December 29, 2005
RE: Stock Option Exercise Election

I, Leonard J. Coulombe, with Social Security Number 032405888, would like to exercise
the following of my vested stock options at the price per share and method selected

below:
Grant Date Jnitial Award | Options Price | Number of
Size Options to
Exercise

= 8/12/1996 8,333 23.025 8,333.
42411997 8,333 18.75 8,333
4241997 25,060 18.75, 25,000
2/27/1998 30,000 32.1875 30,000

Casbless Exercise/Same-Day-Sa x__ BON
Mail Check to this address: 6704 95" Street CtNW Gig Harbor, WA 98332

{ understand that federal income tax and other income taxes will be incurred upon
exercise of my stock options. Taxes computed will be included on my W-2 For (current
or former employees) or 1099 (non-employees) for the year of the exercise. If | am a
current or former employee, I understand that these taxes will be deducted from the

exercise
Sincerely, 4 y .
Leonard Coulombe feof ‘ ( - EAL.

Declaration of
S. Udicious

DV 0002

Coulumbe



CERTIFICATE OF SERVICE

On September 25, 2006, I caused to be served upon counsel of record, at the address

stated below, via the method of service indicated, a true and correct copy of the foregoing

document.

David E. Breskin ___—*Via hand delivery

Short Cressman Burgess PLLC — _—*Via U.S. Mail, Ist Class,
999 Third Avenue, Suite 3000 Postage Prepaid

Seattle, WA 98104-4088 Via Overnight Delivery
Attorneys for Plaintiff Via Facsimile

bel |

Via E-filing
I certify under penalty of perjury under the laws of the State of Washington that the

foregoing is true and correct.

DATED at Seattle, Washington, on September 25, 2006.

s/James Sanders, WSBA #24565
State Bar Number: 36919
James Sanders, WSBA #24565
Brian M. Flock, WSBA #36919
Attorneys for Defendant
Perkins Coie LLP

1201 Third Avenue, Suite 4800
Seattle, WA 98101-3099
Telephone: (206) 359-8000
Fax: (206) 359-9000

E-mail: JSanders@perkinscoie.com

DECLARATION OF STEVE UDICIOUS - 4 PERKINS COLE LLP
(NO. CV6-504 JLR) 1201 Third Avenue, Suite 4800
[38585-0002/SL062640.190] Seattle, Washington 98101-3099

(206) 583-8888



THE HONORABLE JAMES L. ROBART

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

LENNY COULOMBE,
Plaintiff,
v.

TOTAL RENAL CARE HOLDINGS, INC.,
DAVITA, INC.,

Defendants.

No. CV6-504 JLR

DECLARATION OF STEVE UDICIOUS
IN SUPPORT OF DEFENDANT'S CROSS
MOTION FOR SUMMARY JUDGMENT
RE: LIABILITY ON WASHINGTON
WAGE STATUTE CLAIM AND
DEFENDANT'S OPPOSITION TO
PLAINTIFF'S MOTION FOR PARTIAL
SUMMARY JUDGMENT

STEVE UDICIOUS states and declares as follows:

1. I am over the age of 18, competent to testify, and make this declaration based

upon my personal knowledge.

2. DaVita Inc. operates kidney dialysis centers nationwide. Following

extraordinary growth in the 1990's, DaVita's stock, in the Spring of 2000, was trading at a

record low. Many employees had outstanding option shares that were priced above $15, and

were now essentially valueless to those employees. This had a negative impact on employee

morale, and DaVita was concerned that many employees would leave the company. In

addition, DaVita's executives were very concerned about losing talented employees.

DECLARATION OF STEVE UDICIOUS - 1
(NO. CV6-504 JLR)
[38585-0002/SL062640.190)

PERKINS COIE LLP
1201 Third Avenue, Suite 4800
Seattle, Washington 98101-3099
(206) 583-8888



3. During this period DaVita was also having operational difficulties and was
losing money. In an effort to turn the company around, DaVita replaced its senior
management team, beginning in the fall of 1999 and continuing through the first half of 2000.
If significant numbers of DaVita's other key management employees had also decided to
leave during this period, it would have made turning things around at DaVita very difficult, if
not impossible.

4. In an effort to retain DaVita's many talented employees, DaVita's executives
made the decision to exhaust DaVita's pool of available option shares and grant some
employees new option shares at lower strike prices. DaVita's Board, recognizing that it could
not operate with an exhausted option pool, moved forward with this grant of option shares in
the spring of 2000 based on the promises of DaVita’s CEO and senior management team that
they would ask DaVita's employees to turn in their underwater option shares. The Board also
directed management to seek shareholder approval for the issuance of additional option
grants.

5. In November 2000, DaVita requested that hundreds of employees voluntarily
relinquish their option shares valued over $15 per share, which were commonly known
within the company as way-out-of-the-money, or WOOTM, options. The employees were
given the choice to relinquish these option shares, and could, if they wanted, retain these
option shares. The relinquishment program was not mandatory, and many employees, in fact,
chose to retain some or all of their option shares.

6. Overall, about 100 people, or almost one-third of DaVita's option holders,
chose not to participate in the voluntary WOOTM relinquishment program. Employees who
chose to keep their WOOTM stock option shares suffered no adverse employment

consequences because of their decision.

DECLARATION OF STEVE UDICIOUS - 2 PERKINS COIE LLP
(NO. CV6-504 JLR) 1201 Third Avenue, Suite 4800
[38585-0002/SL062640. 190] Seattle, Washington 98101-3099

(206) 583-8888



7. Following DaVita's successful stock relinquishment program, the company
also engaged in an effort to obtain shareholder approval for the issuance of an additional 2.75
million option shares. The company's proposal was vetted through an institutional
shareholder approval service, Institutional Shareholder Services ("ISS"). ISS's model for
evaluating DaVita's proposal included an assessment of the number of outstanding and
available option shares, and their expiration periods. ISS, considering the totality of DaVita's
stock option programs, including the option shares relinquished through the WOOTM.
program, recommended that DaVita's shareholders approve the company’s proposal to issue
an additional 2.75 million option shares. The approval to issue 2.75 million additional option
sharess replenished DaVita's pool of available option shares. These additional option shares
were used to attract and retain talented individuals to work for DaVita.

8. Following his layoff, plaintiff sent a letter to DaVita requesting exercise of the
60,000 stock options he had voluntarily relinquished five years earlier. A true and correct
copy of that letter is attached hereto at Exhibit "A."

9. DaVita's grant of stock option shares to any employee is entirely discretionary.
The decision to grant a stock option is specific to each individual employee. Employees are
not promised stock options as a part of their compensation package, and are not guaranteed to
receive stock options from year-to-year. DaVita uses stock options to attract and retain
talented employees. Any stock options that Mr. Coulombe may have received, including
those granted to him in 1997 and 1998 were entirely discreationary in nature.

Signed sis? tay of September 2006, at Bosémort Pennsylvania.

STEVEN UDIZOUS
DECLARATION OF STEVE UDICIOUS - 3 PERKINS Core uP
(NO. CV6-504 JLR) 1201 Third Avenue, Suite 4800
[3858S-0002/SL062640.190] Seattle, Washington 98101-3099

(206) 583-8888