Exhibit 10.1
                      EXTENSION AND MODIFICATION AGREEMENT

     EXTENSION AND MODIFICATION  AGREEMENT made this 12th day of March, 1998 and
between VASOMEDICAL,  INC., a Delaware corporation  (hereinafter the "Company"),
and Anthony Viscusi,  an individual  residing at 15 West 81st Street,  New York,
New York 10024 (hereinafter "Employee").

                               W I T N E S S E T H

     WHEREAS,  the Company and  Employee  entered into an  Employment  Agreement
dated July 1, 1994 and modified on October 24, 1995 (hereinafter the "Employment
Agreement"); and

     WHEREAS,   the  Company  and  Employee  desire  to  amend  said  Employment
Agreement.

     NOW, THEREFORE, the parties agree as follows:

     1.   Paragraph  3 of the  Employment  Agreement  is hereby  deleted  in its
          entirety, and in its place and stead shall be inserted the following:

"3. Term. Subject to earlier termination on the terms and conditions hereinafter
provided, the term of this Employment Agreement shall end on December 31, 2000."

     2.   Paragraph  6(b)(iii) of the Employment  Agreement is hereby deleted in
          its entirety.

     3.   Paragraph  14 of the  Employment  Agreement  is hereby  deleted in its
          entirety, and in its place and stead shall be inserted the following:

"14. In the event (a) the Company has been  consolidated  or merged into or with
any other  corporation or all or substantially  all of the assets of the Company
have been sold to another corporation,  with or without the consent of Employee,
in his sole  discretion;  or (b) the Company  undergoes a Change of Control,  as
hereinafter defined below, without prior Board approval; then

Employee is entitled to the following settlement benefits:

     (i)  lump-sum  payment  for the  greater of (A) twelve  (12)  months of the
          annual  salary  provided in section  4(a) hereof or (B) the balance of
          compensation for the term of this Employment Agreement; and
     
     (ii) any and all stock options and warrants  held by Employee  shall become
          immediately vested and exercisable; if

               (A)  Employee  voluntarily and unilaterally  resigns his position
                    with the  Company  within 30 days of an event  described  in
                    Section 14(a) or (b) hereof, or    
               (B)  Employee is given notice of termination directly as a result
                    of such Change in Control  within six (6) months of an event
                    described in Section 14(a) or (b) hereof, or
               (C)  Employee's   place  of   employment   is   moved   beyond  a
                    hundred-mile  radius,  as the crow  flies,  from 180  Linden
                    Avenue,  Westbury,  New York  11590 (or the  Company's  then
                    current  business  address)  as a direct  result of an event
                    described in Section 14(a) or (b) hereof.
<PAGE>
     A  "Change  of  Control"  of the  Company,  or in any  person  directly  or
indirectly controlling the Company, shall mean:
     (i) a change of control  as such term is  presently  defined in  Regulation
240.12b-2 under the Securities Exchange Act of 1934 (the "Exchange Act");
     (ii) if during the Term of  employment,  any "person" (as such term is used
in Section  13(d) and  14(d)of the  Exchange  Act) other than the Company or any
person who on the date of this Employment  Agreement is a director or officer of
the Company,  becomes the  "beneficial  owner" (as defined in Rule 13(d)-3 under
the  Exchange  Act),  directly  or  indirectly,  of  securities  of the  Company
representing  20%  of  the  voting  power  of  the  Company's  then  outstanding
securities; or
     (iii)  if  during  the  Term  of  employment,  the  individuals  who at the
beginning  of such period  constitute  the Board cease for any reason other than
death, disability or retirement to constitute at least a majority thereof."

     4. The  aforesaid  Employment  Agreement  in all other  respects  is hereby
ratified and confirmed.

     IN WITNESS  WHEREOF,  the  undersigned  have  executed  this  Extension and
Modification Agreement as of the day and year first written above.

VASOMEDICAL, INC.

By:  /s/Abraham E. Cohen
     ---------------------------------------
     Abraham E. Cohen, Chairman of the Board


     /s/Anthony Viscusi
     ---------------------------------------
     Anthony Viscusi
     Employee