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                                                                EXHIBIT 10.10(M)

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO AND ALL APPLICABLE QUALIFICATIONS UNDER STATE SECURITIES LAWS SHALL HAVE
BEEN OBTAINED WITH RESPECT THERETO; OR (ii) A WRITTEN OPINION FROM COUNSEL FOR
THE HOLDER REASONABLY SATISFACTORY TO THE ISSUER HAS BEEN OBTAINED STATING THAT
NO SUCH REGISTRATION OR QUALIFICATION IS REQUIRED.


                      WARRANT TO PURCHASE COMMON SHARES OF
                   INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.


         FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a Delaware corporation
(the "Company"), hereby grants to CITY NATIONAL BANK, a national banking
association, its successors and assigns (collectively, the "Bank"), an
irrevocable warrant (the "Warrant") to purchase up to 25,000 fully paid and
nonassessable common shares, $.01 par value per share, of the Company (the
"Shares"), adjusted as set forth below, at the Warrant Price, as defined below,
at any time beginning on the date hereof and ending on July 1, 2000 or the
date its indebtedness to the Bank under that certain Amended and Restated
Promissory Note dated as of January 3, 1997 in the principal amount of
$4,900,000, and that certain Promissory Note dated July 29, 1996 in the
principal amount of $1,500,000, is paid in full, whichever is later, all subject
to the provisions, terms and conditions set forth below.

         1.       Exercise; Issuance of Certificates; Payment for Shares. This
Warrant may be exercised by the holder hereof, in whole or in part (but not as
to a fractional Share), and on one or more occasions, by written notice to the
Company at its principal office at 9162 Eton Avenue, Chatsworth, California
91311 (or such other office or agency of the Company as it may designate by
notice in writing to the holder hereof at the address of such holder appearing
on the books of the Company) at any time within the period above named and by
payment to the Company by cashier's check or wire transfer of the Warrant Price
for the number of Shares designated by the holder (but not more than the number
of Shares for which this Warrant then remains unexercised). The Company agrees
that the Shares so purchased will be deemed to have been issued to the holder
hereof as the record owner of such Shares as of the close of business on the
date on which such notice is received and payment made as aforesaid.
Certificates for the Shares so purchased will be delivered to the holder hereof
within a reasonable time, not


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exceeding fifteen (15) business days, after this Warrant has been exercised,
and, unless this Warrant has expired, it will continue in effect with respect to
the number of Shares, if any, as to which it has not then been exercised.

         2.       Shares to be Fully Paid; Reservation of Shares.  The Company
covenants and agrees as follows:

                  2.1      All Shares issued upon the exercise of this Warrant
will, upon issuance, be fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issue thereof.

                  2.2      The Company will from time to time take all actions
required to assure that the par value (if any) per Share issuable pursuant to
this Warrant is at all times equal to or less than the Warrant Price per Share.

                  2.3      During the period within which this Warrant may be
exercised, the Company will at all times have authorized and reserved for the
purpose of issuance or transfer upon exercise of this Warrant a sufficient
number of Shares to provide for the exercise of this Warrant.

                  2.4      The Company will take all actions necessary to assure
that the Shares issuable upon the exercise of this Warrant may be so issued
without violation of any applicable law or regulation, or of any requirements of
any securities exchange upon which the shares of the Company may be listed.

                  2.5      The Company will not take any action that would
result in an adjustment of the Warrant Price if the total number of Shares
issuable after such action upon exercise of this Warrant, together with all
Shares then outstanding and all Shares then issuable upon exercise of all
rights, options or warrants (other than this Warrant) and upon conversion of all
securities convertible into or exchangeable for shares of common stock of the
Company, would exceed the total number of Shares then authorized by the
Company's Articles of Incorporation.

         3.       Warrant Price.

                  3.1      Initial Warrant Price; Subsequent Adjustment of Price
and Number of Purchasable Shares. The Initial Warrant Price will be Four and
1/16 Dollars ($4.0625) per Share, and will be adjusted from time to time as
provided below. The Initial Warrant Price or, if such price has been adjusted,
the price per Share as last adjusted pursuant to the terms hereof is referred to
as the "Warrant Price" herein. Upon each adjustment of the Warrant Price, the
holder of this Warrant will thereafter be entitled to purchase, at the Warrant
Price resulting from such adjustment, the number of Shares obtained by
multiplying the Warrant Price in effect immediately before such adjustment by
the number of Shares purchasable pursuant to this Warrant immediately before
such adjustment and dividing the product by the Warrant Price resulting from
such adjustment.


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                  3.2      Liquidating Dividends. The Company will not declare a
dividend upon the Shares payable otherwise than out of consolidated earnings or
consolidated earned surplus, determined in accordance with generally accepted
accounting principles, including the making of appropriate deductions for
minority interests, if any, in subsidiaries, and otherwise in Shares, unless the
holders hereof have consented to such dividend in writing. In the event the
Company declares such a dividend with such consent, the Company will pay the
holder of this Warrant, on the dividend payment date, the case, Shares or other
securities and other property which the holder would have received if the holder
had exercised this Warrant in full to purchase Shares and had been the record
holder of such Shares on the record date for such dividend, or, if a record is
not taken, the date as of which the holders of Shares of record entitled to such
dividend are determined. For the purposes of the foregoing, a dividend other
than in cash will be considered payable out of earnings or surplus (other than
revaluation or paid-in surplus) only to the extent that such earnings or surplus
are charged an amount equal to the fair value of such dividend as determined in
good faith by the Board of Directors of the Company.

                  3.3      Subdivision or Combination of Shares. If the Company
at any time while this Warrant, or any portion hereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, the Warrant Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination.

                  3.4      Reclassification. If the Company, at any time while
this Warrant, or any portion hereof, remains outstanding and unexpired, by
reclassification of securities or otherwise shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Warrant Price
therefor shall be appropriately adjusted.

                  3.5      Adjustments for Dividends in Stock or Other
Securities or Property. If while this Warrant, or any portion hereof, remains
outstanding and unexpired the holders of the securities as to which purchase
rights under this Warrant exist at the time shall have received, or, on or after
the record date fixed for the determination of eligible stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock
or other securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Warrant shall represent the right to
acquire, in addition to the number of shares of the security receivable upon
exercise of this Warrant, and without payment of any additional consideration
therefor, the amount of such other or additional stock or other securities or
property (other than cash) of the Company that such holder would hold on the
date of such exercise had it been the holder of record of the security
receivable upon exercise of


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this Warrant on the date hereof and had thereafter, during the period from the
date hereof to and including the date of such exercise, retained such shares
and/or all other additional stock available by it as aforesaid during such
period, giving effect to all adjustments called for during such period.

                  3.6      Reorganization, Reclassification, Consolidation,
Merger or Sale. If any capital reorganization or reclassification of the Shares
of the Company, or any consolidation or merger of the Company with another
corporation or entity, or the sale of all or substantially all of the Company's
assets to another corporation will be effected in such a way that holders of
Shares will be entitled to receive Shares, securities or assets with respect to
or in exchange for Shares, then, upon exercise of this Warrant, the holder will
thereafter have the right to receive such Shares, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
Shares equal to the number of Shares immediately theretofore purchasable and
receivable upon the exercise of this Warrant. If a purchase, tender or exchange
offer is made to and accepted by the holders of more than 50% of the outstanding
Shares of the Company, the Company will not effect any consolidation, merger or
sale with the Person, as defined below, making such offer or with any Affiliate,
as defined below, of such Person, unless, before the consummation of such
consolidation, merger or sale, the holder of this Warrant is given at least ten
(10) business days notice prior to the scheduled closing date (the "Closing
Date") of such transaction (which notice shall specify the material terms of
such transaction and the proposed Closing Date). In the event the holder elects
to exercise this Warrant or any portion thereof following such notice and such
consolidation, merger or sale is not consummated within ten (10) days of the
proposed Closing Date (or any subsequent proposed Closing Date), then the Holder
may rescind its exercise of this Warrant by providing written notice thereof to
the Company, the Company shall take all actions consistent therewith (including
without limitation the immediate return of the Warrant Price paid with respect
to such rescinded exercise) and this Warrant shall continue in full force and
effect. As used in this paragraph, the term "Person" includes an individual, a
partnership, a corporation, a trust, a joint venture, a limited liability
company, an unincorporated organization and a government or any department or
agency thereof, and an "Affiliate" of a Person means any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with, such other Person. A Person will be deemed to control a corporation or
other business entity if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.

                  3.7      Notice of Adjustment. Upon any adjustment of the
Warrant Price, the Company will give written notice thereof, by first-class
mail, postage prepaid, addressed to the holder of this Warrant at the address of
such holder as shown on the books of the Company, which notice will state (i)
the Warrant Price resulting from such adjustment and the increase or decrease,
if any, in the number of Shares purchasable at such price upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based, and


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(ii) whether, after giving effect to such adjustment, the maximum number of
Shares issuable upon the exercise of this Warrant will constitute more than 5%
of the total number of then issued and outstanding Shares (including in such
total number the maximum number of Shares issuable upon the exercise of this
Warrant).

                  3.8      Other Notices. If at any time:

                           3.8.1 The Company declares a cash dividend on its
Shares payable at a rate in excess of the rate of the last cash dividend
theretofore paid;

                           3.8.2 The Company declares a dividend on its Shares
payable in Shares or pays a special dividend or other distribution (other than
regular cash dividends) to the holders of its Shares;

                           3.8.3 The Company offers for subscription to the
holders of any of its Shares additional Shares of any class or other rights;

                           3.8.4 There is a capital reorganization, or
reclassification of the Shares of the Company, or consolidation or merger of the
Company with, or sale of all or substantially all of its assets to, another
corporation or other entity; or

                           3.8.5 There is a voluntary or involuntary
dissolution, liquidation or winding up of the Company;

                           Then the Company will give, by first-class mail,
postage prepaid, addressed to the holder of this Warrant at the address of such
holder as shown on the books of the Company, (i) at least twenty (20) days'
prior written notice of the date on which the books of the Company will close or
a record will be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (ii) in the case of such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least
twenty (20) days' prior written notice of the date when the same will take
place. Any notice required by clause (i) will also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Shares will be entitled thereto, and any notice required by (ii) will
also specify the anticipated date on which the holders of Shares will be
entitled to exchange their Shares for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.

         4.       Listing. If any Shares required to be reserved for the purpose
of issue upon the exercise of this Warrant require registration with or approval
of any governmental authority under any federal or state law (other than the
filing of a Registration Statement under the Securities Act of 1933, as then in
effect (the "Securities Act"), or any similar law then in effect), or listing on
any securities exchange, before such Shares may be issued upon such exercise,
the Company will, at its expense and as


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expeditiously as possible, use its best efforts to cause such Shares to be duly
registered or approved or listed on the relevant securities exchange, as the
case may be.

         5.       Closing of Books. The Company will at no time close
its transfer books against the transfer of this Warrant or of any Shares issued
or issuable upon the exercise of this Warrant in any manner which interferes
with the timely exercise of this Warrant.

         6.       Definition of Shares. As used in this Warrant the term
"Shares" includes the Company's authorized common stock, $.01 par value per
share, as constituted on the date hereof and also includes any shares of any
class of stock or other equity securities of the Company thereafter authorized
which will not be limited to a fixed sum or percentage of par value in respect
of the rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company; provided that, except as provided in
paragraph 3.6, the Shares purchasable pursuant to this Warrant will include only
Shares designated as "common shares" of the Company or, in the case of any
reclassification of the outstanding Shares, the Shares, securities or assets
provided for in paragraph 3.6.

         7.       No Participating Preferred Shares. So long as this Warrant
remains outstanding, the Company will not issue any Shares of any class
preferred as to dividends or as to the distribution of assets upon voluntary or
involuntary liquidation, dissolution or winding up, unless the rights of the
holders thereof will be limited to a fixed sum or percentage of par value in
respect of participation in dividends and in the distribution of such assets.

         8.       No Voting Rights.  This Warrant will not entitle the holder
hereof to any voting rights or other rights as a Shareholder of the Company.

         9.       Registration Rights.

                  9.1      Certain Definitions. The following terms shall have
the respective meanings set forth below:

                           9.1.1 "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

                           9.1.2 "Holder" shall mean any person who at a given
time is the holder of record of any Registrable Securities and has agreed in
writing to be bound by the provisions of Section of this Agreement.

                           9.1.3 "Registrable Securities" shall mean those
shares of Common Stock acquired upon exercise of the Warrant but excluding any
shares which may be resold to the public without registration pursuant to Rule
144 or another comparable rule under the Securities Act.


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                           9.1.4 "Registration Period" shall mean the period of
time beginning on the date hereof and ending on the third anniversary of such
date; provided, however, that the Registration Period shall be extended as
required under the last sentence of Section 9.9 if the Company elects to
exercise its right to postpone a demand registration.

                           9.1.5 "Registration Statement" shall mean any
registration statement or comparable document under the Securities Act through
which a public sale or disposition of the Warrant Shares may be registered or
exempted from registration (except a form exclusively for the sale or
distribution of securities by the Company or to employees of the Company or its
subsidiaries or for use exclusively in connection with a business combination).

                           9.1.6 "SEC" shall mean the Securities and Exchange
Commission.

                           9.1.7 "Selling Holder" shall mean, with respect to
any Registration Statement, any Holder whose securities are included therein.

                           9.1.8 "Sellers' Underwriter" shall mean, with respect
to any Registration Statement, the underwriter, if any, designated in writing by
the Selling Holders as underwriting the Registrable Securities involved.

                           9.1.9 "Securities Act" shall mean the Securities Act
of 1933, as amended.

                           9.1.10 "Significant Holders" shall mean, at any time,
Holders together holding more than two-thirds (2/3) of the then outstanding
Registrable Securities held by the Holders.

                  9.2      Demand Registration.

                           9.2.1 Notice of Demand. The Significant Holders may
at any time during the Registration Period by written notice request that the
Company register Registrable Securities under the Securities Act. The maximum
number of such demands shall be one (1). Each notice shall set forth (i) the
number of shares to be included; (ii) the names of the Selling Holders and the
amounts to be sold by each; and (iii) the proposed manner of sale. Within 10
days after receipt of such notice, the Company shall notify all other Holders
and offer to them the opportunity to include their Registrable Securities in
such registration. Each of the other Holders shall have twenty (20) days from
the mailing of such notice to notify the Company of the number of Registrable
Securities such Holder desires be included in the Registration Statement, but
the Company shall have no obligation to include the Registrable Securities of
any such Holder in the Registration Statement if the Company does not receive
the required notice within such 20-day period.


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                           9.2.2 Holder and Registration. Promptly, but in any
event within 60 days after receipt of any demand pursuant to Section 9.2.1, the
Company shall prepare and file with the SEC a Registration Statement on any
applicable form with respect to all the Registrable Securities specified in all
notices received in a timely manner pursuant to Section 9.2.1, and use its best
efforts to cause such Registration Statement to become effective. Each of the
Selling Holders (other than the Holders exercising demand registration rights
with respect to such registration) shall accept a reduction (including a total
elimination) in the number of securities to be included in such registration on
a pro rata basis (based on the number of Registrable Securities held by each) if
the Sellers' Underwriter reasonably deems that without such reduction (or
elimination) the demanding Holders might be substantially hindered in the terms
or number of securities which they could sell in such registration.

                           9.2.3 Required Minimum. The Company may decline to
prepare or file any Registration Statement under this Section 9.2 unless the
Registrable Securities to be sold thereunder constitute at least fifty (50%) of
the then outstanding Registrable Securities held by all Holders.

                  9.3      Incidental Registration. Whenever during the
Registration Period the Company proposes to file a Registration Statement for an
offering of securities for its own account, the Company shall take the following
steps with respect to such Registration Statement:

                           9.3.1 Mail a written notice to each Holder at the
address shown on the books and records of the Company at least thirty (30) days
prior to the effective date of any such Registration Statement; and

                           9.3.2 Include in such Registration Statement any and
all Registrable Securities specified in a notice by the Holder which is received
by the Company not less than twenty (20) days following the mailing of the
notice specified in Section 9.3.1. In connection with any such registration, the
Selling Holder must: (i) if the Holder desires to sell such Registrable
Securities, sell such Registrable Securities in the manner and on the terms
adopted by or through the underwriter(s) acting on behalf of the Company in
connection with such registration, if such underwriter(s) so requests; and (ii)
accept a reduction (including a total elimination) in the number of shares to be
included in such registration on a pro rata basis (based on the number of
securities held by each) with any other selling securityholders if the
underwriter(s) deem that without such reduction (or elimination) the Company
might be substantially hindered in the terms or number of securities which it
could sell in such registration.

                  9.4      Registration Procedures. Whenever the Company shall
register any securities pursuant to this Warrant, the parties agree as follows:

                           9.4.1 Selling Holder Information. Each Selling Holder
shall provide the Company with such information about such Selling Holder and
its intended manner of distributing the Registrable Securities, and shall
otherwise cooperate with the


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Company and the underwriter(s) as may be needed or helpful in the reasonable
opinion of the Company to complete any obligation of the Company hereunder.
Failure to comply with this requirement shall excuse the Company from any
further obligation to a Selling Holder to include its shares in a Registration
Statement;

                           9.4.2 Consultation. The Company shall supply copies
of the Registration Statement and any amendments thereto to each Selling Holder
and to the Sellers' Underwriter at least three (3) business days prior to filing
such document with the SEC, and shall reasonably consult with such persons and
their counsel with respect to the form and content of such filing. The Company
will immediately amend such Registration Statement to include such reasonable
changes as the Selling Holders and the Sellers' Underwriter reasonably agree
should be included therein. Any Selling Holder requesting a change refused by
the Company may withdraw his or her shares from the Registration Statement;

                           9.4.3 Provision of Prospectuses. The Company shall
furnish to each Selling Holder and any Sellers' Underwriter such number of
copies of a summary prospectus or other prospectus (including any amendments and
supplements thereto and a preliminary prospectus in conformity with the
requirements of the Securities Act) and such other documents as such Selling
Holder may reasonably request in order to facilitate the public sale or other
disposition of such securities;

                           9.4.4 Blue Sky Compliance. The Company shall use its
best efforts to register or qualify the securities covered by such Registration
Statement under the securities or "blue sky" laws of such jurisdictions as any
Selling Holder shall reasonably request (provided, however, that the Company
shall not be required (i) to consent to, or take any action which would subject
it to, general service of process for all purposes or (ii) to qualify to do
business in any jurisdiction where it is not then subject or qualified) and do
any and all other acts or things which may be reasonably necessary or advisable
to enable the Selling Holders to consummate the public sale or other disposition
of such securities in such jurisdictions;

                           9.4.5 Amendments. The Company shall use its best
efforts to prepare and file promptly with the SEC such amendments and
supplements to the Registration Statement filed with the SEC in connection with
such registration, and the prospectus used in connection therewith, as may be
necessary to keep such Registration Statement continuously effective and in
compliance with the Securities Act for up to six (6) months or until all
Registrable Securities registered in that Registration Statement are sold,
whichever is earlier;

                           9.4.6 Prospectus Delivery. At any time when a sale or
other public disposition pursuant to a Registration Statement is subject to a
prospectus delivery requirement, the Company shall immediately notify each
Selling Holder and the Seller's Underwriter of the occurrence of any event as a
result of which the prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to


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<PAGE>   10


make the statements therein not misleading in the light of the circumstances
then existing. Upon receipt of such a notice, each Selling Holder shall
immediately discontinue sales or other dispositions of Registrable Securities
pursuant to the Registration Statement. The Selling Holders may resume sales
only upon receipt of amended prospectuses or after such Holders have been
advised by the Company that the use of the previous prospectus may be legally
resumed;

                           9.4.7 Opinions. At the request of the Company, each
Selling Holder shall furnish on the date that the Registrable Securities are
delivered to the underwriter for sale in connection with a registration pursuant
to this Agreement an opinion of the counsel in form and substance as is
customarily given by counsel for the selling securityholders in an underwritten
public offering;

                           9.4.8 Stop-Orders. The Company agrees to immediately
notify each Selling Holder (i) of the issuance by the SEC of any stop order or
order suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, or (ii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction, or the initiation of
any proceedings for such purpose. The Company, with the reasonable cooperation
of the Selling Holders, shall make every reasonable effort to contest any such
proceedings and to obtain the withdrawal of any such order at the earliest
possible moment;

                           9.4.9 Review of Records. The Company shall make
available all financial and other records, pertinent corporate documents and
properties of the Company for inspection by any Seller's Underwriter and its
counsel and accountants, and shall cause the Company's officers, directors and
employees to supply all information reasonably requested by any such person in
connection with any Registration Statement filed or to be filed hereunder so
long as such person agrees to keep confidential any records, information or
documents designated by the Company in writing as confidential;

                           9.4.10 Earnings Statements. The Company shall make
earning statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder generally available to its security holders as soon
as reasonably practicable, but in no event later than 45 days, after the end of
any 12-month period commencing at the end of any fiscal quarter in which
Registrable Securities are sold; and

                           9.4.11 Compliance With Laws. In all actions taken
under this Agreement, the Company and each Selling Holder agree to use their
best efforts to comply with all provisions of the Securities Act, the Exchange
Act and any other law applicable to them.

                  9.5      Registration Not Required. The Company shall have no
obligation to any Holder under this Agreement with respect to whom the Company
has obtained an opinion of counsel, in form reasonably satisfactory to such
Holder, to the effect that the


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<PAGE>   11

Registrable Securities involved may be immediately sold to the public without
registration thereof, whether pursuant to Rule 144 under the Securities Act or
otherwise.

                  9.6      Delay of Registration. No Holder shall have any right
to take any action to restrain, enjoin or otherwise delay the filing or
effectiveness of any Registration Statement on the basis of any controversy
which might arise with respect to the interpretation or implementation of this
Agreement.

                  9.7      Indemnity.

                           9.7.1 The Company Indemnity. The Company agrees that
it will indemnify each Selling Holder and Sellers' Underwriter (and any of its
officers, directors and persons who control such Holder or underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) against all claims, losses, damages, liabilities and expenses (including
those relating to settlements approved by the Company, which consent shall not
be unreasonably withheld) resulting from any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (or in any
other document incident to that registration) or from any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company shall not be liable in any such case to any such indemnified person
to the extent that any such loss, claim, damage, liability or action (including
any legal or other expenses incurred) arises out of or is based upon an untrue
statement or allegedly untrue statement or omission or alleged omission made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such indemnified person
or underwriter specifically for use in the preparation thereof; provided
further, however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any untrue statement, allegedly untrue
statement, omission or alleged omission made in any prospectus but eliminated or
remedied in a subsequent prospectus, such indemnity agreement shall not inure to
the benefit of any indemnified person from whom the person asserting any loss,
claim, damage, liability or expense purchased the shares which are the subject
thereof, if a copy of such subsequent prospectus had been made available to such
indemnified person and such subsequent prospectus was not delivered to such
person with or prior to the written confirmation of the sale of such Registrable
Securities to such person.

                           9.7.2 The Holder's Indemnity. Each Selling Holder
will indemnify the Company, any underwriter, and any other person selling under
the applicable Registration Statement (and any of the officers and directors and
persons who control any of the foregoing within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) against all claims, losses,
damages, liabilities and expenses (including those relating to settlements
approved by the Selling Holder, which consent shall not be unreasonably
withheld) resulting from any untrue statement or alleged untrue statement of a
material fact contained in any registration statement (or in any other document
incident to that registration) or from any omission or alleged omission to state
a material fact required to be stated or necessary to make the


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<PAGE>   12


information therein not misleading, but only to the extent based upon or arising
from any information furnished in writing to the Company by that Selling Holder
expressly for inclusion in that Registration Statement (or such other document
incidental to that registration); provided, however, that the maximum amount of
liability in respect of such indemnification shall be limited, in the case of
each Selling Holder, to an amount equal to the net proceeds actually received by
such Selling Holder from the sale of Registrable Securities effected pursuant to
such registration.

                           9.7.3 Notice. Promptly after receipt by an
indemnified party of notice of the commencement of any action involving a claim
referred to in Section 9.7.1 or 9.7.2, such indemnified party will, if a claim
in respect thereof is made against an indemnified party, give written notice to
the indemnifying party of the commencement of such action; provided, however,
that the indemnified party's failure to give such notice shall not release,
relieve or in any, way affect the indemnifying party's obligation hereunder to
indemnify the indemnified party unless and to the extent that the rights of the
indemnifying party are prejudiced thereby. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that if any indemnified
party shall have reasonably concluded (based on the written advice of counsel)
that there may be one or more legal or equitable defenses available to such
indemnified party which are additional to or conflict with those available to
the indemnifying party, or that such claim or litigation involves or could have
an effect upon matters beyond the scope of the indemnity agreement provided in
this Section 9, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party and such indemnifying
party shall reimburse such indemnified party and any person controlling such
indemnified party for that portion of the fees and expenses of any counsel
retained by the indemnified party which is reasonably related to the matters
covered by the indemnity agreement provided in this Section 9.

                           9.7.4 If the indemnification provided for in this
Section 9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability or action
referred to herein (other than as a result of the applicability of the two
provisos in Section 9.7.1)), then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amounts
paid or payable by such indemnified party as a result of such loss, claim,
damage, liability or action in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which resulted
in such loss, claim, damage, liability or action as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a


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<PAGE>   13


material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties, relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

                           9.7.5 Underwriting Agreement. As a condition of
inclusion of any securities in any Registration Statement, at the request of the
Company, each Selling Holder shall enter into an underwriting agreement with the
Company and the underwriter(s) with respect to the registration of any of their
respective Registrable Securities hereunder in such form as may be reasonably
agreed upon by the Company and such underwriter(s), so long as such form is
consistent with those then currently in use by major underwriters and with the
provisions of this Agreement.

                  9.8      Expenses of Registration. The Company shall bear all
expenses (other than the Selling Holders' pro rata share of any brokerage or
underwriting fees, expenses or commissions) incurred in connection with any
Registration Statement, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), fees and expenses of complying with
securities and blue sky laws, printing expenses and fees and disbursements of
the independent certified public accountants and of the Company's counsel. Each
Selling Holder shall bear its pro rata share of any brokerage or underwriting
fees, expenses or commissions and the cost of any lawyers, accountants, experts
and other consultants retained by it.

                  9.9      Exception as to Timing. Notwithstanding any other
provision of this Agreement, the Company may postpone or suspend for a
reasonable period of time (not to exceed 180 days) the filing or effectiveness
of any Registration Statement demanded under Section 9.2 if (a) the Company is
conducting or is about to conduct a primary offering of securities of the
Company and is advised by its investment banker that such offering would be
materially adversely affected by such demanded registration or (b) the board of
directors of the Company shall in good faith determine that such demand
registration would materially adversely affect any financing, merger, sale of
assets, recapitalization or other material transaction involving the Company,
which, in each case, is either pending or under active and continuing
negotiation. If any demanded registration is so postponed, then, as between the
Company and the Selling Holders, it shall be deemed withdrawn, unless a majority
in interest of Holders elect in writing not to withdraw such registration
demand. A registration demand that is deemed to have been withdrawn by operation
of the preceding sentence shall not count as a demanded registration for
purposes of Section 9.2.1. Furthermore, the length of the Registration Period
(as defined in Section 9.1.4) shall be increased by the length of any
postponement taken by the Company hereunder.

                  9.10     Exchange Act Reports. With a view to making available
to the Holders the benefits of Rule 144 under the Securities Act and any other
rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration under the
Securities Act, the Company agrees


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<PAGE>   14


to (i) make and keep public information available, as those terms are understood
and defined in Rule 144, (ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act, and (iii)
furnish to any Holder, so long as the Holder holds any Registrable Securities,
forthwith upon request (a) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of any such
securities without registration under the Securities Act.

                  9.11     Termination. The Holders shall have no further rights
under Sections 9.2 and 9.3 at any time after such time as no further Registrable
Securities remain outstanding.

         10.      Warrant Transferable. This Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the holder hereof, by
written notice to the Company at the address referred to in Article 1 by the
holder hereof in person or by duly authorized attorney; provided that (i) a
written opinion of counsel for the holder reasonably satisfactory to the Company
has been obtained stating that such transfer will not violate the registration
requirements of the Securities Act or any applicable state securities laws, and
(ii) the transferee has delivered to the Company a written agreement to be bound
by the terms and conditions hereof. Each holder of this Warrant, by taking the
same, agrees that after such notice, the holder hereof may be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to further assign this Warrant, any notice to
the contrary notwithstanding; but until receipt of any such notice of
assignment, the Company may treat the holder hereof as shown on its records as
the owner for all purposes.

         11.      Rights and Obligations Survive Exercise of Warrant. The rights
and obligations of the Company, of the holder of this Warrant, and of the holder
of Shares issued upon exercise of this Warrant, contained in Articles 9 and 10
will survive the exercise of this Warrant.

         12.      Descriptive Headings and Governing Law. The descriptive
headings of the several Articles and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant is
being delivered and is intended


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<PAGE>   15


to be performed in the State of California and will be construed and enforced in
accordance with, and the rights of the parties will be governed by, the law of
such State.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers, as of July 1, 1997.


                                       INTERNATIONAL REMOTE IMAGING
                                       SYSTEMS, INC., a Delaware corporation




                                       By: /s/ Martin S. McDermut
                                           --------------------------
                                           Martin S. McDermut

                                       Its: Vice President and Chief Financial
                                            Officer


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