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                                                                   EXHIBIT 10.83

                                  DEED OF TRUST


                           THIS Deed of Trust made the 14 day of November, 1996,
                  between NEXTHEALTH, INC., a Delaware corporation having an
                  office at 16600 N. Lago Del Oro Parkway, Tucson, Arizona 85739
                  (hereinafter referred to as "Grantor"), and FIDELITY NATIONAL
                  TITLE AGENCY, INC., an Arizona corporation whose mailing
                  address is 7750 E. Broadway, Suite A-200, Tucson, Arizona
                  85710-3903 (hereinafter referred to as "Trustee"), for the use
                  and benefit of AP LOM LLC a Delaware limited liability company
                  having an office at c/o Apollo Real Estate Advisors L.P., 1301
                  Avenue of the Americas, 38th Floor, New York, New York 10019
                  (hereinafter referred to as "Beneficiary"),


                              W I T N E S S E T H :


         A. Whereas Grantor is the owner of a fee estate in the premises
described in EXHIBIT A attached hereto (hereinafter referred to as the
"Premises");

         B. NOW, THEREFORE, to secure the payment of an indebtedness in the
aggregate principal sum of up to THIRTEEN MILLION NINETY THOUSAND and 00/100
Dollars ($13,090,000), lawful money of the United States of America, or so much
thereof as may be advanced in accordance with the provisions of the Credit
Agreement, to be paid with interest according to (i) that certain A Term Note in
an amount up to $8,090,000 and (ii) that certain B Term Note in an amount up to
$5,000,000 (hereinafter referred to collectively as the "Notes") given by
Grantor to Beneficiary (said indebtedness, interest and all other sums of any
nature whatsoever which may or shall become due under or pursuant to the
provisions of the Notes, as such Notes may be extended, modified or renewed,
this Deed of Trust or the other Loan Documents being hereinafter collectively
referred to as the "Debt"), Grantor has given, granted, bargained, sold,
aliened, enfeoffed, conveyed, confirmed and assigned, and by these presents does
give, grant, bargain, sell, alien, enfeoff, convey, confirm and assign unto
Trustee IN TRUST FOREVER, WITH POWER OF SALE, all right, title and interest of
Grantor now owned, or hereafter acquired, in and to the following property,
rights and interests (such property, rights and interests being hereinafter
collectively referred to as the "Trust Property"):

                  (a) the Premises;


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                  (b) all buildings and improvements now or hereafter located on
         the Premises (hereinafter referred to as the "Improvements");

                  (c) all of the estate, right, title, claim or demand of any
         nature whatsoever of Grantor, either in law or in equity, in possession
         or expectancy, in and to the Trust Property or any part thereof;

                  (d) all easements, rights-of-way, gores of land, streets,
         ways, alleys, passages, sewer rights, waters, water courses, water
         rights and powers, and all estates, rights, titles, interests,
         privileges, liberties, tenements, hereditaments, and appurtenances of
         any nature whatsoever, in any way belonging, relating or pertaining to
         the Trust Property (including, without limitation, any and all
         development rights, air rights or similar or comparable rights of any
         nature whatsoever now or hereafter appurtenant to the Premises or now
         or hereafter transferred to the Premises) and all land lying in the bed
         of any street, road or avenue, opened or proposed, in front of or
         adjoining the Premises to the center line thereof;

                  (e) all machinery, apparatus, equipment, fittings, fixtures
         and other property of every kind and nature whatsoever owned by
         Grantor, or in which Grantor has or shall have an interest, now or
         hereafter located upon the Trust Property, or appurtenances thereto, or
         usable in connection with the present or future operation and occupancy
         of the Trust Property and all building equipment, materials and
         supplies of any nature whatsoever owned by Grantor, or in which Grantor
         has or shall have an interest, now or hereafter located upon the Trust
         Property (hereinafter collectively referred to as the "Equipment"), and
         the right, title and interest of Grantor in and to any of the Equipment
         which may be subject to any security agreements (as defined in the
         Uniform Commercial Code of the State in which the Premises are
         located), superior in lien to the lien of this Deed of Trust;

                  (f) all awards or payments, including interest thereon, and
         the right to receive the same, which may be made with respect to the
         Trust Property, whether from the exercise of the right of eminent
         domain (including any transfer made in lieu of the exercise of said
         right), or for any other injury to or decrease in the value of the
         Trust Property;

                  (g) all leases, licenses and other agreements affecting or
         relating to the use or occupancy of the Trust Property now or hereafter
         entered into (hereinafter referred to as the "Leases") and the right to
         receive and apply the rents, income, revenues, receipts, accounts,
         accounts receivable, issues and profits of or derived from or relating
         to the Trust Property and the fees, charges, accounts, accounts
         receivable or other payments for the use or occupancy of rooms, suites
         and private and public function space constituting part of or located
         in the Trust Property including but not limited to the rental of any
         office


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         space, retail space, halls, stores, and offices of every kind, and
         rentals, revenues of the rental of rooms, food and beverage facilities,
         telephone services, laundry, vending, television and parking
         (hereinafter collectively referred to as the "Rents") to the payment of
         the Debt;

                  (h) all proceeds of and any unearned premiums on any insurance
         policies covering the Trust Property, including, without limitation,
         the right to receive and apply the proceeds of any insurance,
         judgments, or settlements made in lieu thereof, for damage to the Trust
         Property; and

                  (i) the right, in the name and on behalf of Grantor, to appear
         in and defend any action, case or proceeding brought with respect to
         the Trust Property and to commence any action, case or proceeding to
         protect the interest of Beneficiary in the Trust Property;

         TO HAVE AND TO HOLD the above granted and described Trust Property unto
and to the proper use and benefit of Trustee, and the successors and assigns of
Trustee, forever;

         IN TRUST, to secure the payment to Beneficiary of the Debt at the time
and in the manner provided for its payment in the Notes, this Deed of Trust and
the other Loan Documents;

         AND Grantor covenants and agrees with and represents and warrants to
Trustee and Beneficiary as follows:

         1.       DEFINITIONS. Attached to this Deed of Trust as EXHIBIT B is an
index of the defined terms used in this Deed of Trust.

         2.       PAYMENT OF DEBT. Grantor will pay the Debt at the time and in
the manner provided for its payment in the Notes, this Deed of Trust and the
other Loan Documents.

         3.       WARRANTY OF TITLE. Subject only to those exceptions to title
specifically set forth in the title policy issued or to be issued by Fidelity
National Title Agency, Inc. to Beneficiary and insuring the lien of this Deed of
Trust, Grantor warrants the title to the Premises, the Improvements, the
Equipment and the balance of the Trust Property.

         4.       INSURANCE COVERAGE. Grantor will insure the Trust Property 
against such perils and hazards, and in such amounts and with such limits, as
Beneficiary may from time to time require, and in any event will continuously
maintain, without cost or expense to Beneficiary, the insurance described in
EXHIBIT C attached to this Deed of Trust (hereinafter collectively referred to
as the "Insurance Policies"). All Insurance Policies shall be in form, issued by
companies and in amounts satisfactory to Beneficiary from time to time. An
insurance company shall not be satisfactory unless such insurance company (i)


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has Best's general policyholder rating of "A-" or better and a financial rating
of "Class VIII" or better, (ii) is licensed in Delaware and in the State in
which the Premises are located, (iii) has actively been in business for at least
five (5) years, (iv) if it is a mutual company, is a nonassessable company, and
(v) does not provide insurance on any one building in excess of 10% of its
policyholders' surplus (including capital). All Insurance Policies insuring
against casualty and business interruption and other Insurance Policies, as
appropriate, shall include non-contributing mortgagee endorsements in favor of
Beneficiary, its affiliates, subsidiaries, successors and assigns, as their
interests may appear, with loss payable to Beneficiary, as well as standard
waiver of subrogation endorsements, and shall provide that the coverage shall
not be terminated or modified, nor a risk changed without thirty (30) days'
advance written notice to Beneficiary. A verified copy of each Insurance Policy
shall be delivered to Beneficiary. Blanket insurance policies shall not be
acceptable unless otherwise agreed to the contrary by Beneficiary. If any
portion of the insured risks are reinsured, the reinsurance policies shall
contain "cut-through" endorsements in form satisfactory to Beneficiary. Grantor
will deliver all Insurance Policies, premium prepaid for a period of one (1)
calendar year to Beneficiary and, in the case of Insurance Policies about to
expire, Grantor will deliver renewal or replacement policies not less than
thirty (30) days prior to the date of expiration. Grantor will provide
Beneficiary on a calendar year basis with evidence satisfactory to Beneficiary
that all insurance premiums (hereinafter referred to as the "Insurance
Premiums") for the required Insurance Policies have been paid with respect to
such calendar year. The foregoing requirements of the this paragraph shall apply
to any separate policies of insurance taken out by Grantor concurrent in form or
contributing in the event of loss with the Insurance Policies. If at any time
Beneficiary is not in receipt of written evidence that all insurance required
hereunder is in force and effect, Beneficiary shall have the absolute and
unconditional right without prior notice to Grantor to take such action as
Beneficiary deems necessary to protect its interest in the Trust Property,
including, without limitation, the obtaining of such insurance coverage as
Beneficiary in its sole and absolute discretion deems appropriate, and all
expenses incurred by Beneficiary in connection with such action or in obtaining
such insurance and keeping it in effect shall be paid by Grantor to Beneficiary
upon demand, together with interest thereon at the Default Rate. Grantor shall
at all times comply with and shall cause the Improvements and Equipment and the
use, occupancy, operation, maintenance, alteration, repair and restoration
thereof to comply with the terms, conditions, stipulations and requirements of
the Insurance Policies. If the Premises, or any portion thereof, are located in
a Federally designated "special flood hazard area", in addition to the other
Insurance Policies required under this paragraph, a flood insurance policy shall
be delivered by Grantor to Beneficiary. If no portion of the Premises is located
in a Federally designated "special flood hazard area" such fact shall be
substantiated by a certificate in form satisfactory to Beneficiary from a
licensed surveyor, appraiser or professional engineer or other qualified person.
If the Trust Property shall be damaged or destroyed, in


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whole or in part, by fire or other property hazard or casualty, Grantor shall
give prompt notice thereof to Beneficiary. Except as otherwise hereinafter
specifically provided to the contrary in paragraph 6 of this Deed of Trust, sums
paid to Beneficiary by any insurer may be retained and applied by Beneficiary
toward payment of the Debt whether or not then due and payable in such order,
priority and proportions as Beneficiary in its discretion shall deem appropriate
or, at the discretion of Beneficiary, the same may be paid, either in whole or
in part, to Grantor for such purposes as Beneficiary shall designate. If
Beneficiary shall receive and retain such insurance proceeds, the lien of this
Deed of Trust shall be reduced only by the amount thereof received and retained
by Beneficiary and actually applied by Beneficiary in reduction of the Debt.

         5.       INSURANCE PREMIUM DEPOSITS. In order to assure the payment of
the Insurance Premiums as and when the same shall become due and payable,
Grantor shall deposit with Beneficiary on the first day of each calendar month
during the term of this Deed of Trust, an amount equal to one-twelfth (1/12) of
the Insurance Premiums to become due with respect to the required Insurance
Policies between one and thirteen months after the date of each such deposit, it
being the intention that at all times during the term of this Deed of Trust
there shall remain on deposit with Beneficiary an amount at least equal to
one-twelfth (1/12) of the Insurance Premiums to become due with respect to the
required Insurance Policies within the ensuing twelve (12) month period. The
amounts of such deposits (hereinafter referred to as the "Insurance Premium
Deposits") shall be based upon Beneficiary's estimate as to the amount of the
Insurance Premiums. Grantor shall, upon demand of Beneficiary, make additional
Insurance Premium Deposits as Beneficiary may from time to time require due to
(i) the failure of Beneficiary to require, or failure of Grantor to make,
Insurance Premium Deposits in previous months, (ii) under estimation of the
amount of the Insurance Premiums, (iii) the particular due dates and amount of
the Insurance Premiums, or (iv) application of the Insurance Premium Deposits
pursuant to the provision of this paragraph hereinafter set forth to the payment
of the Insurance Premiums. Beneficiary will, out of the Insurance Premium
Deposits, upon the presentation to Beneficiary by Grantor of the bills therefor
and at the direction of Grantor, pay the Insurance Premiums which are due or
will, upon the presentation of receipted bills therefor, reimburse Grantor for
such payments made by Grantor. If the total Insurance Premium Deposits on hand
shall not be sufficient to pay all of the Insurance Premiums for the Trust
Property when the same shall become due, then Grantor shall pay to Beneficiary
on demand the amount necessary to make up the deficiency. Beneficiary shall not
be obligated to pay any Insurance Premiums which are due unless it is in receipt
of available funds in an amount sufficient to pay such Insurance Premiums in
full. Notwithstanding anything to the contrary contained herein, Beneficiary
shall have the absolute right, regardless of whether it has received direction
from Grantor, to pay the Insurance Premiums at any time during the thirty (30)
day period prior to the due date thereof. Any excess monies remaining in the
Insurance Premium Escrow Account after the payment in full of the Insurance


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Premiums which are due shall be applied as a credit against future Insurance
Premium Deposits pursuant to this paragraph. All Insurance Premium Deposits
shall be held by Beneficiary in a non-interest bearing account selected by
Beneficiary in its sole and absolute discretion (hereinafter referred to as the
"Insurance Premium Escrow Account"). The Insurance Premium Escrow Account may be
co-mingled with any other accounts of Beneficiary. In order to secure the
payment of the Debt and the performance by Grantor of its obligations under the
Loan Documents, Grantor hereby grants and assigns to Beneficiary a security
interest in and to the Insurance Premium Escrow Account and in and to all monies
from time to time on deposit therein. Until expended or applied in accordance
with the provisions of this Deed of Trust, any amounts in the Insurance Premium
Escrow Account shall constitute additional security for the payment of the Debt.
Upon the occurrence of an Event of Default, Beneficiary shall have the absolute
right to apply all or any portion of the balance held in the Insurance Premium
Escrow Account to the payment of the Debt whether or not then due and payable in
such order, priority and proportions as Beneficiary in its discretion shall deem
appropriate. Notwithstanding anything herein to the contrary, neither
Beneficiary nor its successors and assigns, shall be liable for any failure to
apply the Insurance Premium Deposits to the payment of Insurance Premiums which
are due unless Grantor, while no default exists under the Notes, this Deed of
Trust or any of the other Loan Documents, shall have requested Beneficiary in
writing to make application of the Insurance Premium Deposits on hand to the
payment of the Insurance Premiums which are due, accompanied by the bills
therefor. The provisions of this paragraph are for the benefit of Grantor and
Beneficiary alone. No provision of this Deed of Trust or the other Loan Document
shall be construed as creating in any party (other than Grantor and Beneficiary)
any rights in and to the Insurance Premium Deposits or the Insurance Premium
Escrow Account or any rights to have the Insurance Premium Deposits applied to
payments of the Insurance Premiums. Beneficiary shall have no obligation or duty
to any third party to collect the Insurance Premium Deposits. Notwithstanding
the foregoing, Beneficiary shall not exercise its rights hereunder to require
Insurance Premium Deposits unless and until a default has occurred hereunder or
under the other Loan Documents.

         6.       APPLICATION OF INSURANCE PROCEEDS TO REPAIR. If the 
Improvements shall be damaged or destroyed, in whole or in part, by fire or
other casualty, Beneficiary shall, in accordance with the provisions of this
paragraph hereinafter set forth, make the net amount of all insurance proceeds
received by Beneficiary pursuant to the provisions of this Deed of Trust as a
result of such damage or destruction after deduction of its reasonable costs and
expenses, if any, in collecting the same (hereinafter referred to as the "Net
Proceeds") available for the repair and restoration of the Improvements,
provided that (i) no default shall have occurred and shall be continuing under
the Notes, this Deed of Trust or any of the other Loan Documents, (ii) Grantor
shall commence the repair and restoration of the Improvements, as nearly as
possible to the condition the Improvements were in immediately prior to such
fire or other casualty, with such alterations as may be approved by


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Beneficiary, as soon as reasonably practicable (but in no event later than
thirty (30) days after such damage or destruction occurs) and shall diligently
pursue the same to satisfactory completion, (iii) Beneficiary shall be satisfied
that any operating deficits which will be incurred with respect to the Trust
Property as a result of the occurrence of any such fire or other casualty will
be covered out of the Net Proceeds or by Grantor out-of-pocket or with the
proceeds, if any, of business interruption or rental interruption insurance,
(iv) Beneficiary shall be satisfied that, upon the completion of such repair and
restoration of the Improvements, the gross cash flow and the net cash flow of
the Trust Property will be restored to a level sufficient to cover all carrying
costs and operating expenses of the Trust Property, and not less than the level
immediately prior to such casualty, (v) Beneficiary shall be satisfied that the
repair and restoration of the Improvements will be completed on or before the
earlier to occur of (w) six (6) months prior to the maturity date of the Notes,
or (x) six (6) months after the occurrence of such fire or other casualty. The
Net Proceeds, shall be held by Beneficiary in a non-interest bearing account,
and until disbursed in accordance with the provisions of this paragraph, shall
constitute additional security for the payment of the Debt. The Net Proceeds
together with interest earned thereon, shall be disbursed by Beneficiary to, or
as directed by, Grantor from time to time during the course of the repair and
restoration of the Improvements, upon receipt of evidence satisfactory to
Beneficiary (which evidence shall in each instance and to the full extent
required by Beneficiary include receipted bills, invoices, lien waivers and a
continuation and date down of title to the Trust Property in form satisfactory
to Beneficiary and issued by the title company insuring the lien of this Deed of
Trust or another title company satisfactory to Beneficiary) that (i) all
materials installed and work and labor performed (except to the extent that they
are to be paid for out of the requested disbursement) in connection with the
repair and restoration of the Improvements have been paid for in full, and (ii)
there exist no notice of pendency, stop order, notice of intention to file
mechanic's or materialman's lien, mechanic's or materialman's lien or other lien
or encumbrance of any nature whatsoever on the Trust Property arising out of the
repair and restoration of the Improvements which have not either been fully
bonded to the satisfaction of Beneficiary and discharged of record or in the
alternative fully insured over to the satisfaction of Beneficiary by the title
company insuring the lien of this Deed of Trust. The repair and restoration of
the Improvements shall be done and completed by Grantor in an expeditious and
diligent fashion and in compliance with all applicable governmental laws, rules
and regulations (including, without limitation, all applicable Environmental
Requirements), and all plans and specifications required in connection with the
repair and restoration of the Improvements shall be subject to review and
acceptance in all respects by Beneficiary and by an independent consulting
engineer selected by Beneficiary (hereinafter referred to in this paragraph as
the "Consultant"). Upon the occurrence of an Event of Default, Beneficiary shall
have the use of such plan and specifications and all permits, licenses and
approvals required or obtained in connection with the repair and restoration of
the Improvements. The identity of the


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contractors, subcontractors and materialmen engaged in the repair and
restoration of the Improvements, as well as the contracts under which they have
been engaged, shall be subject to approval, review and acceptance by Beneficiary
and Consultant. All costs and expenses incurred by Beneficiary in connection
with making the Net Proceeds available for the repair and restoration of the
Improvements including, without limitation, reasonable counsel fees and the
Consultant's fees, shall be paid by Grantor. In no event shall Beneficiary be
obligated to make disbursements of the Net Proceeds in excess of an amount equal
to the costs actually incurred from time to time for work in place as part of
the repair and restoration of the Improvements, as certified by the Consultant,
minus the Casualty Retainage. The term "Casualty Retainage" as used in this
paragraph shall mean an amount equal to 10% of the costs actually incurred for
work in place as part of the repair and restoration of the Improvements, as
certified by the Consultant. The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary hereinabove set forth in this
paragraph, be less than the amount actually held back by Grantor from
contractors, subcontractors and materialmen engaged in the making of the repair
and restoration of the Improvements. Beneficiary shall not be obligated to make
disbursements of the Net Proceeds more frequently than once every thirty (30)
days. The Casualty Retainage shall not be released until the Consultant
certifies to Beneficiary that the repair and restoration of the Improvements
have been completed in accordance with the provisions of this paragraph, and
Beneficiary receives evidence satisfactory to Beneficiary that the costs of the
repair and restoration of the Improvements have been paid in full or will be
paid in full out of the Casualty Retainage. Notwithstanding anything to the
contrary contained in this paragraph, if the Net Proceeds shall be less than
$500,000 and if the costs of completing the repair and restoration of the
Improvements shall be less than $500,000, the Net Proceeds will be disbursed by
Beneficiary to Grantor upon receipt, provided that no default shall have
occurred and shall be continuing under the Notes or this Deed of Trust, and
Grantor delivers to Beneficiary a written undertaking to expeditiously commence
and to satisfactorily complete with due diligence the repair and restoration of
the Improvements. If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Beneficiary, be sufficient to pay in full
the balance of the costs which will be incurred in connection with the
completion of the repair and restoration of the Improvements, Grantor shall
deposit the deficiency (hereinafter referred to as the "Net Proceeds
Deficiency") with Beneficiary before any further disbursement of the Net
Proceeds shall be made, which Net Proceeds Deficiency deposit shall be held by
Beneficiary in a non-interest bearing account, shall be disbursed for costs
actually incurred in connection with the repair and restoration of the
Improvements on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this paragraph shall constitute
additional security for the payment of the Debt. Upon the occurrence of an Event
of Default, Beneficiary shall have the right to apply the undisbursed balance of
any Net Proceeds Deficiency deposit, to the payment of the Debt whether or not
then due and payable in such order, priority and proportions as


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Beneficiary shall deem to be appropriate in its discretion. The remaining
balance, if any, of the Net Proceeds Deficiency deposit, after the Consultant
certifies to Beneficiary that the repair and restoration of the Improvements
have been completed in accordance with the provisions of this paragraph, and the
receipt by Beneficiary of evidence satisfactory to Beneficiary that all costs
incurred in connection with the repair and restoration have been paid in full,
shall be remitted by Beneficiary to Grantor, provided no default shall have
occurred and shall be continuing under the Notes, this Deed of Trust or any of
the other Loan Documents. All costs of the repair and restoration of the
Improvements in excess of the Net Proceeds shall be paid for by Grantor. All
insurance proceeds received by Beneficiary and not required to be disbursed for
the repair and restoration of the Improvements may be retained and applied by
Beneficiary toward the payment of the Debt whether or not then due and payable
in such order, priority and proportions as Beneficiary in its discretion shall
deem proper or, at the discretion of Beneficiary, the same may be paid, either
in whole or in part, to Grantor for such purposes as Beneficiary shall
designate, in its discretion. If Beneficiary shall receive and retain insurance
proceeds, the lien of this Deed of Trust shall be reduced only by the amount
thereof received and retained by Beneficiary and actually applied by Beneficiary
in reduction of the Debt.

         7.       PAYMENT OF TAXES, ETC. Grantor shall pay all taxes, 
assessments, water rates, sewer rents and other charges, including vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed against the Trust Property
(hereinafter referred to as the "Taxes") prior to the date upon which any fine,
penalty, interest or cost may be added thereto or imposed by law for the
nonpayment thereof. Grantor shall deliver to Beneficiary, upon request,
receipted bills, cancelled checks and other evidence satisfactory to Beneficiary
evidencing the payment of the Taxes prior to the date upon which any fine,
penalty, interest or cost may be added thereto or imposed by law for the
nonpayment thereof. Beneficiary shall have the right in its discretion to
maintain a tax services contract with respect to the Trust Property with a tax
reporting agency satisfactory to Beneficiary. Grantor shall reimburse
Beneficiary upon demand for the cost of maintaining such tax service contract
during the term of this Deed of Trust, provided that in no event will Grantor be
obligated to pay more than $500 per annum in respect of such tax services
contract. After prior notice to Beneficiary, in the case of any material item,
Grantor, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any of the Taxes,
provided that (i) no default shall have occurred and shall be continuing under
the Notes, this Deed of Trust or any of the other Loan Documents, (ii) Grantor
is permitted to do so under the provisions of any mortgage or deed of trust
superior in lien to this Deed of Trust, (iii) such proceeding shall suspend the
collection of the contested Taxes from Grantor and from the Trust Property, (iv)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to


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which Grantor or the Trust Property is subject and shall not constitute a
default thereunder, (v) neither the Trust Property nor any part thereof nor any
interest therein will in the opinion of Beneficiary be in danger of being sold,
forfeited, terminated, cancelled or lost, and (vi) Grantor shall have set aside
in a manner satisfactory to Beneficiary adequate cash reserves for the payment
of the contested Taxes, together with all interest and penalties thereon, or in
the alternative Grantor shall have furnished such security as may be required in
the proceeding, or as may otherwise be requested or required by Beneficiary to
insure the payment of the contested Taxes, together with all interest and
penalties thereon.

         8.       TAX DEPOSITS. In order to assure the payment of Taxes as and
when the same shall become due and payable, Grantor shall deposit with
Beneficiary on the first day of each calendar month during the term of this Deed
of Trust, an amount equal to one-twelfth (1/12) of the Taxes to become due upon
the Trust Property between one and thirteen months after the date of each such
deposit, it being the intention that at all times during the term of this Deed
of Trust there shall remain on deposit with Beneficiary an amount at least equal
to one-twelfth (1/12) of the Taxes to become due within the ensuing twelve (12)
month period. The amounts of such deposits (hereinafter referred to as the "Tax
Deposits") shall be based upon Beneficiary's estimate as to the amount of the
Taxes. Grantor shall, upon demand of Beneficiary, make additional Tax Deposits
as Beneficiary may from time to time require due to (i) the failure of
Beneficiary to require, or failure of Grantor to make, Tax Deposits in previous
months, (ii) under estimation of the amounts of the Taxes, (iii) the particular
due dates and amount of the Taxes, or (iv) application of the Tax Deposits
pursuant to the provision of this paragraph hereinafter set forth to the payment
of the Taxes. Beneficiary will, out of the Tax Deposits, upon the presentation
to Beneficiary by Grantor of the bills therefor and at the direction of Grantor,
pay the Taxes which are due or will, upon the presentation of receipted bills
therefor, reimburse Grantor for such payments made by Grantor. If the total Tax
Deposits on hand shall not be sufficient to pay all of the Taxes for the Trust
Property when the same shall become due, then Grantor shall pay to Beneficiary
on demand the amount necessary to make up the deficiency. Beneficiary shall not
be obligated to pay any Taxes which are due unless it is in receipt of available
funds in an amount sufficient to pay such Taxes in full. Notwithstanding
anything to the contrary contained herein, but subject to Grantor's right to
contest Taxes in accordance with the provisions of paragraph 7 of this Deed of
Trust, Beneficiary shall have the absolute right, regardless of whether it has
received direction from Grantor, to pay the Taxes at any time during the thirty
(30) day period prior to the due date thereof. Any excess monies remaining in
the Tax Escrow Account after the payment in full of the Taxes which are due
shall be applied as a credit against future Tax Deposits pursuant to this
paragraph. All Tax Deposits shall be held by Beneficiary in a non-interest
bearing account selected by Beneficiary in its sole and absolute discretion
(hereinafter referred to as the "Tax Escrow Account"). The Tax Escrow Account
may be co-mingled with any other accounts of


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Beneficiary. In order to secure the payment of the Debt and the performance by
Grantor of its obligations under the Loan Documents, Grantor hereby grants and
assigns to Beneficiary a security interest in and to the Tax Escrow Account and
in and to all monies from time to time on deposit therein. Until expended or
applied in accordance with the provisions of this Deed of Trust, any amounts in
the Tax Escrow Account shall constitute additional security for the payment of
the Debt. Upon the occurrence of an Event of Default, Beneficiary shall have the
absolute right to apply all or any portion of the balance held in the Tax Escrow
Account to the payment of the Debt whether or not then due and payable in such
order, priority and proportions as Beneficiary in its discretion shall deem
appropriate. Notwithstanding anything herein to the contrary, neither
Beneficiary nor its successors and assigns, shall be liable for any failure to
apply the Tax Deposits to the payment of any Taxes which are due, unless
Grantor, while no default exists under the Notes, this Deed of Trust or any of
the other Loan Documents, shall have requested Beneficiary in writing to make
application of the Tax Deposits on hand to the payment of the Taxes which are
due, accompanied by the bills therefor. The provisions of this paragraph are for
the benefit of Grantor and Beneficiary alone. No provision of this Deed of Trust
or the other Loan Document shall be construed as creating in any party (other
than Grantor and Beneficiary) any rights in and to the Tax Deposits or the Tax
Escrow Account or any rights to have the Tax Deposits applied to payments of the
Taxes. Beneficiary shall have no obligation or duty to any third party to
collect the Tax Deposits. Notwithstanding the foregoing, Beneficiary shall not
exercise its rights hereunder to require Tax Deposits unless and until a default
has occurred hereunder or under the other Loan Documents.

         9.       CONDEMNATION. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise, Grantor shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Notes and this Deed of Trust and the Debt shall not be reduced until any
award or payment therefor shall have been actually received and applied by
Beneficiary to the discharge of the Debt. Subject to the provisions of paragraph
10 of this Deed of Trust, Beneficiary may apply the entire amount of any such
award or payment to the discharge of the Debt whether or not then due and
payable in such order, priority and proportions as Beneficiary in its discretion
shall deem proper. If the Trust Property is sold, through foreclosure or
otherwise, prior to the receipt by Beneficiary of such award or payment,
Beneficiary shall have the right, whether or not a deficiency judgment on the
Notes shall have been sought, recovered or denied, to receive such award or
payment, or a portion thereof sufficient to pay the Debt, whichever is less.
Grantor shall file and prosecute its claim or claims for any such award or
payment in good faith and with due diligence and cause the same to be collected
and paid over to Beneficiary. Grantor hereby irrevocably authorizes and empowers
Beneficiary and Trustee, in the name of Grantor or otherwise, to collect and
receipt for any such award or payment and to file and prosecute such claim or
claims. Although it is hereby expressly agreed that the same shall not be
necessary in any event, Grantor shall, upon


                                      -11-

<PAGE>   12
demand of Beneficiary, make, execute and deliver any and all assignments and
other instruments sufficient for the purpose of assigning any such award or
payment to Beneficiary and Trustee, free and clear of any encumbrances of any
kind or nature whatsoever.

         10.      APPLICATION OF CONDEMNATION AWARD TO REPAIR. If less than all
the Trust Property is taken by any public or quasi-public authority through
eminent domain or otherwise, Beneficiary shall, in accordance with the
provisions of this paragraph hereinafter set forth, make the portion of the
aggregate award or payment received by Beneficiary pursuant to the provisions of
this Deed of Trust as a result of such taking which is specifically awarded for
the repair and restoration of the portion of the Improvements not taken or, in
the absence of any such specific award, is in the sole, but reasonable, opinion
of Beneficiary necessary to pay for the costs which will be incurred in
connection with the repair and restoration of the portion of the Improvements
not taken after deduction of its reasonable costs and expenses, if any, in
collecting the same (hereinafter referred to as the "Net Restoration Award")
available for the repair and restoration of the Improvements, provided that (i)
no default shall have occurred and shall be continuing under the Notes, this
Deed of Trust or any of the other Loan Documents, (ii) Grantor shall commence
the repair and restoration of the Improvements, as nearly as possible to the
condition the Improvements were in immediately prior to such taking, with such
alterations as may be approved by Beneficiary, as soon as reasonably practicable
(but in no event later than thirty (30) days after the earlier to occur of the
date of such taking or the date the condemnation award or payment is settled)
and shall diligently pursue the same to satisfactory completion, (iii)
Beneficiary shall be satisfied that upon the completion of the repair and
restoration of the Improvements the maximum possible principal balance of the
Notes will not be in excess of 75% of the appraised value of the portion of the
Trust Property remaining subject to the lien of this Deed of Trust, as
determined by appraisal satisfactory in all respects to Beneficiary, (iv)
Beneficiary shall be satisfied that any operating deficits which will be
incurred with respect to the Trust Property as a result of the occurrence of any
such taking will be covered out of the Net Restoration Award or by Grantor
out-of-pocket, (v) Beneficiary shall be of the opinion that it is economically
feasible to repair and restore the Improvements, (vi) Beneficiary shall be
satisfied that, upon completion of the repair and restoration of the
Improvements, the gross cash flow and the net cash flow of the Trust Property
will be restored to a level sufficient to cover all carrying costs and operating
expenses of the Trust Property and not less than the level immediately prior to
such condemnation, (vii) Beneficiary shall be satisfied that the repair and
restoration of the Improvements will be completed on or before the earlier to
occur of (w) six (6) months prior to the maturity date of the Notes, or (x) six
(6) months after the occurrence of such taking. The Net Restoration Award shall
be held by Beneficiary in a non-interest bearing account, and until disbursed in
accordance with the provisions of this paragraph, shall constitute additional
security for the payment of the Debt. The Net Restoration Award, together with
interest


                                      -12-

<PAGE>   13
thereon, shall be disbursed by Beneficiary to, or as directed by, Grantor from
time to time during the course of the repair and restoration of the
Improvements, upon receipt of evidence satisfactory to Beneficiary (which
evidence shall in each instance and to the full extent required by Beneficiary
include receipt bills, invoices, lien waivers and a continuation and date down
of title to the Trust Property in form satisfactory to Beneficiary and issued by
the title company insuring the lien of this Deed of Trust or another title
company satisfactory to Beneficiary) that (i) all materials installed and work
and labor performed (except to the extent that they are to be paid for out of
the requested disbursement) in connection with the repair and restoration of the
Improvements have been paid for in full, and (ii) there exist no notice of
pendency, stop order, notice of intention to file mechanic's or materialman's
lien, mechanic's or materialman's lien or other lien or encumbrance of any
nature whatsoever on the Trust Property arising out of the repair and
restoration of the Improvements which have not either been fully bonded to the
satisfaction of Beneficiary and discharged of record or in the alternative
otherwise fully insured over to the satisfaction of Beneficiary by the title
company insuring the lien of this Deed of Trust. The repair and restoration of
the Improvements shall be done and completed by Grantor in an expeditious and
diligent fashion and in compliance with all applicable governmental laws, rules
and regulations (including, without limitation, all applicable Environmental
Requirements), and all plans and specifications required in connection with the
repair and restoration of the Improvements shall be subject to review and
acceptance in all respects by Beneficiary and by an independent consulting
engineer selected by Beneficiary (hereinafter referred to in this paragraph as
the "Consultant"). Upon the occurrence of an Event of Default, Beneficiary shall
have the use of such plans and specifications and all permits, licenses and
approvals required or obtained in connection with the repair and restoration of
the Improvements. The identity of the contractors, subcontractors and
materialmen engaged in the repair and restoration of the Improvements, as well
as the contracts under which they have been engaged, shall be subject to
approval, review and acceptance by Beneficiary and Consultant. All costs and
expenses incurred by Beneficiary in connection with making the Net Restoration
Award available for the repair and restoration of the Improvements, including,
without limitation, appraisal fees, reasonable counsel fees and the Consultant's
fees, shall be paid by Grantor. In no event shall Beneficiary be obligated to
make disbursements of the


                                      -13-

<PAGE>   14
Net Restoration Award in excess of an amount equal to the costs actually
incurred for work in place as part of the repair and restoration of the
Improvements, as certified by the Consultant, minus the Condemnation Retainage.
The term "Condemnation Retainage" as used in this paragraph shall mean an amount
equal to 10% of the costs actually incurred for work in place as part of the
repair and restoration of the Improvements, as certified by the Consultant. The
Condemnation Retainage shall in no event, and notwithstanding anything to the
contrary hereinabove set forth in this paragraph, be less than the amount
actually held back by Grantor from contractors, subcontractors and materialmen
engaged in the making of the repair and restoration of the Improvements.
Beneficiary shall not be obligated to make disbursements of the Net Restoration
Award more frequently than once every thirty (30) days. The Condemnation
Retainage shall not be released until the Consultant certifies that the repair
and restoration of the Improvements have been completed in accordance with the
provisions of this paragraph, and Beneficiary receives evidence satisfactory to
Beneficiary that the costs of the repair and restoration of the Improvements
have been paid in full or will be paid in full out of the Condemnation
Retainage. The excess, if any, of the Net Restoration Award after the repair and
restoration of the Improvements as nearly as possible to their former condition
and the payment in full of all costs incurred in connection therewith shall be
applied by Beneficiary in reduction of the Debt in such order, priority and
proportions as Beneficiary in its discretion shall deem proper. If at any time
the Net Restoration Award, or the undisbursed balance thereof, shall not, in the
opinion of Beneficiary, be sufficient to pay in full the balance of the costs
which will be incurred in connection with the completion of the repair and
restoration of the Improvements, Grantor shall deposit the deficiency
(hereinafter referred to as the "Net Award Deficiency") with Beneficiary before
any further disbursement of the Net Restoration Award shall be made, which Net
Award Deficiency deposit shall be held by Beneficiary in a non-interest bearing
special account, shall be disbursed, for costs actually incurred in connection
with the repair and restoration of the Improvements on the same conditions
applicable to the disbursement of the Net Restoration Award, and shall until so
disbursed pursuant to this paragraph constitute additional security for the
payment of the Debt. Upon the occurrence of an Event of Default, Beneficiary
shall have the right to apply the undisbursed balance of any Net Award
Deficiency deposit, together with interest thereon, to the payment of the Debt
whether or not then due and payable in such order, priority and proportions as
Beneficiary shall deem to be appropriate in its discretion. All costs of the
repair and restoration of the Improvements in excess of the Net Restoration
Award shall be paid for by Grantor. Notwithstanding anything to the contrary
contained in this paragraph, if a non-material part of the Premises is taken
through eminent domain or otherwise and if such taking does not involve a
physical taking of the Improvements, or any portion thereof, any award given as
a result of such taking may be retained by Grantor, provided (i) such award is
not in excess of $500,000, (ii) no default shall have occurred and shall be
continuing under the Notes or this Deed of Trust, (iii) Grantor promptly
commences any necessary repair or restoration to the Premises and the
Improvements, (iv) Beneficiary is satisfied that neither the value, use nor
operation of the Premises and the Improvements will be adversely affected in any
material way as a result of such taking, and (v) Beneficiary is satisfied that
all necessary repairs and restorations to the Premises and the Improvements will
be diligently and satisfactorily completed by Grantor within a reasonable period
of time taking into account the nature of the taking.

         11.      LEASES AND RENTS. Subject to the terms of this paragraph,
Beneficiary and Trustee waive the right to enter the Trust Property for the
purpose of collecting the Rents, and grant Grantor the right to collect the
Rents. Grantor shall hold the Rents, or an amount sufficient to discharge all


                                      -14-

<PAGE>   15
current sums due on the debt, in trust for use in payment of the Debt. The right
of Grantor to collect the Rents may be revoked by Beneficiary upon the
occurrence of any default under the Notes or this Deed of Trust by giving notice
of such revocation to Grantor. Following such notice Beneficiary or Trustee may
retain and apply the Rents toward payment of the Debt in such order, priority
and proportions as Beneficiary, in its discretion, shall deem proper, or to the
operation, maintenance and repair of the Trust Property, and irrespective of
whether Beneficiary or Trustee shall have commenced a foreclosure of this Deed
of Trust or a sale of the Trust Property pursuant to this Deed of Trust or shall
have applied or arranged for the appointment of a receiver. In addition,
Beneficiary shall have the absolute and unconditional right following the
occurrence of a default under the Notes or this Deed of Trust, and without prior
notice to Grantor, to notify the tenants under the Leases that all Rents should
be paid directly to Beneficiary or Trustee. Grantor shall (a) fulfill or perform
each and every provision of the Leases on the part of Grantor to be fulfilled or
performed, (b) promptly send copies of all notices of default which Grantor
shall send or receive under the Leases to Beneficiary, and (c) enforce, short of
termination of the Leases, the performance or observance of the provisions
thereof by the tenants thereunder. In addition to the rights which Beneficiary
may have herein, in the event of any default under the Notes, this Deed of Trust
or any of the other Loan Documents, Beneficiary, at its option, may require
Grantor to pay monthly in advance to Beneficiary, Trustee or any receiver
appointed to collect the Rents, the fair and reasonable rental value for the use
and occupation of such part of the Trust Property as may be in possession of
Grantor. Upon default in any such payment, Grantor will vacate and surrender
possession of the Trust Property to Beneficiary, Trustee or to such receiver
and, in default thereof, Grantor may be evicted by summary proceedings or
otherwise. Nothing contained in this paragraph shall be construed as imposing on
Beneficiary or Trustee any of the obligations of the lessor under the Leases.
Grantor, without the prior written consent of Beneficiary, shall not: (i)
assign, transfer, pledge or encumber, the whole or any part of the Leases and
Rents to anyone other than Beneficiary; or (ii) do or permit anything to be
done, the doing of which, or omit or refrain from doing anything, the omission
of which, could be a breach or default under the terms of any Lease or a basis
for termination thereof. Grantor shall not, without the prior consent of
Beneficiary, make or suffer to be made, any Leases or modify any Leases or
cancel any Leases or accept prepayments of installments of the Rents for a
period of more than one (1) month in advance.

         12.      MAINTENANCE OF THE TRUST PROPERTY. Grantor shall cause the 
Trust Property to be maintained in good condition and repair and will not commit
or suffer to be committed any waste of the Trust Property. The failure of
Grantor to pay any Taxes or any installment thereof, or any Insurance Premiums
payable with respect to any of the Insurance Policies covering the Trust
Property or any portion thereof, or to use and apply the Rents strictly in
accordance with the provisions of this Deed of Trust and the other Loan
Documents, shall be deemed for all purposes to constitute waste, regardless of


                                      -15-

<PAGE>   16
whether the same would, in the absence of this provision, otherwise constitute
waste under applicable law. The Improvements and the Equipment shall not be
removed, demolished or materially altered (except for normal replacement of the
Equipment), without the consent of Beneficiary. Grantor shall promptly comply
with all existing and future governmental laws, orders, ordinances, rules and
regulations affecting the Trust Property, or any portion thereof or the use
thereof including, without limitation, the provisions of the Americans with
Disabilities Act. Grantor shall comply in all material respects with the
requirements of all, and shall not modify, amend or terminate any easements or
restrictive covenants which from time to time affect the whole or any portion of
the Trust Property. Grantor shall also comply in all material respects with the
requirements of, and to the extent reasonably within Grantor's control,
maintain, preserve, enforce and renew, all rights of way, easements, grants,
privileges, licenses, franchises and restrictive covenants which from time to
time benefit or pertain to the whole or any portion of the Trust Property, and
Grantor shall not without obtaining the prior consent of Beneficiary modify,
amend or terminate, or surrender any of its rights under, any of such rights of
way, easements, grants, privileges, licenses, franchises or restrictive
covenants. Grantor shall promptly repair, replace or rebuild any part of the
Trust Property which may be damaged or destroyed by fire or other property
hazard or casualty (including any fire or other property hazard or casualty for
which insurance was not obtained or obtainable) or which may be affected by any
taking by any public or quasi-public authority through eminent domain or
otherwise, and shall complete and pay for, within a reasonable time, any
structure at any time in the process of construction or repair on the Premises.
Grantor will not, without obtaining the prior consent of Beneficiary, initiate,
join in or consent to any private restrictive covenant, zoning ordinance, or
other public or private restrictions, limiting or affecting the uses which may
be made of the Trust Property or any part thereof.

         13.      ENVIRONMENTAL PROVISIONS. For the purposes of this paragraph 
the following terms shall have the following meanings: (i) the term "Hazardous
Material" shall mean any material or substance that, whether by its nature or
use, is now or hereafter defined as a hazardous waste, hazardous substance,
pollutant or contaminant under any Environmental Requirement, or which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and which is now or hereafter regulated under
any Environmental Requirement, or which is or contains petroleum, gasoline,
diesel fuel or another petroleum hydrocarbon product, (ii) the term
"Environmental Requirements" shall collectively mean all present and future
laws, statutes, ordinances, rules, regulations, orders, codes, licenses,
permits, decrees, judgments, directives or the equivalent of or by any
Governmental Authority and relating to or addressing the protection of the
environment or human health, and (iii) the term "Governmental Authority" shall
mean the Federal government, or any state or other political subdivision
thereof, or any agency, court or body of the Federal government, any state or
other political subdivision thereof, exercising executive, legislative,


                                      -16-

<PAGE>   17
judicial, regulatory or administrative functions. Grantor hereby represents and
warrants to Trustee and Beneficiary that to the best of Grantor's knowledge
after diligent inquiry (i) no Hazardous Material is currently located at, on,
in, under or about the Trust Property, (ii) no Hazardous Material is currently
located at, in, on, under or about the Trust Property in a manner which violates
any Environmental Requirement, or which requires cleanup or corrective action of
any kind under any Environmental Requirement, (iii) no releasing, emitting,
discharging, leaching, dumping or disposing of any Hazardous Material from the
Trust Property onto or into any other property or from any other property onto
or into the Trust Property has occurred or is occurring in violation of any
Environmental Requirement, (iv) no notice of violation, lien, complaint, suit,
order or other notice with respect to the Trust Property is presently
outstanding under any Environmental Requirement, and (v) the Trust Property and
the operation thereof are in full compliance with all Environmental
Requirements. Grantor shall comply, and shall cause all tenants or other
occupants of the Trust Property to comply, in all respects with all
Environmental Requirements, and will not generate, store, handle, process,
dispose of or otherwise use, and will not permit any tenant or other occupant of
the Trust Property to generate, store, handle, process, dispose of or otherwise
use, Hazardous Materials at, in, on, under or about the Trust Property in a
manner that could lead or potentially lead to the imposition on Grantor,
Trustee, Beneficiary or the Trust Property of any liability or lien of any
nature whatsoever under any Environmental Requirement. Grantor shall notify
Beneficiary promptly in the event of any spill or other release of any Hazardous
Material at, in, on, under or about the Trust Property which is required to be
reported to a Governmental Authority under any Environmental Requirement, will
promptly forward to Beneficiary copies of any notices received by Grantor
relating to alleged violations of any Environmental Requirement and will
promptly pay when due any fine or assessment against Beneficiary, Trustee,
Grantor or the Trust Property relating to any Environmental Requirement. If at
any time it is determined that the operation or use of the Trust Property
violates any applicable Environmental Requirement or that there are Hazardous
Materials located at, in, on, under or about the Trust Property which, under any
Environmental Requirement, require special handling in collection, storage,
treatment or disposal, or any other form of cleanup or corrective action,
Grantor shall, within thirty (30) days after receipt of notice thereof from any
Governmental Authority or from Beneficiary, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period, Grantor shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Grantor fails to
timely take, or to diligently and expeditiously proceed to complete in a timely
fashion, any such action, Beneficiary, may, in its sole and absolute discretion,
make advances or payments towards the performance or satisfaction of the same,
but shall in no event be under any obligation to do


                                      -17-

<PAGE>   18
so. All sums so advanced or paid by Beneficiary (including, without limitation,
counsel and consultant fees and expenses, investigation and laboratory fees and
expenses, and fines or other penalty payments) and all sums advanced or paid in
connection with any judicial or administrative investigation or proceeding
relating thereto, will immediately, upon demand, become due and payable from
Grantor and shall bear interest at the Default Rate from the date any such sums
are so advanced or paid by Beneficiary until the date any such sums are repaid
by Grantor to Beneficiary. Grantor will execute and deliver, promptly upon
request, such instruments as Beneficiary may deem useful or necessary to permit
Beneficiary to take any such action, and such additional notes, deeds of trust
and mortgages, as Beneficiary may require to secure all sums so advanced or paid
by Beneficiary. If a lien is filed against the Trust Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of Grantor or for which Grantor is responsible, resulting in the
releasing, spilling, leaking, leaching, pumping, emitting, pouring, emptying or
dumping of any Hazardous Material into the waters or onto land located within or
without the State in which the Premises are located, then Grantor will, within
thirty (30) days from the date that Grantor is first given notice that such lien
has been placed against the Trust Property (or within such shorter period of
time as may be specified by Beneficiary if such Governmental Authority has
commenced steps to cause the Trust Property to be sold pursuant to such lien)
either (a) pay the claim and remove the lien, or (b) furnish a cash deposit,
bond, or such other security with respect thereto as is satisfactory in all
respects to Beneficiary and is sufficient to effect a complete discharge of such
lien on the Trust Property. Beneficiary may, at its option, at intervals of not
less than one year, or more frequently if Beneficiary reasonably believes that a
Hazardous Material or other environmental condition violates or threatens to
violate any Environmental Requirement, cause an environmental audit of the Trust
Property or portions thereof to be conducted to confirm Grantor's compliance
with the provisions of this paragraph, and Grantor shall cooperate in all
reasonable ways with Beneficiary in connection with any such audit. If such
audit discloses that a violation of an Environmental Requirement exists, Grantor
shall pay all costs and expenses incurred in connection with such audit,
otherwise, the costs and expenses of such audit shall, notwithstanding anything
to the contrary set forth in this paragraph, be paid by Beneficiary. If this
Deed of Trust is foreclosed, or if the Trust Property is sold pursuant to the
provisions of this Deed of Trust, or if Grantor tenders a deed or assignment in
lieu of foreclosure or sale, Grantor shall deliver the Trust Property to the
purchaser at foreclosure or sale or to Beneficiary, its nominee, or wholly owned
subsidiary, as the case may be, in a condition that complies in all respects
with all Environmental Requirements. Grantor will defend, indemnify, and hold
harmless Beneficiary, Trustee and their respective employees, agents, officers,
and directors, from and against any and all claims, demands, penalties, causes
of action, fines, liabilities, settlements, damages, costs, or expenses of
whatever kind or nature, known or unknown, foreseen or unforeseen, contingent or
otherwise (including, without

                                      -18-

<PAGE>   19
limitation, counsel and consultant fees and expenses, investigation and
laboratory fees and expenses, court costs, and litigation expenses) arising out
of, or in any way related to, (i) any breach by Grantor of any of the provisions
of this paragraph, (ii) the presence, disposal, spillage, discharge, emission,
leakage, release, or threatened release of any Hazardous Material which is at,
in, on, under, about, from or affecting the Trust Property, including, without
limitation, any damage or injury resulting from any such Hazardous Material to
or affecting the Trust Property or the soil, water, air, vegetation, buildings,
personal property, persons or animals located on the Trust Property or on any
other property or otherwise, (iii) any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to any
such Hazardous Material, (iv) any lawsuit brought or threatened, settlement
reached, or order or directive of or by any Governmental Authority relating to
such Hazardous Material, or (v) any violation of any Environmental Requirement.
The aforesaid indemnification shall, notwithstanding any exculpatory or other
provision of any nature whatsoever to the contrary set forth in the Notes, this
Deed of Trust or any of the other Loan Documents, constitute the personal
recourse undertakings, obligations and liabilities of Grantor. The obligations
and liabilities of Grantor under this paragraph shall survive and continue in
full force and effect and shall not be terminated, discharged or released, in
whole or in part, irrespective of whether the Debt has been paid in full and
irrespective of any foreclosure of this Deed of Trust, sale of the Trust
Property pursuant to the provisions of this Deed of Trust or acceptance by
Beneficiary, its nominee or wholly owned subsidiary of a deed or assignment in
lieu of foreclosure or sale and irrespective of any other fact or circumstance
of any nature whatsoever.

         14.      ESTOPPEL CERTIFICATES. Grantor, within ten (10) days after 
request by Beneficiary and at its expense, will furnish Beneficiary with a
statement, duly acknowledged and certified, setting forth the amount of the Debt
and the offsets or defenses thereto, if any.

         15.      TRANSFER OR ENCUMBRANCE OF THE TRUST PROPERTY. No part of the
Trust Property shall in any manner be further encumbered, sold, transferred,
assigned or conveyed, or permitted to be further encumbered, sold, transferred,
assigned or conveyed without the prior consent of Beneficiary, which consent in
any and all circumstances may be withheld in the sole and absolute discretion of
Beneficiary. The provisions of the foregoing sentence of this paragraph shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not Beneficiary has consented to, or waived
by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.


                                      -19-

<PAGE>   20
         16.      NOTICE. All notices, demands, instructions and other 
communications required or permitted to be given to or made upon any party
hereto shall be in writing delivered to the parties at the addresses set forth
below (or such other addresses or may be provided by one party in a notice to
the other parties):

                  If to Grantor:

                           NextHealth, Inc.
                           16600 N. Lago Del Oro Parkway
                           Tucson, Arizona  85739
                           Attention:

                  With a copy to:

                           Neal, Gerber & Eisenberg
                           2 North LaSalle Street
                           Chicago, Illinois  60602
                           Attention:  Steve Berger, Esq.

                  If to Beneficiary:

                           c/o Apollo Real Estate Advisors, L.P.
                           1301 Avenue of the Americas, 38th Floor
                           New York, New York  10019
                           Attention:  Alfred Trivilino

                  With a copy to:

                           Battle Fowler LLP
                           75 East 55th Street
                           New York, New York 10022
                           Attention:  Mary Ann Villari, Esq.

                  If to Trustee:

                           Fidelity National Title Agency, Inc.
                           7750 E. Broadway, Suite A-200
                           Tucson, Arizona 85710
                           Attention:  Cathy Hansen

Notice delivered in accordance with the foregoing shall be effective (i) when
delivered, if delivered personally or by facsimile transmission, (ii) two days
after being delivered in the United States (properly addressed and all fees
paid) for overnight delivery service to a courier (such as Federal Express)
which regularly provides such service and regularly obtains executed receipts
evidencing delivery or (iii) five days after being deposited (properly


                                      -20-

<PAGE>   21
addressed and stamped for first-class delivery) in a daily serviced United
States mail box.

         17.      SALE OF TRUST PROPERTY. If this Deed of Trust is foreclosed or
if the Trust Property is sold pursuant to this Deed of Trust, the Trust
Property, or any interest therein, may, at the discretion of Beneficiary, be
sold in one or more parcels or in several interests or portions and in any order
or manner.

         18.      CHANGES IN LAWS REGARDING TAXATION. In the event of the 
passage after the date of this Deed of Trust of any law of the State in which
the Premises are located deducting from the value of real property for the
purpose of taxation any lien or encumbrance thereon or changing in any way the
laws for the taxation of deeds of trust or mortgages or debts secured by deeds
of trust or mortgages for state or local purposes or the manner of the
collection of any such taxes, and imposing a tax, either directly or indirectly,
on this Deed of Trust, the Notes or the Debt, Grantor shall, if permitted by
law, pay any tax imposed as a result of any such law within the statutory period
or within fifteen (15) days after demand by Beneficiary, whichever is less,
provided, however, that if, in the opinion of the attorneys for Beneficiary,
Grantor is not permitted by law to pay such taxes, Beneficiary shall have the
right, at its option, to declare the Debt due and payable on a date specified in
a prior notice to Grantor of not less than thirty (30) days.

         19.      NO CREDITS ON ACCOUNT OF THE DEBT. Grantor will not claim or 
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Trust Property or any part thereof and no
deduction shall otherwise be made or claimed from the taxable value of the Trust
Property, or any part thereof, by reason of this Deed of Trust or the Debt.

         20.      OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of this Deed
of Trust, the Notes and the other Loan Documents shall take the same free and
clear of all offsets, counterclaims or defenses of any nature whatsoever which
Grantor may have against any assignor of this Deed of Trust, the Notes and the
other Loan Documents, and no such offset, counterclaim or defense shall be
interposed or asserted by Grantor in any action, case or proceeding brought by
any such assignee upon this Deed of Trust, the Notes or any of the other Loan
Documents and any such right to interpose or assert any such offset,
counterclaim or defense in any such action, case or proceeding is hereby
expressly waived by Grantor.

         21.      LOAN DOCUMENTS. Grantor shall observe and perform, and cause 
to be the observed and performed, all of the terms, covenants and provisions
contained in the Notes, this Deed of Trust and the other Loan Documents.


                                      -21-

<PAGE>   22
         22.      DOCUMENTARY STAMPS. If at any time the United States of 
America, any state thereof, or any governmental subdivision of any such state,
shall require revenue or other stamps to be affixed to the Notes, this Deed of
Trust or any of the other Loan Documents, Grantor will pay for the same, with
interest and penalties thereon, if any.

         23.      RIGHT OF ENTRY. Beneficiary and its agents shall have the 
right to enter and inspect the Trust Property at all reasonable times.

         24.      PERFORMANCE OF OTHER AGREEMENTS. Grantor shall observe and 
perform each and every term to be observed or performed by Grantor pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Trust Property.

         25.      EVENTS OF DEFAULT.  The occurrence of any one or more of the
following events, acts or occurrences shall constitute an event of default
(each an "Event of Default"):

                  (a) if any portion of the Debt is not paid within five (5)
         days after the date when due;

                  (b) if an Event of Default shall have occurred under the
         Credit Agreement;

                  (c) if any Insurance Premium Deposit is not made within five
         (5) days after the date when due;

                  (d) if any Tax Deposit is not made within five (5) days after
         the date when due;

                  (e) if Grantor shall fail to pay within twenty (20) days of
         notice and demand by Beneficiary, any installment of any assessment
         against the Trust Property for local improvements heretofore or
         hereafter laid, which assessment is or may become payable in annual or
         periodic installments and is or may become a lien on the Trust
         Property, notwithstanding the fact that such installment may not be due
         and payable at the time of such notice and demand;

                  (f) if without the consent of Beneficiary any Improvement or
         the Equipment (except for normal replacement of the Equipment) is
         removed, demolished or materially altered, or if the Trust Property is
         not kept in good condition and repair;

                  (g) if the Insurance Policies are not kept in full force and
         effect, or if the Insurance Policies are not delivered to Beneficiary
         upon request;


                                      -22-

<PAGE>   23
                  (h) if without the consent of Beneficiary any Leases are made,
         cancelled or modified or if any portion of the Rents is paid for a
         period of more than one (1) month in advance or if any of the Rents are
         further assigned;

                  (i) if the Trust Property shall become subject (i) to any tax
         lien, other than a lien for local real estate taxes and assessments not
         due and payable, or (ii) to any lis pendens, notice of pendency, stop
         order, notice of intention to file mechanic's or materialman's lien,
         mechanic's or materialman's lien or other lien of any nature whatsoever
         and the same shall not either be discharged of record or in the
         alternative insured over to the satisfaction of Beneficiary by the
         title company insuring the lien of this Deed of Trust within a period
         of thirty (30) days after the same is filed or recorded, and
         irrespective of whether the same is superior or subordinate in lien or
         other priority to the lien of this Deed of Trust and irrespective of
         whether the same constitutes a perfected or inchoate lien or encumbered
         on the Trust Property or is only a matter of record or notice; or

                  (j) if Grantor shall continue to be in default under any of
         the other terms, covenants or conditions of this Deed of Trust for five
         (5) days after notice from Beneficiary in the case of any default which
         can be cured by the payment of a sum of money or for thirty (30) days
         after notice from Beneficiary in the case of any other default,
         provided that if such default cannot reasonably be cured within such
         thirty (30) day period and Grantor shall have commenced to cure such
         default within such thirty (30) day period and thereafter diligently
         and expeditiously proceeds to cure the same, such thirty (30) day
         period shall be extended for so long as it shall require Grantor in the
         exercise of due diligence to cure such default, it being agreed that no
         such extension shall be for a period in excess of sixty (60) days.

         26.      RIGHT TO CURE DEFAULTS. If default in the performance of any 
of the covenants of Grantor herein occurs, Beneficiary or Trustee may, at their
discretion, remedy the same and for such purpose shall have the right to enter
upon the Trust Property or any portion thereof without thereby becoming liable
to Grantor or any person in possession thereof holding under Grantor, and to pay
all sums as may be necessary to cure any such default (including, without
limitation, any default by Grantor in the payment of any Insurance Premiums or
any Taxes or other liens or encumbrances covering the Trust Property or any part
thereof). If Beneficiary or Trustee shall remedy any such default (including,
without limitation, any default by Grantor in the payment of any Insurance
Premiums or any Taxes or other liens or encumbrances covering the Trust Property
or any part thereof) or appear in, defend, or bring any action, case or
proceeding to protect its interest in the Trust Property or to foreclose this
Deed of Trust or to sell the Trust Property pursuant to this Deed of Trust or
collect the Debt, the costs and expenses thereof (including reasonable
attorneys' fees to the extent permitted by law),


                                      -23-

<PAGE>   24
with interest as provided in this paragraph, shall be paid by Grantor to
Beneficiary upon demand, and shall be added to and constitute part of the Debt
secured by this Deed of Trust. All such costs and expenses incurred by
Beneficiary or Trustee in remedying any such default or in appearing in,
defending, or bringing any such action, case or proceeding shall be paid by
Grantor to Beneficiary upon demand, with interest at the Default Rate.

         27.      APPOINTMENT OF RECEIVER. Beneficiary or Trustee, in any action
to foreclose this Deed of Trust or upon the actual or threatened waste to any
part of the Trust Property or upon the occurrence of any default hereunder,
shall be at liberty, without notice, to apply for the appointment of a receiver
of the Rents, and shall be entitled to the appointment of such receiver as a
matter of right, without regard to the value of the Trust Property as security
for the Debt, or the solvency or insolvency of any person then liable for the
payment of the Debt.

         28.      NON-WAIVER. The failure of Beneficiary or Trustee to insist 
upon strict performance of any term of this Deed of Trust shall not be deemed to
be a waiver of any term of this Deed of Trust. Grantor shall not be relieved of
Grantor's obligation to pay the Debt at the time and in the manner provided for
its payment in the Notes and this Deed of Trust by reason of (i) failure of
Beneficiary or Trustee to comply with any request of Grantor to take any action
to foreclose this Deed of Trust or to sell the Trust Property pursuant to this
Deed of Trust or otherwise enforce any of the provisions of this Deed of Trust,
the Notes or any of the other Loan Documents, (ii) the release, regardless of
consideration, of the whole or any part of the Trust Property or any other
security for the Debt, or (iii) any agreement or stipulation between Beneficiary
or Trustee and any subsequent owner or owners of the Trust Property or other
person extending the time of payment or otherwise modifying or supplementing the
terms of the Notes, this Deed of Trust or any of the other Loan Documents
without first having obtained the consent of Grantor, and in the latter event,
Grantor shall continue to be obligated to pay the Debt at the time and in the
manner provided in the Notes and this Deed of Trust, as so extended, modified
and supplemented, unless expressly released and discharged from such obligation
by Beneficiary in writing. Regardless of consideration, and without the
necessity for any notice to or consent by the holder of any subordinate lien,
encumbrance, right, title or interest in or to the Trust Property, Beneficiary
may release any person at any time liable for the payment of the Debt or any
portion thereof or any part of the security held for the Debt and may extend the
time of payment or otherwise modify the terms of the Notes, this Deed of Trust
or any of the other Loan Documents, including, without limitation, a
modification of the interest rate payable on the principal balance of the Notes,
without in any manner impairing or affecting this Deed of Trust or the lien
thereof or the priority of this Deed of Trust, as so extended and modified, as
security for the Debt over any such subordinate lien, encumbrance, right, title
or interest. Beneficiary may resort for the payment of the Debt to any other
security held by Beneficiary in such order and manner as Beneficiary, in its


                                      -24-

<PAGE>   25
discretion, may elect. Beneficiary or Trustee may take action to recover the
Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Beneficiary or Trustee thereafter to foreclose this
Deed of Trust or to effect a sale of the Trust Property pursuant to this Deed of
Trust. Beneficiary and Trustee shall not be limited exclusively to the rights
and remedies herein stated but shall be entitled to every additional right and
remedy set forth in the Loan Document or now or hereafter afforded by law. The
rights of Beneficiary and Trustee under this Deed of Trust and the other Loan
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary or Trustee shall be
construed as an election to proceed under any one provision of this Deed of
Trust or of the other Loan Documents to the exclusion of any other provision set
forth in this Deed of Trust or the other Loan Documents.

         29.      POWER OF SALE. Upon the occurrence of any Event of Default,
and at any time while such Event of Default is continuing, Beneficiary may give
such notice of default and of election to cause the Trust Property to be sold as
may be required by law or as may be necessary to cause Trustee to exercise the
power of sale granted herein. Trustee shall then record and give such notice of
trustee's sale as then required by law and, after the expiration of such time as
may be required by law, may sell the Trust Property at the time and place
specified in the notice of sale, as a whole or in separate parcels as directed
by Beneficiary, or by Grantor to the extent required by law, at public auction
to the highest bidder for cash in lawful money of the United States, payable at
time of sale, all in accordance with applicable law. Trustee, from time to time,
may postpone or continue the sale of all or any portion of the Trust Property by
public declaration at the time and place last appointed for the sale. No other
notice of the postponed sale shall be required. Upon any sale, Trustee shall
deliver its deed conveying the property sold, without any covenant or warranty,
express or implied, to the purchaser or purchasers at the sale. The recitals in
such deed of any matters of facts shall be conclusive as to the accuracy
thereof. Any person, including Grantor, Trustee or Beneficiary, may purchase at
the sale.

         30.      CONCERNING TRUSTEE. Trustee shall be under no duty to take any
action hereunder except as expressly required hereunder or by law, or to perform
any act which would involve Trustee in any expense or liability or to institute
or defend any suit in respect hereof, unless properly indemnified to Trustee's
reasonable satisfaction. Trustee, by acceptance of this Deed of Trust, covenants
to perform and fulfill the trusts herein created, being liable, however, only
for willful negligence or misconduct, and hereby waives any statutory fee and
agrees to accept reasonable compensation, in lieu thereof, for any services
rendered by Trustee in accordance with the terms hereof. Trustee may resign at
any time upon giving thirty (30) days' notice to Grantor and to Beneficiary.
Beneficiary may in its sole and absolute discretion and with or without cause
remove Trustee at any time or from time to time and select a successor trustee.
In the event of the death, removal,


                                      -25-

<PAGE>   26
resignation, refusal to act, or inability to act of Trustee, or in its sole and
absolute discretion for any reason whatsoever Beneficiary may, without notice
and without specifying any reason therefor and without applying to any court,
select and appoint a successor trustee, by an instrument recorded wherever this
Deed of Trust is recorded and all powers, rights, duties and authority of
Trustee, as aforesaid, shall thereupon become vested in such successor. Such
substitute trustee shall not be required to give bond for the faithful
performance of the duties of Trustee hereunder unless required to do so by
Beneficiary.

         31.      TRUSTEE'S FEES. Grantor shall pay all costs, fees and expenses
incurred by Trustee and Trustee's agents and counsel in connection with the
performance by Trustee of Trustee's duties hereunder and all such costs, fees
and expenses shall be secured by this Deed of Trust.

         32.      LIABILITY. If Grantor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.

         33.      CONSTRUCTION. The terms of this Deed of Trust shall be 
construed in accordance with the laws of the State in which the Premises are
located.

         34.      SECURITY AGREEMENT. This Deed of Trust constitutes both a real
property mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code of the State in which the Premises are located, and the Trust
Property includes both real and personal property and all other rights and
interest, whether tangible or intangible in nature, of Grantor in the Trust
Property. Grantor by executing and delivering this Deed of Trust has granted to
Beneficiary and Trustee, as security for the Debt, a security interest in the
Equipment. If Grantor shall default under the Notes or this Deed of Trust,
Beneficiary and Trustee, in addition to any other rights and remedies which they
may have, shall have and may exercise immediately and without demand any and all
rights and remedies granted to a secured party upon default under the Uniform
Commercial Code, including, without limiting the generality of the foregoing,
the right to take possession of the Equipment or any part thereof, and to take
such other measures as Beneficiary or Trustee may deem necessary for the care,
protection and preservation of the Equipment. Upon request or demand of
Beneficiary or Trustee, Grantor shall at its expense assemble the Equipment and
make it available to Beneficiary and Trustee at a convenient place acceptable to
Beneficiary and Trustee. Grantor shall pay to Beneficiary on demand any and all
expenses, including legal expenses and attorneys' fees, incurred or paid by
Beneficiary or Trustee in protecting the security interest in the Equipment
granted hereby and in enforcing the rights hereunder with respect to the
Equipment. Any notice of sale, disposition or other intended action by
Beneficiary or Trustee with respect to the Equipment sent to Grantor in
accordance with the provisions of this Deed of Trust at least seven (7) days
prior to the date of any such sale,


                                      -26-

<PAGE>   27
disposition or other action, shall constitute reasonable notice to Grantor, and
the method of sale or disposition or other intended action set forth or
specified in such notice shall conclusively be deemed to be commercially
reasonable within the meaning of the Uniform Commercial Code unless objected to
in writing by Grantor within five (5) days after receipt by Grantor of such
notice. The proceeds of any sale or disposition of the Equipment, or any part
thereof, may be applied by Beneficiary to the payment of the Debt in such order,
priority and proportions as Beneficiary in its discretion shall deem proper.

         35.      FURTHER ACTS, ETC. Grantor will, at the cost of Grantor, and
without expense to Beneficiary or Trustee, do, execute, acknowledge and deliver
all and every such further acts, deeds, conveyances, deeds of trust, mortgages,
assignments, notices of assignments, transfers and assurances as Beneficiary or
Trustee shall, from time to time, require for the better assuring, conveying,
assigning, transferring and confirming unto Beneficiary or Trustee, as the case
may be, the property and rights hereby conveyed or assigned or intended now or
hereafter so to be, or which Grantor may be or may hereafter become bound to
convey or assign to Beneficiary or Trustee, or for carrying out the intention or
facilitating the performance of the terms of this Deed of Trust or for filing,
registering or recording this Deed of Trust and, on demand, will execute and
deliver and hereby authorizes Beneficiary or Trustee to execute in the name of
Grantor to the extent Beneficiary or Trustee may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments, to
evidence more effectively the lien hereof upon the Trust Property.

         36.      HEADINGS, ETC. The headings, titles and captions of various
paragraphs of this Deed of Trust are for convenience of reference only and are
not to be construed as defining or limiting, in any way, the scope or intent of
the provisions hereof.

         37.      FILING OF DEED OF TRUST, ETC. Grantor forthwith upon the 
execution and delivery of this Deed of Trust and thereafter, from time to time,
will cause this Deed of Trust, and any security instrument creating a lien or
evidencing the lien hereof upon the Trust Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect, preserve and perfect the lien hereof upon, and
the interest of Beneficiary and Trustee in, the Trust Property. Grantor will pay
all filing, registration and recording fees, and all expenses incident to the
preparation, execution and acknowledgement of this Deed of Trust, any deed of
trust or mortgage supplemental hereto, any security instrument with respect to
the Trust


                                      -27-

<PAGE>   28
Property, and any instrument of further assurance, and all Federal, state,
county and municipal taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of this Deed of Trust, any
deed of trust or mortgage supplemental hereto, any security instrument with
respect to the Trust Property or any instrument of further assurance. Grantor
shall hold harmless and indemnify Beneficiary and Trustee, and their respective
successors and assigns, against any liability incurred by reason of the
imposition of any tax on the making and recording of this Deed of Trust.

         38.      USURY LAWS. This Deed of Trust and the Notes are subject to 
the express condition that at no time shall Grantor be obligated or required to
pay interest on the principal balance due under the Notes at a rate which could
subject the holder of the Notes to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Grantor is
permitted by law to contract or agree to pay. If by the terms of this Deed of
Trust or the Notes Grantor is at any time required or obligated to pay interest
on the principal balance due under the Notes at a rate in excess of such maximum
rate, the rate of interest under the Notes shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall be computed at such
maximum rate and all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of the Notes.

         39.      SOLE DISCRETION OF BENEFICIARY AND TRUSTEE. Except as may 
otherwise be expressly provided to the contrary, wherever pursuant to the Notes,
this Deed of Trust, or any of the other Loan Documents, Beneficiary or Trustee
exercises any right given to it to consent or not consent, or to approve or
disapprove, or any arrangement or term is to be satisfactory to Beneficiary or
Trustee, the decision of Beneficiary or Trustee, as the case may be, to consent
or not consent, or to approve or disapprove or to decide that arrangements or
terms are satisfactory or not satisfactory, shall be in the sole and absolute
discretion of Beneficiary or Trustee, as the case may be, and shall be final and
conclusive.

         40.      REASONABLENESS. If at any time Grantor believes that 
Beneficiary or Trustee has not acted reasonably in granting or withholding any
approval or consent under the Notes, this Deed of Trust or any of the other Loan
Documents, as to which approval or consent either Beneficiary or Trustee has
expressly agreed to act reasonably, or absent such agreement, a court of law
having jurisdiction over the subject matter would require Beneficiary or Trustee
to act reasonably, then Grantor's sole remedy shall be to seek injunctive relief
or specific performance and no action for monetary damages or punitive damages
shall in any event or under any circumstance be maintained by Grantor against
Beneficiary or Trustee.

         41.      RECOVERY OF SUMS REQUIRED TO BE PAID. Beneficiary and Trustee 
shall have the right from time to time to take action to recover any sum or sums
which constitute a part of the Debt as the same become due, without regard to
whether or not the balance of the Debt shall be due, and without prejudice to
the right of Beneficiary or Trustee thereafter to bring an action of
foreclosure, or any other action, or to otherwise effect a sale


                                      -28-

<PAGE>   29
of the Trust Property pursuant to this Deed of Trust, for a default or defaults
by Grantor existing at the time such earlier action was commenced.

         42.      AUTHORITY. Grantor (and the undersigned representative of 
Grantor, if any) has full power, authority and legal right to execute this Deed
of Trust, and to give, grant, bargain, sell, alien, enfeoff, convey, confirm and
assign the Trust Property pursuant to the terms hereof and to keep and observe
all of the terms of this Deed of Trust on Grantor's part to be performed.

         43.      ACTIONS, CASES AND PROCEEDINGS. Beneficiary and Trustee, shall
have the right to appear in and defend any action, case or proceeding brought
with respect to the Trust Property and to bring any action, case or proceeding,
in the name and on behalf of Grantor, which Beneficiary or Trustee, in its
discretion, feels should be brought to protect their respective interests in the
Trust Property.

         44.      INAPPLICABLE PROVISIONS. If any term, covenant or condition of
this Deed of Trust shall be held to be invalid, illegal or unenforceable in any
respect, this Deed of Trust shall be construed without such provision.

         45.      DUPLICATE ORIGINALS. This Deed of Trust may be executed in any
number of duplicate originals and each such duplicate original shall be deemed
to constitute but one and the same instrument.

         46.      CERTAIN DEFINITIONS. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Deed of Trust shall be used interchangeably in singular or plural form and
the following words shall have the following respective meanings:

                  (a) "Affiliate" shall have the meaning given to such term
         under Title 11 of the United States Code as now constituted;

                  (b) "Beneficiary" shall mean Beneficiary or any subsequent
         holder of the Notes;

                  (c) "Debt" shall mean all sums secured by this Deed of Trust;

                  (d) "default" shall mean the occurrence of any default by
         Grantor or other person in the observance or performance of any of the
         terms, covenants or provisions of the Notes, this Deed of Trust or any
         of the other Loan Documents on the part of Grantor or such other person
         to be observed or performed without regard to whether such default
         constitutes or would constitute upon notice or lapse of time, or both,
         an Event of Default under this Deed of Trust or an event of default
         under the Notes or any of the other Loan Documents;


                                      -29-

<PAGE>   30
                  (e) "Default Rate" shall mean the lesser of (i) eighteen (18%)
         percent per annum or (ii) the highest rate of interest permitted under
         the laws of the State of Arizona.

                  (f) "Grantor" shall mean each Grantor and any subsequent owner
         or owners of the Trust Property or any part thereof or interest
         therein;

                  (g) "Guarantor" shall mean each person guaranteeing payment of
         the Debt or any portion thereof or performance by Grantor of any of the
         terms of this Deed of Trust or any of the other Loan Documents and
         their respective heirs, executors, administrators, legal
         representatives, successors and assigns;

                  (h) "Loan" shall mean the loan in the principal sum of
         $13,090,000 made by Beneficiary to Grantor which is evidenced by the
         Notes and secured by this Deed of Trust;

                  (i) "Loan Documents" shall collectively mean the Notes, this
         Deed of Trust, the Credit Agreement and all other documents and
         instruments now or hereafter executed and delivered in connection
         therewith or otherwise pertaining to the Loan, as the same may be
         modified or amended from time to time;

                  (j) "Notes" shall mean the Notes or any other evidence of
         indebtedness secured by this Deed of Trust;

                  (k) "person" shall include an individual, corporation,
         partnership, trust, unincorporated association, government,
         governmental authority, or other entity;

                  (l) "Trust Property" shall include any portion of the Trust I
         Property or interest therein; and

                  (m) "Trustee" shall mean Trustee or any successor trustee
         under this Deed of Trust.

Whenever the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.

         47.      WAIVER OF NOTICE. Grantor shall not be entitled to any notices
of any nature whatsoever from Beneficiary or Trustee except with respect to
matters for which this Deed of Trust specifically and expressly provides for the
giving of notice by Beneficiary or Trustee to Grantor, and Grantor hereby
expressly waives the right to receive any notice from Beneficiary or Trustee
with respect to any matter for which this Deed of Trust does not specifically
and expressly provide for the giving of notice by Beneficiary or Trustee to
Grantor.


                                      -30-

<PAGE>   31
         48.      NO ORAL CHANGE. This Deed of Trust may only be modified, 
amended or changed by an agreement in writing signed by Grantor and Beneficiary,
and may only be released, discharged or satisfied of record by an agreement in
writing signed by Beneficiary. Trustee shall join in any such agreement if
required for such agreement to be effective under applicable law. No waiver of
any term, covenant or provision of this Deed of Trust shall be effective unless
given in writing by Beneficiary and if so given by Beneficiary shall only be
effective in the specific instance in which given. Grantor acknowledges that the
Notes, this Deed of Trust and the other Loan Documents set forth the entire
agreement and understanding of Grantor and Beneficiary with respect to the loan
secured hereby and that no oral or other agreements, understanding,
representation or warranties exist with respect to the loan secured hereby other
than those set forth in the Notes, this Deed of Trust and the other Loan
Documents.

         49.      ABSOLUTE AND UNCONDITIONAL OBLIGATION. Grantor acknowledges 
that Grantor's obligation to pay the Debt in accordance with the provision of
the Notes and this Deed of Trust is and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Notes or this Deed
of Trust or the obligation of Grantor thereunder to pay the Debt or the
obligations of any other person relating to the Notes or this Deed of Trust or
the obligations of Grantor under the Notes or this Deed of Trust or otherwise
with respect to the loan secured hereby, and Grantor absolutely, unconditionally
and irrevocably waives any and all right to assert any defense, setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of Grantor to pay the Debt in accordance with the provisions of the
Notes and this Deed of Trust or the obligations of any other person relating to
the Notes or this Deed of Trust or obligations of Grantor under the Notes or
this Deed of Trust or otherwise with respect to the loan secured hereby in any
action, case or proceeding brought by Beneficiary to collect the Debt, or any
portion thereof, or to enforce, foreclose and realize upon the lien and security
interest created by this Deed of Trust or any other document or instrument
securing repayment of the Debt, in whole or in part

         50.      WAIVER OF TRIAL BY JURY. GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, AND TRUSTEE BY ITS ACCEPTANCE OF THIS DEED OF TRUST AND
BENEFICIARY BY ITS ACCEPTANCE OF THE NOTES AND THIS DEED OF TRUST IRREVOCABLY
AND UNCONDITIONALLY WAIVE, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
CASE, PROCEEDING, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR
OTHERWISE RELATING TO THE NOTES, THIS DEED OF TRUST OR ANY OF THE OTHER LOAN
DOCUMENTS.

         51.      WAIVER OF STATUTORY RIGHTS. Grantor shall not and will not 
apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called "Moratorium Laws", now existing or hereafter


                                      -31-

<PAGE>   32
enacted, in order to prevent or hinder the enforcement or foreclosure of this
Deed of Trust, but hereby waives the benefit of such laws to the full extent
that Grantor may do so under applicable law. Grantor for itself and all who may
claim through or under it waives any and all right to have the property and
estates comprising the Trust Property marshalled upon any foreclosure of the
lien of this Deed of Trust and agrees that any court having jurisdiction to
foreclose such lien may order the Trust Property sold as an entirety. Grantor
hereby waives for itself and all who may claim through or under it, and to the
full extent Grantor may do so under applicable law, any and all rights of
redemption from sale under any order or decree of foreclosure of this Deed of
Trust or granted under any statute now existing or hereafter enacted.

         52.      RELATIONSHIP. The relationship of Beneficiary to Grantor 
hereunder is strictly and solely that of lender and borrower and nothing
contained in the Notes, this Deed of Trust or any of the other Loan Documents is
intended to create, or shall in any event or under any circumstance be construed
as creating, a partnership, joint venture, tenancy-in-common, joint tenancy or
other relationship of any nature whatsoever between Beneficiary and Grantor
other than as lender and borrower.

         53.      CREDIT AGREEMENT. This Deed of Trust is subject to all of the
terms, covenants and conditions of a certain Credit Agreement dated the date
hereof entered into between Beneficiary and Grantor (herein referred to as the
"Credit Agreement"), which Credit Agreement and all of the terms, covenants and
conditions thereof are by this reference incorporated herein and made a part
hereof with the same force and effect as if set forth at length herein. The
proceeds of the Loan secured hereby are to be advanced by Beneficiary to Grantor
in accordance with the provisions of the Credit Agreement. Grantor shall observe
and perform all of the terms, covenants and conditions of the Credit Agreement
on Grantor's part to be observed or performed. All advances made and all
indebtedness arising and accruing under the Credit Agreement from time to time
shall constitute part of the Debt and shall be secured hereby. In the event of
any conflict or ambiguity between the terms, covenants and conditions of this
Deed of Trust and the Credit Agreement, the terms, covenants and conditions
which shall enlarge the rights and remedies of Beneficiary and the interest of
Beneficiary in the Trust Property, afford Beneficiary greater financial security
in the Trust Property and better assure payment of the Debt in full, shall
control.

         54.      DEPOSITS. Whenever in this Deed of Trust, Grantor is required
to deposit monies with Beneficiary to secure obligations of Grantor under this
Deed of Trust or as a condition precedent to Grantor right to contest certain
obligations, such monies shall (unless otherwise specifically provided to the
contrary in this Deed of Trust) be held in a non-interest bearing account
selected by Beneficiary, which account may be co-mingled with other funds of or
held by Beneficiary and on which non-interest bearing account Beneficiary shall
be entitled to earn interest for its own account


                                      -32-

<PAGE>   33
notwithstanding the fact that insofar as Grantor is concerned such account is
non-interest bearing. In order to secure the payment of the Debt and the
performance by Grantor of their respective obligations under the Loan Documents,
Grantor hereby grants and assigns to Beneficiary a security interest in and to
all monies from time to time on deposit in any such account. Upon the occurrence
of an Event of Default, Beneficiary shall have the absolute right to apply all
or any portion of the balances held in any such accounts to the payment of the
Debt whether or not due and payable in such order, priority and proportions as
Beneficiary in its discretion shall deem appropriate.

         55.      RETENTION OF COUNSEL AND CONSULTANTS. If Beneficiary deems it
to be in its best interest to retain the assistance of persons, firms or
corporations (including, but not limited to, attorneys, title insurance
companies, third party escrow agents, appraisers, engineers and surveyors) with
respect to any request for consent or approval by Beneficiary under the Loan
Documents, Grantor shall reimburse Beneficiary within ten (10) days of demand by
Beneficiary for all reasonable costs incurred in connection with the employment
of such persons, firms or corporations.

         56.      TRANSACTION COSTS. Grantor shall pay all recording and filing
fees, transfer taxes, title insurance premiums, escrow and other title company
charges, attorneys' fees (including the fees and expenses of outside counsel for
Beneficiary and excluding fees and expenses of in-house counsel for
Beneficiary), appraisal and survey fees, environmental engineer and consultant
fees, consulting architect fees, financial consultant fees, fees of other
engineers and consultants, if any, insurance costs and all other expenses in
connection with the making of the Loan.

         IN WITNESS WHEREOF, Grantor has duly executed and delivered this Deed
of Trust the day and year first above written.

                                       NEXTHEALTH, INC., a Delaware
                                       corporation

                                       By:/s/ Bertha B Kenny
                                          ------------------------
                                       Name:Bertha B Kenny
                                       Title: Corp Secretary


                                       FIDELITY NATIONAL TITLE AGENCY,
                                       INC., trustee aforesaid, an Arizona
                                       corporation

                                       By:/s/ Anna M Kane
                                          ------------------------
                                       Name: Anna M Kane
                                       Title: Assistant Vice President


                                      -33-

<PAGE>   34


                                       AP LOM LLC, a Delaware limited
                                       liability company

                                       By: AP GP LOM LLC, its Managing Member

                                       By: Kronus Property, Inc.

                                       By:/s/ Alfred Trivilino
                                          -------------------------
                                       Name: Alfred Trivilino
                                       Title: Vice President


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