FILED
`8/4/2023 4:50 PM
`FELICIA PITRE
`DISTRICT CLERK
`DALLAS CO., TEXAS
`Ricky Brashear DEPUTY
`
`CAUSE No. DC-22-08737
`
`BIOTE MEDICAL, LLC,
`
`Plaintiff,
`
`Vv.
`
`DR. GARYS. DONOVITZ AND LANI
`HAMMONDS DONOVITZ,individually
`and dba LANI D. CONSULTING,
`
`Defendants.
`
`DR. GARYS. DONOVITZ,
`
`Counterclaim Plaintiff,
`
`Vv.
`
`BIOTE MEDICAL, LLC, TERESAS.
`WEBER,individually, and MARY
`ELIZABETH CONLON,individually,
`
`Counterclaim Defendants.
`
`CGGACO?ORUOGRUGUO)CORCO?002UG02ODGOR(OP002UGUG?CONCO?GO?C2ODUO
`
`IN THE DISTRICT COURT
`
`DALLAS COUNTY, TEXAS
`
`134th JUDICIAL DISTRICT
`
`COUNTERCLAIM DEFENDANT BIOTE MEDICAL, LLC AND THIRD PARTY
`DEFENDANTS TERESA S. WEBER AND MARYELIZABETH CONLON’S MOTION
`TO EXCLUDE EXPERT TESTIMONYOF MARK F. RULE
`
`Counterclaim Defendant BioTE Medical, LLC (“Biote Medical”) and Third-Party
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`Defendants Teresa S$. Weber (“Weber”) and Mary Elizabeth Conlon (“Conlon”) (collectively the
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
`MOTION TO EXCLUDE EXPERT TESTIMONY OF MARK F. RULE
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`Page 1
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`“Third Party Defendants”) move the Court to preclude the improper expert witness testimony of
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`Mark F. Rule because such testimony is irrelevant to the issues in dispute and will have the
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`prejudicial impact of confusing and misleadingthe jury.
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`I.
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`Factual And Procedural Background
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`A. Donovitz’s Counterclaims And Third-Party Claims
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`In this proceeding, Counterclaim Plaintiff Dr. Gary Donovitz (“Donovitz’) asserts a series
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`of counterclaims and third-party claims against Biote Medical, Conlon, and Weber, arising from
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`his disappointment in the outcome of a SPACtransaction (the “Transaction’’) involving BioTE
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`Medical and certain affiliated entities. Donovitz alleges that the Third-Party Defendants made
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`certain misrepresentations to him in order to induce him to enter into a “Founder Advisory
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`Agreement” (the “FAA”) and subsequently agree to waive a closing condition of the Transaction.
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`Donovitz’s claims for fraud, misrepresentation, promissory estoppel, breach of fiduciary duty, and
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`conspiracy effectively rely upon a commonset of specific alleged misrepresentations: (1) “that
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`Donovitz would receive a seat on the post-merger board or equivalent powers;” (2) “that Donovitz
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`would be made Chief Medical Officer following the mergeror retain equivalent powers;” (3) “that
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`Donovitz would retain stewardship of BioTE Medical and its doctor-education programsafter the
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`merger;” (4) “that Donovitz would be entitled to a $50 million waterfall distribution upon the
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`closing of the SPAC merger;” (5) “that any ‘non-disparagement’ obligation would be mutual;” and
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`(6) “that the DocuSign FAA supplied to Donovitz by Conlon via ‘DocuSign’ software on the
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`execution date of the FAA wasa different version of the contract than the one [sic].” 3dAAC 4
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`47, 65, 76, 83, 88, 91. In addition to these alleged misrepresentations, Donovitz also asserts that
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
`MOTION TO EXCLUDE EXPERT TESTIMONY OF MARK F. RULE
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`Conlon and Weberwere silent as to certain matters relating to the Transaction, including: (7) the
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`significance of “waiving the net tangible assets closing condition,” which waiver Donovitz signed
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`on May19, 2022 as an executive on behalf of BioTE Medical, Donovitz’s Response to Conlon’s
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`First Rogs at Responses 1 and 2; (8) the status of investor redemptions on May 20, 2022—after
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`Donovitz had signed the FAA and the May 19 waiver, id. at Response | and (9) the status of the
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`parties’ interests and objectives in relation to negotiating the provisions that Donovitz asserts are
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`missing from the FAA,id. at Responses | and 2 and Donovitz’s Response to Weber’s First Rogs
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`at Responses 8 and 9. Donovitz’s claims for breach of contract and breach of the covenant of good
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`faith and fair dealing separately allege that BioTE Medical: (10) “prevented Donovitz from
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`performing under the FAA,” 3dAAC 460; (11) “intentionally deprived Donovitz of material
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`information and published statements that were defamatory,” 3dAAC 998; (12) failed to pay
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`Donovitz everything that was owed to him under the FAA, Donovitz’s Second Amended
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`Responses to Weber’s Second Rogsat 2; and (13) failed to disclose “that it never intended to honor
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`the terms of the FAA,” id. A true and correct copy of Donovitz’s Objections and Responses to
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`Mary Elizabeth Conlon’s First Set of Interrogatories is attached hereto as Exhibit 1 and fully
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`incorporated herein by reference. A true and correct copy of Donovitz’s Objections and Responses
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`to Teresa S. Weber’s First Set of Interrogatories is attached hereto as Exhibit 2 and fully
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`incorporated herein by reference. A true and correct copy of Donovitz’s Second Amended
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`Objections and Responses to Teresa S. Weber’s Second Set of Interrogatories is attached hereto
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`as Exhibit 3 and fully incorporated herein by reference.
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
`MOTION TO EXCLUDE EXPERT TESTIMONY OF MARK F. RULE
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`Page 3
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`B. Donovitz’s Expert Calculates His Damages Without Accounting For The
`Effects Of The Allegedly Wrongful Acts
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`On May5, 2023, Donovitz disclosed that Mark F. Rule, a certified public accountant,
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`would be providing expert opinion on the amount of, and process of determining, the damages
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`Donovitz claims he suffered in connection with his counterclaims and third-party claims. Based
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`on Donovitz’s requests for “equitable relief. . ., “actual damages incurred and that will be incurred
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`in the future, including consequential damages’ .
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`.
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`. [and] ‘any relief the Court deems just and
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`399
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`proper,’”
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`Rule Report § 32, and “given Dr. Donovitz’s position that he would have never
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`consummated the Transaction ‘but for’ the Counterclaim Defendants’ alleged improperactions,”
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`id. at 33, Rule opinedthat the “the proper methodology to determine potential damages in this
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`matter, assuming liability,
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`is to apply a ‘but for’ damages model,” id. Accordingly,
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`in his
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`disclosure, Rule purports “to measure how Dr. Donovitz waspotentially harmed economically as
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`a result of consummating the Transaction” by “comparison between the value of his equity interest
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`in Biote' immediately prior to the Closing Date of the Transaction on May 25, 2022 (the ‘But For
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`World’) with that of his interest immediately after the Closing Date on May 27, 2022 (the ‘Actual
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`World’).” /d. at 7 35. A true and correct copy of the Expert Report of Mark Rule is attached hereto
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`as Exhibit 4 and fully incorporated herein by reference.
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`Rule presented four different versions of his calculation.
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`1. Rule’s Primary Scenario
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`
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`1 In his report, Rule explained that he used “Biote” as a generic term for Biote Medical and affiliated entities. See
`Rule Report at n.2. In discussing Rule’s report, the Third Party Defendants follow his terminology.
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
`MOTION TO EXCLUDE EXPERT TESTIMONY OF MARK F. RULE
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`In his first and primary scenario, Rule calculated his “But-for World” value using both a
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`Discounted Cash Flow (“DCF”) Method and a Guideline Public Company Method. With respect
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`to the DCF method, Rule: “(1) estimate[ed] .
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`.
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`. future cash flows for a certain discrete projection
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`period; (2) estimat[ed] .
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`.
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`. the present value of those cash flows by discounting them to the present
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`using arate of return... ; (3) estimat[ed] [the] cash flows subsequent to the discrete projection
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`period and into perpetuity ... ; and (4) summf[ed]. .
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`. the present value of the residual cash flows
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`with the present value of the discrete projection period cash flows.” Rule Report 4 40.
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`According to Rule, “[t]he Guideline Public Company Method determines a subject
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`company’s enterprise value (‘EV’) by multiplying a stated level of the subject company’s financial
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`metrics, such as historical or projected revenue or earnings, by a selected multiple based on the
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`corresponding market-based EV multiples for the guideline companies.” /d. at § 77. In order to
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`calculate a “But For World” value using the Guideline Public Company Method, Rule began by
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`selecting eleven companies which, according to him, were used by the Transaction’s sponsor“to
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`assess the value that the public markets would likely ascribe to the” post-Transaction company.
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`Id. at § 75. From there, Rule calculated four different multiples across each of the eleven
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`companies, took the median value of each of the four multiples, and multiplied those values by a
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`corresponding metric for Biote. /d. at ¢ 78. He then applied a “15% invested capital control
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`premium”and averagedthe four values he wasleft with. /d. at §| 79-80.
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`Taking the two “But-For World” values, Rule assigned a 50% weightto each, calculated a
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`weighted average, deducted Biote’s net debt, and applied a “discount for lack of marketability,” to
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`arrive at final But-For World value of $673.4 million. /d. 4] 83-84. Rule’s “Actual World”value,
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
`MOTION TO EXCLUDE EXPERT TESTIMONY OF MARK F. RULE
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`on the other hand, was calculated simply by taking Biote’s market capitalization as of the close of
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`trading on May 27, 2022 ($427.4 million). See /d. at 7 86. To arrive at Donovitz’s supposed
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`damages, Rule then subtracted his Actual World value from his But-For World value and adjusted
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`the resulting number using Donovitz’s equity stake in Biote in each scenario.
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`/d. at 4 89.
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`Comparing the two values, Rule concludedthat “[b]ecause the FMV of Dr. Donovitz’s ownership
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`stake after closing the Transaction is less than the FMV of Dr. Donovitz’s ownership stake
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`immediately prior to closing the Transaction, Dr. Donovitz suffered economic damages.” /d. at §
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`11.
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`2. Alternative Scenarios
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`Rule also calculated three “alternative” damages scenarios in which he “base[d] the FMV
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`of Biote’s total equity in the But For World and/or the Actual World on an alternate
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`assumption/source.” /d. at { 90. In the second scenario, Rule assumedthat the But-For World
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`and Actual World FMV of Biote’s total enterprise value remained the same after the Transaction,
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`but calculated that “its equity value changesas a result of the changesto its capital structure
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`directly resulting from the Transaction.” /d. at J 91. In Rule’s third scenario, he subbed in an
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`alternative But-For World value for Biote’s total equity value derived from the proxy statement
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`filed in connection with the Transaction. /d. at 7 97. As in his second damages scenario, Rule
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`comparedthis alternative But-For World value with an Actual World FMVderived solely from
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`changes to Biote’s capital structure following the Transaction. /d. at § 98. Finally, in Rule’s
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`fourth scenario, he used the But-For World value calculated in this third scenario and compared
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`it to the Actual World FMVcalculated in his first scenario. /d. at 99.
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
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`Despite Rule’s exercise in mixing-and-matching various before-and-after valuations of
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`Biote, what each of Rule’s scenarios share in commonis that they calculate Donovitz’s supposed
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`damages simply by comparing the value of his holdings before the Transaction and their value
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`after the Transaction. Rule testified that there were three possible causes for the reduction in the
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`value of the company as he measuredit: (1) Donovitz’s decreased ownership interest in the
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`company; (2) the company’s increase in netliabilities; and (3) Donovitz’s movement from a
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`controlling to non-controlling shareholder in the company. Rule Tr. 81:25-82:11. Critically, Rule
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`made no attempt to ascertain whether it was the Third-Party Defendants’ alleged wrongful
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`conductthat proximately caused the difference. He madethis clear at his deposition:
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`Q. You use the wordsin paragraph 3, “Damagessuffered by counterclaim plaintiff, if
`any, as a result of the alleged improperactions,” correct?
`A. Correct.
`Q. So you were determining whether damages wereresulting from the actions, correct?
`A.No...1?m simply doing a comparison of what his economic interests were before
`closing and whatthey wereafter closing.
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`Transcript of the June 9, 2023 Deposition of Mark F. Rule (“Rule Tr.”’) at 79:15-80:13; see also
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`id. at 77:13-77:24. (“It’s just simply a comparison day before closing—the day before the
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`transaction, what was the economic worth in BioTE versusthe day after it closed.”). True and
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`correct copies of excerpts from the Deposition of Mark Rule are attached hereto as Exhibit 5 and
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`fully incorporated herein by reference.
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`U.
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`Legal Standard
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`“The proponent of expert testimony must show byclear and convincing proofthat the
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`evidence he seeks to introduceis sufficiently (1) relevant and (2) reliable to assist the trier of fact
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
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`in accurately understanding other evidence or in determining a fact at issue.” Baldree v. State,
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`248 S.W.3d 224, 228 (Tex. App. 2007). “Expert testimony is relevant if it is sufficiently tied to
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`the facts of the case such that it will aid the jury in resolving a factual dispute.” Innovative Block
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`ofS. Texas, Ltd. v. Valley Builders Supply, Inc., 603 S.W.3d 409, 422 (Tex. 2020) (internal
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`quotation marks andcitations omitted).
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`Il.
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`Rule’s Damages Calculation Is Irrelevant to the Issues In This Action
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`Rule’s “lost business value” damages opinion must be excluded.” An essential element of
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`Donovitz’s claims is that the alleged wrongful conduct of the Third-Party Defendants was the
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`proximate or natural cause of the damages sought. This meansthat there must be a causal nexus
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`between the conductand the harm: the alleged wrongdoing mustbe a substantial factor in bringing
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`about the alleged damages. Yet Rule expressly disclaimed any such connection between his
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`damages calculations and the alleged wrongful acts. Consequently, his opinion is irrelevant to the
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`issues in this action.
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`A. Causation Is An Essential Element Of Donovitz’s Claims
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`Proof of causation is an essential element for each of the claims Donovitz asserts. See
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`Employees Retirement System of Texas v. Putnam, LLC, 294 8.W.3d 309, 315 (Tex. App.Austin
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`2009) (explaining that “[p]roximate causeis an essential element” of fraud and misrepresentation);
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`2 Rule also calculated Donovitz’s supposed disgorgement damages,stating that “[t]o the extent it is ultimately
`demonstrated that Dr. Donovitz is entitled to disgorgement damagesin this matter, I calculate them astotal profits or
`direct economic benefits (e.g., shares of stock) obtained by Counterclaim Defendants and/or their co-conspirators as
`a direct result of the Transaction’s effectuation.” Rule Report J 101. Third Party Defendants do not seek to preclude
`Rule from testifying regarding any supposed disgorgement damagesin this motion.
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
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`id. at 318 (explaining that the “absence of [the required] causal connection between the alleged
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`breach and the alleged damageswill preclude recovery” on a breach-of-contract claim); Scott v.
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`Sebree, 986 S.W.2d 364, 372 (Tex. App.—Austin 1999) (explaining that proof of damages caused
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`by the breach is an essential element of a breach-of-contract claim); Bechtel Corp. v. CITGO
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`Products Pipeline Co., 271 8.W.3d 898, 926 (Tex. App.—Austin 2008) (explaining that evidence
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`of “loss caused by reliance on the promise” is an essential element of a claim for promissory
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`estoppel); Bos v. Smith, 556 S.W.3d 293, 303 (Tex. 2018) (explaining that claims for breach of
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`fiduciary duty “require showing damages were proximately caused by breach of a duty”); Agar
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`Corporation, Inc. v. Electro Circuits International, LLC, 580 S.W.3d 136, 140-42 (Tex. 2019)
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`(explaining that proof of damages “com|[ing] from the underlying wrongful act” is an essential
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`element of claims for civil conspiracy); Chartis Specialty Ins. Co. v. Tesoro Corp., 930 F. Supp.
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`2d 653, 665, 668 (W.D. Tex. 2013) (explaining that “a claim for breach of the implied covenant
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`of good faith and fair dealing cannotexist absent a breach of contract,” with in turn requires proof,
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`as an essential element, of “damages resulting from the breach’); Jn re Mohawk Rubber Co., 982
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`S.W.2d 494, 498 (Tex. App.—Texarkana 1998) (“Causation is a specific element of tort
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`liability.”); see also W. Page Keeton, Causation, 28 S. TEX. L. REV. 231 (1986).
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`Two elements are required for proximate cause: “cause in fact (or substantial factor) and
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`foreseeability.” JHS Cedars Treatment Ctr. ofDesoto, Texas, Inc. v. Mason, 143 S.W.3d 794, 798-
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`99 (Tex. 2004). These elements “cannot be satisfied by mere conjecture, guess, or speculation.”
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`Id.; Doe v. Boys Clubs of Greater Dallas, Inc., 907 8.W.2d 472, 477 (Tex. 1995); Akin, Gump,
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
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`Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106, 122 (Tex. 2009)
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`(“Causation must be proved, and conjecture, guess, or speculation will not suffice as proof.’’).
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`“Cause in fact is established when the act or omission was a substantial factor in bringing
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`about the injuries, and withoutit, the harm would not have occurred.” JHS Cedars, 143 S.W.3d at
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`798. It is “not enough that the harm would not have occurred” but for the alleged conduct; that
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`conduct“must also be a substantial factor in bringing aboutthe plaintiff's harm.” /d. at 799. Thus,
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`“cause in fact is not established where” the alleged conduct “does no more than furnish a condition
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`which makes the injuries possible.” /d.; Bovs Clubs, 907 S.W.2d at 477. “In other words, the
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`conduct of the defendant may be too attenuated from the resulting injuries to the plaintiff to be a
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`substantial factor in bringing about the harm.” /HS Cedars, 143 S.W.3d at 799. If the evidence
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`does not show that the identified harm “wasthe natural and probable result” of the alleged conduct,
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`then there is no proof of cause in fact. Boys Clubs, 907 S.W.2d at 477.
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`In the context of market losses, as relevant here, the “Texas Supreme Court has held that
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`damagesare not recoverable if they ‘were simply part of the risk’ associated with an investment.”
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`ERS, 294 S.W.3d at 317; Arthur Andersen & Co. v. Perry Equip Corp., 945 S.W.2d 812, 817 (Tex.
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`1997). Instead, there must be “a causal link” between the alleged “conduct and the damages
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`sought.” ERS, 294 $.W.3d at 317. “Without this limitation,’ the Texas Supreme Court has
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`explained, “an investor could shift the entire risk of an investment to a defendant who made a
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`misrepresentation, even if the loss were unrelated to the misrepresentation. The basis of a
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`misrepresentation claim is that the defendant’s false statement induced the plaintiff to assume a
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`risk he would not have taken had the truth been known. But to allow the plaintiff to transfer the
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
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`entire risk of loss associated with his investment, even risks that the plaintiff accepted knowingly
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`or losses that occurred through no fault of the defendant, would unfairly transform the defendant
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`into an insurer of the plaintiff[’]s entire investment.” /d. (citing Arthur Andersen, 945 S.W.2d at
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`817). Thus, business and investment losses flowing from “a risk created by the nature of the
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`market”
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`rather
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`than
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`from “any
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`alleged misrepresentation,”
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`are
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`“unrelated to
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`the
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`misrepresentation,” and “‘cannot satisfy the cause-in-fact requirement of proximate cause.” ERS,
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`294 S.W.3d at 317. A similar absence of “causal connection between the alleged breach and the
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`alleged damages” with preclude recovery under a breach-of-contract theory. /d. at 318.
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`B. Rule’s Calculations Ignore Causation
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`Despite the fact that Donovitz must show that the alleged misconduct proximately caused
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`his damages, Rule’s proposed testimony makes clear that he did not attempt to connect these
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`alleged misrepresentations with the supposed damages he calculated. Instead, he simply mixed
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`and matched different values for Donovitz’s equity holdings in Biote before and after the
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`Transaction. Indeed, Rule confirmed in deposition that he did not take any of the particular
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`misrepresentations or allegations of wrongdoing into consideration in his assessment of
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`proximately caused damages: “It’s just simply a comparison day before closing—the day before
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`the transaction, what was the economic worth in BioTE versus the dayafter it closed.”
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`Not only that, but Rule’s testimony conclusively demonstrates that he does not believe
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`there is any causal nexus betweenthe particular allegations of wrongdoing andthe loss in business
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`value that he measured. When asked at deposition to identify any causes of the alleged loss in
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`business value, Rule testified that there were three possible causes for the reduction in the value
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
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`of the company as he measured it: (1) Donovitz’s decreased ownership interest in the company;
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`(2) the company’s increase in net liabilities; and (3) Donovitz’s movement from a controlling to
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`non-controlling shareholder
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`in the
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`company. But Donovitz has never
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`alleged any
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`misrepresentation or other wrongdoing with respect to any of these three purported causes of the
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`loss in business value. To the contrary, Rule’s deposition testimony confirmsthat the three causes
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`he identified would have occurred regardless of any alleged wrongdoing.
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`This failure necessitate the exclusion of Rule’s testimony. As a matter of law, there is no
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`reason to think—and Rule does not even suggest—that any provision in the FAA or any supposed
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`silence on behalf of the Third-Party Defendants had any impact on the business value of Biote
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`before and after the Transaction. Accordingly, Rule’s “lost business value” calculations are simply
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`irrelevant to the issues in this case and must be excluded.
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`IV.
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`Rule’s Damages Calculation Is Unreliable
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`Rule’s “lost business value” calculation is also unreliable. Because Rule’s methodology
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`simply ignores the causal link between the alleged wrongful conduct and the supposed “lost
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`business value” he calculated, it is not grounded “in the methods and proceduresof science.” E./.
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`du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 557 (Tex. 1995). Accordingly, it should
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`also be excluded on that basis as well.
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`WHEREFORE,Biote Medical, Weber and Conlon pray that this Court preclude the
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`improper expert witness testimony of Mark F. Rule and further for all such other and furtherrelief
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`to which they maybejustly entitled.
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`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
`MOTION TO EXCLUDE EXPERT TESTIMONY OF MARK F. RULE
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`Dated: August 4, 2023
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`Respectfully submitted,
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`MCKOOL SMITH,P.C.
`
`By: /s/ Alan S. Loewinsohn
`Alan S. Loewinsohn
`State Bar No. 12481600
`aloewinsohnn@mckoolsmith.com
`Lewis T. LeClair
`State Bar No. 12072500
`lleclair@mckoolsmith.com
`Kerry F. Schonwald
`State Bar No. 24051301
`kschonwald@mckoolsmith.com
`300 Crescent Court, Suite 1500
`Dallas, Texas 75201
`Telephone: (214) 978-4000
`Facsimile: (214) 978-4044
`
`Attorneys for Counterclaim Defendant and Third-Party
`Defendants
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a true and correct copy of the foregoing document
`wasserved on all counsel of record by electronic mail on August 4, 2023.
`
`/s/ Alan S. Loewinsohn
`Alan S. Loewinsohn
`
`BIOTE MEDICAL, LLC AND THIRD PARTY DEFENDANTS’
`MOTION TO EXCLUDE EXPERT TESTIMONY OF MARK F. RULE
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`Page 13
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`EXHIBIT 1
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`

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`IN THE DISTRICT COURT
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`DALLAS COUNTY, TEXAS
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`134™4 JUDICIAL DISTRICT
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`DC-22-08737
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`§ § § § § § § § § § §:
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`§ § § § § § § § § §
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`§ § §
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`BIOTE MEDICAL LLC.
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`Plaintiff,
`
`Vv.
`
`DR. GARY S. DONOVITZ AND LANI
`HAMMONDS DONOVITZ, individually and
`d/b/a LANI D. CONSULTING,
`
`Defendants;
`
`DR. GARY S. DONOVITZ AND LANI
`HAMMONDS DONOVITZ,individually and
`d/b/a LANI D. CONSULTING,
`
`Counterclaim Plaintiff,
`
`Vv.
`
`BIOTE MEDICAL LLC, TERESAS. WEBER,
`individually,
`and MARY ELIZABETH
`CONLON,individually,
`
`Counterclaim Defendants.
`
`DEFENDANTDR. GARYS. DONOVITZ’S
`OBJECTIONS AND RESPONSES TO
`MARY ELIZABETH CONLON’S FIRST SET OF INTERROGATORIES
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`Pursuant
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`to Texas Rule of Civil Procedure 197, Defendant Dr. Gary S. Donovitz
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`(“Defendant” or “Donovitz’”’) serves this Objections and Responses to Counterclaim Defendant
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`Mary Elizabeth Conlon’s (“Conlon”) First Set of Interrogatories (“ROGs”) to Defendant Dr. Gary
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`S. Donovitz, as follows:
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`DEFENDANTDR. GARYS. DONOVITZ’S
`OBJECTIONS AND RESPONSES TO
`MARY ELIZABETH CONLON’S FIRST SET OF INTERROGATORIES
`
`PAGE 1
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`I.
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`GENERAL OBJECTIONS
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`The following general objection is incorporated as an objection to each interrogatory,
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`whetheror not specific reference to it is made:
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`Defendant objects to the definition of “Defendant,” “Gary,” and “you” in Conlon’s ROGs
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`as including “any and all past or present partners, officers, directors, managers, employees,
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`attorneys, successors, assigns, shareholders, subsidiaries, parents, representatives, or agents,
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`individually, collectively, or in any combination and/or permutation whatsoever” because it
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`unreasonably purports to require Defendant to gather substantial documents and communications
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`from third parties within an expedited-discovery timeframe that is not possible within the
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`expedited timeframe; gathering communications from counsel, in particular, would be unduly
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`burdensome given the need for privilege review. For purposes of his responses, Defendant will
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`construe the ROGs to seek documents within the possession of Defendant, including without
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`limitation mobile-phone contents and email communications.
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`II.
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`SPECIFIC OBJECTIONS AND RESPONSES TO INTERROGATORIES
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`INTERROGATORYNO. 1:
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`Identify every act or omission that You contend constitutes common law fraud, and for
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`each, state when the act or omission occurred and by whom.
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`RESPONSE:
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`Defendant objects to this Interrogatory on the groundsthat it attempts to require Defendant
`to “marshal” its evidence. See TEX. R. CIv. P. 197.1. Specifically, Defendant objects to this
`Interrogatory as an interrogatory may ask the party to describe in general the factual bases for the
`party’s claims or defenses, but it cannot ask the party to state a// its legal and factual assertions.
`See TEX. R. Civ. P. 197.1 & cmt.1. Further, Rule 192.34) makes a party’s legal and factual
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`DEFENDANTDR. GARYS. DONOVITZ’S
`OBJECTIONS AND RESPONSES TO
`MARY ELIZABETH CONLON’S FIRST SET OF INTERROGATORIES
`
`PAGE 2
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`contentions discoverable but does not require more than a basic statement of those contentions.
`See TEX. R. Civ. P. 192.34) & cmt.5. Defendant further objects to this Interrogatory to the extent
`it seeks information beyond Defendant’s knowledge and/or equally available to Conlonasit is to
`Defendant.
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`to and without waiving the foregoing objections and General Objections,
`Subject
`Defendantstates that the following acts constitute fraud:
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`Conlon’s failure to communicate the Net Tangible Assets Proposal added to the April 27,
`2022 Haymaker proxy; Conlon’s failure to communicate to Donovitz that the revisions in the
`redlined version of the FAA sent to both Heyer and Conlon on May 18, 2022 were “still not
`acceptable;” negotiation of the FAA on false pretenses; concealment of removal of Defendant’s
`decision-making authority; failure to accurately apprise Defendantof his potential liability in the
`event Defendant chose to not go forward with the merger; making material misrepresentations and
`concealing material information to fraudulently induce Donovitz to execute the FAA, including
`but not limited to,
`(1) that Donovitz would retain decision-making authority over the BioTE
`Companies,(11) that Donovitz would receive a seat on the post-merger board or equivalent powers;
`(iii) that Donovitz would be made Chief Medical Officer following the mergeror retain equivalent
`powers; (iv) that Donovitz would retain stewardship of BioTE Medical and its doctor-education
`programsafter the merger; (v) that Donovitz would be entitled to a minimum $50 million waterfall
`distribution upon the closing of the SPAC merger; (vi) that any “non-disparagement” obligation
`would be mutual; and (vi1) that the FAA supplied to Donovitz by Conlon via “DocuSign” software
`on the execution date of the FAA was not the FAAheagreed to sign. Conlon’s misrepresentation
`regarding Defendant’s post-merger role and responsibilities; Conlon’s misrepresentation regarding
`the final version of the FAA; Conlon’s failure to inform Defendantthat his edits to the FAA were
`not commercially reasonable and had ultimately been rejected by Biote, eliminating the
`Defendant’s ability to negotiate terms in good faith; Conlon’s deliberate omission of “talking
`points” regarding the rejection of the bi-lateral non-disparagement agreement, one-year non-
`compete clause, edits to Sections 8 regarding ownership of Biote property; Conlon’s failure to
`apprise Donovitz of contemporaneous discussions between Weber, Conlon, and Heyerregarding
`the FAA, wherein the parties choreographed “talking points” regarding the FAA designed to
`mislead Donovitz and defer the “fight” with him which BioTE, Weber, Conlon, and Heyer knew
`would ensue when BioTE failed to honor the assurances it had given in connection with the
`FAA; Conlon’s deliberate omission that the May 19 “FAA” waiver also contained provisions
`waiving the net tangible assets closing condition in the BCA; Conlon’s failure to communicate to
`Donovitz the significance and impact of waiving the net tangible assets closing condition;
`Conlon’s failure to disclose to Defendant that Haymaker received investor redemptions that
`exceeded 96% on May 20, 2022, which guaranteed Donovitz would not receive any cash at the
`SPAC Closing on May 26, 2022.
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`Weber’s failure to communicate comments and revisionsto the FAA, including those made
`on May 18, 2022; negotiation of the FAA on false pretenses; failure to disclose to Defendant
`conflicts of interest as they apply to Weber; concealment of removal of Defendant’s decision-
`making authority; failure to accurately apprise Defendant of his potential liability in the event
`Defendant chose to not go forward with the merger; making material misrepresentations and
`concealing material information to fraudulently induce Donovitz to execute the FAA, including
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`DEFENDANTDR. GARYS. DONOVITZ’S
`OBJECTIONS AND RESPONSES TO
`MARY ELIZABETH CONLON’S FIRST SET OF INTERROGATORIES
`
`PAGE 3
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`(1) that Donovitz would retain decision-making authority over the BioTE
`but not limited to,
`Companies,(11) that Donovitz would receive a seat on the post-merger board or equivalent powers;
`(iii) that Donovitz would be made Chief Medical Officer following the mergeror retain equivalent
`powers; (iv) that Donovitz would retain stewardship of BioTE Medical and its doctor-education
`programsafter the merger; (v) that Donovitz would be entitled to a minimum $50 million waterfall
`distribution upon the closing of the SPAC merger; (vi) and that any “non-disparagement”
`obligation would be mutual; Weber’s misrepresentation regarding Defendant’s post-merger role
`and responsibilities and; Weber’s failure to apprise Donovitz of contemporaneous discussions
`between Weber, Conlon, and Heyer regarding the FAA, wherein the parties choreographed
`“talking points” regarding the FAA designed to mislead Donovitz and defer the “fight” with him
`which BioTE., Weber, Conlon, and Heyer knew would ensue when BioTE failed to honor the
`assurances it had given in connection with the FAA; Weber’s deliberate omission that the May 19
`“FAA” waiver also contained provisions waiving the net tangible assets closing condition in the
`BCA. Weber’s failure to communicate to Donovitz the significance and impact of waiving the net
`tangible assets closing condition. Weber’s failure to disclose to Defendant that Haymaker received
`investor redemptions that exceeded 96% on May 20, 2022, which guaranteed Donovitz would not
`receive any cash at the SPAC Closing on May 26, 2022.
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`Beer’s failure to apprise Defendant of contemporaneous discussions between Weber,
`Conlon, and Beerregarding the fact that Defendant would not have a board memberposition post-
`merger; failure to accurately apprise Defendant of his potential liability in the event Defendant
`chose to not go forward with the merger; making material misrepresentations and concealing
`material information to fraudulently induce Donovitz to execute the FAA,including but notlimited
`to, (1) that Donovitz would receive a seat on the post-merger board or equivalent powers; and(11)
`that Donovitz would be entitled to a minimum $50 million waterfall distribut