AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

        THIS AMENDMENT NO. 1 is made as of the 28th day of August, 2006 and
amends the Employment Agreement dated as of May 2, 2001 (the “Original
Agreement”) by and between HENNESSY ADVISORS, INC., a California corporation
(the “Company”), and NEIL J. HENNESSY (“Employee”).

BACKGROUND

        The Initial Term of the Original Employment Agreement has expired. The
Company desires to retain the services of the Employee, and the Employee desires
to be employed by the Company, in accordance with the terms and conditions set
forth in the Original Agreement, as amended by this Amendment No. 1.
Accordingly, the parties agree as follows (all capitalized terms not otherwise
defined herein have the meanings given to them in the Original Agreement, and
section references below refer to the sections of the Original Agreement):

        1.    Term. The new term (“Renewal Term”) of this Agreement shall
continue until the fifth anniversary of last day of the Initial Term of the
Original Agreement, unless earlier terminated as provided herein. On such fifth
anniversary date and each anniversary date thereafter, the term of this
Agreement automatically shall be extended for an additional one year term (the
“Extended Term”) unless either party hereto shall have provided written notice
to the other party hereto of its, or his, intent not to extend this Agreement
not less than sixty (60) days prior to the end of the Renewal Term or the
Extended Term, as the case may be. For purposes of this Agreement, “Term” means
the Renewal Term and, if so extended, the Extended Term.

        2.    Compensation. Section 3(b) of the Original Agreement is amended to
read in full as follows:

        (b)        Bonus Compensation. The Board shall grant to Employee an
annual bonus equal to 10% of the pre-tax profit of the Company for each fiscal
year as computed for financial reporting purposes in accordance with generally
accepted accounting principles, except that pre-tax profit shall be computed
without regard to any bonuses payable for the fiscal year (“Annual Bonus”). An
amount equal to 50% of the estimated Annual Bonus shall be payable on October 15
for the preceding fiscal year, and the balance of the Annual Bonus shall be
payable within 30 days after the Company’s accountants have completed their
audit of the Company’s financial statements for the fiscal year.

(Signature page follows)

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        IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be
duly executed all as of the day and year first above written. Except as amended
hereby, the Original Agreement shall remain in full force and effect.

HENNESSY ADVISORS, INC.

By:   /s/ Daniel B. Steadman Name:   Daniel B. Steadman Title:   Executive Vice
President
                    Company

/s/ Neil J. Hennessy Neil J. Hennessy
                    Employee

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