BONUS AGREEMENT

        THIS BONUS AGREEMENT is made as of the 28th day of August, 2006 by and
between HENNESSY ADVISORS, INC., a California corporation (the “Company”), and
DANIEL B. STEADMAN, Executive Vice President of the Company (“Executive”).

BACKGROUND

        Executive is a key contributor to the Company’s continued financial
success. In consideration of Executive’s continued employment with the Company,
the Company wishes to provide Executive with bonus compensation in the event of
a change of control of the Company. Accordingly, the parties agree as follows:

        1.    Bonus on Change of Control. In the event of a Change of Control,
provided that Executive remains continuously employed by the Company through the
date of the Change of Control, the Company shall pay Executive within 15 days
after the Change of Control a one-time cash bonus equal to the least of:

  (a)        $500,000;

  (b)        The sum of the following:

           (i)        100% of the total base salary (before deductions for
withholding taxes or reductions for pre-tax contributions or deferrals to any
Company benefit plan) paid by the Company to Executive during the most recent
fiscal year ended prior to the Change of Control;

           (ii)        100% of the Prior Year’s Bonus;

           (iii)        An amount equal to the Pro Rata Portion of the Prior
Year’s Bonus, provided that at least such amount has been accrued by the Company
as bonus compensation for Executive (without regard to this Agreement) for the
fiscal year during which the Change of Control occurs; or

  (c)        The amount specified in Section 2.

        2.     Section 280G Limitation. If the bonus to be paid pursuant to
Section 1, together with any other payments or benefits received or to be
received by Executive from the Company or any successor thereto in the Change of
Control transaction (whether payable upon termination of employment or otherwise
and whether payable pursuant to the terms hereof or any other plan, agreement or
arrangement with the Company or any successor thereto in the Change of Control
transaction) (such payments in the aggregate “Total Benefits”), would constitute
an “excess parachute payment” under Section 280G of the Code, then the amount
that would be payable to Executive under Section 1 shall be reduced such that
the Total Benefits will be One Dollar ($1.00) less than the maximum amount
Executive may receive without becoming subject to the tax imposed by Section
4999 of the Code.

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        3.     Definitions. The following definitions shall apply for purposes
of this Bonus Agreement:

          (a)     “Affiliate” means any person controlling, controlled by or
under common control with the person in question.

          (b)     “Beneficial Ownership” has the meaning set forth in Rule 13d-3
promulgated under the Exchange Act. Beneficial Owner and Beneficially Owned have
correlative meanings.

          (c)     “Board” means the Board of Directors of the Company.

          (d)     “Change of Control” means the occurrence of any one or more of
the following events:

          (i)       an acquisition, in any one transaction or series of
transactions, after which any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), has Beneficial Ownership of
50% or more of either the then outstanding shares of Company common stock or the
combined voting power of the then outstanding voting securities of the Company,
but excluding, for this purpose, any such acquisition (A) by the Company or any
employee benefit plan (or related trust) of the Company, (B) by Neil J. Hennessy
or any Affiliate thereof, or (C) by any corporation with respect to which,
following such acquisition, all of the then outstanding shares of common stock
and voting securities of such corporation are then Beneficially Owned, directly
or indirectly, in substantially the same proportions, by the Beneficial Owners
of the common stock and voting securities of the Company immediately prior to
such acquisition;

          (ii)       50% or more of the members of the Board (A) are not
Continuing Directors, or (B) whether or not they are Continuing Directors, are
nominated by or elected by the same Beneficial Owner or are elected or appointed
in connection with an acquisition by the Company (whether through purchase,
merger or otherwise) of all or substantially all of the operating assets or
capital stock of another entity; or

          (iii)       the (A) consummation of a reorganization, merger, share
exchange, consolidation or similar transaction, in each case, with respect to
which the individuals and entities who were the respective beneficial owners of
the common stock and voting securities of the Company immediately prior to such
transaction do not, following such transaction, beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and voting securities of the corporation resulting from such
reorganization, merger or consolidation, (B) consummation of the sale or other
disposition of all or substantially all of the assets of the Company or (C)
approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

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          (e)     “Code” means the Internal Revenue Code of 1986, as amended.

          (f)     “Continuing Director” means any member of the Board who was a
member of the Board on August 1, 2006, and any successor of a Continuing
Director who is recommended to succeed a Continuing Director (or whose election
or nomination for election is approved) by at least a majority of the Continuing
Directors then on the Board.

          (g)     “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

          (h)     “Prior Year’s Bonus” means the cash bonus (before deductions
for withholding taxes or reductions for pre-tax contributions or deferrals to
any Company benefit plan) paid by the Company based on Executive’s performance
for the most recent fiscal year ended prior to the Change of Control.

          (i)     “Pro Rata Portion” means the portion determined by dividing
(x) the number of days elapsed from the beginning of the fiscal year during
which the Change of Control occurs until and including the date of the Change of
Control by (y) 365.

        4.     Withholding. The Company shall withhold from all payments to
Executive hereunder all amounts required to be withheld under applicable local,
state or federal income tax and payroll laws.

        5.     Miscellaneous. This Agreement shall be construed and enforced in
accordance with the laws of the State of California (exclusive of conflict of
law principles). In the event that any provision of this Agreement shall be
invalid, illegal or unenforceable, the remainder shall not be affected thereby.
This Agreement shall be binding upon and inure to the benefit of Executive and
Executive’s heirs and personal representatives and the Company and its
successors, assigns and legal representatives. Headings herein are inserted for
convenience and shall not affect the interpretation of any provision of this
Agreement. References to sections of the Exchange Act or the Code, or rules or
regulations related thereto, shall be deemed to refer to any successor
provisions, as applicable. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to
expressly assume and agree to perform under this Agreement in the same manner
and to the same extent that the Company would be required to perform if no such
succession had taken place. This Agreement may not be terminated, amended, or
modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

[SIGNATURE PAGE FOLLOWS]

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HENNESSY ADVISORS, INC.

By:   /s/ Neil J. Hennessy Name:   Neil J. Hennessy Title:   President, CEO and
Chairman of the Board

/s/ Daniel B. Steadman Daniel B. Steadman

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