipt of funding and revenues under the agreement and the continuation of
the agreement. The failure to maintain existing strategic alliances for
whatever reason and to secure new alliances would delay the commercialization
of existing and future products and could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business--Strategic Collaborations."

COMPETING TECHNOLOGIES AND RAPID TECHNOLOGICAL CHANGE

The fields of transfusion medicine and therapeutic use of blood products is
characterized by rapid technological change. Accordingly, the Company's
success will depend, in part, on its ability to respond quickly to such change
through the development and introduction of new products and systems. Product
and system development involves a high degree of risk, and there can be no
assurance that the Company's product and

8
<PAGE>

system development efforts will result in any commercial successes.
Technological developments by others may result in the Company's products
becoming obsolete or non-competitive before the Company is able to generate
any significant revenue. Any such occurrence would have a material adverse
effect on the Company's business, financial condition and results of
operations.

The Company expects that all of its products and systems will encounter
significant competition. Any such product or system, once approved for
marketing, would compete with current approaches to blood safety, including
screening and autologous (i.e., self) donations, as well as with future
products and systems developed by medical technology, biopharmaceutical and
hospital supply companies, national and regional blood centers, or certain
governmental organizations and agencies. Many companies and organizations that
may be competitors or potential competitors have substantially greater
financial and other resources than the Company and may have more experience in
conducting pre-clinical studies and clinical trials and other regulatory
approval procedures. The Company's failure to achieve competitiveness of any
of its products may have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Competition."

DEPENDENCE ON KEY EMPLOYEES

The Company's success is dependent upon its ability to retain its scientific
staff and, in particular, Dr. Bernard Horowitz, Executive Vice President and
Chief Scientific Officer of the Company. Dr. Horowitz, a leader in the field
of viral inactivation, leads the group of scientists who were inventors of
most of the Company's core technologies. Although the Company maintains key
man insurance on Dr. Horowitz, the loss of Dr. Horowitz could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company's competitive position in the blood products industry
depends on its continued ability to recruit and retain qualified scientific,
managerial and technical employees. Such employees are not easy to recruit and
retain. Failure to recruit and retain qualified employees could have a
material adverse effect on the Company's business, financial condition and
results of operation. See "Management."

SOLE SOURCE SUPPLIERS

The Company currently obtains from a single supplier the customized bags for
the packaging of its VIPLAS/SD product. Further, the Company has identified
only one source for a key component of one of its proposed wound care
products. While the Company believes that there are alternative sources of
supply for these materials and components, establishing additional or
replacement suppliers for any of the components in the Company's products, if
required, may not be accomplished quickly and could involve significant
additional costs. In addition, because the FDA approval process requires
manufacturers to specify their proposed suppliers of active ingredients and
certain packaging materials in their applications, FDA approval of any new
supplier would be required if active ingredients or such packaging materials
were no longer available from the specified supplier. The qualification of a
new supplier could delay the Company's development and marketing efforts. Any
failure by the Company to obtain any of the components used to manufacture the
Company's products and systems from alternative suppliers, if required, or any
delay in qualifying a new supplier, could limit the Company's ability to
manufacture its products and systems and would have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Business--Manufacturing and Supply" and "--Government Regulation."

PRODUCT LIABILITY EXPOSURE

The Company's operations will expose it to the risk of product liability
claims. There can be no assurance that the Company will not experience losses
due to any such claims. The Company maintains product liability insurance
coverage, but there can be no assurance that the Company's product liability
insurance will continue to be available to the Company on a cost-effective
basis and that such insurance will be adequate to cover any or all potential
claims. In the event that a claim is brought against the Company, liability
for damages beyond the extent of coverage under the insurance policy combined
with the expense of litigating such claim could have a material adverse effect
upon the Company's business, financial condition and results of operations.

9
<PAGE>

UNCERTAINTY OF PROPRIETARY TECHNOLOGIES AND PATENTS

The Company's success depends, in part, on its ability to obtain and
maintain patents, to protect its trade secrets, to operate without infringing
upon the proprietary rights of others and to prevent others from infringing on
the proprietary rights of the Company. The Company has exclusive licenses to
patents and patent applications covering critical components of its viral
inactivation technologies. There can be no assurance that any patents owned by
or licensed to the Company will afford protection against competitors or that
any pending patent applications now or hereafter filed by or licensed to the
Company will result in patents being issued. In addition, the laws of certain
non-U.S. countries do not protect the Company's intellectual property rights
to the same extent as do the laws of the United States. Medical technology
patents involve complex legal and factual questions and, therefore, their
enforceability cannot be predicted with certainty. There can be no assurance
that any of the Company's patents or patent applications, if issued, will not
be challenged, invalidated or circumvented, or that the rights granted
thereunder will provide proprietary protection or competitive advantages to
the Company against competitors with similar technology. Furthermore, there
can be no assurance that the Company's competitors will not obtain patent
protection or other intellectual property rights that would limit the
Company's ability to use its technology or commercialize products that may be
developed. Because of the extensive time required for development, testing and
regulatory review of a potential product, it is possible that, before any of
the Company's products can be commercialized, any related patent may expire or
remain in existence for only a short period following commercialization, thus
reducing any value of the patent, and, consequently, adversely affecting the
Company's business, financial condition and results of operations. Because
patent applications in the United States are maintained in secrecy until
patents issue and because publication of discoveries in the scientific or
patent literature lag behind actual discoveries, the Company cannot be certain
that it was the first to make the inventions covered by each of its issued or
pending patent applications. There can be no assurance that the Company's
planned or potential products will not be covered by third-party patents or
other intellectual property rights, in which case continued development and
marketing of such products would require a license under such patents or other
intellectual property rights. There can be no assurance that such required
licenses will be available to the Company on acceptable terms, if at all. If
the Company does not obtain such licenses, it could encounter delays in
product introductions while it attempts to design around such patents, or
could be completely blocked from developing, manufacturing or selling products
requiring such licenses. Litigation may be necessary to defend against or
assert such claims of infringement, to enforce patents issued to the Company,
to protect trade secrets or know-how owned by the Company or to determine the
scope and validity of the proprietary rights of others. In addition,
interference proceedings declared by the United States Patent and Trademark
Office may be necessary to determine the priority of inventions with respect
to patent applications of the Company. Litigation or interference proceedings
could result in substantial costs to and diversion of management focus, and
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Patents, Licenses and
Proprietary Rights."

The Company may rely, in certain circumstances, on trade secrets to protect
its technology. However, trade secrets are difficult to protect. The Company
seeks to protect its proprietary technology, in part, by confidentiality
agreements with its employees and certain contractors. There can be no
assurance that these agreements will not be breached, that the Company will
have adequate remedies for any breach, or that the Company's trade secrets
will not otherwise become known or be independently discovered by competitors.
Failure of the Company to protect trade secrets could have a material adverse
effect on the Company's business, financial condition or results of
operations. To the extent that the Company's employees or its consultants or
contractors use intellectual property owned by others in their work for the
Company, disputes may also arise as to the rights in related or resulting
know-how and inventions. Litigation proceedings regarding such disputes could
result in substantial costs and diversion of the Company's resources.

ENVIRONMENTAL REGULATION; USE OF HAZARDOUS SUBSTANCES

10
<PAGE>

significant costs to comply with environmental and health and safety
regulations in the future. The Company will be required to obtain an amendment
to a permit from regulatory authorities to increase the volume of permitted
discharge from the manufacture of VIPLAS/SD. Although the Company has
submitted an application to obtain this amendment and is actively pursuing it,
there can be no assurance that such amendment will be obtained in a timely
manner, if at all. The Company's research and development involves the
controlled use of hazardous materials, including certain hazardous chemicals
and radioactive materials. Although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be eliminated. In the
event of such an accident, the Company could be held liable for any damages
that result and any such liability could exceed the resources of the Company.

UNCERTAINTY RELATING TO THIRD-PARTY REIMBURSEMENT; COST CONTAINMENT

Successful commercialization of the Company's products is, in part,
dependent on the reimbursement policies of third-party payors for the costs of
the Company's products. Failure by doctors, hospitals and other users of the
Company's products or systems to obtain reimbursement from managed care
organizations ("MCOs"), private health insurers, government authorities and
other medical cost reimbursement channels could adversely affect the Company's
ability to sell its products and systems. There are widespread public and
private efforts to control health care costs, and it is unlikely that these
efforts will be abandoned in the near future. The inevitable continuation to
limit or reduce health care costs could lead third-party payors to refuse or
limit reimbursement for the Company's products, which the Company expects will
be priced at a premium to corresponding widely used blood products that have
not been virally inactivated. Inadequate reimbursement for the Company's
products and systems could have a material adverse effect on the demand for
the Company's products and systems, which in turn could cause the Company to
reduce the prices of such products and systems below levels at which they
would generate profitability. These potential reimbursement trends would have
a material adverse effect on the Company's business, financial condition and
results of operations of the Company.

CONTROL BY EXISTING STOCKHOLDERS

Upon the closing of this offering and the Pall Private Placement, the
Company's current Directors and executive officers and their respective
affiliates will beneficially own approximately 70.0% of the outstanding Common
Stock of the Company. As a result, these stockholders will be able to exercise
significant influence over all matters requiring stockholder approval,
including the election of Directors and approval of significant corporate
transactions. Such concentration of ownership may also have the effect on
delaying, preventing or deterring a change in control of the Company. See
"Principal Stockholders" and "Description of Capital Stock--Anti-Takeover
Measures."

ANTI-TAKEOVER MEASURES

The Company's Amended and Restated Certificate of Incorporation (the
"Restated Certificate") authorizes the Board of Directors to issue up to
1,000,000 shares of Preferred Stock and to determine the price, rights,
preferences and privileges, including voting rights, of those shares without
any further vote or action by the stockholders. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any Preferred Stock that may be issued in the future. The
Restated Certificate and the Amended and Restated By-laws (the "By-laws"),
among other things, provide for a classified Board of Directors, require that
stockholder actions occur at duly called meetings of the stockholders, limit
who may call special meetings of stockholders, do not permit cumulative voting
in the election of Directors and require advance notice of stockholder
proposals and Director nominations. These provisions contained in the
Company's Restated Certificate and By-laws and certain applicable provisions
of Delaware law could serve to depress the Company's stock price. In addition,
these and other provisions could have the effect of making it more difficult
for a third party to acquire a majority of the outstanding voting stock of the
Company, discourage a hostile bid or delay, prevent or deter a merger,
acquisition or tender offer in which the Company's stockholders could receive
a premium for their shares, or a proxy contest for control of the Company or
other change in the Company's management. See "Management" and "Description of
Capital Stock."

11
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Sales of substantial amounts of Common Stock in the public market following
this offering could adversely affect the market price of the Common Stock.
Upon the closing of this offering and the Pall Private Placement, the Company
will have outstanding an aggregate of 11,874,614 shares of Common Stock. Of
these shares, all of the shares sold in this offering will be freely tradeable
without restriction or further registration under the Securities Act of 1933,
as amended (the "Securities Act"), unless such shares are held by "affiliates"
of the Company as that term is defined in Rule 144 under the Securities Act
("Affiliates"), in which case they will be subject to the volume, manner of
sale and other conditions of Rule 144. The remaining 8,490,590 shares of
Common Stock held by existing stockholders and the shares sold pursuant to the
Pall Private Placement (the "Restricted Shares") are "restricted securities"
as that term is defined in Rule 144. Restricted Shares may be sold in the
public market only if registered or if they qualify for an exemption from
registration under Rule 144 or Rule 701 promulgated under the Securities Act.
As a result of contractual restrictions and the provisions of Rule 144 and
Rule 701, additional shares will be available for sale in the public market as
follows: (i) no Restricted Shares will be eligible for immediate sale on the
date of this Prospectus; (ii) 90,607 Restricted Shares and 276,833 shares of
Common Stock issuable upon exercise of currently outstanding options will be
eligible for sale 90 days after the completion of the offering; (iii) an
additional 7,887,159 Restricted Shares and 144,901 shares of Common Stock
issuable upon exercise of currently outstanding options will be eligible for
sale upon expiration of certain lock-up agreements 180 days after the date of
this Prospectus; and (iv) the remainder of the Restricted Shares and 35,938
shares of Common Stock issuable upon exercise of currently outstanding
warrants will be eligible for sale from time to time thereafter upon
expiration of their respective one-year holding periods. Pursuant to an
agreement between the Company and the holders (or their permitted transferees)
of approximately 7,860,040 shares of Common Stock (plus 384,024 shares sold
pursuant to the Pall Private Placement), these holders are entitled to certain
rights with respect to the registration of such shares under the Securities
Act. See "Description of Capital Stock" and "Shares Eligible for Future Sale."

NO PRIOR PUBLIC MARKET; POSSIBLE SHARE PRICE VOLATILITY

Prior to this offering, there has been no public market for the Common Stock
of the Company, and there can be no assurance that an active trading market
will develop or be sustained. The initial public offering price for the Common
Stock to be sold in this offering will be determined by agreement between the
Company and the Underwriters and may bear no relationship to the price at
which the Common Stock will trade after the closing of this offering. The
market price of the shares of Common Stock, like that of the common stock of
many other companies in similar industries, is likely to be highly volatile.
Factors such as the announcements of research and development milestones or
introduction of new products by the Company or its competitors, governmental
regulation, health care legislation, developments in patent or other
proprietary rights of the Company or its competitors, including litigation,
fluctuations in the Company's operating results and market conditions for
health care stocks in general could have a significant impact on the future
price of the Common Stock. In addition, the stock market has from time to time
experienced extreme price and volume fluctuations, which may be unrelated to
the operating performance of particular companies. In the past, securities
class action litigation has often been instituted following periods of
volatility in the market price for a company's securities. Such litigation
could result in substantial costs and a diversion of management attention and
resources, which could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Underwriting."

DILUTION; ABSENCE OF DIVIDENDS

Purchasers of the Common Stock offered hereby will suffer immediate and
substantial dilution in net tangible book value per share. Such purchasers
will experience additional dilution upon the exercise of outstanding stock
options and warrants. Future capital funding transactions may also result in
dilution to purchasers in this offering. The Company has never paid any cash
dividends and does not intend to pay any cash dividends in the foreseeable
future. Under the Credit Agreement covering the Company's bank term loan, the
Company is restricted from paying dividends without the prior written consent
of the creditor. See "Dividend Policy" and "Dilution."

12
<PAGE>

THE COMPANY

V.I. Technologies, Inc. ("VITEX" or the "Company"), formerly Melville
Biologics, Inc., was incorporated in Delaware in December 1992. Effective
January 1, 1995, pursuant to a transfer agreement dated December 9, 1994 and
amended February 7, 1995 (the "Transfer Agreement"), the Company received
substantially all of the assets of the NYBC relating to its plasma
fractionation business, including title to the real property, building and
fixtures of the NYBC and certain other specified tangible and intangible
assets, as well as various contracts and the assumption of certain obligations
of the NYBC related to such assets and contracts. In exchange for these
assets, the NYBC received all of the issued and outstanding Common Stock of
the Company. The Company's principal executive offices are located at 155
Duryea Road, Melville, New York 11747 and its telephone number is (516) 752-
7314.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock offered hereby are estimated to be $38,210,000 ($44,069,000 if
the Underwriters' over-allotment option is exercised in full) at an assumed
initial public offering price of $14.00 per share and after deducting the
Underwriters' discounts and commissions and estimated offering expenses
payable by the Company.

The Company intends to use the net proceeds to fund costs associated with
the commercialization of VIPLAS/SD, clinical trials and research and
development and for capital investments and other general corporate purposes.
The Company anticipates that the net proceeds of this offering will be
sufficient to finance its operations until the Company achieves positive cash
flow from operations, assuming the timely and successful commercialization of
VIPLAS/SD. This estimate is based on certain assumptions discussed in "Risk
Factors--Need for Additional Funds" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources." Although the Company may use a portion of the net proceeds to
acquire complementary businesses, technologies or products, no material
transactions of this nature are currently planned or being negotiated.

The cost, timing and amount of funds required for such uses by the Company
cannot be precisely determined and will be based on, among other things, the
receipt of regulatory approvals, the progress of the Company's research and
development and product and system commercialization programs, determinations
as to the commercial potential and the terms of any collaborative arrangements
entered into by the Company for the development, licensing and manufacture of
its products and other factors, many of which are beyond the control of the
Company. Pending the application to such uses, the net proceeds will be
invested in short-term, interest-bearing, investment-grade securities. The
Company intends to invest and use the net proceeds so as not to be considered
an investment company under the Investment Company Act of 1940, as amended.

DIVIDEND POLICY

The Company intends to retain earnings, if any, for use in its business and
therefore does not anticipate paying any cash dividends. The payment of any
future cash dividends will be determined by the Board of Directors in light of
conditions then existing, including the Company's financial condition and
requirements, future prospects, restrictions in financing agreements, business
conditions and other factors deemed relevant by the Board of Directors. Under
the credit agreement covering the Company's bank term loan, the Company is
restricted from paying certain dividends without the prior written consent of
the creditor.

13
<PAGE>

CAPITALIZATION

The following table sets forth as of December 31, 1997, the actual
capitalization of the Company and the capitalization as adjusted to reflect:
(i) the sale of the 3,000,000 shares of Common Stock offered hereby at an
assumed initial public offering price of $14.00 per share, after deducting the
underwriting discounts and commissions and estimated offering expenses payable
by the Company and the application of the estimated net proceeds as set forth
in "Use of Proceeds"; (ii) the sale of 477,042 shares of Common Stock to Pall
at a price of $8.39 per share in February 1998; (iii) the sale of 384,024
shares of Common Stock in the Pall Private Placement at an assumed initial
public offering price of $14.00 per share, net of underwriting discounts and
commissions (together with the transaction described in clause (ii), the "Pall
Investments"); (iv) the issuance of 35,778 shares of Common Stock to the NYBC
in satisfaction of certain royalty payment obligations (the "NYBC Issuance");
and (v) an increase in the number of shares of authorized but undesignated
Preferred Stock to 1,000,000 shares. This table should be read in conjunction
with the Company's Financial Statements and notes thereto appearing elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------
ACTUAL AS ADJUSTED
-------- -----------
<S> <C> <C>
Cash and cash equivalents............................ $ 5,250 $ 52,460
======== ========
Long-term debt, less current portion(1).............. $ 8,063 $ 8,063
Capital lease obligations, less current portion(2)... 4,593 4,593
Advances from customer, less current portion(3)...... 2,663 2,663
Stockholders' equity(4):
Preferred stock, par value $.01 per share; 500
shares authorized; no shares issued and
outstanding, actual; 1,000,000 shares authorized,
as adjusted....................................... -- --
Common stock, par value $.01 per share; 30,000,000
shares authorized; 7,852,723 shares issued and
outstanding, actual; 11,749,567 shares issued and
outstanding, as adjusted.......................... 79 118
Additional paid-in capital........................... 38,298 85,769
Note receivable from stockholder..................... (35) (35)
Accumulated deficit.................................. (26,664) (26,664)
-------- --------
Total stockholders' equity....................... 11,678 59,188
-------- --------
Total capitalization........................... $ 26,997 $ 74,507
======== ========
</TABLE>

- --------
(1) See note 7 to the Company's Financial Statements.

(2) See note 15 to the Company's Financial Statements.

(3) See note 11 to the Company's Financial Statements.

(4) Includes 384,024 shares of Common Stock purchased by Pall in the Pall
Private Placement. Excludes 1,373,300 shares of Common Stock issuable upon
exercise of outstanding options as of December 31, 1997 at a weighted
average exercise price of $5.05 per share and 35,939 shares of Common Stock
issuable upon exercise of outstanding warrants at a weighted average
exercise price of $0.30 per share. See "Dilution" and "Description of
Capital Stock."

14
<PAGE>

DILUTION

The net tangible book value of the Company as of December 31, 1997 was
$11,678,000 or $1.49 per share. Net tangible book value per share represents
the amount of the Company's stockholders' equity, less intangible assets,
divided by 7,852,723, the number of shares of Common Stock outstanding as of
December 31, 1997.

Net tangible book value dilution per share represents the difference between
the amount per share paid by purchasers of shares of Common Stock in this
offering and the pro forma net tangible book value per share of Common Stock
immediately after completion of this offering. After giving effect to: (i) the
Pall Investments; (ii) the NYBC Issuance; and (iii) the sale of 3,000,000
shares of Common Stock in this offering at an assumed initial public offering
price of $14.00 per share and after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company and the
application of the estimated net proceeds therefrom, the pro forma net
tangible book value of the Company as of December 31, 1997 would have been
$59,188,000, or $5.04 per share. This represents an immediate increase in net
tangible book value of $3.55 per share to existing stockholders and an
immediate dilution in net tangible book value of $8.96 per share to purchasers
of Common Stock in this offering, as illustrated in the following table:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $14.00
Net tangible book value per share of Common Stock at December
31, 1997.................................................... $1.49
Increase per share of Common Stock attributable to new
investors................................................... 3.55
-----
Pro forma net tangible book value per share of Common Stock
after the offering............................................ 5.04
------
Pro forma dilution per share to new investors.................. $ 8.96
======
</TABLE>

Utilizing the foregoing assumptions, the following table summarizes the
total consideration paid to the Company and the average price per share paid
by the existing stockholders and by purchasers of shares of Common Stock in
this offering:

<TABLE>
<CAPTION>
SHARES TOTAL
PURCHASED CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders... 8,749,567 74.5% $48,145,000 53.4% $ 5.50
New Investors........... 3,000,000 25.5% 42,000,000 46.6% 14.00
---------- ---- ----------- ----
Total................. 11,749,567 100% $90,145,000 100%
========== ==== =========== ====
</TABLE>

The above information excludes 1,373,300 shares of Common Stock issuable
upon exercise of outstanding options as of December 31, 1997 at a weighted
average exercise price of $5.05 per share and 35,939 shares of Common Stock
issuable upon exercise of outstanding warrants at a weighted average exercise
price of $0.30 per share. To the extent that other options and warrants are
exercised, there may be further dilution to new investors. See "Management--
Stock Plans" and "Description of Capital Stock--Stock Purchase Warrants."

15
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data as of December 31, 1995, 1996 and 1997
and for the years then ended are derived from the Company's Financial
Statements which have been audited by KPMG Peat Marwick LLP, independent
certified public accountants. The Financial Statements as of December 31, 1996
and 1997 and for each of the years in the three-year period ended December 31,
1997, and the report thereon, are included elsewhere in the Prospectus. The
data set forth below should be read in conjunction with the Company's
Financial Statements and notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1996 1997
-------- ------- --------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Processing and products........................ $ 438 $14,899 $ 15,843
Licensing fee.................................. -- 3,000 --
Research and development funding............... -- 954 1,224
-------- ------- --------
Total revenues................................ 438 18,853 17,067
-------- ------- --------
Expenses:
Costs relating to processing and products...... 284 8,139 10,346
Facility costs................................. 6,740 1,449 5,980
Research and development....................... 2,777 5,321 7,136
Marketing and sales............................ -- -- 1,075
General and administrative..................... 1,330 2,478 3,278
Non-recurring charge(1)........................ -- 5,100 --
-------- ------- --------
Total expenses................................ 11,131 22,487 27,815
-------- ------- --------
Loss from operations............................ (10,693) (3,634) (10,748)
Interest expense, net........................... (146) (491) (952)
-------- ------- --------
Net loss........................................ ($10,839) ($4,125) ($11,700)
======== ======= ========
Basic and diluted net loss per share(2)......... ($3.64) ($0.84) ($1.62)
Weighted average common shares used in computing
basic
and diluted net loss per share(2).............. 2,982 4,897 7,241
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1996 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....................... $ 3,310 $ 4,752 $ 5,250
Working capital (deficit)....................... 1,594 (4,314) (2,775)
Total assets.................................... 23,242 37,626 38,167
Long-term obligations, less current portion..... 8,488 12,681 15,319
Accumulated deficit............................. (10,834) (14,964) (26,664)
Stockholders' equity............................ 8,632 8,905 11,678
</TABLE>
- --------
(1) See note 6 to the Company's Financial Statement for explanation of non-
recurring charge.
(2) See note 2 to the Company's Financial Statements.

16
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with "Selected
Financial Data" and the Company's Financial Statements and notes thereto
included elsewhere in this Prospectus. This Prospectus contains forward-
looking statements that involve risks and uncertainties. The Company's actual
results could differ significantly from those discussed in these forward-
looking statements as a result of certain factors, including those set forth
under "Risk Factors" and elsewhere in this Prospectus. Recently issued
accounting standards may affect the disclosures in the Company's Financial
Statements in the future. See note 2 to the Company's Financial Statements.

OVERVIEW

VITEX's predecessor, Melville Biologics, Inc., was formed more than 15 years
ago by the NYBC, a world leader in hematology and transfusion medicine
research, to process plasma fractions and derivatives, and to facilitate its
research efforts. Effective January 1, 1995, pursuant to the Transfer
Agreement, the NYBC transferred to the Company substantially all of the assets
of the predecessor Company, including a cGMP manufacturing facility used
primarily to produce plasma fractions and related operating and product
licenses. The Company also received certain rights to a portfolio of patents
and patent applications covering viral inactivation technologies relating to
blood components and other blood products. In addition, several NYBC
scientists who were inventors of most of VITEX's core technologies, including
Dr. Bernard Horowitz, the Company's Executive Vice President and Chief
Scientific Officer, became employees of the Company and are continuing their
research efforts at VITEX. Since its inception in 1995, VITEX has devoted
significant resources to constructing, expanding and validating its production
facility in anticipation of the Company receiving FDA marketing approval of
its first virally inactivated product, VIPLAS/SD. In addition, the Company
continues to operate its plasma fractionation business.

The Company believes that it can accelerate the commercialization and
development of selected products and systems through strategic collaborations.
The Company has established commercial and development relationships with
Bayer, the Red Cross, U.S. Surgical and Pall, each of which has made an
upfront financial commitment to the Company. See "Business--Strategic
Collaborations".

To date, the Company has derived substantially all of its revenues under its
Processing Agreement with Bayer totalling $14.9 million in 1996 and $13.4
million in 1997. Although the Company anticipates FDA marketing approval of
VIPLAS/SD during the first half of 1998, there can be no assurance that
regulatory approval or market acceptance will be achieved in a timely manner,
or at all. The Company anticipates that its principal sources of revenue over
the next several years will be Bayer and the Red Cross. VITEX's financial
performance may vary based on the achievement of research and development
milestones, the timing of new product introductions and the market acceptance
of its virally inactivated products and viral inactivation systems.

To date, the majority of the Company's expenditures has been for capital
investments and facility costs related to the production of plasma fractions
and VIPLAS/SD production facilities. In addition, the Company invests
substantial resources in research and development. The Company expects that
its research and development expenses will continue to increase significantly.
Further, the Company anticipates an increase in marketing costs related to the
Company's obligations under the Red Cross agreement and the anticipated
commercialization of VIPLAS/SD. The Company has incurred losses since its
inception and had an accumulated deficit of $26.7 million at December 31,
1997.

RESULTS OF OPERATIONS

Years Ended December 31, 1996 and 1997

Total revenues decreased from $18.9 million in 1996 to $17.1 million in
1997, a decrease of $1.8 million. This decrease was due principally to the
receipt by the Company in 1996 of a one-time licensing fee of $3.0 million
which was partially offset by increases in processing and product revenues of
$0.9 million and research

17
<PAGE>

and development funding of $0.3 million in 1997. The increase in processing
and product revenues reflects an increase in processing volume offset
partially by a decrease in unit pricing under the Processing Agreement with
Bayer. This Processing Agreement provides for further increases in processing
volume during the next several years which will be partially offset by
decreases in unit pricing.

Costs related to processing and products increased from $8.1 million in 1996
to $10.3 million in 1997, an increase of $2.2 million. The gross margin
decrease from 45.4% in 1996 to 34.7% in 1997, was due to a decrease in unit
pricing under the Processing Agreement with Bayer, increased maintenance costs
related to scheduled servicing of the Company's plasma fractionation assets
and increased materials costs in 1997. The Company anticipates that its gross
margin may decrease in 1998 as compared to 1997 due to decreased unit pricing
under the Processing Agreement with Bayer and costs associated with the
anticipated commercial introduction of VIPLAS/SD. Total costs and expenses in
1996 include a non-recurring charge of $5.1 million relating to a
fractionation equipment malfunction and reflecting the replacement cost of
Bayer's plasma of $4.1 million, and the Company's unrecovered processing costs
of $1.0 million. The Company agreed to reimburse Bayer for the cost of this
plasma in monthly installments of $170,834 over a two-year period that
commenced July 1, 1997. Amounts due to Bayer are payable under a Settlement
Agreement and were $3.1 million at December 31, 1997.

Facility costs increased from $1.4 million in 1996 to $6.0 million in 1997,
an increase of $4.5 million. The increase represents costs associated with
VIPLAS/SD production in anticipation of FDA marketing approval. The Company
anticipates recognizing additional facility costs in the future related to the
production of VIGuard Fibrin Sealant and additional products and systems.

Research and development costs increased from $5.3 million in 1996 to $7.1
million in 1997, an increase of $1.8 million. The increase is due principally
to the expanded activities in the Company's VIGuard RBCC and VIGuard PC
programs, expanded clinical trials for VIGuard Fibrin Sealant and additional
development activities. The Company expects that its research and development
expenses will continue to increase significantly.

Marketing and sales costs increased from zero to $1.0 million in 1997, an
increase of $1.0 million. The increase represents costs associated with the
initiation of market research activities, education and other pre-marketing
activities in connection with the anticipated commercial introduction of
VIPLAS/SD. The Company and the Red Cross have each committed to spend at least
certain minimum amounts for marketing VIPLAS/SD in 1998 and 1999 if the
Company receives FDA marketing approval for this product. The Company is
obligated to spend $2.0 million during the two-year period ending December 31,
1999. The Company expects that its marketing and sales expenses will increase
significantly if and when marketing approval is obtained for VIPLAS/SD.

General and administrative costs increased from $2.5 million in 1996 to $3.3
million in 1997, an increase of $0.8 million. The increase is principally due
to expenses recorded of $0.7 million in connection with a severance
arrangement with the Company's former President and Chief Executive Officer.
In addition, costs of $0.2 million were expensed in connection with the
refinancing of the Company's debt. The Company anticipates that general and
administrative expenses will continue to increase as additional personnel are
hired to support the expansion of the Company's operations.

Interest expense increased from $0.6 million in 1996 to $1.3 million in
1997, an increase of $0.7 million. The increase in interest expense in 1997 is
related to additional debt financings.

Interest income increased from $0.1 million in 1996 to $0.4 million in 1997,
an increase of $0.2 million. The increase in interest income related to a
higher average cash balance related to the proceeds received from the
Company's equity and debt financings.

The Company's net loss increased from $4.1 million in 1996 to $11.7 million
in 1997, an increase of $7.6 million. The increase in net loss resulted from
the increase in expenses associated with the expansion of the Company's
operations, principally research and development, and activities associated
with the launch of VIPLAS/SD.

18
<PAGE>

Years Ended December 31, 1995 and 1996

Total revenues increased from $0.4 million in 1995 to $18.9 million in 1996,
an increase of $18.4 million, of which $14.5 million related to plasma
processing for Bayer, which commenced in November 1995. Of this increase, $3.0
million related to a one-time licensing fee received from U.S. Surgical.

Costs of processing and products increased from $0.3 million in 1995 to $8.1
million in 1996, an increase of $7.9 million which related to a full year of
processing plasma for Bayer. Total costs and expenses in 1996 included a non-
recurring charge of $5.1 million relating to a fractionation equipment
malfunction and reflecting the replacement cost of Bayer's plasma of $4.1
million, and the Company's unrecovered processing costs of $1.0 million. The
Company agreed to reimburse Bayer for the cost of this plasma in monthly
installments of $170,834 over a two-year period that commenced July 1, 1997.

Facility costs decreased from $6.7 million in 1995 to $1.4 million in 1996,
a decrease of $5.3 million. The facility costs in 1995 represent costs
associated with the start-up of the production of plasma fractions. The
facility costs in 1996 represent costs associated with the start-up of
VIPLAS/SD production in anticipation of FDA marketing approval.

Research and development costs increased from $2.8 million in 1995 to $5.3
million in 1996, an increase of $2.5 million. The increase is due principally
to the initiation of clinical trials for VIGuard Fibrin Sealant, the transfer
of certain research and development personnel from the NYBC to the Company and
the hiring of additional research and development personnel associated with
expansion of the Company's operations.

General and administrative costs increased from $1.3 million in 1995 to $2.5
million in 1996, an increase of $1.1 million. The increase is due principally
to additional personnel associated with the expansion of the Company's
operations.

Interest expense increased from $0.2 million in 1995 to $0.6 million in
1996, an increase of $0.4 million. The increase in interest expense of $0.6
million in 1996 is related to additional debt financings.

The Company's net loss decreased from $10.8 million in 1995 to $4.1 million
in 1996, a decrease of $6.7 million. The decrease in net loss resulted from
the increase in processing and products revenues of $14.5 million related to
plasma processing for Bayer, which commenced in November 1995, and a one-time
licensing fee of $3.0 million received from U.S. Surgical. The increase in
revenues was offset by the increase in expenses associated with the expansion
of the Company's operations of $1.6 million and a non-recurring charge of $5.1
million related to processing of Bayer's plasma.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations since inception primarily through
$23.1 million of private placements of common equity securities, $21.5 million
of debt and lease financings, $28.3 million of revenues derived under its
Processing Agreement with Bayer and $3.8 million of upfront and development
fees from U.S. Surgical. Over the term of the Processing Agreement with Bayer,
which expires in December 2001, aggregate revenues to the Company will be
approximately $100 million, subject to compliance by the Company of its
performance obligations under the agreement. In addition, the Company receives
research and development funding, under a collaboration agreement from U.S.
Surgical, related to the direct costs associated with clinical and regulatory
activities for the development of VIGuard Fibrin Sealant. At December 31,
1997, the Company had cash and cash equivalents of $5.3 million.

The Company anticipates that under its strategic collaborations, it will,
subject to the fulfillment of its obligations, receive substantial funds in
the form of processing and product revenues, royalties, milestone payments and
equity investments. No assurance can be given that the Company will be able to
perform its obligations under these arrangements or that the Company's
strategic collaborators will make any such payments. The failure of the
Company to receive any such funds would have a material adverse effect on its
business, financial condition and results of operations.

19
<PAGE>

The Red Cross is required to purchase stated minimum quantities of
VIPLAS/SD, if approved for marketing, to maintain its exclusive rights. Under
the initial Red Cross purchase order, revenues totaling $27.0 million are
anticipated within the nine-month period following FDA marketing approval, and
based on minimum purchase requirements by the Red Cross to maintain exclusive
rights to VIPLAS/SD. The Company is obligated, under certain supply
agreements, to purchase minimum quantities of certain raw materials totaling
$0.8 million. The Company is required to spend $2.0 million for marketing
VIPLAS/SD through December 31, 1999.

U.S. Surgical has agreed to fund all future direct clinical and regulatory
costs associated with the development and regulatory approval of VIGuard
Fibrin Sealant. Total fundings by U.S. Surgical of $2.0 million are
anticipated over the next two years. In addition, for improvements and
enhancements to VIGuard Fibrin Sealant, U.S. Surgical has agreed to pay a
portion of agreed upon research and development costs. Under its collaboration
with Pall, the parties have agreed to share research, development, clinical
and regulatory responsibilities and will equally share profits and joint
expenses from operations, after each party is reimbursed for its cost of
goods. The agreements provide that Pall will purchase up to an aggregate of
$26.0 million of VITEX Common Stock in installments, with $17.0 million of
such obligations tied to the achievement of specified development milestones.
Upon execution of the Pall agreements, Pall made a $4.0 million equity
investment and will make a $5.0 million equity investment contemporaneously
with the closing of the public offering contemplated by this Prospectus, net
of underwriting discounts and commissions. Thereafter, all milestone payments
by Pall will be in the form of Common Stock equity investments at the
prevailing market price per share.

Net cash provided by (used in) operating activities was ($8.2) million, $1.0
million and ($9.7) million, for 1995, 1996 and 1997, respectively. The use of
cash resulted primarily from net losses of the Company's operations; in 1996,
the Company generated positive cash flows from operations.

Net cash used in investing activities from inception through December 31,
1997 totaled $17.8 million related principally to manufacturing facility
renovations. The Company anticipates that capital expenditures and
improvements will be required in future periods for the expansion of the
Company's manufacturing capabilities and development of future products.

Net cash provided by financing activities from inception through December
31, 1997 totaled $39.6 million related principally to private placements of
equity securities, debt and lease financings.

In December 1997, the Company entered into a credit agreement with a bank
providing for a term loan in the principal amount of $10.8 million. The
proceeds under this term loan were used to repay the outstanding balance of
existing term loans aggregating $10.5 million. This loan bears interest at the
Company's option at LIBOR plus 2.75% to 1.75%, or the base rate of the bank,
as defined, plus margins of up to 0.5% as determined based on defined earnings
ratios. The Company is currently using one-month LIBOR plus 2.75%. One month
LIBOR at December 31, 1997 was 6.0%. Under this loan, interest is payable
monthly and the principal balance is payable in 16 equal consecutive quarterly
installments of $0.7 million commencing March 31, 1998 and continuing until
maturity on December 31, 2001. The credit agreement contains default
provisions, including financial covenants which provide restrictions on
capital investments, the payment of cash dividends and, among other things,
requires the Company to maintain minimum cash balances of $2.0 million and
leverage and coverage ratios, as defined. The Company is currently in
compliance with such covenants.

The Red Cross made a $3.0 million non-interest bearing, unsecured loan to
the Company to be used to fund improvements to the Company's manufacturing
facility. The loan amortizes over a five-year period following FDA marketing
approval of VIPLAS/SD, with a balloon payment due in year five.

The outstanding loan balance payable to Bayer under the Settlement
Agreement, which amounted to $3.1 million at December 31, 1997, is subject to
interest at the prime rate, as defined, plus 2.0% over the first 12 months of
the agreement and increasing to 3.0% over the second twelve month period. The
prime rate was 8.5% at December 31, 1997. See note 6 to the Company's
Financial Statements.

20
<PAGE>

Under the Company's capital leases, annual minimum rental payments and
related interest expense over the next four years is $7.1 million. The Company
will receive $0.5 million from the lessor of the Company's capital lease, upon
FDA marketing approval of VIPLAS/SD.

At December 31, 1997, the Company had net operating loss carryforwards for
federal and state income tax reporting purposes of approximately $15.8 million
and has available research and development credit carryforwards for federal
income tax reporting purposes of approximately $0.4 million, which are
available to offset future taxable income, if any. These carryforwards expire
beginning in 2010. The Company's ability to use such net operating loss and
research and development credit carryforwards is limited by change in control
provisions under Section 382 of the Internal Revenue Code. See note 12 to the
Company's Financial Statements.

The Company expects to incur substantial additional costs, including costs
related to increased marketing activities, increased research and development,
seeking regulatory approvals and conducting additional clinical trials,
capital equipment and other costs associated with the Company's manufacturing
capabilities. The Company believes that the proceeds from this offering,
together with existing funds and funds expected to be generated from
operations will be sufficient to meet its projected working capital and other
cash requirements until the Company achieves positive cash flows from
operations.

There can be no assurance that the Company will be able to generate
sufficient income through operations or that additional financing, if at all
available, can be obtained on terms reasonable to the Company. In the event
the Company is unable to generate sufficient income from operations and/or
obtain additional financing as required, its operations and research and
development efforts will need to be curtailed or discontinued. Such an event
would limit the Company's ability to develop its technology and achieve
regulatory milestones with its corporate partners.

YEAR 2000

VITEX is aware of challenges associated with the inability of certain
computer systems to properly format information after December 31, 1999 (the
"Year 2000 Challenge"). The Company is modifying its computer systems to
address the Year 2000 Challenge and does not expect that the cost of modifying
such systems will be material. The Company believes it will fully remediate
any of its Year 2000 Challenges in advance of the year 2000 and does not
anticipate any material disruption in its operations as the result of any
failure by the Company to fully remediate such challenges. The Company does
not have any information concerning the status of Year 2000 Challenges of its
suppliers and customers.

21
<PAGE>

BUSINESS

OVERVIEW

THE COMPANY

VITEX is a leading developer of a broad portfolio of blood products and
systems using its proprietary viral inactivation technologies. The Company's
technologies are intended to address the risks of viral contamination in blood
products, including plasma, plasma derivatives, red blood cells and platelets.
Viral inactivation processes have the potential to eliminate viruses that are
enveloped by lipid membranes such as HBV, HCV and HIV and non-enveloped
viruses such as hepatitis A virus and parvovirus and other known and unknown
pathogens. The first of the Company's virally inactivated products, VIPLAS/SD,
has been recommended for marketing approval by the Blood Products Advisory
Committee to the FDA. VIPLAS/SD uses the Company's S/D viral inactivation
technology to inactivate enveloped viruses. If approved for marketing by the
FDA, VIPLAS/SD, a transfusion plasma, would be the first virally inactivated
blood component introduced in the United States. The Company's other virally
inactivated blood products under development include: (i) Universal VIPLAS/SD,
a product intended to provide the same benefits as VIPLAS/SD without the need
for matching donor and recipient blood types; (ii) Universal VIPLAS/SD UVC, a
product intended to inactivate enveloped and non-enveloped viruses; (iii)
VIGuard Fibrin Sealant, a wound care product that is currently in Phase III
clinical trials for two indications; (iv) VIGuard Albumin Solder, a wound care
product with superior bonding strength for certain applications as compared to
fibrin sealants; and (v) VIGuard RBCC and PC systems designed to broadly
inactivate viruses and other pathogens in red blood cell and platelet
concentrates. Plasma fractions, which the Company has produced since 1995, are
sold principally to Bayer under a multi-year agreement.

VITEX's predecessor was formed more than 15 years ago by the NYBC, a world
leader in hematology and transfusion medicine. The S/D viral inactivation
process was developed by a scientific team led by the Company's Executive Vice
President and Chief Scientific Officer while they were at the NYBC. The first
plasma derivative product using the patented S/D process was commercialized in
1985, and, since then, the S/D process has been adopted by most plasma
fractionators worldwide. The Company has an exclusive license to use the S/D
process for producing its VIPLAS/SD line of products in North America. A Swiss
blood products manufacturer, which had exclusive rights from the NYBC to the
S/D process for transfusion plasma in Europe, has sold virally inactivated
transfusion plasma since 1991 without a single reported incidence of viral
transmission. In addition to the S/D process, VITEX is developing other
proprietary viral inactivation technologies, including ultraviolet light and
light-activated compounds and quenchers, which are intended to inactivate both
enveloped and non-enveloped viruses while maintaining the viability of blood
components.

VITEX believes that establishing sales, marketing and distribution
collaborations can accelerate the commercialization of the Company's products.
The Company's strategic collaborations include agreements with: (i) Bayer to
supply blood plasma fractions, which Bayer further processes into virally
inactivated plasma derivatives; (ii) the Red Cross to distribute VIPLAS/SD,
intended to be marketed under the brand name PLAS+(R)SD; (iii) U.S. Surgical
to develop and distribute VIGuard Fibrin Sealant; and (iv) Pall to develop and
distribute systems for the viral inactivation of red blood cell and platelet
concentrates.

22
<PAGE>

BACKGROUND

Whole blood contains important therapeutic components, including red blood
cells, platelets and plasma. Each of these components can be transfused
directly into patients. Plasma may also be fractionated into plasma fractions,
which in turn can be purified into protein products, referred to as plasma
derivatives. The worldwide blood products market is characterized by two
distinct segments, the blood components segment and the plasma derivatives
segment, as illustrated by the following diagram:

The following diagram appears on page 23 of the Business Section of the
Prospectus: "Therapeutic Blood Products" appears in a box; a line descends from
the box and branches to two boxes, one containing the caption "Blood
Components" and the other "Plasma Derivatives." A line descends from the box
marked "Blood Components" and branches into three boxes marked "Red Blood
Cells," "Platelets" and "Transfusion Plasma," respectively. A line descends from
the box marked "Plasma Derivatives" and branches into lines to three boxes
marked "Albumin ," "Clotting Factors" and "Immunoglobulins," respectively.

[DIAGRAM APPEARS HERE]

THE BLOOD COMPONENTS SEGMENT

Blood Components. Each of the components of blood serves specific functions.
Red blood cells, which transport oxygen and carbon dioxide throughout the
body, are frequently administered to patients who have anemia, trauma,
surgical bleeding or genetic disorders and account for the majority of
transfusions. Platelets, which initiate blood clotting and facilitate the
repair of damaged blood vessels, are often used to treat cancer patients
following chemotherapy and patients who lose large volumes of blood as a
result of trauma or during surgery. Plasma is the liquid part of the blood
that contains a large number of proteins, several of which have important
therapeutic applications, including blood volume expansion, mediating and
controlling blood clotting and providing immune protection. White blood cells,
an additional component of blood, are comprised of many different types of
cells that form part of the body's immune system and are active in wound
repair. White blood cells are rarely transfused because of the potential for
an adverse immune response by the recipient.

Collection and Processing. The participants in the blood components segment
collect and process whole blood from donors and endeavor to provide adequate
quantities of safe whole blood and blood components in compliance with
emerging FDA regulations. Whole blood is collected from volunteer donors at
either mobile or fixed collection sites. Approximately 35 million whole blood
donations occur in North America, western Europe and Japan annually. In the
United States, approximately 45% of donated blood is collected by the Red
Cross, another 45% is collected by independent community blood centers and the
remaining 10% is collected by hospitals.

23
<PAGE>

Whole blood is usually separated by blood banks into red blood cells,
platelets and plasma to optimize transfusion therapy and to efficiently
allocate the limited available blood supply. These blood components are then
distributed by blood collection centers to hospitals for storage and
subsequent transfusion. Red blood cells and platelets each have a very short
shelf life, of 42 and 5 days, respectively. Plasma can be frozen and stored
for up to one year after being collected in the form of FFP.

Transfusions. The Company projects that approximately 30% to 40% of the
United States population will receive a transfusion at some point during their
lifetime. Transfusions containing one or more blood components are often
required to treat diseases or disorders and to replace blood loss resulting
from trauma or during surgery. In the United States, over 11.3 million units
of red blood cells are transfused annually, while annual platelet and plasma
transfusions account for approximately 8.0 million units and 2.7 million
units, respectively. A "unit" of a blood component is the amount of that
component separated from whole blood drawn from a single donor during a single
donation. The average unit price paid by hospitals for red blood cells,
platelets and plasma is estimated to be approximately $80, $50 and $45,
respectively, and varies depending on geographic and other factors. More than
a single unit can be drawn from a donor by a process called apheresis
(collection). For example, 6-8 units of platelets can be drawn from a single
donor by plateletpheresis. The price paid by hospitals for one
plateletpheresis unit can be as high as $600.

THE PLASMA DERIVATIVES SEGMENT

Plasma Derivatives. Plasma contains a large number of proteins, several of
which are well-characterized and have FDA-approved therapeutic applications.
These proteins are separated and purified into plasma derivatives through a
combination of fractionation procedures and modern chromatographic techniques.
Currently marketed plasma derivatives include: albumin, a volume expander and
the most abundant blood protein, the clotting agents Factor VIII and Factor IX
and immunoglobulins or antibodies. Other plasma derivatives, approved for
marketing or under development, include fibrin sealants, approved for use in
certain non-U.S. countries, and albumin solders, wound care products for
reconnecting and sealing wounds and surgical incisions.

Collection and Processing. Approximately 80% of plasma used for
fractionation in North America is collected from paid donors by
plasmapheresis. After plasma is collected from donors, it is frozen and
shipped to large processing facilities where fractionators purify, virally
inactivate, sterile fill and package protein products. Plasma derivatives are
then sold to hospitals where they are administered to patients. Four plasma
fractionators, Bayer, Centeon L.L.C., Alpha Therapeutics, a subsidiary of the
Japanese Green Cross, and Baxter Corporation, currently account for almost 50%
of the worldwide plasma derivatives market. These plasma fractionators are
currently operating at or near manufacturing capacity. The large capital costs
involved in establishing fractionation capacity and the regulatory approvals
necessary to manufacture and sell fractionated products may tend to restrict
the entry of new participants into the market.

Applications. Plasma derivatives have widespread therapeutic applications.
Albumin is frequently used as a volume expander to treat high volume blood
loss which occurs during surgical procedures. Factor VIII and Factor IX
concentrates are routinely administered to patients with hemophilia.
Immunoglobulins, including formulations for intravenous administration, have
been embraced for the prevention and treatment of viral infections in
immunocompromised patients and in treating certain autoimmune disorders. The
market for plasma derivatives delivered to hospitals in 1994 was approximately
$1.1 billion in the United States and approximately $4.6 billion worldwide.

CHALLENGES FACING THE BLOOD PRODUCTS MARKET

Safety of the Blood Supply. Despite the many benefits that blood products
provide, and recent improvements in testing and processing of blood, concerns
remain over the presence of viruses, bacteria and parasites in donated blood.
Viruses such as HBV, HCV, HIV, cytomegalovirus ("CMV") and human T-cell
lymphotropic virus ("HTLV") can present life-threatening risks. In addition,
bacteria and many other agents can transmit disease during transfusion,
including the bacteria which can cause sepsis or other systemic infections
which can result in serious illness or even death. The parasites that cause
malaria and Chagas' disease may also be transmitted by transfusions.

24
<PAGE>

The risk of transmission of any of these pathogens from an infected donor is
compounded by a number of factors, including: (i) dividing a unit of infected
blood into its components which may expose several patients to the pathogen;
(ii) deriving therapeutic quantities of blood components from typically two to
eight donor units, any one of which may contain pathogens; and (iii)
administering frequent transfusions to certain patient populations, such as
patients with cancer, suppressed immune systems, congenital anemias and kidney
and liver disorders, experience a heightened risk of infection due to multiple
transfusions. The following table illustrates the current risks of exposure to
the major, identified pathogenic viruses in transfused blood.

Risks of Viral Infection from Blood Transfusions

<TABLE>
<CAPTION>
Average Single
Transfusion(1) Multiple Transfusions(2)
Virus (5 donors) (100 donors)
----- --------------- ------------------------
<S> <C> <C>
HBV 1:12,600 1:630
HCV 1:20,600 1:1,030
HIV 1:98,600 1:4,930
HTLV (I&II) 1:128,200 1:6,410
Aggregate Risk 1:6,800 1:340
</TABLE>
- ------------------
(1) Such as patients who have had surgery or trauma.
(2) Such as patients who have cancer, liver disease and sickle cell anemia.

Emerging and unidentified pathogens also present a threat to the blood
supply, illustrated by the recent history of HIV contamination. It is
estimated that HIV was present in the blood supply for at least seven years
before it was identified as the causative agent of AIDS and at least eight
years before a test was commercially available to detect the presence of HIV
antibodies in donated blood. During those years, many transfusion recipients
were infected with HIV, including approximately 70% of patients with severe
hemophilia. Moreover, most tests to detect viruses are antibody tests, which
detect an immune response to the virus, rather than the virus itself. As a
result, these tests fail to detect virus when performed during the
"infectivity window" early in the course of an infection before antibodies
appear in detectable quantities.

In the 1980's, the safety of the blood supply became a fundamental concern
with the identification of HIV contamination. As a result, the FDA began to
regulate blood banks and collection agencies in a more stringent manner and
currently all blood collection institutions in the United States are facing
intense scrutiny from the FDA. Consequently, blood centers and hospital blood
banks are focusing additional resources on improving safety. Despite these
efforts, contamination of the blood supply continues to be a serious medical
challenge.

Product Consistency. Unlike pharmaceutical products, blood components vary
in their consistency, creating uncertainty as to proper dosing. This occurs as
a result of: (i) the variability of component concentrations among donors;
(ii) the impracticality of selecting donors with the optimal blood component
profile; and (iii) the imprecisions in the processes for collecting and
separating red blood cells, platelets and plasma. Large plasma fractionators
achieve high consistency by processing plasma from multiple donors in a single
batch and through processing under controlled conditions. Consistency is
confirmed through extensive testing of processed product.

APPROACHES TO THE SAFETY OF THE BLOOD SUPPLY

There are several approaches to improving blood safety currently available
and under development, including the following:

Screening. The screening of blood and blood components for known pathogens
is universally accepted. However, there are many reasons why screening cannot
ensure a safe blood supply, including the following: (i) failure of tests
during the infectivity window; (ii) limitations of test sensitivity where
tests cannot detect a small quantity of virus or antibody; (iii) limitations
of test specificity where tests fail to detect certain viral variants; (iv)
the presence of new viruses that have not been identified and for which no
test exists; (v) the presence of identified viruses for which no test is
available; and (vi) human error.

25
<PAGE>

Donation Strategies. Autologous donation avoids the risk of receiving
contaminated donor blood, but is impractical for most patients. Apheresis
provides a minimal decrease in viral risk. Quarantining of blood seeks to
address the problems associated with the infectivity window by storing a
donor's blood for three to six months after which time the donor must return
for additional testing. However, quarantining depends on the donor's timely
return for additional testing, cannot be applied to red blood cells or
platelets because of their limited shelf life and is subject to limitations
associated with blood screening.

Blood Substitutes. Several companies are developing synthetic "blood
substitutes." For example, intravascular oxygen carriers may provide safe and
efficient alternatives to donor allogenic blood transfusion used for oxygen
transport during elective surgery and possibly in other medical indications.
However, blood substitutes remain in development and may be less effective in
certain indications than the blood components they are intended to replace,
and may be missing important blood factors, including those utilized for blood
clotting, immune surveillance and wound healing.

Viral Inactivation. Viral inactivation has been used successfully for plasma
derivatives worldwide since the mid-1980's and for the treatment of
transfusion plasma in Europe for several years. Viral inactivation has the
potential to inactivate both known and unknown viruses. Viral inactivation for
cellular blood components, such as red blood cells, is still under
development.

26
<PAGE>

THE VITEX ADVANTAGE

In the mid-1980's, Dr. Bernard Horowitz, the Company's Executive Vice
President and Chief Scientific Officer, led a team of researchers in the
development of the solvent/detergent viral inactivation process (the "S/D
process") that destroys the lipid shell or envelope that protects most human
pathogenic viruses found in the blood supply and inactivates all such viruses.
In 1985, the first plasma derivative product using the patented S/D process
was commercialized. Since then, the S/D process has been adopted by most
plasma fractionators worldwide. In 1991, a Swiss blood products manufacturer,
which had exclusive rights from the NYBC to the S/D process for transfusion
plasma in Europe, commercially introduced virally inactivated transfusion
plasma. Dr. Horowitz and his scientific team are continuing their research at
VITEX into the development of a suite of viral inactivation technologies,
designed to be used separately or in combination, on all blood products
including plasma, plasma derivatives, red blood cells and platelets.

THE VITEX STRATEGY

VITEX's mission is to enable the global availability of safe blood products
through the use of the Company's proprietary viral inactivation systems. The
Company's approach to achieving this mission includes: (i) the development and
commercialization of a portfolio of proprietary products; and (ii) the
application of its technologies to develop viral inactivation processes and
systems. The Company intends to implement this approach through the following
strategies:

Expand Technological Leadership. VITEX believes that its scientific team has
developed the leading portfolio of viral inactivation technologies. The
Company intends to enhance this leadership position through continued
investment in these technologies. The Company believes that its technological
expertise and experience will enable it to develop a broad range of virally
inactivated blood products and viral inactivation systems.

Build a Broad Product Portfolio. VITEX will continue to develop its
diversified portfolio of proprietary products and viral inactivation systems.
The Company believes that this portfolio will address the broad product
requirements of its intended markets and provide the Company with multiple
sources of revenue.

Leverage Existing Manufacturing Capabilities and Regulatory Expertise. VITEX
is an integrated operating company engaged in the fractionation of blood
plasma. The Company will continue to invest in its manufacturing facility to
improve the quality and efficiency of manufacturing processes for its plasma
fractionation business and leverage such manufacturing expertise for virally
inactivated products and systems. The Company's managers are highly
experienced in the licensing and manufacturing of blood products and
pharmaceuticals. The Company believes that its existing manufacturing
capabilities and regulatory expertise should expedite the development of new
virally inactivated products and viral inactivation systems.

Capitalize on Corporate Collaborations. VITEX believes that it can
accelerate the commercialization of its products by establishing sales,
marketing and distribution collaborations, rather than by establishing its own
sales force. The Company has entered into collaborations with Bayer, the Red
Cross, U.S. Surgical and Pall for the sales, marketing and distribution of the
Company's products and systems. As part of these agreements, the Company is
collaborating with U.S. Surgical and Pall for the development of certain of
the Company's products and systems. VITEX may seek to establish additional
collaborations in other areas of strategic focus.

27
<PAGE>

PRODUCTS AND PRODUCT DEVELOPMENT

VITEX has developed and is further developing a comprehensive portfolio of
blood products and systems using its proprietary viral inactivation
technologies. In addition to S/D technology, which inactivates lipid-
enveloped viruses in protein solutions, the Company is developing several
other viral inactivation technologies. These additional technologies include
an irradiation technology that uses short wavelength ultraviolet light ("UVC")
to inactivate both enveloped and non-enveloped viruses in protein solutions,
photodynamic technology that uses light-activated compounds ("LAC") to
inactivate viruses in red blood cell and platelet concentrates, and quencher
("Quencher") technology that utilizes antioxidants to prevent damage to the
therapeutic proteins in blood derivatives and to cells from use of UVC and LAC
technologies. The following table identifies the Company's principal products
and product development programs within its major market segments:

<TABLE>
<CAPTION>
VIRAL
VITEX INACTIVATION THERAPEUTIC DEVELOPMENT
MARKET PRODUCT TECHNOLOGY INDICATION COLLABORATOR STATUS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Plasma Derivatives VITEX Plasma S/D(1) Expanding blood Bayer Commercialization
Fractions volume, treating commenced
infections and November 1995
diseases

- --------------------------------------------------------------------------------------------------------------------

Transfusion Plasma VIPLAS/SD S/D Controlling bleeding Red Cross(2) PLA recommended
for approval by
FDA advisory panel;
approval anticipated
first half 1998
Universal VIPLAS/SD S/D Controlling bleeding, Red Cross(3) Research and
with no need for development;
blood typing IND filing
anticipated
first half 1999
Universal VIPLAS/SD S/D; UVC; Controlling bleeding, Red Cross(3) Research and
UVC Quenchers with no need for development
blood typing

- --------------------------------------------------------------------------------------------------------------------

Wound Care VIGuard S/D; UVC; Tissue sealant, U.S. Surgical Phase III clinical
Fibrin Sealant Quenchers controlling bleeding trials; BLA filing
and wound care anticipated
first half 1999
VIGuard UVC; Quenchers; Adhesive for use Unpartnered Pre-clinical studies
Albumin Solder Pasteurization as suture
replacement

- --------------------------------------------------------------------------------------------------------------------

Red Blood Cell VIGuard RBCC LAC; Quenchers Treatment for anemia Pall Pre-clinical studies
Concentrates/ and genetic disorders
Platelet
Concentrates
VIGuard PC LAC; Quenchers Treatment for Pall Research and
chemotherapy patients development
and patients with
acute bleeding
</TABLE>
(1) S/D technology is used by the Company's customers under non-exclusive
licenses from the NYBC to virally inactivate certain plasma derivatives
manufactured from fractions supplied to them by the Company.
(2) Subject to FDA approval, the Red Cross intends to distribute this product
under the name PLAS+(R)SD.
(3) The Red Cross has a right of first refusal to distribute these products.

28
<PAGE>

PLASMA DERIVATIVES

VITEX Plasma Fractions. VITEX is currently producing and selling commercial
quantities of its VITEX Plasma Fractions, principally to Bayer, one of the
four major providers of plasma derivatives worldwide. Bayer purifies and
virally inactivates certain of these fractions using S/D technology and
packages these plasma fractions as final plasma derivatives products. Because
most blood products processors have been licensed by the NYBC to use S/D
technology in the manufacture of virally inactivated plasma derivatives, the
Company's strategy has been to be a supplier to, rather than a competitor of,
these plasma fractionators. The Company's Processing Agreement with Bayer is
structured as a multi-year, "take-or-pay" supply agreement. See "--Strategic
Collaborations--Bayer Corporation."

Plasma Derivatives Market. The principal products derived from plasma are
albumin, Factor VIII and Factor IX and immunoglobulins. The market for plasma
derivatives was estimated to be approximately $1.1 billion in the United
States and approximately $4.6 billion worldwide in 1994. The Company believes
that worldwide demand for plasma derivatives is increasing at a rate of 10-20%
annually, due primarily to an aging population requiring more medical care,
the discovery of new clinical applications for existing products derived from
plasma, and the development of new products such as fibrin sealants and other
bioadhesives. While the demand for plasma derivatives is increasing, each of
the four major fractionators is currently operating at or near manufacturing
capacity. Because of the substantial capital expenditures and time associated
with the construction, validation and licensing of fractionation facilities,
the Company believes that demand for its fractionation capacity will remain
high for the foreseeable future.

The NYBC commercialized plasma fractions and derivatives from 1970 through
1993. Following its spinoff from the NYBC in 1995, the Company began
processing plasma fractions and has since expanded this business. The NYBC
received an Establishment License from the FDA for a new manufacturing
facility in 1980. The NYBC received product licenses from the FDA for the
manufacture of albumin, Factor VIII and immunoglobulins. All FDA approvals
originally granted to the NYBC were assigned to the Company at the time of its
formation.

TRANSFUSION PLASMA

VIPLAS/SD. VIPLAS/SD is intended to serve as a virally inactivated
substitute for FFP and, if approved by the FDA, would be the first virally
inactivated blood component marketed in the United States. VIPLAS/SD is a
transfusion plasma treated with the S/D viral inactivation process which the
Company believes will eliminate the transmission of HIV, HBV, HCV and all
other enveloped viruses transmitted via plasma transfusions, which present the
most significant viral risks from blood transfusions. Upon being approved for
marketing by the FDA, VIPLAS/SD will be a fully manufactured and quality
controlled product, filled in standardized doses, filter-sterilized to
eliminate all bacteria and parasites, and with a uniform content of
coagulation factors and other plasma proteins. Its labeled uses are expected
to be the same as those for FFP and include the treatment of certain
coagulation factor deficits and thrombotic thrombocytopenic purpura, a disease
characterized in part by a low platelet count. VITEX holds an exclusive
license in North America and a non-exclusive license in the rest of the world
excluding Europe from the NYBC to apply the proprietary S/D process to the
viral inactivation of plasma. In addition, under the agreement with the Red
Cross, the Red Cross will act as the mutually exclusive distributor of
VIPLAS/SD in North America, provided that the Red Cross purchases from the
Company certain stated minimum quantities of VIPLAS/SD. See "--Strategic
Collaborations--American National Red Cross."

Transfusion Plasma Market. FFP is the component of blood used primarily in
the treatment of certain coagulation factor deficits. FFP is a source of all
blood clotting factors except platelets and is used to control bleeding in
patients who require clotting factors, such as patients undergoing surgical
transplant or other extensive medical procedures and patients with chronic
liver disease or certain genetic clotting factor deficiencies. The production
of FFP in 1995 is estimated to have been 2.7 million units in North America,
2.7 million units in western Europe and 5.2 million units in Japan. The
average unit selling price for FFP in North America is currently estimated by
the Company to be $45. The FFP market is currently served by the Red Cross and
by more than 100 independent blood centers in the United States.

29
<PAGE>

Regulatory Status. The clinical trials for VIPLAS/SD consisted of eight
protocols performed in 31 medical centers across the United States. These
trials were designed to show the safety and efficacy of VIPLAS/SD and its
comparability to FFP. In total, 164 patients were treated in these trials,
which consistently demonstrated that coagulation factor recovery was normal
and bleeding ceased where it was pre-existent. Side effects, including
headaches and nausea, were mild and typical of those observed with FFP; on
average, transfusion of S/D-treated plasma resulted in no changes in vital
signs (i.e., blood pressure, pulse rate, respiratory rate, body temperature).
No serious treatment related adverse events were observed. A PLA for VIPLAS/SD
for transfusion was filed with the FDA in 1993 and supplemented in 1994. In
December 1996, VIPLAS/SD was reviewed by the BPAC, which unanimously
recommended to the FDA that VIPLAS/SD be approved for marketing. Concurrently
with seeking marketing approval of VIPLAS/SD, VITEX completed a $15 million
renovation and expansion of its facility to satisfy FDA approval requirements
and to enable the annual production of 2.5 million units of VIPLAS/SD. An ELA
for the facility was filed in two parts in January and June of 1997. Because
both the ELA and PLA approvals are required for marketing, the FDA deferred
final action on the PLA subject to completing its review of the ELA. VITEX
currently anticipates approval of both the ELA and PLA and introduction of
VIPLAS/SD in the first half of 1998. VITEX submitted a registration package to
market VIPLAS/SD based on the same clinical data to the Canadian regulatory
authorities in December 1997.

Universal VIPLAS/SD. Universal VIPLAS/SD is a product under development by
the Company which is intended to replace VIPLAS/SD. In addition to having the
same characteristics and benefits as VIPLAS/SD, Universal VIPLAS/SD would
eliminate the need for matching donor and recipient blood types. Universal
VIPLAS/SD is prepared using patented technology, exclusively licensed from the
NYBC, which binds and removes specific antibody present in donor plasma that
would otherwise cause an immune response in the recipient. VITEX has
established the feasibility of this approach and has initiated pre-clinical
studies. The Company expects to file an IND application for Universal
VIPLAS/SD in the first half of 1999.

Universal VIPLAS/SD UVC. Universal VIPLAS/SD UVC adds a second method of
viral inactivation, UVC treatment, in the presence of the Company's
proprietary Quenchers, to Universal VIPLAS/SD. In addition to inactivating
enveloped viruses, UVC also inactivates known non-enveloped viruses and may
offer added protection against other non-enveloped viruses that might
contaminate the blood supply in the future. Although the presence of
antibodies protects against known non-enveloped viruses, S/D and UVC
technologies used in combination provide a higher margin of blood product
safety than S/D technology alone. Additionally, the Company is evaluating UV
equipment designs with the goal of simultaneously maximizing virus
inactivation, protein recovery and throughput. Universal VIPLAS/SD UVC is at
an early stage of development and, consequently, there can be no assurance
that the Company will be able to successfully develop, secure approval for or
commercialize this product.

WOUND CARE PRODUCTS

VITEX is developing two virally inactivated wound care products for surgical
applications, VIGuard Fibrin Sealant and VIGuard Albumin Solder. While fibrin
sealants--also known as fibrin glues--have generally been available for use
outside of the United States, they have not yet been approved for use in the
United States. The Company's approach to viral inactivation of its VIGuard
Fibrin Sealant is based on the use of its proprietary double viral
inactivation system which utilizes the Company's S/D and UVC technologies.
VIGuard Albumin Solder, derived from pasteurized albumin, is also treated by
the Company's UVC technology.

VIGuard Fibrin Sealant. The Company is developing its VIGuard Fibrin Sealant
for use during surgical procedures to augment or replace sutures or staples
for wound closure. The Company expects that VIGuard Fibrin Sealant will be the
first available doubly virally inactivated fibrin sealant in the United
States. Fibrin sealants are created by combining the two principal clotting
factors found in blood, fibrinogen and thrombin, whose natural function is to
halt bleeding and seal tissues. Fibrin sealants are biodegradable, and their
use does not generally elicit an immune response frequently associated with
non-biological glues.

30
<PAGE>

Fibrin Sealant Market. In Europe and Japan where fibrin sealants are
licensed, these products have been shown to reduce the loss of blood or other
important bodily fluids and to produce less scarring when used as a tissue
adhesive as compared to conventional sutures. The Company estimates that the
market for fibrin sealants in Europe and Japan was $150 million and $200
million, respectively, in 1997. It is estimated that the U.S. market for
fibrin sealants will be in excess of $350 million within five years following
the introduction of fibrin sealants in the U.S.

Regulatory Status. VITEX submitted an IND application and commenced clinical
trials for VIGuard Fibrin Sealant in late 1995. Initial Phase II trials were
designed to evaluate the safety and efficacy of VIGuard Fibrin Sealant in
patients who have undergone modified radical mastectomy or lumpectomy in the
treatment of breast cancer. Eighty patients at five clinical sites
participated in the mastectomy/lumpectomy trial which was completed in late
1996. VITEX, in collaboration with U.S. Surgical, commenced two Phase III
trials at more than 20 sites in late 1997, one of which is a continuation of
the evaluation of VIGuard Fibrin Sealant following breast cancer surgery and
the other evaluates VIGuard Fibrin Sealant's ability to reduce blood loss
following carotid artery surgery. The Company is constructing a manufacturing
area within its facility to permit the production, subject to FDA approval, of
commercial quantities of VIGuard Fibrin Sealant. The Company expects to submit
a PLA for VIGuard Fibrin Sealant in the first half of 1999.

VIGuard Albumin Solder. Albumin solder is a solution of highly concentrated
human albumin formulated to solidify and bond tissue when exposed to laser
light. Prior to soldering, the albumin remains at the site of application
because of its high viscosity; exposure to the laser light causes the albumin
to denature and bond. The Company's VIGuard Albumin Solder is based on FDA
licensed processes for the manufacture of normal serum albumin, which includes
pasteurization. After pasteurization, VIGuard Albumin Solder is treated with
the Company's proprietary UVC technology. A patent covering this unique
formulation has been issued to VITEX and The Childrens Hospital in Boston,
VITEX's research collaborator in this area. The bonding strength of this
product has been shown to be higher than fibrin sealant.

Albumin Solder Market. The principal market opportunities for albumin solder
are in the joining of arteries, veins and similar body tissues (i.e.,
anastomosis) in cardiovascular, vascular and urological surgery. Suturing
these vessels can be extremely time consuming and any method which reduces or
eliminates the need for sutures is likely to be embraced. In addition to
having many of the same advantages described above for fibrin sealants, the
higher bond strength of albumin solder may permit sutureless anastomosis in
open and minimally invasive surgical procedures.

Regulatory Status. Pre-clinical studies of VIGuard Albumin Solder have
demonstrated its potential to reduce operating times while achieving complete,
leak-free closure in anastomosis. In limited pre-clinical studies, surgical
wounds were repaired with VIGuard Albumin Solder twice as quickly as compared
with sutures alone. In hypospadia (i.e., urinary duct) repair, albumin solder
performed better than sutures as measured by a lower incidence of duct leakage
following treatment. In a study of carotid artery anastomosis in dogs, the
burst pressure for repaired arteries was equivalent to that for sutured
arteries initially following surgery and 21 days thereafter.

RED BLOOD CELL CONCENTRATES/PLATELET CONCENTRATES

The Company is developing virally inactivated red blood cell concentrates
("RBCC") and platelet concentrates ("PC") based on the use of LAC that respond
to specific wavelengths of light. These viral inactivation procedures, which
are performed in combination with the Company's Quenchers, are designed to
leave unaffected the structure, function and circulatory persistence of the
treated cells, thus preserving the biological characteristics of these blood
components. These results contrast substantially with published data on blood
substitutes (e.g., hemoglobin solutions and platelet membranes) whose
functional properties do not match those of intact red blood cells and
platelets. The Company has entered into an agreement with Pall regarding the
development and distribution of systems for the viral inactivation of RBCC and
PC. See "--Strategic Collaborations--Pall Corporation."

31
<PAGE>

VIGuard Red Blood Cell Concentrates. The majority of blood products
transfusions involve red blood cells. Red blood cells deliver oxygen to and
remove carbon dioxide from tissues. Red blood cells are used in the care of
patients with trauma, anemia and certain genetic disorders. The current
worldwide market for RBCC is estimated at approximately $3.0 billion. In the
United States alone, homologous RBCC transfusions exceed 11 million units
annually, with an estimated market value of $1.0 billion. The Company's lead
light-activated compound, Pc4, is being compared with other compounds
available to VITEX in both laboratory and pre-clinical studies. Pc4 has been
shown to inactivate HIV and the bovine virus used as a model for HCV, as well
as the parasites that cause Chagas' disease and malaria. In addition, Pc4-
treated red blood cells have exhibited an acceptable recovery and circulatory
survival during pre-clinical studies. VITEX expects to file an IND application
for VIGuard RBCC in the first half of 1999.

VIGuard Platelet Concentrates. Platelets initiate blood clotting and promote
wound healing through the delivery of growth factors to the site of injury.
The current annual market for PC is estimated at $1.4 billion worldwide and
over $500 million in the United States. The Company is synthesizing new
compounds and evaluating these compounds using VITEX's screening tests. For
PC, the Company utilizes a LAC which triggers a unique chemical reaction
which, in turn, maximizes damage to viral nucleic acids. This product is at an
early stage of development, and there can be no assurance that any platelet
viral inactivation system will be commercialized by the Company in the near
future, if at all.

VIRAL INACTIVATION TECHNOLOGY PLATFORM

The Company's products are based on a portfolio of technologies which are
designed to be used either individually or in combination. Members of the
Company's scientific team developed the core VITEX viral inactivation
technologies while working at the NYBC. The NYBC subsequently licensed these
technologies to the Company. In addition, the Company continues to make
substantial investments in research and development to enhance the value of
its technology platform and has filed several patent applications as a result
of these activities. The technologies being developed by the Company are
described below:

The Solvent/Detergent ("S/D") Technology. Most pathogenic viruses found in
blood, including HBV, HCV and HIV, are protected by a lipid shell or envelope.
The Company's scientific team, led by Dr. Bernard Horowitz, the Company's
Executive Vice President and Chief Scientific Officer, developed the S/D
process while at the NYBC. The S/D process involves the addition of a chemical
solvent (a di- or trialkyl phosphate) and a detergent into pools of plasma or
plasma fractions. The solvent dissolves the lipid shell of the virus, after
which the virus can no longer bind to and infect plasma cells. The detergent
serves to enhance the contact between solvent and virus. The process is
completed by removing the S/D reagents, typically by extraction with vegetable
oil and hydrophobic chromatography, and sterile filtering to remove bacteria,
parasites and all undesirable blood leukocytes.

The S/D process was first applied to plasma derivatives in 1985 for use in
patients with hemophilia. This process has become the most widely used method
for the inactivation of lipid enveloped viruses around the world and currently
is used, under license from the NYBC, by more than 50 plasma fractionators.
Since 1985, it is estimated that more than 9 million doses of S/D-treated
Factors VIII and IX, and a total of over 15 million doses of all S/D-treated
products, have been administered without a single reported case of HBV, HCV or
HIV transmission.

Research into the application of the S/D process to transfusion plasma began
in the late 1980's and, in 1991, a Swiss blood products manufacturer which had
exclusive rights from NYBC to the S/D process for transfusion plasma in
Europe, introduced its transfusion plasma product. Since that time, more than
3 million units of S/D-treated plasma have been transfused in Europe without a
single reported case of virus transmission. Moreover, experience in Europe has
demonstrated that plasma for transfusion, when treated with the S/D process,
retains blood protein structure and function with minimal loss of essential
protein components and can be implemented cost-effectively.

32
<PAGE>

Ultraviolet C Light ("UVC") Technology. VITEX's proprietary UVC viral
inactivation process has been shown to inactivate both enveloped and non-
enveloped viruses. Viral inactivation occurs because viral nucleic acids are
modified directly when they absorb ultraviolet light energy. Specificity
results from differential absorption of UVC by nucleic acids and proteins and
the much larger target size presented by nucleic acids. Quenchers added to
plasma or plasma derivatives prior to treatment serve as a source of
antioxident, preventing oxidative damage to therapeutic proteins without
interfering with viral inactivation.

Initial research and development of the UVC technology was conducted by the
Company's scientists at the NYBC and is being continued at VITEX. The research
and development effort includes the development of an irradiator which
controls UVC intensity and provides a fluid path for the plasma or plasma
derivative being treated. The Company is currently conducting Phase III
clinical trials of a product which employs S/D and UVC technologies. The
Company intends to file a PLA for this product in the first half of 1999.

Light-Activated Compound ("LAC") Technology. VITEX is developing LAC
technology for viral inactivation of RBCC and PC. LAC technology is based on
the use of specific wavelengths of light and photosensitizers to initiate a
series of reactions leading to the inactivation of viruses. In addition, LAC
technology has been shown to inactivate parasites and bacteria in pre-clinical
studies.

VITEX researchers have shown that many factors regulate the degree of viral
inactivation and associated cellular damage using LAC technology. These
factors include the selection of the specific photosensitizer, the addition of
specific Quenchers, the selection of light at the appropriate wavelength, the
intensity of the light source and the formulation of the photosensitizer. The
Company has available to it a wide variety of light-activated compounds for
the treatment of RBCC and PC. RBCC are generally able to repair oxidative
damage that typically accompanies the use of LAC. One such class of LACs, the
Company's proprietary phthalocyanines, is particularly suited to the treatment
of RBCC since the wavelengths of light used to activate these photosensitizers
are not absorbed by red blood cells. Phthalocyanines cannot be used for the
treatment of platelets because they cause damage to platelets. Other LACs,
like those in the NG/LAC series the Company is creating, are better suited to
the treatment of platelets. Although at an early stage of development, NG/LAC
are designed to bind strongly to viral nucleic acids, damaging them more
efficiently than other LACs. NG/LAC cannot be used with red blood cells
because red blood cells absorb the light that activates NG/LAC.

Quencher Technology. Treatment with UVC or LAC generates reactive oxygen
species ("ROS") which can damage proteins and cells. VITEX has shown in pre-
clinical studies that inclusion of chemical antioxidants during viral
inactivation quench or react readily with ROS to reduce damage to proteins and
cells without interfering with inactivation of viruses and other pathogens. As
examples, under equally virucidal conditions, with the inclusion of Quenchers,
the yield of biologically active UVC-treated Factor VIII, the in vivo survival
of LAC-treated red cells and the yield of biologically active LAC-treated
platelets each improved 2.5 times. The Company's Quenchers include rutin (a
naturally occurring flavonoid found in many fruits and vegetables), mannitol
(a sugar), cysteine (a naturally occurring amino acid), and vitamin E.

STRATEGIC COLLABORATIONS

VITEX believes that it can efficiently accelerate the commercialization of
its products by collaborating with sales, marketing and distribution partners,
rather than by establishing its own sales force. The Company has entered into
collaborations with Bayer, the Red Cross, U.S. Surgical and Pall, for the
sales, marketing and distribution of the Company's products and systems. As
part of these agreements, the Company is collaborating with U.S. Surgical and
Pall for the development of certain of the Company's products and systems.
VITEX may seek to establish additional collaborations with partners in other
areas of strategic focus. The terms of the Company's strategic collaborations
are described below:

Bayer Corporation. In February 1995, the Company entered into an Agreement
for Custom Processing (the "Processing Agreement") with Bayer, one of the
largest processors of blood plasma, to supply VITEX Plasma Fractions to Bayer.
This Processing Agreement was amended in January 1996 and December 1997 to,

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among other things, extend the term through 2001 and increase the volume of
plasma fractionated under this agreement through 1999. The term of the
agreement is automatically extended for two additional one-year periods unless
Bayer notifies VITEX within certain specified periods that it does not desire
to extend the agreement for either one-year period. Through its initial term
ending in December 2001, the contract provides for revenues to VITEX of
approximately $100 million, subject to the Company meeting certain performance
obligations. Cumulative revenues to VITEX, including the amounts paid during
the initial term, will be approximately $140 million if the arrangement is
extended as permitted by the contract, although there can be no assurance that
any such extension will occur. The Company received $13.9 million in revenues
from Bayer in 1997 under this agreement. Under this agreement, Bayer is
obligated to provide the Company with a specified quantity of plasma annually
during the term of the agreement and the Company is obligated to return plasma
fractions to Bayer within certain specified periods. The agreement is
structured as a take-or-pay arrangement under which Bayer is obligated to pay
VITEX a fixed fee per liter of fractionated plasma whether or not Bayer
fulfills its obligation to supply plasma to the Company. Certain of the plasma
fractions supplied to Bayer are virally inactivated by Bayer using the S/D
technology licensed to Bayer by the NYBC. In the event that VITEX does not
provide fractions as required under the agreement, or upon the occurrence of
other events of default, Bayer has certain rights to take over and operate the
fractionation portion of the Company's production facility. As security for
the performance of the Company's obligations under the Bayer agreement, the
Company granted Bayer a second mortgage on the Company's manufacturing
facility and a security interest in all of the Company's fractionation
machinery and equipment. The Company may terminate the agreement upon written
notice of a material breach of the agreement and failure to cure by Bayer.
Bayer may terminate the agreement in certain circumstances including a
material breach of the agreement and failure to cure by the Company and an
event of default under the Company's credit agreement with its institutional
lender.

American National Red Cross. In December 1997, the Company entered into a
supply, manufacturing and distribution agreement with the Red Cross over a
term of 57 months, for the Red Cross to become the exclusive distributor of
the Company's VIPLAS/SD in North America following receipt by the Company of
marketing approval by the FDA. The Red Cross intends to market VIPLAS/SD under
its proposed brand name, PLAS+(R)SD. The Red Cross is the largest supplier of
transfusion plasma to hospitals in the United States, currently providing
about 45% of the transfusion plasma used annually. Under the agreement, the
Red Cross is required to purchase stated minimum quantities of VIPLAS/SD to
maintain its exclusive rights. Once the Red Cross places its annual purchase
order with VITEX, it is obligated to supply VITEX with a sufficient quantity
of plasma to enable VITEX to fulfill the order. The Red Cross must pay for the
amount of VIPLAS/SD specified in the purchase order even if it is unable to
supply sufficient quantities of plasma. The Red Cross must purchase all of its
virally-inactivated plasma from the Company unless an FDA approved product has
been independently shown to be safer than the VIPLAS/SD. The Company, in turn,
is obligated to offer any excess capacity that it has to produce VIPLAS/SD
above the stated minimum purchase requirements to the Red Cross before selling
VIPLAS/SD to any other party. Under the agreement, the Red Cross is required
to pay to the Company a fixed price per unit of VIPLAS/SD, plus a royalty
equal to a portion of the amount by which the average selling price of the Red
Cross exceeds a stated amount. The Company has granted to the Red Cross a
right of first refusal to acquire exclusive distribution rights to any
subsequent generation of viral inactivation plasma products that are developed
during the term of the agreement. The Company and the Red Cross have each
committed to spend minimum amounts for marketing VIPLAS/SD in 1998 and 1999.
Additionally, a joint marketing committee will coordinate all marketing
activities for VIPLAS/SD. The exclusive distribution agreement between the
Company and the Red Cross provides that the Red Cross will use its best
efforts to ensure availability of the Company's virally inactivated plasma
products to all potential customers, including Red Cross blood centers and
non-Red Cross blood centers. This agreement replaces the previous
collaboration agreement among the Red Cross, the NYBC and the Company. Under
the original agreement, the Red Cross made a $3.0 million non-interest
bearing, unsecured loan to the Company to be used to fund improvements to the
Company's manufacturing facility. Under the original agreement, as amended,
the loan amortizes at the rate of 15% per year following receipt of marketing
approval of VIPLAS/SD with a balloon payment due in year five. Each of the
Company and Red Cross has the right to terminate the agreement upon written
notice in certain circumstances, including a material breach of the agreement
which is not cured by the other party.

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United States Surgical Corporation. In September 1996, the Company and U.S.
Surgical entered into an exclusive worldwide distribution agreement, which was
amended in October 1996, regarding VIGuard Fibrin Sealant for an initial
period of 15 years. Upon entering into the agreement, U.S. Surgical paid a
$3.0 million up front fee to the Company. U.S. Surgical has agreed to fund all
direct clinical and regulatory costs associated with the development and
regulatory approval of VIGuard Fibrin Sealant after the initial Phase II trial
conducted by the Company. In addition, U.S. Surgical has agreed, subject to
termination upon notice, to pay a substantial portion of agreed upon research
and development costs associated with any improvements or, in return for
exclusive rights, enhancements to VIGuard Fibrin Sealant. Pursuant to this
agreement, the Company granted U.S. Surgical the mutually exclusive worldwide
right, until October 2011, to seek, in its own name as permitted by law,
necessary government approvals for and to use, market, distribute and sell
fibrin sealants, and any improvements thereto which improve the storage or
reconstitution time of such products, for use in in vivo human and veterinary
medical applications. This mutually exclusive distribution agreement further
provides U.S. Surgical with a first option to obtain exclusive distribution
rights on any enhanced products developed by the Company as well as certain
other wound care products developed in the future. U.S. Surgical must achieve
certain minimum sales of the products to maintain its exclusive rights under
the agreement. Under the agreement, the Company agrees to supply U.S.
Surgical's forecasted demand for the products and if it is unable to supply an
agreed upon level in excess of such forecasted demand, for a stated period,
U.S. Surgical has an option to make arrangements to have the excess demand for
such products produced by third-party manufacturers. Either the Company or
U.S. Surgical may terminate the agreement upon written notice in certain
circumstances, including a breach of the agreement by the other party which is
not cured. U.S. Surgical may also terminate the agreement for any reason upon
nine months' notice to the Company.

Pall Corporation. In February 1998, the Company and Pall entered into a
series of agreements (the "Pall Agreements") providing for, among other
things, a collaboration on the development and marketing of systems employing
the Company's LAC and Quencher viral inactivation technologies for RBCC and
PC, or red blood cell and platelet concentrates. Pall is a leading
manufacturer and supplier of filtration products, including those relating to
the collection, preservation, processing, manipulation, storage and treatment
of blood and blood components. VITEX will continue to develop its proprietary
LAC and Quencher viral inactivation technologies in collaboration with Pall's
proprietary filtration and processing technologies for pathogen removal in the
treatment of red blood cell and platelet concentrates. Under the Pall
Agreements, Pall receives exclusive worldwide distribution rights to any
system incorporating any VITEX viral inactivation technology for red blood
cells and platelets. The parties have also agreed to share research,
development, clinical and regulatory responsibilities and will equally share
profits and joint expenses from operations after each party is reimbursed for
its cost of goods. Upon execution of the Pall Agreements in February 1998,
Pall acquired 477,042 shares of the Common Stock for $4.0 million or $8.39 per
share. Pursuant to the terms of the Pall Agreements, Pall has agreed to make a
$5.0 million investment contemporaneously with the closing of the public
offering contemplated by this Prospectus. In addition, the Pall Agreements
provide that Pall will purchase up to $17.0 million worth of VITEX Common
Stock in installments tied to the achievement of specified development
milestones in the development of VIGuard RBCC and VIGuard PC. Such equity
investments by Pall will be made at the prevailing market price per share.
Pursuant to the Pall Agreements, certain existing stockholders of the Company
have agreed to vote their shares to elect to the Board of Directors of the
Company a nominee designated by Pall. Certain of the Pall Agreements may be
terminated in certain circumstances including an event of default by either
party which, in the case of VITEX, includes the termination for any reason of
Dr. Bernard Horowitz's employment with the Company.

MANUFACTURING AND SUPPLY

The Company currently produces all of its plasma fractions in its 92,000
square foot facility. The Company intends to produce its VIPLAS/SD, VIGuard
Fibrin Sealant and VIGuard Albumin Solder products in its existing
manufacturing facility, when and if FDA approval for such products is
obtained. Through its collaboration with Pall, the Company will cooperate in
the development of red blood cell and platelet concentrate viral inactivation
systems. In December 1997, the FDA inspected the Company's manufacturing
facility where the Company is

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currently producing VIPLAS/SD for inventory pending receipt of FDA marketing
approval. As a result of that inspection, the FDA issued to the Company a list
of inspectional observations which identified various issues related to the
Company's manufacturing and recordkeeping procedures in connection with the
manufacture of VIPLAS/SD. The Company responded to all of the issues raised by
the FDA in February 1998 and is currently awaiting the FDA's confirmation that
its response to the observations is satisfactory. There can be no assurance
that the FDA will find that the Company's responses are adequate. Renovations
to the Company's facility to accommodate production of VIGuard Fibrin Sealant
have been initiated and are expected to be completed in the first half of
1999.

The Company's manufacturing processes are subject to extensive regulation by
the FDA, including the FDA's current Good Manufacturing Practice ("cGMP")
requirements. Failure to comply with such requirements would materially impair
the Company's ability to maintain commercial-scale production of its plasma
fractions or achieve and maintain commercial-scale production of any future
products. If the Company is unable to achieve full scale production capability
for any product, acceptance by the market of such product would be impaired
and any such impairment in market acceptance would have a material adverse
effect on the Company's business, financial condition and results of
operations.

The Company purchases certain key components for the manufacture of its
products from a limited number of outside suppliers and intends to continue
purchasing components from outside suppliers for its future products. The
Company currently obtains from a single supplier the customized bags for the
packaging of its VIPLAS/SD product. Further, the Company has identified only
one source for a key component of one of its proposed wound care products.
While the Company believes that there are alternative sources of supply for
such components, establishing additional or replacement suppliers for any such
components, if required, may not be accomplished quickly and could involve
significant additional costs. Any failure by the Company to obtain any
components used to manufacture its products from alternative suppliers, if
required, could limit the Company's ability to manufacture its products and
could have a material adverse effect on the Company's business, financial
condition and results of operations. Moreover, the inclusion of components
manufactured by others could require the Company to seek approvals from
government regulatory authorities, which could result in delays in product
delivery. There can be no assurance that the Company would receive any such
regulatory approvals. Any such delay would have a material adverse effect on
the Company's business, financial condition and results of operations.

The Company owns its Melville, New York facility subject to an arrangement
with the Suffolk County (New York) Industrial Development Agency for certain
economic benefits. See note 13 to the Company's Financial Statements. The
Company leases 12,000 square feet of laboratory space from Columbia University
to support its research and development activities.

SALES, MARKETING AND DISTRIBUTION

VITEX believes that it can accelerate the commercialization of its products
by collaborating with sales, marketing and distribution partners, rather than
by establishing its own sales force. The Company has entered into
collaborations with Bayer, Red Cross, U.S. Surgical and Pall, for the sales,
marketing and distribution of the Company's products and systems. As part of
these agreements, the Company is also collaborating with U.S. Surgical and
Pall for the development of certain of the Company's products and systems.
VITEX may seek to establish additional collaborations in other areas of
strategic focus.

In December 1997, the Company contracted with the Red Cross for the Red
Cross to become the exclusive distributor of the Company's VIPLAS/SD in North
America, to be marketed under the brand name PLAS+(R)SD by the Red Cross upon
receipt of FDA marketing approval. The Company and the Red Cross have each
committed to spend certain minimums for marketing VIPLAS/SD in 1998 and 1999.
Additionally, a joint marketing committee will coordinate all marketing
activities for VIPLAS/SD. The Company has entered into a distribution
agreement with U.S. Surgical pursuant to which the Company has granted U.S.
Surgical the exclusive worldwide rights to market and distribute its VIGuard
Fibrin Sealant, subject to U.S. Surgical

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achieving stated minimum sales requirements for such products. Under the terms
of the Pall Agreements, Pall agreed to, among other things, collaborate on the
development and marketing of systems employing the Company's viral
inactivation technologies for RBCC and PC. Under the Pall Agreements, among
other things, Pall receives exclusive worldwide distribution rights to any
systems incorporating any VITEX viral inactivation technology for red blood
cells and platelets.

The Company believes that market acceptance of the Company's products and
systems will depend, in part, on the Company's ability to provide acceptable
evidence of the safety, efficacy and cost-effectiveness of its products and
systems, as well as the ability of blood centers and hospitals to obtain
adequate reimbursement for such products. The Company believes that market
acceptance of its products and systems will also depend upon the extent to
which physicians, patients and health care payors perceive that the benefits
of using the Company's products and systems justify the additional costs and
processing requirements. There can be no assurance that the Company's products
and systems will gain any significant degree of market acceptance among blood
centers, physicians, patients and health care payors, even if clinical trials
demonstrate safety and efficacy and necessary regulatory approvals and health
care reimbursement approvals are obtained. There can be no assurance that the
Company's strategic collaborators will market the Company's products
successfully or that any third-party collaboration will be on terms favorable
to the Company. If a collaborator with the Company does not market a product
successfully, the Company's business would be materially adversely affected.
There can be no assurance that the Company's collaborators will be successful
in gaining market acceptance for any products that the Company may develop and
a failure to do so would result in a material adverse affect on the Company's
business, results of operations and financial condition.

PATENTS, LICENSES AND PROPRIETARY RIGHTS

The Company's success depends in part on its ability to maintain licensed
patent rights, obtain patents, protect trade secrets, operate without
infringing upon the proprietary rights of others and prevent others from
infringing on the proprietary rights of the Company. The Company's policy is
to seek to protect its proprietary position by, among other methods, filing
United States and foreign patent applications related to its proprietary
technology, inventions and improvements that are important to the development
of its business. The Company believes that the protection of its proprietary
technologies may create competitive barriers to entry into the viral
inactivation market. The Company intends to continue to pursue its patent
filing strategy and to vigorously defend its intellectual property position
against infringement.

In connection with its spinoff from the NYBC, the Company became the
licensee of a substantial portfolio of patents and patent applications held by
the NYBC. The Company is a nonexclusive worldwide licensee under 12 issued
United States patents, 26 issued foreign counterpart patents and three pending
foreign counterpart patent applications held by the NYBC for use of the S/D
process in treating plasma derivatives. The Company is a nonexclusive
worldwide licensee under two issued United States patents, five pending United
States patent applications, four issued foreign counterpart patents and 20
pending foreign counterpart patent applications held by the NYBC for use of
UVC technology in treating plasma derivatives. The Company is the exclusive
licensee for the U.S., Canada and Mexico and a non-exclusive licensee outside
of the United States, Canada, Mexico and Europe under 14 issued United States
patents, five pending United States patent applications, 17 issued foreign
counterpart patents and 15 pending foreign counterpart patent applications
held by the NYBC for use of the S/D process and UVC technology in treating
transfusion plasma products. The Company is the exclusive worldwide licensee
under two issued United States patents, five pending United States patent
applications, four issued foreign counterpart patents and 20 pending foreign
counterpart patent applications held by the NYBC for use of UVC technology in
treating fibrin sealant/thrombin products and for the manufacture and use of
fibrin sealant, fibrinogen and thrombin and the nonexclusive worldwide
licensee under 12 issued United States patents, 26 issued foreign counterpart
patents and three pending foreign counterpart patent applications held by the
NYBC for use of the S/D process in treating fibrin sealant/thrombin products.
Finally, the Company is the exclusive worldwide licensee under four issued
United States patents, 11 pending United States patent applications, four
issued foreign counterpart patents and 33 pending foreign counterpart patent
applications held by the NYBC for use of light and certain compounds in
virally inactivating cellular products. The rights referred to above are

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granted to the Company by five license agreements between the Company and the
NYBC. The NYBC has the right to terminate any of these licenses if the Company
breaches the respective license and fails to cure such breach, fails to
produce and market the relevant products within specified time frames or fails
to conform to government regulations in the production of the relevant
products. For exclusive licenses, the NYBC has the right to terminate the
license if certain minimum payments and/or minimum royalties are not paid by
the Company. If any of the licenses between the Company and the NYBC were
terminated it would have an adverse effect upon the Company's business,
results of operations and financial condition. See "Risk Factors--Uncertainty
of Proprietary Technologies and Patents."

In addition to being a licensee to patents and patent applications held by
the NYBC, the Company is developing its own technologies and products and
pursuing patent protection for such technologies and products. The Company has
one pending United States patent application and is the co-owner of one issued
United States patent.

Proprietary rights relating to the Company's planned and potential products
will be protected from unauthorized use by third parties only to the extent
that they are covered by valid and enforceable patents or are effectively
maintained as trade secrets. There can be no assurance that any patents owned
by, or licensed to, the Company will afford protection against competitors or
that any pending patent applications now or hereafter filed by, or licensed,
to the Company will result in patents being issued. In addition, the laws of
certain foreign countries do not protect the Company's intellectual property
rights to the same extent as do the laws of the United States. The patent
positions of biopharmaceutical companies involve complex legal and factual
questions and, therefore, their enforceability cannot be predicted with
certainty. There can be no assurance that any of the Company's owned or
licensed patents or patent applications, if issued, will not be challenged,
invalidated or circumvented, or that the rights granted thereunder will
provide proprietary protection or competitive advantages to the Company
against competitors with similar technology. Furthermore, there can be no
assurance that others will not independently develop similar technologies or
duplicate any technology developed by the Company.

Because patent applications in the United States are maintained in secrecy
until patents issue, and since publication of discoveries in the scientific or
patent literature often lag behind actual discoveries, the Company cannot be
certain that it or its licensors were the first to make the inventions covered
by each of its issued, licensed or pending patent applications or that it or
its licensors were the first to file for protection of inventions set forth in
such patent applications. There can be no assurance that the Company's planned
or potential products will not be covered by third-party patents or other
intellectual property rights, in which case continued development and
marketing of such products would require a license under such patents or other
intellectual property rights. There can be no assurance that such required
licenses will be available to the Company on acceptable terms, if at all. If
the Company does not obtain such licenses, it could encounter delays in
product introductions while it attempts to design around such patents or could
find that the development, manufacture or sale of products requiring such
licenses is foreclosed.

COMPETITION

If the Company receives the necessary approvals to market its products
currently under development, the Company's products will compete with current
approaches to enhance blood safety, as well as with future products under
development by others, including medical technology, biotechnology,
pharmaceutical and hospital supply companies, national and regional blood
centers, governmental organizations and agencies, academic institutions and
other agencies. The industries in which the Company competes are characterized
by rapid and significant technological changes. Accordingly, the Company's
success will depend in part on its

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ability to respond quickly to medical and technological changes through the
development and introduction of new products. Many companies and organizations
that may be competitors or potential competitors of the Company have
substantially greater financial and other resources than the Company and may
have greater experience in pre-clinical studies, clinical trials and other
regulatory approval procedures. In addition, other technologies or products
may be developed that have an entirely different approach or means of
accomplishing the intended purposes of the Company's products, or that might
render the Company's technology and products uncompetitive or obsolete.
Furthermore, there can be no assurance that the Company's competitors will not
obtain patent protection or other intellectual property rights that would
limit the Company's ability to use the Company's technology or commercialize
products that may be developed.

For VITEX Plasma Fractions, which are currently in production, the Company
faces competition from other large plasma fractionators. Additional
competition in the market for plasma derivatives may come from producers of
recombinant blood products. Competition in this area may have a material
adverse effect on the Company's business, financial condition and results of
operations.

Competition with the Company's products under development may come from
alternative approaches to the problem of improving the safety of blood and
blood products and from alternative viral inactivation technologies. The
alternative approaches to achieving safer blood component products include
apheresis blood collection systems, the use of blood substitutes, blood
salvage systems, blood cell stimulants, leukocyte filters and reduction
systems and improved blood testing. All of these approaches are currently
available, and each has gained some degree of market acceptance.

In the area of viral inactivation of blood and blood components, several
companies are developing technologies which are, or in the future may be, the
basis for products that will directly compete with or reduce the market
opportunity for the Company's viral inactivation products which are under
development. In the plasma market, treatment with methylene blue is used
commercially in Europe for pathogen inactivation. Because the Company's S/D
process involves pooling plasma, there may be an increased risk of
transmission of pathogens not inactivated by the process, as compared with
processes, such as treatment with methylene blue, which do not require
pooling. In addition to methylene blue, other viral inactivation methods which
may compete with the Company's S/D, UVC and LACs include patented viral
inactivation compounds, including psoralens, developed by Cerus Corporation.
Additionally, ozone sterinetics technology under development may compete with
the Company's viral inactivation technology. The Company believes that the
primary competitive factors in the market for viral inactivation systems will
include the breadth and effectiveness of viral inactivation processes, ease of
use, the scope and enforceability of patent or other proprietary rights,
product price, product supply and marketing and sales capability. In addition,
the length of time required for products to be developed and to receive
regulatory and, in some cases, reimbursement approval is an important
competitive factor. The Company believes it competes favorably with respect to
these factors, although there can be no assurance that it will be able to
continue to do so. Any failure by the Company to compete effectively with
these alternative products and technologies would have a material adverse
effect on the Company's business, financial condition and results of
operations.

The Company's wound care products will compete with existing wound care
techniques, such as sutures and synthetic glues, which do not carry the risk
of viral contamination. The Company may face competition from many other
companies seeking to develop and market fibrin sealants. The Company believes
several other companies are developing competitive wound care products,
including synthetic glues and other alternatives to sutures. There can be no
assurance that any of these alternative viral inactivation systems or wound
care products will not achieve widespread acceptance. For the Company's
products to gain market acceptance, the Company may need to demonstrate that
its products are superior in performance, safer or more cost-effective than
other existing or future technologies or products.

GOVERNMENT REGULATION

The Company and its products are comprehensively regulated by the FDA and,
in some instances, by state and local governments, and by foreign regulatory
authorities. The FDA regulates drugs, medical devices and

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biologics under the Federal Food, Drug and Cosmetic Act and other laws,
including, in the case of biologics, the Public Health Service Act. These laws
and implementing regulations govern, among other things, the development,
testing, manufacturing, record keeping, storage, labeling, advertising,
promotion and premarket approval of such products.

The PLA for the Company's VITEX Plasma Fractions was approved initially by
the FDA in 1970 and amended from time to time thereafter. The Company believes
that its future VIPLAS/SD and VIGuard Fibrin Sealant, like VITEX Plasma
Fractions, will be regulated by the FDA as biologics. The Company anticipates
that its VIGuard Albumin Solder may be regulated as a medical device. However,
despite the Company's expectations of how a given product will be regulated,
it is possible that the FDA will decide to regulate any one or more of the
Company's products as biologics, as medical devices, as "combination
products," including drugs or biologics and one or more medical devices, or as
drugs or biologics with one or more medical devices requiring separate
approval or clearance. Whether the FDA regulates the Company's products as
biologics or as one or more of the other alternatives, it is likely that the
FDA's Center for Biologics Evaluation and Review will be principally
responsible for regulating the Company's products.

Before a new drug may be marketed in the United States, the FDA must approve
an NDA for the product. Before a biologic may be marketed in the United
States, the FDA must approve either a Biologics License Application ("BLA")
covering both the product and the facility or a PLA for the product and an
Establishment License Application ("ELA") for the facility at which the
product is manufactured. Before a medical device may be marketed in the United
States, the FDA must clear a pre-market notification (a "510(k)") or approve a
pre-market application ("PMA") for the product. Before a combination product
may be marketed in the United States, it must have an approved NDA, BLA (or
PLA/ELA) or PMA, depending on which statutory authority the FDA elects to use.

Despite the multiplicity of statutory and regulatory possibilities, the
steps required before approval are essentially the same whether the product is
ultimately regulated as a drug, a biologic, a medical device, a combination
product or some combination thereof. The steps required before a drug,
biologic or medical device may be approved for marketing in the United States
pursuant to an NDA, BLA (or PLA/ELA) or PMA, respectively, generally include:
(i) pre-clinical studies; (ii) submission to the FDA of an IND, for drugs or
biologics, or an investigational device exemption ("IDE"), for medical
devices, for clinical trials, which must become effective before human
clinical trials may begin; (iii) appropriate tests to show the product's
safety; (iv) adequate and well-controlled human clinical trials to establish
the product's efficacy for its intended indications; (v) submission to the FDA
of an NDA, BLA (or PLA/ELA) or PMA, as appropriate and (vi) FDA review of the
NDA, BLA (or PLA/ELA) or PMA in order to determine, among other things,
whether the product is safe and effective for its intended uses. In addition,
the FDA inspects the facilities at which the product is manufactured and will
not approve the product unless compliance with cGMP requirements is
satisfactory. The steps required before a medical device may be cleared for
marketing in the United States pursuant to a 510(k) are generally the same,
except that instead of conducting tests to demonstrate safety and efficacy,
data, including clinical data if necessary, must be obtained to show that the
product is substantially equivalent to a legally marketed device, and the FDA
must make a determination of substantial equivalence rather than a
determination that the product is safe and effective.

The Company believes that, in deciding whether a viral inactivation system
is safe and effective, the FDA is likely to take into account whether it
adversely affects the therapeutic efficacy of blood components as compared to
the therapeutic efficacy of blood components not treated with the system, and
that the FDA will evaluate the system's safety and other risks against the
benefits of using the system in a blood supply that has become safer in recent
years.

There can be no assurance that the means employed by the Company of
demonstrating safety and efficacy will ultimately be acceptable to the FDA.
Moreover, even if the FDA considers these means of demonstrating safety and
efficacy to be acceptable in principle, there can be no assurance that the FDA
will find the data submitted sufficient to demonstrate safety and efficacy.

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Even if regulatory approval or clearance is granted, it could include
significant limitations on the indicated use for which a product could be
marketed. The testing and approval/clearance process requires substantial
time, effort and financial resources, and is generally lengthy, expensive and
uncertain. The approval process is affected by a number of factors, including
the availability of alternative treatments and the risks and benefits
demonstrated in clinical trials. Additional animal studies or clinical trials
may be requested during the FDA review period and may delay marketing
approval. After FDA approval for the initial indications, further clinical
trials may be necessary to obtain approval for the use of the product for
additional indications. The FDA may also require post-marketing testing to
monitor for adverse effects which can involve significant expense. Later
discovery of previously unknown problems with a product may result in
labelling changes and other restrictions on the product, including withdrawal
of the product from the market. In addition, the policies of the FDA may
change, and additional regulations may be promulgated which could prevent or
delay regulatory approval of the Company's planned products. There can be no
assurance that any approval or clearance will be granted on a timely basis, if
at all. Any failure to obtain or delay in obtaining such approvals or
clearances, and any significant limitation on their indicated uses, could have
a material adverse effect on the Company's business, financial condition and
results of operations.

A drug, biologic or medical device, its manufacturer, and the holder of the
NDA, BLA (or PLA/ELA), PMA or 510(k) for a product are subject to
comprehensive regulatory oversight, both before and after approval or
clearance is obtained. Violations of regulatory requirements at any stage,
including during the preclinical and clinical trial process, during the
approval/clearance process or after the product is approved/cleared for
marketing, could result in various adverse consequences, including the FDA's
requiring that a clinical trial be suspended or halted, the FDA's delay in
approving/clearing or refusing to approve/clear a product, withdrawal of an
approved/cleared product from the market and the imposition of criminal
penalties. For example, the holder of an NDA, BLA (or PLA/ELA), PMA or 510(k)
is required to report certain adverse reactions to the FDA, and must comply
with certain requirements concerning advertising and promotional labeling for
the product. Also, quality control and manufacturing procedures must continue
to conform to cGMP regulations after approval or clearance, and the FDA
periodically inspects manufacturing facilities to assess compliance with cGMP.
Accordingly, manufacturers must continue to expend time, monies and efforts on
regulatory compliance, including cGMP compliance. In addition, new government
requirements may be established that could delay or prevent regulatory
approval or clearance of the Company's products under development or otherwise
alter the applicable law. There can be no assurance that the FDA will
determine that the facilities and manufacturing procedures of the Company or
any other third-party manufacturer of the Company's planned products will
conform to cGMP requirements.

In addition to the regulatory requirements applicable to the Company and its
products, there are also regulatory requirements applicable to the Company's
prospective customers, which are primarily entities that ship blood and blood
products in interstate commerce. Such entities are regulated by the FDA
pursuant to the Food, Drug and Cosmetic Act and the Public Health Service Act
and implementing regulations. Blood centers and others that ship blood and
blood products interstate will likely be required to obtain approved license
supplements from the FDA before shipping products processed with the Company's
viral inactivation systems. This requirement and/or FDA delays in approving
such supplements may deter some blood centers from using the Company's
products, and blood centers that do submit supplements may face disapproval or
delays in approval that could provide further disincentives to use of the
systems. The regulatory impact on potential customers could have a material
adverse effect on the Company's business, financial condition and results of
operations.

The Company is subject to federal, state and local laws, rules, regulations
and policies governing the use, generation, manufacture, storage, air
emission, effluent discharge, handling and disposal of certain materials,
biological specimens and wastes. The Company will be required to obtain a
permit amendment from regulatory authorities to increase the volume of
permitted discharge from the manufacture of VIPLAS/SD. Although the Company
has submitted an application to obtain this permit amendment and is actively
pursuing it, there can be no assurance that such permit amendment will be
obtained in a timely manner, if at all. There can be no

41
<PAGE>

assurance that the Company will not be required to incur significant costs to
comply with environmental and health and safety regulations in the future. The
Company's research and development involves the controlled use of hazardous
materials, including certain hazardous chemicals, viruses and radioactive
materials. Although the Company believes that its safety procedures for
handling and disposing of such materials comply with the standard prescribed
by state and federal regulations, the risk of accidental contamination or
injury from these materials cannot be eliminated. In the event of such an
accident, the Company could be held liable for any damages that result and any
such liability could exceed the resources of the Company.

HEALTH CARE REIMBURSEMENT

The Company's ability to commercialize successfully its products is
dependent in part on the extent to which appropriate levels of reimbursement
for the Company's products and related treatments are obtained from government
authorities, private health insurers and other organizations, such as managed
care organizations ("MCOs"). Third-party payors are increasingly challenging
the pricing of medical products and services. The trend toward managed care
health in the U.S., the growth of MCOs and legislative proposals to reform
health care and government insurance programs could significantly influence
the purchase of medical products and services, resulting in lower prices and
reduced demand for the Company's products. Such cost containment measures and
health care reform could affect the Company's ability to sell its products,
which the Company expects will be priced at a premium to corresponding widely
used blood products that are not virally inactivated and may have a material
adverse effect on the Company. Significant uncertainty exists about the
reimbursement status of newly approved medical products and services. There
can be no assurance that reimbursement in the United States or foreign
countries will be available for any of the Company's products, that any
reimbursement granted will be maintained or that limits on reimbursement
available from third-party payors will not reduce the demand for, or
negatively affect the price of, the Company's products. The unavailability or
inadequacy of third-party reimbursement for the Company's products would have
a material adverse effect on the Company.

EMPLOYEES

The Company has approximately 235 permanent employees, including 5 M.D.s and
20 Ph.D.s. Thirty-nine of the Company's employees are engaged in research and
development and 160 in manufacturing. The Company regularly employs the
services of outside consultants with respect to regulatory, scientific, and
certain administrative and commercial matters. The Company expects to continue
to require the services of such outside consultants. The Company believes that
relations with its employees relations are good. No employee is represented by
a union.

LEGAL PROCEEDINGS

There are no material legal proceedings pending against the Company or its
properties or to which the Company is party.

The Company is aware that in the course of ongoing litigation between the
NYBC and a third party, the third party has asserted claims against the NYBC
based on breach of a contract that was executed in 1988 by those parties and
rights under which were assigned to the Company in 1995. The third party has
claimed that it is entitled to payments from the NYBC based on improvements in
albumin throughput yields attributable to certain filtration technology
licensed to the NYBC by the third party. The Company understands that the NYBC
believes it has meritorious defenses against this third party's claims and, in
any event, as part of the assignment of NYBC's rights under the disputed
contract by the NYBC to the Company, the Company assumed no responsibility for
pre-existing contract liabilities. However, there can be no assurance that the
third party will not assert claims against the Company under that contract
which are similar in nature to the claims being asserted against the NYBC. No
such claims have been asserted to date. The Company believes that it would
have meritorious defenses against any such claims.

42
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table provides information regarding Directors and executive
officers of the Company as of February 26, 1998:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David Tendler........... 60 Chairman of the Board of Directors
John R. Barr............ 41 President, Chief Executive Officer and Director
Bernard Horowitz, 53
Ph.D. ................. Executive Vice President, Chief Scientific Officer and Director
Richard A. Charpie(2)... 45 Director
Jeremy Hayward- 55
Surry(2)............... Director
Irwin Lerner(1)......... 67 Director
Peter D. Parker(1)...... 47 Director
Damion E. Wicker, 37
M.D.(1) ............... Director
Joanne M. Leonard....... 34 Vice President, Chief Financial Officer and Treasurer
</TABLE>
- ------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee

DAVID TENDLER has served as a Director and Chairman of the Company since
December 1994. In 1985, Mr. Tendler founded his own international consulting
firm, Tendler Beretz LLC, and has since remained as President and Chief
Executive Officer. In 1981, he was named Chairman and CEO of Phibro
Corporation, which subsequently acquired Salomon Brothers--at which point Mr.
Tendler became Co-Chairman and CEO of Phibro-Salomon. He joined Philipp
Brothers (the predecessor to Englehard Minerals & Chemicals Corp./Phibro
Corp.) in 1960, managed Far Eastern operations for more than seven years, and
was promoted to President of Phibro in 1975. He remains active in the private
equity and consulting businesses, and in various charitable organizations,
including service as a Director of BioTechnology General Corporation and a
member of the Board of Trustees and the Executive Committee of the NYBC. Mr.
Tendler has a B.B.A. from the City University of New York.

JOHN R. BARR joined the Company as President, Chief Executive Officer and a
Director in November 1997. Previously, Mr. Barr served as President of North
American Operations at Haemonetics Corporation from 1995 to 1997 where he had
responsibility for Haemonetics' blood bank, commercial plasma and blood bank
services businesses. He also managed the global manufacturing and North
American research and development functions and served as a member of the
Board of Directors of Haemonetics. Prior to joining Haemonetics in 1990, he
held various positions at Baxter Healthcare Corporation. Mr. Barr has an
undergraduate degree in Biomedical Engineering from the University of
Pennsylvania and an M.M. from the Kellogg School of Management at Northwestern
University.

BERNARD HOROWITZ, PH.D. joined the Company as Executive Vice President,
Chief Scientific Officer and a Director in February 1995. Prior to joining the
Company, Dr. Horowitz was the NYBC's Vice President for Commercial Development
and a Laboratory Head in the NYBC's Lindsley F. Kimball Research Institute. He
is internationally recognized for his research on blood viral safety and the
preparation and characterization of new therapeutics from blood protein
solutions and he holds several U.S. and non-U.S. patents for these processes.
He has extensive experience from his positions at the NYBC and the Company
with the regulatory process including product license and establishment
license applications and administration. Dr. Horowitz has authored over 60
scientific publications and reviews on a wide range of subjects including:
virus inactivation of blood proteins and blood cells, HBV detection,
hemoglobin as a blood substitute and leukocyte interferon as an antiviral and
anticancer agent. Additionally, he has served as a scientific consultant to
the National Institutes of Health, the Food and Drug Administration, the
National Hemophilia Foundation and the International Association of Biological
Standardization. Dr. Horowitz received his B.S. in Biology from the University
of Chicago and his Ph.D. from Cornell University Medical College.

43
<PAGE>

RICHARD A. CHARPIE has served as a Director of the Company since November
1995. Mr. Charpie served as the Chief Executive Officer of the Company from
August 1997 to November 1997. He was the Vice President of the Company from
November 1997 until January 1998. Mr. Charpie has been the Managing General
Partner of Ampersand Ventures and all of its affiliated partnerships
("Ampersand") since he founded Ampersand in 1988 as a spin-off of the venture
capital group of PaineWebber Incorporated. Currently, Mr. Charpie serves as a
director of AutoCyte, Inc. and of several privately-held companies. Mr.
Charpie holds an M.S. in Physics and a Ph.D. in Applied Economics and Finance,
both from The Massachusetts Institute of Technology.

JEREMY HAYWARD-SURRY has served as a Director of the Company since December
1997. He has been the President of Pall Corporation since July 1994 and a
member of its Board of Directors since April 1993. Mr. Hayward-Surry was also
the Treasurer and Chief Financial Officer of Pall from August 1992 until
December 1997 and Executive Vice President of Pall from 1992 to July 1994. Mr.
Hayward-Surry is a Fellow of the Institute of Chartered Accountants in England
and Wales.

IRWIN LERNER has served as a Director of the Company since September 1996.
He is the former Chairman of the Board of Directors, Chairman of the Executive
Committee, President and Chief Executive Officer of Hoffmann-LaRoche Inc.,
having retired in September 1993 after being an employee of the company for
over 31 years. Mr. Lerner is the Chairman of the Board of Medarex, Inc. and
serves on the boards of Humana Inc., Public Service Enterprise Group, Covance
Inc. and Axys Pharmaceuticals. He has been a member of the Board of Project
Hope and has chaired the New Jersey Governor's Council for a Drug-Free
Workplace. He served for twelve years on the Board of Pharmaceutical
Manufacturers Association (now PhRMA), including chairing the Association's
FDA Issues Committee and the PMA Foundation. Mr. Lerner has served on the
Boards of the National Committee for Quality Health Care, the Partnership for
New Jersey and the Center for Advanced Biotechnology and Medicine of Rutgers
University. He received his B.S. and M.B.A. degrees from Rutgers University,
where he is currently the Distinguished Executive-in-Residence at the Graduate
School of Management.

PETER D. PARKER has served as a Director of the Company since November 1995.
After fourteen years at AMAX, a metals company, Mr. Parker joined Ampersand in
1989 to lead its first specialty materials venture capital partnership,
Ampersand Specialty Materials Ventures Limited Partnership and is a General
Partner of Ampersand. He currently serves as a director of MicroPack
Corporation and Pentose Pharmaceuticals, and as the Chairman of Advanced
Chemistry and Technology, Inc., Novel Experimental Technology, Alexis
Corporation and Nanodyne, Inc. He holds an M.S. in Chemical Metallurgy from
Columbia University.

DAMION E. WICKER, M.D. has served as a Director of the Company since May
1997. Dr. Wicker is a General Partner of Chase Capital Partners. Previously,
Dr. Wicker was President of Adams Scientific since July 1991, and, prior to
that, held positions with MBW Venture Partners and Alexon, Inc. Dr. Wicker was
also a Commonwealth Fund Medical Fellow for the National Institute of Health.
He currently is a Director of Landec Corporation and several privately-held
health care companies. Dr. Wicker received a B.S. with Honors from The
Massachusetts Institute of Technology, an M.D. from Johns Hopkins University
and holds an M.B.A. from The Wharton School of the University of Pennsylvania.

JOANNE M. LEONARD joined the Company as Vice President, Chief Financial
Officer and Treasurer in August 1995. Ms. Leonard is also the Secretary of the
Company. From 1985 until 1992, she was employed by KPMG Peat Marwick LLP, most
recently as a Senior Audit Manager. In 1992, Ms. Leonard joined Immunomedics,
Inc., a public biopharmaceutical company as the Corporate Controller. In 1994,
Ms. Leonard was among the first employees at a biotechnology start-up company,
M6 Pharmaceuticals, Inc., where she served as the Corporate Controller. Ms.
Leonard is a Certified Public Accountant. Ms. Leonard holds a B.S. in
Accounting and Finance from Montclair State University.

44
<PAGE>

SCIENTIFIC ADVISORY BOARD

VITEX's management is also supported from a technical and clinical
perspective by the Company's Scientific Advisory Board ("SAB"). The members of
the Company's SAB are valuable resources in identifying commercially promising
applications on the Company's core viral inactivation technology. The members
of the Company's SAB include:

BARBARA ALVING, M.D. is Professor of Medicine of Hematology and Oncology at
the Washington Hospital Center. She was formerly Chief of Hematology at Walter
Reed Army Medical Center in Washington and served as the Medical Review
Officer at the FDA Office of Blood and Blood Products. Dr. Alving has received
several awards, including a Commendable Service Award from the FDA for her
work on hypotensive agents in albumin products and a Meritorious Service Medal
for achievement as a research investigator and a Member of the WRAIR
Director's Peer Review Steering Committee. She is a member of several
professional societies and has served as a Member of the Hematology Study
Section for the NIH, Member of the Blood Products Advisory Committee of the
FDA and Chairman of the American Heart Association's Council on Thrombosis.
She has authored over 30 articles published in the field of hematology and
fibrin sealant. Dr. Alving received her B.S. from Purdue University, a Ph.D.
from Strasbourg University and an M.D. from Georgetown University School of
Medicine.

MORRIS A. BLAJCHMAN, M.D., F.R.C.P. is Chief of Service in Hematology,
Research Director of the Blood Products Laboratory and Professor in the
Departments of Pathology and Medicine at McMaster University. Additionally, he
serves as Medical Director of the Hamilton Centre of the Canadian Red Cross.
Formerly he was the President of the Canadian Society for Transfusion Medicine
and Founding Editor and Editor-in-Chief of Transfusion Medicine Reviews. He
has published over 200 articles on a wide variety of transfusion-related
topics. Dr. Blajchman received an M.D.C.M. degree from McGill University.

RICHARD A. CLARK, M.D. is Chairman and Professor of Dermatology at the
School of Medicine, State University of New York at Stony Brook. He is
President-Elect of the Wound Healing Society, President of the Dermatology
Section of the New York Academy of Medicine, an Associate Editor of the
Journal of Cell Biochemistry and a member of the Scientific Board of the
Eczema Association. In addition, he is a member of the NIAMS Special Grants
Review Committee. His principal research interests are in granulation tissue
induction in cutaneous wound repair and in the pathobiology of fibrin in
chronic venous ulcers. He has authored over 60 articles published in refereed
journals. Dr. Clark received his B.S. from The Massachusetts Institute of
Technology and an M.D. from the University of Rochester School of Medicine and
Dentistry.

NICHOLAS E. GEACINTOV, PH.D. is Professor of Chemistry at New York
University. Formerly he was the President of the American Society for
Photobiology. Additionally, he is a Fellow of the American Physical Society,
ad hoc reviewer for NIH, DOE, NSF, American Chemical Society, Foreign Member
of the Russian Academy of Sciences and serves on the Editorial Board of
Chemical Research Toxicology. He is a member of numerous professional
societies, including the American Chemical Society, American Society of
Photobiology, Biophysical Society and the American Association for Cancer
Research. His principal research interests include the structure and function
of nucleic acids and the influence of light and reactive compounds on nucleic
acid structure. He has authored over 200 publications. Dr. Geacintov received
his B.S. and M.S. degrees as well a Ph.D. in Physical Chemistry from Syracuse
University.

JAY A. LEVY, M.D. is Professor-in-Residence in the Department of Medicine
and a Research Associate in the Cancer Research Institute at the University of
California School of Medicine at San Francisco. Additionally, he is a Fellow
of the American Association for the Advancement of Science, the Editor of the
journal AIDS and a member of 12 journal editorial boards. He has served on
numerous national committees focused on cancer and AIDS research. His honors
include a Fulbright Award, a Research Cancer Development Award, the Murray
Thelin Award from the National Hemophilia Foundation and the Award of
Distinction from the American Foundation for AIDS Research. His principal
research interest is the biology of the AIDS virus. He has authored over 350
publications. Dr. Levy received a B.A. from Wesleyan University and an M.D.
from Columbia University College of Physicians and Surgeons.

45
<PAGE>

DIX P. POPPAS, M.D. is the Director of the Division of Pediatric Urology and
Reconstructive Surgery and Assistant Professor of Pediatric Urology at New
York Hospital/Cornell University Medical Center. Additionally, he is the
Rodgers Foundation Lecturer in Pediatric Urology. He is a member of numerous
professional societies, including the American Urologic Association, the
Society of Urology and Engineering and the Wound Healing Society, and he is a
regular reviewer for the Journal of Urology and Lasers in Surgery and
Medicine. In addition to his active practice as a urologic surgeon, his
principal research interest is in improvements in wound closure and in wound
healing. He has authored over 35 scientific articles and three patent
applications, of which two have been awarded thus far. He received his B.S.
from Virginia Commonwealth University and his M.D. from Eastern Virginia
Medical School.

CLASSIFICATION OF THE BOARD OF DIRECTORS

The Company's Restated Certificate, to be filed concurrently with the
closing of this offering, provides for a Board of Directors consisting of
three classes, with each class being as nearly equal in number as possible. At
each annual meeting of the Company's stockholders the term of one class
expires and their successors are elected for a term of three years. The
Company has designated three Class I Directors (Messrs. Barr, Charpie and
Lerner), three Class II Directors (Messrs. Hayward-Surry and Parker and Dr.
Wicker) and two Class III Directors (Dr. Horowitz and Mr. Tendler). These
Class I, Class II and Class III Directors will serve until the annual meeting
of stockholders to be held in 1999, 2000 and 2001, respectively, and until
their respective successors are duly elected and qualified, or until their
earlier resignation or removal. The Restated Certificate provides that
Directors may be removed only for cause by a majority of stockholders. See
"Description of Capital Stock--Anti-Takeover Measures." There are no family
relationships among any of the Directors or executive officers.

BOARD COMMITTEES

The Company has standing Audit and Compensation Committees of the Board of
Directors. The Audit Committee consists of Mr. Charpie and Mr. Hayward-Surry.
The primary function of the Audit Committee is to assist the Board of
Directors in the discharge of its duties and responsibilities by providing the
Board with an independent review of the financial health of the Company and of
the reliability of the Company's financial controls and financial reporting
systems. The Audit Committee reviews the general scope of the Company's annual
audit, the fee charged by the Company's independent accountants and other
matters relating to internal control systems.

The Compensation Committee of the Board of Directors determines the
compensation to be paid to all executive officers of the Company, including
the Chief Executive Officer. The Compensation Committee's duties include the
administration of the Company's 1998 Equity Incentive Plan (the "1998 Equity
Plan"). The Compensation Committee is currently composed of Messrs. Lerner and
Parker and Dr. Wicker.

DIRECTOR COMPENSATION

Mr. Tendler receives $40,000 a year for his services as Chairman of the
Company's Board of Directors. Mr. Lerner receives $1,000 for each meeting of
the Board or of any committee of the Board which he attends. All members of
the Company's Board receive reimbursement of expenses associated with their
attendance of meetings of the Board or of any committee thereof of which they
are a member.

In February 1998, the Board of Directors and the stockholders of the Company
adopted the 1998 Director Stock Option Plan (the "1998 Director Plan"). All of
the Directors who are not employees of the Company (the "Eligible Directors")
are currently eligible to participate in the 1998 Director Plan. There are
89,445 shares of Common Stock reserved for issuance under the 1998 Director
Plan. Each Eligible Director will receive an annual option to purchase 1,788
shares of Common Stock (the "Option"). Each Option becomes fully exercisable
on the first anniversary of the date of grant, provided that the optionholder
is still a Director of the Company at the opening of business on such date.
The 1998 Director Plan has a term of ten years. The exercise price for the
Options is equal to the last sale price for the Common Stock on the business
day immediately preceding the date of grant, as reported on the Nasdaq
National Market. The exercise price may be paid in cash or if the option
agreement so provides, in shares of Common Stock, or a combination of both.

46
<PAGE>

ARRANGEMENTS REGARDING THE ELECTION OF DIRECTORS

Certain stockholders of the Company, who will hold in the aggregate
approximately 73% of the outstanding shares of the Company's Common Stock
after this offering, have agreed to vote their shares for the election of a
nominee designated by Pall. Mr. Hayward-Surry is the designee of Pall under
this agreement. This agreement terminates upon the termination of the Joint
Development, Marketing and Distribution Agreement between the Company and Pall
or upon a breach of an agreement by Pall not to acquire, by means of open
market purchases, 20% or more of the shares of Common Stock.

Pursuant to the terms of Dr. Horowitz' employment agreement with the
Company, the Company agrees to use its best efforts to cause Dr. Horowitz to
be a member of the Company's Board of Directors throughout the term of the
agreement.

EXECUTIVE COMPENSATION

The following table summarizes the compensation paid to or earned during the
fiscal year ended December 31, 1997 by all persons who served as the Company's
Chief Executive Officer during any part of such year and by all of the other
executive officers of the Company whose salary and bonus for the fiscal year
ended December 31, 1997 exceeded $100,000 (the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- ------------
SECURITIES
NAME AND 1997 PRINCIPAL UNDERLYING ALL OTHER
POSITION SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)
- ----------------------- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C>
John R. Barr(1)............. 16,154 -- 367,621 6,635(2)
President and Chief
Executive Officer
Richard A. Charpie(3)....... 100,000 -- -- --
Bernard Horowitz, Ph.D...... 182,262 36,960 125,223 --
Executive Vice President
and Chief Scientific
Officer
Joanne M. Leonard........... 144,709 23,186 7,155(4) --
Vice President, Chief
Financial Officer and
Treasurer
Thomas R. Ostermueller(5)... 215,914 59,063 -- 270,688(6)
</TABLE>
- ----------------
(1) Mr. Barr became President and Chief Executive Officer of the Company in
November 1997. His current annual salary is $280,000.
(2) Consists of reimbursement of relocation expenses.
(3) Mr. Charpie served as President and Chief Executive Officer of the Company
from August 1997 to November 1997 and as Vice President of the Company
from November 1997 until January 1998.
(4) Does not include the grant to Ms. Leonard in January 1998 of options to
purchase 21,467 shares of Common Stock.
(5) Mr. Ostermueller served as President and Chief Executive Officer of the
Company from February 1995 to October 1997.
(6) Represents a severance payment made to Mr. Ostermueller of $270,000, and a
premium of $688 paid by the Company for term life insurance.

47
<PAGE>

1997 OPTION GRANTS

The following table contains certain information regarding stock option
grants during the fiscal year ended December 31, 1997 to the Named Executive
Officers. No options were granted to Messrs. Ostermueller or Charpie during
the fiscal year ended December 31, 1997.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
----------------------------------------------------- ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK
SECURITIES TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE OR FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME GRANTED (#)(1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ---- -------------- --------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
John R. Barr............ 367,621 54.2% 8.39 11/24/07 1,943,129 4,904,087
Bernard Horowitz,
Ph.D................... 125,223 18.5% 8.39 12/12/07 661,891 1,670,487
Joanne M. Leonard....... 7,155(3) 1.1% 2.80 1/24/07 12,621 31,854
</TABLE>
- ------------------
(1) Each of the options shown vest in equal annual installments over a four-
year period and have a ten-year term.
(2) Amounts represent hypothetical gains that could be achieved for the
options if they are exercised at the end of the option term. Those gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the option was granted through the
expiration date. Actual gains, if any, on the stock option exercises will
depend on the future performance of the Common Stock, the optionee's
continued employment through the option period, and the date on which the
options are exercised.
(3) Does not include a grant to Ms. Leonard in January 1998 of options to
purchase 21,467 shares of Common Stock.

OPTION EXERCISES AND YEAR-END OPTION VALUES

The following table provides information about the number of shares issued
upon option exercises by the Named Executive Officers during the year ended
December 31, 1997 and the value realized by the Named Executive Officers. The
table also provides information about the number and value of options held by
the Named Executive Officers at December 31, 1997. Mr. Charpie did not hold
any options as of December 31, 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John R. Barr............ - - - 367,621 - 2,062,354
Bernard Horowitz,
Ph.D................... - - 111,806 237,031 1,252,787 1,955,931
Joanne M. Leonard....... - - 13,417 20,573(2) 150,338 230,520
Thomas R. Ostermueller.. 12,523 70,004 127,237 -- 1,425,691 --
</TABLE>
- ------------------
(1) For purposes of determining the values of the options held by Named
Executive Officers, the Company has assumed that Common Stock had a value
of $14.00 per share at December 31, 1997. The option value is based on the
difference between the fair market value of the shares at that date and
the option exercise price per share, multiplied by the number of shares of
Common Stock subject to the option.
(2) Does not include a grant to Ms. Leonard in January 1998 of options to
purchase 21,467 shares of Common Stock.

48
<PAGE>

EMPLOYMENT AGREEMENTS

Mr. Barr is a party to a letter agreement with the Company, dated November
10, 1997, pursuant to which he serves as President and Chief Executive
Officer. Under this agreement, Mr. Barr is entitled to annual base
compensation of $280,000, subject to increase by the Board, and is also
entitled to a performance bonus based upon the achievement of financial and
other performance goals. Mr. Barr is guaranteed a bonus of $45,000 in 1998.
Pursuant to the letter agreement, Mr. Barr was also granted options to
purchase 367,621 shares of the Company's Common Stock at an exercise price of
$8.39 per share.

Dr. Horowitz is a party to an employment agreement with the Company which
was entered into on January 15, 1998. Pursuant to this agreement, the Company
agreed to employ Dr. Horowitz as Executive Vice President and Chief Scientific
Officer for a four-year term commencing February 1, 1995, with automatic one-
year renewals thereafter unless either party terminates the agreement. Under
the terms of this agreement, Dr. Horowitz: (i) is entitled to an annual salary
of $170,000 subject to increase by the Board; (ii) was entitled to a grant of
stock options for 223,613 shares of Common Stock at an exercise price of $2.80
per share vesting in equal annual installments over a four year period
commencing February 1, 1995 (the "1995 Grant"); (iii) was entitled to a grant
of stock options for 125,224 shares of Common Stock at an exercise price of
$8.39 per share vesting in equal annual installments over a four-year period
commencing December 12, 1997 (the "1997 Grant"); and (iv) is entitled to
benefits and bonuses at the discretion of the Board, including an annual bonus
based on the performance of the Company targeted at 25% of Dr. Horowitz'
annual salary. The Company also agrees to use its best efforts to cause Dr.
Horowitz to be a member of its Board of Directors throughout the term of the
agreement. If Dr. Horowitz is terminated by the Company without cause, or if
Dr. Horowitz voluntarily terminates his employment with the Company for good
reason, the agreement provides that Dr. Horowitz will be entitled to receive
his base salary for an additional year following such termination of
employment and any vested benefits, and his stock options from the 1995 Grant
will vest in full and from the 1997 Grant will vest to include the amount of
options that would have vested at the next annual vesting anniversary
following the date of termination of employment.

Ms. Leonard, the Company's Vice President, Chief Financial Officer and
Treasurer, entered into an agreement with the Company effective as of December
23, 1997. The agreement provides that if Ms. Leonard decides to terminate her
employment with the Company prior to or more than 60 days after the closing of
a qualified initial public offering, then Ms. Leonard is entitled, at a
minimum, to her base salary and health benefits for a period of six months
following such termination of employment and accelerated vesting with respect
to the next two tranches of her existing options at the time of termination of
employment. The offering contemplated by this Prospectus is expected to
constitute a qualified initial public offering under this agreement. If Ms.
Leonard decides to terminate her employment with the Company within 60 days
following completion of a qualified initial public offering, then Ms. Leonard
is entitled to the same severance amounts as before and is also eligible to
receive additional stock options and bonuses.

Mr. Ostermueller, the Company's former President and Chief Executive
Officer, entered into an employment agreement with the Company in 1995 which
provided a base salary of $262,500, and provided an automobile allowance and
additional life insurance with $600,000 of coverage. The agreement was
terminated effective October 5, 1997 pursuant to a letter agreement the terms
of which entitled Mr. Ostermueller to receive a one-time termination payment
of $270,000, the accelerated vesting of stock options for 27,951 shares of
Common Stock, outplacement support, and medical and insurance benefits through
October 5, 1998.

STOCK PLANS

1998 Equity Incentive Plan. The Company's 1998 Equity Incentive Plan was
originally adopted in October 1995, and was amended and restated in January
1996 and in January 1998 (as amended and restated, the "1998 Equity Plan").
The 1998 Equity Plan is designed to provide the Company flexibility in
awarding equity incentives by providing for multiple types of incentives that
may be awarded. The purpose of the 1998 Equity Plan is to attract and retain
key personnel of the Company and to enable them to participate in the long-
term growth of the Company. The 1998 Equity Plan provides for the grant of
stock options (incentive and

49
<PAGE>

nonstatutory), stock appreciation rights, performance shares, restricted stock
or stock units for the purchase of an aggregate of 2,146,690 shares of Common
Stock, subject to adjustment for stock-splits and similar capital changes.
Awards under the 1998 Equity Plan can be granted to officers, employees,
directors and other individuals as determined by the committee of the Board of
Directors which administers the 1998 Equity Plan, each of whose members is a
"non-employee director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation
Committee of the Board of Directors administers the 1998 Equity Plan. The
Compensation Committee selects the participants and establishes the terms and
conditions of each option or other equity right granted under the 1998 Equity
Plan, including the exercise price, the number of shares subject to options or
other equity rights and the time at which such options become exercisable. The
exercise price of all "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") granted
under the 1998 Equity Plan must be at least equal to 100% of the fair market
value of the option shares on the date of grant. The term of any incentive
stock option granted under the 1998 Equity Plan may not exceed ten years.

1998 Employee Stock Purchase Plan. In February 1998, the Company adopted the
Company's 1998 Employee Stock Purchase Plan (the "1998 Purchase Plan") under
which employees may purchase shares of Common Stock at a discount from fair
market value. There are 89,445 shares of Common Stock reserved for issuance
under the 1998 Purchase Plan. To date, no shares of Common Stock have been
issued under the 1998 Purchase Plan. The 1998 Purchase Plan is intended to
qualify as an employee stock purchase plan within the meaning of Section 423
of the Code. Rights to purchase Common Stock under the 1998 Purchase Plan are
granted at the discretion of the Compensation Committee, which determines the
frequency and duration of individual offerings under the 1998 Purchase Plan
and the dates when stock may be purchased. Eligible employees participate
voluntarily and may withdraw from any offering at any time before stock is
purchased. Participation terminates automatically upon termination of
employment. The purchase price per share of Common Stock in an offering is 85%
of the lesser of its fair market value at the beginning of the offering period
or on the applicable exercise date and may be paid through payroll deductions,
periodic lump sum payments or a combination of both. The 1998 Purchase Plan
terminates in January 2008.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is composed of Messrs. Lerner and Parker and Dr.
Wicker. Mr. Parker is a General Partner of the Ampersand Funds. Dr. Wicker is
a General Partner of Chase Capital Partners. See "Certain Transactions."

50
<PAGE>

CERTAIN TRANSACTIONS

The Company is a party to several license agreements with the NYBC relating
to blood fractionation and viral inactivation technology which grant various
exclusive and non-exclusive licenses to such technology. The Company and the
NYBC have also entered into an Omnibus Agreement which allocates various
rights and obligations under license agreements that the NYBC has entered into
with third parties relating to blood fractionation and other technology. In
the years ended December 31, 1996 and 1997, the Company made royalty payments
to the NYBC under these licenses of $180,000 and $600,000, respectively. The
Company did not make any royalty payments to the NYBC in the year ended
December 31, 1995. In January 1998, the Company issued 35,778 shares of its
Common stock to the NYBC in satisfaction of $300,000 of royalty obligations
due in August and November 1997 under one of the license agreements.

Concurrently with the execution of a Joint Development, Marketing and
Distribution Agreement between the Company and Pall in February 1998, the
Company and Pall entered into a Stock Purchase Agreement pursuant to which
Pall purchased 477,042 shares of Common Stock for an aggregate purchase price
of $4,000,000. In addition, Pall has agreed to invest $5,000,000 in Common
Stock in a private placement concurrently with the closing of this offering at
a price per share equal to the price for which shares of Common Stock are sold
in this offering, net of underwriting discounts and commissions. Pall is
additionally obligated to invest an aggregate of $17,000,000 in Common Stock
in installments at the then public trading prices of the Common Stock upon the
achievement of various development milestones for the development of VIGuard
RBCC and VIGuard PC. Mr. Hayward-Surry, a member of the Company's Board of
Directors, is President of Pall Corporation. See "Management--Arrangements
Regarding the Election of Directors."

In April 1997, the Company sold 1,797,893 shares of Common Stock at a
purchase price of $8.33 per share to CB Capital Investors, L.P. and issued a
contingent stock purchase warrant to CB Capital Investors, L.P. to purchase 1%
of the fully diluted equity of the Company for every $1,000,000 in subsequent
private equity capital raised, subject to a cap of 5%, for a purchase price of
$0.028 per share. This warrant will terminate upon the closing of this
offering. In December 1997, the Chase Manhattan Bank, an affiliate of CB
Capital Investors, L.P. made a term loan in the principal amount of
$10,750,000 to the Company. The principal of this loan is repayable in 16
consecutive quarterly installments commencing on March 31, 1998. The unpaid
principal on the loan accrues interest, at the Company's option at either
LIBOR plus 2.75% to 1.75% or the base rate of the bank, as defined, plus
margins of up to 0.5%. See note 7 to the Company's Financial Statements. Dr.
Wicker, a member of the Company's Board of Directors, is a General Partner of
Chase Capital Partners, an affiliate of CB Capital Investors, L.P. and the
Chase Manhattan Bank.

Dr. Bernard Horowitz, the Company's Executive Vice President and Chief
Scientific Officer, is one of the inventors named in the patents covering
viral inactivation technologies owned by the NYBC and licensed to the Company.
Under the terms of arrangements with the NYBC, Dr. Horowitz will receive a
percentage of the royalty payments made by the Company to the NYBC based on
sales of the Company's products and systems employing the licensed S/D, UVC or
LAC technologies.

Mr. Richard A. Charpie, a Director of the Company and the Managing General
Partner of the Ampersand Funds, served as Chief Executive Officer of the
Company from August 1997 through November 23, 1997 and as a Vice President of
the Company from November 24, 1997 through January 23, 1998. Ampersand
received aggregate compensation on behalf of Mr. Charpie from the Company in
the amount of $100,000 for Mr. Charpie's services. Ampersand was paid an
additional $35,000 for the services of other Ampersand employees provided to
the Company during the period when Mr. Charpie served as Chief Executive
Officer of the Company.

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<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of February 26, 1998 by: (i) each person
known by the Company to own beneficially five percent or more of the Common
Stock; (ii) each Director of the Company; (iii) each Named Executive Officer;
and (iv) all Directors and executive officers of the Company as a group.
Unless otherwise indicated in the footnotes, each stockholder has sole voting
and investment power with respect to the shares listed in the table.

<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL
SHARES --------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED(1) OFFERING OFFERING(2)
- ---------------- ------------ -------- -----------
<S> <C> <C> <C>
5% STOCKHOLDERS
New York Blood Center, Inc. ............... 3,434,704 40.5% 28.9%
310 East 67th Street
New York, NY 10021-6295
Ampersand Funds(3)......................... 2,630,858 31.0% 22.2%
c/o Ampersand Ventures
55 William Street, Suite 240
Wellesley, MA 02181
CB Capital Investors, L.P. and related
entities(4)............................... 1,801,471 21.2% 15.2%
c/o Chase Capital Partners
380 Madison Avenue, 12th Floor
New York, NY 10017
Pall Corporation........................... 477,042 5.6% 7.3%
2200 Northern Boulevard
East Hills, NY 11548
OTHER DIRECTORS
David Tendler(5)........................... 3,434,704 40.5% 28.9%
Richard A. Charpie(6)...................... 2,630,858 31.0% 22.2%
Jeremy Hayward-Surry(7).................... -- -- --
Irwin Lerner............................... 11,180 * *
Peter D. Parker(8)......................... 2,630,858 31.0% 22.2%
Damion E. Wicker, M.D.(9).................. 1,801,471 21.2% 15.2%
NAMED EXECUTIVE OFFICERS
John R. Barr............................... -- -- --
Thomas R. Ostermueller(10)................. 139,760 * *
Bernard Horowitz, Ph.D.(11)................ 111,806 * *
Joanne M. Leonard(12)...................... 15,205 * *
All directors and executive officers as a
group (9 persons)(13)..................... 8,005,224 93.4% 70.0%
</TABLE>
- ----------------
* Indicates less than 1%
(1) Except as indicated by footnote, the persons named in the table above have
sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them. Share ownership information
includes shares of Common Stock issuable pursuant to outstanding options
that may be exercised within 60 days after February 26, 1998. See
"Management--Stock Plans--1998 Equity Incentive Plan."
(2) The number of shares of Common Stock deemed outstanding after this
offering includes 3,000,000 shares of Common Stock which are being offered
for sale by the Company in this offering and 384,024 shares being sold in
the Pall Private Placement.
(3) Consists of 1,087,281 shares held by Ampersand Specialty Materials and
Chemicals III Limited Partnership, 17,679 shares held by Ampersand
Specialty Materials and Chemicals III Companion Fund L.P., 1,052,343

52
<PAGE>

shares held by Ampersand Specialty Materials and Chemicals II Limited
Partnership, 331,488 shares held by Laboratory Partners I Limited
Partnership and 142,066 shares held by Laboratory Partners Companion Fund
Limited Partnership.
(4) Consists of 1,797,893 shares held by CB Capital Investors, L.P. and 3,578
shares held by Chemical Investments, Inc.
(5) Consists of the shares held by the New York Blood Center, Inc., of which
Mr. Tendler is a member of the Board of Trustees.
(6) Consists solely of shares described in note (3). Mr. Charpie is Managing
General Partner of the Ampersand Funds and thus may be considered the
beneficial owner of the shares described in note (3). Mr. Charpie
disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest therein.
(7) Excludes the shares held by Pall Corporation.
(8) Consists solely of shares described in note (3). Mr. Parker is a General
Partner of the Ampersand Funds and thus may be considered the beneficial
owner of the shares described in note (3). Mr. Parker disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest
therein.
(9) Consists solely of shares held by CB Capital Investors, L.P. Dr. Wicker is
a General Partner of Chase Capital Partners, which is an affiliate of CB
Capital Investors, L.P., and thus may be considered the beneficial owner
of the shares held by CB Capital Investors, L.P. Dr. Wicker disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein.
(10) Includes 50,323 shares that may be acquired within 60 days of February
26, 1998.
(11) Includes 67,084 shares that may be acquired within 60 days of February
26, 1998 upon the exercise of outstanding stock options.
(12) Consists of 15,205 shares that may be acquired within 60 days of February
26, 1998 upon the exercise of outstanding stock options.
(13) Includes 82,288 shares that may be acquired within 60 days of February
26, 1998 upon the exercise of outstanding stock options.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company currently consists of 40,000,000
shares of Common Stock, $0.01 par value per share, and 500 shares of Preferred
Stock, $0.01 par value per share. Upon the closing of this offering, the
authorized capital stock of the Company will consist of 29,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock after giving effect to
the amendment and restatement of the Company's Certificate of Incorporation
(the "Restated Certificate"). Prior to this offering, there were outstanding
an aggregate of 8,490,589 shares of Common Stock. As of the date of this
Prospectus, the Company had 17 stockholders. Upon the closing of this offering
and the Pall Private Placement, the Company will have 11,874,614 shares of
Common Stock outstanding.

The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and
qualified in its entirety by: (i) the provisions of the Company's Restated
Certificate and Amended and Restated By-laws (the "By-laws") (each as filed
and effective, respectively, on or before the closing of this offering and
included as exhibits to the Registration Statement); and (ii) the provisions
of applicable law.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on matters to be
voted upon by the stockholders. There are no cumulative voting rights. Holders
of Common Stock are entitled to receive dividends if, as and when declared by
the Board of Directors out of funds legally available therefor. See "Dividend
Policy." Upon the liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in the assets of the
Company available for distribution to its stockholders, subject to the
preferential rights of any then outstanding shares of Preferred Stock. No
shares of Preferred Stock will be outstanding immediately following the
closing of this offering. The Common Stock outstanding upon the effective date
of the Registration Statement, and the shares offered by the Company hereby,
upon issuance and sale, will be fully paid and nonassessable.

PREFERRED STOCK

The Company is currently authorized to issue 500 shares of Preferred Stock.
Upon consummation of the offering, the Company's Board of Directors will have
the authority to issue up to 1,000,000 shares of Preferred Stock in one or
more series and to fix the relative rights, preferences, privileges,
qualifications, limitations and restrictions thereof, including dividend
rights, dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences, sinking fund terms and the number
of shares constituting any series or the designation of such series, without
further vote or action by the stockholders. The Company believes that the
power to issue Preferred Stock will provide flexibility in connection with
possible corporate transactions. The issuance of Preferred Stock could
adversely affect the voting power of the holders of Common Stock and restrict
their rights to receive payment upon liquidation and could have the effect of
delaying, deferring or preventing a change of control of the Company. See
"Description of Capital Stock--Anti-Takeover Measures." The Company has no
present plans to issue any shares of Preferred Stock.

STOCK PURCHASE WARRANTS

In connection with the sale of Common Stock to CB Capital Investors, L.P. in
a private placement on April 29, 1997, the Company issued a warrant to
purchase shares of Common Stock constituting 1% of the Company's fully diluted
equity for every $1,000,000 in subsequent private equity capital raised,
subject to a cap of 5% to CB Capital Investors, L.P. at an exercise price of
$0.028 per share. No such equity capital has been raised prior to this
offering, and this warrant expires upon the consummation of this offering.

54
<PAGE>

In connection with the sale of Common Stock to CB Capital Investors, L.P. on
April 29, 1997, the Company issued a warrant to purchase 32,361 shares of
Common Stock to Bear, Stearns & Co. Inc., the placement agent. This warrant
has an exercise price of $0.028 per share, is exercisable on or after April
29, 1998, will expire after April 29, 2002, and will be automatically
exercised upon the consummation of this offering. The warrant also grants the
holder registration rights with respect to the shares of Common Stock issued
upon the exercise of the warrant.

In connection with the execution of a lease with The Trustees of Columbia
University in the City of New York ("TCU") on June 21, 1996, the Company
issued warrants to purchase 3,577 shares of Common Stock to TCU as additional
consideration under the lease. This warrant has an exercise price of $2.80 per
share, and is exercisable at any time during the term of the lease, including
renewal periods (June 21, 1996 to October 31, 2001 or to October 31, 2006 if
the longest possible renewal period under the lease is exercised). The warrant
also grants the holder registration rights with respect to the shares of
Common Stock issued upon the exercise of the warrant.

ANTI-TAKEOVER MEASURES

In addition to the Board of Directors' ability to issue shares of Preferred
Stock, the Restated Certificate and the By-laws contain several other
provisions that are commonly considered to discourage unsolicited takeover
bids. The Restated Certificate includes a provision classifying the Board of
Directors into three classes with staggered three-year terms and a provision
prohibiting stockholder action by written consent except as otherwise provided
by law. Under the Restated Certificate and By-laws, the Board of Directors may
enlarge the size of the Board and fill any vacancies on the Board. The
Restated Certificate requires the approval of the holders of at least 66 2/3%
of the outstanding capital stock of the Company prior to the Company entering
into certain transactions with entities that own 5% or more of the Company's
Common Stock, such as: (i) the merger of the Company with or into such entity;
(ii) the sale or disposition of all or substantially all of the Company's
assets to such entity; (iii) the issuance or transfer by the Company of its
securities having a market value in excess of $500,000 to such entity; and
(iv) engaging in any other business combination transaction with such entity.
The prohibitions described in the preceding sentence do not apply to
transactions approved by a majority of the Board of Directors provided the
Directors voting in favor of such resolution include a majority of the persons
who were Directors prior to the time such entity became a 5% stockholder of
the Company. Further, provisions of the By-laws and the Restated Certificate
provide that the stockholders may amend the By-laws or certain provisions of
the Restated Certificate only with the affirmative vote of 66 2/3% of the
Company's capital stock. The By-laws provide that nominations for Directors
may not be made by stockholders at any annual or special meeting unless the
stockholder intending to make a nomination notifies the Company of its
intention a specified period in advance and furnishes certain information. The
By-laws also provide that special meetings of the Company's stockholders may
be called only by the President or the Board of Directors and require advance
notice of business to be brought by a stockholder before the annual meeting.

Upon the consummation of this offering, the Company will be subject to the
provisions of Section 203 of the Delaware General Corporation Law, a law
regulating corporate takeovers (the "Anti-Takeover Law"). In certain
circumstances, the Anti-Takeover Law prevents certain Delaware corporations,
including those whose securities are listed on the Nasdaq National Market,
from engaging in a "business combination" (which includes a merger or sale of
more than ten percent of the corporation's assets) with an "interested
stockholder" (a stockholder who owns 15% or more of the corporation's
outstanding voting stock) for three years following the date on which such
stockholder became an "interested stockholder" subject to certain exceptions,
unless the transaction is approved by the board of directors and the holders
of at least 66 2/3% of the outstanding voting stock of the corporation
(excluding shares held by the interested stockholder). The statutory ban does
not apply if, upon consummation of the transaction in which any person becomes
an interested stockholder, the interested stockholder owns at least 85% of the
outstanding voting stock of the corporation (excluding shares held by persons
who are both Directors and officers or by certain employee stock plans). A
Delaware corporation subject to the Anti-Takeover Law may "opt out" of the
Anti-Takeover Law with an express provision either in its certificate of
incorporation or by-laws resulting from a stockholders' amendment approved by
at least a majority

55
<PAGE>

of the outstanding voting shares; such an amendment is effective following
expiration of twelve months from adoption. The Company has not "opted out" of
the Anti-Takeover Law.

The foregoing provisions of the Restated Certificate and By-laws and
Delaware law could have the effect of discouraging others from attempting
hostile takeovers of the Company and, as a consequence, they may also inhibit
temporary fluctuations in the market price of the Common Stock that might
result from actual or rumored hostile takeover attempts. Such provisions may
also have the effect of preventing changes in the management of the Company.
It is possible that such provisions could make it more difficult to accomplish
transactions which stockholders may otherwise deem to be in their best
interests.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is The American Stock
Transfer and Trust Company. Its telephone number is (212) 936-5100.

56
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering and the Pall Private Placement, the Company
will have 11,874,614 shares of Common Stock outstanding, assuming no exercise
of any of the outstanding options and warrants to purchase Common Stock. Of
these shares, the 3,000,000 shares sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
except for shares purchased by "affiliates" of the Company as that term is
defined in Rule 144 under the Securities Act.

The remaining 8,490,590 outstanding shares of Common Stock and the shares
sold in the Pall Private Placement are deemed "Restricted Shares" under Rule
144 and may not be resold except pursuant to an effective registration
statement or an applicable exemption from registration, including Rule 144.
None of these Restricted Shares will be eligible for sale in the public market
immediately after this offering pursuant to Rule 144(k). Approximately 90,607
Restricted Shares and 276,833 additional shares issuable upon the exercise of
options will be eligible for sale in the public market pursuant to Rule 144 or
Rule 701 under the Securities Act beginning 90 days after the effective date
of this offering. Beginning 180 days after the effective date of this
offering, an additional 7,887,159 Restricted Shares and 144,901 additional
shares issuable upon the exercise of options will be eligible for sale
pursuant to Rule 144 or Rule 701 when the agreements between such holders and
the Underwriters not to sell such Restricted Shares expire. See
"Underwriting." The remaining Restricted Shares will become eligible from time
to time thereafter upon the expiration of the minimum one-year holding period
under Rule 144 from the date such Restricted Shares were acquired.

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially
owned Restricted Shares for at least one year from the later of the date such
Restricted Shares were acquired from the Company and (if applicable) the date
they were acquired from an affiliate, is entitled to sell within any three-
month period a number of shares that does not exceed the greater of 1% of the
then outstanding shares of the Common Stock (118,734 shares based on the
number of shares to be outstanding after this offering) or the average weekly
trading volume in the public market during the four calendar weeks preceding
such sale. Sales under Rule 144 are also subject to certain requirements as to
the manner and notice of sale and the availability of public information
concerning the Company. Affiliates may sell shares not constituting Restricted
Shares in accordance with the foregoing volume limitations and other
restrictions, but without regard to the one-year holding period. Restricted
Shares held by affiliates of the Company eligible for sale in the public
market under Rule 144 are subject to the foregoing volume limitations and
other restrictions.

Further, under Rule 144(k), if a period of at least two years has elapsed
between the later of the date Restricted Shares were acquired from the Company
or an affiliate of the Company, a holder of such Restricted Shares who is not
an affiliate of the Company at the time of the sale and has not been an
affiliate of the Company for at least three months prior to the sale would be
entitled to sell the shares immediately without regard to the volume
limitations and other conditions described above.

The Company intends to file registration statements under the Securities Act
to register 2,000,178 shares of Common Stock issuable under the 1998 Equity
Plan, 89,445 shares issuable under the 1998 Purchase Plan and 89,445 shares
issuable under the 1998 Director Plan. See "Management--Stock Plans --1998
Equity Incentive Plan." These registration statements are expected to be filed
as soon as practicable after the date of this Prospectus and are expected to
become effective immediately upon filing. Shares covered by the registration
statements will be eligible for sale in the public market after the effective
dates of such registration statements.

Rule 701 under the Securities Act provides an exemption from the
registration requirements of the Act for offers and sales of securities issued
pursuant to certain compensatory benefit plans or written contracts of a
company not subject to the reporting requirements of Sections 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any
employee, officer or director of or consultant to the Company who acquired
shares of Common Stock pursuant to the Equity Plan or any other written
compensatory plan or contract is entitled to rely on the resale provisions of
Rule 701, which permit non-affiliates to sell such shares

57
<PAGE>

without having to comply with the public information, holding period, volume
limitation, or notice requirements of Rule 144 and permit affiliates to sell
their Rule 701 shares without having to comply with the holding period
requirements of Rule 144 commencing, in each case, 90 days after the date of
this Prospectus.

Rule 144A permits unlimited resales of Restricted Shares under certain
circumstances to Qualified Institutional Buyers, which are generally defined
as institutions with over $100 million invested in securities. Rule 144A
allows holders of Restricted Shares to sell their shares to such institutional
buyers without regard to any volume or other restrictions.

Prior to this offering, there has been no market for the Common Stock and no
prediction can be made as to the effect, if any, that market sales of the
Restricted Shares or the availability of such Restricted Shares for sale will
have on the market price of the Common Stock. Nevertheless, sales of
substantial amounts of Common Stock in the public market may have an adverse
impact on such market price.

REGISTRATION RIGHTS

The holders of an aggregate of: (i) 8,380,013 shares of Common Stock which
are outstanding or which are issuable upon exercise of certain outstanding
warrants; and (ii) the shares which may hereafter be sold to Pall under the
Pall Agreements (together the "Registrable Shares") are entitled to certain
rights with respect to registration of the resales of Registrable Shares under
the Securities Act beginning at the end of the lock-up period. If the Company
proposes to register any of its securities under the Securities Act, either
for its own account or for the account of other security holders, the holders
of 8,344,075 of the Registrable Shares are entitled to notice of such
registration and are entitled to have the Company use its commercially
reasonable efforts to include such Registrable Shares in the registration. The
rights are subject to certain conditions and limitations, among them, the
right of the underwriters of a registered offering to limit the number of
shares included in such registration. The holders of these rights may also
require the Company to file at its expense registration statements under the
Securities Act with respect to their Registrable Shares and, subject to
certain conditions and limitations, the Company is required to use its
commercially reasonable efforts to effect such registrations. Furthermore,
such holders may, subject to certain conditions and limitations, require the
Company to file additional registration statements on Form S-3 with respect to
such Registrable Shares at times when the Company is eligible to use such Form
(at least one year from the date of this Prospectus). The holders of 32,361 of
the Registrable Shares are entitled to notice of a registration and are
entitled to have the Company use its commercially reasonable efforts to
include such Registrable Shares in the registration in the event that the
Company proposes to register its securities for its own account or for the
account of securityholders who are exercising registration rights granted to
them by the Company after April 29, 1997. These rights are subject to certain
conditions and limitations, among them, the right of the underwriters of a
registered offering to limit the number of shares included in such
registration. These holders do not have any demand registration rights. The
holders of 3,577 of the Registrable Shares are entitled to notice of a
registration and are entitled to have the Company include such Registrable
Shares in the registration in the event that the Company proposes to register
any of its securities, either for its own account or for the account of other
security holders. These rights are subject to certain conditions and
limitations, including the right of underwriters of a registered offering to
limit the number of shares included in such registration. These holders do not
have any demand registration rights.

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<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement,
the Underwriters named below (the "Underwriters"), through their
representatives, Cowen & Company and SBC Warburg Dillon Read Inc. (the
"Representatives"), have severally agreed to purchase from the Company, the
following respective number of shares of Common Stock set forth opposite the
name of such Underwriter below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
----------- ----------------
<S> <C>
Cowen & Company.............................................
SBC Warburg Dillon Read Inc. ...............................
---------
Total..................................................... 3,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, including the absence of any
material adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company and its counsel and
independent auditors, and that the Underwriters are committed to purchase all
shares of Common Stock offered hereby (other than those covered by the over-
allotment option described below) if any such shares are purchased.

The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may re-
allow, a concession not in excess of $ per share to certain other brokers and
dealers. After the shares of Common Stock are released for sale to the public,
the offering price and other selling terms may from time to time be varied by
the Representatives.

The Company has granted to the Underwriters an option, exercisable for up to
30 days after the date of this Prospectus, to purchase up to an aggregate of
450,000 additional shares of Common Stock to cover over-allotments, if any. If
the Underwriters exercise the over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by each of them as shown in the foregoing table bears to the total
number of shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
shares of Common Stock offered hereby.

At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to 100,000 shares of Common Stock to be
offered and sold hereby by the Company to certain directors, employees,
consultants, business associates and related persons of the Company. The
number of shares of Common Stock available for sale to the general public will
be reduced to the extent such persons purchase such reserved shares. Any
reserved shares which are not so purchased will be offered by the Underwriters
to the general public on the same terms as the other shares of Common Stock
offered hereby. Certain individuals purchasing reserved shares may be required
to agree not to sell, offer or otherwise dispose of any shares of Common Stock
for a period of three months after the date of this Prospectus.

59
<PAGE>

The Company, the Company's officers and directors and certain other
stockholders and optionholders of the Company have agreed that for a period of
180 days following the date of this Prospectus, without the prior consent of
Cowen & Company, they will not, directly or indirectly, offer, sell, assign,
transfer, encumber, pledge, contract to sell, grant an option to purchase or
otherwise dispose of, other than by operation of law, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
shares of Common Stock, including without limitation, options, warrants and
the like which are owned either of record or beneficially or which are
acquired on or prior to the date of this Prospectus or which are received upon
the exercise of options and warrants. Cowen & Company has advised the Company
that it has no present intention of releasing any of the Company's
stockholders or optionholders from such lock-up agreements until the
expiration of the 180-day period.

The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, and to contribute to payments the Underwriters may be required to
make in respect thereof.

The Representatives have advised the Company that the Underwriters do not
intend to confirm sales in excess of 5% of the shares of Common Stock offered
hereby to any account over which they exercise discretionary authority.

Until the distribution of Common Stock is completed, rules of the Securities
and Exchange Commission may limit the ability of the Underwriters and certain
selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the Representatives are permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with this offering, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Representatives
may reduce that short position by purchasing Common Stock in the open market.
The Representatives may also elect to reduce any short position by exercising
all or part of the over-allotment option described above.

The Representatives may impose a penalty bid on certain Underwriters and
selling group members. This means that if the Representatives purchase Common
Stock in the open market to reduce the Underwriters' short position or to
stabilize the price of the Common Stock, they may reclaim the amount of the
selling concession from the Underwriters and selling group members who sold
those shares of Common Stock as part of this offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of a security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the Representatives will engage in such transactions or
that such transactions, once commenced, will not be discontinued without
notice.

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price was determined by
negotiations between the Company and the Representatives. Among the factors
considered in such negotiations were prevailing market conditions, the results
of operations of the Company in recent periods, the market capitalizations and
stages of development of other companies that the Company and the
Representatives believe to be comparable to the Company, estimates of the
business potential of the Company, the present state of the Company's
development and other factors deemed relevant.

60
<PAGE>

LEGAL MATTERS

The validity of the shares of Common Stock sold in this offering is being
passed upon for the Company by Palmer & Dodge LLP, Boston, Massachusetts.
Certain legal matters in connection with this offering will be passed upon for
the Underwriters by Brown & Wood llp, New York, New York.

EXPERTS

The financial statements of the Company as of December 31, 1997 and 1996 and
for each of the years in the three-year period ended December 31, 1997,
included herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.

The statements in the Prospectus under the captions "Risk Factors--
Uncertainty of Proprietary Technologies and Patents" and "Business--Patents,
Licenses and Proprietary Rights" have been reviewed and approved by Amster,
Rothstein & Ebenstein, New York, New York, as experts on such matters, and are
included in this Prospectus in reliance on that review and approval.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-1 (together with all amendments and
exhibits, the "Registration Statement") under the Securities Act. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules to the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information with respect to the Company
and the Common Stock offered hereby, reference is made to the Registration
Statement and to its exhibits and schedules. Statements in this Prospectus as
to the contents of any contract or other document are not necessarily
complete; and reference is made in each instance to the copy of the contract
or other document filed as an exhibit to the Registration Statement. Each
statement is qualified in all respects by this reference to the exhibit. The
Registration Statement, including exhibits, may be inspected and copied
without charge at the SEC's principal office located at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of
the SEC located at Seven World Trade Center, Suite 1300, New York, New York
10048 and the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, upon the payment of prescribed fees.
The Commission also maintains a web site at http://www.sec.gov that contains
reports, proxy and information statements, as well as other information
regarding registrants that file electronically with the SEC.

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and quarterly reports for the first
three quarters of each fiscal year containing interim unaudited financial
information.

61
<PAGE>

V.I. TECHNOLOGIES, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors........................................... F-2
Balance Sheets as of December 31, 1996 and 1997.......................... F-3
Statements of Operations for the years ended December 31, 1995, 1996 and
1997.................................................................... F-4
Statements of Cash Flows for the years ended December 31, 1995, 1996 and
1997.................................................................... F-5
Statements of Stockholders' Equity for the years ended December 31, 1995,
1996 and 1997........................................................... F-6
Notes to Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders V.I. Technologies, Inc.:

We have audited the accompanying balance sheets of V.I. Technologies, Inc.
as of December 31, 1996 and 1997, and the related statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of V.I. Technologies, Inc. as
of December 31, 1996 and 1997, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1997,
in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Jericho, New York
February 2, 1998, except as
to Notes 8 and 17, which are as of
February 24, 1998

F-2
<PAGE>

V.I. TECHNOLOGIES, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 4,752,363 $ 5,250,019
Trade receivables................................. 1,249,127 1,355,573
Other receivables................................. 1,967,713 894,947
Inventory......................................... 441,487 574,957
Prepaid expenses and other current assets......... 468,670 320,815
------------ ------------
Total current assets............................ 8,879,360 8,396,311
Property, plant and equipment, net................. 27,891,918 29,049,897
Other assets, net.................................. 854,872 720,593
------------ ------------
$ 37,626,150 $ 38,166,801
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................. $ 3,500,000 $ 2,687,500
Current portion of capital lease obligations...... 183,406 964,055
Current portion of advances from customer......... -- 337,500
Accounts payable and accrued expenses............. 9,509,713 7,181,779
------------ ------------
Total current liabilities....................... 13,193,119 11,170,834
------------ ------------
Notes payable...................................... 2,847,167 --
Long-term debt, less current portion............... 9,000,000 8,062,500
Capital lease obligations, less current portion.... 1,680,504 4,592,588
Advances from customer, less current portion....... 2,000,000 2,662,500
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share;
authorized
500 shares; no shares issued and outstanding..... -- --
Common stock, par value $.01 per share; authorized
30,000,000 shares; issued and outstanding
6,042,307
in 1996 and 7,852,723 in 1997.................... 60,423 78,527
Additional paid-in-capital........................ 23,808,827 38,298,387
Note receivable from stockholder.................. -- (35,000)
Accumulated deficit............................... (14,963,890) (26,663,535)
------------ ------------
Total stockholders' equity...................... 8,905,360 11,678,379
------------ ------------
$ 37,626,150 $ 38,166,801
============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-3
<PAGE>

V.I. TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Processing and products............. $ 437,664 $14,898,914 $15,843,046
Licensing fee....................... -- 3,000,000 --
Research and development funding.... -- 954,050 1,223,736
------------ ------------ ------------
Total revenues.................... 437,664 18,852,964 17,066,782
------------ ------------ ------------
COSTS AND EXPENSES:
Costs related to processing and
products........................... 284,482 8,139,030 10,345,515
Facility costs...................... 6,740,201 1,449,242 5,980,295
Research and development............ 2,776,531 5,321,039 7,135,969
Marketing and sales................. -- -- 1,074,466
General and administrative.......... 1,329,796 2,477,405 3,278,265
Non-recurring charge................ -- 5,100,000 --
------------ ------------ ------------
Total operating costs and
expenses......................... 11,131,010 22,486,716 27,814,510
------------ ------------ ------------
Loss from operations................. (10,693,346) (3,633,752) (10,747,728)
INTEREST:
Income.............................. 94,374 125,795 366,167
Expense............................. (239,733) (617,228) (1,318,084)
------------ ------------ ------------
Interest expense, net............. (145,359) (491,433) (951,917)
------------ ------------ ------------
Net loss............................. ($10,838,705) ($ 4,125,185) ($11,699,645)
============ ============ ============
Basic and diluted net loss per
share............................... ($3.64) ($0.84) ($1.62)
============ ============ ============
Weighted average common shares used
in computing
basic and diluted net loss per
share............................... 2,981,515 4,897,271 7,240,903
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-4
<PAGE>

V. I. TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
------------ ----------- ------------
<S> <C> <C> <C>
Cash flows provided by (used in)
operating activities:
Net loss............................. ($10,838,705) ($4,125,185) ($11,699,645)
Adjustments to reconcile net loss to
net cash provided
by (used in) operating activities:
Depreciation and amortization...... 1,942,578 2,308,964 2,985,572
Processing reserve................. -- 4,100,000 --
Debt refinancing costs............. -- -- 190,385
Compensation expense in connection
with issuance of stock options.... -- -- 381,250
Changes in operating accounts:
Trade receivables.................. (437,664) (811,463) (106,446)
Other receivables.................. -- (1,736,234) 1,072,766
Inventory.......................... (234,534) 117,047 (133,470)
Prepaid expenses and other current
assets............................ (80,744) (246,926) 147,855
Accounts payable and accrued
expenses.......................... 1,474,510 1,387,531 (2,544,971)
------------ ----------- ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES................. (8,174,559) 993,734 (9,706,704)
------------ ----------- ------------
Cash flows used in investing
activities:
Additions to property, plant and
equipment........................... (4,140,833) (9,402,114) (3,858,031)
Other investing activities........... -- (277,032) (124,589)
------------ ----------- ------------
NET CASH USED IN INVESTING
ACTIVITIES........................... (4,140,833) (9,679,146) (3,982,620)
------------ ----------- ------------
Cash flows provided by financing
activities:
Proceeds from issuance of common
stock,
net of issuance costs............... 5,000,000 4,025,000 14,091,414
Proceeds from issuance of long-term
debt................................ 10,000,000 5,000,000 10,750,000
Proceeds from issuance of notes
payable............................. 256,000 2,847,167 1,472,797
Advances from customer............... -- 1,012,000 1,000,000
Principal repayment of long-term
debt................................ -- (2,500,000) (12,500,000)
Principal repayment of capital lease
obligations......................... -- -- (627,231)
Principal repayment of note payable.. -- (256,000) --
------------ ----------- ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES........................... 15,256,000 10,128,167 14,186,980
------------ ----------- ------------
Net increase in cash and cash
equivalents.......................... 2,940,608 1,442,755 497,656
Cash and cash equivalents, beginning
of year.............................. 369,000 3,309,608 4,752,363
------------ ----------- ------------
CASH AND CASH EQUIVALENTS, END OF
YEAR................................. $ 3,309,608 $ 4,752,363 $ 5,250,019
============ =========== ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-5
<PAGE>

V.I. TECHNOLOGIES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

<TABLE>
<CAPTION>
NOTE
COMMON STOCK ADDITIONAL RECEIVABLE
----------------- PAID-IN FROM ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL STOCKHOLDER DEFICIT EQUITY
--------- ------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1995, effective date of
spinoff from New York
Blood Center........... 35 $ -- $14,471,000 $ -- $ -- $ 14,471,000
Exchange of 35 shares of
common stock no par
value, held by New York
Blood Center for 35
shares of common stock,
$.01 par value......... -- -- -- -- -- --
Dividend to New York
Blood Center of 26,833
shares per share of
common stock........... 2,683,327 26,833 (26,833) -- -- --
Issuance of shares of
common stock in
connection with a
private placement...... 1,788,909 17,889 4,982,111 -- -- 5,000,000
Net loss................ -- -- -- -- (10,838,705) (10,838,705)
--------- ------- ----------- -------- ------------ ------------
BALANCE AT DECEMBER 31,
1995................... 4,472,271 44,722 19,426,278 -- (10,838,705) 8,632,295
Issuance of shares of
common stock in
connection with a loan
agreement.............. 129,964 1,300 361,950 -- -- 363,250
Issuance of shares of
common stock upon
exercise of stock
options and warrants... 1,440,072 14,401 4,010,599 -- -- 4,025,000
Issuance of warrant to
purchase 3,577 shares
of common stock in
connection with a lease
agreement.............. -- -- 10,000 -- -- 10,000
Net loss................ -- -- -- -- (4,125,185) (4,125,185)
--------- ------- ----------- -------- ------------ ------------
BALANCE AT DECEMBER 31,
1996................... 6,042,307 60,423 23,808,827 -- (14,963,890) 8,905,360
Issuance of shares of
common stock in
connection with a
private placement, net
of issuance costs of
$859,000............... 1,797,894 17,979 14,073,435 -- -- 14,091,414
Compensation expense in
connection with
issuance of stock
options................ -- -- 381,250 -- -- 381,250
Issuance of shares of
common stock upon
exercise of stock
options................ 12,522 125 34,875 (35,000) -- --
Net loss................ -- -- -- -- (11,699,645) (11,699,645)
--------- ------- ----------- -------- ------------ ------------
BALANCE AT DECEMBER 31,
1997................... 7,852,723 $78,527 $38,298,387 ($35,000) ($26,663,535) $ 11,678,379
========= ======= =========== ======== ============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-6
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS OVERVIEW

V.I. Technologies, Inc. ("VITEX" or the "Company"), formerly Melville
Biologics, Inc., was incorporated in Delaware in December 31, 1992. Effective
January 1, 1995, pursuant to a transfer agreement dated December 9, 1994 and
amended February 7, 1995 (the "Transfer Agreement"), the Company received
substantially all of the assets of New York Blood Center, Inc. (the "NYBC")
relating to the plasma fractionation business, including title to the real
property, building and fixtures of the NYBC's fractionation facility and
certain other specified tangible and intangible assets, as well as various
contracts and the assumption of certain obligations of the NYBC related to
such assets and contracts. In exchange for these assets the NYBC received all
of the issued and outstanding common stock of the Company. The transaction was
accounted for utilizing the historical cost basis of the acquired assets and
liabilities (with the exception of property, plant and equipment which was
recorded at the historical net book value).

On October 26, 1995, the Company sold 1,788,909 shares of its common stock
to affiliates of Ampersand Ventures ("Ampersand") in connection with a private
placement, and in September 1996, Ampersand and the NYBC made additional
equity investments (see note 8). Further, on April 29, 1997, the Company sold
1,797,894 shares of its common stock to CB Capital Investors, L.P. ("CBC")
(see note 8). As a result of these transactions, the NYBC owns 43.3%,
Ampersand owns 33.5% and CBC owns 22.9% of the outstanding shares of common
stock of the Company at December 31, 1997 (see note 8).

The Company is a leading developer of viral inactivation technologies for
blood products and is currently processing plasma fractions for certain
customers in its production facility. The Company has applied for marketing
approval of its first virally inactivated blood product, VIPLAS/SD, with the
United States Food and Drug Administration (the "FDA"). The Company's plasma
fractionation business provides plasma fractions principally to Bayer
Corporation ("Bayer") under a multi-year agreement (see note 6).

The Company's operations encompass all the risks inherent in developing and
expanding a new business enterprise, including: (i) market acceptance of the
Company's products and dependence on new product development; (ii) uncertainty
regarding the timing and amount of future revenues; (iii) obtaining future
capital; (iv) the uncertainty regarding approval under, and ongoing compliance
with, government regulations; (v) dependence on manufacturing and equipment;
(vi) reliance on strategic collaborators; (vii) the ability to obtain,
maintain and defend patents and to avoid infringement of patents issued to
competitors; (viii) a business environment characterized by intense
competition and rapid technological change; and (ix) the need to retain and
recruit key personnel. In addition, the Company has reviewed the merits of
threatened claims by third parties relating to the exclusive distribution
agreement with the Red Cross (see note 11) and, upon the advice of its legal
counsel, believes that these claims are without merit. There can be no
assurance, however, that these third parties will not commence litigation
based on such claims or prevail on the merits of such claims in litigation.
The successful assertion of such claims or the failure of the Red Cross for
any reason to successfully market the Company's viral inactivation products to
hospitals and blood centers could delay the commercialization of the Company's
virally inactivated plasma products, which could have a material adverse
effect on the Company's business, financial condition and results of
operations. Further, the Company will be required to generate sufficient
income through operations or obtain additional financing to meet its short-
and long-term liquidity requirements. There can be no assurance that the
Company will be able to generate sufficient income through operations or that
additional financing, if at all available, can be obtained on terms reasonable
to the Company. In the event the Company is unable to generate sufficient
income from operations or obtain additional financing as required, its
operations and research and development efforts will need to be curtailed or
discontinued. Such an event would limit the Company's ability to develop its
technology and achieve regulatory milestones with its corporate partners.

F-7
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash Equivalents

The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents. Cash
equivalents consist primarily of U.S. Government securities and are carried at
cost which approximates market value.

Concentration of Credit Risk

The Company invests its cash in U.S. Government securities to ensure safety
and liquidity. The Company's plasma fractionation processing revenues are
principally derived from Bayer. The Company does not require collateral or
other security to ensure collection.

Inventory

Costs incurred in connection with plasma fractionation processing services
are included in inventories and expensed upon recognition of related revenues.
Such costs include direct labor and processing overheads. Supplies used in
processing are stated at the lower of cost, as determined using the average
cost method, or net realizable value.

Plant and Equipment

Plant and equipment are stated at cost and are depreciated on a straight-
line basis over the estimated useful lives of the respective assets, which
approximates seven to 20 years for building and manufacturing equipment, and
approximates three to five years for all other tangible assets.

Facility Costs

Costs incurred in starting-up and expanding facilities are included in
facility costs in the accompanying statements of operations and expensed as
incurred.

Research and Development

All research and development costs are charged to operations as incurred.
Research and development costs include all costs associated with patents,
which are expensed as incurred.

Revenue Recognition

Revenue from plasma fractionation processing services is recognized in the
period in which the related services have been rendered and upon satisfaction
of certain quality control requirements. Revenue recognized in the
accompanying statements of operations is not subject to repayment. Plasma
fractionation processing services with Bayer commenced in November 1995.
Revenue from research and development grants is recognized in the period in
which the eligible costs are incurred by the Company.

Other Assets

Other assets include organization costs, principally legal fees, which are
amortized on a straight-line basis over a five-year period. In addition, other
assets include certain costs of financing which are being amortized on a
straight-line basis over the respective terms of the financing agreements.
Accumulated amortization at December 31, 1996 and 1997 was $240,412 and
$281,775, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the amounts of existing
assets and liabilities carried on the financial statements and their
respective tax bases and the benefits arising from the realization of
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized.

F-8
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

Stock-Based Compensation

Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of grant only if
the current market price of the underlying stock exceeded the exercise price.
On January 1, 1996, the Company adopted SFAS No. 123, Accounting for Stock-
Based Compensation, which permits entities to recognize as expense over the
vesting period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income or loss and
pro forma earnings or loss per share disclosures for employee stock option
grants made in 1995 and future years as if the fair value-based method defined
in SFAS No. 123 had been applied. The Company has elected to continue to apply
the provisions of APB Opinion No. 25 and provide the pro forma disclosure of
SFAS No. 123 (see note 9).

Net Loss Per Share

At December 31, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 128, Earnings per Share. Basic net loss per
share is computed by dividing the net loss by the weighted average number of
common shares outstanding. Diluted net loss per share is the same as basic net
loss per share since the inclusion of potential common stock equivalents
(stock options and warrants) in the computation would be anti-dilutive.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Impairment of Long-Lived Assets

The Company periodically assesses whether any events or changes in
circumstances have occurred that would indicate that the carrying amount of a
long-lived asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an asset to
future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets.

Fair Value of Financial Instruments

The fair value of the Company's long-term debt and capital lease obligations
approximates the debt's carrying value as the stated interest rates
approximates current market rates available to the Company. For all other
financial instruments, the carrying value approximates fair value due to the
short maturity of those instruments.

New Reporting Pronouncements

The Company will implement the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income, SFAS
No. 131, Disclosures about Segments of an Enterprise and Related Information,
and SFAS No. 132, Employers' Disclosures about Pensions and Other Post-
retirement Benefits which require the Company to report and display certain
information related to comprehensive income, operating segments, and employee
benefit plans, respectively, as required in 1998. Adoption of these statements
will not impact the Company's financial position or results of operations.

F-9
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

Supplemental Disclosure of Cash Flow Information

Information on cash paid for interest and non-cash investing and financing
activities are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Cash paid during the year for interest....... $ 259,000 $ 924,000 $1,511,000
========== ========== ==========
Non-cash investing and financing activities:
Note receivable from stockholder............ $ -- $ -- $ 35,000
========== ========== ==========
Conversion of notes payable to capital lease
obligations................................ $ -- $1,864,000 $2,847,000
========== ========== ==========
Debt financing costs included in accounts
payable and accrued expenses............... $ -- $ -- $ 170,000
========== ========== ==========
Reimbursable construction costs included in
other receivables and accounts payable and
accrued expenses........................... $ -- $ 231,000 $ --
========== ========== ==========
Capital improvements and equipment costs
included in property, plant and equipment
and accounts payable and accrued expenses.. $1,239,000 $ 425,000 $ 47,000
========== ========== ==========
</TABLE>

Reclassification

Certain amounts contained in the 1996 financial statements have been
reclassified to conform to the 1997 presentation.

3. INVENTORY

Inventory consists of the following components as of December 31, 1996 and
1997 (see note 7):

<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Processing costs.......................................... $242,986 $210,572
Supplies used in processing............................... 198,501 364,385
-------- --------
$441,487 $574,957
======== ========
</TABLE>

Processing costs of $382,000 associated with VIPLAS/SD, which has not been
approved for sale by the FDA or non-U.S. regulatory authorities, have been
fully reserved as of December 31, 1997.

F-10
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following components as of
December 31, 1996 and 1997 (see note 7):

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Land............................................... $ 638,000 $ 638,000
Building and related improvements.................. 13,254,197 22,754,028
Manufacturing and laboratory equipment............. 6,771,110 11,716,286
Office furniture and equipment..................... 331,546 581,138
Construction in progress........................... 10,789,531 --
----------- -----------
31,784,384 35,689,452
Accumulated depreciation and amortization.......... (3,892,466) (6,639,555)
----------- -----------
$27,891,918 $29,049,897
=========== ===========
</TABLE>

Interest capitalized in connection with construction activities totaled
$128,000, $306,000 and $370,000 in 1995, 1996 and 1997, respectively.

The cost of equipment and leasehold improvements held under a capital lease
(see note 15) amounted to $1,863,910 in 1996 and $6,183,874 in 1997, and
accumulated depreciation relating to such equipment and leasehold improvements
amounted to $206,129 in 1997.

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following components as
of December 31, 1996 and 1997:

<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Trade accounts payable............................... $1,755,933 $2,503,169
Accrued construction costs........................... 1,973,681 47,037
Reserve for processing costs payable to Bayer
Corporation
(see note 6)........................................ 4,712,420 3,075,063
Accrued employee compensation........................ 786,766 788,054
Due to Ampersand for management advisory services.... -- 134,400
Due to the New York Blood Center, net (see note 10).. 2,168 233,363
Other................................................ 278,745 400,693
---------- ----------
$9,509,713 $7,181,779
========== ==========
</TABLE>

6. PLASMA FRACTIONATION PROCESSING REVENUES

On February 7, 1995, the Company entered into an Agreement for Custom
Processing (the "Processing Agreement") with Bayer (formerly Miles Inc.), a
world leader in the manufacturing and marketing of plasma products, whereby
the Company fractionates plasma for Bayer in return for a contracted fee (the
"Base Processing Fee"). Under the Processing Agreement, as amended on January
24, 1996, and December 22, 1997, Bayer contracted for an initial term through
December 31, 2001 at minimum production volumes, as defined. Bayer also has
two one-year options to extend the term under essentially the same terms and
conditions. The Processing Agreement provides for declining unit prices in
1997 and 1998, and increases thereafter based on increases in the consumer
price index. The Processing Agreement also provides for increases in minimum
production volumes until 1999.

F-11
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

The Processing Agreement contains defined default provisions and, in the
case of a continuing event of default, Bayer may: (i) terminate the Processing
Agreement; (ii) suspend its obligations under the Processing Agreement; or
(iii) notify the Company that it will take over the operation of fractionating
its plasma. In the event of such a takeover, Bayer continues to be responsible
for payment to the Company at the Base Processing Fee in effect and at the
minimum production volumes specified in the Processing Agreement, deducting
therefrom all reasonable expenses paid related to the processing operation.
The Company is currently in compliance with its obligations under the
Processing Agreement.

The Company and Bayer executed, concurrently with the execution of the
Processing Agreement, a Reimbursement and Security Agreement (the
"Reimbursement Agreement"), a Mortgage, a Lease Agreement and a Sublease
Agreement. Under the Reimbursement Agreement, the Company agreed to reimburse
Bayer for any amounts paid or incurred by Bayer under its guarantee of a
$10,000,000 term loan made to the Company by a bank (see note 7). The Company
repaid the outstanding loan balance of $6,250,000 under the Bayer Term Loan on
December 22, 1997 in connection with the refinancing of the Company's long-
term debt (see note 7). At that time, Bayer was released from its guarantee
obligations relative to the Bayer Term Loan, and the Reimbursement
Agreement was modified into a security agreement (the "Security Agreement")
and the Mortgage, Lease Agreement and Sublease Agreement were amended. The
Security Agreement and amended Mortgage secure certain obligations of the
Company to Bayer, including Bayer's march-in rights relating to the Processing
Agreement. The Security Agreement provides a priority security interest in all
of the equipment and other personal property owned by the Company involved in
the Company's plasma fractionation operation (the "Bayer Collateral"). The
amended Mortgage provides a subordinated security interest in the Company's
real property, building, fixtures and equipment as defined. Relative to the
Security Agreement and the amended Mortgage, Bayer entered into an
Intercreditor Agreement with the Company and the bank which refinanced the
Company's long-term debt which, among other things, defines each party's
rights in the event that the Company fails to comply with certain default
provisions contained in the Processing Agreement and the Credit Agreement (see
note 7). Under the Lease Agreement, as amended, the Company leases to Bayer
the real property, building, fixtures and equipment, as defined, (collectively
the "Leased Property"). The Lease remains in effect over the term of the
Processing Agreement and includes the period of any Bayer march-in rights (at
a yearly base rent payment of $1). Under the Sublease Agreement, as amended,
Bayer subleases the Leased Property to the Company. The Leased Property is
included in property, plant and equipment on the accompanying balance sheets.

In August 1996, an equipment malfunction was discovered during plasma
processing for Bayer. It was subsequently determined that material processed
during a five-week period preceding the discovery of the malfunction may have
been adulterated as a result of this malfunction resulting in the leakage of a
cooling agent into the plasma product. The Company's technical evaluation of
this material indicated that: (i) the majority of the material was not
adulterated (the "Unadulterated Material"); and (ii) much of the remaining
material on hold that was adulterated may be rendered suitable for sale by
reprocessing under the Company's current product license (the "Rework
Material"). The Company forwarded this analysis, along with all other
available information about the equipment malfunction, to the FDA. In March
1997, the FDA approved the release of the Unadulterated Material for sale.
Concurrently, the FDA approved the Company's plan to reprocess, where
possible, the Rework Material. Bayer stated that it would not accept any of
the Unadulterated Material or the Rework Material and the Company challenged
Bayer's position. Notwithstanding the FDA's approval of the Company's plan to
reprocess the Rework Material, Bayer would not change its position. In July
1997, the Company entered into a Settlement Agreement with Bayer under which
the Company agreed to reimburse Bayer for the cost of the plasma totaling $4.1
million. The Company recorded a special charge of $5.1 million in the
accompanying 1996 statement of operations representing the plasma replacement
cost of $4.1 million and the Company's unrecovered processing costs. The
Company is making monthly installments of $170,834 over a two-year period that
commenced July 1, 1997. The outstanding balance is subject to interest at the
prime rate, as

F-12
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

defined plus two percent over the first 12 months of the agreement and
increasing to plus three percent over the second 12 month period (the prime
rate was 8.5% at December 31, 1997). In response to this incident, the Company
made certain modifications to its procedures, designed to minimize the risk of
loss associated with an equipment failure, however there can be no assurance
that such equipment malfunction will not occur in the future. Amounts payable
to Bayer under the Settlement Agreement were $3,075,063 at December 31, 1997.

As a potential avenue for recovery, the Company has filed a claim for the
loss under its property insurance policy with a third-party insurance carrier.
The insurance carrier has denied coverage, and on November 26, 1996 commenced
a legal proceeding seeking a determination that the loss is not covered by the
insurance policy. Thereafter, the Company filed an answer and counterclaim to
this action. Subsequently, each party filed motions for summary judgement. By
opinion dated January 8, 1998, the Court ruled in favor of the insurance
company and against the Company finding that the loss was not covered by the
insurance policy. The Company intends to appeal the decision of the Court. The
final outcome of the litigation with the insurance company is uncertain. The
proceeds obtained, if any, as a result of the Company's insurance claim will
be recorded at such future date.

7. LONG-TERM DEBT

On December 22, 1997, the Company entered into a credit agreement (the
"Credit Agreement") with a bank providing for a term loan in the principal
amount of $10,750,000 (the "New Term Loan"). The proceeds under the New Term
Loan were used to repay the outstanding balance of existing term loans
aggregating $10,500,000 previously provided by other banks (and guaranteed by
Bayer and Ampersand), and related expenses associated with executing the New
Term Loan. At that time, Bayer was released from its obligations relative to
the Bayer Term Loan and Ampersand was released from its guarantee obligations
relative to a Letter of Credit arranged for by Ampersand. The New Term Loan
bears interest at the Company's option at either LIBOR plus 2.75% to 1.75% or
the base rate of the bank, as defined, plus margins of up to 0.5%, as
determined based on defined earnings ratios. The Company is currently using
one-month LIBOR plus 2.75% (one month LIBOR at December 31, 1997 was 6.0%).
Under the New Term Loan, interest is payable monthly and the principal balance
is payable in sixteen equal consecutive quarterly installments of $671,875
commencing March 31, 1998 and continuing until maturity on December 31, 2001.
The Credit Agreement contains default provisions, including financial
covenants which provide restrictions on capital investments and the payment of
cash dividends and, among other things, requires the Company to maintain
minimum cash balances of $2,000,000 and leverage and coverage ratios, as
defined. The Company is currently in compliance with these covenants.

Under the New Term Loan, the Company granted the bank a mortgage upon, and
security interest in, substantially all of the property owned by the Company,
including the real property, building and fixtures, equipment, inventory,
accounts receivable, cash and certain intangible assets, subject to Bayer's
security interest in the Bayer Collateral (see note 6) and the security
interests of a third party under a Master Equipment Lease Agreement (see note
15). Relative to the Mortgage and Security Agreement, the bank entered into an
Intercreditor Agreement with the Company and Bayer which, amongst other
things, defines each parties rights in the event the Company fails to comply
with certain covenants contained in the Processing Agreement and the Credit
Agreement (see note 6). Amounts outstanding under the Term Loan are
$10,750,000 at December 31, 1997.

On June 21, 1996, the Company entered into a term loan facility (the
"Ampersand Term Loan") with a bank in the amount of $5,000,000 to be used for
facility and equipment renovations and working capital needs. The bank
received an up-front fee of $30,000 of which $20,000 was paid in cash and the
balance paid pursuant to the terms of a Subscription Agreement (see note 8),
whereby the Company issued 3,577 shares of common stock to an affiliate of the
bank. The Company repaid the outstanding balance of $4,250,000 under the
Ampersand Term Loan on December 22, 1997 in connection with the refinancing of
the Company's long-term

F-13
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

debt, as further discussed above. The Ampersand Term Loan was secured by a
Letter of Credit arranged for by Ampersand, under which the Company granted
Ampersand a security interest in certain real and personal property of the
Company. In connection with the repayment of the Ampersand Term Loan,
Ampersand was released from its obligations relative to the Letter of Credit,
and the security interests previously provided by the Company to Ampersand
under its guarantee were terminated. Under the terms of a Subscription
Agreement dated June 21, 1996, the Company issued 126,387 shares of common
stock to Ampersand in connection with the Letter of Credit provided. (see note
8). The fair market value of the shares issued to the affiliate of the bank
and Ampersand was being amortized on a straight-line basis over the original
term of the Ampersand Term Loan. The unamortized debt financing costs were
expensed in connection with the repayment of the Ampersand Term Loan totaled
$190,385 and are included in general and administrative expenses in the
accompanying 1997 Statement of Operations.

On February 7, 1995, the Company entered into a term loan facility (the
"Bayer Term Loan") with a bank in the amount of $10,000,000 to be used for
facility and equipment renovations and working capital needs. The Company
repaid the outstanding balance of $6,250,000 under the Bayer Term Loan on
December 22, 1997 in connection with the refinancing of the Company's long-
term debt, as further discussed above. All amounts payable by the Company
under the Bayer Term Loan were guaranteed by Bayer (see note 6). Under the
guarantee, Bayer had a security interest in the Company's real and personal
property to the extent of its guarantee and had agreed to subordinate a
portion of its security interest to facilitate the Company's ability to secure
additional financing. In connection with the repayment of the Bayer Term Loan,
Bayer was released from its guarantee obligations (see note 6).

8. STOCKHOLDERS' EQUITY

Pursuant to the Transfer Agreement between the Company and the NYBC (see
note 1), the Company issued to the NYBC 35 shares of no par value common
stock, representing all shares of common stock then issued and outstanding. On
October 26, 1995, these shares were exchanged for 35 shares of common stock,
$.01 par value.

On October 26, 1995, the Company's Certificate of Incorporation was amended
to increase the number of shares of common stock authorized from 500 shares to
19,625,000 shares. Effective upon the filing of the amended certificate, the
Board of Directors approved a dividend of 26,833 shares to be paid on each
share of common stock then outstanding. Further, a Warrant to purchase 715,563
shares of common stock at an exercise price of $2.80 per share was issued to
the NYBC in connection with the Company's recapitalization. This Warrant was
exercised by the NYBC in September 1996. The Company's Certificate of
Incorporation was further amended on June 10, 1996 to increase the number of
shares of common stock authorized from 19,625,000 to 20,000,000 shares in
connection with the Ampersand Term Loan, and amended on April 29, 1997 to
increase the number of shares of common stock authorized from 20,000,000 to
30,000,000 shares in connection with the CBC investment, and was further
amended on February 18, 1998 to increase the number of shares of common stock
authorized from 30,000,000 to 40,000,000 shares in connection with a
collaboration with Pall Corporation ("Pall") (see note 17). The Company is
required to reserve 2,504,472 shares of common stock in connection with future
sales under the Pall collaboration (see note 10).

Also on October 26, 1995, the Company completed a $5,000,000 private
placement of 1,788,909 shares of common stock, par value $.01 per share, to
Ampersand. Both the NYBC and Ampersand have certain registration rights as
defined in the Common Stock Purchase Agreement. In connection with the private
placement, Ampersand also received a Warrant to purchase an additional 715,563
shares of common stock at $2.80 per share which it exercised in September
1996.

On June 21, 1996, in connection with a term loan facility in which the
Company borrowed $5,000,000 from a bank, Ampersand was issued 126,387 shares
of common stock, par value $.01 per share, as consideration for

F-14
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

providing a Letter of Credit, and an affiliate of the bank was issued 3,577
shares of common stock, par value $.01 per share, as part of an up front fee
for providing the loan (see note 7). The fair market value of these equity
instruments was estimated at $2.80 per share and amortized on a straight-line
basis over the term of the related term loan facility. Further, on June 21,
1996, in connection with a Lease Agreement for occupancy of laboratory and
office space, the owner received a Warrant to purchase 3,577 shares of the
Company's common stock at $2.80 per share, subject to adjustment as defined in
the Warrant Agreement. The Warrant is exercisable at any time during the term
of the Lease Agreement. In addition, the owner has certain registration
rights, as defined (see note 15). The fair market value of this equity
instrument was estimated at $2.80 per share, is recorded in other assets in
the accompanying financial statements and is being amortized on a straight-
line basis over the term of the Lease Agreement.

On April 29, 1997, the Company completed a $14,950,000 private placement of
1,797,894 shares of common stock, par value $.01 per share, to CBC, less
issuance costs of $858,586, including a cash payment of $627,900 to a private
placement agent. CBC is entitled to certain anti-dilution protection, voting
rights, registration rights and board representation. In addition, the Company
issued a contingent stock purchase warrant exercisable into 1% of the
Company's fully diluted shares for every $1,000,000 in subsequent private
equity capital raised, after giving effect to such financing, subject to a cap
of 5% of the fully diluted equity of the Company. The contingent warrant has
an exercise price of $0.028 per share. The contingent warrant terminates upon
an initial public offering of the Company's common stock. In addition, the
Company issued a warrant to purchase 32,361 shares of common stock to a
private placement agent with an estimated fair market value of $270,000. This
warrant has an exercise price of $0.028 per share, is exercisable after April
28, 1998, will expire after April 29, 2002, and will be automatically
exercised upon consummation of an initial public offering of the Company's
common stock. The warrant also grants the holder certain registration rights.

In October 1997, the NYBC and the Company agreed to amend a license
agreement whereby the NYBC would receive common stock of the Company in lieu
of cash payable to the NYBC in connection with certain royalty payments due
under the license agreement totaling $300,000 (see note 10). The amendment was
approved by the Company's Board of Directors in January 1998, and pursuant to
a Stock Purchase Agreement dated January 23, 1998, the Company issued 35,778
shares of common stock, par value $.01 per share to the NYBC. The balance
payable to the NYBC of $300,000 is included in accounts payable and accrued
expenses in the 1997 accompanying balance sheet.

The Company's Certificate of Incorporation was amended on February 18, 1998
to increase the number of shares of preferred stock authorized from 500 shares
to 1,000,000 shares. The preferred stock may be issued from time to time in
one or more series, with such designations, rights and preferences as shall be
determined by the Board of Directors. No preferred stock was outstanding as of
December 31, 1997.

9. STOCK OPTION PLAN

The Company's 1995 Stock Plan/Stock Issuance Plan was originally adopted in
October 1995 and was amended and restated in January 1996 and February 1998,
as the 1998 Equity Incentive Plan (the "1998 Equity Plan"). The amendment in
January 1996 increased the shares of common stock reserved for issuance from
1,118,067 to 1,788,908. The amendment in February 1998 increased the shares of
common stock reserved from 1,788,908 to 2,146,690. The 1998 Equity Plan,
permits the granting of both incentive stock options and nonstatutory stock
options. The option price of the shares for incentive stock options cannot be
less than the fair market value of such stock at the date of grant. Options
are exercisable over a period determined by the Board of Directors, but not
longer than ten years after the grant date. All stock options issued to-date
have been granted at the fair market value of the stock on the respective
grant dates.

F-15
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

The per share weighted-average fair value of stock options granted during
1997 was $3.94 and in 1996 and 1995 was $1.12 on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions: no volatility, expected dividend yield of 0%, risk-free interest
rate of 6.0% in 1997 and 5.5% in 1996 and 1995, and an expected life of ten
years.

The Company applied APB Opinion No. 25 in accounting for its stock option
plan and, accordingly, no compensation cost has been recognized for its stock
options in the financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under
SFAS No. 123, which is then reflected over the four year vesting period, the
Company's net loss would have been increased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
1995 1996 1997
------------ ----------- ------------
<S> <C> <C> <C>
Net loss:
As reported...................... ($10,838,705) ($4,125,185) ($11,699,645)
Pro forma........................ ($11,049,667) ($4,265,743) ($11,974,787)
Basic and diluted net loss per
share:
As reported...................... ($3.64) ($0.84) ($1.62)
Pro forma........................ ($3.71) ($0.87) ($1.65)
</TABLE>

There were no options granted prior to 1995 and, therefore, the full impact
of calculating compensation cost of stock options under SFAS No. 123 is
reflected in the pro forma net loss amounts presented above.

Because the determination of the fair value of all options granted after the
Company becomes a public entity will include an expected volatility factor,
additional option grants are expected to be made subsequent to December 31,
1997 and options vest over a four-year period, the pro forma effects of
applying the fair value method may be material to reported net income in
future years.

Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1995 1996 1997
----------------- ------------------ --------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- --------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of
year................... -- $ -- 677,280 $2.80 812,880 $2.80
Granted................. 677,280 2.80 165,832 2.80 678,487 7.85
Exercised............... -- -- (8,944) 2.80 (12,522) 2.80
Forfeited............... -- -- (21,288) 2.80 (105,545) 7.01
------- ------- ---------
Balance, end of year.... 677,280 2.80 812,880 2.80 1,373,300 5.05
======= ======= =========
Exercisable............. -- -- 164,713 2.80 385,957 2.82
======= ======= =========
Available for future
grant.................. 440,787 296,243 394,141
======= ======= =========
</TABLE>

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- --------------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ------------------------ ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$2.80................... 763,103 8.3 $2.80 384,168 $2.80
$8.39................... 610,197 10.0 8.39 1,789 8.39
--------- -------
1,373,300 385,957
========= =======
</TABLE>

F-16
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

Stock options issued in 1995 and 1996 have been granted at $2.80 per share
pursuant to the 1998 Equity Plan, and in 1997 have been granted at exercise
prices ranging from $2.80 to $8.39 per share, the fair market value of the
stock on the respective grant dates. In January 1998, options for 304,114
shares were granted pursuant to the 1998 Equity Plan at $11.18 per share, the
fair market value of the stock on the respective grant dates.

Pursuant to a Letter Agreement dated October 1997, between the Company and
its former President and Chief Executive Officer, the former President was
entitled to receive a one-time termination payment of $270,000, and
outplacement support and health benefits through October 5, 1998. In addition,
the former President was entitled to the accelerated vesting of stock options
for 27,951 shares of common stock and the extension of the stock option
exercise period from ninety days to one year, expiring October 5, 1998.
Accordingly, in connection with such stock option amendments, the Company
recorded compensation expense totaling $381,250, representing the difference
between the estimated fair market value of the common stock on the date the
stock option amendments were effective and the exercise price. Compensation
expense was recorded as a one-time charge to operations and an increase to
stockholders' equity. Additional expenses totaling $320,000 were recorded in
connection with the Letter Agreement and are included in general and
administrative expenses in the accompanying 1997 Statement of Operations. At
December 31, 1997, stock options for 12,522 shares were exercised and the
exercise price is payable to the Company under a one-year loan arrangement
with interest payable to the Company at 6.0% per annum.

10. RELATED-PARTY TRANSACTIONS

The NYBC is the largest independent blood collection, processing and
distribution entity in the United States, providing blood products and related
services throughout the New York metropolitan region. In addition, the NYBC
conducts research in the fields of hematology and transfusion medicine. The
NYBC is a not-for-profit corporation. In 1996, the NYBC sponsored certain
scientific research at the Company, and such NYBC payments are included in
research and development funding in the accompanying 1996 statement of
operations.

License Agreements

The Company has entered into various license agreements with the NYBC. Under
these agreements, the Company has been granted exclusive and non-exclusive
worldwide licenses under the NYBC know-how and patents relating to viral
inactivation and other technologies. Under certain of these licenses, the
Company may grant sublicenses. The Company also has rights of first
negotiation for the license to any NYBC improvements not otherwise exclusively
licensed in the field of viral inactivation for use with certain products, as
defined.

Under the license agreements, the Company is required to pay royalties to
the NYBC on the Company's revenues derived from the use of these licenses, as
defined. The Company is required to pay aggregate minimum royalties to
maintain its exclusive licenses of $920,000 in 1998, $1,500,000 in 1999,
$2,000,000 in 2000 and $2,300,000 in each year thereafter. Minimum royalties
of $600,000 were payable to the NYBC in 1997, of which $300,000 was paid in
cash and the balance paid pursuant to a Stock Purchase Agreement, whereby the
Company issued 35,778 shares of common stock to the NYBC (see note 8). The
Company also is required to meet certain research and development milestones,
as defined, to maintain its exclusive licenses; the Company can pay to the
NYBC $200,000 in 1998 if certain milestones, as defined, are not met to
maintain certain exclusive licenses. The NYBC waived a milestone payment of
$250,000 due in 1996. The Company paid the NYBC $50,000 in 1997, which payment
will be credited against future milestone payments due. The NYBC also extended
milestone payment due dates from early 1998 to late 1998. Further, the Company
is required to spend a minimum of $500,000 per annum in 1998, exclusively in
the further development, evaluation and registration of products, as defined.
The Company met similar minimum spending requirements defined for 1996 and
1997. If minimum

F-17
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

royalties are not paid or if any milestone is not met, as defined for a given
country, the NYBC may terminate the license for that country and may terminate
other such licenses if the licenses in all covered countries have been
individually terminated. The Company and the NYBC have also entered into an
Omnibus Agreement which allocates various rights and obligations under license
agreements that the NYBC has entered into with third parties relating to
fractionation and other technology. The Omnibus Agreement also provides that
the NYBC pay the Company a fee for providing technical support to licensees of
certain of the NYBC technologies.

The NYBC may terminate any license by reasonable notice if the Company fails
to cure a breach, conform to government regulations, or sell products within a
specified number of years, as defined. Upon termination, all rights revert to
the NYBC. The Company is currently in compliance with all such obligations and
covenants.

Other Services

The Company leased, through November 30, 1996, approximately 6,000 square
feet of laboratory space from NYBC. Rental payments made to the NYBC were
$532,000 and $441,000 in 1996 and 1995, respectively. The Company moved its
research and development laboratories and offices in November 1996 to another
location in New York City (see note 16).

During 1995, the NYBC provided certain administrative services to the
Company including human resources, accounting and legal support. Payments made
to the NYBC for such services in 1995 totaled $334,000. Effective January 1,
1996, administrative services are no longer being provided by the NYBC.

The Company believes all of its agreements with the NYBC were negotiated at
"arm's length" and that the costs associated with the agreements are deemed to
be at market rates for the related services and licensing arrangements
provided by the NYBC.

During 1997, Ampersand provided certain management advisory services to the
Company, including the provision of an interim Chief Executive Officer. In
1998, amounts payable to Ampersand for such services rendered during 1997
totalled $134,400, and such amount is included in general and administrative
expenses in the accompanying statement of operations for 1997 and in accounts
payable and accrued expenses in the 1997 accompanying balance sheet.

11. COLLABORATIONS

American National Red Cross. On December 15, 1997, the Company entered into
a Supply, Manufacturing, and Distribution Agreement with the American National
Red Cross (the "Red Cross") over a term of 57 months for the Red Cross to
become the exclusive distributor of the Company's virally inactivated
transfusion plasma product, VIPLAS/SD, in North America upon marketing
approval by the FDA, to be marketed by the Red Cross under its proposed brand
name PLAS+(R)SD. The Red Cross is the largest supplier of transfusion plasma
to hospitals in the United States, currently providing approximately 45% of
the transfusion plasma used in the United States annually. The Red Cross is
required to purchase stated minimum quantities of VIPLAS/SD to maintain its
exclusive rights. Once the Red Cross places its annual purchase order with the
Company, it is obligated to supply the Company with a sufficient quantity of
plasma to enable the Company to fulfill such order. The Red Cross must pay for
the amount of VIPLAS/SD specified in the purchase order even if it is unable
to supply sufficient quantities of plasma. The Red Cross must purchase all of
its virally inactivated plasma from the Company unless an FDA approved product
has been independently shown to be safer than the VIPLAS/SD. The Company, in
turn, is obligated to offer any excess capacity that it has to produce
VIPLAS/SD above the stated minimum purchase requirements to the Red Cross
before selling VIPLAS/SD to any other party. Under the agreement, the Red
Cross is required to pay to the Company a fixed price per unit of VIPLAS/SD,

F-18
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

plus a royalty equal to a portion of the amount by which the average selling
price of the Red Cross exceeds a stated amount. The Company has granted to the
Red Cross a right of first refusal for exclusive distribution rights to any
subsequent generation of viral inactivation plasma products that are developed
during the term of the agreement. The Company and the Red Cross have each
committed to spend minimum amounts for marketing VIPLAS/SD in 1998 and 1999.
The Company is obligated to spend $2,000,000 during the two-year period ending
December 31, 1999. Additionally, a joint marketing committee will coordinate
all marketing activities for VIPLAS/SD. The exclusive Distribution Agreement
between the Company and the Red Cross provides that the Red Cross will use its
best efforts to insure universal availability of the Company's virally
inactivated plasma products to all potential customers, including both Red
Cross blood centers and non-Red Cross blood centers. This agreement replaces
the previous collaboration agreement among the Red Cross, NYBC and the Company
(the "Original Agreement"). Under the Original Agreement, the Red Cross made a
$3,000,000 non-interest bearing, unsecured loan to the Company to be used to
fund improvements to the Company's manufacturing facility. The loan amortizes
at the rate of 15% per year commencing upon FDA marketing approval of
VIPLAS/SD, with a balloon payment due in year five. Amounts outstanding under
this loan were $3,000,000 at December 31, 1997. The loan has not been
discounted since the ultimate repayment terms of the loan could not be
determined at the time of the advances since repayment is subject to FDA
marketing approval of VIPLAS/SD. A portion of the liability has been
classified as short-term in the 1997 accompanying balance sheet based on the
anticipated market approval of VIPLAS/SD during 1998. If the Company was not
to receive market approval for VIPLAS/SD, the Company would not be obligated
to repay the advances.

United States Surgical Corporation. In September 1996, the Company entered
into an Exclusive Distribution Agreement with United States Surgical
Corporation ("U.S. Surgical") regarding VIGuard Fibrin Sealant for a period of
15 years, which was amended in October 1996. U.S. Surgical is primarily
engaged in the development, manufacture and commercialization of surgical
wound products for hospitals throughout the world. In connection with entering
into the agreement, U.S. Surgical paid a $3,000,000 up front fee to the
Company. U.S. Surgical has agreed to fully fund all direct clinical and
regulatory costs associated with the development and regulatory approval of
VIGuard Fibrin Sealant after the initial Phase II trial conducted by the
Company. In addition, U.S. Surgical has agreed, subject to termination upon
notice, to pay a substantial portion of agreed upon research and development
costs for improvements or, in return for exclusive rights, enhancements to
VIGuard Fibrin Sealant. Pursuant to this agreement, the Company granted U.S.
Surgical the mutually exclusive worldwide right, until October 2011, to seek,
in its own name as permitted by law, necessary government approvals for and to
use, market, distribute and sell fibrin sealants, and any improvements
thereto. This exclusive distribution agreement further provides U.S. Surgical
with a first option to obtain exclusive distribution rights on any enhanced
products, new products or new applications, as defined, developed by the
Company. The first option on rights to enhanced products is for a transfer
price to be negotiated in good faith by the parties as well as U.S. Surgical
sharing in specified research and development costs for the enhanced product.
U.S. Surgical must achieve certain minimum sales of the products to maintain
its exclusive rights under the agreement. Under the exclusive distribution
agreement, the Company has agreed to supply U.S. Surgical's forecasted demand
for the products and if it is unable to supply such forecasted demand, plus an
excess of up to 25% over such forecasted demand, U.S. Surgical has an option
to make arrangements to have the excess demand for such products produced by
third-party manufacturers until the later of one year or the Company's supply
of such demand. The NYBC was paid a royalty in connection with the execution
of this agreement, which is included in research and development expense in
the accompanying 1996 statement of operation.

F-19
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

12. INCOME TAXES

The Company's deferred tax assets as of December 31, 1996 and 1997,
respectively, are estimated as follows:

<TABLE>
<CAPTION>
1996 1997
----------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward.................. $ 2,003,000 $ 6,474,000
Start-up expenditures............................ 2,864,000 2,125,000
Depreciation and amortization.................... 1,005,000 1,603,000
Replacement cost of plasma....................... 1,681,000 1,261,000
Other, net....................................... 246,000 1,495,000
----------- ------------
Total.......................................... 7,799,000 12,958,000
Valuation allowance............................... (7,799,000) (12,958,000)
----------- ------------
Net deferred taxes................................ $ -- $ --
=========== ============
</TABLE>

A valuation allowance for 1996 and 1997 has been applied to offset the
respective deferred tax assets in recognition of the uncertainty that such tax
benefits will be realized.

At December 31, 1997, the Company has available net operating loss
carryforwards for federal and state income tax reporting purposes of
approximately $15,790,000, and has available research and development credit
carryforwards for federal income tax reporting purposes of approximately
$437,000, which are available to offset future taxable income, if any. These
carryforwards expire beginning in 2010. The Company's ability to use such net
operating loss and research and development credit carryforwards is limited by
change of control provisions under Section 382 of the Internal Revenue Code.

13. INDUSTRIAL DEVELOPMENT AUTHORITY

In order to obtain certain economic development incentives, including sales
tax exemptions, real estate tax abatements and mortgage tax exemptions, the
Company transferred its real property, building and fixtures (the "Property")
to the Suffolk County Industrial Development Agency (the "IDA") and leases
back the Property from the IDA under a Facility Lease Agreement (the "Lease
Agreement") which terminates on March 1, 2007. Further, the Company entered
into a Mortgage, Security Agreement and Fixture Filing whereby the Company and
the IDA mortgaged the Property to Bayer to secure certain obligations of the
Company to Bayer, including Bayer's march-in rights under the Processing
Agreement (see note 7). The Company also entered into a Mortgage, Security
Agreement and Fixture Filing whereby the Company and the IDA mortgaged the
Property to a bank to secure certain obligations of the Company to the bank
(see note 7). Under the Lease Agreement, the Company is responsible for all
expenses associated with the Property and is responsible for annual basic rent
payments of one dollar ($1.00). The Lease Agreement contains an early
termination provision whereby the Company has the option to terminate the
Lease Agreement at any time. Upon termination or expiration of the lease term,
the Company is required to purchase the facility for one dollar ($1.00) plus
all unpaid payments in lieu of real estate taxes. The Property is included in
property, plant and equipment on the accompanying balance sheets. The Company
also entered into a security agreement with the IDA related to equipment
leased by the Company under a Master Equipment Lease Agreement with a third
party (see note 15).

14. PROFIT SHARING 401(K) PLAN

Effective January 1, 1995, the Company established a 401(k) Profit Sharing
Plan (the "401(k) Plan") which covers substantially all employees. All
eligible employees may elect to contribute a portion of their wages to the
401(k) Plan, subject to certain limitations. Although the Company does not
match employee contributions at this time, the Company is currently reviewing
its policy.

F-20
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

15. CAPITAL LEASE OBLIGATION

On April 8, 1996, the Company entered into a Master Equipment Lease
Agreement ("the Master Lease") under which the Company borrowed $6,200,000 to
be used for leasing production equipment. The Company utilized the proceeds to
fund progress payments required under various equipment agreements with third
party vendors. The Company was required to pay interest on the notes payable
only until all of the equipment was ready for use at which time the notes
payable were converted to a capital lease obligation. In addition, the lease
facility required an 8.0% security deposit and first and last month's rent to
be paid upon each funding. The security deposit will be refunded upon FDA
marketing approval of VIPLAS/SD. The Master Lease contains escalating monthly
lease payments over a five-year period. The Master Lease also contains an
early purchase option and an option to purchase the equipment at 15.0% of the
equipment cost at the end of the lease term. The effective interest rate is
approximately 16.2% per annum.

Annual minimum rental payments and related interest under the Master Lease
are as follows:

16. COMMITMENTS AND CONTINGENCIES

Lease Agreement

On June 21, 1996, the Company entered into a Lease Agreement for occupancy
of 12,000 square feet of laboratory and office space. The initial term of the
lease is five years with options to renew thereafter, with a three-year early
termination provision. The Lease commenced December 1, 1996. The owner
provided $1,800,000 of construction funding to cover the costs associated with
constructing and equipping the laboratory and offices. Included in other
receivables at December 31, 1996 are reimbursable construction costs of
$1,384,000 incurred by the Company in connection with such leasehold
improvements, which the Company was reimbursed by the owner in 1997. Further,
if the Company elects to terminate the lease at the end of year three, it is
not responsible for a portion of the rental payments in years four and five.
Rental expense in 1996 and 1997 was $107,000 and $415,000, respectively.

Annual minimum rental payments are as follows:

In connection with the Lease, the Company issued to the owner a Warrant to
purchase 3,577 shares of the Company's common stock at $2.80 per share,
subject to adjustment as defined in the Warrant Agreement. The Warrant is
exercisable at any time during the term of the Lease Agreement. In addition,
the Owner has certain registration rights, as defined (see note 8).

F-21
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

Supply Agreements

The Company has entered into certain raw material supply agreements for
initial terms of up to five years following FDA marketing approval of
VIPLAS/SD. Under the agreements, the Company is obligated to purchase minimum
quantities at pricing levels, as defined, totaling $800,000 over the term of
the agreements. The party to one of the supply agreements is an affiliate of
Pall (see note 17).

Employment Arrangements

The Company provides a severance arrangement for its executives and key
employees which includes salary continuance and health benefits for a six-
month period and accelerated vesting of certain options. In certain instances
salary continuance extends up to a one-year period.

Litigation

There are no material legal proceedings pending against the Company or its
properties to which the Company is a party.

The Company is aware that in the course of ongoing litigation between the
NYBC and a third party, the third party has asserted claims against the NYBC
based on breach of a contract that was executed in 1988 by those parties and
rights thereunder were assigned to the Company in 1995. The third party has
claimed that it is entitled to payments from the NYBC based on improvements in
albumin throughput yields attributable to certain filtration technology
licensed to the NYBC by the third party. The Company understands that the NYBC
believes it has meritorious defenses against this third party's claims and, in
any event, as part of the assignment of the NYBC's rights under the disputed
contract by the NYBC to the Company, the Company assumed no responsibility for
pre-existing liabilities under the contract. However, there can be no
assurance that the third party will not assert claims against the Company
under that contract similar in nature to the claims being asserted against the
NYBC. No such claims have been asserted to date. The Company believes that it
would have meritorious defenses against any such claims.

17. SUBSEQUENT EVENTS

Proposed Initial Public Offering of Common Stock and Reverse Stock Split

On January 23, 1998, the Board of Directors authorized the filing of a
registration statement on Form S-1 with the Securities and Exchange Commission
covering an initial public offering of the Company's common stock. In February
1998, the Company amended its Certificate of Incorporation to increase its
authorized common stock to 40,000,000 shares (see note 8). Further, in
February 1998, the Board of Directors authorized and the stockholders approved
a 1-for-2.795 reverse split of the Company's common stock which became
effective on February 23, 1998. All share amounts in these Financial
Statements have been restated to reflect the reverse stock split.

New Stock Plans

In February 1998, the Company adopted the Company's 1998 Employee Stock
Purchase Plan (the "1998 Purchase Plan") under which employees may purchase
shares of common stock at a discount from fair market value. There are 89,445
shares of common stock reserved for issuance under the Purchase Plan. To date,
no shares of common stock have been issued under the 1998 Purchase Plan. The
1998 Purchase Plan is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Internal Revenue Code. Rights to
purchase common stock under the 1998 Purchase Plan are granted at the
discretion of the Compensation Committee of the Board of Directors, which
determines the frequency and duration of individual

F-22
<PAGE>

V.I. TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED

offerings under the 1998 Purchase Plan and the dates when stock may be
purchased. Eligible employees participate voluntarily and may withdraw from
any offering at any time before stock is purchased. Participation terminates
automatically upon termination of employment. The purchase price per share of
common stock to the purchaser under the 1998 Purchase Plan is 85% of the
lesser of the Company's common stock fair market value at the beginning of the
offering period or on the applicable exercise date and may be paid through
payroll deductions, periodic lump sum payments or both. The 1998 Purchase Plan
terminates in February 2008.

In February 1998, the Company adopted and the Board of Directors and the
stockholders of the Company adopted the 1998 Director Stock Option Plan (the
"1998 Director Plan"). All of the Directors who are not employees of the
Company (the "Eligible Directors") are currently eligible to participate in
the 1998 Director Plan. There are 89,445 shares of Common Stock reserved for
issuance under the Director Plan, and to date no shares of common stock have
been issued. Each Eligible Director will receive an annual option to purchase
1,788 shares of common stock (the "Option"). Each Option becomes fully
exercisable on the first anniversary of the date of grant, provided that the
optionholder is still a Director of the Company at the opening of business on
such date. The 1998 Director Plan has a term of ten years. The exercise price
for the Options is equal to the last sale price for the common stock on the
business day immediately preceding the date of grant. The exercise price may
be paid in cash or shares.

New Collaboration

On February 19, 1998, the Company and Pall entered into a series of
agreements (the "Pall Agreements") providing for, among other things, a
collaboration on the development and marketing of systems employing the
Company's LAC and Quencher viral inactivation technologies for red blood cell
and platelet concentrates. Pall is a leading manufacturer and supplier of
filtration components including those relating to the collection,
preservation, processing, manipulation, storage and treatment of blood and
blood products. Under the Pall Agreements, Pall receives exclusive worldwide
distribution rights to all the Company's systems incorporating viral
inactivation technology for red blood cells and platelets. The parties have
also agreed to share research, development, clinical and regulatory
responsibilities and will equally share profits and joint expenses from
operations (after each party is reimbursed for its cost of goods). Upon
execution of the Pall Agreements in February 1998, Pall made a $4,000,000
equity investment representing 477,042 shares at $8.39 per share and has
agreed to make a $5,000,000 equity investment contemporaneously with the
closing of the Company's proposed initial public offering. In addition, the
Pall Agreements provide that Pall will purchase up to $17,000,000 worth of the
Company's common stock in installments tied to the achievement of specified
development milestones. Such equity investments by Pall will be made at the
prevailing market price per share. Pursuant to the Pall Agreements, certain
existing stockholders of the Company have agreed to vote their shares of
common stock of the Company to elect to the Board of Directors of the Company
a nominee designated by Pall. Certain of the Pall Agreements may be terminated
in certain circumstances including an event of default by either party which,
in the case of the Company, includes the termination of the Company's current
Chief Scientific Officer. The Company will record a charge to earnings in 1998
for the difference between the exercise price and fair market value, for the
shares issued upon execution of the Pall Agreements.

F-23
<PAGE>

The following depiction appears on the inside back cover of this
prospectus:

The heading "The VIPLAS/SD Viral Inactivation Process" appears at the top of the
page. Underneath this heading appears the phrase "Untreated Blood Plasma
Delivered to VITEX by Red Cross." An arrow is drawn from this phrase to a
photograph of a stainless steel tank (the "Tank Photo") with the caption "Plasma
Pooled and Treated by VITEX Solvent/Detergent Process." An arrow is drawn from
the Tank Photo to a photograph of an adsorption column (the "Column Photo") with
the caption "Solvents and Detergents Removed from Plasma in Adsorption Column."
An arrow is drawn from the Column Photo to a photograph of a plasma bag filling
machine (the "Machine Photo") with the caption "VIPLAS/SD Packaged in Sterile
Bags." An arrow is drawn from the Machine Photo to a photograph of the Quality
Assurance and Quality Control staff at VITEX (the "Staff Photo") with the
caption "VIPLAS/SD Inspected by QA/QC staff." An arrow is drawn from the Staff
Photo to a photograph of a walk-in freezer (the "Freezer Photo") with the
caption "VIPLAS/SD Stored at -30C Pending Shipment to Red Cross." An arrow is
drawn from the Freezer Photo to a photograph of bags filled with plasma with the
caption "VIPLAS/SD ready for shipment to the Red Cross for marketing under the
proposed name PLAS+(R)SD."
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS OR BY ANY
OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLIC-
ITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE COMMON STOCK OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION TO SUCH PERSON.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UN-
DER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

-----------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 5
The Company.............................................................. 13
Use of Proceeds.......................................................... 13
Dividend Policy.......................................................... 13
Capitalization........................................................... 14
Dilution................................................................. 15
Selected Financial Data.................................................. 16
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 17
Business................................................................. 22
Management............................................................... 43
Certain Transactions..................................................... 51
Principal Stockholders................................................... 52
Description of Capital Stock............................................. 54
Shares Eligible for Future Sale.......................................... 57
Underwriting............................................................. 59
Legal Matters............................................................ 61
Experts.................................................................. 61
Additional Information................................................... 61
Index to Financial Statements............................................ F-1
</TABLE>

-----------------

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT PAR-
TICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACT-
ING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

3,000,000 SHARES

[VITEX LOGO]

COMMON STOCK

-----------------
PROSPECTUS
-----------------

COWEN & COMPANY

SBC WARBURG DILLON READ INC.

, 1998

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the estimated costs and expenses, other than
underwriting discounts and commissions, expected to be incurred by the Company
in connection with the issuance and distribution of the Common Stock being
registered under this registration statement.

<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $ 15,267
Nasdaq National Market Listing Fee 50,000
NASD Filing Fee and Expenses 5,675
Blue Sky Fees and Expenses 2,500
Printing and Engraving Expenses 100,000
Accounting Fees and Expenses 150,000
Legal Fees and Expenses 430,000
Transfer Agent and Registrar Fees 2,000
Miscellaneous 94,558
--------
Total $850,000
========
</TABLE>

Item 14. Indemnification of Directors and Officers

Article NINTH of the Company's Restated Certificate of Incorporation
provides that directors of the Company will not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director, whether or not an individual continues to be a director at the
time such liability is asserted, except for liability (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) pursuant to Section 174 of the General
Corporation Law of the State of Delaware or (iv) for any transaction from
which the director derives an improper personal benefit.

Article TENTH of the Company's Restated Certificate of Incorporation
provides that the Company shall, to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as amended from time to
time, indemnify each person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that such person is or was, or has agreed to become a
director or officer of the Company, or is or was serving, or has agreed to
serve, at the request of the Company, as a director, officer, or trustee of,
or in a similar capacity with, another corporation, partnership, joint
venture, trust or other enterprise. The indemnification provided for in
Article TENTH is expressly not exclusive of any other rights to which those
seeking indemnification may be entitled under any law, agreement or vote of
stockholders or disinterested directors or otherwise, and shall inure to the
benefit of the heirs, executors and administrators of such persons. Article
TENTH further permits the board of directors to authorize the grant of
indemnification rights to other employees and agents of the Company and such
rights may be equivalent to, or greater or less than, those set forth in
Article TENTH.

Section 102(b)(7) of the General Corporation law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) pursuant to Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit. No such provision
shall eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective.

Section 145 of the General Corporation Law of the State of Delaware provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or

II-1
<PAGE>

completed action, suit or proceeding, whether civil, criminal, administrative
or investigative by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful, provided, however, no
indemnification shall be made in connection with any proceeding brought by or
in the right of the corporation where the person involved is adjudged to be
liable to the corporation except to the extent indemnification is approved by
a court.

Pursuant to Section 145 of the General Corporation Law of the State of
Delaware and the By-laws of the Company, the Company maintains directors' and
officers' liability insurance for its executive officers and directors against
certain liabilities they may incur in their capacity as such.

The Company has entered into agreements with all of its directors and
executive officers affirming the Company's obligation to indemnify them to the
fullest extent permitted by law and providing various other protections.

Item 15. Recent Sales of Unregistered Securities

(a) Since the beginning of 1995, the Registrant has sold and issued the
following unregistered securities:

In September 1995 the Registrant issued 2,683,363 shares (adjusted to
reflect a dividend of 26,833 shares for every outstanding share of Common
Stock declared in October 1995) to the NYBC in connection with the transfer
of title to real property, building and fixtures used in the NYBC's plasma
fractionation business and certain other specified tangible and intangible
assets.

In October 1995 the Registrant issued a warrant to purchase 715,563
shares of Common Stock to the NYBC exercisable at $2.80 per share in
connection with a recapitalization of the Company. In September 1996 the
NYBC exercised this warrant.

In October 1995, the Registrant issued 1,788,908 shares of Common Stock
at a purchase price of $2.80 per share to certain purchasers affiliated
with Ampersand Specialty Materials and Chemicals III Limited Partnership.

In connection with this financing the Registrant also issued a warrant to
purchase 715,563 shares of Common Stock to Ampersand exercisable at $2.80
per share. In September 1996 Ampersand exercised this warrant.

In June 1996, the Registrant issued 126,386 shares of Common Stock to
certain purchasers affiliated with Ampersand Specialty Materials and
Chemicals III Limited Partnership in consideration of the provision of an
irrevocable standby letter of credit to secure a $5,000,000 loan from
Chemical Bank.

In June 1996, the Registrant issued 3,577 shares of Common Stock to CB
Capital Investors, L.P. as part of an upfront fee in connection with the
loan from Chemical Bank.

In June 1996 a warrant to purchase 3,577 shares of Common Stock at $2.80
per share was issued to the Trustees of Columbia University ("TCU") in
connection with the Company entering into a lease with TCU for its facility
at Audubon Center.

In April 1997, the Registrant sold 1,797,893 shares of Common Stock at a
purchase price of $2.98 per share to CB Capital Investors, L.P. and in
connection therewith issued a contingent stock purchase warrant to CB
Capital Investors, L.P. to purchase up to 1% of the fully diluted equity of
the Registrant for every $1,000,000 in subsequent private equity capital
raised, subject to a cap of 5%, for a purchase price of $.028 per share.

II-2
<PAGE>

In April 1997 the Registrant issued a warrant to purchase 32,361 shares
of Common Stock to Bear, Stearns & Co. Inc. exercisable at $.028 per share
for services as a private placement agent in connection with the April 1997
financing.

In January 1998, the Registrant issued 35,778 shares of Common Stock to
the NYBC in consideration of the forgiveness of an obligation to pay
$300,000 in royalty payments.

In February 1998, the Registrant sold 477,042 shares of Common Stock for
an aggregate purchase price of $4.0 million to Pall. In addition, Pall has
agreed to invest $5.0 million in Common Stock concurrently with the Closing
of this offering at a price per share equal to the price for which shares
of Common Stock are sold in this offering, less underwriters' discounts and
commissions.

Since its inception the Registrant has issued options to purchase an
aggregate of 1,698,880 shares of Common Stock under the 1998 Equity
Incentive Plan, exercisable at a weighted average exercise price of $6.51
per share. Options for 146,511 shares have been exercised to date.

(b) No underwriter was engaged in connection with the foregoing issuance of
securities except that Bear, Stearns served as a private placement agent in
connection with the April 1997 sale of shares to CB Capital Investors, L.P.
The above described issuances of Common Stock were made in reliance upon
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
as transactions not involving any public offering, and Rule 701 promulgated
thereunder. The Company has reason to believe that all of the foregoing
purchasers were familiar with or had access to information concerning the
operations and financial conditions of the Company, and all of those
individuals were acquiring the shares for investment and not with a view to
the distribution thereof. At the time of issuance, all of the foregoing shares
of Common Stock were deemed to be restricted securities for purposes of the
Securities Act and the certificates representing such securities bore legends
to that effect.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of Melville Biologics, Inc. (the
"Company"), dated December 31, 1992.
3.2 Certificate of Amendment of Certificate of Incorporation of the Company,
dated October 26, 1995.
3.3 Certificate of Amendment of Certificate of Incorporation of the Company,
dated June 12, 1996.
3.4 Certificate of Amendment of Certificate of Incorporation of the Company,
dated August 26, 1996.
3.5 Certificate of Amendment of Certificate of Incorporation of the Company,
dated April 29, 1997.
3.6 Certificate of Amendment of Certificate of Incorporation of the Company,
dated February 18, 1998.
3.7 Certificate of Amendment of Certificate of Incorporation of the Company,
dated February 24, 1998.
3.8 Form of Restated Certificate of Incorporation of Company, as proposed to
be amended and restated.
3.9 By-Laws of the Company, dated November 25, 1994, as amended on December
12, 1997.
3.10 Form of Amended and Restated By-laws of Company, as proposed to be
amended and restated.
4.1* Specimen of Common Stock Certificate.
4.2 Stock Warrant between the Company and Bear, Stearns & Co. Inc., dated
April 29, 1997.
4.3 Warrant to Purchase Common Stock between the Company and the Trustees of
Columbia University in the City of New York, dated June 21, 1996.
4.4 Contingent Stock Subscription Warrant between the Company and CB Capital
Investors, Inc., dated April 29, 1997.
5.1 Opinion of Palmer & Dodge LLP.
</TABLE>

II-3
<PAGE>

(a) Exhibits

<TABLE>
<C> <S>
10.1 1998 Equity Incentive Plan.
10.2 1998 Director Stock Option Plan.
10.3 1998 Employee Stock Purchase Plan.
10.4+* Non-Exclusive License Agreement #1 for Solvent Detergent Treated Blood
Derived Therapeutic Products between the Company and the New York
Blood Center, Inc., dated September 21, 1995.
10.5+* Non-Exclusive License Agreement #2 for UV Treated Blood Derived
Therapeutic Products between the Company and the New York Blood
Center, Inc., dated September 21, 1995.
10.6+* Exclusive License Agreement #3 for Virally Inactivated Transfusion
Plasma Products between the Company and the New York Blood Center,
Inc., dated September 21, 1995, as amended on December 31, 1996 and
July 1, 1997.
10.7+* Exclusive License Agreement #4 for Virally Inactivated Fibrin Sealant
Thrombin Products between the Company and the New York Blood Center,
Inc., dated September 21, 1995, as amended on September 27, 1996 and
January 1, 1998.
10.8+* Exclusive License Agreement #5 for Virally Inactivated Cellular
Products between the Company and the New York Blood Center, Inc.,
dated September 21, 1995, as amended on February 16, 1998.
10.9+* Omnibus License Agreement between the Company and the New York Blood
Center, Inc., dated September 25, 1995.
10.10+* Exclusive Distribution Agreement between the Company and United States
Surgical Corporation, dated September 11, 1996, as amended on October
3, 1996.
10.11+* First Amended and Restated Agreement for Custom Processing between the
Company and Bayer Corporation, dated January 24, 1996.
10.12+* Modification Agreement between the Company and Bayer Corporation,
dated December 22, 1997.
10.13+* Supply, Manufacturing and Distribution Collaboration Agreement between
the Company and the American National Red Cross, dated December 15,
1997.
10.14+* Amended and Restated Collaboration Agreement among the Company,
American National Red Cross and the New York Blood Center, Inc., dated
December 15, 1997.
10.15+* Joint Development, Marketing and Distribution Agreement between the
Company and Pall Corporation, dated February 19, 1998.
10.16* Stock Purchase Agreement between Pall Corporation and the Company,
dated February 19, 1998.
10.17* Registration Rights Agreement between the Company and the Investors
named therein, dated February 19, 1998.
10.18* Facility Lease Agreement between the Company and Suffolk County
Industrial Development Agency, dated February 15, 1995.
10.19* Lease Agreement between the Company and Bayer Corporation, dated
February 7, 1995.
10.20* Sublease Agreement between the Company and Bayer Corporation, dated
February 7, 1995.
10.21* Security Agreement between the Company and Bayer Corporation, dated
December 22, 1997.
10.22* Lease between the Company and the Trustees of Columbia University in
the City of New York, dated June 21, 1996.
10.23* Settlement Agreement between the Company and Bayer Corporation, dated
July 1, 1997.
10.24 Letter Agreement between the Company and Thomas R. Ostermueller, dated
November 7, 1997.
10.25 Memorandum from John Barr to Joanne Leonard, dated December 23, 1997.
10.26 Employment Agreement between the Company and Bernard Horowitz, dated
January 15, 1998.
10.27 Letter Agreement between the Company and John R. Barr, dated November
10, 1997.
10.28 Memorandum from Rick Charpie to the Company's Vice Presidents, dated
October 28, 1997.
10.29* Credit Agreement between the Company and The Chase Manhattan Bank,
dated December 22, 1997.
10.30* Intercreditor Agreement among the Company, Bayer Corporation and The
Chase Manhattan Bank, dated December 22, 1997.
</TABLE>

II-4
<PAGE>

(a) Exhibits

<TABLE>
<C> <S>
10.31* Mortgage and Security Agreement among the Company, Suffolk County
Industrial Development Agency and The Chase Manhattan Bank, dated
December 22, 1997.
10.32* Guaranty and Collateral Agreement between the Company and The Chase
Manhattan Bank, dated December 22, 1997.
10.33 Form of Indemnification Agreement.
23.1 Consent of Palmer & Dodge LLP (to be included in Exhibit 5.1).
23.2 Consent of Amster Rothstein & Ebenstein.
23.3 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included in signature page hereto).
24.2 Certified resolutions of the Company authorizing power of attorney.
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
+ Certain confidential material contained in the document has been omitted
and filed separately with the Securities and Exchange Commission pursuant
to Rule 406 of the Securities Act.

(b) Financial Statement Schedules

All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

Item 17. Undertakings

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement (filed herewith as
Exhibit 1.1) certificates in such denominations and registered in such names
as required by the Underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Melville, State of New York, on February 26, 1998.

V.I. TECHNOLOGIES, INC.

/S/ JOHN R. BARR
By:__________________________________
JOHN R. BARR
PRESIDENT AND CHIEF EXECUTIVE
OFFICER

II-6
<PAGE>

POWER OF ATTORNEY

We, the undersigned officers and directors of V.I. Technologies, Inc.,
hereby severally constitute and appoint John R. Barr, Joanne M. Leonard and
William T. Whelan, and each of them singly, our true and lawful attorneys,
with full power to them in any and all capacitates, to sign any amendments to
this Registration Statement on Form S-1 (including Pre-and Post-Effective
Amendments), and any related Rule 462(b) registration statement or amendment
thereto, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact may do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE

/S/ JOHN R. BARR President, Chief February 26,
- --------------------------------- Executive Officer and 1998
JOHN R. BARR Director (Principal
Executive Officer)

/S/ JOANNE M. LEONARD Vice President, Chief February 26,
- --------------------------------- Financial Officer and 1998
JOANNE M. LEONARD Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)

/S/ DAVID TENDLER Director February 26,
- --------------------------------- 1998
DAVID TENDLER

/S/ RICHARD A. CHARPIE Director February 26,
- --------------------------------- 1998
RICHARD A. CHARPIE

/S/ JEREMY HAYWARD-SURRY Director February 26,
- --------------------------------- 1998
JEREMY HAYWARD-SURRY

/S/ BERNARD HOROWITZ, PH.D. Director February 26,
- --------------------------------- 1998
BERNARD HOROWITZ, PH.D.

/S/ IRWIN LERNER Director February 26,
- --------------------------------- 1998
IRWIN LERNER

/S/ PETER D. PARKER Director February 26,
- --------------------------------- 1998
PETER D. PARKER

/S/ DAMION E. WICKER, M.D. Director February 26,
- --------------------------------- 1998
DAMION E. WICKER, M.D.

II-7
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
(a) Exhibits PAGE NO.
------------ --------
<C> <S> <C>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of Melville Biologics,
Inc. (the "Company"), dated December 31, 1992.
3.2 Certificate of Amendment of Certificate of
Incorporation of the Company, dated October 26, 1995.
3.3 Certificate of Amendment of Certificate of
Incorporation of the Company, dated June 12, 1996.
3.4 Certificate of Amendment of Certificate of
Incorporation of the Company, dated August 26, 1996.
3.5 Certificate of Amendment of Certificate of
Incorporation of the Company, dated April 29, 1997.
3.6 Certificate of Amendment of Certificate of
Incorporation of the Company, dated February 18, 1998.
3.7 Certificate of Amendment of Certificate of
Incorporation of the Company, dated February 24, 1998.
3.8 Form of Restated Certificate of Incorporation of
Company, as proposed to be amended and restated.
3.9 By-Laws of the Company, dated November 25, 1994, as
amended on December 12, 1997.
3.10 Form of Amended and Restated By-laws of Company, as
proposed to be amended and restated.
4.1* Specimen of Common Stock Certificate.
4.2 Stock Warrant between the Company and Bear, Stearns &
Co. Inc., dated April 29, 1997.
4.3 Warrant to Purchase Common Stock between the Company
and the Trustees of Columbia University in the City of
New York, dated June 21, 1996.
4.4 Contingent Stock Subscription Warrant between the
Company and CB Capital Investors, Inc., dated April
29, 1997.
5.1 Opinion of Palmer & Dodge LLP.
10.1 1998 Equity Incentive Plan.
10.2 1998 Director Stock Option Plan.
10.3 1998 Employee Stock Purchase Plan.
10.4+* Non-Exclusive License Agreement #1 for Solvent
Detergent Treated Blood Derived Therapeutic Products
between the Company and the New York Blood Center,
Inc., dated September 21, 1995.
10.5+* Non-Exclusive License Agreement #2 for UV Treated
Blood Derived Therapeutic Products between the Company
and the New York Blood Center, Inc., dated September
21, 1995.
10.6+* Exclusive License Agreement #3 for Virally Inactivated
Transfusion Plasma Products between the Company and
the New York Blood Center, Inc., dated September 21,
1995, as amended on December 31, 1996 and July 1,
1997.
10.7+* Exclusive License Agreement #4 for Virally Inactivated
Fibrin Sealant Thrombin Products between the Company
and the New York Blood Center, Inc., dated September
21, 1995, as amended on September 27, 1996 and January
1, 1998.
10.8+* Exclusive License Agreement #5 for Virally Inactivated
Cellular Products between the Company and the New York
Blood Center, Inc., dated September 21, 1995, as
amended on February 16, 1998.
10.9+* Omnibus License Agreement between the Company and the
New York Blood Center, Inc., dated September 25, 1995.
10.10+* Exclusive Distribution Agreement between the Company
and United States Surgical Corporation, dated
September 11, 1996, as amended on October 3, 1996.
10.11+* First Amended and Restated Agreement for Custom
Processing between the Company and Bayer Corporation,
dated January 24, 1996.
10.12+* Modification Agreement between the Company and Bayer
Corporation, dated December 22, 1997.
10.13+* Supply, Manufacturing and Distribution Collaboration
Agreement between the Company and the American
National Red Cross, dated December 15, 1997.
10.14+* Amended and Restated Collaboration Agreement among the
Company, American National Red Cross and the New York
Blood Center, Inc., dated December 15, 1997.
10.15+* Joint Development, Marketing and Distribution
Agreement between the Company and Pall Corporation,
dated February 19, 1998.
10.16* Stock Purchase Agreement between Pall Corporation and
the Company, dated February 19, 1998.
10.17* Registration Rights Agreement between the Company and
the Investors named therein, dated February 19, 1998.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
PAGE NO.
--------
<C> <S> <C>
10.18* Facility Lease Agreement between the Company and Suffolk
County Industrial Development Agency, dated February 15,
1995.
10.19* Lease Agreement between the Company and Bayer Corporation,
dated February 7, 1995.
10.20* Sublease Agreement between the Company and Bayer
Corporation, dated February 7, 1995.
10.21* Security Agreement between the Company and Bayer
Corporation, dated December 22, 1997.
10.22* Lease between the Company and the Trustees of Columbia
University in the City of New York, dated June 21, 1996.
10.23* Settlement Agreement between the Company and Bayer
Corporation, dated July 1, 1997.
10.24 Letter Agreement between the Company and Thomas R.
Ostermueller, dated November 7, 1997.
10.25 Memorandum from John Barr to Joanne Leonard, dated December
23, 1997.
10.26 Employment Agreement between the Company and Bernard
Horowitz, dated January 15, 1998.
10.27 Letter Agreement between the Company and John R. Barr, dated
November 10, 1997.
10.28 Memorandum from Rick Charpie to the Company's Vice
Presidents, dated October 28, 1997.
10.29* Credit Agreement between the Company and The Chase Manhattan
Bank, dated December 22, 1997.
10.30* Intercreditor Agreement among the Company, Bayer Corporation
and The Chase Manhattan Bank, dated December 22, 1997.
10.31* Mortgage and Security Agreement among the Company, Suffolk
County Industrial Development Agency and The Chase Manhattan
Bank, dated December 22, 1997.
10.32* Guaranty and Collateral Agreement between the Company and
The Chase Manhattan Bank, dated December 22, 1997.
10.33 Form of Indemnification Agreement.
23.1 Consent of Palmer & Dodge LLP (to be included in Exhibit
5.1).
23.2 Consent of Amster Rothstein & Ebenstein.
23.3 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included in signature page hereto).
24.2 Certified resolutions of the Company authorizing power of
attorney.
27.1 Financial Data Schedule.
</TABLE>
- -------
* To be filed by amendment.
+ Certain confidential material contained in the document has been
omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act.

<PAGE>

EXHIBIT 3.1

CERTIFICATE OF INCORPORATION

MELVILLE BIOLOGICS, INC.

The undersigned, for the purpose of organizing a corporation under the
General Corporation Law of the State of Delaware (the "DGCL"), certifies:

FIRST: The name of the Corporation is MELVILLE BIOLOGICS, INC.

SECOND: The address of the Corporation's registered office in the State of
Delaware is the Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the DGCL.

FOURTH: The total number of shares of stock which the Corporation shall
have the authority to issue is one thousand (1,000) shares, of which five
hundred (500) shares shall be shares of common stock, without par value (the
"Common Stock"), and five hundred (500) shares shall be shares of preferred
------------
stock, without par value (the "Preferred Stock"). The designations, voting
---------------
powers, preferences, and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of the above classes of
stock are as follows:

(A) COMMON STOCK

Except as provided in this Certificate of Incorporation, each holder
of Common Stock shall have one vote in respect of each share of stock held by
the holder of
<PAGE>

record on the books of the Corporation for the election of directors and on all
matters submitted to a vote of stockholders of the Corporation.

Subject to the provisions of this Article FOURTH and any further
provisions prescribed in accordance herewith, the holders of shares of Common
Stock shall be entitled to receive, when and if declared by the board of
directors, out of the assets of the Corporation which are by law available
therefor, dividends payable either in cash, in stock or otherwise.

(B) PREFERRED STOCK

The board of directors is expressly authorized at any time, and from
time to time, subject to the limitations prescribed by law and the provisions of
this Article FOURTH, to provide for the issuance of shares of Preferred Stock
in one or more series, with such designations, voting powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issue thereof adopted by the board
of directors, and as are not stated and expressed in this Certificate of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) the following:

(a) the designation of and number of shares constituting that
series;

(b) the dividend rate of that series, the conditions and dates upon
which dividends thereon shall be payable, the preference or relation which
dividends thereon shall bear to the dividends payable on any other class or
classes or of any other series of capital stock, and whether dividends thereon
shall be cumulative or non-cumulative;

(c) whether that series shall have voting rights, full or limited,
in addition to the voting rights provided by law, and if so, the terms of such
voting rights;

-2-
<PAGE>

(d) whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different conditions
and at different redemption dates;

(e) whether that series will have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;

(f) whether or not the shares of that series shall be convertible
into, or exchangeable for, shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation, and, if so,
the conversion price or prices, or the rates of exchange, and the adjustments
thereof, if any, at which the conversion or exchange may be made, and any other
terms and conditions of the conversion or exchange as the board of directors
shall determine,

(g) the extent, if any, to which the holders of the shares of that
series shall be entitled to vote as a class or otherwise with respect to the
election of directors or otherwise,

(h) the restrictions, if any, on the issue or reissue of any
additional Preferred Stock;

(i) the rights of the holders of the shares of such series upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and

(j) any other relative rights, preferences and limitations of that
series.

FIFTH: The name and mailing address of the incorporator is Guilford W.
Gaylord, 1 Chase Manhattan Plaza. 47th floor, New York, New York 10005.

SIXTH: To the fullest extent permitted by the DGCL as it exists on the
date hereof or as it may hereafter be amended, a director of the Corporation
shall not be liable to

-3-
<PAGE>

the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. No repeal or modification of this Article SIXTH shall apply
to or have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such director
occurring prior to such repeal or modification.

SEVENTH: The directors shall have power to make, alter or repeal By-
Laws, except as may otherwise be provided in the By-Laws.

EIGHTH: Elections of directors need not be written ballot, except as
may otherwise be provided in the By-Laws.

NINTH: The number of directors of the Corporation shall be fixed by,
or in the manner provided in, the By-Laws.

WITNESS my signature this 30th day of December 1992.

/s/ Guilford W. Gaylord
--------------------------------
Guilford W. Gaylord
Sole Incorporator

-4-

<PAGE>

EXHIBIT 3.2

CERTIFICATE OF AMENDMENT
OF THE
CERTifICATE OF INCORPORATION
OF
MELVILLE.LE BIOLOGICS, INC.

Under Section 242 of the General Corporation Law
of the
State of Delaware

The undersigned, Thomas R Ostermueller, President of Melville Biologics,
Inc. (the "Corporation"), for the purpose of amending the Certificate of
Incorporation of the Corporation, pursuant to Section 242 of the General
Corporation Law of the State of Delaware, does hereby certify and set forth:

1. The name of the Corporation is Melville Biologics, Inc.

2. The Certificate of Incorporation was originally filed in the
Office of the Secretary of State on January 1, 1993

3. The first sentence of Article Fourth of the Certificate of
Incorporation is amended to read in its entirety as follows, in order
to increase from five hundred (500) shares to nineteen million six
hundred twenty-five thousand (19,625,000) shares the number of shares
of common stock which the Corporation shall have authority to issue
and to change the par value of the shares of stock of the Corporation
from without par value to par value $0.01 per share.

3. "The total number of shares of stock which the Corporation shall
have authority to issue is nineteen million six hundred twenty-five thousand
five hundred (19,625,500) shares, of which nineteen million six hundred twenty-
five thousand (19,625,000) shares shall be shares of common stock, par value
$0.01 per share (the 'Common Stock'), and five hundred (500) shares shall be
shares of preferred stock, par value $0.01 per share (the Preferred Stock')."

4. This amendment of the Certificate of Incorporation was duly adopted in
accordance with die provisions of Section 242 of the General
Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of the Certificate of Incorporation this 26th day of October 1995.

/s/ Thomas R. Ostermueller
_________________________________
Thomas R. Ostermueller
President

<PAGE>

EXHIBIT 3.3

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

MELVILLE BIOLOGICS, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware

Melville Biologics, Inc. (hereinafter called the "Corporation"), organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:

That, by a unanimous consent of the Board of Directors of the Corporation
in accordance with Section 141(f) of the General Corporation Law of the State of
Delaware, a resolution was duly adopted, setting forth an amendment to the
Certificate of Incorporation of the Corporation and declaring said amendment to
be advisable. The Stockholders of the Corporation have duly approved said
amendment in accordance with Section 242 of the General Corporation Law of the
State of Delaware. The resolution setting forth the amendment is as follows:

RESOLVED: That the Certificate of Incorporation of the Company, as amended
--------
to date, be further amended by amending the first sentence of Article Fourth
thereof to read in its entirety as follows:

"The total number of shares of capital stock that the Corporation
shall have the authority to issue is twenty million five hundred
(20,000,500) shares, of which twenty million (20,000,000) shares shall
be shares of common stock, $0.01 par value per share (the "Common
Stock"), and five hundred (500) shares shall be shares of preferred
stock, $0.01 par value per share (the "Preferred Stock")."
<PAGE>

IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to be signed by its President
and attested to by its Secretary this 11th day of June 1996.

MELVILLE BIOLOGICS, INC.

By: /s/ Thomas R. Ostermueller
----------------------------------------
Thomas R. Ostermueller
President

ATTEST:

By: /s/ Joanne Leonard
---------------------------
Assistant Secretary

[Corporate Seal]

<PAGE>

EXHIBIT 3.4

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

MELVILLE BIOLOGICS, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware

Melville Biologics, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:

That, by a unanimous consent of the Board of Directors of the
Corporation in accordance with Section 141(f) of the General Corporation Law of
the State of Delaware, a resolution was duly adopted, setting forth an amendment
to the Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. The Stockholders of the Corporation have duly
approved said amendment in accordance with Section 228, including the notice
provisions thereof, and Section 242 of the General Corporation Law of the State
of Delaware. The resolution setting forth the amendment is as follows:

RESOLVED, that the Certificate of Incorporation of the Company, as
amended to date, be further amended by amending the Article First thereof to
read in its entirety as follows:

"The name of the Corporation is V.I. Technologies, Inc."

MELVILLE BIOLOGICS, INC.

By: /s/ Thomas R. Ostermueller
------------------------------
Thomas R. Ostermueller
President

ATTEST:

By: /s/ Joanne Leonard
-----------------------------
Assistant Secretary

[Corporate Seal]

<PAGE>

EXHIBIT 3.5

CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION
OF
V.I. TECHNOLOGIES, INC.

It is hereby certified that:

1. The name of the Corporation (hereinafter referred to as the
"Corporation") is V.I. Technologies, Inc.

2. In order to increase the number of shares of Common Stock of the
Corporation which the Corporation shall have the authority to issue from Twenty
Million (20,000,000) to Thirty Million (30,000,000) shares, Article FOURTH of
the Certificate of Incorporation is hereby amended to read in its entirety as
follows:

"FOURTH: The total number of shares of stock which the Corporation
shall have the authority to issue is thirty million five hundred (30,000,500)
shares, of which thirty million (30,000,000) shares shall be shares of common
stock, par value $0.01 per share (the "Common Stock"), and five hundred (500)
shares shall be shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"). The designations, voting powers, preferences, and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions of the above classes of stock are as follows:

(A) COMMON STOCK

Except as provided in this Certificate of Incorporation, each
holder of Common Stock shall have one vote in respect of each share of stock,
held by the holder of record on the books of the Corporation for the election of
directors and on all matters submitted to a vote of stockholders of the
Corporation.

Subject to the provisions of this Article FOURTH and any further
provisions prescribed in accordance herewith, the holders of shares of Common
Stock shall
<PAGE>

be entitled to receive, when and it declared by the board of directors, out of
the assets of the Corporation which are by law available therefor, dividends
payable either in cash, in stock or otherwise.

(B) PREFERRED STOCK

The board of directors is expressly authorized at any time, and
from time to time, subject to the limitations prescribed by law and the
provisions of this Article FOURTH, to provide for the issuance of shares of
Preferred Stock in one or more series, with such designations, voting powers,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions providing for the issue thereof
adopted by the board of directors, and as are not stated and expressed in this
Certificate of Incorporation, or any amendment thereto, including (but without
limiting the generality of the foregoing) the following:

(a) the designation of and number of shares constituting that
series;

(b) the dividend rate of that series, the conditions and dates
upon which dividends thereon shall be payable, the preference or relation which
dividends thereon shall bear to the dividends payable on any other class or
classes or of any other series of capital stock, and whether dividends thereon
shall be cumulative or non-cumulative;

(c) whether that series shall have voting rights, full or
limited, in addition to the voting rights provided by law, and if so, the terms
of such voting rights;

(d) whether or not the shares of that series shall be
redeemable, and if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;

-2-
<PAGE>

(e) whether that series will have a sinking fund for the
redemption or purchase of shares of that series, and if so, the terms and amount
of such sinking fund;

(f) whether or not the shares of that series shall be
convertible into, or exchangeable for, shares of any other class or classes or
of any other series of any class or classes of capital stock of the Corporation,
and if so, the conversion price or prices, or the rates of exchange, and the
adjustments thereof, if any, at which the conversion or exchange may be made,
and any other terms and conditions of the conversion or exchange as the board of
directors shall determine;

(g) the extent, if any, to which the holders of the shares of
that series shall be entitled to vote as a class or otherwise with respect to
the election of directors or otherwise;

(h) the restrictions, if any, on the issue or reissue of any
additional Preferred Stock;

(i) the rights of the holders of the shares of such series upon
the voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and

(j) any other relative rights, preferences and limitations of
that series.

3. The amendment of the Certificate of Incorporation of the Corporation
herein certified was duly adopted, pursuant to the provisions of Section 242 of
the General Corporation Law of the State of Delaware, by unanimous written
consent of all of the members of the Board of Directors of the Corporation and
the consent of a majority of the outstanding stock of the Corporation entitled
to vote thereon.

-3-
<PAGE>

Signed and attested to on April 29, 1997:

/s/ Thomas Ostermueller
----------------------------------------
Thomas Ostermueller, President

ATTEST:

/s/ Joanne Leonard
- -----------------------------------------
Joanne Leonard, Assistant Secretary

-4-

<PAGE>

EXHIBIT 3.6

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
V.I. TECHNOLOGIES, INC.

Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
----------------------------------

V.I. Technologies, Inc. (hereinafter called the "Corporation"), organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:

By written consent of the Board of Directors of the Corporation, a
resolution was duly adopted, pursuant to Sections 141 and 242 of the General
Corporation Law of the State of Delaware, setting forth certain amendments to
the Certificate of Incorporation of the Corporation and declaring said
amendments to be advisable. The stockholders of the Corporation duly approved
said proposed amendments by written consent in accordance with Sections 228 and
242 of the General Corporation Law of the State of Delaware, and written notice
of such consent has been given to all stockholders who have not consented in
writing to said amendments. The resolutions setting forth the amendments are as
follows:

RESOLVED: That the first paragraph of Article FOURTH of the Corporation's
--------
Certificate of Incorporation be and hereby is replaced with the following:

FOURTH: The total number of shares of stock which the Corporation
shall have the authority to issue is forty million five hundred (40,000,500)
shares, of which forty million (40,000,000) shares shall be shares of common
stock, par value $0.01 per share (the "Common Stock"), and five hundred (500)
shares shall be shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"). The designations, voting powers, preferences, and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions of the above classes stock are as follows:
<PAGE>

IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment of Certificate of Incorporation
to be signed by its President this 18th day of February, 1998.

V.I. TECHNOLOGIES, INC,

By: /s/ John Barr
---------------------------
John R. Barr
President

ATTEST:

By: /s/ Joanne Leonard
---------------------
Joanne M. Leonard
Secretary

-2-

<PAGE>

EXHIBIT 3.7

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
V.I. TECHNOLOGIES, INC.

Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
---------------------

V.I. Technologies, Inc. (hereinafter called the "Corporation"), organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:

By written consent of the Boards of the Corporation, a resolution was duly
adopted, pursuant to Section 141 and 242 of the General Corporation Law of the
State of Delaware, setting forth certain amendments to the Certificate of
Incorporation of the Corporation and declaring said amendments to be advisable.
The stockholders of the Corporation duly approved said proposed amendments by
written consent in accordance with Section 228 and 242 of the General
Corporation Law of the State of Delaware, and written notice of such consent has
been given to all stockholders who have not consented in writing to said
amendments. The resolutions setting forth amendments are as follows:

RESOLVED: That Article FOURTH of the Corporation's Certificate of
Incorporation be and hereby is amended by adding the following
language as a second paragraph:

Upon the effectiveness of this Certificate of Amendment, each
2.795 issued and outstanding shares of Common Stock of the
Corporation shall thereby be combined into one validly issued,
fully paid, and nonassessable share of Common Stock of the
Corporation. No scrip or fractional shares will be issued, and
each fractional share resulting from such combination shall be
redeemed by the Corporation for cash at a price per share equal
to the fair market value of a share of Common Stock on the date
hereof, as determined by the Board of Directors. There shall not
be any change in the number of shares authorized by reason of
such combination.
<PAGE>

V.I. TECHNOLOGIES, INC.

By: /s/ John Barr
-----------------------------
John R. Barr
President

ATTEST:

By: /s/ Joanne Leonard
---------------------
Joanne M. Leonard
Secretary

<PAGE>

EXHIBIT 3.8

RESTATED CERTIFICATE OF INCORPORATION

V.I. TECHNOLOGIES, INC.

The undersigned, John R. Barr and Joanne M. Leonard, do hereby certify:

A. They are the duly elected and acting President and Secretary,
respectively, of V.I. Technologies, Inc., a Delaware corporation (the
"Corporation").

B. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State on January 1, 1993, and the name under which the
Corporation was originally incorporated was Melville Biologics, Inc.

C. The Certificate of Incorporation, as previously amended, is further
amended and restated to read in full as follows:

FIRST: The name of the Corporation is V.I. Technologies, Inc.

SECOND: The address of the registered office of the Corporation in the
state of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, State of Delaware. The name of its registered
agent at such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is thirty million (30,000,000) shares,
consisting of: (i) twenty-nine million (29,000,000) shares of Common Stock, $.01
par value per share ("Common Stock"), and (ii) one million (1,000,000) shares of
Preferred Stock, $.01 par value per share ("Preferred Stock").

The following is a statement of the designations and the powers, privileges
and rights, and the qualifications, limitations or restrictions thereof in
respect of each class of capital stock of the Corporation.

A. PREFERRED STOCK
---------------

The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article FOURTH, to provide by resolution for the
issuance of the shares of Preferred Stock in one or more series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be
<PAGE>

included in each such series, and to fix the designations, powers, preferences
and rights of the shares of each such series and any qualifications, limitations
or restrictions thereof.

The authority of the Board with respect to each series shall include, but
shall not be limited to, determination of the following:

(a) The number of shares constituting that series and the distinctive
designation of that series;

(b) The dividend rate, if any, on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
series;

(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;

(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;

(e) Whether or not the shares of that series shall be redeemable, and if
so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;

(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and if so, the terms and amount of such
sinking fund;

(g) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that series; and

(h) Any other relative rights, preferences and limitations of that series.

B. COMMON STOCK
------------

The Common Stock is subject to the rights and preferences of the Preferred
Stock as hereinbefore set forth or authorized.

Subject to the provisions of any applicable law or of the By-laws of the
Corporation, as from time to time amended, with respect to the fixing of a
record date for the determination of stockholders entitled to vote, and except
as otherwise provided herein or by law or by the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of
outstanding shares of Common Stock shall have exclusive voting rights

-2-
<PAGE>

for the election of directors and for all other purposes, each holder of record
of shares of Common Stock being entitled to one vote for each share of Common
Stock standing in his name on the books of the Corporation.

Subject to the rights of any one or more series of Preferred Stock, the
holders of Common Stock shall be entitled to receive such dividends from time to
time as may be declared by the Board of Directors out of any funds of the
Corporation legally available for the payment of such dividends.

In the event of the liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of the Preferred Stock of the full amount to which they are
entitled, the holders of Common Stock shall be entitled to share ratably
according to the number of shares of Common Stock held by them, in all remaining
assets of the Corporation available for distribution to its stockholders.

C. ISSUANCE
--------

Subject to the provisions of this Restated Certificate of Incorporation and
except as otherwise provided by law, the shares of stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.

FIFTH: The Corporation is to have perpetual existence.

SIXTH: The Board of Directors shall consist of not less than three
directors, the exact number to be determined from time to time by resolution
adopted by the affirmative vote of a majority of the directors then in office.
The directors shall be divided into three classes, as nearly equal in number as
the then total number of directors constituting the entire Board of Directors
permits, with the term of office of one class expiring each year. The initial
directors of the first class shall be elected to hold office for a term expiring
at the next succeeding annual meeting following the filing of this Restated
Certificate of Incorporation, the initial directors of the second class shall be
elected to hold office for a term expiring at the second succeeding annual
meeting and the initial directors of the third class shall be elected to hold
office for a term expiring at the third succeeding annual meeting. At each
succeeding annual meeting of stockholders beginning in the first year following
the election of such staggered Board of Directors, successors to the class of
directors whose term expires at that meeting shall be elected for a three-year
term. If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible, and any additional directors of any class
elected to fill a vacancy resulting from an increase in the size of such class
shall hold office for a term that shall coincide with the remaining term of that
class, but in no event will a decrease in the number of directors shorten the
term of any incumbent director. Any vacancies in the Board of Directors for any
reason, and any directorships resulting from any increase in the number of
directors, may be filled by the Board of Directors, acting by a

-3-
<PAGE>

majority of the directors then in office, although less than a quorum, and any
directors so chosen shall hold office until the next election of the class for
which such directors shall have been chosen. Notwithstanding the foregoing, and
except as otherwise required by law, whenever the holders of any one or more
series of Preferred Stock shall have the right, voting separately as a class, to
elect one or more directors of the Corporation, the election, term of office and
other features of such directorships shall be governed by the terms of this
Restated Certificate of Incorporation and certificates of designation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article SIXTH unless expressly provided by such terms. Subject
to the foregoing, at each annual meeting of stockholders the successors to the
class of directors whose terms shall then expire shall be elected to hold office
for a term expiring at the annual meeting for the year in which their term
expires and until their successors shall be elected and qualified, subject to
prior death, resignation, retirement or removal.

Except as otherwise determined by the Board of Directors in establishing a
series of Preferred Stock as to directors elected by holders of such series, at
any special meeting of the stockholders called at least in part for the purpose,
any director or directors may, by the affirmative vote of the holders of at
least a majority of the stock entitled to vote for the election of directors, be
removed from office for cause. The provisions of this subsection shall be the
exclusive method for the removal of directors. This Article SIXTH may not be
amended, revised or revoked, in whole or in part, except by the affirmative vote
of the holders of 66 2/3% of the voting power of the shares of all classes of
stock of the Corporation entitled to vote for the election of directors,
considered for the purposes of this Article SIXTH as one class of stock.

SEVENTH: The Board of Directors shall have the right to make, alter or
repeal the By-laws of the Corporation.

EIGHTH: Elections of directors need not be by written ballot unless the
By-laws of the Corporation shall so provide.

NINTH: A director shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that the elimination or limitation of liability
is not permitted under the General Corporation Law of the State of Delaware as
in effect when such liability is determined. No amendment or repeal of this
provision shall deprive a director of the benefits hereof with respect to any
act or omission occurring prior to such amendment or repeal.

TENTH: The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as amended from
time to time, indemnify each person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to

-4-
<PAGE>

serve, at the request of the Corporation, as a director, officer or trustee of,
or in a similar capacity with, another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with such action, suit or proceeding and
any appeal therefrom.

Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified to
repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article TENTH, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayments.

The Corporation shall not indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person
unless the initiation thereof was approved by the Board of Directors of the
Corporation.

The indemnification rights provided in this Article TENTH (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this Article TENTH.

ELEVENTH: (a) Except as set forth in part (b) of this Article ELEVENTH,
the affirmative vote of the holders of 66 2/3% of the shares of all classes of
stock of the Corporation entitled to vote for the election of directors,
considered for the purposes of this Article ELEVENTH as one class, shall be
required (i) for the adoption of any agreement for the merger or consolidation
of the Corporation or any Subsidiary (as hereinafter defined) with or into any
Other Corporation (as hereinafter defined), (ii) to authorize any sale, lease,
exchange, mortgage, pledge or other disposition of all or substantially all of
the assets of the Corporation or any Subsidiary to any Other Corporation, (iii)
to authorize the issuance or transfer by the Corporation of any Substantial
Amount (as hereinafter defined) of securities of the Corporation in exchange for
the securities or assets of any Other Corporation or (iv) to engage in any
other transaction the effect of which is to combine the assets and business of
the Corporation or any Subsidiary with any Other Corporation. Such affirmative
vote shall be in addition to the vote of the holders of the stock of the
Corporation otherwise required by law, the Restated Certificate of Incorporation
of the Corporation or any agreement or contract to which the Corporation is a
party.

(b) The provisions of part (a) of this Article ELEVENTH shall
not be applicable to any transaction described therein if such transaction is
approved by a resolution

-5-
<PAGE>

of the Board of Directors of the Corporation, provided that the directors voting
in favor of such resolution include a majority of the persons who were duly
elected and acting members of the Board of Directors prior to the time any such
Other Corporation became a Beneficial Owner (as hereinafter defined) of 5% or
more of the shares of stock of the Corporation entitled to vote for the election
of directors. In considering such transaction, the Board of Directors shall give
due consideration to such factors as it deems relevant, which may include
without limitation the social and economic effects on the employees, customers,
suppliers and other constituents of the Corporation and its Subsidiaries and on
the communities in which the Corporation and its Subsidiaries operate or are
located.

(c) The Board of Directors shall have the power and duty to determine
for the purposes of this Article ELEVENTH, on the basis of information known to
such Board, if and when any Other Corporation is the Beneficial Owner of 5% or
more of the outstanding shares of stock of the Corporation entitled to vote for
the election of directors. Any such determination, if made in good faith, shall
be conclusive and binding for all purposes of this Article ELEVENTH.

(d) As used in this Article ELEVENTH, the following terms shall have
the meanings indicated:

"Other Corporation" means any person, firm, corporation or
other entity, other than a Subsidiary of the Corporation, which is the
Beneficial Owner of 5% or more of the shares of stock of the Corporation
entitled to vote in the election of directors.

"Subsidiary" means any corporation in which the Corporation
owns, directly or indirectly, more than 50% of the voting securities.

"Substantial Amount" means any securities of the Corporation
having a then fair market value of more than $500,000.

An Other Corporation (as defined above) shall be deemed to
be the "Beneficial Owner" of stock if such Other Corporation or any "affiliate"
or "associate" of such Other Corporation (as those terms are defined in Rule
12b-2 promulgated under the Securities and Exchange Act of 1934 (15 U.S.C. 78
aaa et seq.), as amended from time to time), directly or indirectly, controls
the voting of such stock or has any options, warrants, conversion or other
rights to acquire such stock.

(e) This Article ELEVENTH may not be amended, revised or revoked, in
whole or in part, except by the affirmative vote of the holders of 66 2/3% of
the shares of all classes of stock of the Corporation entitled to vote for the
election of directors, considered for the purposes of this Article ELEVENTH as
one class of stock.

-6-
<PAGE>

TWELFTH: No action required to be taken or that may be taken at any annual
or special meeting of stockholders of the Corporation may be taken by written
consent without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.

This Article TWELFTH may not be amended, revised or revoked, in whole or in
part, except by the affirmative vote of the holders of 66 2/3% of the voting
power of the shares of all classes of stock of the Corporation entitled to vote
for the election of directors, considered for the purposes of this Article
TWELFTH as one class of stock.

THIRTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

D. The foregoing Restated Certificate of Incorporation has been duly
adopted by the Board of Directors of the Corporation in accordance with Section
245 of the Delaware General Corporation Law.

E. The foregoing Restated Certificate of Incorporation was approved by
the written consent of the holders of a majority of the outstanding shares of
Common Stock in accordance with Sections 228, 242, and 245 of the Delaware
General Corporation Law.

IN WITNESS WHEREOF, V.I. Technologies, Inc. has caused this Restated
Certificate of Incorporation to be signed by John R. Barr, its President, and
attested by Joanne M. Leonard, its Secretary, this ___ day of __________ 1998.

V.I. TECHNOLOGIES, INC.

By:_____________________________
John R. Barr
President

ATTEST:

By:______________________
Joanne M. Leonard
Secretary

-7-

<PAGE>

EXHIBIT 3.9

Modified - December 12, 1997

BY-LAWS

V.I. TECHNOLOGIES, INC.

Adopted: November 25, 1994
<PAGE>

TABLE OF CONTENTS
-----------------

<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. Stockholders

Sec. 1.1 Annual Meeting......................................... 1
Sec. 1.2 Special Meetings....................................... 1
Sec. 1.3 Notice of Meetings..................................... 1
Sec. 1.4 Quorum................................................. 2
Sec. 1.5 Voting................................................. 3
Sec 1.6 Presiding Officer and Secretary........................ 4
Sec. 1.7 Proxies................................................ 4
Sec. 1.8 List of Stockholders................................... 5
Sec. 1.9 Written Consent of Stockholders in Lieu of Meeting..... 5

ARTICLE II. Directors

Sec. 2.1 Number of Directors.................................... 6
Sec. 2.2 Election and Term of Directors......................... 7
Sec. 2.3 Vacancies and Newly Created Directorships.............. 7
Sec. 2.4 Resignation............................................ 8
Sec. 2.5 Removal................................................ 8
Sec. 2.6 Meetings............................................... 8
Sec. 2.7 Quorum and Voting...................................... 9
Sec. 2.8 Written Consent of Directors in Lieu of a Meeting...... 10
Sec. 2.9 Compensation........................................... 10
Sec. 2.10 Contracts and Transactions Involving Directors......... 10

ARTICLE III. Committees of the Board of Directors

Sec. 3.1 Appointment and Powers................................. 12

ARTICLE IV. Officers, Agents and Employees

Sec. 4.1 Appointment and Term of Office......................... 13
Sec. 4.2 Resignation and Removal................................ 14
Sec. 4.3 Compensation and Bond.................................. 14
Sec. 4.4 Chairman of the Board.................................. 15
Sec. 4.5 President.............................................. 15
Sec. 4.6 Vice Presidents........................................ 16
Sec. 4.7 Treasurer.............................................. 16
Sec. 4.8 Secretary.............................................. 17
Sec. 4.9 Assistant Treasurers................................... 17
Sec. 4.10 Assistant Secretaries.................................. 18
Sec. 4.11 Delegation of Duties................................... 18
Sec. 4.12 Loans to Officers and Employees;
Guaranty of Obligations of Officers
and Employees.......................................... 18

ARTICLE V. Indemnification

Sec. 5.1 Indemnification of Directors, Officers,
</TABLE>
<PAGE>

<TABLE>
<S> <C>
Employees and Agents................................... 19

ARTICLE VI. Capital Stock

Sec. 6.1 Certificates........................................... 20
Sec. 6.2 Transfers of Stock..................................... 21
Sec. 6.3 Lost, Stolen or Destroyed Certificates................. 22
Sec. 6.4 Stockholder Record Date................................ 22

ARTICLE VII. Seal

Sec. 7.1 Seal................................................... 24

ARTICLE VIII. Waiver of Notice

Sec. 8.1. Waiver of Notice....................................... 24

ARTICLE IX. Checks, Notes, Drafts, Etc.

Sec. 9.1 Checks, Notes, Drafts, Etc............................. 25

ARTICLE X. Amendments

Sec. 10.1 Amendments............................................. 25
</TABLE>
<PAGE>

BY-LAWS

V.I. TECHNOLOGIES, INC.

ARTICLE I

Stockholders
------------

Section 1.1 Annual Meeting. Except as otherwise provided in
----------- --------------
Section 1.9 of these By-Laws, an annual meeting of stockholders of the
Corporation for the election of directors and for the transaction of any other
proper business shall be held at such time, date and place as the Board of
Directors, the Chairman of the Board, if any, or the President may from time to
time determine.

Section 1.2 Special Meetings. A special meeting of the holders of
----------- ----------------
stock of the Corporation entitled to vote on any business to be considered at
any such meeting may be called by the Chairman of the Board, if any, or the
President or any Vice President, and shall be called by the Chairman of the
Board, if any, or the President or the Secretary when directed to do so by
resolution of the Board of Directors or at the written request of directors
representing a majority of the whole Board of Directors. Any such request shall
state the purpose or purposes of the proposed meeting.

Section 1.3 Notice of Meetings. Whenever stockholders are required
----------- ------------------
or permitted to take any action at a meeting, unless notice is waived in
writing by all stockholders entitled to vote
<PAGE>

at the meeting, a written notice of the meeting shall be given which shall state
the place, date and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.

Unless otherwise provided by law, and except as to any stockholder
duly waiving notice, the written notice of any meeting shall be given personally
or by mail, not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, notice
shall be deemed given when deposited in the mail, postage prepaid, directed to
the stockholder at his or her address as it appears on the records of the
Corporation.

When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If, however, the adjournment is for more than thirty days, or
if after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.

Section 1.4 Quorum. Except as otherwise provided by law or by the
----------- ------
Certificate of Incorporation or by these By-Laws in respect of the vote required
for a specified action, at any
<PAGE>

meeting of stockholders the holders of a majority of the outstanding stock
entitled to vote thereat, either present or represented by proxy, shall
constitute a quorum for the transaction of any business, but the stockholders
present, although less than a quorum, may adjourn the meeting to another time or
place and, except as provided in the last paragraph of Section 1.3 of these By-
Laws, notice need not be given of the adjourned meeting.

Section 1.5 Voting. Whenever directors are to be elected at a
----------- ------
meeting, they shall be elected by a plurality of the votes cast at the meeting
by the holders of stock entitled to vote. Whenever any corporate action, other
than the election of directors, is to be taken by vote of stockholders at a
meeting, it shall, except as otherwise required by law or by the Certificate of
Incorporation or by these By-Laws, be authorized by a majority of the votes cast
at the meeting by the holders of stock entitled to vote thereon.

Except as otherwise provided by law, or by the Certificate of
Incorporation, each holder of record of stock of the Corporation entitled to
vote on any matter at any meeting of stock-holders shall be entitled to one vote
for each share of such stock standing in the name of such holder on the stock
ledger of the Corporation on the record date for the determination of the
stockholders entitled to vote at the meeting.

Upon the demand of any stockholder entitled to vote,
<PAGE>

the vote for directors or the vote on any other matter at a meeting shall be by
written ballot, but otherwise the method of voting and the manner in which votes
are counted shall be discretionary with the presiding officer at the meeting.

Section 1.6 Presiding Officer and Secretary. At every meeting of
----------- -------------------------------
stockholders the Chairman of the Board, or in his or her absence (or if there be
none) the President, or in his or her absence a Vice President, or, if none be
present, the appointee of the meeting, shall preside. The Secretary, or in his
or her absence an Assistant Secretary, or if none be present, the appointee of
the presiding officer of the meeting, shall act as secretary of the meeting.

Section 1.7 Proxies. Each stockholder entitled to vote at a meeting
----------- -------
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. Every proxy shall be
signed by the stockholder or by his duly authorized attorney.

Section 1.8 List of Stockholders. The officer who has charge of the
----------- --------------------
stock ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting,
<PAGE>

arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this Section or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.

Section 1.9 Written Consent of Stockholders in Lieu of Meeting.
----------- --------------------------------------------------
Any action required by statute to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted.
<PAGE>

Prompt written notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Any such written consent may be given by one or
any number of substantially concurrent written instruments of substantially
similar tenor signed by such stockholders, in person or by attorney or proxy
duly appointed in writing, and filed with the Secretary or an Assistant
Secretary of the Corporation. Any such written consent shall be effective as of
the effective date thereof as specified therein, provided that such date is not
more than sixty days prior to the date such written consent is filed as
aforesaid, or, if no such date is so specified, on the date such written consent
is filed as aforesaid.

ARTICLE II

Directors
---------

Section 2.1 Number of Directors. The Board of Directors shall
----------- -------------------
consist of 10 directors until changed as provided in this Section. The number of
directors may be changed at any time and from time to time by vote at a meeting
or by written consent of the holders of stock entitled to vote on the election
of directors, or by a resolution of the Board of Directors passed by a majority
of the whole Board of Directors, except that no decrease shall shorten the term
of any incumbent director unless such director is specifically removed pursuant
to Section 2.5 of these By-Laws at the time of such decrease.
<PAGE>

Section 2.2 Election and Term of Directors. Directors shall be
----------- ------------------------------
elected annually, by election at the annual meeting of stockholders or by
written consent of the holders of stock entitled to vote thereon in lieu of such
meeting. If the annual election of directors is not held on the date designated
therefor, the directors shall cause such election to be held as soon thereafter
as convenient. Each director shall hold office from the time of his or her
election and qualification until his successor is elected and, qualified or
until his or her earlier resignation, or removal.

Section 2.3 Vacancies and Newly Created Directorships. Vacancies
----------- -----------------------------------------
and newly created directorships resulting from any increase in the authorized
number of directors may be filled by election at a meeting of stockholders or by
written consent of the holders of stock entitled to vote thereon in lieu, of a
meeting. Except as otherwise provided by law, vacancies and such newly created
directorships may also be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director.

Section 2.4 Resignation. Any director may resign at any time upon
----------- -----------
written notice to the Corporation. Any such resignation shall take effect at the
time specified therein or, if the time be not specified, upon receipt thereof,
and the acceptance of such resignation, unless required by the terms
<PAGE>

thereof, shall not be necessary to make such resignation effective.

Section 2.5 Removal. Any or all of the directors may be removed at any
----------- -------
time, with or without cause, by vote at a meeting or by written consent of the
holders of stock entitled to vote on the election of directors.

Section 2.6 Meetings. Meetings of the Board of Directors, regular
----------- --------
or special, may be held at any place within or without the State of Delaware.
Members of the Board of Directors, or of any committee designated by the Board,
may participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting. An annual
meeting of the Board of Directors shall be held after each annual election of
directors. If such election occurs at an annual meeting of stockholders, the
annual meeting of the Board of Directors shall be held at the same place and
immediately following such meeting of stockholders, and no notice thereof need
be given. If an annual election of directors occurs by written consent in lieu
of the annual meeting of stockholders, the annual meeting of the Board of
Directors shall take place as soon after such written consent is duly filed with
the Corporation as is practicable, either at the next regular

<PAGE>

meeting of the Board of Directors or at a special meeting. The Board of
Directors may fix times and places for regular meetings of the Board and no
notice of such meetings need be given. A special meeting of the Board of
Directors shall be held whenever called by the Chairman of the Board, if any, or
by the President or by at least one-third of the directors for the time being in
office, at such time and place as shall be specified in the notice or waiver
thereof. Notice of each special meeting shall be given by the Secretary or by a
person calling the meeting to each director by mailing the same, postage
prepaid, not later than the second day before the meeting, or personally or by
telegraphing or telephoning the same not later than the day before the meeting.

Section 2.7 Quorum and Voting. A majority of the total number of directors
----------- -----------------
shall constitute a quorum for the transaction of business, but, if there be less
than a quorum at any meeting of the Board of Directors, a majority of the
directors present may adjourn the meeting from time to time, and no further
notice thereof need be given other than announcement at the meeting which shall
be so adjourned. Except as otherwise provided by law, by the Certificate of
Incorporation, or by these By-Laws, the vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.

Section 2.8 Written Consent of Directors in Lieu of a Meeting.
----------- -------------------------------------------------
Any action required or permitted to be taken at any
<PAGE>

meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if all members of the Board or of such committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.

Section 2.9 Compensation. Directors may receive compensation for services
----------- ------------
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board of Directors.

Section 2.10 Contracts and Transactions Involving Directors. No
------------ ----------------------------------------------
contract or transaction between the Corporation and one or more of its directors
or officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his, her
or their votes are counted for such purpose, if: (1) the material facts as to
his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the
Board or committee in good faith authorizes the contract or transaction by the
<PAGE>

affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (2) the material facts as to
his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.

ARTICLE III

Committee of the Board of Directors
-----------------------------------

Section 3.1 Appointment and Powers. The Board of Directors may from time
----------- ----------------------
to time, by resolution passed by majority of the whole Board, designate one or
more committees, each committee to consist of one or more directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. The resolution of the Board of Directors
may, in addition or alternatively, provide that in the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting any not disqualified from voting, whether or not he,
<PAGE>

she or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it, except as otherwise provided by law.
Unless the resolution of the Board of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Any such committee may adopt rules governing
the method of calling and time and place of holding its meetings. Unless
otherwise provided by the Board of Directors, a majority of any such committee
(or the member thereof, if only one) shall constitute a quorum for the
transaction of business, and the vote of a majority of the members of such
committee present at a meeting at which a quorum is present shall be the act of
such committee. Each such committee shall keep a record of its acts and
proceedings and shall report thereon to the Board of Directors whenever
requested so to do. Any or all members of any such committee may be removed,
with or without cause, by resolution of the Board of Directors, passed by a
majority of the whole Board.

ARTICLE IV

Officers, Agents and Employees
------------------------------
<PAGE>

Section 4.1 Appointment and Term of Office. The officers of the
----------- ------------------------------
Corporation may include a President, a Secretary and a Treasurer, and may also
include a Chairman of the Board, one or more Vice Presidents, one or more
Assistant Secretaries and one or more Assistant Treasurers. All such officers
shall be appointed by the Board of Directors or by a duly authorized committee
thereof. Any number of such offices may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity. Except as may be prescribed otherwise by the Board of Directors or a
committee thereof in a particular case, all such officers shall hold their
offices at the pleasure of the Board for an unlimited term and need not be
reappointed annually or at any other periodic interval. The Board of Directors
may appoint, and may delegate power to appoint, such other officers, agents and
employees as it may deem necessary or proper, who shall hold their offices or
positions for such terms, have such authority and perform such duties as may
from time to time be determined by or pursuant to authorization of the Board of
Directors.

Section 4.2 Resignation and Removal. Any officer may resign at any time
----------- -----------------------
upon written notice to the Corporation. Any officer, agent or employee of the
Corporation may be removed by the Board of Directors, or by a duly authorized
committee thereof, with or without cause at any time. The Board of Directors or
such a committee thereof may delegate such power of removal as to
<PAGE>

officers, agents and employees not appointed by the Board of Directors or such a
committee. Such removal shall be without prejudice to a person's contract
rights, if any, but the appointment of any person as an officer, agent or
employee of the Corporation shall not of itself create contract rights.

Section 4.3 Compensation and Bond. The compensation of the officers of the
----------- ---------------------
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his or her control.
The Corporation may secure the fidelity of any or all of its officers, agents or
employees by bond or otherwise.

Section 4.4 Chairman of the Board. The Chairman of the Board, if there be
----------- ---------------------
one, shall preside at all meetings of stockholders and of the Board of
Directors, and shall have such other powers and duties as may be delegated to
him or her by the Board of Directors.

Section 4.5 President. The President shall be the chief executive officer
----------- ---------
of the Corporation. In the absence of the Chairman of the Board (or if
there be none), he or she shall preside at all meetings of the stockholders and
of the Board of Directors. He or she shall have general charge of the business
affairs of the Corporation. He or she may employ and discharge employees and
agents of the Corporation, except such as shall be
<PAGE>

appointed by the Board of Directors, and he or she may delegate these powers.
The President may vote the stock or other securities of any other domestic or
foreign corporation of any type or kind which may at any time be owned by the
Corporation, may execute any stockholders' or other consents in respect thereof
and may in his or her discretion delegate such powers by executing proxies, or
otherwise, on behalf of the Corporation. The Board of Directors by resolution
from time to time may confer like powers upon any other person or persons.

Section 4.6 Vice Presidents. Each Vice President shall have such
----------- ---------------
powers and perform such duties as the Board of Directors or the President may
from time to time prescribe. In the absence or inability to act of the
President, unless the Board of Directors shall otherwise provide, the Vice
President who has served in that capacity for the longest time and who shall be
present and able to act, shall perform all the duties and may exercise any of
the powers of the President. The performance of any duty by a Vice President
shall, in respect of any other person dealing with the Corporation, be
conclusive evidence of his or her power to act.

Section 4.7 Treasurer. The Treasurer shall have charge of all funds
----------- ---------
and securities of the Corporation, shall endorse the same for deposit or
collection when necessary and deposit the same to the credit of the Corporation
in such banks
<PAGE>

or depositaries as the Board of Directors may authorize. He or she may endorse
all commercial documents requiring endorsements for or on behalf of the
Corporation and may sign all receipts and vouchers for payments made to the
Corporation. He or she shall have all such further powers and duties as
generally are incident to the position of Treasurer or as may be assigned to him
or her by the President or the Board of Directors.

Section 4.8 Secretary. The Secretary shall record all the
----------- ---------
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose and shall also record therein all action taken by written
consent of the stockholders or directors in lieu of a meeting. He or she shall
attend to the giving and serving of all notices of the Corporation. He or she
shall have custody of the seal of the Corporation and shall attest the same by
his or her signature whenever required. He or she shall have charge of the stock
ledger and such other books and papers as the Board of Directors may direct, but
he or she may delegate responsibility for maintaining the stock ledger to any
transfer agent appointed by the Board of Directors. He or she shall have all
such further powers and duties as generally are incident to the position of
Secretary or as may be assigned to him or her by the President or the Board of
Directors.

Section 4.9 Assistant Treasurers. In the absence or inability to
----------- --------------------
act of the Treasurer, any Assistant Treasurer may
<PAGE>

perform all the duties and exercise all the powers of the Treasurer. The
performance of any such duty shall, in respect of any other person dealing with
the Corporation, be conclusive evidence of his or her power to act. An Assistant
Treasurer shall also perform such other duties as the Treasurer or the Board of
Directors may assign to him or her.

Section 4.10 Assistant Secretaries. In the absence or inability to
------------ ----------------------
act of the Secretary, any Assistant Secretary may perform all the duties and
exercise all the powers of the Secretary. The performance of any such duty
shall, in respect of any other person dealing with the Corporation, be
conclusive evidence of his or her power to act. An Assistant Secretary shall
also perform such other duties as the Secretary or the Board of Directors may
assign to him or her.

Section 4.11 Delegation of Duties. In case of the absence of any
------------ --------------------
officer of the Corporation, or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors may confer for the time being the
powers or duties, or any of them, of such officer upon any other officer or upon
any director.

Section 4.12 Loans to Officers and Employees; Guaranty of Obligations
------------ --------------------------------------------------------
of Officers and Employees. The Corporation may lend money to, or guarantee any
- -------------------------
obligation of, or otherwise assist
<PAGE>

any officer or other employee of the Corporation or any subsidiary, including
any officer or employee who is a director of the Corporation or any subsidiary,
whenever, in the judgment of the directors, such loan, guaranty or assistance
may reasonably be expected to benefit the Corporation. The loan, guaranty or
other assistance may be with or without interest, and may be unsecured, or
secured in such manner as the Board of Directors shall approve, including,
without limitations, a pledge of shares of stock of the Corporation.

ARTICLE V

Indemnification
---------------

Section 5.1 Indemnification of Directors, Officers, Employees and
----------- -----------------------------------------------------
Agents. Any person who was or is a party or is threatened to be made a party to
- ------
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including any action or suit by or in
the right of the Corporation to procure judgment in its favor) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the Corporation, if,
as and to the extent authorized by applicable law, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with the defense or
<PAGE>

settlement of such action, suit or proceeding. Expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Corporation as authorized by statute.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the Board of Directors
deems appropriate. The indemnification and advancement of expenses provided by,
or granted pursuant to, this By-Law or statute shall not be deemed exclusive of
any other rights to which any person seeking indemnification or advancement of
expenses may be entitled under any lawful agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.

ARTICLE VI

Common Stock
------------

Section 6.1 Certificates. Certificates for stock of the Corporation
----------- ------------
shall be in such form as shall be approved by the
<PAGE>

Board of Directors and shall be signed in the name of the Corporation by the
Chairman or a Vice Chairman of the Board, if any, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary. Such certificates may be sealed with the seal of the
Corporation or a facsimile thereof. Any of or all the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.

Section 6.2 Transfer of Stock. Transfers of stock shall be made
----------- -----------------
only upon the books of the Corporation by the holder, in person or by duly
authorized attorney, and on the surrender of the certificate or certificates for
such stock properly endorsed. The Board of Directors shall have the power to
make all such rules and regulations, not inconsistent with the Certificate of
Incorporation and these By-Laws and the law, as the Board of Directors may deem
appropriate concerning the issue, transfer and registration of certificates for
stock of the Corporation. The Board may appoint one or more transfer agents or
registrars of transfers, or both, and may require all stock certificates to bear
the signature of either or both.
<PAGE>

Section 6.3 Lost, Stolen or Destroyed Certificates. The Corporation
----------- --------------------------------------
may issue a new stock certificate in the place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed certificate
or his or her legal representative to give the Corporation a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate. The Board of Directors may require such owner to
satisfy other reasonable requirements.

Section 6.4 Stockholder Record Date. In order that the Corporation
----------- -----------------------
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. Only such stockholders as shall be stockholders of record on the
date so fixed shall be entitled to notice of, and to vote at, such meeting and
any adjournment thereof, or to give such
<PAGE>

consent, or to receive payment of such dividend or other distribution, or to
exercise such rights in respect of any such change, conversion or exchange of
stock, or to participate in such action, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any record date so
fixed.

If no record date is fixed by the Board of Directors, (1) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
date on which notice is given, or, if notice is waived by all stockholders
entitled to vote at the meeting, at the close of business on the day next
preceding the day on which the meeting is held, (2) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary shall be at the close of business on the day on which the first
written consent is expressed by the filing thereof with the Corporation as
provided in Section 1.9 of these By-Laws, and (3) the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.

A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
<PAGE>

ARTICLE VII

Seal
----

Section 7.1 Seal. The seal of the Corporation shall be circular in
----------- ----
form and shall bear, in addition to any other emblem or device approved by the
Board of Directors, the name of the corporation, the year of its incorporation
and the words "Corporate Seal" and "Delaware". The seal may be used by causing
it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.

ARTICLE VIII

Waiver of Notice
----------------

Section 8.1 Waiver of Notice. Whenever notice is required to be given
----------- ----------------
by statute, or under any provision of the Certificate of Incorporation or these
By-Laws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. In the case of a stockholder, such waiver of notice may be signed by
such stockholder's attorney or proxy duly appointed in writing. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors or members of a committee of directors need be specified in any
<PAGE>

written waiver of notice.

ARTICLE IX

Checks, Notes, Drafts, Etc.
---------------------------

Section 9.1 Checks, Notes, Drafts, Etc. Checks, notes, drafts,
----------- --------------------------
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as the
Board of Directors or a duly authorized committee thereof may from time to time
designate.

ARTICLE X

Amendments
----------

Section 10.1 Amendments. These By-Laws or any of them may be
------------ ----------
altered or repealed, and new By-Laws may be adopted, by the stockholders by vote
at a meeting or by written consent without a meeting. The Board of Directors
shall also have power, by a majority vote of the whole Board of Directors, to
alter or repeal any of these By-Laws, and to adopt new By-Laws.

<PAGE>

EXHIBIT 3.10

AMENDED AND RESTATED BY-LAWS

V.I. TECHNOLOGIES, INC.

ARTICLE I

STOCKHOLDERS

SECTION 1. Place of Meetings. All meetings of stockholders shall be held
-----------------
at such place within or without the State of Delaware as may be designated from
time to time by the Board of Directors or, if not so designated, at the
principal office of the corporation.

SECTION 2. Annual Meeting. The annual meeting of stockholders for the
--------------
election of directors and the transaction of such other business as may properly
come before the meeting shall be held on such date and at such hour and place as
the directors or an officer designated by the directors may determine If the
annual meeting is not held on the date designated therefor, the directors shall
cause the meeting to be held as soon thereafter as convenient.

SECTION 3. Special Meetings. Special meetings of the stockholders may be
----------------
called at any time by the President or the Board of Directors.

SECTION 4. Notice of Meetings. Except where some other notice is required
------------------
by law, written notice of each meeting of stockholders, stating the place, date
and hour thereof and the purposes for which the meeting is called, shall be
given by or under the direction of the Secretary, not less than 10 nor more than
60 days before the dare fixed for such meeting, to each stockholder entitled to
vote at such meeting of record at the close of business on the day fixed by the
Board of Directors as a record date for the determination of the stockholders
entitled to vote at such meeting or, if no such date has been fixed, of record
at the close of business on the day before the day on which notice is given
Notice shall be given personally to each stockholder or left at his or her
residence or usual place of business or mailed postage prepaid and addressed to
the stockholder at his or her address as it appears upon the records of the
corporation. In case of the death, absence, incapacity or refusal of the
Secretary, such notice may be given by a person designated either by the
Secretary or by the person or persons calling the meeting or by the Board of
Directors. A waiver of such notice in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to such notice. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at; the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
<PAGE>

specified in any written waiver of notice. Notice of any meeting of the
stockholders shall be deemed to have been given to any person who may become a
stockholder of record after the mailing of such notice and prior to such
meeting. Except as required by statute, notice of any adjourned meeting of the
stockholders shall not be required.

SECTION 5. Stockholder Nominations of Directors. Only persons who are
------------------------------------
nominated in accordance with the following procedures shall be eligible for
election as directors at any annual or special meeting. Nominations of persons
for election as directors may be made by or at the direction of the Board of
Directors or by any stockholder entitled to vote for the election of directors
at the meeting who complies with the notice procedures set forth in this Section
5. Such nominations, other than those made by or at the direction of the Board,
shall be made pursuant to timely notice in writing to the Chairman, if any, the
President, the Secretary or the Treasurer. To be timely, a stockholder's notice
shall be delivered to or mailed and received at the principal executive' of the
corporation not less than 50 days nor more than 75 days prior to the meeting;
provided, however, that if less than 65 days' notice or prior public disclosure
- -------- -------
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth: (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of capital stock
of the corporation which are beneficially owned by the person and (iv) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
corporation which are beneficially owned by such stockholder. No person shall be
eligible for election as a director at any annual or special meeting of
stockholders unless nominated in accordance with the procedures set forth herein
Nothing in this Section 5 shall be deemed to grant stockholders the right have
such nominations included on the agenda or in the notice or proxy materials for
such meeting except as otherwise required by law.

The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.

SECTION 6. Record Date. The Board of Directors may fix in advance a
-----------
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action. Such record date shall not be
more than 60 days nor less than 10 days before the date of such meeting, nor
more than 60 days prior to any other action to which such record date relates.

-2-
<PAGE>

If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating to such purpose. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
-------- -------
that the Board of Directors may fix a new record date for the adjourned meeting.

SECTION 7. Advance Notice of Stockholder-Proposed Business at Annual
---------------------------------------------------------
Meetings. At an annual meeting of the stockholders, only such business shall
- --------
be conducted as shall have been properly brought before the meeting. To be
brought properly before an annual meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the President or the Board of Directors, (b) otherwise properly
brought before the meeting by or at the direction of the Board or (c) otherwise
properly brought before the meeting by a stockholder. In addition to any other
applicable requirements, for business to be brought properly before an annual
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Chairman, if any, the President, the Secretary or the
Treasurer. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the corporation not less than
50 days nor more than 75 days prior to the meeting; provided, however, that if
-------- -------
less than 65 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the 15th day following the
day on which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such business.

Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 7, provided, however, that nothing in this
-------- -------
Section 7 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure; provided, further, that nothing in this Section 7 shall be deemed to
-------- -------
grant stockholders the right have such business included on the agenda or in the
notice or proxy materials for such meeting except as otherwise required by law.

The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 7, and if
he should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.

SECTION 8. Voting List. The officer who has charge of the stock
-----------
ledger of the corporation shall make or have made, at least 10 days before every
meeting of stockholders, a

-3-
<PAGE>

complete list of the stockholders, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting, either at a place
within the city or other municipality or community where the meeting is to be
held, which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section or the books of the
corporation, or to vote at any meeting of stockholders.

SECTION 9. Quorum of Stockholders. At any meeting of the
----------------------
stockholders, the holders of a majority in interest of all stock issued and
outstanding and entitled to vote upon a question to be considered at the
meeting, present in person or represented by proxy, shall constitute a quorum
for the consideration of such question, but a smaller group may adjourn any
meeting from time to time. When a quorum is present at any meeting, a majority
of the stock represented thereat and entitled to vote shall, except where a
larger vote is required by law, by the Certificate of Incorporation, or by these
by-laws, decide any question brought before such meeting. Any election by
stockholders shall be determined by a plurality of the votes cast by the
stockholders entitled to vote at the election.

SECTION 10. Proxies and Voting. Unless otherwise provided in the
------------------
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock held of record by such stockholder, but no proxy shall be voted or
acted upon after three years from its date, unless said proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledger on the books of the corporation
the pledgee shall have been expressly empowered to vote thereon, in which case
only the pledgee or the pledgee's proxy may represent said stock and vote
thereon. Shares of the capital stock of the corporation belonging to the
corporation or to another corporation, a majority of whose shares entitled to
vote in the election of directors is owned by the corporation, shall neither be
entitled to vote nor be counted for quorum purposes.

SECTION 11. Conduct of Meeting. Meetings of the stockholders shall be
------------------
presided over by one of the following officers in the order of seniority and if
present and acting: the President, a Vice President, the Chairman of the Board,
if any, the Vice Chairman of the Board, if any, or, if none of the foregoing is
in office and present and acting, a chairman to be chosen by the stockholders.
The Secretary of the corporation, if present, or an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the chairman of the meeting shall appoint a secretary of
the meeting.

-4-
<PAGE>

ARTICLE II

DIRECTORS

SECTION 1. General Powers. The business and affairs of the
--------------
corporation shall be managed by or under the direction of a Board of Directors,
who may exercise all of the powers of the corporation which are not by law or
the Certificate of Incorporation required to be exercised by the stockholders.
In the event of a vacancy in the Board of Directors, the remaining directors,
except otherwise provided by law, may exercise the powers of the full Board
until the vacancy is filled.

SECTION 2. Number, Election, Tenure and Qualification. Subject to any
------------------------------------------
restrictions contained in the Certificate of Incorporation, the number of
directors that shall constitute the Board of Directors shall be fixed by
resolution of the Board of Directors but in no event shall be less than three.
Directors shall be elected in the manner provided in the Certificate of
Incorporation by such stockholders as have the right to vote thereon. The number
of directors may be increased or decreased by action of the Board of Directors.
Directors need not be stockholders of the corporation.

SECTION 3. Enlargement of the Board. Subject to the restrictions
------------------------
contain in the Certificate of Incorporation, the number of the Board of
Directors may be increased at any time, such increase to be effective
immediately, by vote of a majority of the directors then in office.

SECTION 4. Vacancies. Unless and until filled by the stockholders,
---------
any vacancy in the Board of Directors, however occurring, including a vacancy
resulting from an enlargement of the Board and an unfilled vacancy resulting
from the removal of any director for cause, may be filled in the manner provided
in the Certificate of Incorporation. When one or more directors shall resign
from the Board, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective. If at any time there are no directors in
office, then an election of directors may be held in accordance with the General
Corporation Law of the State of Delaware.

SECTION 5. Resignation. Any director may resign at any time upon
-----------
written notice to the corporation. Such resignation shall take effect at the
time specified therein, or if no time is specified, at the time of its receipt
by the President or Secretary.

SECTION 6. Removal. Directors may be removed from office only as
-------
provided in the Certificate of Incorporation. The vacancy or vacancies thus
created may be filled by the stockholders at the meeting held for the purpose of
removal or, if not so filled, by the directors in the manner provided in Section
4 of this Article II.

SECTION 7. Committees. The Board of Directors may, by resolution or
----------
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who

-5-
<PAGE>

may replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of such absent or disqualified member.

A majority of all the members of any such committee may fix its rules of
procedure, determine its action and fix the time and place, whether within or
without the State of Delaware, of its meetings and specify what notice thereof,
if any, shall be given, unless the Board of Directors shall otherwise by
resolution provide. The Board of Directors shall have the power to change the
members of any such committee at any time, to fill vacancies therein and to
discharge any such committee, either with or without cause, at any time.

Any such committee, unless otherwise provided in the resolution of the
Board of Directors, or in these By-laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
such power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending a dissolution of the corporation
or a revocation of a dissolution, or amending the By-laws of the corporation,
and, unless the resolution or these By-laws expressly so provide, no such
committee shall have the power or the authority to declare a dividend or to
authorize the issuance of stock.

Each committee shall keep regular minutes of its meetings and make such
reports as the Board of Directors may from time to time request.

SECTION 8. Meetings of the Board of Directors. Regular meetings of
----------------------------------
the Board of Directors may be held without call or formal notice at such places
either within or without the State of Delaware and at such times as the Board
may by vote from time to time determine. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders, or any special meeting of
the stockholders at which a Board of Directors is elected.

Special meetings of the Board of Directors may be held at any place
either within or without the State of Delaware at any time when called by the
Chairman of the Board of Directors, if any, the President, Treasurer,
Secretary, or two or more directors. Reasonable notice of the time and place of
a special meeting shall be given to each director unless such notice is waived
by attendance or by written waiver in the manner provided in these By-laws for
waiver of notice by stockholders. Notice may be given by, or by a person
designated by, the Secretary, the person or persons calling the meeting, or the
Board of Directors. No notice of any adjourned meeting of the Board of Directors
shall be required. In any case it shall be deemed sufficient notice to a
director to send notice by mail at least 72 hours, or by telegram at least 48
hours, before the meeting, addressed to such director at his or her usual or
last known business or home address.

-6-
<PAGE>

Directors or members of any committee designated by the directors may
participate in a meeting of the Board of Directors or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation by
such means shall constitute presence in person at such meeting

SECTION 9. Quorum and Voting. A majority of the total number of
-----------------
directors shall constitute a quorum, except that when a vacancy or vacancies
exist in the Board, a majority of the directors then in office (but not less
than one-third of the total number of the directors) shall constitute a quorum.
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting from time to time. The vote of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors, except where a different vote is required or permitted by
law, by the Certificate of Incorporation, or by these by-laws.

SECTION 10. Compensation. The Board of Directors may fix fees for
------------
their services and for their membership on committees, and expenses of
attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity as an officer, agent or otherwise, and
receiving compensation therefor.

SECTION 11. Action Without Meeting. Any action required or permitted
----------------------
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, and without notice, if a written
consent thereto is signed by all members of the Board of Directors, or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or such committee.

ARTICLE III

OFFICERS

SECTION 1. Titles.The officers of the corporation shall consist of a
------
President, a Secretary, a Treasurer, and such other officers with such other
titles as the Board of Directors shall determine, including without limitation a
Chairman of the Board, a Vice Chairman of the Board, and one or more Vice
Presidents, Assistant Treasurers, or Assistant Secretaries.

SECTION 2. Election and Term of Office. The officers of the
---------------------------
corporation shall be elected annually by the Board of Directors at its first
meeting following the annual meeting of the stockholders. Each officer shall
hold office until his or her successor is elected and qualified, unless a
different term is specified in the vote electing such officer, or until his or
her earlier death, resignation or removal.

SECTION 3. Qualification. Unless otherwise provided by resolution of
-------------
the Board of Directors, no officer, other than the Chairman or Vice Chairman of
the Board, need be a director. No officer need be a stockholder. Any number of
offices may be held by the same person, as the directors shall determine.

-7-
<PAGE>

SECTION 4. Removal. Any officer may be removed, with or without cause,
-------
at any time, by resolution adopted by the Board of Directors

SECTION 5. Resignation. Any officer may resign by delivering a written
-----------
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt or at such later
time as may be specified therein.

SECTION 6. Vacancies. The Board of Directors may at any time fill any
---------
vacancy occurring in any office for the unexpired portion of the term and may
leave unfilled for such period as it may determine any office other than those
of President, Treasurer and Secretary.

SECTION 7. Powers and Duties. The officers of the corporation shall
-----------------
have such powers and perform such duties as are specified herein and as may be
conferred upon or assigned to them by the Board of Directors, and shall have
such additional powers and duties as are incident to their office except to the
extent that resolutions of the Board of Directors are inconsistent therewith.

SECTION 8. President and Vice Presidents. The President shall be the
-----------------------------
chief executive officer of the corporation, shall preside at all meetings of the
stockholders and the Board of Directors unless a Chairman or Vice Chairman of
the Board is elected by the Board, empowered to preside, and present at such
meeting, shall have general and active management of the business of the
corporation and general supervision of its officers, agents and employees, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.

In the absence of the President or in the event of his or her inability or
refusal to act, the Vice President if any (or in the event there be more than
one Vice President, the Vice Presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President. The Board of Directors may assign to any Vice President the title of
Executive Vice President, Senior Vice President or any other title selected by
the Board of Directors.

SECTION 9. Secretary and Assistant Secretaries. The Secretary shall
-----------------------------------
attend all meetings of the Board of Directors and of the stockholders and record
all the proceedings of such meetings in a book to be kept for that purpose,
shall give, or cause to be given, notice of all meetings of the stockholders
and special meetings of the Board of Directors, shall maintain a stock ledger
and prepare lists of stockholders and their addresses as required and shall have
custody of the corporate seal which the Secretary or any Assistant Secretary
shall have authority to affix to any instrument requiring it and attest by any
of their signatures. The Board of Directors may give general authority to any
other officer to affix and attest the seal of the corporation.

The Assistant Secretary if any (or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors or if there be no
such determination, then in the order of their election) shall, in the absence
of the Secretary or in the event of the Secetary's inability or refusal to act,
perform the duties and exercise the powers of the Secretary.

-8-
<PAGE>

SECTION 10. Treasurer and Assistant Treasurers. The Treasurer shall
----------------------------------
have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Director. The Treasurer shall1 disburse the funds of the
corporation as may be ordered by the Board of Directors or the President, taking
proper vouchers for such disbursements, and shall render to the President and
the Board of Directors, at its regular meetings, or whenever they may require
it, an account of all transactions and of the financial condition of the
corporation.

The Assistant Treasurer if any (or if there be more than one, the
Assistant Treasurers in the order determined by the Board of Directors or if
there be no such determination, then in the order of their election) shall, in
the absence of the Treasurer or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Treasurer.

SECTION 11. Bonded Officers. The Board of Directors may require any
---------------
officer to give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors upon such terms and
conditions as the Board of Directors may specify, including without limitation a
bond for the faithful performance of the duties of such officer and for the
restoration to the corporation of all property in his or her possession or
control belonging to the corporation.

SECTION 12. Salaries. Officers of the corporation shall be entitled
--------
to such salaries, compensation or reimbursement as shall be fixed or allowed
from time to time by the Board of Directors.

ARTICLE IV

STOCK

SECTION 1. Certificates of Stock. One or more certificates of
---------------------
stock, signed by the Chairman or Vice Chairman of the Board of Directors or by
the President or Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying, in the aggregate, the number of shares owned by the stockholder in
the corporation. Any or all signatures on any such certificate may be
facsimiles. In case any officer, transfer agent or registrar who shall have
signed or whose facsimile signature shall have been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.

Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the By-
laws, applicable securities laws, or any agreement among any number of
stockholders or among such holders and the corporation shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.

-9-
<PAGE>

SECTION 2. Transfers of Shares of Stock. Subject to the
----------------------------
restrictions, if any, stated or noted on the stock certificates, shares of stock
may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, and with such proof of authority or the authenticity of
signature as the corporation or its transfer agent may reasonably require. The
corporation shall be entitled to treat the record holder of stock as shown on
its books as the owner of such stock for all purposes, including the payment of
dividends and the right to vote with respect to that stock, regardless of any
transfer, pledge or other disposition of that stock, until the shares have been
transferred on the books of the corporation in accordance with the requirements
of these By-laws.

SECTION 3. Lost Certificates. A new certificate of stock may be
-----------------
issued in the place of any certificate theretofore issued by the corporation and
alleged to have been lost, stolen, destroyed, or mutilated, upon such terms in
conformity with law as the Board of Directors shall prescribe. The directors
may, in their discretion, require the owner of the lost, stolen, destroyed or
mutilated certificate, or the owner's legal representatives, to give the
corporation a bond, in such sum as they may direct, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss,
theft, destruction or mutilation of any such certificate, or the issuance, of
any such new certificate.

SECTION 4. Fractional Share Interests. The corporation may, but
--------------------------
shall not be required to, issue fractions of a share. If the corporation does
not issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined or (3) issue scrip or warrants in registered or bearer
form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.

SECTION 5. Dividends. Subject to the provisions of the Certificate
---------
of Incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting, declare dividends upon the common
stock of the corporation as and when they deem expedient.

-10-
<PAGE>

ARTICLE V

INSURANCE

SECTION 1. Indemnification. The corporation shall, to the full
---------------
extent permitted by the General Corporation Law of the State of Delaware, as
amended from time to time, the Certificate of Incorporation, and any agreement
of the Corporation, indemnify each person whom it may indemnify pursuant
thereto.

SECTION 2. Insurance. The corporation shall have power to purchase
---------
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such liability
under the provisions of the General Corporation Law of the State of Delaware.

ARTICLE VI

GENERAL PROVISIONS

SECTION 1. Fiscal Year. Except as otherwise designated from time
-----------
to time by the Board of Directors, the fiscal year of the corporation shall
begin on the first day of January and end on the last day of December.

SECTION 2. Corporate Seal. The corporation seal shall be in such
--------------
form as shall be approved by the Board of Directors. The Secretary shall be the
custodian of the seal. The Board of Directors may authorize a duplicate seal to
be kept and used by any other officer.

SECTION 3. Certificate of Incorporation. All references in these
----------------------------
By-laws to the Certificate of Incorporation shall be deemed to refer to the
Certificate of Incorporation of the corporation, as in effect from time to time.

SECTION 4. Execution of Instruments. The Chairman and Vice
------------------------
Chairman of the Board of Directors, if any, the President, any Vice President,
and the Treasurer shall have the power to execute and deliver on behalf and in
the name of the corporation any instrument requiring the signature of an officer
of the corporation, including deeds, contracts, mortgages, bonds, notes,
debentures, checks, drafts, and other orders for the payment of money. In
addition, the Board of Directors may expressly delegate such powers to any other
agent of the corporation.

SECTION 5. Voting of Securities. Except as the directors may
--------------------
otherwise designate, the President or Treasurer may waive notice of, and act as,
or appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of

-11-
<PAGE>

substitution) at any meeting of stockholders or shareholders of any other
corporation or organization the securities of which may be held by this
corporation.

SECTION 6. Evidence of Authority. A certificate by the Secretary,
---------------------
or an Assistant Secretary, or a temporary secretary, as to any action taken by
the stockholders, directors, a committee or any officer or representative of
the corporation shall, as to all persons who rely on the certificate in good
faith, be conclusive evidence of that action.

SECTION 7. Transactions with Interested Parties. No contract or
------------------------------------
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for that reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors which authorizes the contract or transaction
or solely because the vote of any such director is counted for such purpose, if:

(1) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or

(2) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or

(3) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors, or the stockholders.

Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.

SECTION 8. Books and Records. The books and records of the corporation
-----------------
shall be kept at such places within or without the State of Delaware as the
Board of Directors may from time to time determine.

ARTICLE VII

AMENDMENTS

SECTION 1. By the Board of Directors. These By-laws may be altered,
-------------------------
amended or repealed or new by-laws may be adopted by the affirmative vote of a
majority of

-12-
<PAGE>

the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present.

SECTION 2. By the Stockholders. These By-laws may be altered, amended
-------------------
or repealed or new by-laws may be adopted by the affirmative vote of the holders
of a majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at any regular meeting of stockholders, or at
any special meeting of stockholders provided notice of such alteration,
amendment, repeal or adoption of new by-laws shall have been stated in the
notice of such special meeting.

-13-

<PAGE>

EXHIBIT 4.2

THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED
FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED OR
PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, OR IF THE PROPOSED
TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR
REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

V.I. TECHNOLOGIES, INC.
-----------------------

STOCK WARRANT

NO. W-5 APRIL 29, 1997

THIS CERTIFIES that, for value received, BEAR, STEARNS & CO. INC.
("Bear Stearns") or its assigns (the "Holder"), shall be entitled to subscribe
for and purchase from V. I. TECHNOLOGIES, INC., a Delaware corporation (the
"Corporation"), 90,450 shares of Common Stock, $.01 par value per share of the
Corporation (the "Common Stock"), at the exercise price (the "Exercise Price")
of $.01 per share of Common Stock, subject to adjustment pursuant to Section 3
hereof (such shares of Common Stock as may be so adjusted being referred to
herein as "Warrant Shares"). This Warrant may be exercised during the Exercise
Period (as defined in Section 2 hereof), pursuant to the terms and subject to
the conditions hereof.

SECTION 1. DEFINITIONS. As used herein, the following terms shall
------------
have the meanings set forth below:

"Business Day" means any day that is not a Saturday, Sunday or a day
on which banking institutions in New York, New York are required to be
closed.

"IPO" means the closing of the first underwritten public offering for
the account of the Corporation of Common Stock pursuant to a registration
statement declared effective under the Securities Act with aggregate
proceeds (before underwriter discounts and commissions) to the Corporation
of not less than $20,000,000.
<PAGE>

"Other Shares" means at any time those shares of Common Stock which do
not constitute Primary Shares, Privileged Shares or Registrable Shares.

"Person" shall be construed broadly and shall include any natural
person, company, partnership, joint venture, corporation, business trust,
unincorporated organization or governmental authority.

"Primary Shares" means at any time the authorized but unissued shares
of Common Stock or shares of Common Stock held by the Corporation in its
treasury.

"Privileged Shares" means, at any time, those shares of Common Stock
other than Registrable Shares which are held by Persons exercising
registration rights granted to such Persons by the Corporation on or prior
to April 29, 1997

"Registrable Shares" means, at any time, those shares of Common Stock
which are held by the Holder of this Warrant or by the holders of warrants
issued by the Corporation of like tenor to this Warrant; the rights of all
such warrants having originally been contained in the Warrant issued by the
Corporation to Bear, Stearns & Co. Inc. as of April 29, 1997.

SECTION 2. EXERCISE PERIOD. This Warrant may be exercised by the
---------------
Holder at any time and from time to time on or after April 29, 1998 and on or
prior to April 29, 2002 (such period being herein referred to as the "Exercise
Period"). This Warrant shall be considered automatically exercised by the
Holder upon the consummation of the IPO or the Sale of the Corporation.

SECTION 3. ANTIDILUTION PROTECTION. (A) If at any time the
-----------------------
Corporation subdivides (by any stock split, stock dividend, recapitalization or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of Warrant Shares obtainable upon
exercise of this Warrant shall be proportionately increased. If the Corporation
at any time combines (by reverse

-2-
<PAGE>

stock split or otherwise) its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately decreased.

(B) Any recapitalization (other than a subdivision or combination of
Common Stock described in paragraph (a) above), reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Corporation's assets (determined on a consolidated basis in accordance with
Delaware Law) to another Person or other transaction which is effected in such a
way that holders of Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, cash, securities or assets with respect to
or in exchange for Common Stock is referred to herein as "Organic Change." Prior
to the consummation of any Organic Change, the Corporation shall make
appropriate provision to insure that each Holder shall thereafter have the right
to acquire and receive in lieu of or addition to (as the case may be) the shares
of Common Stock immediately theretofore acquirable and receivable upon the
exercise of this Warrant, such shares of stock, cash, securities or assets as
such Holder would have received in connection with such Organic Change if such
Holder had exercised such Warrant immediately prior to such Organic Change. In
any such case, the Corporation shall make appropriate provision with respect to
such Holders' rights and interests to insure that the provisions of this Section
shall thereafter be applicable to the Warrants. The Corporation shall not effect
any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor corporation (if other than the Corporation) resulting
from consolidation or merger or the corporation purchasing such assets assumes
by written instrument, the obligation to deliver to each such Holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to acquire.

(D) Immediately upon any adjustment in the number of Warrant Shares
subject to this Warrant and of the Exercise Price, the Corporation shall give
written notice thereof to the Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment. The Corporation shall also give
written notice to the Holder at least 10 Business Days prior to the date on
which an Organic Change shall take place.

SECTION 4. EXERCISE OF WARRANT; WARRANT SHARES. (A) The rights
-----------------------------------
represented by this Warrant may be exercised, in whole or in any part (but not
as to a fractional share of Common

-3-
<PAGE>

Stock), by (i) the surrender of this Warrant (properly endorsed) at the office
of the Corporation (or at such other agency or office of the Corporation in the
United States of America as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the Corporation), (ii)
delivery to the Corporation of a notice of election to exercise in the form of
EXHIBIT A attached hereto, and (iii) payment to the Corporation of the aggregate
- ---------
Exercise Price by (A) cash, wire transfer funds or check or (B) shares of Common
Stock or Warrants to purchase Common Stock (net of the Exercise Price for such
shares) valued for such purposes at the Market Price per share on the date of
exercise. As used herein "Market Price" shall mean (x) if this Warrant is
exercised upon the consummation of the IPO, the offer price of the Common Stock
in such IPO, (y) if this Warrant is exercised upon the Sale of the Corporation,
the Fair Value Per Share in connection with such Sale of the Corporation and (z)
if this Warrant is exercised prior to the consummation of the IPO or the Sale of
the Corporation, the value given such share as determined by the Corporation's
Board of Directors. For the purpose of this Warrant, "Fair Value Per Share"
means the fair market value of the distribution distributed in respect of each
share of Common Stock in such transaction; provided, however, that if differing
-------- -------
prices are paid for shares of Common Stock in any Sale of the Corporation, the
Fair Value Per Share shall be calculated using the average of all such prices.

(B) Each date on which this Warrant is surrendered and on which
payment of the Exercise Price is made in accordance with Section 4(A) above is
referred to herein as an "Exercise Date." Simultaneously with each exercise, the
Corporation shall issue and deliver a certificate or certificates for the
Warrant Shares being purchased pursuant to such exercise, registered in the name
of the Holder or the Holder's designee, to such Holder or designee, as the case
may be. If such exercise shall not have been for the full number of Warrant
Shares, then the Corporation shall issue and deliver to the Holder a new
Warrant, registered in the name of the Holder, of like tenor to this Warrant,
for the balance of the Warrant Shares that remain after exercise of the Warrant.

(C) The Person in whose name any certificate for shares of Common
Stock is issued upon any exercise shall for all purposes be deemed to have
become the holder of record of such shares as of the Exercise Date, except that
if the Exercise Date is a date on which the stock transfer books of the
Corporation are closed, such Person or entity shall be deemed to have become the
holder of record of such shares at the close of business on the next succeeding
date on which the stock transfer books are open.

-4-
<PAGE>

SECTION 5. CHARACTER OF WARRANT SHARES. All Warrant Shares issuable
---------------------------
upon the exercise of this Warrant shall be, when issued, duly authorized,
validly issued, fully paid and nonassessable, free from all transfer taxes,
liens, charges and preemptive rights, if any, with respect thereto or to the
issuance thereof. Without limiting the generality of the foregoing, the
Corporation shall take all such actions as may be required to assure that the
par value per share of the Common Stock, if any, is at all times equal to or
less than the Exercise Price.

SECTION 6. NO VOTING RIGHTS. This Warrant shall not entitle the
----------------
Holder to any voting rights as a shareholder of the Corporation.

SECTION 7. FRACTIONAL SHARES. No fractional shares or scrip
-----------------
representing fractional shares shall be issued upon the exercise of this
Warrant. All fractional shares shall be eliminated by rounding any fraction up
to the nearest whole number of Warrant Shares.

SECTION 8. RESTRICTIONS ON TRANSFER. Subject to the other provisions
------------------------
of this Section 8 and to the compliance in all respects with all applicable
federal and state securities laws, this Warrant, the Warrant Shares and all
rights hereunder are transferable and assignable, in whole or in part, at the
agency or office of the Corporation referred to in Section 4 hereof, by the
Holder in person or by duly authorized attorney, upon (i) surrender of this
Warrant properly endorsed, and (ii) delivery of a notice of transfer in the form
of EXHIBIT B hereto. Each transferee and holder of this Warrant, by accepting
---------
or holding the same, consents that this Warrant, when endorsed, in blank, shall
be deemed negotiable, and, when so endorsed, the holder hereof shall be treated
by the Corporation and all other Persons dealing with this Warrant as the
absolute owner hereof for any purposes and as the Person entitled to exercise
the rights represented by this Warrant, or to the transfer hereof on the books
of the Corporation, any notice to the contrary notwithstanding; provided,
--------
however, that until each such transfer is recorded on such books, the
- -------
Corporation may treat the registered holder hereof as the owner hereof for all
purposes. No such transfer shall be effected or effective if such transfer
would constitute a violation of any federal or state securities laws.

-5-
<PAGE>

SECTION 9. PIGGYBACK REGISTRATION.
----------------------

(a) If the Corporation at any time proposes for any reason to register
Primary Shares or Other Shares under the Securities Act (other than on Form S-4
or Form S-8 promulgated under the Securities Act or any successor forms thereto
or other than in connection with an exchange offer or offering solely to the
Corporation's stockholders), it shall promptly give written notice to the Holder
of its intention to so register the Primary Shares or Other Shares and, upon the
written request, given within 10 days after delivery of any such notice by the
Corporation, of the Holder to include in such registration Warrant Shares held
by the Holder (which request shall specify the number of Warrant Shares proposed
to be included in such registration), the Corporation shall use its commercially
reasonable efforts to cause all such Warrant Shares to be included in such
registration on the same terms and conditions as the securities otherwise being
sold in such registration; provided, however, that if the managing underwriter
-------- -------
advises the Corporation that the inclusion of all Other Shares proposed to be
included in such registration would interfere with the successful marketing
(including pricing) of the Primary Shares proposed to be registered by the
Corporation, then the number of Primary Shares and Other Shares proposed to be
included in such registration shall be included in the following order:

first, the Primary Shares;
-----

second, the Privileged Shares in accordance with the rights granted to
------
the holders of such Privileged Shares;

third, the Registrable Shares pro rata, based upon the number of
----- --- ----
Registrable Shares owned by each holder of Registrable Shares at the
time of such registration; and

fourth, to the Other Shares.
------

(b) The Corporation shall bear the expense of all registrations
effected pursuant to this section, including in each case, without limitation,
all registration and filing fees (including all expenses incident to filing with
the NASD), fees and expenses of complying with securities and blue sky laws,
printing expenses, and fees and expenses of the Corporation's counsel and
accountants, but excluding any underwriters' or brokers' discounts or
commissions.

(c) Notwithstanding the above, if the Holder is entitled to sell the
Warrant Shares under Rule 144 of the Securities Act, the Corporation shall not
be required to include

-6-
<PAGE>

any Warrant Shares in any registration statement under the Securities Act.

SECTION 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
--------------------------------------------
Warrant is lost, stolen, mutilated or destroyed, the Corporation shall, on such
terms as to indemnity or otherwise as it may in its reasonable discretion impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an
original contractual obligation of the Corporation, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.

SECTION 11. NOTICES. All notices or other communications which are
-------
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by registered mail, postage prepaid, return receipt
requested, or via facsimile, addressed as follows:

If to the Corporation, to:

V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Attention: Joanne Leonard
Telephone: (516) 752-7398
Facsimile: (516) 752-3854;

With a copy to:

Crummy, Del Deo, Dolan,
Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102
Attention: Frank Lawatsch, Esq.
Telephone: (201) 596-4637
Facsimile: (201) 639-6249;

If to the Holder, to:

Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10017
Attention: George Raab
Telephone: (212) 272-2173;
Facsimile: (212) 272-5322;

-7-
<PAGE>

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. If mailed, as
aforesaid, any such communication shall be deemed to have been given on the
third Business Day following the day on which the piece of mail containing such
communication is posted.

SECTION 12. GOVERNING LAW. This Warrant shall be governed by and
-------------
construed in accordance with the laws of the State of New York.

SECTION 13. HEADINGS. The headings of the various sections contained
--------
in this Warrant have been inserted for convenience of reference only and should
not be deemed to be a part of this Warrant.

SECTION 14. EXECUTION IN COUNTERPART. This Warrant may be executed
------------------------
in one or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument and not separate Warrants.

* * * *

-8-
<PAGE>

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed by its duly authorized officers as of the date first written above.

V.I. TECHNOLOGIES, INC.

By: /s/ Joanne Leonard
-----------------------------
Name: Joanne Leonard
Title: Vice President, CFO

ATTEST:
- ------

/s/ Thomas R. Ostermueller
- -----------------------------
Name: Thomas R. Ostermueller
Title: President & CEO

-9-
<PAGE>

EXHIBIT A
---------

FORM OF NOTICE OF ELECTION TO EXERCISE

[To be executed only upon exercise
of the Warrant to which this form is attached]

To V.I. Technologies, Inc.:

The undersigned, the holder of the Warrant to which this form is
attached, hereby irrevocably elects to exercise the right represented by such
Warrant to purchase _________ shares of Common Stock of V.I. TECHNOLOGIES, INC.,
and herewith tenders the aggregate payment of $_______________ in the form of
(i) cash, wire transfer funds or check and/or (ii) shares of Common Stock or
Warrants to purchase Common Stock (net of the Exercise Price for such shares)
valued for such purposes at the Market Price (as defined in Section 4) per share
on the date of exercise, in full payment of the purchase price for such shares.
The undersigned requests that a certificate for such shares be issued in the
name of ________________________, whose address is ___________________________,
and that such certificate be delivered to ___________________________, whose
address is ________________________.

If such number of shares is less than all of the shares purchasable under
the current Warrant, the undersigned requests that a new Warrant, of like tenor
as the Warrant to which this form is attached, representing the remaining
balance of the shares purchasable under such current Warrant be registered in
the name of ________________________, whose address is _______________________,
and that such new Warrant be delivered to __________________________, whose
address is _____________________________.

Signature:
---------------------------------------------
(Signature must conform in all respects to
the name of the holder of the Warrant as
specified on the face of the Warrant)

Date:
--------------------------------------------------
<PAGE>

EXHIBIT B
---------

FORM OF NOTICE OF TRANSFER

[To be executed only upon transfer
of the Warrant to which this form is attached]

For value received, the undersigned hereby sells, assigns and transfers
unto _____________________________________ all of the rights represented by the
Warrant to which this form is attached to purchase ___________________________
shares of Common Stock of V.I TECHNOLOGIES, INC. (the "Corporation"), to which
such Warrant relates, and appoints as its attorney to transfer such right on the
books of the Corporation, with full power of substitution in the premises.

Signature:
--------------------------------------------------
(Signature must conform in all respects to the
name of the holder of the Warrant as specified on
the face of the Warrant )

Address:
--------------------------------------------------

--------------------------------------------------

Date:
--------------------------------------------------

Signed in the presence of:

- -----------------------------------

<PAGE>

EXHIBIT 4.3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT
(i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR (ii) UPON FIRST
FURNISHING TO THE COMPANY AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN
VIOLATION OF THE REGISTRATION REQUIREMENTS
OF THE ACT OR ANY STATE SECURITIES LAW.

MELVILLE BIOLOGICS, INC.

WARRANT TO PURCHASE COMMON STOCK

This certifies that, for value received, the Trustees of Columbia
University in the City of New York (the "Holder") is entitled to subscribe for
and purchase up to 10,000 shares (subject to adjustment from time to time
pursuant to the provisions of Section 5 hereof) of fully paid and nonassessable
Common Stock of MELVILLE BIOLOGICS, INC., a Delaware corporation (the
"Company"), at the Warrant Price (as defined in Section 2 hereof), subject to
the provisions and upon the terms and conditions hereinafter set forth.

As used herein, the term "Common Stock" shall mean the Company's
presently authorized Common Stock, $.01 par value per share, and any stock into
or for which such Common Stock may hereafter be converted or exchanged.

1. Term of Warrant. The purchase right represented by this Warrant
---------------
to Purchase Common Stock (this "Warrant") is exercisable, in whole or in part,
at any time during the period beginning the date hereof and ending on the
termination date of the Lease dated June 21, 1996 between the Holder and the
Company (the "Lease").

2. Warrant Price. The initial exercise price of this Warrant is
-------------
$1.00 per share, subject to adjustment from time to time pursuant to the
provisions of Section 5 hereof (the "Warrant Price").

3. Method of Exercise; Payment; Issuance of New Warrant. Subject to
----------------------------------------------------
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit 1 duly
---------
executed) at the principal office of the Company and by the payment to the
Company, by check or wire transfer, of an amount equal to the then applicable
Warrant Price per share multiplied by the number of shares then being purchased.
In the event of any exercise of this Warrant, certificates for the shares of
stock so purchased shall be delivered to the holder hereof within 15 days
thereafter and, unless this Warrant has been fully exercised or expired, a new
warrant representing the portion of shares, if any, with
<PAGE>

respect to which this Warrant shall not then have been exercised or converted,
shall also be issued to the holder hereof within such 15-day period.

4. Stock Fully Paid: Reservation of Shares. All Common Stock which
---------------------------------------
may be issued upon the exercise of this Warrant will, upon issuance, be fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof. During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of the issuance upon exercise of the purchase
rights evidenced by this Warrant, a sufficient number of shares of its Common
Stock to provide for the complete exercise of the rights represented by this
Warrant.

5. Adjustments.
-----------

(a) Stock Dividends and Stock Splits. If, at any time after the
--------------------------------
date hereof and before the termination date of the Lease, (i) the Company shall
fix a record date for the issuance of any stock dividend payable in shares of
Common Stock or (ii) the number of shares of Common Stock outstanding shall have
been increased by a subdivision or split-up of shares of Common Stock, then, on
the record date fixed for the determination of holders of Common Stock entitled
to receive such dividend or immediately after the effective date of such
subdivision or split-up, as the case may be, the number of shares of Common
Stock to be delivered upon exercise of this Warrant will be appropriately
increased so that the holder thereafter will be entitled to receive the number
of shares of Common Stock that the holder would have owned immediately following
such action had this warrant been fully exercised immediately prior thereto, and
the Warrant Price will be appropriately adjusted.

(b) Combination of Stock. If, at any time after the date hereof
--------------------
and before the termination date of the Lease, the number of shares of Common
Stock outstanding shall have been decreased by a reverse stock split or other
combination of the outstanding shares of Common Stock, then, immediately after
the effective date of such combination, the number of shares of Common Stock to
be delivered upon exercise of this Warrant will be appropriately decreased so
that the Holder thereafter will be entitled to receive the number of Shares of
Common Stock that the Holder would have owned immediately following such action
had such Warrant been fully exercised immediately prior thereto, and the Warrant
Price will be appropriately adjusted.

(c) Reorganization, etc. If any capital reorganization of the
-------------------
Company, or any reclassification of the Common Stock, or any consolidation of
the Company with or merger of the Company with or into any other person or any
sale, lease or other transfer of all or substantially all of the assets of the
Company to any other person (including any individual, partnership, joint
venture, corporation, trust or group thereof) shall be effected in such a way
that, following consummation of such transaction, the holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, upon exercise of this Warrant in accordance
with Section 3 hereof, the holder shall have the right to receive the kind and
amount of stock, securities or assets

-2-
<PAGE>

receivable upon such reorganization, reclassification, consolidation, merger or
sale, lease or other transfer by a holder of the number of shares of Common
Stock that the holder would have been entitled to receive upon exercise of this
Warrant pursuant to Section 3 hereof had such Warrant been exercised immediately
before such reorganization, reclassification, consolidation, merger or sale,
lease or other transfer, subject to adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
5.

(d) Rights Offering. If the Company, at any time after the date
---------------
hereof and before the termination date of the Lease, shall issue or sell or fix
a record date for the issuance of rights, options, warrants or convertible or
exchangeable securities to all holders of Common Stock entitling them to
subscribe for or purchase Common Stock (or securities convertible into Common
Stock) at a price per share (or having a conversion price per share) that,
together with the value of any consideration paid for any such right, options,
warrants or convertible or exchangeable securities (as determined in good faith
by the Board of Directors of the Company) is less than the fair market value of
a share of Common Stock as of the date of such issuance or sale or on such a
record date; then, immediately after the date of such issuance or sale or on
such record date, the holder shall have the right to receive, upon the same
terms as the holders of Common Stock, the kind and amount of rights, options,
warrants or convertible or exchangeable securities receivable in such offering
by a holder of the number of shares of Common Stock that the holder would have
been entitled to receive upon exercise of this Warrant pursuant to Section 3
hereof had such Warrant been exercised immediately before such issuance or the
record date for such issuance.

(e) Special Dividend. If (other than in dissolution or
----------------
liquidation), securities of the Company (other than shares of Common Stock or
securities issued pursuant to a shareholder rights or similar plan) or assets
(other than cash dividends) are issued by way of a dividend on outstanding
shares of Common Stock, then the Warrant Price shall be adjusted so that it
shall equal the price determined by multiplying the Warrant Price in effect
immediately prior to the close of business on the record date for the
determination of the stockholders entitled to receive such dividend by a
fraction, the numerator of which shall be the last sale price of the Common
Stock on such record date or if not publicly traded, the fair market value of
the Common Stock (as determined in good faith by the Board of Directors of the
Company) less the then fair market value as determined by the Board of Directors
of the Company) of the portion of the securities or assets distributed
applicable to one share of Common Stock, and the denominator of which shall be
such last sale price or, if not publicly traded, the fair market value of the
Common Stock (as determined in good faith by the Board of Directors of the
Company). Such adjustment shall become effective immediately prior to the
opening of business on the day following such record date.

(f) Limitations. Anything in this Section 5 to the contrary
-----------
notwithstanding, no adjustment in the Warrant Price in accordance with the
provisions of 5(a), 5(b), 5(c), 5(d), or 5(e), hereof need be made if such
adjustment would amount to a change in such Warrant Price of less than $0.01;
provided, however, that the amount by which any

-3-
<PAGE>

adjustment is not made by reason of the provisions of this Section 5(f) shall be
carried forward and taken into account at the time of any subsequent adjustment
in the Warrant Price.

(g) Readjustments. If an adjustment is made under Section 5(a),
-------------
5(b), 5(c), 5(d) or 5(e), and the event to which the adjust relates does not
occur, then and adjustments in the Warrant Price or the number of shares of
Common Stock issuable upon the exercise of this Warrant that were made in
accordance with such sections shall be adjusted back to the Warrant Price and
the number of Warrant Shares that were in effect immediately prior to the date
of or record date for such event.

(h) Notice of Adjustment Under this Warrant. Upon any adjustment
---------------------------------------
of the Warrant Price or the number of shares of Common Stock issuable upon
exercise of this Warrant, then, and in each such case, the Company shall give
written notice thereof, in the form of an officer's certificate, to the holder
thereof, which notice shall state the Warrant Price resulting from such
adjustment and/or the increase or decrease in the number of shares of Common
Stock purchasable hereunder at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. However, failure to give such notice, or any
defect therein, shall not affect the legality or validity of the subject
adjustment.

6. Fractional Shares. No fractional shares of Common Stock will be
-----------------
issued in connection with any exercise hereunder, but, in lieu of such
fractional shares, the Company shall make a cash payment therefor upon the basis
of the fair market value of a share of Common Stock as of the date of exercise.

7. Compliance with the Act. The holder of this Warrant, by
-----------------------
acceptance hereof, agrees that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment, for such holder's
own account and not with a view toward distribution hereof or thereof, and that
it will not offer, sell or otherwise dispose of this Warrant or any shares of
Common Stock to be issued upon exercise hereof unless this Warrant has been
registered under the Act and applicable state securities laws or (i) such
registration is not required and (ii) an opinion of counsel satisfactory to the
Company is furnished to the Company to that effect.

8. Transfer and Exchange of Warrant.
--------------------------------

(a) Transfer. This Warrant may be transferred or succeeded to
--------
by any person. Each transferee shall give the Company written notice, at the
time of such a transfer, stating the name and address of the transferee and
identifying the securities with respect to which the rights hereunder are being
assigned.

(b) Exchange. Subject to compliance with the terms hereof, this
--------
Warrant and all rights hereunder are transferable, in whole or in part, at the
office of the Company by the holder hereof or by duly authorized attorney, upon
surrender of this Warrant

-4-
<PAGE>

properly endorsed. Each taker and holder of this Warrant, by taking or holding
the same, consents and agrees that this Warrant, when endorsed in blank, shall
be deemed negotiable; provided, that the last holder of this Warrant as
registered on the books of the Company may be treated by the Company and all
persons dealing with this Warrant as the absolute owner hereof for any purposes
and as the person entitled to exercise the rights represented by this Warrant or
to transfer hereof on the books of the Company, any notice to the contrary
notwithstanding, unless and until such holder seeks to transfer registered
ownership of this Warrant on the books of the Company and such transfer is
effected.

9. Registration Rights.
-------------------

(a) Certain Definitions. As used in this Section 9 and elsewhere
-------------------
in this Warrant, the following terms shall have the following respective
meanings:

"Commission" means the Securities and Exchange Commission,
----------
or any other Federal agency at the time administering the Act.

"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, or any similar United States statute, and the rules and regulations of
the Commission issued under such Act, as they each may, from time to time, be in
effect.

"Registration Statements" means a registration statement
-----------------------
filed by the Company with the Commission for a public offering and sale of
securities of the Company (other than a registration statement on Form S-8 or
Form S-4, or their successors, or any other form for a limited purpose, or any
registration statement; covering only securities proposed to be issued in
exchange for securities or assets of another corporation).

"Registration Expenses" means the expenses described in
---------------------
Section 9(c).

"Registrable Shares" means the Shares and any other shares
------------------
of Common Stock issued because of stock splits, stock dividends,
reclassification, recapitalizations, or similar events.

(b) Incidental Registration.
-----------------------

i) Whenever the Company proposes to file a Registration
Statement, prior to such filing it shall give written notice to the Holder of
its intention to do so, and upon the written request of the Holder given within
30 days after the Company provides such notice (which request shall state the
intended method of disposition of such Registrable Shares), the Company shall
cause all Registrable Shares which the Company has been requested to register to
be registered under the Act to the extent necessary to permit their sale or
other disposition in accordance with the intended methods of distribution
specified in the request of the Holder.

-5-
<PAGE>

ii) In connection with any offering under this Section 9
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such underwriting unless the Holder accepts the terms of
the underwriting as agreed upon between the Company and the underwriter(s)
selected by it. Moreover, if, in the opinion of the managing underwriter, the
registration of all of the Registrable Shares which the holders have requested
to be included would materially and adversely affect such public offering, then
the Company shall be required to include in the underwriting only that number of
Registrable Shares, if any, which the managing underwriter believes may be sold
without causing such adverse effect.

(c) Registration Expenses. The Company shall pay the Registration
---------------------
Expenses for any registration of Shares effected hereunder. For purposes
hereof, the term "Registration Expenses" shall mean all expenses incurred by the
Company in complying with this Section 9, including, without limitation, all
registration and filing fees, exchange listing fees, printing expenses, fees and
disbursements of counsel for the Company, out-of-pocket expenses of the Company
and the underwriter(s), state Blue Sky fees and expenses, and the expense of any
special audits incident to or required by any such registration, but excluding
underwriting discounts and selling commissions and fees of counsel for the
Holder.

(d) Indemnification. In the event of any registration of any of
---------------
the Registrable Shares under the Act pursuant to this Warrant, then, to the
extent permitted by law, the Company shall indemnify and hold harmless the
Holder and each other person, if any, who controls the Holder, within the
meaning of the Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Holder or such controlling person
may become subject under the Act, the Exchange Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company shall reimburse the Holder or such
controlling person for reasonable legal or any other expenses incurred by the
Holder or such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or omission made in such Registration Statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by or on
behalf of the Holder or such controlling person specifically for use in the
preparation thereof.

In the event of any registration of any of the Registrable Shares
under the Act pursuant to this Warrant, then to the extent permitted by law, the
Holder shall indemnify and

-6-
<PAGE>

hold harmless the Company, each of its directors and officers and each
underwriter (if any) and each person, if any, who controls the Company or any
such underwriter within the meaning of the Act of the Exchange Act, against any
losses, claims, damages or liabilities, joint or several, to which the Company,
such directors and officers, underwriters or controlling person may become
subject under the Act, Exchange Act, state securities laws or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Act, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission was made solely in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the Holder,
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; and the Holder shall reimburse
the Company for reasonable legal or other expenses incurred by the Company in
connection with investigating or defending any such loss, claim, damage,
liability or action.

No indemnification shall be provided pursuant to this subsection in
the event that any error in a preliminary prospectus of the Company is
subsequently corrected in the final prospectus of the Company for a particular
offering, and such final prospectus is delivered to all purchasers in the
offering prior to the date of purchase of the securities.

Each party entitled to indemnification under this Section 9(d) (the

"Indemnified Party") shall give notice to the party required to provide
- ------------------
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
------------------
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
--------
Party, who shall conduct the defense of such claim of litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
-------- -------
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 9(d). The Indemnified Party may participate in
such defense at such party's expense; provided, however. that the Indemnifying
-------- -------
Party shall pay such expense if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to accrual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceedings. No Indemnifying Party,
in the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment, or settle such claim or litigation without the
prior written consent of the Indemnifying Party.

-7-
<PAGE>

(e) Information Regarding the Holder. In connection with the
--------------------------------
inclusion of Registrable Shares in any registration, the Holder shall furnish to
the Company such information regarding the Holder and any distribution proposed
by the Holder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Section 9.

(f) Rule 144 Requirements. With a view to making available to
---------------------
the Holder the benefits of Rule 144 promulgated under the Act and any other rule
or regulation of the Commission that may at any time permit the Holder to sell
securities of the Company to the public without registration, the Company agrees
to use its best efforts to:

i) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Act (at any time after it
has become subject to the reporting requirements of the Exchange Act);

ii) file with the Commission in a timely manner all reports
and other documents required of the Company under the Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and

iii) furnish to the Holder, upon request, a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 (at any time after 90 days after the closing of the first sale of securities
by the Company pursuant to a Registration Statement), and of the Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as the Holder may
reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.

10. Miscellaneous.
-------------

(a) No Rights as Shareholder. No holder of this Warrant, as
------------------------
such, shall be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose; nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issuance of stock, reclassification of stock, change of
par value or changes of stock to no par value, consolidation, merger, conveyance
or otherwise) or to receive notice of meetings, or to receive dividends or
subscription right or otherwise until this Warrant shall have been exercised or
converted and the shares purchasable upon the exercise hereof shall have been
deliverable, as provided herein.

-8-
<PAGE>

(b) Replacement. On receipt of evidence reasonably satisfactory
-----------
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement, or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu of this Warrant a new
warrant of like tenor.

(c) Notice. Any notice given to either party under this Warrant
------
shall be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of (i) delivery thereof by hand delivery, by courier, or by
standard form of telecommunication, and (ii) three (3) business days after the
mailing hereof if sent registered mail with postage prepaid, addressed to the
Company at its principal executive offices and to the holder at its address set
forth in the Company's books and records or at such other address as the holder
may have provided to the Company in writing.

(d) No Impairment. The Company will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of the
Warrant.

(e) Governing Law. This Warrant shall be governed by and
-------------
construed under the laws of the State of Delaware.

IN WITNESS WHEREOF, this Warrant is executed as of this 21 day of
June, 1996.

MELVILLE BIOLOGICS, INC.

By: /s/ Joanne Leonard
-------------------------------
Title: Vice President, CFO

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<PAGE>

NOTICE OF EXERCISE

TO: MELVILLE BIOLOGICS, INC.

1. The undersigned hereby elects to purchase _________ shares of Common
Stock of MELVILLE BIOLOGICS, INC. pursuant to the terms of the attached Warrant,
and tenders herewith cash payment of the purchase price of such shares in full.

2. Please issue a certificate or certificates representing said shares of
Common Stock, in the name of the undersigned or in such other name as is
specified below:

---------------------------------
(Name)

---------------------------------

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

---------------------------------
Signature

<PAGE>

EXHIBIT 4.4

THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED
FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED OR
PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, OR EXCEPT UPON DELIVERY
TO V.I. TECHNOLOGIES, INC. OF AN OPINION OF COUNSEL, WHICH OPINION OF COUNSEL
SHALL BE REASONABLY SATISFACTORY TO V.I. TECHNOLOGIES, INC. AND ITS COUNSEL,
THAT THE PROPOSED TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS.

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE ARE ALSO SUBJECT TO
A STOCKHOLDERS AGREEMENT DATED AS OF APRIL 29, 1997 AMONG V.I. TECHNOLOGIES,
INC. AND CERTAIN OF ITS STOCKHOLDERS. THE TERMS OF SUCH STOCKHOLDERS AGREEMENT
INCLUDE, AMONG OTHER THINGS, VOTING AGREEMENTS, CO-SALE AGREEMENTS AND
RESTRICTIONS ON TRANSFERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY V.I. TECHNOLOGIES TO THE HOLDER HEREOF UPON WRITTEN
REQUEST.

V.I. TECHNOLOGIES, INC.
-----------------------

CONTINGENT STOCK SUBSCRIPTION WARRANT

No. W-4 April 29, 1997

THIS CERTIFIES that, for value received, CB CAPITAL INVESTORS, INC.
("CBCI") or its assigns (the "Holder"), shall be entitled to subscribe for and
purchase from V.I. TECHNOLOGIES, INC., a Delaware corporation (the
"Corporation"), the number of shares of Common Stock, $.01 par value per share,
of the Corporation (the "Common Stock") as provided below, at the exercise price
(the "Exercise Price") of $.01 for each Warrant Share, subject to adjustment
pursuant to Section 4 hereof. This Warrant may be exercised during the Exercise
Period (as defined in Section 3 hereof), pursuant to the terms and subject to
the conditions hereof. This Warrant is being issued pursuant to the Common Stock
Purchase Agreement dated as of the date hereof (as amended from time to time,
the "Purchase Agreement") between the Corporation and CBCI. Capitalized terms
used herein but not otherwise defined herein have the meanings ascribed thereto
in the Purchase Agreement.
<PAGE>

SECTION 1. Definitions. As used herein, the following terms shall have
-----------
the meanings set forth below:

"Aggregate New Issuance Amount" means, at any point in time, the
aggregate fair market value of all consideration paid to the Corporation in
connection with all New Issuances through the date in question; provided,
--------
however, that if any New Issuance includes options or warrants, the
-------
exercise price of the options or warrants shall be added to the cash paid
for such options or warrants. The "fair market value" of any consideration
other than cash paid in connection with a New Issuance shall be determined
in the manner prescribed within the definition of "Fair Value Per Share" in
Article V of the Purchase Agreement with respect to a New Issuance
thereunder.

"Applicable Percentage" means the result obtained by multiplying five
percent by a fraction (not to exceed one) the numerator of which shall be
the Aggregate New Issuance Amount and the denominator of which shall be
$5,000,000.

"Business Day" means any day that is not a Saturday, Sunday or a day
on which banking institutions in New York, New York are required to be
closed.

"Fully-Diluted Shares" means the aggregate number of shares of Common-
Stock outstanding assuming (i) the conversion or exchange of all securities
by their terms convertible into or exchangeable for Common Stock, (ii) the
Plan Shares (as defined in the Purchase Agreement) are issued and
outstanding, (iii) the exercise of all options or warrants to purchase or
rights to subscribe for Common Stock or such convertible or exchangeable
securities, (iv) the issuance of all Additional Shares (as defined in
Article V of the Purchase Agreement) or other shares of capital stock of
the Corporation required to be issued at such time to stockholders of the
Corporation pursuant to anti-dilution or other protections granted to such
stockholders (including shares issuable as a result of the number of shares
issuable upon exercise of this Warrant being increased as provided herein)
and (v) the exercise of this Warrant; provided, however, that shares of
-------- -------
Common Stock issuable upon exercise of options (other than the Plan Shares)
or warrants or conversion of convertible securities with exercise or
conversion prices above the Fair Value Per Share (as defined in the
Purchase Agreement) at the time of such calculation shall not be considered
to be issued and outstanding.

"IPO" means the consummation of the first underwritten public offering
for the account of the Corporation of Common Stock pursuant to a
registration statement declared effective under the Securities Act with

-2-
<PAGE>

aggregate gross proceeds (before underwriter discounts and commissions) to
the Corporation of not less than $20,000,000.

"New Issuance" means each issuance by the Corporation of Common Stock,
securities convertible into or exchangeable for Common Stock or options or
warrants exercisable for Common Stock prior to the consummation of the IPO
or the Sale of the Corporation to any Person or Persons primarily for cash,
but shall not mean any such issuance (i) made under any provision of the
Purchase Agreement or this Warrant, (ii) to officers, employees or
directors of the Corporation pursuant to the Corporation's 1995 Equity
Incentive Plan, including any reissuances of any such shares which are
repurchased by the Corporation from employees or consultants upon
termination of employment or other forfeiture events, (iii) issuable upon
exercise of the warrant exercisable for 10,000 shares of Common Stock
granted to the Trustees of Columbia University in the City of New York on
June 21, 1996 and the warrant exercisable for 90,450 shares of Common Stock
granted to Bear, Stearns & Co. Inc. on the date hereof, (iv) made in
association with a merger or consolidation of the Corporation with or into
any other entity, (v) to any Person from whom the Corporation shall acquire
assets or acquire or license intellectual property rights, (vi) to any
Person with whom the Corporation shall enter into any bona fide joint-
---- ----
venture research, production, manufacturing, marketing or distribution
agreement (which agreement shall not have as a material purpose thereof the
raising of capital for the Corporation) or a research collaboration
agreement, a license agreement or a strategic alliance (which agreement or
alliance shall not have as a material purpose thereof the raising of
capital for the Corporation) or (vii) the proceeds of which are used solely
to effect any acquisition or to acquire an asset or build a facility which
are not reflected in the Business Plan.

"Person" shall be construed broadly and shall include any natural
person, company, partnership, joint venture, corporation, business trust,
unincorporated organization or governmental authority.

"Sale of the Corporation" shall mean (i) the sale of all or
substantially all of the assets of the Corporation and its subsidiaries on
a consolidated basis or (ii) the sale of all of the outstanding Common
Stock of the Corporation to a Person or an affiliated group of Persons in
one or a series of related transactions; provided, however, that a "Sale of
-------- -------
the Corporation" shall not include the sale or lease of the Corporation's
fractionation facility in Melville, New York.

-3-
<PAGE>

SECTION 2. Number of Warrant Shares.
------------------------

(a) Upon the consummation of any New Issuance, the aggregate number of
shares of Common Stock subject to this Warrant (the "Aggregate Warrant Shares")
shall equal the product of (i) the Applicable Percentage (expressed as a
decimal) multiplied by (ii) the Fully Diluted Shares, after giving effect to
such New Issuance, any Additional Shares to be issued in connection therewith
and any resulting increase in the number of Warrant Shares purchasable upon
exercise of this Warrant.

(b) The number of Aggregate Warrant Shares shall be calculated upon each
New Issuance until the earlier to occur of (i) the consummation of the IPO, (ii)
the Sale of the Corporation or (iii) the consummation of a New Issuance which
results in the New Issuance Amount exceeding $5,000,000. The number of shares of
Common Stock for which this Warrant shall be exercisable at any point in time
(the "Warrant Shares") shall be equal to the number obtained by subtracting from
the number of Aggregate Warrant Shares at such time, the number of shares of
Common Stock theretofore purchased upon exercise of this Warrant.

(c) If no New Issuance shall occur prior to the (consummation of the IPO or
a Sale of the Corporation, this Warrant shall be cancelled effective upon the
consummation of the IPO or such Sale of the Corporation.

(d) The Corporation shall notify the Holder in writing within two Business
Days of each New Issuance as to the Aggregate Warrant Shares under this Warrant.

(e) All calculations under this Section 2 shall be made to the nearest
whole share.

SECTION 3. Exercise Period. This Warrant may be exercised by the Holder
---------------
at any time and from time to time on or after any New Issuance and on or prior
to the date of the IPO or the Sale of the Corporation (such period being herein
referred to as the "Exercise Period"). This Warrant shall be considered
automatically exercised by the Holder upon the consummation of the IPO or the
Sale of the Corporation.

SECTION 4. Antidilution Protection.
-----------------------

(a) If at any time after any New Issuance the Corporation subdivides (by
any stock split, stock dividend, recapitalization or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced
and the number of Warrant Shares obtainable upon exercise of this Warrant shall
be proportionately increased. If the Corporation at any time combines (by
reverse stock split or otherwise) its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant

-4-
<PAGE>

Shares obtainable upon exercise of this Warrant shall be proportionately
decreased.

(b) Any recapitalization (other than a subdivision or combination of Common
Stock described in paragraph (a) above), reorganization, reclassification.
consolidation, merger, sale of all or substantially all of the Corporations
assets (determined on a consolidated basis) to another Person or other
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
cash, securities or assets with respect to or in exchange for Common Stock is
referred to herein as "Organic Change." Prior to the consummation of any Organic
Change, the Corporation shall make appropriate provision to insure that each
Holder shall thereafter have the right to acquire and receive in lieu of or
addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the exercise of this Warrant, such
shares of stock, cash, securities or assets as such Holder would have received
in connection with such Organic Change if such Holder had exercised such Warrant
immediately prior to such Organic Change. In any such case, the Corporation
shall make appropriate provision (in form and substance satisfactory to the
Holder) with respect to such Holders' rights and interests to insure that the
provisions of this Section shall thereafter be applicable to the Warrants. The
Corporation shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation (if other than the
Corporation) resulting from consolidation or merger or the corporation
purchasing such assets assumes by written instrument (in form and substance
satisfactory to the Holder), the obligation to deliver to each such Holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to acquire.

(d) Immediately upon any adjustment in the number of Warrant Shares subject
to this Warrant and of the Exercise Price, the Corporation shall give written
notice thereof to the Holder, setting forth in reasonable detail and certifying
the calculation of such adjustment. The Corporation shall also give written
notice to the Holder at least 10 Business Days prior to the date on which an
Organic Change shall take place.

SECTION 5. Exercise of Warrant: Warrant Shares.
-----------------------------------

(a) The rights represented by this Warrant may be exercised, in whole or in
any part (but not as to a fractional share of Common Stock), by (i) the
surrender of this Warrant (properly endorsed) at the office of the Corporation
(or at such other agency or office of the Corporation in the United States of
America as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Corporation),

-5-
<PAGE>

(ii) delivery to the Corporation of a notice of election to exercise in the form
of Exhibit A attached hereto, and (iii) payment to the Corporation of the
---------
aggregate Exercise Price by (A) cash, wire transfer funds or check or (B.)
shares of Common Stock or Warrants to purchase Common Stock (net of the Exercise
Price for such shares) valued for such purposes at the Market Price per share on
the date of exercise. As used herein, "Market Price" shall mean (x) if this
Warrant is exercised upon the consummation of the IPO, the offer price of the
Common Stock in such IPO, (y) if this Warrant is exercised upon the Sale of the
Corporation, the Fair Value Per Share in connection with such Sale determined as
provided in the Purchase Agreement or (z) if this Warrant is exercised prior to
the consummation of the IPO or the Sale of the Corporation, the value given such
share as determined by the Corporation's Board of Directors.

(b) Each date on which this Warrant is surrendered and on which payment of
the Exercise Price is made in accordance with Section 5(a) above is referred to
herein as an "Exercise Date." Simultaneously with each exercise, the
Corporation shall issue and deliver a certificate or certificates for the
Warrant Shares being purchased pursuant to such exercise, registered in the name
of the Holder or the Holder's designee, to such Holder or designee, as the case
may be. If such exercise shall not have been for the full number of Warrant
Shares, then the Corporation shall issue and deliver to the Holder a new
Warrant, registered in the name of the Holder, of like tenor to this Warrant,
for the balance of the Warrant Shares that remain after exercise of the Warrant.

(c) The Person in whose name any certificate for shares of Common Stock is
issued upon any exercise shall for all purposes be deemed to have become the
holder of record of such shares as of the Exercise Date, except that if the
Exercise Date is a date on which the stock transfer books of the Corporation are
closed; such person or entity shall be deemed to have become the holder of
record of such shares at the close of business on the next succeeding date on
which the stock transfer books are open. The Corporation shall pay all
documentary, stamp or other transactional taxes attributable to the issuance or
delivery of shares of Common Stock upon exercise of all or any part of this
Warrant; provided, however, that the Corporation shall not be required to pay
-------- -------
any taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any certificate for such shares in a name other than
that of the Holder to the extent such taxes would exceed the taxes otherwise
payable if such certificate had been issued to the Holder.

SECTION 6. Character of Warrant Shares. All Warrant Shares issuable upon
---------------------------
the exercise of this Warrant shall be, when issued, duly authorized, validly
issued, fully paid and nonassessable, free from all transfer taxes. liens,
charges and preemptive rights, if any, with respect thereto or to the

-6-
<PAGE>

issuance thereof. Without limiting the generality of the foregoing, the
Corporation shall take all such actions as may be required to assure that the
par value per share of the Common Stock, if any, is at all times equal to or
less than the Exercise Price.

SECTION 7. No Shareholder Rights. This Warrant shall not entitle the
---------------------
Holder to any voting rights or other rights as a shareholder of the Corporation.

SECTION 8. Fractional Shares. No fractional shares or scrip representing
-----------------
fractional shares shall be issued upon the exercise of this Warrant. All
fractional shares shall be eliminated by rounding any fraction up to the nearest
whole number of Warrant Shares.

SECTION 9. Restrictions on Transfer. Subject to the other provisions of
------------------------
this Section 9 and Article III of the Stockholders' Agreement dated the date
hereof between the Corporation and the stockholders of the Corporation named
therein, this Warrant, the Warrant Shares and all rights hereunder are
transferable and assignable, in whole or in part, at the agency or office of the
Corporation referred to in Section 5 hereof, by the Holder in person or by duly
authorized attorney, upon (i) surrender of this Warrant properly endorsed, and
(ii) delivery of a notice of transfer in the form of Exhibit B hereto. Each
---------
transferee and holder of this Warrant, by accepting or holding the same,
consents that this Warrant, when endorsed, in blank, shall be deemed negotiable,
and, when so endorsed, the holder hereof shall be treated by the Corporation and
all other Persons dealing with this Warrant as the absolute owner hereof for any
purposes and as the Person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Corporation, any notice
to the contrary notwithstanding; provided, however, that until each such
-------- -------
transfer is recorded on such books, the Corporation may treat the registered
holder hereof as the owner hereof for all purposes.

SECTION 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
--------------------------------------------
is lost, stolen, mutilated or destroyed, the Corporation shall, on such terms as
to indemnity or otherwise as it may in its reasonable discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed. Any such new Warrant shall constitute an original
contractual obligation of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.

SECTION 11. Notices. All notices or other communications which are
-------
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by

-7-
<PAGE>

registered mail, postage prepaid, return receipt requested, or via facsimile,
addressed as follows:

If to the Corporation, to:

V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747
Attention: Joanne Leonard
Telephone: (516) 752-7398
Facsimile: (516) 752-3854;

With a copy to:

Crummy, Del Deo, Dolan,
Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102
Attention: Frank Lawatsch
Telephone: (201) 596-4637
Facsimile: (201) 639-6249;

If to the Holder, to:

CB Capital Investors, Inc.
c/o Chase Capital Partners
380 Madison Avenue, 12th Floor
New York, New York 10017
Attention: Damion Wicker, M.D.
Jonas Steinman
Telephone: (212) 662-3101;
Facsimile: (212) 662-3100;

With a copy to:

O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 41st Floor
New York, New York 10112
Attention: John J. Suydam
Telephone: (212) 408-2420;
Facsimile: (212) 408-2400;

SECTION 12. Governing Law. This Warrant shall be governed by and
-------------
construed in accordance with the laws of the State of New York.

-8-
<PAGE>

SECTION 13. Headings. The headings of the various sections contained in
--------
this Warrant have been inserted for convenience of reference only and should not
be deemed to be a part of this Warrant.

SECTION 14. Execution in Counterpart. This Warrant may be executed in one
------------------------
or more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument and not separate Warrants.

* * * *

-9-
<PAGE>

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
by its duly authorized officers as of the date first written above.

V.I. TECHNOLOGIES, INC.

By: /s/ Joanne Leonard
_________________________
Name: Joanne Leonard
Title: Vice President, CFO

ATTEST:
- ------

/s/ Thomas R. Ostermueller
____________________________
Name: Thomas R. Ostermueller
Title: President and CEO

<PAGE>

EXHIBIT A
---------

FORM OF NOTICE OF ELECTION TO EXERCISE

[To be executed only upon exercise
of the Warrant to which this form is attached]

To V.I. Technologies, Inc.:

The undersigned, the holder of the Warrant to which this form is attached,
hereby irrevocably elects to exercise the right represented by such Warrant to
purchase ______________ shares of Common Stock of V. I. TECHNOLOGIES, INC., and
herewith tenders the aggregate payment of $______________________ in the form of
(i) cash, wire transfer funds or check and/or (ii) shares of Common Stock or
Warrants to purchase Common Stock (net of the Exercise Price for such Shares)
valued for such purposes at the Market Price (as defined in Section 5) per share
on the date of exercise, in full payment of the purchase price for such shares.
The undersigned requests that a certificate for such shares be issued in the
name of _______________, whose address is ____________________________________,
and that such certificate be delivered to __________________________, whose
address is __________________________.

If such number of shares is less than all of the shares purchasable under
the current Warrant, the undersigned requests that a new Warrant, of like tenor
as the Warrant to which this form is attached, representing the remaining
balance of the shares purchasable under such current Warrant be registered in
the name of _________________________, whose address is ______________________,
and that such new Warrant be delivered to ____________________, whose address
is___________________________________.

Signature: _______________________________________
(Signature must conform in all
respects to the name of the holder
of the Warrant as specified on the
face of the Warrant)

Date: ____________________________________________

<PAGE>

EXHIBIT B
---------

FORM OF NOTICE OF TRANSFER

[To be executed only upon transfer
of the Warrant to which this form is attached]

For value received, the undersigned hereby sells, assigns and transfers
unto _______________________ all of the rights represented by the Warrant to
which this form is attached to purchase ______________________________ shares of
Common Stock of V.I. TECHNOLOGIES, INC. (the "Corporation"), to which such
Warrant relates, and appoints ____________________________ as its attorney to
transfer such right on the books of the Corporation, with full power of
substitution in the premises.

Signature: ________________________________
(Signature must conform in all
respects to the name of the holder
of the Warrant as specified on the
face of the Warrant)

Address: ________________________________

________________________________

Date: _____________________________________

Signed in the presence of:

________________________________

<PAGE>

EXHIBIT 5.1

PALMER & DODGE LLP
One Beacon Street
Boston, Massachusetts 02108-3190

February 26, 1998

V.I. Technologies, Inc.
155 Duryea Road
Melville, New York 11747

We are rendering this opinion in connection with the Registration
Statement on Form S-1 (the "Registration Statement") filed by
V.I. Technologies, Inc. (the "Company") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, on or about the date
hereof. The Registration Statement relates to up to 3,450,000 shares of the
Company's Common Stock, $0.01 par value (the "Shares"). We understand that the
Shares are to be offered and sold in the manner described in the Registration
Statement.

We have acted as your counsel in connection with the preparation of the
Registration Statement. We are familiar with the actions taken by the Board of
Directors of the Company at a meeting held on January 23, 1998 in connection
with the authorization, issuance and sale of the Shares (the "Resolutions"). We
have examined such other documents as we consider necessary to render this
opinion.

Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and, when issued and delivered by the Company against
payment therefor at the price to be determined pursuant to the Resolutions, will
be validly issued, fully paid and non-assessable.

We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus filed as part thereof.

Very truly yours,

/s/ Palmer & Dodge LLP

<PAGE>

EXHIBIT 10.1
V.I. TECHNOLOGIES, INC.

1998 EQUITY INCENTIVE PLAN

Section 1. Purpose
-------

The purpose of the V.I. Technologies, Inc. 1998 Equity Incentive Plan (the
"Plan") is to attract and retain key employees and directors and consultants of
the Company and its Affiliates, to provide an incentive for them to achieve
long-range performance goals, and to enable them to participate in the long-term
growth of the Company by granting Awards with respect to the Company's Common
Stock.

Section 2. Definitions
-----------

"Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.

"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock, Stock Unit or Other Stock-Based Award awarded under the Plan.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor to such Code.

"Committee" means a committee comprised of not less than two members of the
Board appointed by the Board to administer the Plan or a specified portion
thereof. If the Committee is authorized to grant Awards to a Reporting Person or
a Covered Employee, each member shall be a "Non-Employee Director" or the
equivalent within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 or any successor provision, as applicable to the Company at the time ("Rule
16b-3"), or an "outside director" or the equivalent within the meaning of
Section 162(m) of the Code, respectively. In the event no such Committee is
appointed, then "Committee" means the Board.

"Common Stock" or "Stock" means the Common Stock, $0.01 par value, of the
Company.

"Company" means V.I. Technologies, Inc.
<PAGE>

"Covered Employee" means a person whose income is subject to Section
162(m) of the Code.

"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, "Designated
Beneficiary" shall mean the Participant's estate.

"Effective Date" means January 25, 1996.

"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.

"Incentive Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 that is intended to meet the
requirements of Section 422 of the Code or any successor provision.

"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 that is not intended to be an
Incentive Stock Option.

"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.

"Other Stock-Based Award" means an Award, other than an Option, Stock
Appreciation Right, Performance Share, Restricted Stock or Stock Unit, having a
Common Stock element and awarded to a Participant under Section 11.

"Participant" means a person selected by the Committee to receive an
Award under the Plan.

"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.

"Performance Shares" mean shares of Common Stock, which may be earned
by the achievement of performance goals, awarded to a Participant under Section
8.

"Reporting Person" means a person subject to Section 16 of the
Securities Exchange Act of 1934 or any successor provision.

"Restricted Period" means the period of time during which an Award may
be forfeited to the Company pursuant to the terms and conditions of such
Award.

"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.

-2-
<PAGE>

"Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.

"Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.

Section 3. Administration
--------------

The Plan shall be administered by the Committee, provided that the Board
may in any instance perform any of the functions delegated to the Committee
hereunder. The Committee shall select the Participants to receive Awards and
shall determine the terms and conditions of the Awards. The Committee shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Committee's
decisions shall be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the Company the
power to make Awards to Participants who are not Reporting Persons and all
determinations under the Plan with respect thereto, provided that the
Committee shall fix the maximum amount of such Awards for all such Participants
and a maximum for any one Participant.

Section 4. Eligibility
-----------

All employees and, in the case of Awards other than Incentive Stock
Options, directors and consultants of the Company or any Affiliate, capable of
contributing significantly to the successful performance of the Company, other
than a person who has irrevocably elected not to be eligible, are eligible to
be Participants in the Plan. Incentive Stock Options may be awarded only to
persons eligible to receive such Options under the Code.

Section 5. Stock Available for Awards
--------------------------

(a) Subject to adjustment under subsection (b), Awards may be made under
the Plan for up to 6,000,000 shares of Common Stock. If any Award in respect of
shares of Common Stock expires or is terminated unexercised or is forfeited, the
shares subject to such Award, to the extent of such expiration, termination or
forfeiture, shall again be available for award under the Plan. Common Stock
issued through the assumption or substitution of outstanding grants from an
acquired company shall not reduce the shares available for Awards under the
Plan. Shares issued under the Plan may consist in whole or in part of authorized
but unissued shares or treasury shares.

(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization reorganization, merger, consolidation, split-up, spin-off.
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair

-3-
<PAGE>

market value, or other similar transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits or potential benefits
intended to be made available under the Plan, then the Committee (subject, in
the case of incentive Stock Options, to any limitation required under the Code)
shall equitably adjust any or all of (i) the number and kind of shares in
respect of which Awards may be made under the Plan. (ii) the number and kind of
shares subject to outstanding Awards, and (iii) the award, exercise or
conversion price with respect to any of the foregoing, and if considered
appropriate, the Committee may make provision for a cash payment with respect to
an outstanding Award, provided that the number of shares subject to any Award
shall always be a whole number.

Section 6 Stock Options
-------------

(a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The
Committee may impose such conditions with respect to the exercise of Options,
including conditions relating to applicable federal and state securities laws,
as it considers necessary or advisable. The terms and conditions of Incentive
Stock Options shall be subject to and comply with Section 422 of the Code or any
successor provision and any regulations thereunder, and no Incentive Stock
Option may be granted hereunder more than ten years after the Effective Date.

(b) The Committee shall establish the option price at the time each Option
is awarded, which price shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of award with respect to Incentive Stock Options.
Nonstatutory Stock Options may be granted at such prices as the Committee may
determine.

(c) Until the completion of an initial public offering of the Common
Stock, each optionholder shall execute a Stock Purchase and Right of Repurchase
Agreement, substantially in the form of Exhibit 1 hereto, prior to the purchase
---------
of any Stock pursuant to the exercise of Options. Each Option shall be
exercisable at such times and subject to such additional terms and conditions
as the Committee may specify in the applicable Award or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including conditions relating to applicable federal or state securities laws, as
it considers necessary or advisable.

(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the award of the Option, by delivery of a note or
shares of Common Stock owned by the optionee, including Restricted Stock, or by
retaining shares otherwise issuable pursuant to the Option, in each case valued
at their Fair Market Value on the date of delivery or retention, or such other
lawful consideration as the Committee may determine.

-4-
<PAGE>

(e) The Committee may provide that, subject to such conditions as it
considers appropriate, upon the delivery or retention of shares to the Company
in payment of an Option, the Participant automatically be awarded an Option for
up to the number of shares so delivered.

Section 7. Stock Appreciation RightS
-------------------------

(a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. The Committee shall
determine at the time of grant or thereafter whether SARs are settled in cash,
Common Stock or other securities of the Company, Awards or other property, and
may define the manner of determining the excess in value of the shares of Common
Stock.

(b) The Committee shall fix the exercise price of each SAR or specify the
manner in which the price shall be determined. SARs granted in tandem with
Options shall have an exercise price not less than the exercise price of the
related Option. SARs granted alone and unrelated to an Option may not have an
exercise price less than 100% of the Fair Market Value of the Common Stock on
the date of grant, provided that such a SAR granted to a new employee or
consultant within 90 days of the date of employment may have a lower exercise
price so long as it is not less than 100% of the Fair Market Value on the date
of employment.

(c) An SAR related to an Option, which SAR can only be exercised upon or
during limited periods following a change in control of the Company, may entitle
the Participant to receive an amount based upon the highest price paid or
offered for Common Stock in any transaction relating to the change in control or
paid during the thirty-day period immediately preceding the occurrence of the
change in control in any transaction reported in the stock market in which the
Common Stock is normally traded.

Section 8. Performance Shares
------------------

(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares shall
be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Shares have been earned.

-5-
<PAGE>

(b) The committee shall establish performance goals for each Cycle, for
the purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems
equitable in recognition of unusual or non-recurring events affecting the
Company, changes in applicable tax laws or accounting principles, or such other
factors as the Committee may determine.

(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares that have been
earned on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be distributed
to the Participant or, if the Participant has died, to the Participant's
Designated Beneficiary, as soon as practicable thereafter. The Committee shall
determine, at or after the time of award, whether payment values will be
settled in whole or in part in cash or other property, including Common Stock
or Awards.

Section 9. Restricted Stock
----------------

(a) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock may be issued for no cash consideration or such minimum consideration as
may be required by applicable law.

(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Notwithstanding the foregoing, in the Committee's
discretion, Awards in the form of Restricted Stock may be made transferable to
a limited liability company controlled solely by the Participant. Shares of
Restricted Stock shall be evidenced in such manner as the Committee may
determine. Any certificates issued in respect of shares of Restricted Stock
shall be registered in the name of the Participant and unless otherwise
determined by the Committee, deposited by the Participant, together with a
stock power endorsed in blank, with the Company. At the expiration of the
Restricted Period, the Company shall deliver such certificates to the
Participant or if the Participant has died, to the Participant's Designated
Beneficiary.

Section 10. Stock Units
-----------

(a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.

(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration as may
be required by applicable law.

-6-
<PAGE>

Section 11. Other Stock-Based Awards
------------------------

(a) Subject to the provisions of the Plan, the Committee may make other
awards of Common Stock and other awards that are valued in whole or in part by
reference to, or are otherwise based on, Common Stock including without
limitation convertible preferred stock, convertible debentures, exchangeable
securities and Common Stock awards or options. Other Stock-Based Awards may be
granted either alone or in tandem with other Awards granted under the Plan
and/or cash awards made outside of the Plan.

(b) The Committee may establish performance goals, which may be based on
performance goals related to book value, subsidiary performance or such other
criteria as the Committee may determine, Restricted Periods, Performance Cycles,
conversion prices, maturities and security, if any, for any Other Stock-Based
Award. Other Stock-Based Awards may be sold to Participants at the face value
thereof or any discount therefrom or awarded for no consideration or such
minimum consideration as may be required by applicable law.

Section 12. General Provisions Applicable to Awards
---------------------------------------

(a) Limitations on Grants of Options and SARs. Subject to adjustment
under Section 5(b), the number of shares subject to Options and SARs granted to
any one individual during any fiscal year may not exceed 625,000 shares.

(b) Reporting Person Limitations. Notwithstanding any other provision
of the Plan, to the extent required to qualify for the exemption provided by
Rule 16b-3, Awards made to a Reporting Person shall not be transferable by such
person other than by will or the laws of descent and distribution or, if then
permitted by Rule 16b-3, pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income Security Act or
the rules thereunder, and are exercisable during such person's lifetime only by
such person or by such person's guardian or legal representative.

(c) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or to comply with applicable tax and regulatory
laws and accounting principles.

(d) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of award or at any time thereafter.

-7-
<PAGE>

(e) Settlement. The Committee shall determine whether Awards are
settled in whole or in part in cash, Common Stock, other securities of the
Company, Awards or other property. The Committee may permit a Participant to
defer all or any portion of a payment under the Plan, including the crediting of
interest on deferred amounts denominated in cash and dividend equivalents on
amounts denominated in Common Stock.

(f) Dividends and Cash Awards. In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.

(g) Termination of Employment. The Committee shall determine the
effect on Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.

(h) Change in Control. In order to preserve a Participant's rights
under an Award in the event of a change in control of the Company, the Committee
in its discretion may, at the time an Award is made or at any time thereafter,
take one or more of the following actions: (i) provide for the acceleration of
any time period relating to the exercise or realization of the Award, (ii)
provide for the purchase of the Award upon the Participant's request for an
amount of cash or other property that could have been received upon the exercise
or realization of the Award had the Award been currently exercisable or payable,
(iii) adjust the terms of the Award in a manner determined by the Committee to
reflect the change in control, (iv) cause the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable and in the best interests of the Company.

(i) Loans. The Committee may authorize the making of loans or cash
payments to Participants in connection with any Award under the Plan, which
loans may be secured by any security, including Common Stock, underlying or
related to such Award (provided that such Loan shall not exceed the Fair Market
Value of the security subject to such Award), and which may be forgiven upon
such terms and conditions as the Committee may establish at the time of such
loan or at any time thereafter.

(j) Withholding Taxes. The Participant shall pay to the Company, or
make provision satisfactory to the Committee for payment of, any taxes required
by law to be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant.

-8-
<PAGE>

(k) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable laws .

(l) Amendment of Award. The Committee may amend, modify or terminate
any outstanding Award, including substituting therefor another Award of the same
or a different type, changing the date of exercise or realization and converting
an Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.

Section 13. Miscellaneous
-------------

(a) No Right To Employment. No person shall have any claim or right to
be granted an Award, and the grant of an Award shall not be construed as giving
a Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided in the Applicable Award.

(b) No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.

(c) Effective Date. The Plan became effective on January 25, 1996.
Subject to the approval of the stockholders of the Company, this 1998 Equity
Incentive Plan will become effective on February 18, 1998. Prior to such
approval, Awards may be made under the Plan expressly subject to such approval.

(d) Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, subject to any stockholder approval
that the Board determines to be necessary or advisable.

(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of Delaware.

______________________________

-9-

<PAGE>

EXHIBIT 10.2

V.I. TECHNOLOGIES, INC.

1998 Director Stock Option Plan
-------------------------------

1. Purpose.
-------

This 1998 Director Stock Option Plan (the "Plan") governs options to
purchase Common Stock, $.01 par value per share (the "Common Stock"), of V.I.
Technologies, Inc. (the "Company") granted by the Company to members of the
Board of Directors of the Company who are not also officers or employees of the
Company. The purpose of the Plan is to attract and retain qualified persons to
serve as Directors of the Company and to encourage ownership of the Common Stock
of the Company by such Directors.

2. Administration.
--------------

Grants of stock options under the Plan shall be automatic as provided in
Section 8. However, a11 questions of interpretation of the Plan or of any
options granted hereunder shall be determined by the Board of Directors of the
Company (the "Board"). Any and all powers of the Board under the Plan may be
exercised by a committee consisting of one or more Directors appointed by the
Board.

3. Eligibility.
-----------

Members of the Board who are not also officers or employees of the Company
shall be eligible to participate in the Plan.

4. Shares Subject to the Plan.
--------------------------

Options may be granted under the Plan in respect of a maximum of 250,000
shares of Common Stock, subject to adjustment as provided in Section 5 below.
Shares to be issued upon the exercise of options granted under the Plan may be
either authorized but unissued shares or shares held by the Company in its
treasury. Whenever options under the Plan lapse or terminate or otherwise become
unexercisable, the shares of Common Stock which were available for such options
shall again be available for the grant of options under the Plan. The Company
shall at all times while the Plan is in force reserve such number of shares of
Common Stock as will be sufficient to satisfy the requirements of the Plan.

5. Adjustment of Number of Option Shares.
-------------------------------------

In the event of a stock dividend, split-up, combination or reclassification
of shares, recapitalization or other similar capital change relating to the
Company's Common Stock, the maximum aggregate number and kind of shares or
securities of the Company as to which options may be granted under this Plan,
the number and kind of Shares as to which options then outstanding shall be
exercisable, the number and kind of Shares as to which the options granted
pursuant to Section 8 below shall be exercisable and the option price of such
options shall be appropriately adjusted so that the
<PAGE>

proportionate number of shares or other securities as to which options may be
granted and the proportionate interest of holders of outstanding options shall
be maintained as before the occurrence of such event.

In the event of any reorganization, consolidation or merger to which the
Company is a party and in which the Company does not survive, or upon the
dissolution or liquidation of the Company, all outstanding options shall
terminate; provided, however, that (i) in the event of the liquidation or
-------- -------
dissolution of the Company, or in the event of any such reorganization,
consolidation or merger in which the Company does not survive and with respect
to which the resulting or surviving corporation does not assume such outstanding
option or issue a substitute option therefor, such option shall be exercisable
in full, without regard to any installment restrictions on exercise imposed
pursuant to this Plan or any Option Agreement (as defined below), during such
period preceding the effective date of such liquidation, dissolution,
reorganization, consolidation or merger (unless such option is terminated
earlier by its terms) as may be specified by the Board; and (ii) in the event of
any such reorganization, consolidation or merger, the Board may, in its good
faith discretion, arrange to have the resulting or surviving corporation assume
such outstanding option or issue a substitute option therefor.

No fraction of a share shall be purchasable or deliverable upon exercise of
an option, but, in the event any adjustment hereunder of the number of shares
covered by the option shall cause such number to include a fraction of a share,
such fraction shall be adjusted to the nearest smaller whole number of shares.

6. Non-Statutory Stock Options.
---------------------------

Al1 options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").

7. Form of Option Agreements.
-------------------------

Options shall be granted hereunder pursuant to the terms of written
agreements ("Option Agreements") which shall be substantially in the form of the
attached Exhibit A or in such other form as the Board may
---------
from time to time determine.

8. Grant of Options and Option Terms.
---------------------------------

Automatic Grant of Options. Commencing after the closing Of the initial
public offering of the Company's Common Stock, each non-employee director of the
Company and is thereafter elected or reelected to the Board of Directors or who
continues in office as a director of the Company following a meeting of the
stockholders of the Company at which any directors are elected or reelected (a
"Stockholder Meeting") shall, upon his or her election and each reelection or
his or her continuation in office as described above, automatically be granted
an option to purchase 5,000 shares of Common Stock. No options shall be granted
hereunder after ten years from the date on which this Plan was initially
approved and adopted by the Board.

-2-

<PAGE>

Date of Grant. The "Date of Grant" for options granted under this Plan
shall be the date of the respective director's election or reelection or the
date of the Stockholder Meeting for directors continuing in office.

Option Price. The option price for each option granted under this Plan
shall be the current fair market value of a share of Common Stock of the Company
as determined by the Board of Directors in good faith, provided that if the
Company's Common Stock is then quoted on the National Association of Securities
Dealers Automated Quotations National Market ("Nasdaq") or traded on any other
exchange, then the current fair market value of a share of Common Stock of the
Company shall be the closing price for the Company's Common Stock as reported by
Nasdaq, or the principal exchange on which the Company's Common Stock is then
traded, on the last trading day prior to the Date of Grant.

Term of Option. The term of each option granted under the Plan shall be
ten years from the Date of Grant.

Period of Exercise. Options granted under the Plan shall become exercisable
in full on the first anniversary of the Date of Grant if and only if the option
holder is a member of the Board at the opening of business on that anniversary
date. Directors holding exercisable options under the Plan who cease to serve as
members of the Board of the Company for any reason other than death may, for a
period of seven months following the date of cessation of service, exercise the
rights they had under such options at the time they ceased being a Director. Any
rights that have not yet become exercisable shall terminate upon cessation of
membership on the Board. Upon the death of a Director, those entitled to do so
under the Director's will or the laws of descent and distribution shall have the
right, at any time within twelve months after the date of death, to exercise in
whole or in part any rights which were available to the Director at the time of
his death. The rights of the option holder may be exercised by the holder's
guardian or legal representative in the case of disability and by the
beneficiary designated by the holder in writing delivered to the Company or, if
none has been designated, by the holder's estate or his or her transferee on
death in accordance with this Plan, in the case of death. Options granted under
the Plan shall terminate, and no rights thereunder may be exercised, after the
expiration of the applicable exercise period. Notwithstanding the foregoing
provisions, no rights under any options may be exercised after the expiration of
ten years from their Date of Grant.

Method of Exercise and Payment. Each exercise of an option hereunder may be
effected only by giving written notice, in the manner provided in Section 12
hereof, of intent to exercise the option, specifying the number of shares as to
which the option is being exercised, and accompanied by full payment of the
option price for the number of shares then being acquired. Such payment shall be
made in cash, by certified or bank check payable to the order of the Company,
credit to the Company's account at a financial or brokerage institution on the
date of exercise or a payment commitment of such an institution acceptable to
the Company, or if the option so provides, (i) in shares of Common Stock having
an aggregate Fair Market Value, at the time of such payment, equal to the total
option price for the number of shares of Common Stock for which payment is then
being made, or (ii) partly in cash or by certified or bank check payable to the
order of the Company and the balance in shares of Common Stock having an
aggregate Fair Market

-3-

<PAGE>

Value, at the time of such payment, equal to the difference between the total
option price for the number of shares of Common Stock for which payment is then
being made and the amount of the payment in cash or by certified or bank check.
Shares of Common Stock surrendered in payment of all or part of the option price
shall have been held by the person exercising the option free of restrictions
imposed by the Company for at lease six months unless otherwise permitted by the
Board. For purposes hereof, the "Fair Market Value" of the Common Stock shall be
the current fair market value of a share of Common Stock of the Company as
determined by the Board of Directors in good faith, provided that if the
Company's Common Stock is then quoted on Nasdaq or traded on any other exchange,
then the Fair Market Value shall be the closing price for the Company's Common
Stock as reported by Nasdaq, or the principal exchange on which the Company's
Common Stock is then traded, for the business day immediately preceding the
option exercise date.

Receipt by the Company of such notice and payment shall, for purposes of
this Plan, constitute exercise of the option or a part thereof. Within twenty
(20) days thereafter, the Company shall deliver or cause to be delivered to the
optionee a certificate or certificates for the number of shares of Common Stock
then being purchased by the optionee. Such shares shall be fully paid and non-
assessable. If any law or applicable regulation of the Securities and Exchange
Commission or other public regulatory authority (including, but not limited to,a
stock exchange) shall require the Company or the optionee (i) to register or
qualify, under the Securities Act, any similar federal statute then in force or
any state law regulating the sale of securities, any shares of Common Stock
covered by an option with respect to which notice of intent to exercise shall
have been delivered to the Company or (ii) to take any other action in
connection with such shares before issuance thereof may be effected, then the
delivery of the certificate or certificates for such shares shall be postponed
until completion of the necessary action, which the Company shall take in good
faith and without delay. All such action shall be taken by the Company at its
own expense.

To the extent determined necessary by counsel to the Company to comply with
any applicable law, the Company may require an individual exercising an option
to represent that his purchase of shares of Common Stock pursuant to such
exercise is for his own account, for investment and without a view to resale or
distribution, and that he will not sell or otherwise dispose of any such shares
except pursuant to (i) an effective registration statement covering such
transaction filed with the Securities and Exchange Commission and in compliance
with all of the applicable provisions of the Securities Act, and the rules and
regulations thereunder, or (ii) an opinion of Company counsel that such
registration is not required.

Non-transferability. Options granted under the Plan shall not be
transferable by the holder thereof otherwise than by will or the laws of descent
and distribution or by such other means as may be permitted by Rule 16b-3 (or
any successor provision) under the Securities Exchange Act of 1934, as amended.

-4-
<PAGE>

9. Limitation of Rights.
---------------------

No Right to Continue as a Director. Neither the Plan, nor the granting of
an option or any other action taken pursuant to the Plan, shall constitute an
agreement or understanding, express or implied, that the Company will retain an
optionee as a Director for any period of time or any particular rate of
compensation.

No Stockholder's Rights for Options. Directors shall have no rights as
stockholders with respect to the shares covered by their options until the date
they exercise such options and pay the option price to the Company, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such option is exercised and paid for.

10. Stockholder Approval.
---------------------

The Plan is subject to approval by the stockholders of the Company by the
affirmative vote of the holders of a majority of the shares of voting capital
stock present or represented and entitled to vote at a meeting of the Company's
stockholders. In the event such approval is not obtained, all options granted
under this Plan shall be void and without effect.

11. Amendment or Termination.
--------------------------

The Board may amend or terminate this Plan at any time subject to any
stockholder approval that the Board deems necessary.

12. Notices.
--------

Any communication or notice required or permitted to be given under this
Plan shall be in writing and mailed by registered or certified mail or delivered
in hand, if to the Company, to its Chief Financial Officer at V.I. Technologies,
Inc., 155 Duryea Road, Melville, New York 11747 and, if to an optionee, to such
address as the optionee shall last have furnished to the Company.

13 Governing Law.
--------------

The Plan be governed by and construed in accordance with the laws of
Delaware.

As adopted by the Board of Directors on
February 18, 1998

As approved by the Stockholders on
February 18, 1998

-5-
<PAGE>

EXHIBIT A
---------

1998 DSO - ________ 5,000 Shares

V.I. TECHNOLOGIES, INC.
1998 Director Stock Option Plan
Non-statutory Stock Option Agreement
------------- --, 199-

V.I. Technologies, Inc. (the "Company"), a Delaware corporation, hereby
grants to the person named below an option to purchase shares of Common Stock,
$.01 par value per share of the Company (the "Option") under and subject to the
Company's 1998 Director Stock Option Plan (the "Plan") exercisable only on the
following terms and conditions and those set forth on the reverse side of this
Agreement:

Name of Optionee:
Address:

Social Security No.
Option Price:
Date of Grant:

Exercisability Schedule:

At any time on or after the first anniversary of the date hereof, as to
5,000 shares, provided that this Optionee is a member of the Board of Directors
of the Company (the "Board") at the opening of business on the date described
above and provided that this Option may not be exercised as to any shares after
the expiration of ten years from the date hereof.

By signing this Stock Option Agreement and returning on signed copy of to
the Company, the Optionee accepts the Option described therein on the terms
and conditions set forth herein or in the plan.

V.I. TECHNOLOGIES, INC. Accepted and agreed to:

By: ------------------ -----------------------
Title: Optionee

-6-
<PAGE>

V.I. TECHNOLOGIES, INC.
1998 Director Stock Option Plan Terms and Conditions

1. This Option may be exercised from time to time in accordance with
the exercisability Schedule for up to the aggregate number of shares specified
herein, but in no event for the purchase of other than full shares; provided,
however that this Option may not be exercised as to any shares after the
expiration of ten years from the date hereof. Written notice of exercise shall
be delivered to the Company specifying the number of shares with respect to
which the Option is being exercised. Not later than twenty days after the date
of the delivery of such notice the Company will deliver to the Optionee a
certificate for the number of shares with respect to which the Option is being
exercised against payment therefor in cash or by check, credit to the Company's
account at a financial or brokerage institution of the date of exercise or a
payment commitment of such an institution acceptable to the Company or, to the
extent the option agreement permits, by shares of the Company's Common Stock,
valued at their fair market value as of the date of exercise as determined as
provided in the Plan, or in any combination of cash, check and shares of Common
Stock. Shares of Common Stock surrendered in payment of the option price shall
have been held by the person exercising the option free of restrictions imposed
by the Company for at least six months unless otherwise permitted by the Board.

2. The Optionee shall not be deemed, for any purpose, to have any
rights whatever in respect of shares to which the Option shall not have been
exercised and payment made as aforesaid. The Optionee shall not be deemed to
have any rights to continued service as director by virtue of the grant of this
Option.

3. In the event of stock dividend, split-up, combination or
reclassification of shares, recapitalization or other similar capital change
relating to the Common Stock, the maximum aggregate number and kind of shares of
securities of the Company subject to this Option and the exercise price of this
Option shall be appropriately adjusted by the Board (whose determination shall
be conclusive) so that the proportionate number of shares or other securities
subject to this Option and the proportionate interest of the Optionholder shall
be maintained as before the occurrence of such event.

4. In the event of any reorganization, consolidation or merger to
which the Company is a party and in which the Company does not survive, or upon
the dissolution or liquidation of the Company, this option, to the extent
outstanding and unexercised, shall terminate; provided, however, that (i) in the
event of the liquidation or dissolution of the Company, or in the event of any
such reorganization, consolidation or merger in which the Company does not
survive and with respect to which the resulting or surviving corporation does
not assume such outstanding option or issue a substitute option herefor, this
option shall be exercisable in full, without regard to any installment
restrictions on exercise imposed pursuant to the Plan or this Option Agreement,
during such period preceding the effective date of such liquidation,
dissolution, reorganization, consolidation or merger (unless this option is
terminated earlier by its terms) as may be specified by the Board; and (ii) in
the event of any such reorganization, consolidation or merger, the Board may, in
its good faith discretion, arrange to have the resulting or surviving
corporation assume this option, to the extent outstanding and unexercised, or
issue a substitute option therefor.

5. This Option is not transferable by the Optionee otherwise than by
will or the laws of descent and distribution or by such other means as may be
permitted by Rule 16b-3 (or any successor provision) under the Securities
Exchange Act of 1934, as amended. This Option is exercisable during the
Optionee's lifetime only by the Optionee, provided that this Option may be
exercised by the Optionholder's guardian or legal representative in the case of
disability and by the beneficiary designated by the Optionholder in writing
delivered to the Company, or, (if none has been designated, by the
Optionholder's estate or his or her transferee on death in accordance with this
Section, in the case of death.

6. If the Optionee ceases to serve as a member of the Board for any
reason other than death, the Optionee may, for a period of seven months
following such cessation of service, exercise the rights which the Optionee had
hereunder at the time the Optionee ceased being a director. Upon the death of
the Optionee, those entitled to do so shall have the right, at any time within
twelve months after the date of death (subject to the prior expiration of the
Option exercise period), to exercise in whole or in part any rights which were
available to the Optionee at the time of the Optionee's death. This Option shall
terminate after the expiration of the applicable exercise period.
Notwithstanding the foregoing provisions of this Section 6, no rights under this
Option may be exercised after the expiration of ten years from the date hereof.

7. It shall be a condition to the Optionee's right to purchase
shares of Common Stock hereunder that the Company may, in its discretion,
require (a) that the shares of Common Stock reserved for issue upon the exercise
of this Option shall have been duly listed, upon official notice of issuance,
upon any national securities exchange on which the Company's Common Stock may
then be listed, (b) that either (i) a Registration Statement under the
Securities Act of 1933, as amended, with respect to said shares shall be in
effect or (ii) in the opinion of counsel for the Company the proposed purchase
shall be exempt from registration under said Act and the Optionee shall have
made such undertakings and agreements with the Company as the Company may
reasonably require, and (c) that such other steps, if any, as counsel for the
Company shall deem necessary to comply with any law, rule or regulation
applicable to the issue of such shares by the Company shall have been taken by
the Company or the Optionee, or both. The certificates representing the shares
purchased under this Option may contain such legends as counsel for the Company
shall deem necessary to comply with any applicable law, rule or regulation.

8. Any exercise of this Option is conditioned upon the payment, if
the company so requests, by the Optionee or such other person who may be
entitled to exercise this Option in accordance with the terms hereof, of all
state and federal taxes imposed upon the exercise of this Option and the issue
to the Optionee of the shares covered hereby.

9. This Option shall not be treated as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended.

10. This Option is issued pursuant to the terms of the Plan. This
Certificate does not set forth all of the terms and conditions of the Plan,
which are incorporated herein by reference. Capitalized terms used and not
otherwise defined herein have the meanings given to them in the Plan. Copies of
the Plan may be obtained upon written request without charge from the Company.

-7-

<PAGE>

EXHIBIT 10.3

V.I. TECHNOLOGIES, INC.

1998 Employee Stock Purchase Plan
---------------------------------

1. Purpose
-------

The purpose of this 1998 Employee Stock Purchase Plan (the "Plan") is to
provide employees of V.I. Technologies, Inc. (the "Company"), who wish to become
shareholders of the Company an opportunity to purchase Common Stock of the
Company (the "Shares"). The Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code").

2. Eligible Employees.
------------------

Subject to the provisions of Sections 7, 8 and 9 below, any individual who
is a full-time employee (as defined below) of the Company, or any of its
subsidiaries (as defined in Section 424(f) of the Code) the employees of which
are designated by the Board of Directors as eligible to participate in the Plan,
is eligible to participate in any Offering of Shares (as defined in Section 3
below) made by the Company hereunder. Full-time employees shall include all
employees whose customary employment is:

(a) 20 hours or more per week and
(b) more than five months

in the calendar year during which said Offering Date occurs or in the calendar
year immediately preceding such year.

3. Offering Dates.
--------------

From time to time, the Company, by action of the Board of Directors, will
grant rights to purchase Shares to employees eligible to participate in the Plan
pursuant to one or more offerings (each of which is an "Offering" on a date or
series of dates (each of which is an "Offering Date") designated for this
purpose by the Board of Directors).

4. Prices.
------

The price per share for each grant of rights hereunder shall be the lesser
of:

(a) eighty-five percent (85%) of the fair market value of a Share
on the Offering Date on which such right was granted; or
(b) eighty-five percent (85%) of the fair market value of a Share
on the date such right is exercised.

At its discretion, the Board of Directors may determine a higher price for a
grant of rights.
<PAGE>

5. Exercise of Rights and Method of Payment.
----------------------------------------

(a) Rights granted under the Plan will be exercisable periodically
on specified dates as determined by the Board of Directors.

(b) The method of payment for Shares purchased upon exercise of
rights granted hereunder shall be through regu1ar payroll deductions or by lump
sum cash payment or both, as determined by the Board of Directors. No interest
shall be paid upon payroll deductions unless specifically provided for by the
Board of Directors.

(c) Any payments received by the Company from a participating
employee and not utilized for the purchase of Shares upon exercise of a right
granted hereunder shall be promptly returned to such employee by the Company
after termination of the right to which the payment relates.

6. Term of Rights.
--------------

The total period from an Offering Date to the last date on which rights
granted on that Offering Date are exercisable (the "Offering Period") shall in
no event be longer than twenty-seven (27) months. The Board of Directors when it
authorizes an Offering may designate one or more exercise periods during the
Offering Period. Rights granted on an Offering Date shall be exercisable in full
on the Offering Date or in such proportion on the last day of each exercise
period as the Board of Directors determines.

7. Shares Subject to the Plan.
--------------------------

No more than 250,000 Shares may be sold pursuant to rights granted under
the Plan. Appropriate adjustments in the above figure, in the number of Shares
covered by outstanding rights granted hereunder, in the exercise price of the
rights and in the maximum number of Shares which an employee may purchase
(pursuant to Section 8 below) shall be made to give effect to any mergers,
consolidations, reorganizations, recapitalizations, stock splits, stock
dividends or other relevant changes in the capitalization of the Company
occurring after the effective date of the Plan, provided that no fractional
Shares shall be subject to a right and each right shall be adjusted downward to
the nearest full Share. Any agreement of merger or consolidation will include
provisions for protection of the then existing rights of participating employees
under the Plan. Either authorized and unissued Shares or issued Shares
heretofore or hereafter reacquired by the Company may be made subject to rights
under the Plan. If for any reason any right under the Plan terminates in whole
or in part, Shares subject to such terminated right may again be subjected to a
right under the Plan.

8. Limitations on Grants.
---------------------

(a) No employee shall be granted a right hereunder if such employee,
immediately after the right is granted, would own stock or rights to purchase
stock

-2-
<PAGE>

possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company, or of any subsidiary, computed
in accordance with Section 423(b)(3) of the Code.

(b) No employee shall be granted a right which permits his right to
purchase shares under all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) (or such other maximum as may be prescribed from time to time by the
Code) of the fair market value of such Shares (determined at the time such right
is granted) for each calendar year in which such right is outstanding at any
time in accordance with the provisions of Section 423(b)(8) of the Code.

(c) No right granted to any participating employee under an Offering,
when aggregated with rights granted under any other Offering still exercisable
by the participating employee, shall cover more shares than may be purchased at
an exercise price equal to fifteen percent (15%) of the employee's annual rate
of compensation on the date the employee elects to participate in the Offering
or such lesser percentage as the Board of Directors may determine.

9. Limit on Participation.
----------------------

Participation in an Offering shall be limited to eligible employees who
elect to participate in such Offering in the manner, and within the time
limitations, established by the Board of Directors when it authorizes the
Offering.

10. Cancellation of Election to Participate.
---------------------------------------

An employee who has elected to participate in an Offering may cancel such
election as to all (but not part) of the unexercised rights granted under such
Offering by giving written notice of such cancellation to the Company before the
expiration of any exercise period. Any amounts paid by the employee for the
Shares or withheld for the purchase of Shares from the employee's
compensation through payroll deductions shall be paid to the employee, without
interest, unless otherwise determined by the Board of Directors, upon such
cancellation.

11. Termination of Employment.
-------------------------

Upon the termination of employment for any reason, including the death of
the employee, before the date on which any rights granted under the Plan are
exercisable, all such rights shall immediately terminate and amounts paid by the
employee for the Shares or withheld for the purchase of Shares from the
employee's compensation through payroll deductions shall be paid to the employee
or to the employee's estate, without interest unless otherwise determined by the
Board of Directors.

-3-
<PAGE>

12. Employees' Rights as Shareholders.
---------------------------------

No participating employee shall have any rights as a shareholder in the
Shares covered by a right granted hereunder until such right has been exercised,
full payment has been made for the corresponding Shares and the Share
certificate is actually issued.

13. Rights Not Transferable.
-----------------------

Rights under the Plan are not assignable or transferable by a participating
employee and are exercisable only by the employee.

14. Amendments to or Discontinuation of the Plan.
--------------------------------------------

The Board of Directors of the Company shall have the right to amend, modify
or terminate the Plan at any time without notice; provided, however, that the
then existing rights of all participating employees shall not be adversely
affected thereby, and provided further that, subject to the provisions of
Section 7 above, no such amendment to the Plan shall, without the approval of
the shareholders of the Company, increase the total number of Shares which may
be offered under the Plan.

15. Effective Date and Approvals.
----------------------------

This Plan became effective on February 18, 1998, the date it was adopted by
the Board of Directors, provided that it is approved by the shareholders of the
Company within twelve (12) months before or after the date of adoption.

The Company's obligation to offer, sell and deliver its Shares under the
Plan is subject to (i) the approval of any governmental authority required in
connection with the authorized issuance or sale of such Shares, (ii)
satisfaction of the 1isting requirements of any national securities exchange on
which the Shares are then listed and (iii) compliance, in the opinion of the
Company's counsel with, all applicable federal and state securities and other
laws.

16. Term of Plan.
------------

No rights shall be granted under the Plan after February 18, 2008.

17. Administration of the Plan.
--------------------------

The Board of Directors or any committee or person(s) to whom it delegates
its authority (the "Administrator") shall administer, interpret and apply all
provisions of the Plan as it deems necessary to meet special circumstances not
anticipated or covered expressly by the Plan. Nothing contained in this Section
shall be deemed to authorize the Administrator to

-4-
<PAGE>

alter or administer the provisions of the Plan in a manner inconsistent with the
provisions of Section 423 of the Code.

-5-

<PAGE>

EXHIBIT 10.24

LETTERHEAD OF V.I. TECHNOLOGY, INC.

November 7, 1997

Mr. Thomas R. Ostermueller
35 Fallow Field Road
Fairfield, CT 06430

Dear Tom:

This letter agreement (the "Letter Agreement") and the release attached as
Exhibit A hereto (the "Release") are provided to you in connection with the
decision of the Board of Directors to terminate your employment by V.I.
Technologies, Inc. ("VITEX").

The terms of your severance from VITEX are as follows:

1. Your employment with VITEX and your position as a director and officer
of VITEX will be deemed terminated by mutual agreement as of October
5, 1997.

2. VITEX will make a one-time, termination payment to you equal to
$270,000 on the date the Release becomes effective (i.e. it can no
longer be revoked by you pursuant to its terms), subject to reduction
for withholding and other taxes.

3. Subject to the Release becoming effective as above, VITEX will
accelerate the vesting of 50% of the third tranche of the options to
acquire common stock of VITEX granted to you by VITEX under the V.I.
Technologies, Inc. 1995 Equity Incentive Plan (the "Plan") from
February 8, 1998 to October 5, 1997 in the case of the Non-Qualified
Stock Option and January 4, 1998 with respect to the Incentive Stock
Option--which would bring your total common shares of VITEX subject to
such options to 390,625 shares of common stock of VITEX. Except as
provided immediately above, no further vesting of VITEX options
granted to you will occur thereafter and all other unvested options to
acquire VITEX common stock granted to you will terminate effective
October 5, 1997. Should you exercise Incentive Stock Options granted
to you by VITEX before they terminate three months from your date of
termination of employment (January 5, 1998), VITEX will allow you to
delay payment of the exercise price until October 5, 1998. You must
execute the Amendment Agreement which is attached hereto as Exhibit B
to permit these changes and deliver such Amendment Agreement at the
time you execute this Letter Agreement. VITEX agrees that
notwithstanding the provisions of the V.I. Technologies, Inc. Stock
Purchase and Right of Repurchase Agreement, VITEX will not exercise
its option to purchase shares of common
<PAGE>

Mr. Thomas R. Ostermuller
October 7, 1997
Page 2

stock of VITEX issued to you as provided in Section 1(c) of the
foregoing agreement.

4. You will be provided with normal medical, dental and insurance
benefits, as currently provided to you by VITEX, until the sooner of
the date you become employed again and October 5, 1998.

5. You will be allowed twelve months (e.g. until October 5, 1998) to
exercise the Non-Qualified stock options portion of the 390,625 share
options granted to you by VITEX which you hold after October 5, 1997.
Incentive Stock Options granted to you by VITEX will terminate three
months from your date of termination of employment (January 5, 1998).

6. Normal outplacement assistance/support will be provided to you by
VITEX extending until the earlier of your employment and October 5,
1998 through Drake Beam Morin.

7. VITEX represents that it does not have knowledge of any facts or
circumstances pursuant to which it could bring any claim, demand or
cause of action against you and does not have knowledge of any facts
or circumstances that reasonably would cause VITEX to investigate
whether it could bring any claim, demand or cause of action against
you.

8. VITEX agrees that in the event a director, officer or human resources
manager of VITEX receives an inquiry from any individual concerning
your departure from VITEX, the following statement, or words
substantially similar to the following statement, shall be used in
response:

"Tom worked for more than a year to complete the successful
spinoff of VITEX from the New York Blood Center, a milestone that
was achieved in early-1995. He served as President and CEO of
VITEX for the next 2-1/2 years. Over that period, VITEX made
considerable progress operationally, financially and
organizationally in the pursuit of its long-term vision.
However, achieving this progress was an all-consuming effort that
was compounded by a 160 mile round trip commute between
Connecticut and Long Island. It was jointly decided by Tom and
the Board that, given the significant effort still required for
the nest state of the Company's development, such a personal
situation was not sustainable and that a new CEO should be
brought on-board. Tom assisted with the transition process to
ensure the continuity of VITEX's near-term progress."
<PAGE>

Mr. Thomas R. Ostermuller
October 7, 1997
Page 3

You understand and acknowledge that VITEX has numerous employees and agents
and that with respect to all such employees and agents other than directors,
officers or human resources managers, VITEX's only commitments of contractual
significance contained in this paragraph 8 are to insert a memorandum in your
personnel record containing said statement and to do nothing in bad faith to
induce other employees or agents of VITEX not to use that statement in response
to any inquiry.

VITEX may withdraw and terminate this Letter Agreement at any time prior to
your acceptance thereof which shall be evidenced only by returning a copy of
this Letter Agreement signed by you together with the Release executed by you.
If you revoke the Release or violate its terms or the terms of this Letter
Agreement, this Letter Agreement will terminate forthwith without any further
liability of VITEX, all shares of VITEX common stock acquired by you after the
date of this Letter Agreement by exercising options granted to you by VITEX will
be cancelled and returned by you to VITEX in exchange for the exercise price
paid by you pursuant to the terms of such options, the amendments to the option
agreements will be voided forthwith and only if you claim that all or any part
of the Release is unenforceable or void or you bring any claims against VITEX or
any other person released by the Release in violation of the Release all
payments of cash made to you pursuant to this Letter Agreement (net of
withholding) will be returned by you to VITEX. This Letter Agreement shall be
governed and construed in accordance with the laws of the State of New York.
The provisions of paragraph 11 of the Release are incorporated herein by
reference. This Letter Agreement replaces all prior correspondence to you from
VITEX regarding your termination of employment by VITEX. You acknowledge that
you have relied on the advice of your own legal counsel with respect to the
matters set forth in this Letter Agreement and the Release.

Sincerely,

V.I. TECHNOLOGIES, INC.

/s/ Peter D. Parker
By: ______________________________
Peter Parker
Director

AGREED: November 12, 1997

/s/ Thomas R. Ostermueller
_______________________________
THOMAS R. OSTERMUELLER
<PAGE>

EXHIBIT A

RELEASE
-------

THIS RELEASE ("Release") is made and entered into as of this 12th day
of November, 1997 by Thomas R. Ostermueller, with the address of 35 Fallow Field
Road, Fairfield, Connecticut 06430 ("You" or "Your") in favor of V.I.
Technologies, Inc., a Delaware corporation (the "Company").

RECITAL
-------

The parties desire to enter into this Release for the purposes of
amicably and fully resolving any and all claims, disputes and issues arising out
of Your employment and the termination thereof by the Company.

AGREEMENT
---------

The parties agree as follows:

1. For and in consideration of the letter agreement between You and
the Company of even date herewith (the "Letter Agreement"),

(a) You hereby release, acquit and forever discharge the Company, and
all its affiliated, parent and subsidiary corporations and its
past, present and future owners, officers, directors, partners,
stockholders, servants, agents, attorneys, employees, suppliers,
underwriters, dealers, distributors, principals, insurers,
successors and assigns from any and all claims, suits, demands,
losses, costs, actions, expenses or causes of action of
whatsoever kind or character, whether known or unknown by You,
arising out of Your employment by the Company and/or the
termination thereof by the Company. By way of example, the types
of claims that are covered under this Release include, but are
not limited to:

(i) all "wrongful discharge" claims, "constructive discharge"
claims, all claims relating to any contracts of employment,
express or implied, any covenants of good faith and fair
dealing, expressed or implied, and any personal wrongs or
injuries:

(ii) any claims that could be brought pursuant to Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Age Discrimination in Employment Act, the Americans with
Disabilities Act; or the Worker Adjustment and Retraining
Notification Act (all as may have been amended); and
<PAGE>

(iii) any claims that could be brought under any other federal,
state, county or municipal statute or ordinance dealing with
discrimination in employment on the basis of sex, race,
national origin, religion, disability, age, marital status,
affectional or sexual orientation or other reason.

(b) You also agree that, You shall not apply for, nor be entitled to
employment with the Company, its parents, subsidiaries or
affiliates, and You acknowledge that no promises of any kind have
been made to You regarding such future employment.

(c) You agree that You will never sue or otherwise institute a claim
of any kind, against the Company, its parent, subsidiary or
affiliated corporations, any personnel of the Company, or its
parents, subsidiaries or affiliates, or their officers,
directors, employees, partners, agents or attorneys for anything
which has happened up to now, whether presently known or unknown
by You, (whether unknown through ignorance, oversight, error,
negligence, or otherwise, and which, if known, would materially
affect the decision to enter into this Release) in any way
related to Your employment by the Company, and/or the termination
of that employment. By entering into this Release, the Company,
does not admit, expressly or impliedly that it has engaged in any
wrongdoing whatsoever. If You breach the terms of this Release
by suing the Company, any of its respective parents, subsidiaries
or affiliates, or any personnel of the Company, any of its
parents, subsidiaries or affiliates, or any of their respective
directors, officers, employees, partners, agents or attorneys,
You agree that You will pay all costs and expenses incurred by
the Company, any of its parents, subsidiaries or affiliates, or
any personnel of the Company, any of its respective parents,
subsidiaries or affiliates, or any of their respective directors,
officers, employees, partners, agents or attorneys in defending
against the suit, including reasonable attorneys' fees.
Additionally, if You institute a claim against the Company which
is released by this Release, any of its respective parents,
subsidiaries or affiliates, or any personnel of the Company, any
of its parents, subsidiaries or affiliates, or any of their
respective directors, officers, employees, partners, agents or
attorneys, the Company shall have the right to discontinue the
providing of benefits to You under the Letter Agreement and to
obtain, by way of counterclaim or other lawful means, the moneys
paid to You under the Letter Agreement or any shares of common
stock of the Company issued to You after the date hereof upon
exercise of options to acquire common stock of the Company
granted to You by the Company.
<PAGE>

2. You agree that to the extent you have any information regarding any
violation of law relating to Your employment with the Company and/or the
termination of that employment You have disclosed that information to the
Company.

3. You agree that You have executed this Release on Your own behalf and
also on behalf of any agents, heirs, representatives, administrators,
successors, assigns and insurers that You may have now or in the future. You
represent and warrant that no other person had, or has, or claims any interest
in the claims referred to in this Release, that You have the sole right and
exclusive authority to execute this Release and to receive the consideration
paid therefor; and that You have not sold, assigned, transferred, conveyed or
otherwise disposed of any claim or demand relating to any matter covered by this
Release.

4. This Release does not include any claims You may have (i) with respect
to any medical, prescription, dental, or flexible spending account benefits
provided by plans maintained by the Company to which You may be entitled or any
rights You may have under the applicable worker's compensation laws, (ii) for
reimbursement of ordinary and necessary business expenses incurred by You as an
officer or director of the Company prior to October 5, 1997 in accordance with
the Company's policies for reimbursement of business expenses, (iii) any rights
You may have under the Company's by-laws, certificate of incorporation or the
Delaware General Corporation Law for indemnification for actions or inactions by
You as an employee, officer or director of the Company, (iv) the Letter
Agreement between You and the Company dated the date hereof, and (v) rights
vested in You under the Melville Biologics, Inc. 1995 Equity Incentive Plan with
respect to options to acquire common stock of the Company as such rights have
been modified by the Letter Agreement.

5. You acknowledge and agree that the consideration set forth in the
Letter Agreement exceeds any amount to which You would otherwise be presently
entitled under the Company's policies, procedures and benefits programs and/or
under any applicable law, and constitutes valuable consideration for this
Release.

6. You acknowledge that the Company, has advised You and that You are
aware of the following:

(a) You have the right to and should consult with an attorney prior
to signing this Release;

(b) You have 21 days from the receipt of this Release to decide
whether to sign this Release; and

(c) If You sign this Release, You have up to 7 days to revoke it and
the Release will not become effective until this 7 day period has
expired.

This Release and the Letter Agreement and documents and agreements referred
to therein contain the entire agreement of the parties and supersedes and is in
lieu of any and all other agreements between You and the Company; provided,
however, that this Release shall not be
<PAGE>

construed to supersede Your continuing obligations entered into with the
Company, under the Letter Agreement and documents and agreements referred to
therein. This Release cannot be amended, modified, or supplemented in any
respect except by the written agreement of the parties hereto.

7. In the event You believe that You are required by legal process to
disclose any term of this Release, or otherwise take any action in violation of
the terms of this Release, You will notify the Company of any such legal
process, as promptly as reasonably possible. Such notice shall be effective on
delivery to the party which it is addressed. Such notice shall be in writing
and received by V.I. Technologies, Inc., 155 Duryea Road, Melville, New York
11747, Attn: President with a copy to Crummy, Del Deo, Dolan, Griffinger &
Vecchione, One Riverfront Plaza, Newark, New Jersey 07102-5497, Attn: Frank E.
Lawatsch, Jr., Esq., as promptly as reasonably possible before any allegedly
compelled action of disclosure, or if notice of such legal process requiring
disclosure is not received by You as promptly as reasonably possible before the
time of required disclosure, You shall give immediate notice, orally and in
writing to V.I. Technologies, Inc., 155 Duryea Road, Melville, New York 11747,
Attn: President with a copy to Crummy, Del Deo, Dolan, Griffinger & Vecchione,
One Riverfront Plaza, Newark, New Jersey 07102-5497, Attn: Frank E. Lawatsch,
Jr., Esq.

As an inducement to the Company, to enter into this Release, You hereby
agree to keep confidential indefinitely and not disclose to any person or entity
other than the Company, any and all secret, confidential and/or proprietary
information or ideas developed by You for, or learned by You from the Company,
their affiliates, consultants, or vendors. Such information or ideas shall
include, but are not limited to, business plans, reports, sales, cost or pricing
data, product data, methods of production or manufacture, formula,
intercorporate structure and dealings, and lists or identifications of suppliers
or customers. Any and all documents that may be in Your possession containing
such information or ideas must be delivered to the Company prior to the date of
this Release. The foregoing provisions of this paragraph shall not prevent You
from utilizing information which is publicly available through no fault of
Yours. The provisions of this paragraph shall expire on December 31, 1998.

You understand and agree that any breach by You of any of the covenants
contained in this Release shall entitle the Company, to bring an action for
failure to comply with the terms of this Release and, further, the Company,
shall be entitled to attorney's fees and costs as part of such action. In
addition, You agree that no adequate remedy exists at law for breach of this
Release and that the Company, shall be entitled to injunctive relief.

8. As a further inducement to the Company, to enter into this Release,
You agree not to knowingly or intentionally commit an act that is detrimental to
the reputation of the Company, its respective parents, subsidiaries, or
affiliates, or any of its past, present or future officers, directors,
employees, agents or attorneys. Similarly, the Company agrees not to knowingly
or intentionally commit an act that is detrimental to Your reputation.
<PAGE>

9. You agree that if, in any judicial proceeding, a court finds any
portion of the Release unenforceable, the remainder of the Release shall be
enforced to the maximum extent permitted by law.

10. This Release and the Letter Agreement and documents and agreements
referred to in the Letter Agreement contain the entire agreement between You and
the Company, with regard to the matters set forth herein, and shall be binding
upon and inure to the benefit of the executors, administrators, personal
representatives, heirs, successors and assigns of each.

11. You agree that New York law shall govern the validity and
interpretation of this Release. No provision in this Release shall be construed
to be inconsistent with any applicable law. You hereby agree that any dispute
regarding the rights and obligations of You under this Release and/or the Letter
Agreement or under any law governing the relationship created by this Release
and/or the Letter Agreement, must be resolved pursuant to this Section 11.
Within seven (7) days of Your written notice of Your desire to submit any
arbitrable matter as set forth herein to arbitration, You and the Company will
meet to attempt to amicably resolve their differences and, failing such
resolution, either or both of You and the Company may submit the matter to
mandatory and binding arbitration with the Center for Public Resources ("CPR").
The issue(s) in dispute shall be settled by arbitration in accordance with the
Center for Public Resources Rules for Non-Administered Arbitration of Business
Disputes, by a panel of three arbitrators (the "Panel"). The only issue(s) to
be determined by the Panel will be those issues specifically submitted to the
Panel. The Panel will not extend, modify or suspend any of the terms of this
Release. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. (S)1-16, and judgment upon the award rendered by the Panel may be
entered by any court having jurisdiction thereof. A determination of the Panel
shall be by majority vote. Promptly following receipt of the request for
arbitration, CPR shall convene You and the Company in person or by telephone to
attempt to select the arbitrators by agreement of You and the Company. If
agreement is not reached, the Company shall select one arbitrator and You shall
select one other arbitrator. These two arbitrators shall select a third
arbitrator. If these two arbitrators are unable to select the third arbitrator
by mutual agreement, CPR shall submit to You and the Company a list of not less
than eleven (11) candidates. Such list shall include a brief statement of each
candidate's qualifications. You and the Company shall each number the
candidates in order of preference, shall note any objection they may have to any
candidate, and shall deliver the list so marked back to CPR. If You or the
Company fail without good cause to return the candidate list so marked within
ten (10) days after receipt the nonresponding person shall be deemed to have
assented to all candidates listed thereon. CPR shall designate the arbitrator
willing to serve for whom You and the Company collectively have indicated the
highest preference and who does not appear to have a conflict of interest. If a
tie should result between two candidates, CPR may designate either candidate.
This agreement to arbitrate is specifically enforceable. Judgment upon any
award rendered by the Panel may be entered in any court having jurisdiction.
The decision of the Panel within the scope of the submission is final and
binding on You and the Company, and any right to judicial action on any matter
subject to arbitration hereunder hereby is waived (unless otherwise provided by
applicable law), except suit to enforce this arbitration award or in the event
arbitration is not available for any reason. If the rules of the CPR differ
from those of this Section 11, the provisions of this Section 11 will control.
The Company and
<PAGE>

You shall each pay one-half of all the costs of arbitration including the fees
of the arbitrators. Notwithstanding the foregoing, You agree that the Company
may seek preliminary injunctive relief for breach of this Release by You and
equitable relief for the enforcement of its rights hereunder and You submit to
the jurisdiction of all federal and state courts sitting in Connecticut or New
York for such purpose and You agree that any order, process, pleading, notice of
motion or other application to or by any such court or a judge thereof may be
served within or without such court's jurisdiction by registered mail (with
return receipt requested) or by personal service, provided that a reasonable
time for appearance is allowed. You hereby irrevocably waive any objection that
You may hereafter have to laying of venue of any suit, action or proceeding
brought in any federal or state court sitting in New York or Connecticut as
provided herein and irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

12. You agree that You are fully aware of Your rights, that You have
carefully read and fully understand all of the provisions set forth in this
Release, that You have had the opportunity to consult with Your attorney, and
that You are voluntarily and knowingly entering into this Release. You further
acknowledged that You have not relied on any representations, promises, or
agreements of any kind made to You in connection with your decision to accept
this Release except for the terms set forth above and as contained in the Letter
Agreement.

This Release is not effective or enforceable for 7 days after you sign it
and You may revoke it during that time. To revoke, a written notice of
revocation in the form attached hereto must be mailed to V.I. Technologies,
Inc., 155 Duryea Road, Melville, New York 11747, Attn: President with a copy to
Crummy, Del Deo, Dolan, Griffinger & Vecchione, One Riverfront Plaza, Newark,
New Jersey 07102-5497, Attn: Frank E. Lawatsch, Jr., Esq., within 7 days after
You sign this Release. The revocation must be:

(a) postmarked within the 7 day period and be identical to the
Revocation Form attached hereto; and

(b) properly addressed to Frank E. Lawatsch, Jr. and President at the
respective addresses above; and

(c) be accompanied by payment in full of cash and certificates
representing common stock of the Company delivered to You
pursuant to the exercise of options granted to You by the Company
which are exercised after the date hereof endorsed in blank.

By such revocation You acknowledge the termination of the payment
obligations of the Company and obligations of the Company to provide any
benefits to You, in each case as set forth in the Letter Agreement, You must
return endorsed in blank shares of common stock of the Company acquired by You
after the date hereof and pursuant to the exercise of options granted to You by
the Company upon return by the Company to You of the exercise price thereof and
You must return all payments made to You under the Letter Agreement. You also
acknowledge the amendment to the option agreements between You and the Company
will be terminated.
<PAGE>

If the Company does not receive a written revocation and return of the
items referred to in clause (c) in accordance with the foregoing terms, You will
not be able to rescind this Release.

* * * * * * * * *

It is understood and agreed by the undersigned that this is a full, final
and complete release of any and all claims and demands of every kind and
character whatsoever and releases any and all claims and demands which are
known, unknown, suspected or unsuspected relating to Your employment by the
Company and termination of that employment.

Notwithstanding any other provision of this Release, You are not by this
Release releasing the Company from any of its obligations under the Letter
Agreement or in any way limiting Your right to enforce Your rights under the
Letter Agreement.

WITNESSED: DATE OF EXECUTION:

/s/ Una S. Ryan /s/ Thomas R. Ostermueller November 12, 1997
- --------------- -------------------------
Thomas R. Ostermueller

WITNESSED: V.I. TECHNOLOGIES, INC.

/s/ Mark Byrnes By: /s/ Peter D. Parker November 12, 1997
- --------------- -------------------
<PAGE>

EXHIBIT B

AMENDMENT AGREEMENT

This Amendment Agreement entered into on November 12, 1997 by and between
Thomas R. Ostermueller ("Optionee") and V.I. Technologies, Inc., a Delaware
corporation (formerly known as Melville Biologics, Inc.) (the "Company").

WHEREAS, the Company granted an option 1995 ISO-20 under the V.I.
Technologies, Inc. 1995 Equity Incentive Plan (the "Plan") covering 400,000
shares of common stock of the Company dated October 18, 1995 (the "ISO Option");

WHEREAS, the Company granted an option 1995 NSQ-2 under the Plan covering
225,000 shares of common stock of the Company dated October 18, 1995 (the "NSQ
Option").

NOW, THEREFORE, the parties hereto agree as follows:

1. The ISO Option is amended to change the Exercisability Schedule thereof
to strike the words "after February 8, 1998, as to 100,000 additional shares,
and after February 8, 1999, as to 100,000 additional shares" and add the
following words in their place: "and, after January 4, 1998, as to 50,000
additional shares."

2. The NSQ Option is amended to change the Exercisability Schedule thereof
to strike the words "after February 8, 1998 as to 56,250 additional shares, and
after February 8,
<PAGE>

1999, as to 56,250 additional shares" and add the following words in their
place: "and, after October 5, 1997, as to 28,125 additional shares."

3. Pursuant to Paragraph 4 of the ISO Option, the committee administering
the Plan has agreed to permit the Optionee to exercise the ISO Option by
delivering to the Company a recourse note in the form attached hereto secured by
the common stock of the Company received by the Optionee upon exercise of the
ISO Option to the extent exercised by delivery of such note.

4. The first sentence of Paragraph 8 of the NSQ Option is amended to
strike the words "three months" and insert the words "twelve months."

5. The number of shares covered by the ISO Option is reduced to 250,000
shares and the NSQ Option is reduced to 140,625 shares effective as of October
5, 1997.

6. For purposes of the NSQ Option and the ISO Option, the Optionee shall
have terminated his employment with the Company on October 5, 1997.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement this 12th day of November 1997.

V.I. TECHNOLOGIES, INC.

/s/ Peter D. Parker
By: ___________________________
Name: Peter Parker
Title: Director

/s/ Thomas R. Ostermueller
______________________________
Thomas R. Ostermueller

<PAGE>

EXHIBIT 10.25

VITEX

MEMORANDUM

TO: Joanne Leonard

FROM: John Barr

DATE: December 23, 1997

________________________________________________________________________________

As a follow-up to our discussions of last week, I have reviewed your request and
my associated recommendation with the Board of Vitex. Let me provide you with
the incentives that we plan to put in place to minimally have you stay through a
successful IPO.

As I have stated, it is my sincere hope that you will make a decision to
continue your career with Vitex for a far longer period of time.

If we decide jointly that it is in your best interest to leave prior to
completion of an IPO by Vitex, let me outline the minimum severance package for
which you will be eligible:

1. Base salary will be paid for a period of six months from date of
termination.

2. Health benefits will continue for the six month period of salary
continuation.

3. Accelerated vesting of the next two tranches of your existing options at
the date of termination. You will have 6 months to pay for these options.

Joanne, this program is more generous than the retention program approved by the
board and communicated to the senior management team by memo on Oct. 28, 1997.

Let me know review an even more generous program should you decide to stay
through a successful IPO. For the purposes of this agreement and for you to be
eligible for the enhanced severance arrangement, a successful IPO is one in
which Vitex raises a minimum of $30MM by no later than July 1, 1998.

1. Base salary will be paid for a period of six months from date of
termination.

2. Health benefits will continue for the six month period of salary
continuation.
<PAGE>

PAGE TWO
JOANNE LEONARD
DECEMBER 23, 1997

3. Accelerated vesting of the next two tranches of your existing options (i.e.
options rewarded prior to December 1997). You will have six months from
the date of termination to exercise these options.

4. You will be eligible for an stock option award based on 1997 performance
along with other key members of the management team. That award will be
determined prior to the end of January, 1998. You will receive accelerated
vesting of the first two tranches of this award. You will have six months
from the date of termination to exercise these options.

5. You would be eligible for any bonus rewarded to the management team for
1997 performance consistent with your individual performance rating and
performance of the management team against 1998 objectives.

6. You would be eligible for a one time cash bonus of 25% of your current base
salary or $39,500.

Please note that you will have 60 days from the time the IPO is completed to
make a decision to leave the company and receive the enhanced severance package.
At the end of the sixty day period you will be only eligible for the minimum
severance package outlined above (should you subsequently be terminated from
Vitex). I would expect you to regard the terms of these agreements as strictly
confidential.

I sincerely hope that you will choose to continue your career indefinitely with
Vitex. Please contact me if any of these terms are not clear or you require
additional information.

<PAGE>

EXHIBIT 10.26

EMPLOYMENT AGREEMENT

PARTIES

EMPLOYMENT AGREEMENT ("Agreement") made as of January 15, 1998 between VI
Technologies, Inc. (VITEX), a Delaware corporation (the "Company"), and BERNARD
HOROWITZ (the "Executive").

RECITALS

The Company desires to retain the Executive to provide the services set
forth below, and the Executive is willing to provide such services to the
Company, subject to the terms and conditions of this Agreement.

TERMS OF AGREEMENT

The parties agree as follows:

1. EMPLOYMENT

1.1 EMPLOYMENT DUTIES. The Company employs the Executive, for the
-----------------
Term (as hereinafter defined in Section 2), to render exclusive
and full-time services to the Company as Executive Vice President
and Chief Scientific Officer of the Company, subject to the
direction of the President and the Board of Directors of the
Company. In connection therewith, the executive shall perform
such duties consistent with his position as he shall reasonably
be directed by the Board of Directors or by the President of the
Company to perform.

1.2 ACCEPTANCE. The Executive accepts such employment and agrees to
----------
render the services described above. The Executive further agrees
to accept election and to serve the Term as an officer and
director of the Company, without any compensation therefor other
than that specified in the Agreement.

1.3 DIRECTOR. The Company shall use its best efforts to cause the
--------
Executive to be a member of its Board of Directors throughout the
Term and shall include him in the management slate for election
as a director at every stockholders' meeting at which his term as
a director would otherwise expire. The Executive agrees to tender
his resignation as a director of the Company upon termination of
the Term.

1.4 LOCATION. The duties to be performed by the Executive hereunder
--------
shall be performed primarily at the office of the Company in New
York
<PAGE>

City, subject to reasonable travel requirements on behalf of the
Company.

1.5 SOLVENT/DETERGENT BUSINESS. Notwithstanding anything to the
--------------------------
contrary set forth in this Agreement, the Executive may during
the Term continue to provide support and services in connection
with the blood solvent/detergent business, provided that such
support and services do not materially interfere with the
Executive's performance of duties under this Agreement.

2. TERM OF EMPLOYMENT.

The term of the Executive's employment under this Agreement (the
"Term") commenced as of February 1, 1995 hereof and shall end on the fourth
anniversary thereof, unless sooner terminated pursuant to Article 4 of this
Agreement; PROVIDED, HOWEVER, that the Term shall be extended automatically for
-----------------
additional one-year periods unless one party shall advise the other in writing
before the initial expiration of the Term or an anniversary date thereof that
this Agreement shall no longer be so extended.

3. COMPENSATION AND BENEFITS.

3.1 Base Salary. As compensation for the services to be rendered by
-----------
the Executive pursuant to this Agreement, the Company agrees to
pay the Executive, commencing September 1, 1995 and for the
balance of the term, a base salary (the "BASE SALARY") at the
fixed rate of $170,000 per annum, payable in installments in
accordance with the Company's payroll practices for its senior
executives, less such deductions or amounts to be withheld as
shall be required by applicable law and regulations. The Base
Salary amount may be increased from time to time by the Board of
Directors of the Company.

3.2 Bonus. executive's Base Salary may be supplemented by an annual
-----
bonus payment ("Bonus"). The amount of the Bonus shall be
determined by the Company in its sole and absolute discretion,
based on the performance of Vitex and the Executive. The Bonus
shall be paid within 2 weeks after the audited financial results
for the Bonus period are approved by Vitex's Board of Directors.
The Bonus will be based on Vitex and Executive achieving the
targets set by Vitex's Board of Directors and will be an amount
targeted at 25% of Executive's Base Salary. Such Bonus may be
larger or smaller based on actual performance.

3.3 Stock Options. As additional compensation for the services to be
-------------
rendered by the Executive pursuant to this Agreement, the Company
has granted the Executive stock options totaling 625,000 shares
(the "1995 Grant"). Such stock options vest annually over a four
year
<PAGE>

period commencing February 1, 1995 and ending on the fourth
anniversary thereof and, subject to such vesting period, shall be
exercisable at any time prior to the tenth anniversary of the
date of grant of such options. The exercise price of the options
granted to the Executive in 1995 is equal to $1/share.

In December, 1997 the Executive received as additional grant of
stock options totaling 350,000 shares (the "1997 Grant"). The
exercise price of these options is equal to $3/share. Other
provisions of the 1997 Grant are the same as the 1995 Grant
including 4-year annual vesting.

3.4 Other Benefits. The Executive shall be entitled to any
--------------
additional rights and benefits (such as, for example, dental,
medical, medical reimbursement and hospital plans, pension plans,
employee stock purchase plans, profit sharing plans, bonus plans
and other so-called "fringe" benefits) as the Company shall make
available to its senior executives.

At the time the Executive retires from VITEX, or otherwise ceases
to be employed by VITEX for any reason, and annually thereafter,
VITEX will offer the Executive the opportunity to enroll in any
major medical and dental insurance plans VITEX provides to its
full time, senior management staff. The cost to the Executive
will be as though he were still actively employed by VITEX.

3.5 Expenses. The Company shall pay or reimburse the Executive for
--------
all reasonable expenses actually incurred or paid by him during
the Term in the performance of his services under this Agreement,
upon presentation of expense statements or vouchers or such other
supporting information as the Company may reasonably require.

3.6 Office and Support Staff. The Executive shall be entitled to an
------------------------
office or offices of a size and with furnishings and other
appointments, and to secretarial and other support staff and
assistance, as shall be provided by the Company for its other
senior executives.

3.7 Vacation. The Executive shall be entitled to such period or
--------
period of vacation during each year of the Term in accordance
with the Company's vacation policy for its senior executives.

3.8 Life Insurance. The Executive shall be entitled to $500,000 of
--------------
term life insurance, payable to his family, at the Company's
expense. This insurance shall remain in full force for a period
of one year beyond the Executive's employment Term.

4. TERMINATION.
<PAGE>

4.1 Termination for Cause. The Company may discharge the Executive
---------------------
and terminate this Agreement for cause (as defined below). Discharge for cause
shall be effective ten (10) days after the Executive's receipt of written notice
of discharge or at such later date as may be specified in that notice, provided
such notice contains the specific reasons and the specific events upon which
discharge is predicated.

4.1.1 As used in this Agreement, "CAUSE" shall mean any or all
of the following occurring during the Term:

(i) any act or acts of dishonesty taken by the Executive
and intended to result in substantial personal
enrichment of the Executive at the expense of the
Company; or

(ii) any gross negligence or willful violation by the
Executive of the Executive's obligations under this
Agreement or the Employee Non-Competition Agreement
dated December 16, 1997 or the Non-Disclosure and
Inventions Agreement, which results in material injury
to the Company.

4.2 Disability; Death. If during the Term the Executive fails to
-----------------
perform his usual duties under this Agreement for a period in
excess of 120 consecutive days mental disability, the Company
shall have the right to terminate the Executive's employment on
30 days' notice to the Executive. If the Executive dies during
the Term, this Agreement shall be deemed to have been terminated
on the date of the Executive's death.

4.3 Good Reason. The Executive may voluntarily terminate his
-----------
employment hereunder for good reason. For purposes of this
Agreement, "good reason" shall mean any or all of the following:

(i) The assignment to the Executive of any duties materially
inconsistent with his position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
1 of this Agreement, or any other action taken by the Company which results in a
material diminishment in such position, authority, duties or responsibilities,
which assignment or other action is not remedied by the Company within 30 days
after receipt of notice thereof given by the Executive.

(ii) any failure by the Company to comply with any of the material
provisions of Section 3 of this Agreement, which failure is not remedied by the
Company within 30 days after receipt of notice thereof given by the Executive;
<PAGE>

(iii) the termination of the Executive as a director of the Company,
other than in connection with a termination of the Executive's employment
hereunder for cause or as a result of his death or disability pursuant to
Section 4.2;

(iv) the Company's shifting the Executive's principal office to a
location that would require the Executive to relocate his residence (other than
as part of the movement of all of the Company's offices).

4.4 Payment Upon Termination of Employment
--------------------------------------

4.1.1 If (a) the Executive's employment is terminated by the
Company for cause pursuant to Section 4.1 or (b) the Executive voluntarily
terminates his employment under this Agreement other than for good reason
pursuant to Section 4.3, the Executive shall receive his Base Salary and Annual
Bonus, if any, together with any accrued but unreimbursed or unsubmitted
expenses, through the termination date of his employment.

4.4.2 If the Executive's employment is terminated by the Company
as a result of his death or disability pursuant to Section 4.2, (a) the
Executive (or his legal representatives, if applicable) shall receive his Base
Salary and Annual Bonus, if any, together with any accrued but unreimbursed or
unsubmitted expenses, through the termination date of his employment, (b) the
Executive (or his legal representatives, if applicable) shall continue to
receive any benefits remaining effective thereafter in accordance with the terms
of the underlying benefit plans and (c) the stock options granted to the
Executive in the 1995 Grant shall vest in full and the stock options granted in
the 1997 Grant shall be vested to include the Executive's next annual vesting
anniversary after the date of termination.

4.4.3 If the Executive's employment is terminated by the Company
for reasons other than for cause pursuant to Section 4.1, or the Executive
terminates his employment hereunder for good reason pursuant to Section 4.3:
(a) all stock options granted to the Executive in the 1995 Grant shall vest in
full and the stock options granted in the 1997 Grant shall be vested to include
the Executive's next annual vesting anniversary after the date of termination,
and (b) in addition to all amounts due to the Executive hereunder through the
date of such termination, the Company shall pay the Executive in cash in 6-month
installments commencing within 30 days after such termination (i) an amount
equal to the Executive's Base Salary for one year at the rate in effect on the
date of such termination and (ii) any vested benefits.

5. INDEMNIFICATION.

The Company shall indemnify, defend and hold harmless the Executive,
to the maximum extent permitted by applicable law, against all costs, charges
and expenses incurred or sustained by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his being an officer,
director or an executive of the Company or of any subsidiary or affiliate of the
Company. The provisions of this Section
<PAGE>

shall survive the termination or expiration of this Agreement irrespective of
the reason therefor.

6. NOTICES.

All notices, requests, consents and other communications, required or
permitted to be given hereunder, shall be in writing and shall be delivered
personally or by an overnight courier service or transmitted by facsimile or
sent by registered or certified mail, postage prepaid, return receipt requested,
to the following parties at the following addresses and numbers, and shall be
deemed given when so delivered personally or by overnight courier, or when
transmitted and received by facsimile, or, if mailed, five days after the date
of deposit in the United States mails:

(i) if to the Company, as follows:

V.I. Technologies, Inc.
155 Duryea Road
Melville, NY 11747
Attn: Chairman of the Board and President
Facsimile No.: 516-752-8754

(ii) if to the Executive, as follows:

Bernard Horowitz, Ph.D.
156 Taymil Road
New Rochelle, NY 10804
Facsimile No.: (914) 636-5620

Either party may designate another address, number, or person for
receipt of notices hereunder by giving notice to the other party in accordance
with this Section.

7. GENERAL.

7.1 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in such State.

7.2 Arbitration. Any dispute arising out of, or relating to, this
-----------
Agreement or the breach thereof, or regarding the interpretation thereof, shall
be finally settled by arbitration conducted in New York City in accordance with
the rules of the American Arbitration Association then in effect before a single
arbitrator appointed in accordance with such rule. Judgment upon any award
rendered therein may be entered and enforcement obtained thereon in any court
having jurisdiction. The arbitrator shall have authority to grant any form of
appropriate relief, whether legal or equitable in nature, including specific
performance. For the purpose of any judicial proceeding to enforce such award
or incidental to such arbitration or to compel arbitration, the parties hereby
submit to the non-exclusive
<PAGE>

jurisdiction of the Supreme Court of the State of New York, New York County, or
the United States District Court for the Southern District of New York and that
service of process in such arbitration proceedings or in any court action
ancillary to such proceedings shall be satisfactorily made upon it if sent by
registered mail addressed to it at the address set forth in Section 6 hereof.

7.3 Headings. The article and section headings contained herein are
--------
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

7.4 Entire Agreement. This Agreement sets forth the entire agreement
----------------
and understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.

7.5 Assignments. This Agreement, and the Executive's rights other
-----------
than the right to receive payments hereunder and obligations hereunder, may not
be assigned by the Executive. The Company may assign its rights, together with
its obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets; in all
events, the obligations of the Company hereunder shall be binding on its
successors or assigns, whether by merger, consolidation or acquisition of all or
substantially all of its business or assets.

7.6 Amendments; Waivers. This Agreement may be amended, modified,
-------------------
superseded, canceled, renewed or extended and the terms or covenants hereof amy
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. The failure of
either party at any time or times to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the same. No
waiver by either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach or a waiver of the breach of any other term or covenant contained in this
Agreement.

7.7 Severability. If any one or more of the terms, provisions,
------------
covenants or restrictions of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, unless the parties hereto would not have entered into this
Agreement without such invalid, void or unenforceable term, provision, covenant
or restriction.

7.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same instrument.
<PAGE>

EXECUTION

The parties have executed this Agreement as of the date first above
written.

V.I. Technologies, Inc.

/s/ John Barr
By: _________________________________
Name:
Title:

/s/ Bernard Horowitz
_________________________________
Bernard Horowitz

<PAGE>

EXHIBIT 10.27

VITEX

November 10, 1997

John R. Barr
120 Walpole Street
Dover, MA 02030

Dear John:

On behalf of the VITEX Board of Directors, I would like to take this opportunity
to confirm the Company's offer to you to join the VITEX team at our Melville
facility as President, Chief Executive Officer and Member of the Board of
Directors. We are pleased you have accepted our offer to start on or about
December 1, 1997, at a salary of $10,769.23 biweekly (which annualized is
$280,000).

Each year, you will also be eligible for additional compensation (a "Performance
Bonus") which will be determined by the achievement of personal objectives and
by the Company's achievement of financial and other performance goals. For
1998, the Company will guarantee you a bonus of $45,000 payable in two equal
installments - at the end of 6 months from your start date and at the end of 12
months from your start date.

Furthermore, upon approval by the VITEX Board of Directors you will receive a
stock option grant of 1,027,500 shares which will enable you to participate
meaningfully in the long-term growth and success of the Company. A personalized
description of the specific compensation package being offered to you is
attached.

Please sign and date in the space provided below and remit to us at your
earliest convenience.

John, all of us look forward to welcoming you personally to the VITEX team.

Sincerely,

/s/ James Northrup

James Northrup
Vice President, Human Resources

/s/ John R. Barr
AGREED:__________________________

11/11/97
DATED: __________________________
<PAGE>

VITEX
COMPENSATION SUMMARY - JOHN R. BARR

BASE SALARY:

You will receive a base salary at the biweekly rate of $10,769.23
which annualized is $280,000. Pay checks are distributed
biweekly (every other Thursday) and we provide Direct Deposit for
your convenience.

Annual Merit Increases based upon job performance are granted as
of April 1st each year for work performed during the previous
twelve months (April 1 - March 31). Team Members hired on or
after January 1st through March 31st are not eligible for merit
increases given as of April 1st of the current year, but will be
considered for increases the following year.

Team Members hired between April 1st and December 31st will be
eligible for a pro rata increase based on the number of full
payroll periods they were on payroll, assuming expected
performance, during that time frame.

PERFORMANCE
BONUS:

You will be eligible for additional compensation, a "Performance
Bonus", to be paid after the end of the Company's fiscal
(calendar) year. The Performance Bonus payouts will be
determined by the Company's achievement of annual financial and
other performance goals and by the achievement of specific
personal performance objectives.

Eligibility to participate in the Performance Bonus is determined
by being a regular full-time team member and by being on the
Company's payroll on or before June 30 of the Performance Bonus
year (calendar year).

Team members who join the Company after January 1 and by no later
than June 30 will be eligible for a pro-rata Performance Bonus
payment based upon the number of full payroll periods on payroll.
Your guaranteed 1998 award will be $45,000.
<PAGE>

INCENTIVE STOCK
OPTION:

You will be eligible to participate in the Company's Incentive
Stock Option (ISO) program. Based on your Job level in the
Company and upon approval by the Company's Board of Directors,
you will receive a stock option grant of 1,027,500 shares.

Stock options are subject to vesting requirements under the
Company's Incentive Stock Option Plan. Yearly vesting occurs at
the rate of 25% per year starting at the date of grant. For
example, if you were granted 1,000 shares, you would vest in the
right to purchase 250 shares one year from the date of grant at
the price in effect as of the date of grant. You would vest in
another 250 shares at the end of the second year, and so forth.

ISO's are granted to team members upon hire at the total
discretion of the Company's Board of Directors. Therefore, we
cannot guarantee that the number of shares and the timing of the
grant will be as stated in this letter. Grants will be
determined at the next quarterly Board Meeting.

BENEFITS SUMMARY

MEDICAL &
DENTAL: You will be eligible to participate in a comprehensive medical
insurance plan, which includes major medical and dental coverage.
Coverage is provided on either team member-only, or family
coverage basis. Participation in this program requires partial
team member co-payment of premiums which is deducted on a pre-tax
basis via payroll deduction.

FLEXIBLE SPENDING/
DEPENDENT CARE
ACCOUNT:

Team members will have the opportunity to put away monies on a
pre-tax basis for medical expenses and/or dependent care expenses
which are not covered under the medical or dental plan. For
example, this will allow you to save on your eligible out-of-
pocket medical expenses, such as deductibles or vision care,
and/or your out-of-pocket child care expenses, such as daycare.

LIFE INSURANCE,
ACCIDENTAL DEATH
& DISMEMBERMENT:
<PAGE>

Life insurance at one times your base annual salary will be
provided by VITEX. You may purchase additional coverage for you
and your eligible dependents at your own expense and pay for this
coverage via payroll deduction. This optional coverage is
available up to a maximum of $300,000. Eligibility for and the
cost of optional coverage is governed by your age and evidence of
insurability.

LONG-TERM
DISABILITY:

If you become disabled and the disability lasts for more than six
months, you will be eligible to receive a benefit of up to 60% of
your base annual salary. This coverage will be paid by VITEX; or
if you choose, you may pay the monthly premium on an after-tax
basis. If you pay the premium instead of the Company, any
benefits received by you in the future would be tax-free,
providing added income during your disability. If VITEX pays
your LTD premium, any benefits received by you in the future
would be subject to tax as ordinary income.

401(K):

After one month of service, you will be eligible to enter the
VITEX Savings Plan on the first day of the following months --
January, April, July or October. You may save on a pre-tax basis
up to 20% of your pay via payroll deduction.

VACATION/HOLIDAYS:

You will be eligible for 27 vacation/holiday benefits. The
following is our regular vacation/holiday accrual:

1st five years of service 22 days
6th through 10th years 27 days
11th year and beyond 32 days

SICK TIME:

It is expected that everyone will be at work and fulfilling their
responsibilities whenever possible. If you are sick and cannot
properly carry out your responsibilities, please remain at home
and get well as soon as possible. There is no specific sick time
"allotment".
<PAGE>

RELOCATION PACKAGE:

You will receive our executive relocation package. In addition,
the Company will reimburse you for reasonable and customary
temporary living expenses and once weekly round trip travel from
your current home to the Melville, NY area during the period from
your date of hire until the end of the Dover school year, after
which it is expected that you and your family will relocate to
within reasonable commuting distance of the Company's Melville
facility.

AUTOMOBILE OPTION:

The Company will pick up your current automobile lease or provide
a comparable situation.

The compensation and benefits outlined above are subject to change, and they may
be reviewed and revised in the future to ensure that VITEX maintains a
competitive position in the marketplace. More detailed information will be made
available to you in written and oral communications.

Our offer is based on confidence that your employment with VITEX will be a
mutually rewarding and enriching experience, but this offer does not constitute
a contract of employment, nor does it guarantee a lifetime security. Employment
at VITEX is employment-at-will.
<PAGE>

VITEX
RELOCATION PACKAGE
- ------------------

V.I. Technologies, Inc. ("VITEX") will reimburse senior level, exempt
Regular Full Time employees for reasonable moving expenses, if agreed to as a
condition of employment. This assistance is available for newly hired employees
whose current residence is outside a 100 mile radius from our worksite. In
order to assure appropriate costs are incurred and to minimize the tax impact on
the employee, the Company, at its sole discretion, reserves the right to utilize
the services of a relocation company in order to assist the employee.

The employee should identify in advance the nature of expenses that can be
foreseen relative to the move and obtain agreement with VITEX on the terms which
are covered by this policy.

Final approval will be given by the CEO and the VP-Human Resources. Any
exceptions to this policy will require the written authorization of the CEO.

Approved expense items must be supported by receipts or other proof of
payment and submitted in an itemized report to the VP-Human Resources.

. MOVING OF HOUSEHOLD GOODS - reasonable expenses for moving household
-------------------------
furnishings and personal effects (including one car) to the new location
will be reimbursed. (The moving of major recreational equipment or hobby
equipment such as a boat and items such as firewood will not be
reimbursed.) Two bids for such services are to be obtained and a final
written proposal is to be submitted to the Company for approval prior to
moving. Reasonable expenses associated with the temporary storage of
household goods will also be reimbursed.

. FINDING A NEW HOME - reasonable expenses (including airfare, hotel, car
------------------
rental and meals) associated with one trip of up to 4 days to the area for
the purpose of finding a new home will be reimbursed.

. SELLING OF FORMER HOME AND PURCHASING OF NEW HOME - reasonable expenses
-------------------------------------------------
incidental of the sale of the former primary residence and the purchase of
a new primary residence will be reimbursed, including:

1) attorney's fees;

2) real estate broker's commission at the selling location;

3) other reasonable legally or contractually required charges such as
mortgage tax, title insurance, up to two points on a new mortgage,
transfer taxes;
<PAGE>

PAGE TWO
VITEX
Relocation Package
- ------------------

4) bridge loan financing costs (or equivalent) for up to 4 months to
assist the employee in the purchase of a new residence prior to the
sale of the former residence.

. TRAVELING TO NEW HOME AND TEMPORARY LIVING EXPENSES - reasonable travel and
---------------------------------------------------
related expenses for the employee and his/her family during the move from
the former home location to the VITEX area will be reimbursed. If the
employee and his/her family cannot move directly from their old home into
their new home, expenses for reasonable lodging and meals for up to 5 days
will be reimbursed.

Furthermore, for a period of up to 3 months, reasonable temporary living
expenses for the new employee at the new location will be reimbursed.
Also, during the time period of temporary living expenses and prior to the
closing of the sale of the former residence, reasonable expenses associated
with the employee's trips back to the prior residence scheduled no more
frequently than once every four weeks will be reimbursed.

IF AN EMPLOYEE WHO RECEIVED BENEFITS/REIMBURSEMENT UNDER THE TERMS OF THIS
RELOCATION POLICY VOLUNTARILY TERMINATES HIS/HER EMPLOYMENT AT VITEX WITHIN ONE
YEAR OF BEING RELOCATED, ALL MONIES PAID BY VITEX TO OR ON BEHALF OF THE
EMPLOYEE FOR RELOCATION MUST BE REIMBURSED TO VITEX.

<PAGE>

EXHIBIT 10.28

PERSONAL AND CONFIDENTIAL
-------------------------

October 28, 1997

TO: VITEX Vice Presidents (a similar memo would go to the next level
Directors)

FROM: Rick Charpie

SUBJECT: Management Reward and Retention Program

================================================================================

Over the past three months, we have been working together as a team in a
difficult, risky attempt to turn VITEX around. While it is too early to declare
success, it is not too early to know how hard all of you have worked during the
recent past and how hard we are all going to have to work during the future.

The VITEX Board and I have appreciated the fact that each of you has
participated as an active member of a cohesive team throughout this challenging
period. That you have done so, without complaint and without putting your own
individual interests before the Company's needs, deserves recognition.

In addition, as we get closer to bringing in a new CEO, I believe that some
kind of retention program should be implemented. While none of you has consumed
valuable time worrying publicly about what, if any, changes a new CEO will make,
my experience in similar situations in the past tells me that each of you is
concerned about the potential uncertainty.

Therefore, in the spirit of both reward and retention, the VITEX Board has
accepted my recommendation that we provide all VITEX Vice Presidents with a two-
part severance plan. Specifically, in the event that any VITEX Vice President is
terminated without cause, you will receive:

. CASH SEVERANCE - six months of base salary and health benefits from
--------------
date of termination; and,

. EQUITY SEVERANCE - accelerated vesting of the next tranche of any
----------------
current outstanding options (as opposed to future option grants - see
below), with up to six months from the termination date to pay for any
option exercise.

I hasten to add that this offer is not being made because I expect, or
because I am in any way recommending, that any changes will be made to the
senior management team. Rather, it is simply a case of trying to anticipate
your needs and respond to them in advance. In particular, this approach uses
what we hope to be the value of the outstanding options to reward and reassure
those who have stuck with us through this difficult period.
<PAGE>

Management Retention and Reward Program
Page Two

To make this point even clearer, it is my strong opinion that the current
management team does not have a sufficient equity stake in VITEX. Therefore, I
have recommended to the Board that, concurrent with hiring the new CEO, VITEX
should make additional option grants to the senior management team. As noted
above, these incremental grants would not be subject to the accelerated
severance vesting described earlier. While no final action has been taken, the
Compensation Committee has agreed to consider this recommendation in the very
near future.

Thank you for your loyalty and effort. Now let's get back to work -
there's much to be done if VITEX is to achieve the objectives necessary to make
everybody's equity as valuable as we would all like.
<PAGE>

per James Northrup -- severance letter to:

Kenneth Graziano, Ph.D.

Howard Grossberg, M.D.

Joanne Leonard

Donald Mozes

James Northrup

Vishva, Rai, Ph.D.

<PAGE>

EXHIBIT 10.33

V.I. TECHNOLOGIES, INC.

INDEMNIFICATION AGREEMENT
-------------------------

This Agreement dated ______________________ is between V.I. Technologies,
Inc. (the "Company"), a Delaware corporation, and ______________________ (the
"Indemnitee"), who is [an officer] [a director] [an officer and director] of the
Company. Its purpose is to provide the maximum protection for the Indemnitee
against personal liability arising out of his or her service to the Company so
as to encourage the continuation of such service and the effective exercise of
his or her business judgment in connection therewith.

The parties hereto agree as follows:

1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings hereafter assigned to them:

(a) CHANGE IN CONTROL: a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") whether or not the Company is in fact
required to comply therewith; provided, that, without limitation, such a change
in control shall be deemed to have occurred if:

(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities; or

(ii) during any period of twenty-four (24) consecutive months
(not including any period prior to the date of this Agreement), individuals
who at the beginning of such period constitute the Company's Board of
Directors (the "Board") and any new director (other than a director
designated by a person who has entered into an agreement with the Company
to effect a transaction described in paragraphs (i), (ii) or (iii) of this
Section 1(a)) whose election by the Board or nomination for election by the
stockholders of the Company was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority
thereof; or

(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% of the combined voting
securities of the Company or such surviving entity outstanding immediately
after such
<PAGE>

merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no "person" (as hereinabove defined) acquires 30% or more of the
combined voting power of the Company's then outstanding securities; or

(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.

(b) CLAIM: any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether instituted by the Company
or any other party that the Indemnitee in good faith believes might lead to the
institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.

(c) EXPENSES: include attorneys' fees and all other costs, expenses
and obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing to
defend, be a witness in or participate in, any Claim relating to any
Indemnifiable Event.

(d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact
that the Indemnitee is or was a director, officer, employee, agent or fiduciary
of the Company, or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by the Indemnitee in any such capacity.

(e) POTENTIAL CHANGE IN CONTROL: shall be deemed to have occurred
if:

(i) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;

(ii) any person (as hereinabove defined), including the
Company, publicly announces an intention to take or consider taking actions
which if consummated would constitute a Change in Control;

(iii) any person (as hereinabove defined), other than the
Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company (A) is or becomes
the beneficial owner, (B) discloses directly or indirectly to the Company
or publicly a plan or intention to become the beneficial owner, or (C)
makes a filing under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, with respect to securities to become the beneficial
owner, directly or indirectly, of securities representing 9.9% or more of
the combined voting power of the outstanding voting securities of the
Company; or

2
<PAGE>

(iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a potential change in control of the Company
has occurred.

(f) REVIEWING PARTY: The person or body appointed by the Board
pursuant to Section 2(b), which shall not be or include a person who is a party
to the particular Claim for which the Indemnitee is seeking indemnification.

2. Basic Indemnification Arrangement. (a) In the event that the
Indemnitee was, is or becomes a party to or witness or other participant in, or
is threatened to be made a party to or witness or other participant in, a Claim
by reason of (or arising in part out of) an Indemnifiable Event, the Company
shall indemnify the Indemnitee to the fullest extent permitted by law as soon as
practicable, but in any event no later than thirty days after written demand is
presented to the Company, against all Expenses, judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of such Claim. If so
requested by the Indemnitee, the Company shall advance (within ten business days
of such request) all Expenses to the Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary, prior to a Change in
Control, the Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by the Indemnitee against
the Company or any director or officer of the Company (otherwise than to enforce
his or her rights under this Agreement) unless the Company has consented in
writing to the initiation of such Claim.

(b) In the event of any demand by the Indemnitee for indemnification
hereunder or under the Company's Restated Certificate of Incorporation or By-
laws, the Board shall designate a Reviewing Party, who shall, if there has been
a Change of Control of the Company, be the special independent counsel referred
to in Section 3 hereof. The obligations of the Company under Section 2(a) shall
be subject to the condition that the Reviewing Party shall not have determined
(in a written opinion, in any case in which the special independent counsel
referred to in Section 3 hereof is involved) that the Indemnitee is not
permitted to be indemnified under applicable law, and the obligation of the
Company to make an Expense Advance pursuant to Section 2(a) shall be subject to
the condition that, if, when and to the extent that the Reviewing Party
determines that the Indemnitee is not permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by the Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore
paid. If the Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that the Indemnitee may be indemnified
under applicable law, any determination made by the Reviewing Party that the
Indemnitee is not permitted to be indemnified under applicable law shall not be
binding, and the Indemnitee shall not be required to reimburse the Company for
any Expense Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). If there has been no determination by the Reviewing Party or if the
Reviewing Party determines that the Indemnitee is not permitted to be
indemnified in whole or in part under applicable law, the Indemnitee shall have
the right to commence litigation in any court in the state of Delaware having
subject matter jurisdiction thereof and in which venue is proper seeking an
initial determination by the court or challenging any such determination by the
Reviewing Party or any

3
<PAGE>

aspect thereof, and the Company hereby consents to service of process and to
appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and the Indemnitee.

3. Change in Control. The Company agrees that if there is a Change in
Control of the Company, then with respect to all matters thereafter arising
concerning the rights of the Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under the Company's
Restated Certificate of Incorporation or By-laws now or hereafter in effect
relating to Claims for Indemnifiable Events, the Company shall seek legal advice
only from special independent counsel selected by the Indemnitee and approved by
the Company (which approval shall not be unreasonably withheld) who has not
otherwise performed services for the Company within the last ten years (other
than in connection with such matters) or for the Indemnitee. Such counsel, among
other things, shall render its written opinion to the Company and the Indemnitee
as to whether and to what extent the Indemnitee is permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
special independent counsel and to indemnify such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and damages relating
to this Agreement or its engagement pursuant hereto.

4. Establishment of Trust. In the event of a Potential Change in Control,
the Company may create a trust for the benefit of the Indemnitee (either alone
or together with one or more other indemnitees) and from time to time fund such
trust in such amounts as the Board may determine to satisfy Expenses reasonably
anticipated to be incurred in connection with investigating, preparing for and
defending any Claim relating to an Indemnifiable Event, and all judgments,
fines, penalties and settlement amounts of all Claims relating to an
Indemnifiable Event from time to time paid or claimed, reasonably anticipated or
proposed to be paid. The terms of any trust established pursuant hereto shall
provide that upon a Change in Control (i) the trust shall not be revoked or the
principal thereof invaded, without the written consent of the Indemnitee, (ii)
the trustee shall advance, within ten business days of a request by the
Indemnitee, all Expenses to the Indemnitee (and the Indemnitee hereby agrees to
reimburse the trust under the circumstances under which the Indemnitee would be
required to reimburse the Company under Section 2(b) of this Agreement), (iii)
the trustee shall promptly pay to the Indemnitee all amounts for which the
Indemnitee shall be entitled to indemnification pursuant to this Agreement or
otherwise, and (iv) all unexpended funds in such trust shall revert to the
Company upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that the Indemnitee has been fully
indemnified under the terms of this Agreement. The trustee shall be a person or
entity satisfactory to the Indemnitee. Nothing in this Section 4 shall relieve
the Company of any of its obligations under this Agreement.

5. Indemnification for Additional Expenses. The Company shall
indemnify the Indemnitee against all expenses (including attorneys' fees)
and, if requested by the Indemnitee, shall (within ten business days of such
request) advance such expenses to the Indemnitee, which are incurred by the
Indemnitee in connection with any claim asserted against or action brought
by the Indemnitee for (i) indemnification or advance payment of Expenses by
the Company under this Agreement or any other agreement or Company By-law or
provision of the

4
<PAGE>

Company's Restated Certificate of Incorporation now or hereafter in effect
relating to Claims for Indemnifiable Events or (ii) recovery under any
directors' and officers' liability insurance policies maintained by the Company,
regardless of whether the Indemnitee ultimately is determined to be entitled to
such indemnification, advance expense payment or insurance recovery, as the case
may be.

6. Partial Indemnity, Etc. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for a portion of
the Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not for the total amount thereof, the Company shall indemnify the
Indemnitee for the portion thereof to which the Indemnitee is entitled.
Notwithstanding any other provision of this Agreement, to the extent that the
Indemnitee has been successful on the merits or otherwise in defense of Claims
relating to an Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, the Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.

7. Burden of Proof. In connection with any determination by the
Reviewing Party or otherwise as to whether the Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that the Indemnitee is not so entitled.

8. No Presumption. For purposes of this Agreement, the termination
of any claim, action, suit or proceeding, by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether the Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that the Indemnitee has not met such
standard of conduct or did not have such belief, prior to the commencement of
legal proceedings by the Indemnitee to secure a judicial determination that the
Indemnitee should be indemnified under applicable law shall be a defense to the
Indemnitee's claim or create a presumption that the Indemnitee has not met any
particular standard of conduct or did not have any particular belief.

9. Non-exclusivity, Etc. The rights of the Indemnitee hereunder
shall be in addition to any other rights the Indemnitee may have under the
Company's Restated Certificate of Incorporation and By-laws or the Delaware
General Corporation Law or otherwise. To the extent that a change in the
Delaware General Corporation Law (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Company's Restated Certificate of Incorporation and By-laws and this
Agreement, it is the intent of the parties hereto that the Indemnitee shall
enjoy by this Agreement the greater benefits afforded by such change.

5
<PAGE>

10. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, the Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.

11. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.

12. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute all such papers and do all such
things as may be necessary or desirable to secure such rights.

13. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against the
Indemnitee to the extent the Indemnitee has otherwise received payment (under
any insurance policy, provision of the Company's Restated Certificate of
Incorporation, Company By-law or otherwise) of the amounts otherwise
indemnifiable hereunder.

14. Binding Effect, Etc. This Agreement shall be binding and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, liquidation or otherwise) to all
or substantially all of the business or assets of the Company by written
agreement expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its business
or assets aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. This Agreement shall continue in effect
regardless of whether the Indemnitee continues to serve as an officer or
director of the Company or of any other enterprise at the Company's request.

15. Severability. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.

6
<PAGE>

16. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.

V.I. TECHNOLOGIES, INC.

By:___________________________________

Title ________________________________

______________________________________
(Indemnitee)

<PAGE>

EXHIBIT 23.2

CONSENT
OF
AMSTER, ROTHSTEIN & EBENSTEIN

We consent to the reference to our firm under the heading "Experts" in the
prospectus that forms a part of the registration statement (the "Registration
Statement") to which this consent is filed as an exhibit. We also consent to the
incorporation by reference of this consent into any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933 in
connection with the offering to which the Registration Statement relates.

AMSTER, ROTHSTEIN & EBENSTEIN

By: /s/ Kenneth P. George
---------------------------------------
Kenneth P. George

New York, New York
February 25, 1998

<PAGE>

EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
V.I. Technologies, Inc.

We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.

Jericho, New York
February 26, 1998

<PAGE>

EXHIBIT 24.2

V.I. Technologies, Inc.

Certificate of Secretary

I, Joanne M. Leonard, being the duly elected and acting Secretary of V.I.
Technologies, Inc. (the "Company"), a Delaware corporation, hereby certify that
the following is a true, correct and complete copy of a vote duly adopted by the
Board of Directors of the Company at a meeting of the Board of Directors
convened and held on January 23, 1998, at which meeting a quorum for the
transaction of business was present and acting throughout; and that said vote
has not been amended or rescinded and is now in full force and effect.

VOTED: That John R. Barr, Joanne M. Leonard, Steven N. Farber and William T.
- -----
Whelan, and each of them acting singly, be and hereby are designated
as attorneys-in-fact of the Corporation and of any officer or director
executing the Registration Statement and any related Rule 462(b)
registration statement on behalf of the Corporation, or otherwise,
with full power of substitution and resubstitution, for each of them
in any and all capacities, to execute and file the Registration
Statement and any amendments (including pre- and post-effective
amendments), any related Rule 462(b) registration statement, and any
and all supplements, schedules or exhibits thereto or requests for
acceleration thereof, and that any such officer or director of the
Corporation be and hereby is authorized to execute and deliver an
appropriate power of attorney reflecting such authorization and to do
and perform any and all acts and things whatsoever necessary,
appropriate or desirable to be done in the premises, all in the name,
place and stead of the Corporation, as fully and to all intents and
purposes as such officer or director might or could do in person, and
such acts of such attorneys or any of them and any such substitute are
hereby ratified and approved.

WITNESS my signature this 23 day of January, 1998.

/s/ Joanne M. Leonard
-------------------------------
Joanne M. Leonard
Secretary

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF DECEMBER 31, 1997 AND STATEMENTS OF OPERATIONS, STOCKHOLDERS' EQUITY
AND CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 5,250
<SECURITIES> 0
<RECEIVABLES> 1,356
<ALLOWANCES> 0
<INVENTORY> 575
<CURRENT-ASSETS> 8,396
<PP&E> 35,689
<DEPRECIATION> 6,640
<TOTAL-ASSETS> 38,167
<CURRENT-LIABILITIES> 11,171
<BONDS> 8,063
0
0
<COMMON> 79
<OTHER-SE> 11,599
<TOTAL-LIABILITY-AND-EQUITY> 38,167
<SALES> 15,843
<TOTAL-REVENUES> 17,067
<CGS> 10,346
<TOTAL-COSTS> 10,346
<OTHER-EXPENSES> 17,469
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,318
<INCOME-PRETAX> 11,700
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,700
<EPS-PRIMARY> (1.62)
<EPS-DILUTED> (1.62)

</TABLE>