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                               ADVISORY AGREEMENT

                                     BETWEEN

                         SHELBOURNE PROPERTIES I, INC.,

                         SHELBOURNE PROPERTIES I GP, LLC

                                       AND

                            SHELBOURNE MANAGEMENT LLC















                          Dated as of __________, 2000


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                               ADVISORY AGREEMENT

                  THIS AGREEMENT, made as of ____________, 2000, between
SHELBOURNE PROPERTIES I, INC., a Delaware corporation ("Company"), SHELBOURNE
PROPERTIES I GP, LLC, a Delaware limited liability company (the "General
Partner") and SHELBOURNE MANAGEMENT LLC, a Delaware limited liability company
(the "Advisor").

                  WHEREAS, pursuant to a merger (the "Merger"), Integrated
Resources High Equity Partners, Series 85, A California Limited Partnership
("HEP") was merged into Shelbourne Properties I L.P. (the "Operating
Partnership") and each partner of HEP received in exchange for their partnership
interests in HEP shares of common stock in the Company;

                  WHEREAS, the Operating Partnership is the surviving entity in
the Merger and now owns all of the properties formerly owned by HEP;

                  WHEREAS, the General Partner is the general partner of the
Operating Partnership;

                  WHEREAS, the Company is the sole member of the General Partner
and the Company intends to qualify as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code");

                  WHEREAS, the Company and the General Partner desire to avail
themselves of the services of the Advisor as hereafter set forth.

                  NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, it is agreed as follows:

                                   ARTICLE I.

                              RETENTION OF ADVISOR

                  Subject to the terms and conditions hereinafter set forth, the
Company and the General Partner hereby each retain the Advisor to undertake the
duties and responsibilities hereinafter set forth. By its execution and delivery
of this Agreement, the Advisor represents and warrants that (i) it is duly
organized, validly existing, in good standing under the laws of the state of
Delaware and has all requisite power and authority to enter into and perform its
obligations under this Agreement and (ii) the person signing this Agreement for
the Advisor is duly authorized to execute this Agreement on the Advisor's
behalf.

                                  ARTICLE II.

                           RESPONSIBILITIES OF ADVISOR

         2.01  General Responsibility.  Subject to the supervision of the Board
of Directors of the Company (the "Board"), the Advisor shall use its best
efforts to:


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         (a) with respect to the Company:

               (i) serve as the Company's investment and financial advisor and
               recommend changes in the Company's investment policies, when
               appropriate;

               (ii) investigate and evaluate investment opportunities and
               recommend them to the Board;

               (iii)  administer the day-to-day operations of the Company;

               (iv) investigate, select and conduct relations and enter into
               appropriate contracts on behalf of the Company with other
               individuals, corporations and entities in furtherance of the
               investment activities of the Company;

               (v) acquire and dispose of investments and funds of the Company,
               handle, prosecute and settle any claims of the Company and
               handle, defend and settle claims against the Company;

               (vi) invest and reinvest any money of the Company;

               (vii) negotiate, as appropriate, on behalf of the Company with
               investment banking firms, banks and other institutions or
               investors for public or private sales of securities of the
               Company or for other financing on behalf of the Company;

               (viii) conduct relations on behalf of the Company with the
               Company's shareholders and with securities exchanges and dealers
               making markets in the Company's securities;

               (ix) establish one or more bank accounts in the name of the
               Company and deposit into and disburse from such accounts any
               moneys on behalf of the Company, provided that no funds in any
               such account shall be commingled with funds of the Advisor, and
               the Advisor shall as requested by the Board render appropriate
               accountings of such deposits and payments to the Board;

               (x) administer such day-to-day bookkeeping and accounting
               functions as are required for the proper management of the assets
               of the Company and prepare or cause to be prepared such reports
               (other than the preparation and filing of tax returns) as may be
               required by any governmental authority in connection with the
               ordinary conduct of the Company's business, including without
               limitation, periodic reports, returns or statements required
               under the Securities Exchange Act of 1934, as amended, the Code,
               the securities and tax statutes of any jurisdiction in which the
               Company is obligated to file reports or the rules and regulations
               promulgated under any of the foregoing; and


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               (xi) from time to time, or at any time requested by the officers
               and Directors of the Company, make reports to the officers and
               directors of the Company of its performance of the foregoing
               services.

         (b)  with respect to the General Partner:

                           (i) Administration and Management. The Advisor shall
         provide all management and administrative services required to be
         provided by the General Partner to the Operating Partnership under the
         terms of the Agreement of Limited Partnership of the Operating
         Partnership.

                           (ii) Property Management Services. The Advisor shall
         provide or arrange for the provision of property management services
         for each property owned by the Operating Partnership. The compensation
         for the performance of property management services shall be based on
         competitive rates in the area in which a property is located but shall
         not exceed 6% of gross revenues.

         2.02 REIT  Qualification.  The Advisor shall refrain from taking any
action which in its sole judgment made in good faith would adversely  affect
the status of the  Company as a real  estate  investment  trust as defined
under the Code, except if such action shall be ordered by the Board, in which
event the Advisor shall promptly notify the Board of the Advisor's judgment that
such action would adversely  affect such status and shall refrain from taking
such action pending further clarification or instructions from the Board.

         2.03 Authority. The Advisor shall have full discretion and authority
pursuant to this Agreement to perform the duties and services specified in
Section 2.01 hereof in such manner as the Advisor reasonably considers
appropriate. In furtherance of the foregoing, the Company and the General
Partner each hereby designates and appoints the Advisor or its designee as the
agent and attorney-in-fact of the Company and the General Partner, with full
power and authority and without further approval of the Company or the General
Partner, for purposes of accomplishing on its behalf any of the foregoing
matters or any matters which are properly the subject matter of this Agreement.
The Advisor may execute, in the name and on behalf of the Company and/or the
General Partner and their respective affiliates (including the Operating
Partnership and any other partnership in which the Company, any of the Company's
affiliates or the General Partner is acting as a general partner), as the case
may be, all such documents and take all such other actions which the Advisor
reasonably considers necessary or advisable to carry out its duties hereunder.

                                  ARTICLE III.

                                 INDEMNIFICATION

         3.01 The Company's Indemnity. The Company shall indemnify and hold
harmless the Advisor, and its officers, directors, shareholders, agents and
employees, from and against any and all liability, claims, demands, expenses and
fees, fines, suits, losses and causes of action of any and every kind or nature
arising from or in any way connected with the

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performance by the Advisor of its obligations under this Agreement, other than
any liability, claim, demand, expense, fee, suit, loss or cause of action
arising from or in any way connected with (a) any acts of the Advisor, or its
officers, agents or employees, outside the scope of the authority of the Advisor
under this Agreement unless such person acted in good faith and reasonably
believed that his conduct was within the scope of authority of the Advisor under
this Agreement, or (b) the gross negligence, willful misconduct or material
breach of this Agreement by the Advisor, its officers, agents or employees.

         3.02 Additional Costs; Survival. The obligation to indemnify set forth
in Section 3.01 above shall include the payment of reasonable attorneys' fees
and investigation costs, as well as other reasonable costs and expenses incurred
by the indemnified party in connection with any such claim. At the option of,
and upon receipt of notice from, the indemnified party, the indemnifying party
shall promptly and diligently defend any such claim, demand, action or
proceeding. The provisions of Sections 3.01 and 3.02 hereof shall survive the
expiration or earlier termination of this Agreement.

                                  ARTICLE IV.

                                  COMPENSATION

         In addition to the compensation provided for under the Supervisory
Management Agreement, the Company agrees to pay to the Advisor, and the Advisor
agrees to accept from the Company, the following compensation as full and
complete consideration for all services to be rendered by the Advisor pursuant
to this Agreement:

         4.01 Annual Asset Management Fee The Advisor shall be entitled to
receive an annual asset management fee equal to 1.25% of the Gross Asset Value
as of the last day of the period in respect of which the annual asset management
fee is payable (which amount shall be prorated for any partial year). The annual
asset management fee shall be paid quarterly. For purposes of this Paragraph
4.01, the term "Gross Asset Value" on a particular date means the gross asset
value of all assets owned by the Company and the Operating Partnership on that
date, as determined by the most recent appraisal of such assets by an
independent appraiser of national reputation selected by the General Partner.

         4.02 Expense Reimbursement. Without regard to other compensation
received by the Advisor from the Company pursuant to this Agreement, the Company
shall:

         (a) pay the Advisor $150,000 per annum as a non-accountable expense
         reimbursement; and

         (b) reimburse the Advisor for all out of pocket expenses (including
         overhead expenses) incurred by the Advisor in connection with the
         performance of its services hereunder. The Advisor shall be entitled to
         be reimbursed for accountable expenses to the same extent as the
         general partners of HEP were previously entitled to be reimbursed prior
         to the Merger.


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         4.03 Expenses of the Company and the Operating Partnership. All
expenses relating to the operation and management of the Company and the
Operating Partnership shall be paid by the Company and the Operating
Partnership. Such expenses include, without limitation:

         (a) The cost of borrowed money;

         (b) Taxes on income and taxes and assessments on real property, if any,
         and all other taxes;

         (c) Underwriting, brokerage, listing, reporting, registration and other
         fees, and printing, engraving and other expenses and taxes incurred in
         connection with the issuance, distribution, transfer, trading,
         registration and securities exchange or quotation system listing of the
         Company's securities;

         (d) Fees and expenses paid to directors, independent advisors,
         consultants, managers, local property managers or management firms, and
         other agents employed by or on behalf of the Company;

         (e) Expenses directly connected with the acquisition, disposition and
         ownership of real estate interests or other property (including the
         costs of foreclosure, insurance premiums, legal services, brokerage and
         sales commissions, maintenance, repair, improvement and local
         management of property);

         (f) Expenses connected with payments of dividends or interest or
         distributions in cash or any other form made to holders of securities
         of the Company;

         (g) All expenses connected with communications to holders of securities
         of the Company and the other bookkeeping and clerical work necessary in
         maintaining relations with holders of securities and proxy solicitation
         materials and reports to holders of the Company's securities;

         (h) Transfer agent's, registrar's and indenture trustee's fees and
         charges;

         (i) Legal, accounting, auditing and tax return preparation fees and
         expenses;

         (j) All expenses in connection with shareholders meetings and meetings
         of the Board; and

         (k) All expenses relating to membership of the Company in any trade or
         similar association.

                                   ARTICLE V.

                         TERM OF AGREEMENT; TERMINATION

         5.01 Term. This Agreement shall become effective on ___________, 2000
and shall, unless sooner terminated in accordance with the terms of the
Agreement, terminate on ___________, 2010.


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         5.02 Right of Termination. Notwithstanding anything to the contrary
contained in this Agreement, the Company and/or the General Partner may
terminate this Agreement for cause upon thirty (30) days' prior written notice
to the Advisor. The occurrence of any of the following events shall be deemed
"cause" for termination by the Company of this Agreement:

         (a) The Advisor's continuous and intentional failure to perform its
         duties under this Agreement after written notice from the Company
         and/or the General Partner to the Advisor of such non-performance;

         (b) Intentional misconduct by the Advisor which is materially injurious
         to the Company or the General Partner, monetarily or otherwise; or

         (c) The material breach by the Advisor of any of the material terms or
         conditions of this Agreement.

         5.03 The Advisor's Right of Termination. The Advisor may terminate this
Agreement upon sixty (60) days' prior written notice to the Company and the
General Partner.

         5.04 Continued Responsibility. Notwithstanding termination of this
Agreement as provided above, the Advisor agrees to use its best efforts in the
performance of its duties under this Agreement until the effective date of the
termination of this Agreement.

         5.05 Responsibilities upon Termination. Upon termination of this
Agreement, the Advisor shall forthwith deliver the following to the Company
and/or the General Partner, as applicable, on the effective date of termination:

         (a) A final accounting reflecting the balance of funds held on behalf
         of the Company or the General Partner as of the date of termination;
         and

         (b) All files, records, documents and other property of any kind
         relating to the Company or the General Partner, including, but not
         limited to, computer records, contracts, leases, warranties, bank
         statements, rent rolls, employment records, plans and specifications,
         inventories, correspondence, tenant records, receipts, paid and unpaid
         bills or invoices, maintenance records.

                                  ARTICLE VI.

                            MISCELLANEOUS PROVISIONS

         6.01 Other Activities of Advisor. Nothing herein shall prevent the
Advisor from engaging in other activities or businesses or from acting as
advisor to any other person or entity even though such person or entity has
investment policies and objectives similar to those of the Company or its
affiliates . Specifically, the Company acknowledges that the Advisor is
presently acting as advisor for Shelbourne Properties II, Inc. and Shelbourne
Properties III, Inc. under agreements substantially identical to this Agreement.


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         6.02 Notice. Any notice required or permitted under this Agreement
shall be in writing and shall be given by being delivered to the following
addresses or fax numbers of the parties hereto:

                  To the Company:           Shelbourne Properties I, Inc.
                                            5 Cambridge Center, 9th Floor
                                            Cambridge, Massachusetts  02142
                                            Fax:(617) 234-3346

                  To the General Partner:   Shelbourne Properties I GP, LLC
                                            527 Madison Avenue
                                            New York, New York  10022
                                            Fax:(212) 319-4557

                  To the Advisor:           Shelbourne Management LLC
                                            100 Jericho Quadrangle, Suite 214
                                            Jericho, New York  11753
                                            Fax:(516) 433-2777

or to such other address or fax number as may be specified from time to time by
such party in writing.

         6.03 Entire Agreement; Amendment. This Agreement contains the entire
agreement of the parties hereto with respect to the subject matter hereof. This
Agreement shall not be amended or modified in any respect unless agreed to in
writing by the Company, the General Partner and the Advisor.

         6.04 Governing Law. This Agreement shall be construed, interpreted and
applied in accordance with, and shall be governed by, the laws of the State of
New York without reference to principles of conflicts of law.

         6.05 Assignment This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties hereto; provided,
however, that the Advisor shall be permitted to assign this Agreement or any of
its rights hereunder, and delegate any and all of its responsibilities and
obligations hereunder, to any of its affiliates without the consent of the other
parties hereto.


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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.


                                          SHELBOURNE PROPERTIES I, INC.



                                          By:  _________________________
                                               Name:
                                               Title:


                                          SHELBOURNE MANAGEMENT LLC



                                          By:  _________________________
                                               Name:
                                               Title:


                                          SHELBOURNE PROPERTIES I GP, LLC



                                          By:  _________________________
                                               Name:
                                               Title:




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