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.

                          AMENDED AND RESTATED 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 5:00 p.m.,  New York time,  on April 15, 1997 (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
nonassessable  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).

           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.

           "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.


                                                                 -1-

<PAGE>



           "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 a price per share of  $1.9375,  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.

           "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


                                       -2-

<PAGE>



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

(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


                                       -3-

<PAGE>



           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).

           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-

<PAGE>



           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  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


                                       -5-

<PAGE>



           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.

(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


                                       -6-

<PAGE>



           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.

(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


                                      -7-

<PAGE>



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),  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.



                                       -8-

<PAGE>



           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.

           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:



                                                                 -9-

<PAGE>


(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  shall be
subject to all of the terms and conditions of that certain  Registration  Rights
Agreement between Holder and the Company, dated as of January 13, 1997, with the
same effect as though this Warrant was included  within the term  "Warrants"  as
defined in such Registration Rights Agreement.

           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.



                                      -10-

<PAGE>


           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  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


                                      -11-

<PAGE>



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.

           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.



                                      -12-

<PAGE>



   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.

           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.



                                      -13-

<PAGE>



           19.        AMENDED AND  RESTATED  WARRANT.  This  Warrant  amends and
restates in its entirety  that certain  Warrant No. C-1 issued by the Company to
Holder for 379,900 shares, dated April 15, 1997.

           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 15th day of April, 1997.

                                       COMMUNITY CARE OF AMERICA, INC.


                                       By: /S/ DEBORAH A. LAU,
                                          -----------------------
                                          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-