<PAGE>

                                  SUNRISE MEDICAL
                      MANAGEMENT INCENTIVE BONUS PLAN - FY1998
                                     ("MIB 98")

The Sunrise Medical Management Incentive Bonus Plan is an annual cash bonus
program which shares with key members of management the rewards for successful
operating unit ("Unit") and Corporate performance.  For the operating unit,
successful performance for the year is defined as achieving or exceeding the
Corporate approved targets for Unit operating profit growth and return on net
assets (RONA).  For the Corporation, performance is measured by earnings per
share growth and return on equity.

The MIB Plan represents one component of an integrated compensation program
designed to attract and retain high-caliber managers. The company's incentive
programs aim to align the Associate's interests with those of our stockholders
and to support Sunrise Medical's achievement of its strategic intent and growth
objectives.

Sunrise's compensation philosophy rewards individual and team performance on the
basis of both quantitative and qualitative factors.  Besides the attainment of
Unit earnings targets, each manager's bonus is also based on the achievement of
individual objectives agreed upon by the manager and his or her immediate
supervisor.  Even if a bonus is earned based on the team's profit performance,
managers must still accomplish their personal objectives for the year in order
to qualify for their designated amount.

The MIB Plan is designed to pay for performance, not excuses.  No bonus is paid
at either the Corporate or Unit level unless earnings (as defined) exceed prior
year results.  The MIB payment represents a sharing of profits when the Unit
contributes to Corporate earnings per share growth.  Each manager's salary is
the basic compensation for doing his or her job well during a year when the
shareholders do not receive the benefit of earnings improvement from that Unit.

A.   PLAN ADMINISTRATION

The MIB Plan will be co-administered by Sunrise Medical's chief financial
officer and its vice president corporate human resources ("Plan
Administrators").  They will be supported by each Unit's financial and human
resource officers, who will administer the MIB Plan at the Unit level.  All
annual targets and awards must be approved by the CEO of Sunrise Medical and by
the compensation committee of the board of directors.  Awards will be made
annually within 90 days after the end of the fiscal year, generally, on or about
September 1.  

For purposes of this plan description, a Unit can consist of the corporation as
a whole in the case of Corporate Office executives, an operating group, a free
standing division, or a wholly owned subsidiary such as a country distribution
organization.  In cases where there is ambiguity, managers will be told at the
beginning of the year to which Unit's profit performance and bonus pool they
will be assigned.  If managers are contributing at two different levels or wear
multiple hats, their MIB awards may be split between two or more 


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<PAGE>

Units based on the performance of each, calculated independently but applied to
only a portion of his/her award salary (e.g., 50/50, or 80/20).

In dividing administrative responsibilities, financial officers at the Corporate
and Unit level will be responsible for calculating targets and determining the
Unit's financial performance against the approved targets.  The HR officers at
the Corporate and Unit level will determine who is eligible for MIB
participation at what level, and they will administer the Management by
Objectives (MBO) system and the calculation of individual performances against
those objectives.  The Corporate HR department will also be responsible for
maintaining records of all MIB awards earned and for liaison with the
compensation committee of the board of directors.

It will be up to the Unit presidents to maintain equity between the different
department managers as they develop their MBOs and subsequently calculate their
performance ratings.  Likewise, it will be up to the Plan Administrators at
Corporate to make sure the plan is being administered equitably across all
Units.  In cases where the rules promulgated here do not adequately address
specific issues, the corporate plan administrators will make the ultimate
decision in balancing the interests of management participants against those of
the stockholders.

B.   INDIVIDUAL BONUS CALCULATION

The annual MIB award to each plan participant will be based on a MULTIPLICATION
of operating Unit, corporate, and individual performance factors applied to the
Associate's On-target bonus level and base salary.  The exact formula is shown
below:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
     A            =     U            x      T             x       C          x       I             x      S
<S>                  <C>                 <C>                 <C>                  <C>                  <C> 
------------------------------------------------------------------------------------------------------------------
 Individual          Unit                On-target           Corporate            Individual           Annual 
 Bonus               Performance         Bonus               Performance          Performance          Base 
 Award            =  Rating          X   Participation    X  Factor           X   Rating            X  Salary 
 ($ or local                             Level                                                         ($ or local
 currency)           (0-200%)            (5-40%)             (75-125%)            (0-100%)             currency)
------------------------------------------------------------------------------------------------------------------
</TABLE>

Each of these factors will be explained in more detail below.

C.   OPERATING UNIT BPE PERFORMANCE RATING

Awards under the MIB Plan are determined primarily by each operating unit's
"Bonus Purpose Earnings" - or BPE, which is equivalent to operating profit after
adjustments for interest on cash flow.  Specifically, extra interest income is
earned whenever cash upstreamed to Corporate exceeds plan, and conversely, an
interest penalty and surcharge reduce operating income whenever cash is borrowed
or cash flows fall below plan.  

Early in the year, after the prior year's audited figures are available, MIB
benchmarks are set for three different levels of BPE performance for each Unit:
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<PAGE>

-    Minimum ("Min") - The beginning threshold that must be exceeded for any
     bonus to be earned.  Usually, but not always, this is based on the prior
     year's actual earnings level.
     
-    On-target - The level associated with a solid, above average performance. 
     This is usually, but not necessarily, the same as the Unit's annual profit
     plan.
     
-    Maximum ("Max") - The performance goal that must be achieved for a maximum
     bonus to be awarded.  This figure is set by the Corporate Office and
     approved by the board of directors each year so as to provide an aggressive
     but attainable stretch goal.

At year end, based on its BPE versus these three benchmarks, the Unit will be
given a performance rating from  0 to 200%:

-    A Unit's BPE figure below Min will automatically earn a 0% rating.

-    Achieving On-target performance will earn a 100% rating.

-    Hitting the Max goal will earn a 200% rating.
     
-    If the Unit's BPE performance for the year falls somewhere between two
     benchmarks, the percentage rating will be interpolated to the nearest tenth
     of a percent (e.g., 138.7%).
     
-    The Unit's BPE rating may then be adjusted upward or downward to give
     weight to its RONA performance, if this exceeds or falls short of plan by a
     material margin.  (See Appendix I for details)

D.   BONUS PARTICIPATION LEVELS

Members of the management team will be assigned to a bonus participation level
for each fiscal year based on his or her level of responsibility in the
organization.  The bonus participation level is a percentage of the manager's
annual base salary.  The Max payout level is always twice the On-target level,
and at the Min level, the payout is always zero.  For higher level managers, 20%
of the bonus is deferred and paid out, if earned, in two equal installments over
the following two years.

Participation of each Associate must be formally requested by the Unit
presidents through the submission of an Associate Action Form and approved by
the Corporate Office in accordance with the HR Approval Authority Matrix, Policy
6.20 (see Corporate Policy Manual, section six).  Standard participation levels
and deferral percentages are shown in the table below, based on the most common
positions or titles.  The Corporate Performance Factor (CPF) mechanism is
explained in the next section.
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January 16, 1998                                                    PAGE 3 of 18
<PAGE>
 

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                      BONUS PARTICIPATION LEVELS (% of salary)
--------------------------------------------------------------------------------
                                    On-target   Max   Max % with    % of Bonus 
           Generic Titles               %        %        CPF     Award Deferred
--------------------------------------------------------------------------------
<S>                                 <C>         <C>  <C>          <C>
 Managers  - I                           5%     10%      12.5%           0
 Managers - II                          10      20        25             0
 Directors                              18      36        45            20%
 Vice Presidents                        22      44        55            20%
 Division Presidents and Sr. Vps        28      56        70            20%
 Group Presidents & Corporate CFO       32      64        80            20%
 Chairman & CEO                         40      80       100            20%
--------------------------------------------------------------------------------
</TABLE>
 

DEFERRED BONUS CRITERIA.  As the table indicates, 20% of the bonus earned by
executives at the director level or above, will be deferred.  This deferred
amount will be paid out in two installments over the two succeeding years,
providing two criteria are met each year:  (1) the executive is still employed
as of the end of the fiscal year; and (2) the executive's Unit achieves minimal
earnings growth over the two preceding years.  Specifically, in year two, the
Unit must achieve at least a 5% earnings increase over the year one level, and
in year three, the Unit must achieve at least a 5% increase over the year two
level or if year two is a down year at least On-target in year three.  No MBO or
RONA modifier is applied to these subsequent year payouts.  If an executive
transfers between two Units, the deferred amount will be tied to his or her new
Unit's performance, not the old one's.

The overall affect of this deferred feature is to reward sustained, steady
profit growth over a three year period.  If the Unit achieves consistent
earnings growth, its senior management  team will be working to earn THREE MIB
layers in any given year, 80% being paid out of current year earnings and 10%
from an accrual made in each of the two preceding years.  A hypothetical example
tracking the 20% deferred bonus over a four year period is illustrated in
Exhibit A.

E.   CORPORATE PERFORMANCE FACTOR

The Corporate Performance Factor (CPF) is designed to modify Unit payouts by up
to 25% upward or downward, based on corporate earnings per share (EPS)
performance.  The purpose of this provision is to incorporate a shareholder
perspective more strongly into the calculation of operating unit bonuses and
management bonuses in all Units at all levels.  The CPF is applied as part of
the bonus calculation process by modifying in certain cases the Unit performance
rating, as shown below:

-    Each Unit's bonus is first calculated based on its own earnings
     performance, yielding a figure of 0-200%, with 100% being On-target.  Then
     the CPF is applied.

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<PAGE>

-    If the Corporation exceeds its Max earnings per share benchmark, the CPF
     modifies each Unit's performance factor UPWARD by 25%.  If the Unit is
     already at Max or 200%, this would raise its performance rating to 250%.

-    If Corporate EPS is below On-target, the Unit bonus calculations are
     modified DOWNWARD by up to 25%.  This could reduce a division's rating, if
     it hits On-target exactly, from 100% to 75%.  If the Unit is at 40%, the
     CPF in this case would reduce its rating to 30%.

-    If Corporate EPS is between On-target and Max there is no change to Unit
     MIB performance calculations at the division or group level.

At the margin, if EPS is just slightly below target, only part of the Unit's CPF
penalty may be necessary to make up the shortfall.  In those cases a partial
penalty between 0 and 25% will be applied equally across all Units.  At the
other end, if the EPS excess over Max is not sufficient to fund a full 25% boost
to the Unit's bonus calculations, a partial uplift between 0 and 25% will be
applied across all Units.  

Note: the Corporate Performance Factor will not be applied to bonuses at the
Manager I (5/10) or Manager II (10/20) levels until FY1999.

F.   INDIVIDUAL PERFORMANCE RATINGS

Each Sunrise manager will annually be given an individual performance rating
based on his or her achievement of specific objectives identified at the
beginning of the year.  This incorporates "management by objectives" into the
bonus plan, and thus we use the term "MBOs" for the individual objectives.

MIB participants must prepare their individual MBOs at the beginning of the
fiscal year and get them approved by their manager, by the Unit president, and
by the appropriate Corporate executive, in the case of finance, HR, purchasing
and RA/QA. All MBOs are then submitted to the Corporate HR department.  Unit
president and vice-president MBOs must be approved by the Corporate CEO.  No MIB
award may be paid to a manager unless MBOs have been submitted and approved
prior to September 30th each fiscal year.

MBOs should be 6-12 in number a total of 1-2 pages in length.  They should be
weighted as to importance with points that total 100, including 10 points for a
"discretionary" rating by the participant's manager or Corporate office
counterpart.  The discretionary evaluation by one's manager will weight such
factors as creativity, initiative, and resourcefulness.  It may also be used to
address lack of performance on issues that surfaced during the year.

Objectives should be specific, concrete, quantified if possible, and with target
dates where appropriate.  They should emphasize new programs or creative
contributions which generate improvements rather than simply maintaining the
routine aspects of each job.  A sample set of calculations is shown in Exhibit
B.

In the case of the divisional/group officers responsible for finance, HR,
purchasing, and RA/QA, their Corporate Office counterparts will be responsible
for evaluating a predetermined 


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SUNRISE MEDICAL INC.                                            FY 1998 REVISION
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<PAGE>

percentage of their MBOs for the year.  This percentage may vary from year to
year but will be agreed upon at the time the MBOs are prepared.  It will
generally range from 15 to 35 points, including up to 5 points out of the
discretionary award.

At year end, managers will first grade themselves on all their MBOs (except
discretionary), summing the total to yield an overall MBO rating between 0 and
90%.  They will then discuss this self-rating with their immediate supervisor
and determine a joint evaluation, including the discretionary portion.  Finally,
this rating must be reviewed by the Unit president and by the applicable
Corporate manager, in the case of finance, HR, purchasing and RA/QA.  For the
Unit president and vice-presidents, this rating will also be approved by the CEO
of Sunrise Medical and subject to review by the board of directors.  This
individual performance rating of 0-100% (with the possibility of overachievement
points) is then applied to the manager's potential bonus payout to yield the
actual bonus earned.

OVERACHIEVEMENT POINTS  Where appropriate, each MIB participant may also
identify one primary objective  or "gorilla goal" for the year which is eligible
for overachievement points.  This primary objective must have at least 20, but
no greater than 40 points assigned to it (e.g., refer to scaling points in goal
1 of Exhibit C).  It must also be tied to a quantitative scale with important
profit implications, such as sales, gross profit, operating profit, BPE, OFIs,
cost savings, ITO or DSO.  This objective will have the possibility of an
additional 50% boost to its score if it is overachieved by a specified amount
established at the same time the objective is set.  For example, the primary
objective if scored at 40 points could be awarded as much as 60 overachievement
points, making it possible for an Associate to have a final MBO score in excess
of 100 points.  The Associate will develop with his or her manager an
appropriate linear scale for measuring this objective which establishes
benchmarks for the base, on-target, and overachievement max levels.  These
should be included as part of the MBO and approved in the normal manner.   An
example of bonus calculation with over achievement is shown in Exhibit B, while
an MBO with a primary objective can be found in Exhibit C.

G.   DISCRETIONARY PROGRAM

This MIB plan is not a contractual obligation of any kind, except to the extent
as may apply under local law outside the U.S.  It is a discretionary program,
the criteria for which can be changed or eliminated at any time by the CEO and
board of directors of Sunrise Medical.

H.   FINANCIAL ADMINISTRATION

The specific financial guidelines for setting targets and calculating Unit BPE
are specified in Appendix I.

I.   HUMAN RESOURCES ADMINISTRATION

The human resources guidelines for applying this program to individual
Associates are specified in Appendix II.


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SUNRISE MEDICAL INC.                                            FY 1998 REVISION
January 16, 1998                                                    PAGE 6 of 18
<PAGE>

                                     EXHIBIT A
                                          
                               DEFERRED BONUS EXAMPLE

Assume a division VP earned bonuses over a 4 year period of $20,000, $30,000,
zero, and $10,000.  Each year 20% was deferred according to the provisions of
the Plan.  Now suppose his/her division achieved the minimum 5% earnings growth
required in years 2 and 4, but not in year 3.  Shown below is a table tracking
these deferred bonus amounts over the 4 years and indicating payouts and
forfeitures.  In year 3, you can see that deferrals of $5,000 were forfeited and
the accrual reversed to help make up the shortfall in corporate earnings.
 

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                       Year 1 (FY98)           Year 2 (FY99)           Year 3 (FY00)             Year 4 (FY01)
-------------------------------------------------------------------------------------------------------------------
 Fiscal  Total              Paid                     Paid                     Paid                     Paid
 Year    Bonus    Deferred  (Forfeited)    Deferred  (Forfeited)  Deferred    (Forfeited)   Deferred   (Forfeited)
         Earned
-------------------------------------------------------------------------------------------------------------------
<S>      <C>      <C>       <C>            <C>       <C>          <C>         <C>           <C>        <C>
 1998     20,000      -           16,000       2,000       2,000       2,000       (2,000)

 1999     30,000      -           -            -          24,000       3,000       (3,000)      3,000         3,000

 2000          0      -           -            -          -            -                 -      -           -

 2001     10,000      -           -            -          -            -                 -      -             8,000
-------------------------------------------------------------------------------------------------------------------
 Total                            16,000       2,000      26,000       5,000       (5,000)      3,000        11,000
-------------------------------------------------------------------------------------------------------------------
</TABLE>
 

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SUNRISE MEDICAL INC.                                            FY 1998 REVISION
January 16, 1998                                                    PAGE 7 of 18

<PAGE>

                                     EXHIBIT B
     
                           SAMPLE MIB AWARD CALCULATIONS
                                          
Listed below are three MIB calculation examples for Associates at the Manager I
and Manager II levels.  For simplicity we've assumed the CPF does not affect
Unit bonuses earned in any of these three cases:

EXAMPLE 1:
Assume a Manager I making $30,000/year falls short on a number of MBOs (80
points) and that the Unit is midway between its On-target and Maximum
performance levels (150%).

Earned Bonus Award = 150% X 80 pts X 5% (On-target) = 6.0% bonus X $30,000
annual salary = $1,800.
 
EXAMPLE 2:
Assume that a Manager II making $50,000/year does an excellent job on her MBOs
(95 points) and the Unit hits its Maximum target (200%).

Earned Bonus Award = 200% X 95 pts X 10% (On-target) = 19.0% bonus X $50,000
annual salary = $9,500.

EXAMPLE 3:
Assume a Manager II earning $40,000 performs at above average level (90 points)
but the Unit falls midway between Minimum and On-target performance (50%).

Earned Bonus Award = 50% X 90 pts X 10% (On-target) = 4.5% bonus X $40,000
annual salary = $1,800.

For directors and above, the MIB calculation includes the deferral of 20% of the
bonus amount until the following two years.  In the next three examples, we've
also incorporated the Corporate Performance Factor (CPF).

EXAMPLE 4:
Assume that a director earning $60,000 does an excellent job (95 points) and the
Unit hits its Maximum target (200%).  The corporation as a whole also exceeded
its Max.

Earned Bonus Award = 200% X 95 pts X 18% (On-target) = 34.2% bonus X $60,000
annual salary = $20,520.  CPF factor of 125% raises bonus total to $25,650.

-    $20,520 will be paid out in year 1 (80% X $25,650)
-    $2,565 will be deferred and paid out, if earned in each of years 2 and 3

EXAMPLE 5:


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<PAGE>

Assume that a VP's performance is average (80 points) and that the Unit is
midway between its On-target and Maximum performance levels (150%).  Corporate
EPS also exceeds On-target, but does not reach Max.

Earned Bonus Award = 150% X 80 pts X 18% (On-target) = 21.6% bonus X $100,000
annual salary = $21,600.  No CPF adjustment.

-    year 1 payout = 80% of $21,600 or $17,288
-    $2,160 is accrued and paid out, if earned, in each of years 2 and 3.

Below is an example of the bonus calculation with overachievement points and the
CPF included.

EXAMPLE 6:
Assume that the VP of sales overachieves his sales target, earning 55 points
instead of 40.  This gives him an MBO score of 110 points, but the Unit falls
midway between Minimum and On-target performance, and the corporation as a whole
falls well below its EPS target.

-    Earned Bonus Award = 50% X 110 pts X 18% (On-target) = 9.9% bonus X
     $100,000 = $9,900.  CPF reduces this by 25% to $7,425
-    Year 1 payout is 80% of $7,425, or $5,940
-    $742.50 is accrued and paid out, if earned, in each of years 2 and 3.


--------------------------------------------------------------------------------
SUNRISE MEDICAL INC.                                            FY 1998 REVISION
January 16, 1998                                                    PAGE 9 of 18

<PAGE>
                                          
                                     EXHIBIT C

                                SUNRISE MEDICAL INC.
                                        MBOS
                            UNIT CHIEF FINANCIAL OFFICER
 
<TABLE>
<CAPTION>
  WEIGHT                                                                                    RESULTS
---------------------------------------------------------------------------------------------------
<S>       <C>                                                                               <C>
    30    1.   PRIMARY OBJECTIVE: Achieve budgeted receivables days sales 
               outstanding (DSO) of 60 days from year-end figure of 66 days.
              
               57 days         150%              45 pts
               60 days         100%              30 pts
               63 days          50%              15 pts
               66 days           0%               0 pts
                                                                                             _____
               
     20   2.   Negative or positive adjustments to profit and loss, either individually or
               in the aggregate should not exceed 1% of operating income.
               -    At year end, for audit adjustments                          10 pts
               -    As a result of any physical 
                    inventory, net of shrinkage reserves                        10 pts       _____

    10    3.   Develop and maintain a good system of internal controls.
               -    Ensure  division complies with the Sunrise Medical 
                    Internal Control Standards Guide in all material respects    2 pts
               -    Ensure all management responses to internal 
                    control improvement recommendations from internal
                    and external audit reports are implemented on schedule       3 pts
               -    Ensure all material balance sheet accounts (including
                    all cash accounts) are reconciled as part of each month's
                    final closing                                                5 pts       _____

    10    4.   Maintain G&A departmental expenses at or below $2,680 budget for the 
               year.                                                                         _____

    10    5.   Achieve  budgeted  payables days purchases outstanding (DPO) of 45 days and
               $50,000 in cash discounts or equivalent combination.                          _____
              
    5     6.   Establish a professional costing function and install an effective activity
               based  accounting  system  which  measures  and  reduces  operational costs
               drivers.  Target savings:  $100,000 annualized.                               _____

    5     7.   Develop  professional  skills of all exempt people in department, providing
               or  sponsoring  at least 50 hours of classroom/seminar training for each in
               both technical disciplines and personal development.                          _____

    10    8.   Discretionary. (5 points by Unit president, 5 points by Corporate CFO.)       _____

--------
--------
   100%        Total                                                                         _____
</TABLE>

 

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SUNRISE MEDICAL INC.                                            FY 1998 REVISION
January 16, 1998                                                   PAGE 10 of 18

<PAGE>

                       APPENDIX I:  FINANCIAL ADMINISTRATION

The following rules and guidelines will be used by the Corporate CFO in
administering the financial aspects of the MIB plan.  All Unit financial
officers are responsible for explaining these rules to their respective
management teams.  For example, it is critical that operating management
understand the way in which poor asset management, negative cash flow, or R&D
underspending can penalize their earnings performance.

A.   OPERATING UNIT BPE PERFORMANCE

The primary determinant of company performance is profit in the form of "Bonus
Purpose Earnings" - or BPE.  BPE is defined as operating profit plus or minus
any interest charges (both internal and external), but before "other income and
expense" or income taxes.   BPE is budgeted each fiscal year at the time that
Unit operating profit budget is approved.  This BPE plan is then modified as
necessary after the prior year's audited figures are available to take into
consideration material differences between the actual finish and the assumption
at the time of the budget approval.

B.   OPERATING UNIT RONA PERFORMANCE

The Unit's RONA will be factored into its BPE performance by using a RONA
Multiplier to increase or reduce the Unit's bonus pool in cases where its
average RONA for the year has either dramatically improved or significantly
slipped.  The Corporate office will establish RONA threshold levels for all
Units based on their budgeted RONA levels.  Where applicable, the appropriate
RONA Multiplier will be multiplied times the Unit's BPE performance to yield an
adjusted Unit performance percentage.  (see Section F below)

Positive RONA adjustments may increase the Unit performance percentage up to but
not higher than 200%.  (250% with maximum CPF.)

C.   30-25% LIMITATION RULE

1.  30% LIMITATION (BELOW ON-TARGET)  The Unit's total On-target "Bonus 
Pool", i.e., the aggregate of the On-target payout to all plan participants, 
will be budgeted in advance of the year, accrued in accordance with corporate 
policy, and subtracted at year end from earnings before that earnings figure 
is used in calculating the Unit's performance level.  (In other words, the 
calculation of earnings and bonus level is a circular, iterative process.)  
However, under no circumstances may the total of the Bonus Pool being paid to 
management exceed 30% of the actual profit increase before bonuses, compared 
to profit as reported (i.e., after bonuses) the prior year.  If the pool is 
so limited, each participant's earned share shall be reduced pro rata, based 
on his or her percentage of the Unit's total On-target Bonus Pool.

2.  25% LIMITATION (ABOVE ON-TARGET)  The increment between On-target and
Maximum performance goals will be set each year such that no more than 25% of
any profit increase above On-target (before bonuses) will go toward the Bonus
Pool and be shared with Unit 


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<PAGE>

management.  Furthermore, as a general guideline, the less ambitious a company's
profit budget (i.e., On-target) is, the more ambitious its maximum will be set,
and vice versa.  A very aggressive budget will be rewarded with a more moderate
maximum goal, providing the 25% limitation has not been exceeded.

Note:  To determine the minimum BPE increase (i.e., after deduction of
applicable bonus) required to support a full bonus payout, multiply the
On-target bonus pool by 2.33 X for a 30% sharing ratio and by 3.0 X for a 25%
sharing ratio.

Example (all dollar figures in thousands):
Suppose an On-target BPE goal is $2,000 and its On-target Bonus Pool amounts to
$100.  The Unit would have to earn at least $2,300 after bonus to qualify for a
Maximum payout.  The $2,300 (25% sharing ratio) is derived by calculating what
number $100 is 25% of ($400), adding that to the On-target level ($2,000), and
then subtracting the additional bonus payout ($100) to get the reported earnings
after bonuses ($2,300).  The exact Maximum will be set by the Corporate Office
and approved by the board of directors, and in general will fall somewhere
between a 20% and 25% sharing ratio on profit improvement (pre-bonus) above last
year's actual reported earnings.

D.   INTEREST CHARGES

1.  INTEREST RATES:  The inter-company interest rate charged on cash transfers
to or from Corporate will be set by the chief financial officer at the beginning
of the year and budgeted accordingly.  This rate will remain constant for
purposes of calculating Bonus Purpose Earnings, except in the event of major
swings (i.e., more than 100 basis points) in the corporation's borrowing rate,
in which case this will be passed on to the Unit in order to better reflect the
true cost of money in their asset management decisions.  Any change in the
inter-company rate will be published at least 30 days in advance by the CFO.  An
interest surcharge of 100% will be added in any shortfall in cash transfers to
Corporate below budget or on any unplanned cash borrowings.  This severe penalty
is intentionally designed to incentivize good asset management and accurate cash
flow budgeting, both of which are extremely important to the corporation.

2.  CASH UPSTREAM STANDARD:  The corporate operating standard requires that 75%
of operating profit in any year be "upstreamed" to the Corporate Office (or used
to retire local debt) except in years when a major capital expenditure program
has been approved, such as a new factory.  Normally such cash transfers should
be made ratably during the year.  If a Unit budget does not meet the standard,
causing its budgeted interest income to appear low, the Corporate CFO may
arbitrarily raise the required interest component to at or near the corporate
standard in calculating the three BPE targets.  In that case the Unit will
either have to upstream more cash sooner than budgeted or raise its operating
profit to compensate for the interest shortfall if it is to achieve its BPE
goal.

3.  MAJOR CASH FLOW DISCREPANCIES:  Large cash transfers in either direction
which were planned for late one fiscal year but spilled over into early the
following fiscal year, and thus were not properly budgeted, will be reviewed on
an individual basis for the fairness of the 

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<PAGE>

inclusion or exclusion of their interest effect on Bonus Purpose Earnings.  
Cash transfers may not be intentionally delayed beyond a fiscal year end and 
still receive interest credit the following year.  To avoid windfall interest 
expense savings due to delays in or cancellation of budgeted capital 
expenditures, a Unit's BPE will be charged for 80% of the interest savings to 
budget in any such cases.  Conversely, unplanned interest expense due to 
major unbudgeted capital expenditures approved during the year will be 
granted 80% relief for BPE purposes.  Under no circumstances will any such 
interest adjustments be made for less than $5,000. The intent of the program 
is to reward asset management efficiency rather than to reward inaccurate 
budgeting.  On the other hand, the interest charges are not intended to cause 
any Unit to forego a particularly attractive capital expenditure opportunity 
simply because it was not budgeted in advance of the year.

4.  FOREIGN INTEREST RATES:  In the case of foreign subsidiaries, gains or
losses from unbudgeted fluctuations in local interest rates may be excluded, at
the Corporate CFO's discretion, when they significantly distort BPE.

E.   FINANCIAL RULES & GUIDELINES

1.  FOREIGN CURRENCY FLUCTUATIONS:  Each Unit's BPE will be calculated in its
local currency.  Gains and losses which derive from translating its results into
U.S. dollars will be excluded from measurement of BPE, as will profits or losses
arising from hedging contracts at rates different than Plan.  Unbudgeted profits
or losses on sales to third parties resulting from fluctuations in foreign
currencies are included in BPE.

2.  BONUS RELIEF:  There are two categories of bonus relief which are
automatically added back to operating profit each month to determine Bonus
Purpose Earnings:

-    LIFO CHARGES:  All LIFO charges to earnings are added back below the
     operating profit line to determine BPE, both in calculating actual earnings
     each period and in determining the three BPE target levels.  In other
     words, BPE is always adjusted--historically and prospectively--as if LIFO
     didn't exist.
     
-    STRATEGIC INVESTMENT PROGRAMS (SIP):  Once corporate funded Strategic
     Investment Programs (for high potential R&D or marketing projects) are
     approved, they are then added back below the line as an adjustment to
     determine both planned and actual BPE.  On multi-year development projects,
     once a SIP spending program has reached a steady state level, it can be
     eliminated as a BPE adjustment as long as it can be documented that
     spending does not decrease.  Once a project reaches fruition and revenues
     are being generated (or expenses curtailed), a return on the corporation's
     investment will be required in the form of higher earnings targets, but
     this will no longer require a BPE adjustment.

Any other requests for BPE relief or for other modifications in this plan as it
is written must be submitted to the Corporate CFO in writing prior to June 30 of
the fiscal year in question.  They are not to be considered accepted until
approved by the Corporate CFO and CEO and confirmed in writing back to the Unit
CFO.


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<PAGE>

3.  RESEARCH AND DEVELOPMENT EXPENDITURES:  Although the MIB program has a one
year horizon, building profitable, sustainable longer term earnings growth is
management's primary responsibility.  With that goal in mind, any reduction in
actual R&D expenditures over the prior year will be added back as an adjustment
to year-end Bonus Purpose Earnings.  No bonus dollars will be paid on profits so
derived.  R&D expenditures which fall below budget may also result in a
reduction in BPE, at the discretion of the Corporate CFO and CEO, even if
increased over the prior year.  The corporation never wants to incentivize short
term earnings performance at the expense of longer term growth.

4.  TRANSFER PRICING:  The effect on earnings and therefore BPE of intercompany
pricing negotiations or transfer price policy changes are to be reflected in
each division's fiscal year financial budget.  In the event a mid-year change in
intercompany pricing policies, foreign exchange rates or other significant
changes affecting transfer prices takes place which was not contemplated in
setting BPE, earnings targets will be adjusted where appropriate.  The objective
is to eliminate paying bonus dollars on earnings increases which do not benefit
corporate earnings per share but simply represent a transfer of profit from one
division to another.  The converse is also true on earnings penalties derived
from transfer price changes which take place in mid-year and hurt one Unit while
benefiting another.

F.   UNIT BONUS AND RONA CALCULATION EXAMPLE ($000)

This section presents examples of how BPE and RONA calculations interact to
determine operating unit performance.  Assume that a Unit delivered BPE of
$1,700 last year and had a budget this year of $2,000.  Its BPE targets were set
as follows:

<TABLE>
         <S>                        <C>
-------------------------------------------------
          Maximum                   $2,400
         On-target                  $2,000
          Minimum                   $1,700
-------------------------------------------------
</TABLE>


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<PAGE>

The Unit's RONA reached 27% last year and was budgeted for 30% this year.  It
was assigned the following RONA threshold levels by the Corporate Office:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
    THRESHOLD LEVEL          AVERAGE RONA FOR YEAR           RONA MULTIPLIER
                                                                 FACTOR
------------------------------------------------------------------------------
<S>                          <C>                             <C>
           A                          40%                         1.10X
           B                          39%                         1.09X
           C                          38%                         1.08X
           D                          37%                         1.07X
           E                          36%                         1.06X
           F                      25% to 35.9%                    1.0X
           G                          24%                         0.9X
           H                          23%                         0.8X
           I                          22%                         0.7X
           J                          21%                         0.6X
           K                          20%                         0.5X
           L                       Under 19%                      0.0X
------------------------------------------------------------------------------
</TABLE>

This means that, as long as the Unit RONA comes in somewhere between 25% and
36%, there will be no RONA penalty or multiplier applied to BPE.

Now let's look at how the Unit's bonus pool is calculated assuming a variety of
BPE and RONA performances:

CASE 1:
Suppose actual performance exceeds budget as follows:

     BPE  =    $2,200

     RONA =     24.4%

BPE of $2,200 is 50% of the way between $2,000 (On-target) and $2,400 (Maximum),
which yields a BPE performance of 150%.

RONA of 24.4% is above the G threshold but below F, for a 0.9 X multiplier.
(The RONA Multiplier is NOT interpolated.)

Unit performance =  0.9 x 150%  = 135%


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<PAGE>

CASE 2:
Suppose actual performance falls short of budget on both earnings and RONA as
follows:

          BPE  =    $1,900

          RONA =      22.0%

BPE of $1,900 is 67% of the way between $1,700 (Minimum) and $2,000 (On-target),
calculated as 200 DIVIDED BY 300 = 67%

RONA of 22% right at the D threshold, for a 0.7 X RONA Multiplier.

Unit performance = 0.7 X 67% = 46.9%

CASE 3:
Suppose actual BPE performance exceeds budget and RONA performance is very
strong:

     BPE  =    $2,327

     RONA =        40%

BPE of $2,327 is 81.8% of the way between $2,000 (On-target) and $2,400
(Maximum), which yields a BPE performance of 181.8%.

RONA of 40% is above the A threshold, for a 1.10 X multiplier.

Unit performance = 1.10 X 181.8% = 200%


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<PAGE>

                    APPENDIX II:  HUMAN RESOURCES ADMINISTRATION

The Corporate human resources department will be responsible for the overall
administration of the MIB Plan, supported by the operating unit HR officers and
working closely with the Corporate finance department.  Corporate HR will
prepare annually the summary sheets of all MIB awards, meet with the
compensation committee of the board of directors, and coordinate the payment of
bonuses with the payroll department.

In administering the MIB Plan, the HR department will follow these general rules
and guidelines:

1.  BASE SALARY/BONUS LEVEL:  Each Associate's gross or pre-adjusted (i.e., 
before pre-tax deductions or contributions) base salary compensation, 
exclusive of bonus payments and international or expatriate living 
allowances, will be the basis for calculating his or her bonus earned.  
Mid-year increases in base salary, if any, will be prorated to reflect length 
of time at each salary level. For purposes of prorating, the "salary year" is 
September 1 - August 31.

2.  MID YEAR TERMINATIONS:  No awards will be paid to any Associate whose 
active employment has been terminated prior to the fiscal year end unless the 
separation occurred due to retirement, death, or an approved medical leave of 
absence.  In those cases, pro-rata payments will be made after the completion 
of the fiscal year at the normal payout time for all Associates (i.e., 
September 1).  An Associate who is laid off after fiscal year end but before 
the plan's payment date will be paid the full amount due.  Associates who 
resign voluntarily or are terminated for cause during this period will 
receive the amount due less an automatic 25% penalty.

3.  NEW HIRES AND PROMOTIONS:  A newly hired Associate may qualify for 
participation after the commencement of a plan year (July 1 to June 30).  In 
such a case, the participant shall be eligible to receive a bonus award on 
only his or her base pay earned during the time of participation in the plan 
prior to the fiscal year end.  New hires starting May 1, or later, will not 
be eligible to participate in the bonus plan until July 1.  Associates 
promoted to a higher bonus level ANYTIME during the fiscal year will get the 
benefit of that MIB percentage applied to their actual salaried earnings 
during the salary year.

4.  MBO ADMINISTRATION:  In order to participate in the MIB program, each 
manager must have a list of objectives, approved by his or her immediate 
supervisor and Unit president, on the file at the Sunrise Medical Corporate 
HR Department no later than September 30 of each fiscal year.  MBOs for new 
hires and transfers should be submitted within 60 days of the hire/transfer 
date.  The MBOs must also be approved by the appropriate Corporate function 
head where required (finance, HR, purchasing and RA/QA) and by the Sunrise 
Medical CEO for Unit vice presidents and above.

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<PAGE>

5.  PERFORMANCE REVIEWS:  In addition to discussing their MBO performance
immediately after fiscal year end, MIB participants will also be given a more
general performance review by their immediate supervisors.  This evaluation will
form the basis for the annual salary review.

6.  SALES MANAGERS:  Regional or market segment sales managers will not 
participate in the MIB plan but instead will participate in a Sales 
Commission Plan developed at the Unit level, with earnings potential 
comparable to the appropriate MIB bonus level.  Their incentive payments will 
be tied specifically to sales performance targets in their regions or market 
segments, based on specific programs to be designed by each operating unit.  
All sales managers should submit MBOs and go through a performance review 
similar to MIB participants.  Regional sales manager bonuses will NOT be 
included in the MIB pool for purposes of calculating the 30 - 25% limitation 
rules.

7.  PROJECT ENGINEERS:  Product development engineers who are not in 
managerial positions, but whose salary and responsibility levels are 
comparable to those who are, will participate in the Project Engineering 
Bonus (PEB) Plan rather than the MIB Plan.  PEB participants will have 
potential bonus payouts equal to the on-target and Max levels of their 
product management counterparts.  In the case of project engineers, however, 
payouts will be tied to successful completion of a major development project 
rather than to their Unit's results. Timing of payouts will be at successful 
project completion, however defined, rather than tied to a fiscal year end.  
The PEB Plan will be administered at the Unit level.  It may also be applied 
to other technology professionals assigned to focus on a single major 
project, such as manufacturing engineers in the case of a new plant or 
automated assembly line, or systems engineers or IT specialists in the case 
of a major computer system conversion.  (See separate PEB Plan description.)

8.  NEWLY ACQUIRED BUSINESSES:  Business Units acquired during the year may 
participate in the MIB program on a partial basis providing: (a) they were 
acquired prior to January 1; (b) a budget for the remainder of the fiscal 
year has been submitted and approved; and (c) MBOs have been prepared and 
submitted for each participant within 60 days of the acquisition.  Where 
these criteria are not met, participation in the plan will commence on the 
following July 1. Any bonuses paid for the partial year will be on a 
completely discretionary basis tied to the earnings assumptions made at the 
time of acquisition.

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SUNRISE MEDICAL INC.                                            FY 1998 REVISION
January 16, 1998                                                   PAGE 18 of 18