PART 1

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART), DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

FOR IMMEDIATE RELEASE

12 November 2013

RECOMMENDED OFFER

BY

GENERAL SALES AND LEASING, INC.

FOR

XENETIC BIOSCIENCES PLC

to be effected by means of a Scheme of Arrangement

under Part 26 of the Companies Act 2006

SUMMARY

Commenting on the Offer, Ari L. Nagler, President and CEO of GSL, said:

“General Sales and Leasing, Inc. is delighted to be undertaking this transaction with Xenetic Biosciences plc and looks forward to its successful completion.”

Commenting on the Offer, Sir Brian Richards, Chairman of Xenetic, said:

“We have been working long and hard to find a suitable US company to effect a reverse merger and we are delighted to be able to announce this transaction with General Sales and Leasing, Inc. which, when completed, we believe will provide Xenetic Biosciences with the benefits available to US-registered biotechs and which are, sadly, less readily available to biotechs in the UK or Europe. This is only an interim stage, but a key one, in our plan to achieve a listing on a major US stock exchange. We believe that this is a good move for Xenetic and its shareholders.”

Nothing in this announcement is intended, or is to be construed, as a profit forecast or should be interpreted to mean that earnings per GSL Consideration Share for the current or future financial years will match or exceed the historical earnings per Xenetic Share or GSL Consideration Share.

This summary should be read in conjunction with the full text of this Announcement and the Appendices. The Acquisition is subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions to be set out in the Scheme Document, the Equivalent Document and the Forms of Proxy. The bases of calculations and sources of certain financial information contained in this Announcement, and certain additional financial and operational information, are set out in Appendix 2 to this Announcement. Details of the irrevocable undertakings received in relation to the Acquisition are set out in Appendix 3 to this Announcement. Certain definitions and terms used in this Announcement are set out in Appendix 4 to this Announcement.

Enquiries:

General Sales and Leasing, Inc. +1 702 312 6255

Ari L. Nagler (President and CEO)

Kyleen Cane, Cane Clark LLP (US counsel to GSL)

Xenetic Biosciences plc +44 (0)20 3021 1500

Colin Hill (Chief Financial Officer)

London Bridge Capital Limited +44 (0)7912 201639

(Financial adviser to Xenetic)

Adam Hart

N+1 Singer +44 (0)20 7496 3000

(Nominated Adviser & Broker to Xenetic)

Aubrey Powell

Jenny Wyllie

Further information

There has been limited trading in GSL Shares and no prior trading in GSL Consideration Shares; therefore neither is considered to have a public valuation. Accordingly an estimate of the value of a GSL Consideration Share pursuant to Rule 24.10 of the City Code prepared by London Bridge Capital will be contained in the Scheme Document. This estimate values a GSL Consideration Share at 18.59 pence.

This announcement is for information only and is not intended to and does not constitute, or form part of, any offer to sell or invitation to purchase or subscribe for any securities, or any solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise.  The Acquisition will be effected solely through the Scheme Document, the Equivalent Document and the Forms of Proxy, which together will contain the full details and terms and conditions of the Scheme, including the details of how to approve the Scheme. The Equivalent Document in relation to the GSL Consideration Shares, for which GSL is responsible, will be published by GSL on or about the date on which the Scheme Document is posted and will contain information about GSL and the GSL Consideration Shares. The text of the Equivalent Document will, for convenience only, be replicated in the Scheme Document.

Any decision regarding the Scheme should be made only on the basis of information referred to in the Scheme Document and Equivalent Document which are intended to be dispatched as soon as practicable to Xenetic Shareholders, persons with information rights and, for information only, to participants in the Xenetic share incentive schemes and other option holders and warrant holders.

Please be aware that addresses, electronic addresses and certain other information provided by Xenetic Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from Xenetic may be provided to GSL during the Offer Period as required under Section 4 of Appendix 4 to the City Code.

London Bridge Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Xenetic as its financial adviser and no one else in connection with the Acquisition and will not be responsible to anyone other than Xenetic for providing the protections afforded to clients of London Bridge Capital Limited nor for providing advice in connection with the Acquisition or the content of, or any other matter or arrangement described or referred to in, this document. Neither London Bridge Capital Limited nor any of its directors, officers, subsidiaries or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of London Bridge Capital Limited in connection with the Acquisition or any other matter referred to in this document, any statement contained herein or otherwise.

N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Xenetic as its nominated adviser and broker and no one else in connection with the Acquisition and will not be responsible to anyone other than Xenetic for providing the protections afforded to clients of N+1 Singer nor for providing advice in connection with the Acquisition or the content of, or any other matter or arrangement described or referred to in, this document. Neither N+1 Singer nor any of their respective directors, officers, subsidiaries or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of N+1 Singer in connection with the Acquisition or any other matter referred to in this document, any statement contained herein or otherwise.

This announcement has been prepared for the purposes of complying with English law and the information disclosed may be different from that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England and Wales. Overseas Shareholders should consult their own legal and tax advisers with regard to the legal and tax consequences of the Scheme and the Acquisition on their particular circumstances.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom and the availability of any offer to shareholders in Xenetic who are not resident in the United Kingdom may be affected by the laws or regulations of any such jurisdictions.  Accordingly, any persons who are subject to the laws or regulations of any jurisdiction other than the United Kingdom should inform themselves of, and observe, any applicable requirements.

Overseas Shareholders

The implications of the Scheme and the Acquisition for Overseas Shareholders may be affected by the laws of the relevant jurisdictions. Overseas Shareholders should inform themselves about and observe any applicable legal requirements. It is the responsibility of each Overseas Shareholder to satisfy himself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes due in such jurisdiction.

The Acquisition relates to the acquisition of shares in a UK public company and is proposed to be made by means of a scheme of arrangement under Part 26 of the Companies Act. In particular, with respect to investors in the United States, a transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US tender offer rules. Financial information on the Xenetic Group included in the relevant documentation has been prepared in accordance with accounting standards applicable to listed companies in the UK, being IFRS as adopted by the European Union. These may not be comparable to the financial statements of US companies.

To the extent that the Acquisition is effected by way of a Scheme, the GSL Consideration Shares to be issued under the Scheme have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any state, district or other jurisdiction of the United States, the Republic of South Africa, Canada or Japan.

It is expected that the GSL Consideration Shares will be issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof. Under applicable US Securities laws, shareholders who are or will be deemed to be affiliates of Xenetic or GSL prior to, or of the Enlarged Group after, the Effective Date will be subject to certain transaction restrictions relating to the GSL Consideration Shares received in connection with the Scheme.

This announcement does not constitute an offer for sale of any securities or an offer or an invitation to purchase any securities. Xenetic Shareholders are advised to read carefully the Equivalent Document as well as the Scheme Document and the Forms of Proxy once these have been dispatched. 

Disclosure requirements of the City Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.

An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4). Opening Position Disclosures have already been made both by GSL and by Xenetic.

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.”

Rule 2.10

In accordance with Rule 2.10 of the City Code, GSL confirms that it currently has 135,000,000 shares of Common Stock with a par value of USD0.001 each in issue. The ISIN reference for these securities is US3707291056. Xenetic confirms that it currently has 407,875,428 ordinary shares of 0.5 pence each in issue. The ISIN reference for these securities is GB00B08NWV55.

Publication on website

A copy of this announcement is, and will be available, free of charge for inspection on Xenetic's website at www.xeneticbio.com/investorrelations during the course of the Acquisition but should not be forwarded or transmitted in or into or from any Overseas Jurisdiction.

For the avoidance of doubt, the content of the website referred to above is not incorporated into and does not form part of this announcement.

Cautionary note regarding forward-looking statements

This announcement contains statements about Xenetic and GSL that are or may be forward-looking statements. All statements other than statements of historical facts included in this announcement may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Xenetic's or GSL’s operations; and (iii) the effects of government regulation or stock exchange on Xenetic's or GSL’s business or securities.

Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Each of Xenetic and GSL disclaims any obligation to update any forward-looking or other statements contained in this announcement, except as required by applicable law.

PART 2

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF ANY RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

FOR IMMEDIATE RELEASE

RECOMMENDED OFFER

BY

GENERAL SALES AND LEASING, INC.

FOR

XENETIC BIOSCIENCES PLC

to be effected by means of a Scheme of Arrangement

under Part 26 of the Companies Act 2006

The boards of directors of General Sales and Leasing, Inc. (“GSL”) and Xenetic Biosciences plc (“Xenetic”) are pleased to announce that they have reached agreement on the terms of a recommended proposal for the Acquisition under which GSL will acquire the entire issued and to be issued share capital of Xenetic. The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.

2. Summary of the terms of the Acquisition

The Acquisition is to be implemented by means of a scheme of arrangement between Xenetic and the Scheme Shareholders under Part 26 of the Companies Act and involves a reduction of capital under section 648 of the Companies Act. Details of the Acquisition (including the Conditions to which it is subject) are summarised in Parts 2 and 3 of this Announcement and will be set out in full in the Scheme Document.

The Scheme requires the requisite approval of Shareholders at a meeting convened by the Court and the subsequent sanction of the Court. The Reduction of Capital requires the approval of Scheme Shareholders at the General Meeting and the subsequent confirmation of the Court. Once the Scheme becomes Effective, the terms will be binding on all Scheme Shareholders whether or not they voted in favour of the Scheme.

The purpose of the Scheme is to enable GSL to become the holder of the entire issued and to be issued share capital of Xenetic. This is to be achieved by the cancellation of the Scheme Shares and the application of the reserve resulting from such cancellation in paying up in full such number of New Shares as is equal to the number of Scheme Shares cancelled, and issuing the same to GSL, in circumstances where the Scheme Shareholders on the register of members at the Scheme Record Time will receive:

for every 175 Scheme Shares : 56 GSL Consideration Shares

Xenetic Shareholders holding 175 Scheme Shares or less will be entitled to vote at the Meetings. They will not however receive any GSL Consideration Shares. The GSL Consideration Shares attributable to their Scheme Shares will be aggregated and sold for cash on behalf of such Xenetic Shareholders as soon as reasonably practicable following completion of the Acquisition at the then prevailing market price on the OTCBB or OTCQB. The proceeds will then be converted into sterling at the exchange rate prevailing at that time and Xenetic Shareholders with entitlements to proceeds of such sale of less than £1 will have their proceeds aggregated and donated to charity. Those with entitlements to proceeds of greater than or equal to £1 will receive sterling cheques for their entitlements as soon as reasonably practicable after such sale. Xenetic Shareholders with entitlements to proceeds of £1 or more, will also be able to opt to have such proceeds donated to charity.

Any Xenetic Shareholders to the extent holding a number of Scheme Shares not divisible by 175, will also have such Scheme Shares aggregated together with similar Scheme Shares of other Xenetic Shareholders to result in GSL Consideration Shares to be sold on behalf of such Xenetic Shareholders in the same manner as explained above. Again, Xenetic Shareholders with entitlements to proceeds of such sale of less than £1 will have their proceeds aggregated and donated to charity. Those with entitlements to proceeds of greater than or equal to £1 will receive sterling cheques for their entitlements as soon as reasonably practicable after such sale. Xenetic Shareholders with entitlements to proceeds of £1 or more, will also be able to opt to have such proceeds donated to charity.

An estimate prepared by London Bridge Capital pursuant to Rule 24.10 of the City Code of the value of a GSL Consideration Share will be contained in the Scheme Document. This estimate values a GSL Consideration Share at 18.59 pence. On the basis of the value of a GSL Consideration Share of 18.59 pence, the Acquisition values the entire existing issued share capital of Xenetic at approximately £24.3 million and each Scheme Share at approximately 5.95 pence representing a premium or discount of approximately:

Roman Knyazev is an employee and investment manager of Rusnano (a significant shareholder in Synbio, the 45% shareholder of Xenetic). He was appointed to the Board as a nominated director by Synbio pursuant to the relationship agreement between Synbio and Xenetic dated 28 November 2011 (the "Relationship Agreement"). As a result of his employment by Rusnano, a Russian state-owned entity, Mr Knyazev is unable to express a view on any transaction involving a board recommendation for shareholders to vote either in favour or against any particular proposal.

Since his appointment, the Xenetic Board has been aware of this situation and is wholly supportive of it and such a situation has not arisen to date. This does not affect Mr Knyasev's ability to participate as a director of Xenetic as regards day-to-day and operational matters. Dr Dmitry Genkin and Dr Artur Isaev are directors of both Xenetic and SynBio (but not of Rusnano) and, as stated below, have voted in favour of the Scheme and recommend it to Xenetic Shareholders along with the remainder of the Xenetic Board.

The Xenetic Directors (other than Roman Knyazev for the reasons stated above), who have been so advised by London Bridge Capital Limited in its capacity as Xenetic’s independent financial adviser for the purposes of Rule 3 of the City Code, consider the terms of the Scheme to be fair and reasonable in so far as Xenetic Shareholders are concerned. Accordingly, the Xenetic Directors (other than Roman Knyazev) unanimously recommend that all Xenetic Shareholders vote in favour of the Scheme Resolutions, as they have irrevocably undertaken to do in respect of their entire beneficial holdings in Xenetic which amount to 11,271,086 Xenetic Shares, representing, in aggregate, 2.76 per cent. of Xenetic’s existing issued ordinary share capital on 11 November 2013 (being the last Business Day prior to the date of this Announcement). In providing its advice, London Bridge Capital Limited has taken into account the Xenetic Directors’ commercial assessments.

The Acquisition and the resolutions required to implement the Scheme will be put to Xenetic Shareholders at the Court Meeting and the General Meeting in due course. If the Scheme becomes Effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attend or vote at the Court Meeting or the General Meeting (and if they attended and voted, whether or not they voted in favour).

Shareholders’ attention is drawn to the application that has been made by Xenetic to the London Stock Exchange to cancel the admission to trading on AIM of its Shares, such cancellation being conditional upon the Scheme becoming Effective. This Announcement provides Shareholders with notice of the intended cancellation, the expected date of which will be set out in the Scheme Document and notified to Shareholders in accordance with AIM Rule 41 at the same time as the Scheme Document is posted to them. Cancellation will not take place until at least 20 Business Days thereafter.

3. Further details of the Scheme

Further details of the Scheme will be set out in the Scheme Document. The GSL Consideration Shares will, when issued, be fully paid and rank pari passu in all respects with the New GSL Shares.

The Scheme will extend to any Xenetic Shares which have been unconditionally allotted or issued and fully paid (or credited as fully paid) by the date on which the Scheme is approved together with any further Xenetic Shares which are unconditionally allotted or issued during the offer period (or by such earlier date as GSL may, subject to the City Code, decide). The articles of association of Xenetic will also be amended as part of the Scheme resolution(s), such that any Xenetic Shares issued after the Scheme becomes Effective will automatically be acquired by GSL for such number of GSL Consideration Shares as would have been issued had the relevant Xenetic Shares been Scheme Shares.

GSL will publish an Equivalent Document in connection with the issue of the GSL Consideration Shares. The Equivalent Document, for which GSL is responsible, will be published on or about the date on which the Scheme Document is posted and will contain information on GSL and the GSL Consideration Shares. The text of the Equivalent Document will, for convenience only, be replicated in the Scheme Document.

4. Background to and reasons for the Xenetic Directors' recommendation of the Acquisition

The Board believes that at the present time smaller quoted bioscience companies, in general, have a higher profile and a better investor following in the US than is found in European markets in general and in the UK market, in particular. The Board believes that by achieving a listing for Xenetic on an Exchange, significant benefits will accrue to Xenetic and its shareholders including, but not exclusively:

The Board has considered a number of options to achieve the goal of migration to the US, including seeking a quotation of Xenetic's shares directly on an Exchange and seeking a merger with an existing US-quoted biotechnology company with complementary activities. Following careful consideration of the issues, the Board has determined that the most appropriate way of achieving this outcome is to be acquired by an SEC-reporting company, and then seek to achieve a quotation on an Exchange within a reasonable period; and to effect such an acquisition by the Scheme.

Xenetic's plan is for it to be acquired on a share-for-share basis by GSL, where the level of effective dilution to Xenetic Shareholders does not exceed 3% as at the Effective Date. This means that, other than for such dilution and the fees and costs of the Acquisition (which are deemed to be the "cost" of achieving Xenetic's aims), the group formed by the completion of the Acquisition will be effectively the same group as at present, with the same assets and liabilities, save that it will have a US holding company (GSL) with an enhanced ability to achieve a listing on an Exchange. Whilst Xenetic and GSL have commenced developing a plan regarding such a listing, there is no guarantee that such a listing can be achieved.

5. Information on Xenetic

Xenetic is committed to becoming a US-based and Exchange-listed speciality drug developer focused on achieving full value recognition of the Xenetic patent-protected portfolio with its core technologies and targeted therapeutic offerings.

Xenetic is currently a UK based biopharmaceutical company with core technology capabilities, intended to facilitate the development of a new generation of biological drugs, vaccines and oncology therapies.

Together with its collaborative partners SynBio, Pharmasynthez, SIIL and Baxter, the Group is developing a pipeline of next-generation biotherapeutics based on its proprietary PolyXen, Oncohist and ImuXen platform technologies. The Group is pursuing a development strategy of clinical advancement through its own efforts and those of its collaborative partners (such as SynBio, Pharmsynthez, SIIL and Baxter).

6. Information on GSL

GSL Shares are currently available for quotation on the OTCBB and OTCQB. There has been only limited trading recently in such shares and therefore they are not considered to have a public valuation or market.

GSL is not currently identified as a 'shell company' under relevant SEC rules and regulations, which means that its stock is not subject to certain limitations contained in these rules. There can be no assurance, however, that the SEC and/or various regulatory bodies in the US will not reject this classification and effectively apply the shell company rules to GSL in the future. Additionally, any Exchange may apply its own rules and/or analysis and reach the conclusion that GSL was or is a shell company.

Any such determination, either by the SEC, one of the regulatory bodies in the US or an Exchange, could adversely impact the Enlarged Group's attempt to be listed on an Exchange or the tradability of its shares, and/or the cost and time involved in doing so. This may include being subject to the “seasoning rules” of an Exchange prior to being quoted, in effect requiring GSL to wait a year or more before being allowed to obtain a listing on such Exchange.

GSL was incorporated in August 2011 for the purpose of owning and operating helicopters for use in sightseeing tours and as pilot training aircraft. Whilst there is demand for hourly helicopter rental in Las Vegas, GSL believes that it is in the best interests of its shareholder base to enter into the Acquisition and to dispose of all its current business operations.

Accordingly, on 12 November 2013, GSL entered into a conditional agreement with its largest shareholder, Oxbridge Technology Partners, SA (“Oxbridge”), a Belize Corporation, pursuant to which Oxbridge will acquire the entirety of GSL's existing business, which acquisition is conditional upon and will complete immediately after the Scheme becomes Effective. Under this disposition agreement, the shares of GSL’s two subsidiaries, Shift It Media and General Aircraft, Inc., along with the assets and liabilities associated with their businesses, will pass to Oxbridge.  In addition, the 100,000,000 GSL Shares currently held by Oxbridge shall at the same time be retired to treasury.  Furthermore, GSL shall make a payment of US$430,000 in cash to Oxbridge subject to the Scheme becoming Effective.

GSL will also undertake a share consolidation in advance of the Scheme becoming Effective whereby every holder of GSL Shares will receive 1 New GSL Share for every 10 GSL Shares held on the consolidation date.

7. GSL's strategic plans for Xenetic

On the Scheme becoming Effective, GSL's sole director will resign and the Proposed Directors will join the board of GSL as directors with the intention that their service agreements and/or terms of appointment are to be substantially equivalent to their current terms, subject to applicable US laws and regulations.

No material changes to the terms of engagement of Xenetic's current employees are expected as a result of the conclusion of the transaction contemplated by the Scheme. However, independently of the Scheme and in accordance with its stated strategy, Xenetic has undertaken some restructuring (which is ongoing) in relation to the re-location of some operations to the US and the set up of an operations centre in Lexington, Massachusetts.

There is expected to be no change to the business or strategy of Xenetic following completion of the Scheme.

8. Irrevocable Undertakings

Xenetic has sought and received irrevocable undertakings from those Xenetic Directors who are beneficial owners of Xenetic Shares to vote in favour of the Scheme Resolutions in respect of their entire beneficial holdings of Xenetic Shares, a total of 11,271,086 Xenetic Shares, representing approximately 2.76 per cent. of the existing issued ordinary share capital of Xenetic as at 11 November 2013 (being the Business Day prior to the date of this Announcement), as set out in Appendix 3.

Xenetic has sought and received irrevocable undertakings from certain other Xenetic Shareholders who beneficially own or otherwise control Xenetic Shares to vote or procure the vote in favour of the Scheme Resolutions in relation to a total of 82,863,741 Xenetic Shares, representing approximately 20.32 per cent. of the existing issued ordinary share capital of Xenetic as at 11 November 2013, also as set out in Appendix 3.

In relation to the Scheme Resolutions, Xenetic has therefore received total irrevocable undertakings in respect of 94,134,827 Xenetic Shares representing, in aggregate, 23.08 per cent. of the existing issued ordinary share capital of Xenetic as at 11 November 2013.

The irrevocable undertakings are governed by English law and copies will be available, no later than 12 noon on 13 November 2013 on the following website: www.xeneticbio.com/investorrelations, until the completion of the Scheme.

9. Listing arrangements

Shareholders’ attention is drawn to the application that has been made by Xenetic to the London Stock Exchange to cancel the admission to trading on AIM of its Shares, such cancellation being conditional upon the Scheme becoming Effective. This Announcement provides Shareholders with notice of the intended cancellation, the expected date of which will be set out in the Scheme Document and notified to Shareholders in accordance with AIM Rule 41 at the same time as the Scheme Document is posted to them. Cancellation will not take place until at least 20 Business Days thereafter.

It is intended that, as soon as reasonably practicable after the Scheme becomes Effective, Xenetic will be re-registered as a private limited company in accordance with the Companies Act.

It is the intention of the Proposed Directors and Xenetic that GSL, following the completion of the Acquisition, will seek a listing of its shares on an Exchange at the earliest practicable opportunity.

The GSL Consideration Shares will in the meantime be available for quotation on the OTCBB and/or the OTCQB and will be issued free from all liens, charges, encumbrances and other third party rights and/or interests of any nature whatsoever. It is expected that the GSL Consideration Shares to be issued will be entitled to be deposited, in the normal course, into an individual shareholder’s trading account and then available for immediate trading.

Xenetic Shareholders should, however, be aware that the deposit of their GSL Consideration Shares into their existing trading accounts may be restricted or delayed as a result of the rules of their individual US broker-dealer or its clearing house. It is not uncommon for many US broker-dealers to require a substantial amount of additional documentation to effectuate the deposit and subsequent trading of new OTCBB and OTCQB shares. Consequently, shareholders may be required to set up a new trading account with a different broker-dealer or otherwise find themselves subject to delays and other issues in the deposit of their GSL Consideration Shares. The deposit of the GSL Consideration Shares will be the responsibility of the recipient shareholder.

The GSL Consideration Shares will be capable of being held in both certificated and uncertificated form, will be issued credited as fully paid and will rank pari passu in all respects with the New GSL Shares, including as to voting rights and the right to receive and retain all dividends and other distributions declared, paid or made after the Effective Date. The New GSL Shares and the GSL Consideration Shares will be denominated in US$.

The GSL Consideration Shares will be issued on implementation of the Scheme to Scheme Shareholders on the register of members of Xenetic at the Scheme Record Time.

Xenetic Shareholders should also note that following the completion of the Acquisition, and their receipt of their entitlements to GSL Consideration Shares, the protections contained within the City Code will not apply to such holdings.

10. Proposed arrangements with related parties

Alongside equity subscriptions previously made by them, Xenetic has previously negotiated warrant arrangements with some of its collaborative partners. These take the form of investment incentives designed to allow those parties to benefit from growth in shareholder value anticipated to arise as a result of the collective efforts of Xenetic and its collaborators in the positive clinical development of Xenetic's drug candidate pipeline.

All such arrangements have been based upon aspirational share price enhancement resulting from pre-clinical and clinical development milestones being achieved; such as, for example, the filing of Innovative New Drug (“IND”) applications or progression through regulated clinical trials whether in Western Europe or elsewhere.

This has customarily been the case given that Xenetic's three principal co-development agreements are with two Russian entities (SynBio and Pharmsynthez) and with Serum Institute of India. Xenetic has also previously granted warrant rights to individuals within certain of these collaborative partnerships, designed to align the interests of operational field management with those of Xenetic’s shareholders and directors.

At the time of the making any such grants/awards, it is clearly difficult to account for future influences which can conspire against planned developments by way both as to absolute negative influences coming to bear, and in relation to the timing of events. Such has been the case with both SynBio and SII, where the warrant entitlements granted in 2011 have been rendered either effectively worthless (SII) or are now recognised as being relatively very much less attainable (SynBio) than was first considered reasonable by the parties at the date of grant.

Accordingly, Xenetic has been in discussions with SII and Synbio to revisit the original terms of grant with a view to their warrants being renewed/re-priced with the benefit of current levels of understanding and development plans resulting from Xenetic's migration to the United States. Additionally, now that product development lies at the heart of Xenetic's activities, the Directors believe that it is again appropriate that further operational management awards should be considered.

Additionally, in 2011-12 Synbio provided Xenetic with a loan facility to fund its operations. Xenetic is now in discussions with Synbio as regards the repayment of the loan by way of a further issue of shares to them after the Scheme becomes Effective.

While all of the above discussions are at an early stage, if arrangements are agreed before the issue of the Scheme Document, appropriate announcements will be made if required under the AIM Rules and, to the extent required by the City Code, appropriate resolutions will be put to shareholders at the General Meeting. Such resolutions would be separate, and completion of the Scheme would not be conditional on such resolutions being passed or not passed.

If arrangements are not agreed before the issue of the Scheme Document, and insofar as the Scheme is completed and such arrangements are concluded within six months of the Scheme becoming Effective, Xenetic and GSL will put appropriate resolutions to the shareholders of GSL to approve the agreed arrangements, whether or not such resolutions are required to be considered by such shareholders under applicable laws or regulations (including the laws of Nevada).

11. Xenetic options, warrants and jointly-owned shares

The Scheme will extend to any Xenetic Shares which are unconditionally allotted or issued and fully paid (or credited as fully paid) upon the exercise of options (including under employee share schemes) or warrants before the date on which the Scheme is approved (or such earlier date as GSL may, subject to the City Code, decide).

The articles of association of Xenetic will also be amended as part of the Scheme resolution(s), such that any Shares issued after the Scheme becomes Effective following the exercise of options or warrants in accordance with their terms will automatically be acquired by GSL for such number of GSL Consideration Shares as would have been issued had the relevant Shares been Scheme Shares.

Holders of share options granted under Xenetic employee share option schemes will each be invited by GSL to exchange such options for equivalent rights to acquire shares in GSL, conditional upon the Scheme becoming effective.

Xenetic Shares which are jointly-owned by executive directors and a trustee under the terms of the Xenetic Executive Shared Ownership Plan (“the Xenetic JSOP”) will, pursuant to the terms of the Scheme, become the joint beneficial owners of GSL Consideration Shares which will remain held by the trustee as nominee for the beneficial joint owners upon and subject to the terms of the Xenetic JSOP.

Insofar as employee share options granted under Xenetic employee share option plans, and interests under the Xenetic JSOP, are subject to vesting conditions expressed as share price targets, those targets will relate to the prices of GSL Consideration Shares and will be adjusted as appropriate to ensure that no additional benefits are conferred on participants.

12. General

The Scheme will be subject to the Conditions and certain further terms set out in Appendix 1 and the further terms and conditions to be set out in the Scheme Document, the related Forms of Proxy and any other document by which the Acquisition is made.

The sources and bases of certain information contained in this announcement are set out in Appendix 2. Certain terms used in this announcement are defined in Appendix 4.

The Scheme will be governed by English law and will be subject to the applicable requirements of the City Code. The AIM Rules will continue to apply to Xenetic for as long as its Shares remain admitted to trading on AIM.

Enquiries:

General Sales and Leasing, Inc. +1 702 312 6255

Ari L. Nagler (President and CEO)

Kyleen Cane, Cane Clark LLP (US counsel to GSL)

Xenetic Biosciences plc +44 (0)20 3021 1500

Colin Hill (Chief Financial Officer)

London Bridge Capital Limited +44 (0)7912 201639

(Financial adviser to Xenetic)

Adam Hart

N+1 Singer +44 (0)20 7496 3000

(Nominated Adviser & Broker to Xenetic)

Aubrey Powell

Jenny Wyllie

Further information

This Announcement is for information only and is not intended to and does not constitute, or form part of, any offer to sell or invitation to purchase or subscribe for any securities, or any solicitation of any vote or approval in any jurisdiction pursuant to the Offer or otherwise.  The Acquisition will be effected solely through the Scheme Document and the Equivalent Document, the former containing the full details (and terms and conditions) of the Scheme and how to approve the Scheme.  The Equivalent Document in relation to the GSL Consideration Shares, for which GSL is responsible, will be published by GSL on or about the date on which the Scheme Document is posted and will contain information about GSL and the GSL Consideration Shares.

Any decision regarding the Scheme should be made only on the basis of information referred to in the Scheme Document which Xenetic intends to dispatch as soon as practicable to Xenetic Shareholders, persons with information rights and, for information only, to participants in the Xenetic share incentive schemes, optionholders and warrantholders.

Please be aware that addresses, electronic addresses and certain other information provided by Xenetic Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from Xenetic may be provided to GSL during the Offer Period as required under Section 4 of Appendix 4 to the City Code.

London Bridge Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Xenetic as its financial adviser and no one else in connection with the Acquisition and will not be responsible to anyone other than Xenetic for providing the protections afforded to clients of London Bridge Capital Limited nor for providing advice in connection with the Acquisition or the content of, or any other matter or arrangement described or referred to in, this document. Neither London Bridge Capital Limited nor any of its directors, officers, subsidiaries or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of London Bridge Capital Limited in connection with the Acquisition or any other matter referred to in this document, any statement contained herein or otherwise.