Summary of GTC BIOTHERAPEUTICS INC

Item 1.01 Entry into a Material Definitive Agreement.

On October 31, 2008, we entered into a Note and Warrant Purchase Agreement (the "Purchase Agreement") with LFB Biotechnologies S.A.S.U. ("LFB"), under which we agreed to issue to LFB a $15.0 million secured convertible note (the "Convertible Note") and a warrant to purchase 23,193,548 shares of our common stock (the "Warrant") for payment to us of $15.0 million. We expect to receive net proceeds of approximately $10.0 million, after payment of fees and expenses related to the transaction and after depositing $4.0 million of the proceeds into a restricted cash account for the benefit of General Electric Capital Corporation ("GE Capital") to satisfy a condition to receiving GE Capital's consent to the transaction. We expect to use the net proceeds for general corporate purposes.

The principal amount of the Convertible Note will be convertible into 48,387,096 shares of our common stock, and the Warrant will be exerciseable for 23,193,548 shares of our common stock. Upon exercise of the Warrant in full and conversion of the Convertible Note in full, LFB would own 91,844,048 shares, or 52.6%, of our common stock. The Purchase Agreement also provides LFB with certain rights and benefits, including a right of first refusal and a right of first negotiation with respect to our future sales of common stock, the right of first negotiation with respect to certain of our products and technologies and the right to designate board representatives upon conversion of the Convertible Note. The Purchase Agreement also requires that we grant to LFB rights and licenses to certain technology, products and patents to guaranty our obligations under the Convertible Note.

Completion of the transaction is subject to satisfaction of certain conditions, including: the receipt of certain approvals from our stockholders; the execution of an intercreditor agreement between LFB and GE Capital, the lender under our existing senior secured credit facility; the accuracy of the representations and warranties of the parties; and the satisfaction of other customary closing conditions. We expect the transaction to close within three days after receipt of all required approvals from our stockholders.

Convertible Note. The Convertible Note will mature on June 30, 2012 and will accrue interest at a rate equal to 8% per annum. Accrued interest shall be payable in cash in arrears on the last day of each fiscal quarter commencing on December 31, 2008. On or

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before June 1, 2009, we have the right to redeem the Convertible Note at a price equal to 100% of the outstanding principal amount plus accrued and unpaid interest. After June 1, 2009, LFB has the right to convert all or a portion of the Convertible Note into shares of our common stock at a conversion price equal to $0.31 per share. We may repay the Convertible Note after June 1, 2009 and prior to maturity only with LFB's consent. Under the Purchase Agreement, we have agreed to enter into a Security Agreement with LFB to secure our obligations under the Convertible Note by granting to LFB a first priority lien on our intellectual property and a second priority lien on all of our other assets. Under the Purchase Agreement, our obligations under the Convertible Note are also secured by a grant to LFB of rights and licenses with respect to certain technologies, inventions and patent rights under the Joint Development and Commercialization Agreement dated September 29, 2006 between us and LFB (the "JDA").

Warrant. The Warrant is exercisable, in full or in part, at any time before the fifth year anniversary of the date it is issued to purchase an aggregate of 23,193,548 shares of our common stock at a cash exercise price of $0.31 per share. If we repay the Convertible Note, LFB will have the right to require us to redeem the Warrant for a redemption price of $1.5 million, which may include repurchase of shares of common stock previously issued upon prior exercise of the Warrant. If we repay the Convertible Note at maturity and LFB exercises its redemption right under the Warrant, we have the option to pay the redemption price in shares of our common stock based on the fair market value of the stock (as calculated pursuant to the terms of the Warrant) on the date LFB exercises its redemption right.

Participation and First Negotiation Rights with respect to Future Security Offerings. Under the Purchase Agreement, LFB has the right to participate in all of our future offerings of common stock or securities exercisable or convertible into common stock to purchase the number of shares in proportion to its then pro rata ownership of our common stock, on an as converted basis. LFB's participation will be on the terms agreed upon by us and other investors in the future offerings, including price and closing date; provided that LFB will have 10 calendar days upon notice of any offering to choose to participate. After June 1, 2009, LFB will have a right of first refusal and right of first negotiation with respect to any proposed sale by us of common stock or securities exercisable or convertible into common stock. Pursuant to this right, if we intend to undertake an offering, we must notify LFB of the proposed terms of such offering and LFB has the right to refuse to purchase the securities on the proposed terms and the right to negotiate with us alternative terms to purchase all of the securities to be sold in the proposed offering.

Board Representatives. Under the terms of the Purchase Agreement, upon . . .

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated herein by this reference.

Under the Security Agreement, the agreed form of which is filed as an exhibit to the Purchase Agreement, LFB, at its option upon the occurrences of specified events of default under the Security Agreement, may declare any or all of the amounts we owe to LFB to be immediately due and payable, without demand or notice to us. If we are in default under other specified provisions of the Security Agreement, or if we act in a

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fraudulent manner or commit an act of fraud, then the amounts we owe to LFB shall immediately become due and payable, without demand or notice to us. These accelerated obligations and liabilities shall bear an increased interest rate until paid in full at the lower of 18% per annum or the maximum rate not prohibited by applicable law.