SEVERANCE COMPENSATION AGREEMENT


       THIS AGREEMENT is entered into as of August 17, 1998, between Crowley,
Milner & Company, a Michigan corporation (the "Company"), and John Freudenthal,
currently an executive officer of the Company employed in the position of
Senior Vice President (the "Executive").

                               RECITALS:

       A.      The Board of Directors of the Company (the "Board") recognizes
that the Executive has contributed to the management and performance of the
Company due to his industry, dedication and services.

       B.      The Board believes that it is in the best interests of the
Company and its shareholders if the Executive is assured that he will receive
appropriate financial protection in the event of a Change in Control (as
defined in Section 2 below), thus ensuring that the Executive will have an
incentive to perform valuable services for the Company and will not be
distracted in the event of an actual or threatened Change in Control, and that
this will also encourage the Executive to remain in the employ of the Company
through the transition period following a Change in Control, which is in the
best interests of the Company and its shareholders.

       C.      In addition, the Board believes that the assurance of
appropriate financial protection to the Executive in the event of a Termination
of Employment (as defined in Section 1 below) of the Executive is in the best
interests of the Company because it will ensure that the Executive will have
an incentive to continue to perform valuable services to the Company. 

       D.      The Executive is willing to provide dedicated services to the
Company on the condition that he receives adequate assurance that he will
receive the financial protections provided herein.

       In consideration of the premises and the mutual promises made
hereafter, the parties agree as follows:

       1.      Severance Payment.  (a)  The Executive shall be entitled to a
cash severance benefit equal to 100% of the Executive's then current annual
salary, as most recently approved by the Compensation Committee of the Board
of Directors if there shall occur (i) a Termination of Employment of the
Executive (as defined in paragraph (b) below) or (ii) a Change in Control
Termination (as defined in paragraph (c) below).  This cash severance benefit,
when aggregated with any other "parachute payments", as defined under Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), payable
under any other plans, agreements or policies of the Company, shall be reduced
to the highest amount permissible under Sections 280G and 4999 of the Code
before the Executive becomes subject to the excess parachute payment excise tax
under Section 4999 of the Code and the Company loses all or part of its
compensation deduction for such payments.

       (b)      For purposes of this Agreement a "Termination of Employment"
shall mean either (i)  the Executive's involuntary termination by the Company
for any reason other than death, Disability, Retirement or Cause; or (ii) the
Executive's voluntary termination of his employment due to the Company's breach
of any provision in this Agreement.

       (c)     For purposes of this Agreement, a "Change of Control
Termination" shall be deemed to have occurred if any of the following events
shall occur following a Change in Control (as defined in Section 2 below):

               (i)    Any reassignment of the Executive to duties
       substantially inconsistent with his position, title, duties,
       responsibilities and status with the Company immediately prior to the
       Change in Control, or a change in the Executive's reporting
       responsibilities, including a change in the identity or the corporate
       position to which the Executive reports, or a change in title (except
       for a promotion) in effect immediately prior to the Change in Control;
       or

               (ii)   Any reduction in the Executive's base salary in effect
       immediately prior to the Change in Control, or failure by the Company
       to continue any bonus, stock or incentive plans in effect immediately
       prior to the Change in Control (without the implementation of a
       comparable successor plans which provides equivalent benefits), or any
       removal of the Executive from participation in such aforementioned
       plans; or

               (iii)  A discontinuance or reduction in benefits to the
       Executive of any qualified or nonqualified retirement or welfare plan
       maintained by the Company immediately prior to the Change in Control,
       or the discontinuance of any fringe benefits or other perquisites which
       the Executive received immediately prior to the Change in Control; or

               (iv)   Any requirement that the Executive relocate to an
       office outside of Wayne, Oakland, Macomb or Washtenaw Counties,
       Michigan, in order to perform his assigned duties.

       2.      Change in Control.  A Change in Control shall be deemed to
have occurred:

       (a)     If any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
in effect on the date hereof) or group of persons acting in concert, other than
(i) the Company or (ii) any employee benefit plan of the Company becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing 40% or more of the combined
voting power of all classes of the Company's then outstanding securities
ordinarily having the right to vote in the election of directors ("voting
stock").  Notwithstanding the foregoing, the beneficial ownership requirement
in this Section 2(a) shall not be satisfied if the attainment of the applicable
percentage of beneficial ownership is the result of an acquisition of voting
stock by the Company which, by reducing the number of shares outstanding
increases the proportionate number of shares beneficially owned by any person;
provided, however, that if a person shall become the beneficial owner of 40%
or more of the voting stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company
become the beneficial owner of any additional voting stock, then the beneficial
ownership requirement in this Section 2(a) shall have been satisfied; or 

       (b)     if there is a change in the majority of the members of the
Board within any twenty-four month period, unless the election or nomination
for election of each new director was approved by a vote of at least a majority
of the directors still in office who were directors at the beginning of the
period; or

       (c)     if there shall be consummated any merger or consolidation (or
series of mergers or consolidations) of the Company, or any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company other
than (i) a merger or consolidation which would result in the voting stock of
the Company immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting stock of the surviving
entity) more than 60% of the combined voting power of the voting stock of the
Company (or such surviving entity) outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization (or similar transaction) of the Company in which no person
becomes the owner of 40% or more of the combined voting power of the then
outstanding voting stock of the Company, or (iii) a merger or consolidation
effected to implement a reorganization of the Company's ownership wherein the
Company shall become a wholly-owned subsidiary of another corporation and the
shareholders of the Company shall become shareholders of such other corporation
without any material change in each shareholder's proportionate ownership of
such other corporation from that owned in the Company prior to such merger or
consolidation.

       3.      Other Defined Terms.  For purposes of this Agreement, the
following terms shall have the meanings set forth below:

       (a)     "Disability" shall mean the Executive's total and permanent
disability which prevents the Executive from performing the duties he was
assigned for a continuous period exceeding 9 months.  The determination of
Disability shall be made by a medical board certified physician mutually
acceptable to the Company and the Executive (or the Executive's legal
representative, if one has been appointed), and if the parties cannot mutually
agree to the selection of a physician, then each party shall select such a
physician and the two physicians so selected shall select a third physician who
shall make this determination.

       (b)     "Retirement" shall mean retirement on or after age 65.

       (c)     "Cause" shall mean the Executive's willful gross misconduct,
willful and material breach of his duties or an act of fraud or dishonesty by
the Executive that directly or indirectly results in material harm to the
Company.

       4.      Time of Payment.  The Executive's severance benefit shall be
paid in a lump sum cash payment within 10 days following a Termination of
Employment or a Change in Control Termination.  Any payment made later than 10
days following a Termination of Employment or a Change in Control Termination,
for whatever reason, shall include interest at the prime rate plus 4% per
annum, which shall begin accruing on the 10th day following the Termination of
Employment or the Change in Control Termination.  For purposes of this Section,
the "prime rate" shall be determined by reference to the prime rate established
by NBD Bank (or its successor), in effect from time to time commencing on the
10th day following the Termination of Employment or the Change in Control
Termination.

       5.      No Mitigation or Duty to Seek Reemployment.  The Executive
shall be under no duty or obligation to seek or accept other employment after
a Termination of Employment or a Change in Control Termination and shall not
be required to mitigate the amount of any  payments provided for by this
Agreement by seeking employment or otherwise.  

       6.      Tax Withholding.  The Company may withhold from any amounts
payable to the Executive under this Agreement to satisfy all applicable
Federal, State, local or other withholding taxes.  In the event the Company
fails to withhold such sums for any reason, it may require the Executive to
promptly remit to the Company sufficient cash to satisfy all applicable income
and employment withholding taxes.

       7.      Binding Effect.  (a)  This Agreement shall be binding upon the
successors and assigns of the Company.  The Company shall take whatever actions
are necessary to ensure that any successor to its operations (whether by
purchase, merger, consolidation, sale of substantially all assets or otherwise)
assumes the obligations under this Agreement and will cause such successor to
evidence the assumption of such obligations in an agreement satisfactory to the
Executive.  Notwithstanding any other provisions in this Agreement, if the
Company fails to obtain an agreement evidencing the assumption of the Company's
obligations by any such successor, the Executive shall be entitled to immediate
payment of the severance compensation provided hereunder, irrespective of
whether there has occurred a Change in Control Termination.  For purposes of
implementing the foregoing, the date on which any succession becomes effective
shall be deemed to constitute the date of the Change in Control Termination.

       (b)     This Agreement shall be binding upon the Executive and shall
inure to the benefit of and be enforceable by his legal representatives and
heirs.  However, the rights of the Executive under this Agreement shall not be
assigned, transferred, pledged, hypothecated or otherwise encumbered, except
by operation of law.

       8.      Notices.  Any notice required or permitted by this Agreement
shall be in writing, sent by registered or certified mail, return receipt
requested, addressed to the Company at the Company's then principal office, or
to the Executive at the Executive's last address on file with the Company, as
the case may be, or to such other address as a party hereto may from time to
time specify in writing in a notice given to the other party in compliance with
this Section.  Notices shall be deemed given when received.

       9.      Miscellaneous.  This Agreement may not be modified or amended
except by instrument in writing signed by the parties hereto.  The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which
shall continue in full force and effect.  This Agreement shall not be deemed
to create a contract of employment between the Company and the Executive and
shall create no right in the Executive to continue in the Company's employment
for any specific period of time, or to create any other rights in the Executive
or obligations on the part of the Company, except as set forth herein.  This
Agreement shall not restrict the right of the Company to terminate the
Executive, or restrict the right of the Executive to terminate his employment. 
The headings in this Agreement are inserted for convenience of reference only
and shall not be a part of or control or affect the meaning of any provision
hereof.

       10.     Entire Agreement.  This document represents the entire
agreement and understanding of the parties with respect to the subject matter
of the Agreement and it may not be altered or amended except by an agreement
in writing.

       IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
Detroit, Michigan, on the date first written above.

CROWLEY, MILNER AND COMPANY

By: /S/ DENNIS P. CALLAHAN
    Dennis P. Callahan, Chairman and President


/S/ JOHN FREUDENTHAL
Executive