<PAGE>

                                                                    Exhibit 10.1


                   SEPARATION AGREEMENT AND GENERAL RELEASE
                   ----------------------------------------

        Separation Agreement and General Release ("Agreement") executed this ___
day of September 1999, by and between Bernard Horowitz, Ph.D. ("Dr. Horowitz" or
"Releasor") and V.I. Technologies, Inc. ("VITEX" or "the Company").

        WHEREAS, Dr. Horowitz and VITEX entered into an Employment Agreement
dated January 15, 1998 (the "Employment Agreement") a copy of which is annexed
hereto as Exhibit "B"; and

        WHEREAS, Dr. Horowitz has expressed his intention to voluntarily
terminate his employment pursuant to the provisions of (P) 4.3 of the Employment
Agreement;

        NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, it is hereby agreed that:

        1.   DR. HOROWITZ'S RESIGNATION
             --------------------------

        (a)  Dr. Horowitz hereby irrevocably gives notice of his intention to
        resign from his employment at VITEX, effective October 1, 1999, and
        VITEX accepts that resignation. Dr. Horowitz and VITEX expressly
        acknowledge that this Agreement supercedes and replaces the Employment
        Agreement and except as otherwise provided herein, effective October 1,
        1999, the Employment Agreement, and all terms, conditions, and
        obligations set forth therein, will expire and will be declared null and
        void.

        2.   THE SEVERANCE PAYMENT, VESTING OF STOCK OPTIONS, AND LIFE INSURANCE
             -------------------------------------------------------------------

        (a)  As used herein, the term "Severance Period" refers to the one year
        period beginning on October 1, 1999 and ending on September 30, 2000.

        (b)  Subject to Dr. Horowitz's execution of this Agreement, VITEX shall
        pay Dr. Horowitz severance equivalent to one year's salary at his
        current rate of pay, a total of $198,919.00 (the "Severance Payment"),
        less applicable withholding taxes and deductions. The Severance Payment
        will be made in two (2) equal installments, paid six months apart, less
        applicable withholding taxes and deductions. The first such payment will
        be made on or before October 20, 1999.

                     (i)   Dr. Horowitz expressly acknowledges that he will not
                           be entitled to any annual bonus payment pursuant to
                           (P) 3.2 of the Employment Agreement.

        (c)  Subject to the approval of the Compensation Committee of the Board
        of Directors of VITEX, (i) the stock options granted to Horowitz in 1995
        and 1997 to purchase 223,614 shares (at $2.795 per share) and 125,224
        shares (at $8.39 per

<PAGE>

        share) respectively, of VITEX common stock, $.01 par value per share
        under the Equity Incentive Plan (the "Stock Options"), shall fully vest,
        to the extent they have not previously vested, on October 1, 1999, and
        (ii) Horowitz shall be permitted to exercise the Stock Options at any
        time prior to the tenth anniversary of the date of grant of such
        options, in accordance with the terms of the Equity Incentive Plan and
        the stock option agreements executed thereunder (as modified by this
        Agreement).

        (d)  Dr. Horowitz's participation in VITEX's medical and dental benefit
        plans will continue for the duration of the Severance Period, and will
        terminate on September 30, 2000, at which time, and on an annual basis
        thereafter for as long as he is alive, he will be offered the
        opportunity to enroll in any major medical and dental insurance plans
        VITEX provides to its full time, senior management staff. If he chooses
        to enroll in such plans, the cost to Dr. Horowitz will be as though he
        were still actively employed by VITEX.

        (e)  The life insurance referenced in (P) 3.8 of the Employment
        Agreement will remain in force (to the extent the policy is payable to
        Dr. Horowitz's family), at VITEX's cost, until the end of the Severance
        Period (September 30, 2000).

        (f)  Except as provided herein, Dr. Horowitz's participation in all
        other benefit plans will cease on October 1, 1999.

        3.   CONTINUED MEMBERSHIP ON VITEX'S BOARD OF DIRECTORS
             --------------------------------------------------

        (a)  Dr. Horowitz will remain a member of VITEX's Board of Directors
        after October 1, 1999. Dr. Horowitz expressly acknowledges that he has
        been given no guarantees with respect to his continued membership on the
        Board of Directors. Dr. Horowitz agrees that if the Board of Directors
        requests his resignation from the Board of Directors for any reason, he
        will immediately tender his resignation as a Director of VITEX. After
        the expiration of the Severance Period, if Dr. Horowitz remains a member
        of the Board of Directors, he will be entitled to receive the same
        benefits received by other members of the Board of Directors.

        4.   CONSULTING SERVICES
             -------------------

        (a)  Although under no obligation to do so, Dr. Horowitz may perform
        consulting services to VITEX. Any such consulting services will be
        performed upon reasonable notice, at mutually agreeable times and
        locations. Dr. Horowitz agrees that during the Severance Period he will
        not seek, nor is he entitled to, any additional compensation for any
        such consulting services, unless he has provided more than 800 hours of
        services during the Severance Period. Dr. Horowitz will be compensated
        for each hour of consulting services provided during the Severance
        Period in excess of 800 hours at the rate of $200.00 per hour.

        (b)  After the expiration of the Severance Period, and beginning on
        October 1, 2000, Dr. Horowitz will begin receiving quarterly retainer
        payments of $25,000.00 as compensation for consulting services to be
        provided during the following calendar quarter (e.g. the October 1, 2000
        payment will cover services rendered

<PAGE>

        during the fourth quarter of 2000). Such payments will be made on the
        first day of each quarter during which the contemplated services are to
        be provided. These quarterly retainer payments will continue until such
        time as this consulting arrangement is terminated by VITEX or Dr.
        Horowitz in the manner described below. The $25,000.00 retainer will
        constitute full compensation for up to 200 hours of consulting services
        provided during the quarter. Dr. Horowitz will be compensated for each
        hour of consulting services in excess of 200 hours during a calendar
        quarter at the rate of $200.00 per hour.

              (i)  The consulting arrangement described in this sub paragraph
              "4(b)" can be terminated by either Dr. Horowitz or VITEX, at any
              time, with 90 days notice.

        5.    CONSIDERATION AND FULL DISCHARGE
              --------------------------------

           a) Dr. Horowitz agrees that the aggregate consideration provided in
              this Agreement:

                    (i)    exceeds any payment, benefit, or other thing of value
                           to which he might otherwise be entitled under any
                           policy, plan or procedure of VITEX, and

                    (ii)   is in full discharge of any and all of VITEX's
                           liabilities and obligations to him, whether written
                           or oral, including, without limitation, any bonus,
                           deferred bonus, accrued vacation pay, severance
                           payment or any other contractual or other obligation,
                           compensation or remuneration that may be owed to Dr.
                           Horowitz by VITEX.

        6.    GENERAL RELEASE
              ---------------

        (a)   For good and valuable consideration, the receipt of which is
        hereby acknowledged, Dr. Horowitz for himself and for his heirs,
        executors, administrators, trustees, legal representatives and assigns
        (hereinafter, collectively referred to as ("Releasors"), hereby forever
        release and discharge VITEX, or any of VITEX's past, present or future
        parent entities, partners, subsidiaries, affiliates, divisions, employee
        benefit and/or pension plans or funds, successors and assigns and any of
        its or their past, present or future directors, officers, attorneys,
        agents, trustees, administrators, employees, or assigns (whether acting
        as agents for VITEX or in their individual capacities) (collectively
        referred to as "Releasees") from any and all claims, demands, causes of
        action, and liabilities of any kind whatsoever (upon any legal or
        equitable theory, whether contractual, common-law, statutory, federal,
        state, local, or otherwise), whether known or unknown, by reason of any
        act, omission, transaction or occurrence which Releasors ever had, now
        have or hereafter can, shall or may have against Releasees up to and
        including the Agreement Effective Date, as defined in Paragraph 10(c)
        below.

        Without limiting the generality of the foregoing, Releasors hereby
        release and discharge Releasees from:

<PAGE>

                     (i)   any and all claims relating to Dr. Horowitz's
                           employment by VITEX, the terms and conditions of such
                           employment, the employee benefits related to his
                           employment and/or his separation from such
                           employment;

                     (ii)  any and all claims of employment discrimination
                           and/or retaliation under any federal, state or local
                           statute or ordinance, including without limitation,
                           any and all claims under Title VII of the Civil
                           Rights Act of 1964 as amended; the Age Discrimination
                           in Employment Act, the Older Workers Benefit
                           Protection Act, the Americans with Disabilities Act;
                           the Family and Medical Leave Act of 1993; the
                           Employee Retirement Income Security Act; the New York
                           State Human Rights Law; and the New York City Human
                           Rights Law;

                     (iii) any and all claims for wrongful discharge and/or
                           breach of employment contract (including, but not
                           limited to the Employment Agreement) or any claims
                           related to compensation or benefits, including claims
                           for bonus or deferred payments;

                     (iv)  any and all claims for defamation, libel or slander
                           against any Releasees; and

                     (v)   any and all claims for attorney's fees, costs
                           disbursements and the like;

        which Releasors ever had, now have or hereafter can, shall or may have
        against Releasees for, upon or by reason of any act, omission,
        transaction or occurrence up to and including the date of the execution
        of this Agreement.

        (b)  Dr. Horowitz agrees, unless such agreement is otherwise prohibited
        by law, that he will not commence, maintain, prosecute or participate
        (except as compelled by legal process) in any action or proceeding of
        any kind (judicial or administrative) against Releasees, arising out of
        any act, omission, transaction or occurrence occurring up to and
        including the Agreement Effective Date, as defined in paragraph 10(c)
        below.

        (c)  Dr. Horowitz further agrees, unless such agreement is otherwise
        prohibited by law, that he will not seek or accept any award or
        settlement from any source or proceeding with respect to any claim or
        right covered by paragraphs "6(a) and (b)" and that this Agreement shall
        act as a bar to recovery in any such proceedings.
<PAGE>

        7.   CONFIDENTIALITY
             ---------------

        (a)  Dr. Horowitz acknowledges that this Agreement and all terms and
        conditions thereof shall be kept strictly confidential and shall not be
        disclosed by Dr. Horowitz to anyone, except to the extent required by
        law; except that Dr. Horowitz may disclose the terms of this Agreement
        to his spouse, accountant, attorney and/or his financial advisor, who
        shall be instructed that the Agreement and its terms are to be kept
        confidential. In the event of any breach of this provision, Dr. Horowitz
        consents to the entry of injunctive relief in the United States District
        Court for the Southern District of New York, and further, inasmuch as
        the damages from any material breach of this confidentiality provision
        cannot be ascertained, Dr. Horowitz agrees that a material breach of
        this provision by Dr. Horowitz shall result in the payment by Dr.
        Horowitz to VITEX of liquidated damages in the amount of $198,919.00.
        Notwithstanding the foregoing, this paragraph shall not apply to Dr.
        Horowitz if he is acting in his capacity as director of VITEX.

        (b)  VITEX acknowledges that this Agreement and all terms and conditions
        thereof shall be kept strictly confidential and shall not be disclosed
        by any officer or director of VITEX to anyone, except to the extent
        required by law and to those persons whose efforts are required to
        effectuate the terms of this Agreement; except that VITEX, through its
        officers, may disclose the terms of this Agreement to VITEX's attorneys
        and/or accountants, who shall be instructed that the Agreement and its
        terms are to be kept confidential.

        (c)  The parties agree that this Agreement and the attached General
        Release may be used as evidence only in a subsequent proceeding in which
        any of the parties allege a breach of this Agreement or the attached
        General Release.

        8.   NON-DISPARAGEMENT
             -----------------

        (a)  Dr. Horowitz agrees that he will not disparage (or induce or
        encourage others to disparage) VITEX, any of its past or present
        directors, officers, agents, trustees, administrators, attorneys or
        employees with respect to any events relating to his employment with
        VITEX, including, without limitation, disparaging any of such parties in
        connection with disclosing the facts or circumstances surrounding his
        separation from employment with VITEX or criticizing VITEX's business
        strategy. For the purposes of this Agreement, the term "disparage" means
        any comments or statements which would adversely affect in any manner:
        (i) the conduct of VITEX's business; or (ii) the business reputation or
        relationships of VITEX and/or any of its past or present directors,
        officers, agents, trustees, administrators, attorneys or employees.
        Notwithstanding the foregoing, this paragraph shall not apply to Dr.
        Horowitz if he is acting in his capacity as a director of VITEX.

        (b)  VITEX agrees not to disparage Dr. Horowitz. For purposes of this
        subparagraph, the term "disparage" means any statements made by VITEX
        senior officers or directors, or any statements made officially by VITEX
        that adversely affect Dr. Horowitz's personal or professional
        reputation.
<PAGE>

        9.   COMPANY DOCUMENTS AND PROPERTY
             ------------------------------

        (a)  Dr. Horowitz agrees not to copy or take any books, notes or
        documents belonging to VITEX without its express written consent. In
        this regard, Dr. Horowitz acknowledges that he has had access to
        confidential, sensitive or proprietary information during the course of
        his employment at VITEX. Unless compelled by judicial process, Dr.
        Horowitz agrees that he will not, for herself or any other person or
        entity, directly or indirectly divulge, communicate or in any way make
        use of any confidential, sensitive, or proprietary information acquired
        in the performance of his services or in connection with the performance
        of such services for VITEX without the prior written consent of VITEX.
        Upon receipt of judicial process or governmental request for such
        information, Dr. Horowitz shall immediately notify VITEX and shall
        cooperate with VITEX in efforts to limit such disclosure and shall not
        make such disclosure unless compelled to do so. For the purpose of this
        Agreement, all information acquired during the course of Dr. Horowitz's
        employment and in connection with such employment shall be deemed to be
        confidential, sensitive or proprietary, unless VITEX shall have
        published said information. Not withstanding the foregoing, it is
        understood that (i) Dr. Horowitz brought certain materials with him when
        he joined VITEX and that such materials do not belong to VITEX, (ii) Dr.
        Horowitz may retain published scientific works and slides which he
        collected while an employee of VITEX.

        (b)  If Dr. Horowitz has not already done so, he shall immediately
        return to VITEX all Company property in his possession (with the
        exception of a computer which VITEX has permitted Dr. Horowitz to
        retain) including, but not limited to credit cards, building passes,
        airline tickets, facsimile machines, paging devices and portable
        telephones.

        (c)  If Dr. Horowitz has not already done so, he shall immediately
        deliver to VITEX all correspondence, documents, papers and other media
        containing information about the accounts, clients, interests, or
        business of VITEX together with all copies in his possession.


        10.  REVIEW AND REVOCATION PERIODS
             -----------------------------

        (a)  Dr. Horowitz shall have at least twenty-one (21) days from the date
        of receipt, or until September 30, 1999, to consider the terms and
        conditions of this Agreement. Dr. Horowitz may accept this Agreement by
        signing it, having his signature notarized and returning it to James
        Northrup, VITEX, Inc., 155 Duryea Road, Melville, NY 11747, by no later
        than 5:00 p.m. on September ___, 1999. Further, Dr. Horowitz may sign
        and return this Release at any time prior to September 30, 1999.

        (b)  After signing this Release, Dr. Horowitz shall have seven (7) days
        to revoke this Agreement by indicating his desire to do so in writing
        (a) addressed to James Northrup, at the address listed above, and (b)
        received by Mr. Northrup no later than 5:00 p.m. on the seventh (7th)
        day following the date Dr. Horowitz signs this Agreement.

        (c)  The effective date of this Agreement shall be the eighth (8th) day
        following Dr. Horowitz's signing of this Agreement (the "Agreement
        Effective Date"), provided Dr. Horowitz does not revoke this Agreement
        during the revocation
<PAGE>

        period. In the event Dr. Horowitz does not accept this Agreement as set
        forth above, or revokes this Agreement during the Revocation Period,
        this Agreement including but not limited to the obligation of the
        Releasees to provide the payments, and provide the benefits, referred to
        in paragraph "2" and "3" above, shall automatically be deemed null and
        void.

        11.  Dr. Horowitz acknowledges that: (a) he has carefully read this
        Agreement in its entirety; (b) he has had an opportunity to consider
        fully the terms of this Agreement for at least twenty-one (21) days; (c)
        he has been advised by VITEX in writing to consult with an attorney of
        his choosing in connection with this Agreement; (d) he fully understands
        the significance of all of the terms and conditions of this Agreement;
        (e) he has discussed it with his independent legal counsel, or has had a
        reasonable opportunity to do so; (f) he has had answered to his
        satisfaction any questions he has asked with regard to the meaning and
        significance of any of the provisions of this Agreement; (g) he is
        signing this Agreement voluntarily and of his own free will and assents
        to all the terms and conditions contained herein; (h) the amounts being
        paid hereunder are in excess of those amounts he would be entitled to if
        he did not sign this Agreement; and (i) that as of December 23, 1999 his
        employment relationship with VITEX will be permanently and irrevocably
        severed and that to the full extent permitted by law he will not be
        eligible for rehire or re-employment with any of the Releasees, that he
        will not apply for re-employment with any of the Releasees and that the
        Releasees have no obligation, now or at any time in the future, to
        rehire or re-employ him in any capacity, that any future decision by any
        of the Releasees not to hire him will be based upon this subparagraph
        and that he will not assert any claims against any Releasees based upon
        such decision.

ADDITIONAL PROVISIONS
---------------------
        12.  The making of this Agreement is not intended, and shall not be
        construed, as an admission that Releasees have violated any federal,
        state or local law (statutory or decisional), ordinance or regulation,
        breached any contract, or committed any wrong whatsoever against Dr.
        Horowitz.

        13.  This Agreement is binding upon, and shall inure to the benefit of,
        the parties and their respective heirs, executors, administrators,
        successors and assigns.

        14.  This Agreement shall be interpreted, construed and governed
        according to the laws of the State of New York.

        15.  If any provision of this Agreement shall be held by a court of
        competent jurisdiction to be illegal, void, or unenforceable, such
        provision shall be of no force and effect. However, the illegality or
        unenforceability of such provision shall have no effect upon, and shall
        not impair the enforceability of, any other provision of this Agreement;
        provided, however, that, upon any finding by a court of competent
        jurisdiction that the release and covenants provided for by paragraphs
        "5," and "6" of this Agreement are illegal, void, or unenforceable, Dr.
        Horowitz agrees, at the Releasees option, either to return promptly to
        VITEX the amounts paid to his or paid on his behalf pursuant to this
        Agreement or to execute a release, waiver and/or covenant that is legal
        and enforceable. Further, if Dr. Horowitz seeks to challenge
<PAGE>

        the validity of or otherwise vitiate this Agreement or any provision
        thereof (including, without limitation, paragraphs "5,"and "6"), Dr.
        Horowitz shall, as a precondition, be required to repay to VITEX the
        amounts paid to him or paid on his behalf pursuant to the terms of this
        Agreement. Finally, any breach of the terms of paragraphs "5," "6," "7,"
        "8," and/or "9" shall constitute a material breach of this Agreement as
        to which the Releasees may seek appropriate relief (including but not
        limited to repayment of the amounts paid to him or paid on his behalf
        referred to this Agreement) in a court of competent jurisdiction.

        17.  The paragraph and section headings contained herein are for
        reference purposes only and shall not in any way affect the meaning or
        interpretation of this Agreement.

        18.  This Agreement (together with the accompanying cover letter)
        constitutes the complete understanding between the parties and
        supersedes any and all Releases, understandings, and discussions,
        whether written or oral, between the parties. No other promises or
        agreements shall be binding unless in writing and signed after the
        Agreement Effective Date by the parties to be bound thereby.

        WHEREFORE, Dr. Horowitz places his hand on the dates hereinafter set
        forth.

Bernard Horowitz, Ph.D.

 /s/ Bernard Horowitz                               Date  September 13, 1999
---------------------------------                         ------------------

On this 13/th/ day of September, 1999, before me personally appeared Bernard
Horowitz, Ph.D., to me known personally and known to me to be the individual
described herein, whose name is subscribed to, and who executed the above
Agreement and General Release.

 /s/ Howell Bramson
--------------------------------
Notary Public

Agreed:

         V.I.Technologies, Inc.

By:      /s/ John Barr
         --------------
         John Barr
         President & Chief Executive Officer