8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): October 12, 2006

DAVITA INC.

(Exact name of registrant as specified in its charter)

Delaware	1-14106	No. 51-0354549
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

601 Hawaii Street

El Segundo, CA 90245

(Address of principal executive offices including Zip Code)

(310) 536-2400

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 240.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13c-4)

Item 1.01. Entry into a Material Definitive Agreement.

Approval of an Amendment to the Forms of Non-Qualified Stock Option Agreement, the Form of Restricted Stock Units Agreement, and the Form of Stock Appreciation Rights Agreement

On October 12, 2006, the Compensation Committee of the Board of Directors of the Company approved an amendment to each of (i) the forms of Non-Qualified Stock Option Agreement for non-qualified stock option grants to employees under the 2002 Equity Compensation Plan (the “Plan”) and the 1999 Non-Executive Officer and Non-Director Equity Compensation Plan, (ii) the form of Restricted Stock Units Agreement for restricted stock unit awards to employees under the Plan and (iii) the form of Stock Appreciation Rights Agreement for stock appreciation rights awards to employees under the Plan (collectively, the “Agreements”). The amendment to each of the Agreements provides that the participant’s equity award shall automatically vest and become immediately exercisable or issuable in its entirety in connection with a change of control (as defined in the Agreements) in the event that the acquiror (as defined in the Agreements) does not assume, convert or replace the equity award or the participant’s employment is terminated without cause (as defined in the Agreements) or terminated by the participant for good reason under certain circumstances, within twenty-four months of the change of control. The Agreements were also amended to limit the participant’s relationships with competitors, suppliers and certain physician groups during the one year period following termination and to prohibit the participant from accepting employment or providing services where disclosure of confidential information would be inevitable because of the nature of the position.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
10.1	Form of Non-Qualified Stock Option Agreement – Employee (DaVita Inc. 2002 Equity Compensation Plan).
10.2	Form of Non-Qualified Stock Option Agreement-Employee (DaVita Inc. 1999 Non-Executive Officer and Non-Director Equity Compensation Plan).
10.3	Form of Restricted Stock Units Agreement – Employee (DaVita Inc. 2002 Equity Compensation Plan).
10.4	Form of Stock Appreciation Rights Agreement – Employee (DaVita Inc. 2002 Equity Compensation Plan).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DAVITA INC.
Date: October 18, 2006	By:	/s/ Joseph Schohl
		Joseph Schohl
		Vice President, General Counsel and Secretary

EXHIBIT INDEX

10.1	Form of Non-Qualified Stock Option Agreement – Employee (DaVita Inc. 2002 Equity Compensation Plan).
10.2	Form of Non-Qualified Stock Option Agreement-Employee (DaVita Inc. 1999 Non-Executive Officer and Non-Director Equity Compensation Plan).
10.3	Form of Restricted Stock Units Agreement – Employee (DaVita Inc. 2002 Equity Compensation Plan).
10.4	Form of Stock Appreciation Rights Agreement – Employee (DaVita Inc. 2002 Equity Compensation Plan).

EX-10.1

Exhibit 10.1

Form of Non-Qualified Stock Option Agreement under

the DaVita Inc. 2002 Equity Compensation Plan

- Employee

Primary Terms

Optionee:
SSN:
Address:
Grant Date:
Options Granted:
Option Price per Share:
Expiration Date:
Plan Name:	2002 Equity Compensation Plan
Plan ID#:	2002
Vesting Schedule:

The terms set forth above, together with the terms and conditions attached, constitute one agreement.

Note: Please mark and initial any correction to the Name, SSN and/or Address shown on this page before returning a signed copy of this agreement to the Stock Plan Administrator.

This Non-Qualified Stock Option Agreement is dated as of                      (“Grant Date”) by and between DaVita Inc., a Delaware corporation (“Company”) and                      (“Optionee”) pursuant to the Company’s 2002 Equity Compensation Plan (“Plan”). Capitalized terms that are used but not defined in this document shall have the meanings set forth in the Plan.

1. Grant of Option.

(a) The Company hereby grants to the Optionee the right (“Option”) to purchase all or any portion of                  shares (“Shares”) of the common stock of the Company (“Common Stock”) at a purchase price of $                 per share (“Option Price”).

(b) It is intended that this Option will not qualify for treatment as an incentive stock option under Internal Revenue Code (“Code”) Section 422.

2. Term of Option.

(a) This Option shall be effective for the period (“Term”) from the Grant Date shown above through March 30, 2010 (“Expiration Date”).

(b) In the case of the termination of the Optionee’s employment with the Company (“Severance”), the following rules shall apply in determining the date on which the Option shall terminate.

(i) If the Optionee dies while employed by the Company or during the three (3) month period immediately subsequent to his or her Severance, the Option shall terminate one (1) year from the date of the Severance.

(ii) If the Optionee was disabled (within the meaning of Section 22(e)(3) of the Code) at the time of his or her Severance, the Option shall terminate one (1) year following the Severance.

(iii) In all other cases, the Option shall terminate three (3) months following the Severance.

(c) If the Optionee is transferred between the Company and a subsidiary thereof, or vice versa, or between subsidiaries, Severance shall not be deemed to have occurred.

(d) If there is a meaningful reduction, determined in the Company’s sole discretion, in both the Optionee’s duties and responsibilities and the level of the Optionee’s regular cash compensation for an extended or indefinite period of time, the Company reserves the right to unilaterally revoke some or all of the unvested portion of the Option.

3. Exerciseability.

(a) The shares subject to this Option shall become exerciseable (“vest”) on the dates indicated under the Vesting Schedule table above such that this Option shall be fully exerciseable on the last date listed on such table; provided, however, that such vesting shall cease at the time of Optionee’s Severance.

(b) These installments shall be cumulative, so that this Option may be exercised as to any or all of the Shares covered by an installment at any time or times after the installment becomes vested and until this Option terminates.

(c) The foregoing notwithstanding, in the event that either (i) in connection with a “Change of Control” (defined below), the “Acquiror” (defined below) fails to assume, convert or replace this Option, or (ii) the Optionee’s employment is terminated within the twenty-four (24) month period following a Change of Control by the Company (or the Acquiror) other than for “Cause” (defined below) or, if applicable, by the Optionee in accordance with the termination for “Good Reason” provisions of the Optionee’s employment agreement, if any, then, in any such case, this Option shall automatically vest and become immediately exerciseable in its entirety, such vesting to be effective as of immediately prior to the effective date of the Change of Control in the case of (i), and as of the date of termination of the Optionee’s employment in the case of (ii). For purposes of this agreement, a “Change of Control”, is defined herein as (i) any transaction or series of transactions in which any person or group (within the meaning of Rule 13d-5 under the Exchange Act and Sections 13(d) and 14(d) under the Exchange Act) becomes the direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), by way

of a stock issuance, tender offer, merger, consolidation, other business combination or otherwise, of greater than 50% of the total voting power (on a fully diluted basis as if all convertible securities had been converted and all warrants and options had been exercised) entitled to vote in the election of directors of the Company (including any transaction in which the Company becomes a wholly-owned or majority-owned subsidiary of another corporation), or (ii) any merger or consolidation or reorganization in which the Company does not survive, or (iii) any merger or consolidation in which the Company survives, but the shares of the Company’s Common Stock outstanding immediately prior to such merger or consolidation represent 50% or less of the voting power of the Company after such merger or consolidation, or (iv) any transaction in which more than 50% of the Company’s assets are sold, provided, however, that no transaction contemplated by clauses (i) through (iv) above shall constitute a Change of Control if both (x) the person acting as the Chief Executive Officer of the Company for the six months prior to such transaction becomes the Chief Executive Officer or Executive Chairman of the Board of Directors of the entity that has acquired control of the Company as a result of such transaction (the “Acquiror”) immediately after such transaction and remains the Chief Executive Officer or Executive Chairman of the Board of Directors for not less than one year following the transaction and (y) a majority of the Acquiror’s board of directors immediately after such transaction consist of persons who were directors of the Company immediately prior to such transaction. For purposes of this Agreement, “Cause” means: (1) a material breach by Optionee of those duties and responsibilities of the Optionee which do not differ in any material respect from the duties and responsibilities of the Optionee during the ninety (90) day period immediately prior to a Change in Control (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on the Optionee’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and which is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach; (2) willful misconduct or gross negligence which results in material harm to the Company; or (3) the conviction of the Optionee of, or a plea of nolo contendere by the Employee to, a felony or other crime involving fraud or dishonesty; or (4) willful violation of Company policies which results in material harm to the Company.

(d) Except as otherwise provided for herein, the Optionee’s Severance (whether by reason of death or otherwise) shall not accelerate the number of shares with respect to which an Option may be exercised.

4. Method of Exercising.

This Option may be exercised by the Optionee upon delivery of the following documents to the Company at its principal executive offices:

(a) Written notice, in the form of a completed exercise election form, specifying the number of full Shares to be purchased;

(b) Payment of the full purchase price therefor in cash, by check, or in such other form of lawful consideration as the Committee may approve from time to time;

(c) Such agreements or undertakings that are required by the Committee pursuant to the Plan; and

(d) Payment of any taxes (including withholding taxes) which may be required by the Committee.

5. Assignments.

(a) This Option shall be exerciseable only by the Optionee during the Optionee’s lifetime.

(b) The rights of the Optionee under this Option may not be assigned or transferred except by will or by the laws of descent and distribution.

6. No Rights as a Stockholder.

The Optionee shall have no rights as a stockholder of any Shares covered by this Option until the date a certificate for such Shares has been issued to him or her following the exercise of the Option.

7. Interpretation of Option.

(a) This Option is made under the provisions of the Plan and shall be interpreted in a manner consistent with it.

(b) Any provision in this Option inconsistent with the Plan shall be superseded and governed by the Plan.

(c) For all purposes under this Agreement, employment by the Company shall include employment by the Company or any subsidiary thereof.

8. Legends on Certificates.

The Optionee acknowledges that the certificates representing the Shares issued upon exercise of this Option may bear such legends and be subject to such restrictions on transfer as the Company may deem necessary to comply with all applicable state and federal securities laws and regulations.

9. Amendments.

This Option may be amended at any time with the consent of the Company and the Optionee.

10. Non-Competition/Non-Solicitation/Non-Disclosure.

(a) The Optionee acknowledges and recognizes the highly competitive nature of the business of the Company and accordingly agrees that while Optionee is an employee of the Company and for the one-year period following termination of such relationship, the Optionee will not (i) engage in or become an employee, director, principal or shareholder of, consultant to or equity participant in, any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company that engages in activities that are in competition with the Company in the United States (the “Territory”); (ii) directly or indirectly, own, manage, control, operate, invest in, acquire an interest in, or otherwise engage in, act for, or act on behalf of any person firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise other than the Company that engages in activities that are in competition with the Company; (iii) be an officer, director, consultant, partner, employee, creditor, agent, trustee, independent contractor, or advisor on a paid or unpaid basis of any person, firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise that has been a supplier to or client of the Company; (iv) be an officer, director, consultant, partner, owner, employee, creditor, agent, trustee, independent contractor, or advisor on a paid or unpaid basis of any physician group or physician partners who provide nephrology-related services; (v) (x) directly or indirectly induce any employee of the Company, its affiliates or its subsidiaries or any physician with privileges at a dialysis facility owned by the Company, its affiliates or its subsidiaries to (A) engage in any activity that Optionee has agreed to refrain from pursuant to (i)-(iv) above or (B) terminate his or her relationship with the Company or any of its affiliates or subsidiaries or (y) directly or indirectly employ, or offer employment to or other similar arrangement with, any person who is or was during the period of the Optionee’s employment or consulting or advisory relationship with the Company, or was beforehand, employed or engaged by the Company, its affiliates or subsidiaries, including but not limited to a medical director of a dialysis facility owned or operated by the Company, its subsidiaries or affiliates, or a physician with admitting privileges at a dialysis facility owned, operated or managed by Company, or one of its affiliates or subsidiaries, or (vi) take any action that results, or might reasonably result in any of the foregoing.

(b) In addition, Optionee agrees not to disclose or use for his or her own benefit or purposes or for the benefit or purposes of any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates, any trade secrets, information, data, or other confidential information relating to customers, development, programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company (“Information”); provided, however, the foregoing shall not apply to (i) Information which is not unique to the Company, or (ii) Information which is generally known to the industry or the public other than as a result of the Optionee’s breach of this covenant, or (iii) disclosure that is required by any applicable law, rule or regulation. If Optionee receives such a request to produce Information in his or her possession, Optionee shall provide Company reasonable advance notice, in writing, prior to producing said Information, so as to give Company reasonable time to object to Optionee producing said Information. Optionee also agrees that Optionee will not become employed by or enter into service with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates in which Optionee will be obligated to disclose or use any Information, or where such disclosure would be inevitable because of the nature of the position.

(c) If, at any time within (a) the Term of this Option, or (b) one (1) year after termination of employment for any reason, whichever is the latest, Optionee (i) breaches the non-competition provision of Section 10(a), (ii) breaches the non-solicitation provision of Section 10(a), (iii) breaches the non-disclosure provision of Section 10(b), (iv) is convicted of a felony, (v) has been adjudicated by a court of competent jurisdiction of having committed an act of fraud or dishonesty resulting or intending to result directly or indirectly in personal enrichment at the expense of the Company, or (vi) is excluded from participating in any federal health care program, then (1) this Option shall terminate effective on the date on which Optionee enters into such activity and (2) any gain realized by Optionee from exercising all or a portion of this Option shall be paid by Optionee to the Company.

This agreement may be considered null and void at the discretion of the Company if a signed copy is not returned to the Stock Plan Administrator for the Company by NO LATER THAN                         .

In Witness Whereof, the Company and the Optionee have executed this Option as of the date first written above.

Optionee	Leadership (Executive, V.P., etc.)	Company
Printed Name	Printed Name	Printed Name
Signature	Signature	Signature
Title	Title	Title
Division/Department	Division/Department	Division/Department

EX-10.2

Exhibit 10.2

Form of Non-Qualified Stock Option Agreement under

the DaVita Inc. 1999 Non-Executive Officer and Non-Director

Equity Compensation Plan

- Employee

Primary Terms

Optionee:
SSN:
Address:
Grant Date:
Options Granted:
Option Price per Share:
Expiration Date:
Plan Name:	1999 Non-Exec Non-BOD Plan
Plan ID#:	9901
Vesting Schedule:

The terms set forth above, together with the terms and conditions attached, constitute one agreement.

Note: Please mark and initial any correction to the Name, SSN and/or Address shown on this page before returning a signed copy of this agreement to the Stock Plan Administrator.

This Non-Qualified Stock Option Agreement is dated as of                      (“Grant Date”) by and between DaVita Inc., a Delaware corporation (“Company”) and                      (“Optionee”) pursuant to the Company’s 1999 Non-Executive Officer and Non-Director Equity Compensation Plan (“Plan”). Capitalized terms that are used but not defined in this document shall have the meanings set forth in the Plan.

1. Grant of Option.

(a) The Company hereby grants to the Optionee the right (“Option”) to purchase all or any portion of                  shares (“Shares”) of the common stock of the Company (“Common Stock”) at a purchase price of $                 per share (“Option Price”).

(b) It is intended that this Option will not qualify for treatment as an incentive stock option under Internal Revenue Code (“Code”) Section 422.

2. Term of Option.

(a) This Option shall be effective for the period (“Term”) from the Grant Date shown above through March 30, 2010 (“Expiration Date”).

(b) In the case of the termination of the Optionee’s employment with the Company (“Severance”), the following rules shall apply in determining the date on which the Option shall terminate.

(i) If the Optionee dies while employed by the Company or during the three (3) month period immediately subsequent to his or her Severance, the Option shall terminate one (1) year from the date of the Severance.

(ii) If the Optionee was disabled (within the meaning of Section 22(e)(3) of the Code) at the time of his or her Severance, the Option shall terminate one (1) year following the Severance.

(iii) In all other cases, the Option shall terminate three (3) months following the Severance.

(c) If a Participant is transferred between the Company and a subsidiary thereof, or vice versa, or between subsidiaries, Severance shall not be deemed to have occurred.

(d) If there is a meaningful reduction, determined in the Company’s sole discretion, in both the Optionee’s duties and responsibilities and the level of the Optionee’s regular cash compensation for an extended or indefinite period of time, the Company reserves the right to unilaterally revoke some or all of the unvested portion of the Option.

3. Exerciseability.

(a) The shares subject to this Option shall become exerciseable (“vest”) on the dates indicated under the Vesting Schedule table above such that this Option shall be fully exerciseable on the last date listed on such table; provided, however, that such vesting shall cease at the time of Optionee’s Severance.

(b) These installments shall be cumulative, so that this Option may be exercised as to any or all of the Shares covered by an installment at any time or times after the installment becomes vested and until this Option terminates.

(c) The foregoing notwithstanding, in the event that either (i) in connection with a “Change of Control” (defined below), the “Acquiror” (defined below) fails to assume, convert or replace this Option, or (ii) the Optionee’s employment is terminated within the twenty-four (24) month period following a Change of Control by the Company (or the Acquiror) other than for “Cause” (defined below) or, if applicable, by the Optionee in accordance with the termination for “Good Reason” provisions of the Optionee’s employment agreement, if any, then, in any such case, this Option shall automatically vest and become immediately exerciseable in its entirety, such vesting to be effective as of immediately prior to the effective date of the Change of Control in the case of (i), and as of the date of termination of the Optionee’s employment in the case of (ii). For purposes of this agreement, a “Change of Control”, is defined herein as (i) any transaction or series of transactions in which any person or group (within the meaning of Rule 13d-5 under the

Exchange Act and Sections 13(d) and 14(d) under the Exchange Act) becomes the direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), by way of a stock issuance, tender offer, merger, consolidation, other business combination or otherwise, of greater than 50% of the total voting power (on a fully diluted basis as if all convertible securities had been converted and all warrants and options had been exercised) entitled to vote in the election of directors of the Company (including any transaction in which the Company becomes a wholly-owned or majority-owned subsidiary of another corporation), or (ii) any merger or consolidation or reorganization in which the Company does not survive, or (iii) any merger or consolidation in which the Company survives, but the shares of the Company’s Common Stock outstanding immediately prior to such merger or consolidation represent 50% or less of the voting power of the Company after such merger or consolidation, or (iv) any transaction in which more than 50% of the Company’s assets are sold, provided, however, that no transaction contemplated by clauses (i) through (iv) above shall constitute a Change of Control if both (x) the person acting as the Chief Executive Officer of the Company for the six months prior to such transaction becomes the Chief Executive Officer or Executive Chairman of the Board of Directors of the entity that has acquired control of the Company as a result of such transaction (the “Acquiror”) immediately after such transaction and remains the Chief Executive Officer or Executive Chairman of the Board of Directors for not less than one year following the transaction and (y) a majority of the Acquiror’s board of directors immediately after such transaction consist of persons who were directors of the Company immediately prior to such transaction. For purposes of this Agreement, “Cause” means: (1) a material breach by Optionee of those duties and responsibilities of Optionee which do not differ in any material respect from the duties and responsibilities of the Optionee during the ninety (90) day period immediately prior to a Change in Control (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on the Optionee’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and which is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach; (2) willful misconduct or gross negligence which results in material harm to the Company; or (3) the conviction of the Optionee of, or a plea of nolo contendere by the Optionee to, a felony or other crime involving fraud or dishonesty; or (4) willful violation of Company policies which results in material harm to the Company.

(d) Except as otherwise provided for herein, the Optionee’s Severance (whether by reason of death or otherwise) shall not accelerate the number of shares with respect to which an Option may be exercised.

4. Method of Exercising.

This Option may be exercised by the Optionee upon delivery of the following documents to the Company at its principal executive offices:

(a) Written notice, in the form of a completed exercise election form, specifying the number of full Shares to be purchased;

(b) Payment of the full purchase price therefor in cash, by check, or in such other form of lawful consideration as the Committee may approve from time to time;

(c) Such agreements or undertakings that are required by the Committee pursuant to the Plan; and

(d) Payment of any taxes (including withholding taxes) which may be required by the Committee.

5. Assignments.

(a) This Option shall be exerciseable only by the Optionee during the Optionee’s lifetime.

(b) The rights of the Optionee under this Option may not be assigned or transferred except by will or by the laws of descent and distribution.

6. No Rights as a Stockholder.

The Optionee shall have no rights as a stockholder of any Shares covered by this Option until the date a certificate for such Shares has been issued to him or her following the exercise of the Option.

7. Interpretation of Option.

(a) This Option is made under the provisions of the Plan and shall be interpreted in a manner consistent with it.

(b) Any provision in this Option inconsistent with the Plan shall be superseded and governed by the Plan.

(c) For all purposes under this Agreement, employment by the Company shall include employment by the Company or any subsidiary thereof.

8. Legends on Certificates.

The Optionee acknowledges that the certificates representing the Shares issued upon exercise of this Option may bear such legends and be subject to such restrictions on transfer as the Company may deem necessary to comply with all applicable state and federal securities laws and regulations.

9. Amendments.

This Option may be amended at any time with the consent of the Company and the Optionee.

10. Non-Competition/Non-Solicitation/Non-Disclosure.

(a) The Optionee acknowledges and recognizes the highly competitive nature of the business of the Company and accordingly agrees that while Optionee is an employee of the Company and for the one-year period following termination of such relationship, the Optionee will not (i) engage in or become an employee, director, principal or shareholder of, consultant to or equity participant in, any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company that engages in activities that are in competition with the Company in the United States (the “Territory”); (ii) directly or indirectly, own, manage, control, operate, invest in, acquire an interest in, or otherwise engage in, act for, or act on behalf of any person firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise other than the Company that engages in activities that are in competition with the Company; (iii) be an officer, director, consultant, partner, employee, creditor, agent, trustee, independent contractor, or advisor on a paid or unpaid basis of any person, firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise that has been a supplier to or client of the Company; (iv) be an officer, director, consultant, partner, owner, employee, creditor, agent, trustee, independent contractor, or advisor on a paid or unpaid basis of any physician group or physician partners who provide nephrology-related services; (v) (x) directly or indirectly induce any employee of the Company, its affiliates or its subsidiaries or any physician with privileges at a dialysis facility owned by the Company, its affiliates or its subsidiaries to (A) engage in any activity that Optionee has agreed to refrain from pursuant to (i)-(iv) above or (B) terminate his or her relationship with the Company or any of its affiliates or subsidiaries or (y) directly or indirectly employ, or offer employment to or other similar arrangement with, any person who is or was during the period of the Optionee’s employment or consulting or advisory relationship with the Company, or was beforehand, employed or engaged by the Company, its affiliates or subsidiaries, including but not limited to a medical director of a dialysis facility owned or operated by the Company, its subsidiaries or affiliates, or a physician with admitting privileges at a dialysis facility owned, operated or managed by Company, or one of its affiliates or subsidiaries, or (vi) take any action that results, or might reasonably result in any of the foregoing.

(b) In addition, Optionee agrees not to disclose or use for his or her own benefit or purposes or for the benefit or purposes of any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates, any trade secrets, information, data, or other confidential information relating to customers, development, programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company (“Information”);

provided, however, the foregoing shall not apply to (i) Information which is not unique to the Company, or (ii) Information which is generally known to the industry or the public other than as a result of the Optionee’s breach of this covenant, or (iii) disclosure that is required by any applicable law, rule or regulation. If Optionee receives such a request to produce Information in his or her possession, Optionee shall provide Company reasonable advance notice, in writing, prior to producing said Information, so as to give Company reasonable time to object to Optionee producing said Information. Optionee also agrees that Optionee will not become employed by or enter into service with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates in which Optionee will be obligated to disclose or use any Information, or where such disclosure would be inevitable because of the nature of the position.

(c) If, at any time within (a) the Term of this Option, or (b) one (1) year after termination of employment for any reason, whichever is the latest, Optionee (i) breaches the non-competition provision of Section 10(a), (ii) breaches the non-solicitation provision of Section 10(a), (iii) breaches the non-disclosure provision of Section 10(b), (iv) is convicted of a felony, (v) has been adjudicated by a court of competent jurisdiction of having committed an act of fraud or dishonesty resulting or intending to result directly or indirectly in personal enrichment at the expense of the Company, or (vi) is excluded from participating in any federal health care program, then (1) this Option shall terminate effective on the date on which Optionee enters into such activity and (2) any gain realized by Optionee from exercising all or a portion of this Option shall be paid by Optionee to the Company.

This agreement may be considered null and void at the discretion of the Company if a signed copy is not returned to the Stock Plan Administrator for the Company by NO LATER THAN                         .

In Witness Whereof, the Company and the Optionee have executed this Option as of the date first written above.

Optionee	Leadership (Executive, V.P., etc.)	Company
Printed Name	Printed Name	Printed Name
Signature	Signature	Signature
Title	Title	Title
Division/Department	Division/Department	Division/Department

EX-10.3

Exhibit 10.3

Form of DaVita Inc.

Restricted Stock Units Award

under the DaVita Inc. 2002 Equity Compensation Plan

Name:

Address:

SSN:

In recognition of your continuing contributions toward making DaVita the Greatest Dialysis Company the World has ever seen, and as a reward for your hard work and commitment to living our Mission and our Values, you have been granted this award (the “Award”) of restricted stock units (“Restricted Stock Units” or “Units”) under DaVita’s 2002 Equity Compensation Plan (the “Plan”). This award represents your right to receive shares of common stock of DaVita Inc. (the “Company”), subject to your fulfillment of the vesting conditions set forth in this agreement (the “Agreement”).

The terms of your Award are as set forth in this Agreement and in the Plan. The Plan is incorporated into this Agreement by reference, which means that this Agreement is limited by and subject to the terms of the Plan. In the event of a conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan will control. Capitalized terms that are used here but that are not defined in this Agreement have the meanings given to them in the Plan. The most important terms of the Award are summarized as follows:

1. Award Date:

2. Number of Units:

3. Vesting Schedule:

The terms set forth above, together with the terms and conditions attached, constitute one agreement.

Note: Please mark and initial any correction to the Name, SSN and/or Address shown on this page before returning a signed copy of this agreement to the Stock Plan Administrator

4. Conversion of Restricted Stock Units and Stock Issuance. Upon each vesting date of the Award (each, a “Vesting Date”), one share of Common Stock will become issuable to you for each Restricted Stock Unit that vests on such Vesting Date (the “Shares”). After the Vesting Date, the Company will issue the Shares to you, after reducing the Shares by a number of shares (if any) that are sold to satisfy your tax withholding obligations. No fractional shares will be issued under this Agreement, even though such fractions may result if a portion of a share must be sold to pay your withholding taxes.

5. Termination of Employment. You must be an employee of the Company on a Vesting Date in order to receive the Shares then vesting. Thus, Restricted Stock Units will not continue to vest if your employment terminates for any reason, including in the event you die, become disabled, retire, or change status to that of an independent contractor. In those circumstances, you will forfeit your right to any Restricted Stock Units that would otherwise vest after the date on which your employment is terminated.

6. Right to Shares. You will not have any right to the Shares subject to your Award until they are actually issued to you.

7. Taxes.

(a) Generally. You are ultimately liable and responsible for all taxes owed in connection with the Award, regardless of any action the Company or any of its Subsidiaries takes with respect to any tax withholding obligations that arise in connection with the Award. Neither the Company nor any of its Subsidiaries makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company and its Subsidiaries do not commit and are under no obligation to structure the Award to reduce or eliminate your tax liability. As a condition and term of this Award, no election under 83(b) of the United States Internal Revenue Code may be made by you or any other person with respect to all or any portion of the Award.

(b) Payment of Withholding Taxes. Prior to any event in connection with the Award (e.g., vesting) that the Company determines may result in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any social tax obligation (the “Tax Withholding Obligation”), you must arrange for the satisfaction of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company. You may choose to satisfy your tax obligation in either of the following manners:

(i) By Sale of Shares. Unless you choose to satisfy the Tax Withholding Obligation by some other means in accordance with clause (ii) below, your acceptance of this Award constitutes your instruction and authorization to the Company and any brokerage firm determined acceptable to the Company for such purpose to withhold or sell on your behalf a whole number of Shares from those Shares issuable to you as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the Tax Withholding Obligation. Such Shares will be sold on the day the tax Withholding Obligation arises (e.g., a Vesting Date) or as soon thereafter as practicable. You will be responsible for all broker’s fees and other costs of sale, and you agree to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale. To the extent the proceeds of such sale exceed your Tax Withholding Obligation, the Company agrees to pay such excess in cash to you through payroll or otherwise as soon as practicable. You acknowledge that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy your Tax Withholding Obligation. Accordingly, you agree to pay to the Company or any of its Subsidiaries as soon as practicable, including through additional payroll withholding, any amount of Tax Withholding Obligation that is not satisfied by the sale of Shares described above.

(ii) By Check, Wire Transfer or Other Means. At any time not less than ten (10) business days before any Tax Withholding Obligation arises (e.g., a Vesting Date), you may notify the Company of your intent to make a separate cash payment to satisfy your Tax Withholding Obligation. If you elect to satisfy your Tax Withholding Obligation in this manner, you will be asked to remit to the Company an amount that the Company determines is sufficient to satisfy the Tax Withholding Obligation within ten (10) business days after the Vesting Date by (a) delivery of a certified check payable to the Company, attn: Dan Chandler, Stock Plan Administrator, P.O Box 2076, Tacoma, Washington 98401-2076, or such other address as the Company may from time to time direct, (b) wire transfer to such account as the Company may direct, or (c) such other means as the Company may establish or permit. If you do not remit this amount to the Company within twenty (20) business days after the Vesting Date, the Company reserves the right to satisfy your Tax Withholding Obligation in the manner set out under paragraph (i) above in its sole discretion.

(c) Right to Retain Shares. The Company will not be able to issue any Shares to you until you satisfy the Tax Withholding Obligation.

8. Assignment. Your interest in this Award may not be assigned or alienated, whether voluntarily or involuntarily.

9. Amendments. This Award may be amended only by means of a written document signed by both you and the Company. Notwithstanding the foregoing, if there is a meaningful reduction, determined in the Company’s sole discretion, in your duties and responsibilities and the level of your regular cash compensation for an extended or indefinite period of time, the Company reserves the right to unilaterally revoke some or all of the unvested portion of the Award.

10. Change of Control of the Company. Under certain circumstances, if the Company is sold, your entire Award will vest immediately. The specific rules regarding the circumstances in which full vesting would occur are contained in an exhibit to this Agreement.

11. Non-Competition/Non-Solicitation/Non-Disclosure

(a) You acknowledge and recognize the highly competitive nature of the business of the Company and accordingly agree that while you are an employee of the Company and for the one-year period following termination of such relationship, you will not (i) engage in or become an employee, director, principal or shareholder of, consultant to or equity participant in, any person, firm, partnership in, any person, firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise other than the Company that engages in activities that are in competition with the Company in the United States; (ii) directly or indirectly, own, manage, control, operate, invest in, acquire an interest in, or otherwise engage in, act for, or act on behalf of any person firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise other than the Company that engages in activities that are in competition with the Company; (iii) be an officer, director, consultant, partner, employee, creditor, agent, trustee, independent contractor, or advisor on a paid or unpaid basis of any person, firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise that has been a supplier to or client of the Company; (iv) be an officer, director, consultant, partner, owner, employee, creditor, agent, trustee, independent contractor, or advisor on a paid or unpaid basis of any physician group or physician partners who provide nephrology-related services; (v) (x) directly or indirectly induce any employee of the Company, its affiliates or its subsidiaries or any physician with privileges at a dialysis facility owned by the Company, its affiliates or its subsidiaries to (A) engage in any activity that you have agreed to refrain from pursuant to (i)-(iv) above or (B) terminate his or her relationship with the Company or any of its affiliates or subsidiaries or (y) directly or indirectly employ, or offer employment to or other similar arrangement with, any person who is or was during the period of your employment or consulting or advisory relationship with the Company, or was beforehand, employed or engaged by the Company, its affiliates or subsidiaries, including but not limited to a medical director of a dialysis facility owned or operated by the Company, its subsidiaries or affiliates, or a physician with admitting privileges at a dialysis facility owned, operated or managed by Company, or one of its affiliates or subsidiaries, or (vi) take any action that results, or might reasonably result in any of the foregoing.

(b) In addition, you agree not to disclose or use for your own benefit or purposes or for the benefit or purposes of any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates, any trade secrets, information, data, or other confidential information relating to customers, development, programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company (“Information”); provided, however, the foregoing shall not apply to (i) Information which is not unique to the Company, or (ii) Information which is generally known to the industry or the public other than as a result of your breach of this covenant, or (iii) disclosure that is required by any applicable law, rule or regulation. If you receive such a request to produce Information in your possession, you shall provide Company reasonable advance notice, in writing, prior to producing said Information, so as to give Company reasonable time to object to your producing said Information. You also agree that you will not become employed by or enter into service with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates in which you will be obligated to disclose or use any Information, or where such disclosure would be inevitable because of the nature of the position.

(c) If, at any time within (a) the Term of this Agreement, or (b) one (1) year after termination of employment for any reason, whichever is the latest, you (i) breach the non-competition provision of Section 11(a), (ii) breach the non-solicitation provision of Section 11(a), (iii) breach the non-disclosure provision of Section 11(b), (iv) are convicted of a felony, (v) have been adjudicated by a court of competent jurisdiction of having committed an act of fraud or dishonesty resulting or intending

to result directly or indirectly in personal enrichment at the expense of the Company, or (vi) are excluded from participating in any federal health care program, then (1) this Agreement shall terminate effective on the date on which you enter into such activity, and (2) any consideration received by you as a result of this Award under this Agreement shall be paid by you to the Company.

12. Execution of Award Agreement. This agreement may be considered null and void at the discretion of the Company if a signed copy is not returned to the Stock Plan Administrator for the Company by NO LATER THAN                         .

In Witness Whereof, the Company and the recipient have executed this Agreement as of the date first written above.

Recipient	Leadership (Executive, V.P., etc.)	Company
Printed Name	Printed Name	Printed Name
Signature	Signature	Signature
Title	Title	Title
Division/Department	Division/Department	Division/Department

EXHIBIT

Events Causing Full Vesting Awards

In the event that either (i) in connection with a “Change of Control” (defined below), the “Acquiror” (defined below) fails to assume, convert or replace this Award, or (ii) your employment is terminated within the twenty-four (24) month period following a Change of Control by the Company (or the Acquiror) other than for “Cause” (defined below) or, if applicable, by you in accordance with the termination for “Good Reason” provisions of your employment agreement, if any, then, in any such case, this Award shall automatically vest and become immediately exerciseable in its entirety, such vesting to be effective as of immediately prior to the effective date of the Change of Control in the case of (i), and as of the date of termination of your employment in the case of (ii).

Change of Control will mean:

(i) any transaction or series of transactions in which any person or group (within the meaning of Rule 13d-5 under the Exchange Act and Sections 13(d) and 14(d) under the Exchange Act) becomes the direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), by way of a stock issuance, tender offer, merger, consolidation, other business combination or otherwise, of greater than 50% of the total voting power (on a fully diluted basis as if all convertible securities had been converted and all warrants and options had been exercised) entitled to vote in the election of directors of the Company (including any transaction in which the Company becomes a wholly-owned or majority-owned subsidiary of another corporation), or

(ii) any merger or consolidation or reorganization in which the Company does not survive, or

(iii) any merger or consolidation in which the Company survives, but the shares of the Company’s Common Stock outstanding immediately prior to such merger or consolidation represent 50% or less of the voting power of the Company after such merger or consolidation, or

(iv) any transaction in which more than 50% of the Company’s assets are sold.

However, no transaction contemplated by clauses (i) through (iv) above shall constitute a Change of Control if both (x) the person acting as the Chief Executive Officer of the Company for the six months prior to such transaction becomes the Chief Executive Officer or Executive Chairman of the Board of Directors of the entity that has acquired control of the Company as a result of such transaction (the “Acquiror”) immediately after such transaction and remains the Chief Executive Officer or Executive Chairman of the Board of Directors for not less than one year following the transaction and (y) a majority of the Acquiror’s board of directors immediately after such transaction consist of persons who were directors of the Company immediately prior to such transaction. For purposes of this Agreement, “Cause” means: (1) a material breach by you of your duties and responsibilities which do not differ in any material respect from your duties and responsibilities during the ninety (90) day period immediately prior to a Change in Control (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on your part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and which is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach; (2) willful misconduct or gross negligence which results in material harm to the Company; or (3) your conviction of, or a plea of nolo contendere by you to, a felony or other crime involving fraud or dishonesty; or (4) willful violation of Company policies which results in material harm to the Company.

EX-10.4

Exhibit 10.4

Form of Stock Appreciation Rights Agreement under

the DaVita Inc. 2002 Equity Compensation Plan

- Employee

Primary Terms

Grantee:
SSN:
Address:
Grant Date:
Base Shares:
Base Price per Share:
Expiration Date:
Plan Name:	2002 Equity Compensation Plan
Plan ID#:	2002
Vesting Schedule:

The terms set forth above, together with the terms and conditions attached, constitute one agreement.

Note: Please mark and initial any correction to the Name, SSN and/or Address shown on this page before returning a signed copy of this agreement to the Stock Plan Administrator.

This Stock Appreciation Rights Agreement is dated as of                      (“Grant Date”) by and between DaVita Inc., a Delaware corporation (“Company”) and                      (“Grantee”) pursuant to the Company’s 2002 Equity Compensation Plan (“Plan”). Capitalized terms that are used but not defined in this document shall have the meanings set forth in the Plan.

1. Grant of SAR.

The Company hereby grants to the Grantee the right (“SAR”) to receive with respect to all or any portion of                  shares (“Base Shares”) of the common stock of the Company (“Common Stock”) a number of shares (“Gain Shares”) of Common Stock with a Fair Market Value equal to the amount by which the Fair Market Value of one share of Common Stock on the date on which the SAR is exercised exceeds a base price of $                 per share (“Base Price”).

2. Term of SAR.

(a) This SAR shall be effective for the period (“Term”) from the Grant Date shown above through July 1, 2011 (“Expiration Date”).

(b) In the case of the termination of the Grantee’s employment with the Company (“Severance”), the following rules shall apply in determining the date on which the SAR shall terminate.

(i) If the Grantee dies while employed by the Company or during the three (3) month period immediately subsequent to his or her Severance, the SAR shall terminate one (1) year from the date of the Severance.

(ii) If the Grantee was disabled (within the meaning of Section 22(e)(3) of the Code) at the time of his or her Severance, the SAR shall terminate one (1) year following the Severance.

(iii) In all other cases, the SAR shall terminate three (3) months following the Severance.

(c) If the Grantee is transferred between the Company and a subsidiary thereof, or vice versa, or between subsidiaries, Severance shall not be deemed to have occurred.

(d) If there is a meaningful reduction, determined in the Company’s sole discretion, in both the Grantee’s duties and responsibilities and the level of the Grantee’s regular cash compensation for an extended or indefinite period of time, the Company reserves the right to unilaterally revoke some or all of the unvested portion of the SAR.

3. Exerciseability.

(a) The Base Shares subject to this SAR shall become exerciseable (“vest”) on the dates indicated under the Vesting Schedule table above such that this SAR shall be fully exerciseable on the last date listed on such table; provided, however, that such vesting shall cease at the time of Grantee’s Severance.

(b) These installments shall be cumulative, so that this SAR may be exercised as to any or all of the Base Shares covered by an installment at any time or times after the installment becomes vested and until this SAR terminates.

(c) The foregoing notwithstanding, in the event that either (i) in connection with a “Change of Control” (defined below), the “Acquiror” (defined below) fails to assume, convert or replace this SAR, or (ii) the Grantee’s employment is terminated within the twenty-four (24) month period following a Change of Control by the Company (or the Acquiror) other than for “Cause” (defined below) or, if applicable, by the Grantee in accordance with the termination for “Good Reason” provisions of the Grantee’s employment agreement, if any, then, in any such case, this SAR shall automatically vest and become immediately exerciseable in its entirety, such vesting to be effective as of immediately prior to the effective date of the Change of Control in the case of (i), and as of the date of termination of the Grantee’s employment in the case of (ii). For purposes of this agreement, a “Change of Control”, is defined herein as (i) any transaction or series of transactions in which any person or group (within the meaning of Rule 13d-5 under the Exchange Act and Sections 13(d) and 14(d) under the Exchange Act) becomes the direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), by way of a stock issuance, tender offer, merger, consolidation, other business combination or otherwise, of greater than 50% of the total voting power (on a fully diluted basis as if all convertible securities had been converted and all warrants and options had

been exercised) entitled to vote in the election of directors of the Company (including any transaction in which the Company becomes a wholly-owned or majority-owned subsidiary of another corporation), or (ii) any merger or consolidation or reorganization in which the Company does not survive, or (iii) any merger or consolidation in which the Company survives, but the shares of the Company’s Common Stock outstanding immediately prior to such merger or consolidation represent 50% or less of the voting power of the Company after such merger or consolidation, or (iv) any transaction in which more than 50% of the Company’s assets are sold, provided, however, that no transaction contemplated by clauses (i) through (iv) above shall constitute a Change of Control if both (x) the person acting as the Chief Executive Officer of the Company for the six months prior to such transaction becomes the Chief Executive Officer or Executive Chairman of the Board of Directors of the entity that has acquired control of the Company as a result of such transaction (the “Acquiror”) immediately after such transaction and remains the Chief Executive Officer or Executive Chairman of the Board of Directors for not less than one year following the transaction and (y) a majority of the Acquiror’s board of directors immediately after such transaction consist of persons who were directors of the Company immediately prior to such transaction. For purposes of this Agreement, “Cause” means: (1) a material breach by the Grantee of those duties and responsibilities of the Grantee which do not differ in any material respect from the duties and responsibilities of the Grantee during the ninety (90) day period immediately prior to a Change in Control (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on the Grantee’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and which is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach; (2) willful misconduct or gross negligence which results in material harm to the Company; or (3) the conviction of the Grantee of, or a plea of nolo contendere by the Grantee to, a felony or other crime involving fraud or dishonesty; or (4) willful violation of Company policies which results in material harm to the Company.

(d) Except as otherwise provided for herein, the Grantee’s Severance (whether by reason of death or otherwise) shall not accelerate the number of Base Shares with respect to which an SAR may be exercised.

4. Method of Exercising.

This SAR may be exercised by the Grantee upon delivery of the following documents to the Company at its principal executive offices, or as otherwise required in accordance with a broker-assisted cashless exercise program:

(a) Written notice, in the form of a completed exercise election form, specifying the number of Base Shares with respect to which the SAR is being exercised;

(b) Such agreements or undertakings that are required by the Committee pursuant to the Plan; and

(c) Provision for the payment of any taxes (including withholding taxes) which may be required by the Committee.

5. Settlement of SAR.

Upon exercise of the SAR, in whole or in part, the Company shall:

(1) provide for the registration in book-entry form for the Grantee’s benefit of the Gain Shares (rounded down to the nearest whole number, and which may be reduced by any Gain Shares required to be withheld or sold on behalf of the Grantee to satisfy tax withholding requirements), or

(2) deliver to the Grantee a stock certificate representing the Gain Shares (rounded down to the nearest whole number, and which may be reduced by any Gain Shares required to be withheld or sold on behalf of the Grantee to satisfy tax withholding requirements).

6. Assignments.

(a) This SAR shall be exerciseable only by the Grantee during the Grantee’s lifetime.

(b) The rights of the Grantee under this SAR may not be assigned or transferred except by will or by the laws of descent and distribution.

7. No Rights as a Stockholder.

The Grantee shall have no rights as a stockholder of any Base Shares or Gain Shares unless and until Gain Shares are issued to Grantee upon the exercise of the SAR.

8. Interpretation of SAR.

(a) This SAR is granted under the provisions of the Plan and shall be interpreted in a manner consistent with it.

(b) Any provision in this SAR inconsistent with the Plan shall be superseded and governed by the Plan.

(c) For all purposes under this SAR, employment by the Company shall include employment by the Company or any subsidiary thereof.

9. Legends on Certificates.

The Grantee acknowledges that the certificates representing any Gain Shares issued upon exercise of this SAR may bear such legends and be subject to such restrictions on transfer as the Company may deem necessary to comply with all applicable state and federal securities laws and regulations.

10. Amendments.

This SAR may be amended at any time with the consent of the Company and the Grantee.

11. Non-Competition/Non-Solicitation/Non-Disclosure.

(a) The Grantee acknowledges and recognizes the highly competitive nature of the business of the Company and accordingly agrees that while Grantee is an employee of the Company and for the one-year period following termination of such relationship, the Grantee will not (i) engage in or become an employee, director, principal or shareholder of, consultant to or equity participant in, any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company that engages in activities that are in competition with the Company in the United States (the “Territory”); (ii) directly or indirectly, own, manage, control, operate, invest in, acquire an interest in, or otherwise engage in, act for, or act on behalf of any person firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise other than the Company that engages in activities that are in competition with the Company; (iii) be an officer, director, consultant, partner, employee, creditor, agent, trustee, independent contractor, or advisor on a paid or unpaid basis of any person, firm, partnership, joint venture, association, corporation or other business organization, entity, or enterprise that has been a supplier to or client of the Company; (iv) be an officer, director, consultant, partner, owner, employee, creditor, agent, trustee, independent contractor, or advisor on a paid or unpaid basis of any physician group or physician partners who provide nephrology-related services; (v) (x) directly or indirectly induce any employee of the Company, its affiliates or its subsidiaries or any physician with privileges at a dialysis facility owned by the Company, its affiliates or its subsidiaries to (A) engage in any activity that Grantee has agreed to refrain from pursuant to (i)-(iv) above or (B) terminate his or her relationship with the Company or any of its affiliates or subsidiaries or (y) directly or indirectly employ, or offer employment to or other similar arrangement with, any person who is or was during the period of the Grantee’s employment or consulting or advisory relationship with the Company, or was beforehand, employed or engaged by the Company, its affiliates or subsidiaries, including but not limited to a medical director of a dialysis facility owned or operated by the Company, its subsidiaries or affiliates, or a physician with admitting privileges at a dialysis facility owned, operated or managed by Company, or one of its affiliates or subsidiaries, or (vi) take any action that results, or might reasonably result in any of the foregoing.

(b) In addition, Grantee agrees not to disclose or use for his or her own benefit or purposes or for the benefit or purposes of any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates, any trade secrets, information, data, or other confidential information relating to customers, development, programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, financing methods, plans, or the business and affairs of the Company (“Information”); provided, however, the foregoing shall not apply to (i) Information which is not unique to the Company, or (ii) Information

which is generally known to the industry or the public other than as a result of the Grantee’s breach of this covenant, or (iii) disclosure that is required by any applicable law, rule or regulation. If Grantee receives such a request to produce Information in his or her possession, Grantee shall provide Company reasonable advance notice, in writing, prior to producing said Information, so as to give Company reasonable time to object to Grantee producing said Information. Grantee also agrees that Grantee will not become employed by or enter into service with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates in which Grantee will be obligated to disclose or use any Information, or where such disclosure would be inevitable because of the nature of the position.

(c) If, at any time within (a) the Term of this SAR, or (b) one (1) year after termination of employment for any reason, whichever is the latest, Grantee (i) breaches the non-competition provision of Section 11(a), (ii) breaches the non-solicitation provision of Section 11(a), (iii) breaches the non-disclosure provision of Section 11(b), (iv) is convicted of a felony, (v) has been adjudicated by a court of competent jurisdiction of having committed an act of fraud or dishonesty resulting or intending to result directly or indirectly in personal enrichment at the expense of the Company, or (vi) is excluded from participating in any federal health care program, then (1) this SAR shall terminate effective on the date on which Grantee enters into such activity and (2) any gain realized by Grantee from exercising all or a portion of this SAR shall be paid by Grantee to the Company.

This agreement may be considered null and void at the discretion of the Company if a signed copy is not returned to the Stock Plan Administrator for the Company by NO LATER THAN                         , 2006.

In Witness Whereof, the Company and the Grantee have executed this SAR effective as of the date first written above.

Grantee	Leadership (Executive, V.P., etc.)	Company
Printed Name	Printed Name	Printed Name
Signature	Signature	Signature
Title	Title	Title
Division/Department	Division/Department	Division/Department