Amendment to Shareholder Rights Agreement

In connection with the closing of the sale of Series E Preferred Stock described below, we entered into a Third Amendment to the Shareholder Rights Agreement dated July 30, 2009 between us and American Stock Transfer and Trust Company, as rights agent, further amending the Shareholder Rights Agreement dated May 31, 2001 between us and the rights agent. The amendment exempts LFB's acquisition from us of shares of our Series E Convertible Preferred Stock so that the acquisition does not trigger the exercisability of the preferred stock purchase rights pursuant to the Shareholder Rights Agreement.

The foregoing description of the amendment to the Shareholder Rights Agreement is subject to, and qualified in its entirety by reference to, the full text of the amendment, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by this reference.

On July 31, 2009 we completed the closing of the transactions under our securities purchase agreement with LFB Biotechnologies S.A.S., or LFB, dated June 18, 2009, previously reported in our Current Report on Form 8-K filed with the SEC on June 19, 2009. At the closing, we issued to LFB 12,000 shares of our newly-designated Series E-1 10% Convertible Preferred Stock and 13,500 shares of our newly-designated Series E-2 10% Convertible Preferred Stock for payment to us of approximately $8.3 million cash and conversion of the $4.5 million convertible promissory note issued to LFB on June 18, 2009. The Series E-1 Convertible Preferred Stock is convertible into 4,562,738 shares of our common stock at a conversion price of $2.63 per share and the Series E-2 Convertible Preferred Stock is convertible into 6,305,437 shares of our common stock at a conversion price of $2.2368. If LFB were to fully convert all of its Series E and Series D convertible preferred stock, fully convert its $15M convertible note and exercise in full its warrant holdings, LFB would hold 19,782,550 shares of our common stock, or 70.1% of our shares outstanding. For more information regarding the terms and conditions of the Series E Preferred Stock and the purchase of such stock by LFB, please see our June 18, 2009 8-K.

The Series E Preferred Stock was issued to LFB in reliance on the exemption from registration provided under the provisions of Section 4(2) of the Securities Act (and the regulations promulgated thereunder, including Regulation D) relating to sales by an issuer not involving a public offering. LFB has represented to us in the securities purchase agreement that it is acquiring the shares of Series E Preferred Stock and the shares of common stock issuable upon conversion thereof for investment and not for distribution, that it can bear the risks of the investment and that it has had an opportunity to ask questions of, and receive answers from, us regarding the terms and conditions of the offering.

As previously reported in our June 19, 2009 8-K, our Board of Directors approved an amendment to our Restated Articles of Organization which provided for the designation of (i) 18,000 shares of authorized and unissued Preferred Stock as shares of "Series E-1 10% Convertible Preferred Stock" and (ii) 27,000 shares of our authorized and unissued Preferred Stock as shares of "Series E-2 10%

On July 30, 2009, we held a special meeting of shareholders. The following table sets forth the results of voting of our shareholders of common stock and Series D Preferred Stock, voting on an as-converted basis, on the proposal submitted at the meeting to our shareholders:

Proposal                                                 "For"      "Against"    "Abstain"
Proposal to approve the issuance of Series E-1 10%
Convertible Preferred Stock and Series E-2 10%
Convertible Preferred Stock to LFB Biotechnologies
S.A.S. pursuant to the Securities Purchase
Agreement between GTC and LFB                          5,409,410      339,192       72,036

(d) Exhibits.

3.1 Articles of Amendment to the Restated Articles of Organization of GTC Biotherapeutics, Inc., as filed with the Secretary of the Commonwealth of Massachusetts on July 30, 2009.

4.1 Third Amendment to Shareholder Rights Agreement dated as of July 30, 2009 between GTC Biotherapeutics, Inc. and American Stock Transfer and Trust Company.