WARRANT NO. C-1                                                   379,900 SHARES

            NO SALE, OFFER OR TRANSFER OF THIS WARRANT SHALL BE MADE
           UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
                     1933, AS AMENDED, WITH RESPECT TO SUCH

          TRANSACTION IS THEN IN EFFECT OR SUCH TRANSFER IS EXEMPT FROM

                          REGISTRATION UNDER SUCH ACT.

                                     WARRANT

                     TO SUBSCRIBE FOR AND PURCHASE SHARES OF

                                 COMMON STOCK OF

                         COMMUNITY CARE OF AMERICA, INC.

         This certifies that, for value received,  Integrated  Health  Services,
Inc., a Delaware  corporation  (the  "Holder")  or its  registered  assigns,  is
entitled,  subject to the terms and  conditions of this Warrant,  at any time or
from time to time at or after the time the  Purchase  Price (as defined  herein)
has been established (the  "Commencement  Date") and at or before 5:00 P.M., New
York time,  on April 15, 2002 (the  "Expiration  Date"),  to  subscribe  for and
purchase an  aggregate  of Three  Hundred  Seventy  Nine  Thousand  Nine Hundred
(379,900) fully paid and non assessable  shares of the common stock,  $.0025 par
value ("Common Stock"), of Community Care of America,  Inc. (the "Company"),  at
the  Purchase  Price (as defined  herein),  upon  surrender  of this Warrant and
payment of the Purchase Price to the Company at the address set forth herein for
notices to the Company or at such other place as the  Company may  designate  by
written  notice to the Registered  Holder.  The number of shares of Common Stock
issuable  upon  exercise of this Warrant and the  Purchase  Price are subject to
adjustment and change as provided herein (any reference  hereinafter to Purchase
Price  shall mean the  Purchase  Price as  adjusted  pursuant  the terms of this
Warrant).  This Warrant is issued pursuant to that certain  Warrant  Acquisition
Agreement,  dated of even date herewith, between the Company and the Holder (the
"Purchase Agreement").

         1.       CERTAIN DEFINITIONS.

         As used in this Warrant the  following  terms shall have the  following
respective meanings:

         "Common Stock Deemed  Outstanding" means, at any given time, the number
of shares of Common Stock actually  outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding  pursuant to Sections 4.1(i) and
4.l(ii) hereof  regardless of whether the Options or Convertible  Securities are
actually  exercisable  at such time,  but  excluding  any shares of Common Stock
issuable upon exercise of the IHS Warrants.

         "Convertible Securities" shall mean any stock or securities directly or
indirectly convertible into Common Stock.



<PAGE>




         "IHS Warrants"  shall mean this Warrant and Warrant No. W-2,  issued to
the Holder on even date herewith,  and any warrants delivered in substitution or
exchange therefor as provided herein and therein.

         "Market  Price" as to any  security  on any day shall mean the  closing
sale  price  of  such  security  as  reported  for  such  day  pursuant  to  the
consolidated  quotation  system or any other  transaction  reporting  plan under
Section 11A of the  Securities  Exchange Act of 1934, as amended (the  "Exchange
Act"),  or, if there have been no sales so reported for such day, the average of
the best bid and best  offer  prices  quoted  under the  consolidated  quotation
system or any other such  transaction  reporting  plan as of 4:00 P.M., New York
time, on such day, or, if on any day such security is not so quoted, the average
of  the  best  bid  and  best  offered  prices  on  such  day  in  the  domestic
over-the-counter market as reported by any electronic communications network, as
such  term is  used  in Rule  11Acl-1(a)(8)  under  the  Exchange  Act or by the
National Quotation Bureau, Incorporated,  or any similar successor or comparable
organization.  If at any  time  such  security  is not  listed  on any  domestic
securities  exchange  or quoted  under a  transaction  reporting  plan or in the
domestic  over-the-counter  market,  the "Market  Price" shall be the fair value
thereof determined jointly by the Company and the Registered  Holders;  provided
that if such parties are unable to reach  agreement as to the Market Price,  the
Market Price shall be determined by appraisal as set forth in Section 12 of this
Warrant.

         "Note" shall mean the Subordinated Note, dated as of December 27, 1996,
executed by the Company  pursuant to that certain  Revolving  Credit  Agreement,
dated as of December 27, 1996, between the Company and the Holder.

         "Options"  means any rights,  warrants or options to  subscribe  for or
purchase Common Stock or Convertible Securities.

         "Person"   shall  mean  any   natural   person  and  any   corporation,
partnership,  limited liability company,  limited liability  partnership,  joint
venture,   association,    joint-stock   partnership,    trust,   unincorporated
organization or government or other agency or political subdivision thereof.

         "Purchase Price" shall mean the price per share equal to the average of
the high and low trading  price of the Common Stock  reported in The Wall Street
Journal, Eastern edition, for the first two full trading days following the Date
of Issuance (as such term is defined in Section 7.2 hereof) of this Warrant,  as
such price may be adjusted from time to time pursuant to Section 4 hereof

         "Registered Holder" shall mean any Person in whose name this Warrant is
registered upon the books and records maintained by the Company.

                                       -2-


<PAGE>



         "Subsidiary"  shall mean, with respect to any Person,  any corporation,
limited liability company, partnership,  association or other business entity of
which (i) if a  corporation,  a majority of the total  voting power of shares of
stock entitled  (without regard to the occurrence of any contingency) to vote in
the election of directors,  managers or trustees thereof is at the time owned or
controlled,  directly or indirectly,  by that Person or one or more of the other
Subsidiaries  of that  Person  or a  combination  thereof,  or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar  ownership  interest  thereof is at the time
owned or  controlled,  directly  or  indirectly,  by that  Person or one or more
Subsidiaries of that Person or a combination  thereof.  For purposes  hereof,  a
Person or Persons  shall be deemed to have a majority  ownership  interest  in a
limited liability company, partnership,  association or other business entity if
such  Person or  Persons  shall be  allocated  a majority  of limited  liability
company,  partnership,  association or other business  entity gains or losses or
shall be or control any  managing  director or general  partner of such  limited
liability company, partnership, association or other business entity.

         "Underlying  Common  Stock"  shall mean (i) the shares of Common  Stock
issued or issuable upon exercise of the Warrant and (ii) any Common Stock issued
or issuable  with respect to the  securities  referred to in clause (i) above by
way of stock  dividend or stock split or in  connection  with a  combination  of
shares, recapitalization, merger, consolidation, or other reorganization.

         "Warrant"  as used herein,  shall  include this Warrant and any warrant
delivered in substitution or exchange therefor as provided herein.

         2.       EXERCISE.

         2.1 EXERCISE  PERIOD.  The Warrant shall be  exercisable in whole or in
part from and after 9:00 A.M., New York time, on the Commencement Date.

         2.2      EXERCISE PROCEDURE.

         (I) This  Warrant  shall be  deemed  to have  been  exercised  when the
Company has received all of the following items:

                  (A) an Election to  Purchase  in the form  attached  hereto as
         Exhibit  A,  properly   completed  and  executed  by  the  Person  (the
         "Purchaser")  exercising all or part of the purchase rights represented
         by this Warrant;

                  (B)      this Warrant;

                  (C) if  this  Warrant  is not  registered  in the  name of the
         Purchaser,  an  Assignment  or  Assignments  in the form  set  forth in
         Exhibit B hereto  evidencing  the  assignment  of this  Warrant  to the
         Purchaser, in which case the Registered Holder shall have complied with
         the provisions set forth in Section 7.1 hereof; and


                                       -3-


<PAGE>



                  (D) either (1) a check or wire transfer payable to the Company
         in an amount equal to the product of the Purchase  Price  multiplied by
         the number of shares of Common Stock being purchased upon such exercise
         (the "Aggregate  Exercise Price"),  (2) a written notice to the Company
         that the Purchaser is exercising the Warrant (or a portion  thereof) by
         authorizing the Company to withhold from issuance a number of shares of
         Common  Stock  issuable  upon such  exercise of the Warrant  which when
         multiplied  by the  Market  Price  of  Common  Stock  is  equal  to the
         Aggregate  Exercise  Price (and such  withheld  shares of Common  Stock
         shall no longer be issuable under this  Warrant),  or (3) if the Holder
         holds the Note,  a written  notice to the  Company  that the  Holder is
         exercising  the  Warrant  (or a portion  thereof)  by  authorizing  the
         Company to withhold  and apply such amount of  principal or accrued but
         unpaid interest under the Note (whether or not then due) as is equal to
         the Aggregate  Purchase  Price (and such amount of principal or accrued
         and  unpaid  interest  under the Note shall no longer be payable to the
         Holder).

         (II) Certificates for shares of Common Stock purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within three (3)
business days after the date of the exercise,  together with cash in lieu of any
fraction of a share of Common Stock that would be issuable upon such exercise in
an amount equal to the Market Price of such  fractional  share as of the date of
exercise. No fractional shares of Common Stock or scrip representing  fractional
shares of Common Stock shall be issued upon an exercise of this Warrant.  Unless
this Warrant has expired or all of the purchase rights  represented  hereby have
been exercised, the Company shall prepare a new Warrant, substantially identical
hereto,  representing the rights formerly represented by this Warrant which have
not  expired or been  exercised  and shall  within such three (3)  business  day
period deliver such new Warrant to the Purchaser.

         (III) The shares of Common  Stock  issuable  upon the  exercise of this
Warrant  shall be  deemed to have been  issued to the  Purchaser  at the time of
exercise,  and the Purchaser shall be deemed for all purposes to have become the
record holder of such Common Stock at such time.

         (IV) The Company shall not close its books against the transfer of this
Warrant or of any share of Common Stock issued or issuable  upon the exercise of
this Warrant in any manner  which  interferes  with the timely  exercise of this
Warrant.  The  Company  shall  from time to time take all such  action as may be
necessary  to assure that the par value per share of the  unissued  Common Stock
acquirable  upon  exercise of this Warrant is at all times equal to or less than
the Purchase Price then in effect.

         (V) The Company shall assist and cooperate with any  Registered  Holder
or  Purchaser  to make any  governmental  filings  or  obtain  any  governmental
approvals  required prior to or in connection  with any exercise of this Warrant
(including,  without limitation, making at the Company's own expense any filings
required to be made by the Company).


                                       -4-


<PAGE>



         3.       EXPIRATION DATE.

         The Warrant  evidenced  hereby may not be exercise after 5:00 P.M., New
York time, on the Expiration Date with respect to the shares of the Common Stock
as to which the Warrant may be exercised and, to the extent not exercised by the
Expiration Date, the Warrant evidenced hereby shall become void.

         4.       ADJUSTMENTS.

         Subject to the provisions of this Section 4, the Purchase Price and the
number of shares of the Common  Stock as to which the Warrant  may be  exercised
shall be subject to adjustment from time to time as hereinafter set forth:

         4.1 EFFECT ON PURCHASE PRICE AND NUMBER OF SHARES OF CERTAIN EVENTS. If
and whenever on or after the Commencement  Date, the Company issues or sells, or
in accordance  with this Section 4.1 is deemed to have issued or sold, any share
of Common Stock for a  consideration  per share less than the Purchase  Price in
effect  immediately  prior to such time, then  immediately upon such issuance or
sale the Purchase  Price shall be reduced  pursuant to this Section 4.1 to a new
Purchase Price  determined by dividing (A) the sum of (x) the product derived by
multiplying the Purchase Price in effect immediately prior to such issue or sale
times the number of shares of Common Stock Deemed Outstanding  immediately prior
to such  issue or sale,  plus (y) the  consideration,  if any,  received  by the
Company  upon such issue or sale,  by (13) the number of shares of Common  Stock
Deemed  Outstanding  immediately  after  such  issue or  sale.  Upon  each  such
adjustment of the Purchase Price,  the number of shares of Common Stock issuable
upon the  exercise  of this  Warrant (to the extent not  theretofore  exercised)
shall be  increased to a number  determined  by  multiplying  the number of such
shares so purchasable  immediately  prior to such adjustment by a fraction,  the
numerator of which shall be the Purchase  Price in effect  immediately  prior to
such  adjustment  and the  denominator  of which shall be the Purchase  Price in
effect  immediately  after such  adjustment.  For  purposes of  determining  the
Purchase  Price as adjusted  under this  Section  4.1,  the  following  shall be
applicable:

         (I) ISSUANCE OF RIGHTS OR OPTIONS. If on or after the Commencement Date
the Company in any manner issues,  grants or sells any Options and the price per
share for which a share of Common  Stock is  issuable  upon the  exercise of any
such Option, or upon conversion or exchange of any Convertible Security issuable
upon  exercise  of such  Option,  is less  than the  Purchase  Price  in  effect
immediately  prior to the time of the granting or sale of such Option,  then the
total  maximum  number of shares of Common Stock  issuable  upon the exercise of
such Options,  or upon  conversion  or exchange of the total maximum  amounts of
such Convertible Securities issuable upon the exercise of such Options, shall be
deemed to be  outstanding  for purposes of  determining  the Common Stock Deemed
Outstanding  and to have been  issued  and sold by the  Company at such time for
such price per share. For purposes of this Section 4. l(i), the "price per share
for which a share of Common Stock is issuable"  shall be equal to the sum of the
amount of  consideration  (if any)  received or  receivable  by the Company with
respect to the


                                       -5-


<PAGE>



issuance,  grant, or sale of the Option,  plus the amount of  consideration  (if
any) that would be  received  by the  Company  with  respect to  exercise of the
Option in full plus the amount of consideration  (if any) that would be received
by the Company with respect to conversion or exchange in full of any Convertible
Security issuable upon exercise of such Option,  all divided by the total number
of shares of Common Stock issuable upon exercise of the Option and conversion or
exchange of the  Convertible  Security.  No further  adjustment  of the Purchase
Price  shall be made  upon the  actual  issue  of such  Common  Stock or of such
Convertible  Security upon the exercise of such Options or upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible Security.

         (II)  ISSUANCE  OF   CONVERTIBLE   SECURITIES.   If  on  or  after  the
Commencement  Date the  Company  in any  manner  issues,  grants,  or sells  any
Convertible  Security  and the price per share for which a share of Common Stock
is issuable upon conversion or exchange  thereof is less than the Purchase Price
in effect  immediately prior to the time of such issue or sale, then the maximum
number of shares of Common Stock  issuable  upon  conversion or exchange of such
Convertible  Securities  shall be  deemed  to be  outstanding  for  purposes  of
determining the Common Stock Deemed Outstanding and to have been issued and sold
by the Company at such time for such price per share.  For the  purposes of this
Section 4.  l(ii),  the  "price  per share for which a share of Common  Stock is
issuable"  shall be equal to the sum of the  amount  of  consideration  (if any)
received or  receivable  by the Company with respect to the  issuance,  grant or
sale of the Convertible  Security plus the amount of consideration (if any) that
would be received by the Company with respect to the  conversion  or exchange of
such Convertible  Security in full, all divided by the total number of shares of
Common Stock issuable upon conversion or exchange of the  Convertible  Security.
No further  adjustment of the Purchase Price shall be made upon the actual issue
of such Common Stock upon  conversion or exchange of any  Convertible  Security,
and if any such issue or sale of such Convertible Security is made upon exercise
of any Options for which  adjustments of the Purchase Price has been or is to be
made pursuant to other  provisions  of this Section 4, no further  adjustment of
the Purchase Price shall be made under this Section 4.

l(ii) by reason of such issue or sale.

         (III) CHANGE IN OPTION PRICE OR  CONVERSION  RATE.  If the amount to be
received by the Company upon the exercise of any Options  outstanding  as of the
Commencement  Date,  the  additional  consideration,  if any,  payable  upon the
issuance,  conversion,  or exchange of any Convertible Securities outstanding as
of the  Commencement  Date,  or the rate at  which  any  Convertible  Securities
outstanding as of the Commencement Date are convertible into or exchangeable for
Common Stock changes at any time after the  Commencement  Date, then such Option
or  Convertible  Security and the Common Stock deemed  issuable  upon  exercise,
conversion or exchange  thereof shall be deemed for purposes of this Section 4.1
to have been  issued,  granted  or sold as of the date of such  changes  and the
Purchase  Price  shall be adjusted as  provided  herein;  provided  that no such
change shall at any time cause the Purchase Price hereunder to be increased.


                                       -6-


<PAGE>



         (IV)  TREATMENT  OF  EXPIRED   OPTIONS  AND   UNEXERCISED   CONVERTIBLE
SECURITIES.  Upon the  expiration of any Option  described in Section 4. l(i) or
the termination of any right to convert or exchange any  Convertible  Securities
described in Section  4.1(ii)  without the exercise or conversion in whole or in
part of such Option or Convertible  Security,  the Purchase Price then in effect
and the number of shares of Common Stock  issuable  hereunder  shall be adjusted
immediately to the Purchase Price and the number of shares of Common Stock which
would have been in effect at the time of such expiration or termination had such
Option or Convertible  Securities,  never been issued, granted or sold; provided
that if such  expiration  or  termination  would  result in an  increase  in the
Purchase Price then in effect, such increase shall not be effective until thirty
(30) days after written notice thereof has been given to the Registered  Holder.
For purposes of this Section 4.1, the expiration or termination of any Option or
Convertible Security which was outstanding as of the Commencement Date shall not
cause the Purchase Price hereunder to be adjusted unless, and only to the extent
that, a change in the term of such Option or Convertible  Security  caused it to
be deemed to have been issued after the  Commencement  Date  pursuant to Section
4.1(iii).

         (V) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock, Options
or  Convertible  Securities  are issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to be the net
amount received by the Company  therefor.  In case any Common Stock,  Options or
Convertible  Securities are issued or sold for a consideration  other than cash,
the amount of the consideration other than cash received by the Company shall be
the fair value of such consideration,  except where such consideration  consists
of securities, in which case the amount of consideration received by the Company
shall be the Market Price thereof as of the date of receipt.  In case any Common
Stock  Options  or  Convertible  Securities  are  issued  to the  owners  of the
non-surviving  entity in connection  with any merger in which the Company is the
surviving  corporation,  the amount of consideration therefor shall be deemed to
be the  fair  value  of such  portion  of the net  assets  and  business  of the
non-surviving  entity  as is  attributable  to  such  Common  Stock  Options  or
Convertible Securities,  as the case may be. The fair value of any consideration
other than cash or securities shall be determined jointly by the Company and the
Registered  Holder.  If such  parties are unable to reach  agreement,  such fair
value shall be determined by appraisal pursuant to Section 12.

         (VI)  INTEGRATED  TRANSACTIONS.   In  case  any  Option  is  issued  in
connection with the issue or sale of other  securities of the Company,  together
comprising one  integrated  transaction  in which no specific  consideration  is
allocated to such Options by the parties thereto, the Options shall be deemed to
have been issued without consideration.

         (VII) EACH SERIES A SEPARATE SECURITY. In case an agreement relating to
Options or Convertible  Securities  provides that more than one Purchase  Price,
conversion or exchange  provisions  are  applicable to the  securities  issuable
thereunder,  then the  securities  subject  to each  different  exercise  price,
conversion  or  exchange  provisions  shall be deemed to be subject to  separate
Options or Convertible Securities for purposes of applying this Section 4.1.


                                       -7-


<PAGE>



         (VIII) TREASURY SHARES.  The Common Stock outstanding at any given time
does not  include  shares  owned or held by or for the account of the Company or
any  Subsidiary,  and the  disposition  of any  shares so owned or held shall be
considered an issue or sale of Common Stock.

         (IX)  RECORD  DATE.  If the  Company  takes a record of the  holders of
Common  Stock for the  purpose of  entitling  them (A) to receive a dividend  or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) to  subscribe  for or  purchase  Common  Stock,  Options  or  Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common  Stock  deemed to have been issued or sold upon the
declaration  of such  dividend or the making of such other  distribution  or the
date of the granting of such right of subscription or purchase,  as the case may
be.

         4.2  SUBDIVISION OR COMBINATION OF COMMON STOCK.  If the Company at any
time  subdivides  (by any  stock  split,  stock  dividend,  recapitalization  or
otherwise) one or more classes of its outstanding  shares of Common Stock into a
greater number of shares, the Purchase Price in effect immediately prior to such
subdivision shall be proportionately  reduced and the number of shares of Common
Stock  obtainable  upon exercise of this Warrant (to the extent not  theretofore
exercised)  shall  be  proportionally  increased.  If the  Company  at any  time
combines  (by  reverse  stock  split or  otherwise)  one or more  classes of its
outstanding shares of Common Stock into a smaller number of shares, the Purchase
Price  shall be  proportionately  increased  and the  number of shares of Common
Stock  issuable  upon  exercise of this  Warrant (to the extent not  theretofore
exercised) shall be proportionally decreased.

         4.3 REORGANIZATION  RECLASSIFICATION,  CONSOLIDATION,  MERGER, OR SALE.
Any recapitalization, reorganization, reclassification, spin-off, consolidation,
merger,  sale, or distribution of the Company's assets or other transaction,  in
each case which is effected  in such a way that the holders of Common  Stock are
entitled to receive  (either  directly  or upon  subsequent  liquidation)  stock
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Organic  Change." Prior to the consummation of any Organic Change,
the Company shall make appropriate provision (in form and substance satisfactory
to the Registered  Holders) to insure that each of the Registered  Holders shall
thereafter  have the right to acquire and receive,  in lieu of or in addition to
(as  the  case  may be) the  shares  of  Common  Stock  immediately  theretofore
acquirable  and  receivable  upon the exercise of such  Warrant,  such shares of
stock  securities  or assets as may be issued or payable  with  respect to or in
exchange  for the  number  of shares of  Common  Stock  immediately  theretofore
issuable upon  exercise of the Warrant had such Organic  Change not taken place.
In any such case,  the Company  shall make  appropriate  provision  (in form and
substance  satisfactory to the Registered Holders) with respect to such Holders'
rights and interests to insure that the provisions of this Section 4, Section 5,
and Section 6 hereof shall  thereafter be applicable to the Warrant  (including,
in the case of any such  consolidation,  merger or sale in which  the  successor
entity or purchasing entity is other than the Company, an immediate reduction in
the Purchase  Price to the value of the Common  Stock  reflected by the terms of
such consolidation,  merger or sale, and a corresponding immediate adjustment in
the number of shares of Common Stock  issuable upon exercise of this Warrant (to
the extent not theretofore exercised),


                                       -8-


<PAGE>



if the value so reflected is less than the Purchase Price in effect  immediately
prior to such  consolidation,  merger or sale). The Company shall not effect any
such spin-off,  consolidation,  merger or sale, unless prior to the consummation
thereof,  the  successor  entity  (if other  than the  Company)  resulting  from
spin-off,  consolidation, or merger or the entity purchasing such assets assumes
by written  instrument  (in form and substance  satisfactory  to the  Registered
Holders),  the  obligation  to deliver to each such  holder such shares of stock
securities  or assets as, in  accordance  with the  foregoing  provisions,  such
holder may be entitled to acquire.

         4.4 CERTAIN EVENTS. If any event occurs of the type contemplated by the
provisions of this Section 4 but not expressly  provided for by such  provisions
(including,  without  limitation,  the  granting of stock  appreciation  rights,
phantom  stock  rights or other  rights  with equity  features  or  equity-based
valuation or any  dividend or  distribution  of the capital  stock issued by any
Person other than the Company), then the Company's Board of Directors shall make
an  appropriate  adjustment  in the  Purchase  Price  and the  number  of shares
issuable upon exercise of this Warrant (to the extent not theretofore exercised)
so as to protect the rights of the  Registered  Holders;  provided  that no such
adjustment shall increase the Purchase Price as otherwise determined Pursuant to
this Section 4.

         4.5      CALCULATION OF PURCHASE PRICE: NOTICES.

         (I) All  calculations  of the Purchase Price under this Section 4 shall
be computed to the nearest One-Thousandth (1/l000th) of a cent.

         (II) Immediately upon any adjustment of the Purchase Price, the Company
shall give written  notice thereof to the  Registered  Holder,  setting forth in
reasonable  detail and certifying the calculation of such  adjustment,  provided
however,  that  such  notice  shall not be  deemed  to be  conclusive  as to the
Purchase Price calculation. At the request of the Registered Holder, the Company
shall certify the Purchase Price of and the number of shares for which a Warrant
at the time may be exercised.

         (III) The Company shall give written notice to the Registered Holder at
least  thirty (30) days prior to the date on which the Company  closes its books
or takes a record (A) with  respect to any  subdivision  or  combination  of the
Common  Stock  that  is  subject  to  Section  4.2,  or any  other  dividend  or
distribution   upon  the  Common  Stock,  (B)  with  respect  to  any  pro  rata
subscription  offer to holders of Common Stock or (C) for determining  rights to
vote with respect to any Organic Change, dissolution or liquidation.

         (IV) The  Company  shall  also give  written  notice to the  Registered
Holder at least thirty (30) days prior to the date on which any Organic  Change,
dissolution or liquidation shall take place.

         4.6 EXCLUDED  TRANSACTIONS.  The provisions of this Section 4 shall not
apply to the exercise of the IHS Warrants.


                                       -9-


<PAGE>



         4.7 EXPRESSION OF PURCHASE PRICE AND NUMBER OF SHARES.  Irrespective of
any  adjustments  or change in the  Purchase  Price or the number of  securities
actually  purchasable under the Warrant, the Warrants theretofore and thereafter
issued may continue to express the purchase  price and the number of  securities
purchasable  thereunder  as the  Purchase  Price and the  number  of  securities
purchasable were expressed in the Warrant when initially issued.

         5. NO RIGHTS OR  LIABILITIES AS  STOCKHOLDERS  AND NOTICE TO REGISTERED
HOLDER.

         Nothing  contained  herein shall be construed  as  conferring  upon the
Registered  Holder the right to vote or to  consent  or to  receive  notice as a
stockholder  in respect of the  meetings  of  stockholders  for the  election of
directors of the Company or any other matter,  or any other rights whatsoever as
a stockholder of the Company; provided, however, that in the event that:

         (A) the Company  shall take a record of the holders of its Common Stock
or other stock or  securities  for the purpose of entitling  them to receive any
dividend or other  distribution,  or any right to subscribe  for or purchase any
shares of stock of any class or any other  securities  or to  receive  any other
right;

         (B)  the  Company   shall  take  action  to   accomplish   any  capital
reorganization,  or  reclassification  of the capital stock of the Company, or a
consolidation  or merger of the Company into, or a sale of all or  substantially
all of its assets to, another corporation;

         (C) the  Company  shall take  action to redeem or convert any or all of
outstanding Common Stock or other stock or securities of the Company; or

         (D) the Company shall take action  looking to a voluntary  dissolution,
liquidation or winding up of the Company;

then, and in each such case, the Company shall mail or cause to be mailed to the
Registered Holder of this Warrant a notice  specifying,  as the case may be, (i)
the date on which a record  is to be taken  for the  purpose  of such  dividend,
distribution  or  right,  or  (ii)  the  date  on  which  such   reorganization,
reclassification,  spin-off,  consolidation,  merger,  conveyance,  dissolution,
liquidation,  winding-up,  redemption or  conversion  is to take place,  and the
time, if any, is to be fixed,  as of which the holders of record of Common Stock
or such other stock or securities  shall be entitled to exchange their shares of
Common Stock or such other stock or securities  for securities or other property
deliverable upon such reorganization,  reclassification,  consolidation, merger,
conveyance, dissolution, liquidation, winding-up, conversion or redemption. Such
notice  shall be  delivered  at least thirty (30) days prior to the date therein
specified.

         6.       DUTY TO REGISTER COMMON STOCK.

         The shares of Common Stock issuable under this Warrant are subject to a
Registration Rights Agreement with the Company dated of even date herewith.


                                      -10-


<PAGE>



         7.       TRANSFERS AND EXCHANGES.

         7.1 WARRANT  TRANSFERABLE.  Subject to the transfer conditions referred
to in the  legend  endorsed  hereon,  this  Warrant  and  all  rights  hereunder
(including those under the Purchase Agreement) are transferable,  in whole or in
part,  without charge to the Registered  Holder,  upon surrender of this Warrant
with a  properly  executed  Assignment  (in the form of Exhibit B hereto) at the
principal  office of the  Company.  The  Company  shall  record on its books the
transferee as the Registered  Holder of the portion of this Warrant  transferred
pursuant to this Section 7.1.

         7.2 WARRANT EXCHANGEABLE FOR DIFFERENT  DENOMINATIONS.  This Warrant is
exchangeable,  upon  the  surrender  hereof  by  the  Registered  Holder  at the
principal office of the Company,  for new Warrants of like teens representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered  Holder
at the time of such  surrender.  The  date the  Company  initially  issues  this
Warrant  shall be deemed to be the "Date of Issuance"  hereof  regardless of the
number of times new  certificates  representing  the unexpired  and  unexercised
rights  formerly  represented  by this  Warrant  shall be issued.  All  Warrants
representing  portions  of the rights  hereunder  are  referred to herein as the
"Warrants."

         8.       VALID ISSUANCE AND PAYMENT OF TAXES.

         All shares of Common  Stock  issued upon the  exercise of this  Warrant
shall be validly issued,  fully paid and  non-assessable,  and the Company shall
pay all taxes and other  governmental  charges that may be imposed in respect of
the issue or delivery thereof.  The Company shall not be required to pay any tax
or other charge imposed in connection with any transfer involved in the issuance
of any certificate for shares of Common Stock in any name other than that of the
Registered  Holder of this  Warrant,  and in such case the Company  shall not be
required to issue or deliver any stock certificate or security until such tax or
other  charge has been  paid,  or it has been  established  that no tax or other
charge is due.

         9.       MUTILATED OR MISSING WARRANTS.

         In case  any of the  Warrants  shall  be  mutilated,  lost,  stolen  or
destroyed, the Company shall issue and deliver in exchange and substitution for,
and  upon  cancellation  of  the  mutilated  Warrant,  or in  lieu  of,  and  in
substitution for, the Warrant lost,  stolen or destroyed,  a new Warrant of like
tenor and representing an equivalent right or interest, but only upon receipt of
reasonable evidence of such loss, theft, or destruction of such Warrant.

         10.      RESERVE.

         The Company hereby represents and covenants that it has reserved and at
all  times  there  shall  be  reserved  for  issuance  such  number  and type of
securities  as the  Registered  Holders are entitled to receive upon exercise of
the IHS Warrants. Prior to the issuance of any equity


                                      -11-


<PAGE>



securities  (or  any  instrument  exercisable  for or  convertible  into  equity
securities)  and  whenever  otherwise  required to satisfy  this Section 10, the
Company will amend its Certificate of  Incorporation  to the extent necessary to
ensure  that there is  reserved  for  issuance a  sufficient  number and type of
securities as the Registered Holders of the IHS Warrants are entitled to receive
upon exercise thereof.

         11.      NO IMPAIRMENT.

         The Company will not, by amendment of its Certificate of  Incorporation
or bylaws, or through reorganization,  consolidation, merger, dissolution, issue
or sale of securities,  sale of assets or any other voluntary  action,  avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the  Registered  Holders  against  impairment.  Without
limiting the generality of the foregoing, the Company (a) shall not increase the
par  value of any  shares  issuable  upon  exercise  of this  Warrant  above the
Purchase  Price  and (b) will  take  all  such  action  as may be  necessary  or
appropriate  in order that the Company may validly and legally  issue fully paid
and non-assessable shares of Common Stock upon exercise of this Warrant.

         12.      APPRAISAL.

         In case  of any  dispute  as to  valuation  of a  security  under  this
Agreement,  the fair value of such security  shall be determined by an appraiser
without any discount for liquidity or  restrictions  under the  Securities  Act.
This  appraisal  process shall be instituted  within  fourteen (14) days after a
party to this  Agreement  notifies  the other  party of its desire to submit the
issue to an appraiser. In the event that, within seven (7) days after a party to
this Agreement  notifies the other party of its desire to submit the issue to an
appraiser,  the parties do not agree on a single appraiser to determine the fair
value of such  security,  the fair value of such security  shall be  determined,
without any discount for liquidity or restrictions  under the Securities Act, by
the  majority  determination  of a panel of three  (3)  appraisers  who shall be
selected in the following manner: the Company shall select one (1) appraiser and
the Registered  Holder entitled to exercise this Warrant for the greatest number
of shares of Common Stock (in the event there shall be more than one  Registered
Holder),  on behalf  of all of the  Registered  Holders,  shall  select  one (1)
appraiser and the two (2) appraisers  selected by the Company and the Registered
Holder shall jointly select a third appraiser. The appraiser selected jointly by
the parties and, if applicable,  each member of the appraisal  panel shall be an
individual  who  personally  and  whose  Affiliates  shall  not have a  previous
business  relationship with either party. The appraiser and, if applicable,  the
appraisal panel shall endeavor to complete the appraisal as soon as practicable.
The  determination  of such appraiser and, if  applicable,  the appraisal  panel
shall be final and binding on the Company and the  Registered  Holders,  and the
fees and expenses of such  appraisal  shall be borne equally by the Company,  on
the one hand, and the Registered Holders on the other.


                                      -12-


<PAGE>



         13.      NOTICES.

         Except as may be  otherwise  provided  herein,  all  notices  and other
communications  required or permitted hereunder shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other
party,  (b) when  received  when sent by  facsimile  to number  set forth  below
(provided,  however,  that  notices  given by  facsimile  shall not be effective
unless either (i) a duplicate copy of such facsimile notice is promptly given by
one of the other  methods  described in this  Section 13, or (ii) the  receiving
party  delivers a written  confirmation  of receipt  for such  notice  either by
facsimile  or any other  method  described  in this Section 13) and (c) the next
business day after deposit with a national overnight  delivery service,  postage
prepaid,  addressed  to the  parties as set forth  below with  next-business-day
delivery guaranteed,  provided that the sending party receives a confirmation of
delivery from the delivery service provider.

   TO:  THE REGISTERED HOLDER                   TO:  THE COMPANY

   Integrated Health Services, Inc.             Community Care of America, Inc.
   10065 Red Run Boulevard                      3050 North Horseshoe Drive
   Owings Mills, MD 21117                       Naples, FL 33942
   Fax No.: (410) 998-8747                      Fax No.: (941) 435-0087
   Attn: Marshall A. Elkins, Esq.               Attn: Deborah A. Lau, President

A party may  change or  supplement  the  addresses  given  above,  or  designate
additional addresses,  for purposes of this Section 13 by giving the other party
written notice of the new address in the manner set forth above.

         14.      HEADINGS.

         The  headings  in this  Warrant  are for  purposes  of  convenience  in
reference only, and shall not be deemed to constitute a part hereof.

         15.      GOVERNING LAW.

         This Warrant shall be construed and enforced in  accordance  with,  and
governed  by,  the laws of the State of New York  without  regard to  provisions
regarding choice of laws.

         16.      SEVERABILITY.

         If any term, provision, covenant or restriction of this Warrant is held
by a court of competent  jurisdiction to be invalid, void or unenforceable,  the
remainder of the terms,  provisions,  covenants and restrictions of this Warrant
shall remain in full force and effect and shall in no way be affected,  impaired
or invalidated.


                                      -13-


<PAGE>



         17.      NO INCONSISTENT AGREEMENTS.

         The Company  will not on or after the date of this  Warrant  enter into
any agreement  which is  inconsistent  with the rights granted to the Registered
Holders of this Warrant or otherwise  conflicts with the provisions  hereof. The
Company hereby represents and warrants that the rights granted to the Registered
Holders  hereunder do not in any way conflict with and are not inconsistent with
the  rights  granted  to holders  of the  Company's  securities  under any other
agreements, except rights that have been waived.

         18.      SATURDAYS, SUNDAYS, AND HOLIDAYS.

         If the Expiration Date falls on a Saturday,  Sunday,  or legal holiday,
the  Expiration  Date shall  automatically  be extended until 5:00 p.m. the next
business day.

         IN WITNESS  WHEREOF,  Community  Care of America,  Inc. has caused this
Warrant to be signed  manually  by a duly  authorized  officer of the Company on
this ______ day of _____________________________ , 1997.

                                           COMMUNITY CARE OF
                                           AMERICA, INC.

                                           By:
                                              ----------------------------------
                                              Deborah A. Lau, President

                                      -14-


<PAGE>





                                    EXHIBIT A

                              ELECTION TO PURCHASE

To:      Community Care of America, Inc.

         --------------------------------

         --------------------------------

         --------------------------------


         The  undersigned  hereby elects to exercise the Warrant  represented by
the within Warrant  Certificate to purchase  shares of the Common Stock issuable
upon the exercise of the Warrant and requests that  certificates for such shares
shall be issued in the name of:


                        --------------------------------
                                     (Name)


                        --------------------------------
                                    (Address)


                        --------------------------------
                                (Taxpayer number)

                        and be delivered to:
                                            ------------


                        --------------------------------
                                     (Name)

                        --------------------------------
                                    (Address)

and, if said number of shares of the Common Stock shall not be all the shares of
the Common Stock evidenced by the within Warrant Certificate, that a new Warrant
Certificate  for the balance  remaining of such said shares be registered in the
name of:

                        --------------------------------
                                     (Name)

                        --------------------------------
                                    (Address)

                        --------------------------------
                                (Taxpayer number)


                                      -15-


<PAGE>



and delivered to the undersigned at the address below stated.

Dated:              , 19
      --------------     --
Name of holder of Warrant Certificate


                        --------------------------------
                                 (please print)


                        --------------------------------
                                    (Address)


                        --------------------------------
                                   (Signature)


                                      -16-


<PAGE>


                                    EXHIBIT B

                                   ASSIGNMENT

                    (to be executed by the registered holder
                   to effect a transfer of the within Warrant)

FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns, and transfers unto_______________________________________
________________________________________________________________________________
                                     (Name)
________________________________________________________________________________
                                    (Address)
________________________________________________________________________________

the right to purchase the  _________  shares of Common  Stock  evidenced by this
Warrant,    and    does    hereby    irrevocably    constitute    and    appoint
________________________ to transfer the said right on the books of the Company,
with full power of substitution.

Dated: ________________________
                                             ___________________________________
                                                           (Signature)


                                      -17-


<PAGE>