EMPLOYMENT AGREEMENT

Exhibit 10.42

EXECUTION COPY

EMPLOYMENT AGREEMENT

This Agreement, dated as of February 19, 2008 (the “Effective Date”), is by and between NightHawk Radiology Holdings, Inc., a Delaware corporation (“Employer”), and Mr. Tim Murnane (“Executive”).

1. PERIOD OF EMPLOYMENT. Employer shall employ Executive to render services to Employer in the position and with the duties and responsibilities described in Section 2 for the period (the “Period of Employment”) commencing on March 17, 2008 or such earlier date as shall be agreed upon between Executive and Employer (the “Services Start Date”) and ending on the date upon which the Period of Employment is terminated in accordance with Section 4.

2. POSITION AND RESPONSIBILITIES.

(a) Position. Executive accepts employment with Employer as Executive Vice President and Chief Operating Officer and shall perform all services appropriate to that position, as well as such other services as may be assigned by Employer’s Chief Executive Officer (the “CEO”). Executive shall devote his best efforts and full-time attention to the performance of his duties. Executive acknowledges that it is understood that Executive will re-locate to Coeur d’Alene, Idaho in a reasonable time frame as shall be agreed upon between Executive and Employer.

(b) Other Activity. During the Period of Employment, and except upon the prior written consent of the CEO, Executive shall not (i) accept any other employment or (ii) engage in, manage, control, participate in, consult with, or render services for, directly or indirectly, any other business, commercial, or professional activity (whether or not pursued for pecuniary advantage) that is competitive with Employer, creates a conflict of interest with Employer, or otherwise materially interferes with his duties to Employer or the business of Employer or any Affiliate (as such businesses exist or are in development during the Period of Employment) (and shall immediately cease any such ongoing activity that becomes so competitive, begins to create such a conflict or begins to materially interfere with his duties to Employer or the business of Employer or any Affiliate). An “Affiliate” shall mean any person or entity that directly or indirectly controls, is controlled by, or is under common control with Employer. Executive may engage in civic and charitable activities that do not interfere with Executive’s employment under this Agreement and that do not conflict with Employer’s interests.

3. COMPENSATION AND BENEFITS.

(a) Salary. In consideration of the services to be rendered under this Agreement, Employer shall pay Executive $375,000 per year (as it may be adjusted from time to time by the Compensation Committee of the Board, the “Base Salary”), payable in regular installments in accordance with Employer’s general payroll policies for salaried employees, in effect from time to time. Within thirty (30) days of the beginning of each calendar year during the Period of Employment, the Compensation Committee of the Board shall review Executive’s Base Salary for the purpose of making market and performance increases, shall make a determination of any such increase and give notice thereof to Executive. It is understood that any such increase so determined may or may not apply retroactively to the beginning of such calendar year, which shall be determined by the Compensation Committee of the Board in its sole discretion.

(b) Bonus. In addition to the Base Salary, Executive shall, subject to such performance criteria as shall be determined by the Compensation Committee of the Board, be entitled to an annual bonus in an amount up to 100% of Executive’s Base Salary, or such additional amounts as shall be established from time to time by the Compensation Committee of the Board in connection with its

calendar-year market and performance assessments described in Section 3(a), less applicable withholding (the “Bonus”). Within thirty (30) days of the beginning of each calendar year during the Period of Employment (or such other period of time as shall be reasonably established by the Compensation Committee of the Board), the Compensation Committee of the Board and Executive shall agree upon performance criteria upon which the Bonus shall be based. The Employer shall pay the Bonus, if so earned by satisfaction of such criteria, on or after January 1 of the following calendar year, but in no event later than January 30^th of such year.

For purposes of clarification, Employer hereby acknowledges that for fiscal 2008, Executive shall be eligible to receive a Bonus notwithstanding the fact that all performance criteria shall have already been established by the Compensation Committee prior to Executive’s Services Start Date. For 2008, Executive’s Bonus shall be calculated in accordance with Section 3(b) above and with the formulas adopted by the Compensation Committee applicable to Employer’s other executive management. Executive’s 2008 Bonus shall be pro rated based upon the number of days Executive is employed by Employer during 2008.

(c) Equity Grants. Employer will recommend at the first meeting of the Board of Directors of Employer (the “Board”) following the Services Start Date that Employer grant Executive (i) 30,000 restricted stock units and (ii) an option to purchase 125,000 shares of the Employer’s Common Stock at a price per share equal to the fair market value per share of the Common Stock on the effective date of grant (which shall be established in accordance with the Board’s policies) (collectively, the “Initial Grants”). The restricted stock units will vest over three (3) years, with one-third of the restricted stock units vesting on each of the three anniversaries following the Services Start Date. One-third (33.34%) of the shares subject to the option shall vest on the one (1) year anniversary of the Services Start Date (the “Anniversary Date”), and the remaining shares shall vest monthly over the next 24 months in equal monthly amounts subject to Executive’s continuing employment with Employer.

In addition, Employer will recommend at the first meeting of the Board following the Anniversary Date that Employer grant Executive an additional option to purchase 100,000 shares of the Employer’s Common Stock at a price per share equal to then fair market value per share of the Common Stock on the effective date of such grant (which shall be established in accordance with the Board’s policies) (such grant, the “Anniversary Grant” and, together with the Initial Grants, the “Grants”). The Anniversary Grant shall vest monthly over the 24 months following the Anniversary Date such that the Anniversary Grant shall be fully vested two (2) years following the Anniversary Date, subject to Executive’s continuing employment with Employer.

The Grants shall be subject to the terms and conditions of Employer’s 2006 Equity Incentive Plan. Except as described herein, no right to any stock is earned or accrued until such time that vesting occurs, nor does the grant confer any right to continue vesting or employment.

(d) Vacation and Holidays. Executive shall be entitled to not less than twenty (20) days of vacation per calendar year (or such greater vacation benefits as may be provided for by Employer’s vacation policies applicable to its senior executives), pro rated for any partial year. Executive may accumulate and carry over from one calendar year to the next any unused vacation time; provided, however, that, in accordance with Employer’s vacation policies, at no time will Executive be allowed to accumulate a balance of greater than twenty (20) days vacation. Upon termination of this Agreement for any reason, Employer shall upon such termination pay Executive in full for any accrued but unused vacation. Executive also shall be entitled to such paid holidays as are established by Employer for all employees.

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(e) Benefits. As Executive becomes eligible, he shall have the right to participate in and to receive benefits from all present and future benefit plans specified in Employer’s policies and generally made available to salaried employees and senior executives of Employer from time to time. The amount and extent of benefits to which Executive is entitled shall be governed by the specific benefit plan, as amended. Executive also shall be entitled to any benefits or compensation tied to termination as described in Section 4. Employer reserves the ability, in its sole discretion, to adjust benefits provided to Executive in connection with the adjustment of benefits to salaried employees. No statement concerning benefits or compensation to which Executive is entitled shall alter in any way the Period of Employment or the termination thereof as provided in this Agreement.

(f) Expenses. Employer shall reimburse Executive, or otherwise advance amounts, for reasonable travel and other business expenses incurred or to be incurred by Executive in the performance of his duties, subject to reasonable documentation thereof and in accordance with Employer’s expense reimbursement policies in effect from time to time, but in no event more than thirty (30) days after Executive’s submission of such documentation in accord with such policies. Specifically, and without limiting anything set forth in this Section 3(e), Employer hereby agrees to reimburse Executive in an amount up to $5,000 for all reasonable lodging and other expenses incurred by Executive during the first 45 days following the Services Start Date as Executive travels to and from the Coeur d’Alene, Idaho area or such other locations as shall be requested by Employer in connection with Executives duties.

(g) Signing Bonus. Upon execution of this Agreement by both parties, Executive shall be eligible to receive a signing bonus equal to $75,000 (the “Signing Bonus”). Employer shall pay Executive the Signing Bonus in one or more installments as shall be requested by Executive in Executive’s sole discretion. If, within six (6) months of the Services Start Date, Executive resigns without Good Reason, then Executive shall re-pay to Employer such portion of the Signing Bonus as shall have been paid to Executive prior to such resignation.

(h) Withholding. All compensation and comparable payments to be paid to Executive under this Agreement shall be less all applicable withholdings required by applicable federal, state or local law, including, without limitation, payment of withholding taxes and unemployment compensation taxes in such state or states as shall be mutually determined by Executive and Employer in respect of Executive’s compensation under this Agreement.

4. TERMINATION OF EMPLOYMENT.

(a) By Employer Without Cause. At any time, Employer may terminate the Period of Employment without Cause (as defined below), effective as of the date specified in a written notice from Employer to Executive. Employer may dismiss Executive as provided in this Section 4 notwithstanding anything to the contrary contained in or arising from any statements, policies, or practices of Employer relating to the employment, discipline, or termination of its employees. If the Period of Employment is terminated by Employer without Cause, Employer shall continue to pay Executive (A) his Base Salary, payable in regular monthly installments as severance payments from the date of termination for a period of twelve (12) months thereafter (the “Severance Period”), and (B) on or after January 1 of the following calendar year, but in no event later than January 30^th of such year, such pro rata amount of the Bonus for which Executive would have been eligible had the Period of Employment not been terminated by Employer without Cause, pro-rated to the date of termination based upon the actual number of days elapsed in the calendar year in which such termination occurs (both such payments, the “Severance Payment”). Notwithstanding the foregoing, the Executive shall only be entitled to the Severance Payment if, and only if, Executive (1) has executed and delivered to Employer the General Release in the form attached hereto as Exhibit A, (2) has not revoked or breached the provisions of the General Release or breached the provisions of this Agreement or the Confidentiality and Non-Compete Agreement between

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Executive and Employer dated as of the date hereof (the “Non-Compete Agreement”), and (3) does not apply for unemployment compensation chargeable to Employer during the Severance Period. Upon such termination, Executive shall not be entitled to any other salary, compensation or benefits after termination of the Period of Employment, except as specifically provided for herein or in Employer’s employee benefit plans or as otherwise expressly required by applicable law (such as COBRA); provided, however, that Employer shall pay Executive’s COBRA health insurance premiums from the date of termination through the date that is twelve (12) months after the date of termination. Notwithstanding anything to the contrary contained in this Section 4(a), in the event Executive breaches the provisions of this Agreement or the Non-Compete Agreement, the severance amounts payable by Employer under this Section 4(a) shall not terminate unless and until more than fifteen (15) days have elapsed from and after the date written notice of such breach has been delivered to Executive without such breach having been cured during such 15-day period, provided, however, Executive will be permitted to avail himself of the cure rights contained in this Section 4(a) one time only during the Period of Employment.

(b) By Employer For Cause. At any time, and without prior notice (except as otherwise provided in the definition of Cause set forth below), Employer may terminate the Period of Employment for Cause. Employer shall pay Executive all compensation then due and owing; thereafter, all of Employer’s obligations under this Agreement shall cease. Termination shall be for “Cause” if Executive (i) breaches his duty of loyalty to Employer or any of its Affiliates or engages in any acts of dishonesty or fraud with respect to Employer or any of its Affiliates or any of their respective business relations, (ii) commits a felony or any crime involving dishonesty, breach of trust, or physical or emotional harm to any person (or enters a plea of guilty or nolo contendere with respect thereto), (iii) breaches any material term of this Agreement or any other agreement between Executive and Employer or any of its Affiliates and such breach (if capable of cure) is not cured within fifteen (15) days following written notice thereof from Employer, (iv) reports to work under the influence of alcohol or illegal drugs, the use of illegal drugs (whether or not at the workplace) or other repeated conduct causing Employer or any of its Affiliates substantial public disgrace, disrepute or economic harm, (v) substantial and repeated failure to perform the duties as reasonably directed by the CEO or (vi) gross negligence or willful misconduct with respect to the Employer or any of its Affiliates.

(c) By Executive for Good Reason. If Executive shall resign for Good Reason, Executive shall be entitled to the same rights, and be subject to the same restrictions as provided in Section 4(a) upon termination by Employer without Cause. For purposes of this Section 4(c), “Good Reason” will mean Executive’s voluntary resignation within ninety (90) days after the occurrence of any of the following without the express written consent of Executive (i) a reduction in Executive’s annualized Base Salary or (ii) without the express written consent of Executive, a material diminution in Executive’s supervisory responsibilities, or (iii) any requirement that the Executive relocate to a work site that would increase the Executive’s one-way commute distance from Executive’s then principal residence by more than fifty (50) miles, unless Executive accepts such relocation opportunity; provided, however, that Executive acknowledges and agrees that a requirement to relocate to the Coeur d’Alene, Idaho area from Executive’s current residence shall not constitute Good Reason for purposes of this Agreement. In addition, Employer shall pay Executive’s COBRA health insurance premiums from the date of termination by Executive for Good Reason through the date that is twelve (12) months after the date of termination by Executive for Good Reason. In the event that Executive terminates his employment for Good Reason, the Employer shall be entitled to deliver written notice to Executive within fifteen (15) days following such termination demanding that the determination of the existence of Good Reason be determined by arbitration in accordance with the procedures set forth in Section 9 hereof. If the arbitrator determines that Good Reason did not exist, the termination shall be treated as a voluntary termination by Executive and the Employer shall have no obligations to pay or provide to Executive the compensation payments and other benefits to which he would have otherwise been entitled to pursuant to a termination for Good Reason. If the arbitrator determines that Good Reason did exist, Executive shall be entitled to the same rights, and be subject to the same restrictions as provided in Section 4(a) upon termination by Employer without Cause.

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(d) Voluntary Termination by Executive. At any time, Executive may terminate the Period of Employment for any or no reason by providing Employer at least thirty (30) days’ advance written notice. Employer shall have the option, in its complete discretion and upon payment of all compensation then due and owing (including any portion of the Bonus earned for the calendar year of termination, pro rated to the date of any such termination based upon the actual number of days elapsed in such calendar year and paid in accordance with Section 3(b) above) through the last day of the notice period, to make Executive’s termination effective at any time prior to the end of such thirty (30) day notice period and, thereafter, all of Employer’s obligations under this Agreement shall cease.

(e) Termination Upon Death or Permanent Disability. Executive’s employment with Employer shall also terminate upon Executive’s death or permanent mental or physical disability or other incapacity (as determined by the Board in its good faith judgment). Upon any such termination, Employer shall pay Executive (or Executive’s estate or legal representative or guardian) all compensation then due and owing (including any portion of the Bonus earned for the calendar year of termination, pro rated to the date of termination based upon the actual number of days elapsed in such calendar year and paid in accordance with Section 3(b) above); thereafter, all of Employer’s obligations under this Agreement shall cease.

(f) Acceleration. If Executive’s employment terminates without Cause or for Good Reason, then the vesting schedule applicable to any stock options, restricted stock or other rights to acquire stock in Employer (including, but not limited to, the Grants) shall automatically accelerate by twelve (12) months and all such stock options and other rights that would otherwise vest during such twelve (12) month period shall, on the date of such termination, become vested and/or immediately exercisable. In the event that Executive is terminated by Employer (or its successor) within twelve (12) months of a Change in Control (as hereinafter defined), then any then-unvested stock options, restricted stock or other rights to acquire stock in Employer (as they may be assumed by Employer’s successor) shall automatically and fully vest as of the date of such termination. For purposes of this Agreement, the term “Change of Control” means (i) a business combination (such as a merger or consolidation) of Employer with any other corporation or other type of business entity (such as a limited liability company), other than (A) a business combination which would result in the voting securities of Employer outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of Employer or such controlling surviving entity outstanding immediately after such business combination, and (B) any bona fide equity financing; or (ii) the sale, lease, exchange or other transfer or disposition by Employer of all or substantially all of Employer’s assets.

(g) Termination of Compensation. Except as otherwise expressly provided herein, all of Executive’s rights to salary, bonuses, employee benefits and other compensation hereunder which would have accrued or become payable after the termination or expiration of the Period of Employment shall cease upon such termination or expiration, other than those expressly required under applicable law (such as COBRA).

(h) Employer Right to Delay Payment. Employer shall have the right to delay the payment of any severance amount payable hereunder (all of such amounts being “Delayed Severance Payments”) to the extent necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the “Code”) (relating to payments made to certain “key employees” of certain publicly-traded companies) and in such event, Employer shall pay the Delayed Severance Payments to the Executive on the first business day following the expiration of such six (6) month period described in Code Section 409A(a)(2)(B)(i).

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(i) Termination Obligations.

(i) Executive agrees that all property, including, without limitation, all equipment, Confidential Information (as defined in the Non-Compete Agreement), documents, books, records, reports, notes, contracts, lists, computer disks (and other computer-generated files and data), and copies thereof, created on any medium and furnished to, obtained by, or prepared by Executive in the course of or incident to his employment, belongs to Employer. Accordingly, Executive shall return such property to Employer promptly upon termination or expiration of the Period of Employment.

(ii) All employee and other benefits to which Executive is otherwise entitled shall cease upon the termination or expiration of the Period of Employment, unless explicitly continued either under this Agreement or under any specific written policy or benefit plan of Employer.

(iii) Upon termination or expiration of the Period of Employment, Executive shall be deemed to have resigned from all offices and directorships then held with Employer or any Affiliate.

(iv) The representations and warranties contained in this Agreement and Executive’s obligations under this Section 4(i) shall survive the termination or expiration of the Period of Employment and the termination of this Agreement.

(j) Cooperation. For sixty (60) days following any termination or expiration of the Period of Employment and at Employer’s sole cost and expense, Executive shall cooperate in a reasonable manner with Employer in all matters relating to the winding up of pending work on behalf of Employer and the orderly transfer of work to other employees of Employer. At all times following any termination or expiration of the Period of Employment, Executive shall also cooperate in the defense of any action brought by any third party against Employer that relates in any way to Executive’s acts or omissions while employed by Employer; provided that Employer shall reimburse Executive for his reasonable out-of-pocket expenses after being provided with reasonable documentation of such expenses.

(k) Golden Parachute Taxes. In the event that any of the benefits provided to Executive by this Agreement (A) constitute “parachute payments” within the meaning of Section 280G of the Code, or any comparable successor provisions, and (B) but for this paragraph would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the “Excise Tax”), then Executive’s benefits hereunder shall be either (1) provided to Executive in full, or (2) provided to Executive as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts (when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes) results in the receipt by Executive of the greatest amount of benefits, on an after-tax basis, notwithstanding that all or some portion of such benefits may be subject to payment of an Excise Tax. Unless Employer and Executive agree otherwise in writing, any determination required under this Section 4(j) shall be made in writing in good faith by a mutually determined and qualified third party (the “Professional Service Firm”). In the event of a reduction of benefits hereunder, Executive shall be given the choice of which benefits to reduce. For purposes of making the calculations required by this Section 4(j), the Professional Service Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable

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legal authority. Employer and Executive shall furnish to the Professional Service Firm such information and documents as the Professional Service Firm may reasonably request in order to make a determination under this Section 4(j). Employer shall bear all costs and expenses the Professional Service Firm may reasonably incur in connection with any calculations contemplated by this Section 4(j)(i).

5. ARBITRATION.

(a) Arbitrable Claims. To the fullest extent permitted by law, disputes between Executive (and his attorneys, successors, and assigns) and Employer (and its Affiliates, shareholders, directors, officers, employees, agents, successors, attorneys, and assigns) relating in any manner to the employment or termination of Executive, and all disputes arising under this Agreement (“Arbitrable Claims”) shall be resolved by arbitration. All persons and entities specified in the preceding sentence (other than Employer and Executive) shall be considered third-party beneficiaries of the rights and obligations created by this Section on Arbitration. Arbitrable Claims shall include, without limitation, contract (express or implied) and tort claims of all kinds, as well as all claims based on any federal, state, or local law, statute, or regulation, excepting only claims under applicable workers’ compensation law and unemployment insurance claims. By way of example and not in limitation of the foregoing, Arbitrable Claims shall include (to the fullest extent permitted by law) any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, as well as any claims asserting wrongful termination, harassment, breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, defamation, invasion of privacy, and claims related to disability.

(b) Procedure. Arbitration of Arbitrable Claims shall be in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, as amended (“AAA Employment Rules”), as augmented in this Agreement. Arbitration shall be initiated as provided by the AAA Employment Rules, although the written notice to the other party initiating arbitration shall also include a statement of the claim(s) asserted and the facts upon which the claim(s) are based. Arbitration shall be final and binding upon the parties and shall be the exclusive remedy for all Arbitrable Claims. Either party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Otherwise, neither party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim. Notwithstanding the foregoing, either party may, at its option, seek injunctive relief under the laws of the State of Idaho. All arbitration hearings under this Agreement shall be conducted in Kootenai County, Idaho. The decision of the arbitrator shall be in writing and shall include a statement of the essential conclusions and findings upon which the decision is based. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS, INCLUDING WITHOUT LIMITATION ANY RIGHT TO TRIAL BY JURY AS TO THE MAKING, EXISTENCE, VALIDITY, OR ENFORCEABILITY OF THE AGREEMENT TO ARBITRATE.

(c) Arbitrator Selection and Authority. All disputes involving Arbitrable Claims shall be decided by a single arbitrator. The arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of the effective date of the notice initiating the arbitration. If the parties cannot agree on an arbitrator, then the complaining party shall notify the AAA and request selection of an arbitrator in accordance with the AAA Employment Rules. The arbitrator shall have only such authority to award equitable relief, damages, costs, and fees as a court would have for the particular claim(s) asserted. The fees of the arbitrator shall be paid equally by the parties. If the allocation of responsibility for payment of the arbitrator’s fees would render the obligation to arbitrate unenforceable, the parties authorize the arbitrator to modify the allocation as necessary to preserve enforceability. The arbitrator shall have exclusive authority to resolve all Arbitrable Claims, including, but not limited to, whether any particular claim is arbitrable and whether all or any part of this Agreement is void or unenforceable.

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(d) Confidentiality. All proceedings and all documents prepared in connection with any Arbitrable Claim shall be confidential and, unless otherwise required by law, the subject matter thereof shall not be disclosed to any person other than the parties to the proceedings, their counsel, witnesses and experts, the arbitrator, and, if involved, the court and court staff. All documents filed with the arbitrator or with a court shall be filed under seal. The parties shall stipulate to all arbitration and court orders necessary to effectuate fully the provisions of this subsection concerning confidentiality.

(e) Continuing Obligations. The rights and obligations of Executive and Employer set forth in this Section 5 shall survive the termination of Executive’s employment and the expiration of this Agreement.

6. EXECUTIVE’S REPRESENTATIONS. Executive hereby represents and warrants to Employer that (a) the execution, delivery and performance of this Agreement by Executive does not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (b) Executive is not a party to or bound by any employment agreement or noncompete agreement or confidentiality agreement with any other person or entity that would have the effect of preventing Executive from entering into this Agreement or performing his obligations described herein, and (c) upon the execution and delivery of this Agreement by Employer, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms.

7. NOTICES. Any notice or other communication under this Agreement must be in writing and shall be effective upon delivery by hand, or three (3) business days after deposit in the United States mail, postage prepaid, certified or registered, and addressed to Employer or to Executive at the corresponding address below. Executive shall be obligated to notify Employer in writing of any change in his address. Notice of change of address shall be effective only when done in accordance with this Section.

Employer’s Notice Address:

NightHawk Radiology Holdings, Inc.

250 Northwest Blvd., #202

Coeur d’Alene, ID 83814

Attn: Vice President, General Counsel and Secretary

Telecopy: (208)  ###-###-####

with a copy to (that does not constitute notice):

Wilson Sonsini Goodrich & Rosati, P.C.

701 Fifth Avenue

Suite 5100

Seattle, Washington, 98104

Attn: Mark J. Handfelt

Email: ***@***

Telecopy: (206)  ###-###-####

Executive’s Notice Address:

The last residential address known by Employer.

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With a copy to (that does not constitute notice):

Bosen & Springer, PLLC

1 New Hampshire Avenue, Suite 215

Portsmouth, NH 03801

Attn: John Bosen, Esq.

Email: ***@***

Or such other advisor indicated to Employer by Executive in writing.

8. ACTION BY EMPLOYER. All actions required or permitted to be taken under this Agreement by Employer, including, without limitation, exercise of discretion, consents, waivers, and amendments to this Agreement, shall be made and authorized only by the Board.

9. INTEGRATION. This Agreement is intended to be the final, complete, and exclusive statement of the terms of Executive’s employment by Employer. This Agreement supersedes all other prior and contemporaneous agreements and statements, whether written or oral, express or implied, pertaining in any manner to the employment of Executive, and it may not be contradicted by evidence of any prior or contemporaneous statements or agreements. To the extent that the practices, policies, or procedures of Employer, now or in the future, apply to Executive and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control.

10. AMENDMENTS; WAIVERS. This Agreement may not be amended except by an instrument in writing, signed by each of the parties. No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity.

11. ASSIGNMENT; SUCCESSORS AND ASSIGNS. Executive agrees that he will not assign, sell, transfer, delegate, or otherwise dispose of, whether voluntarily or involuntarily, or by operation of law, any rights or obligations under this Agreement. Any such purported assignment, transfer, or delegation shall be null and void. Nothing in this Agreement shall prevent the consolidation of Employer with, or its merger into, any other entity, or the sale by Employer of all or substantially all of its assets, or the assignment by Employer of any rights or obligations under this Agreement. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, legal representatives, successors, and permitted assigns, and shall not benefit any person or entity other than those specifically enumerated in this Agreement.

12. SEVERABILITY. If any provision of this Agreement, or its application to any person, place, or circumstance, is held by an arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or void, such provision shall be enforced to the greatest extent permitted by law, and the remainder of this Agreement and such provision as applied to other persons, places, and circumstances shall remain in full force and effect.

13. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the law of the State of Idaho. Subject to Section 5, the parties hereto irrevocably and unconditionally submit to the exclusive jurisdiction of any state or federal court sitting in Coeur d’Alene, Idaho over any suit, action or proceeding brought pursuant to the terms of this Agreement.

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14. INTERPRETATION. This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party. By way of example and not in limitation, this Agreement shall not be construed in favor of the party receiving a benefit nor against the party responsible for any particular language in this Agreement. Captions are used for reference purposes only and should be ignored in the interpretation of the Agreement.

15. CONFLICT WITH EMPLOYER POLICIES. In the event of any conflict between this Agreement and the policies and procedures adopted by Employer from time to time during the Period of Employment, this Agreement shall control.

16. EMPLOYEE ACKNOWLEDGMENT. Executive acknowledges that he has had the opportunity to consult legal counsel in regard to this Agreement, that he has read and understands this Agreement, that he is fully aware of its legal effect, and that he has entered into it freely and voluntarily and based on his own judgment and not on any representations or promises other than those contained in this Agreement.

17. COUNTERPARTS; FACSIMILE SIGNATURE. This Agreement may be executed in one or more counterparts and by facsimile signature, each of which shall constitute an original and all of which together shall constitute one and the same instrument.

[Signature Page Follows]

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The parties have duly executed this Agreement as of the date first written above.

EMPLOYMENT AGREEMENT BETWEEN

NIGHTHAWK RADIOLOGY HOLDINGS, INC. & TIM MURNANE

SIGNATURE PAGE

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EXHIBIT A

GENERAL RELEASE

I, Tim Murnane, in consideration of and subject to the performance by NightHawk Radiology Holdings, Inc., a Delaware corporation (the “Employer”), of its obligations under the Employment Agreement, dated as of February 19, 2008 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Employer and each of its affiliates and all present and former directors, officers, agents, representatives, employees, successors and assigns of the Employer and each of its affiliates and the Employer’s direct or indirect owners (collectively, the “Released Parties”) to the extent provided below.

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT: