Exhibit 10.3
                      EXTENSION AND MODIFICATION AGREEMENT


     EXTENSION AND MODIFICATION  AGREEMENT made this 12th day of March,  1998 by
and  between  VASOMEDICAL,   INC.,  a  Delaware  corporation   (hereinafter  the
"Company")  and JOHN C. K. HUI, an individual  residing at 7 Braemer Road,  East
Setauket, New York 11733 (hereinafter "Employee").

                              W I T N E S S E T H:

     WHEREAS,  the Company and  Employee  entered into an  Employment  Agreement
dated February 1, 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 the following:

          "3. Term.  Subject to earlier  termination on the terms and conditions
     hereinafter  provided,  the term of the Agreement  shall be for a three (3)
     year period of employment  commencing  February 1, 1999 and ending  January
     31, 2002."

     2.  Paragraphs  "4(a)" and "4(c)" of the  Employment  Agreement  are hereby
deleted in their entirety and in their place and stead shall be the following:

          "4 (a).  Employee  shall be paid a minimum per annum base salary equal
     to the compensation currently received by Employee,  such base salary to be
     payable in equal  periodic  installments  in accordance  with the Company's
     regular  payroll  procedures  for its executive  employees.  Employee's per
     annum  base  salary  may  be  increased  based  upon  merit  and  increased
     responsibilities   as  determined  by  the  Company's  Board  of  Directors
     consistent with its salary administration guidelines."

          "4(c).  The  Company  shall  forthwith  issue to  Employee  options to
     purchase an aggregate of three  hundred  thousand  (300,000)  shares of the
     Company's Common Stock at $1.90625 per share (the  "Options").  The Options
     shall  be  vested  and  exercisable  at the  rate of one  hundred  thousand
     (100,000) shares annually  commencing  January 31, 2000;  provided that the
     Options  shall vest only in the event  Employee is a full-time  employee of
     the Company at the time of vesting.  The time within  which the Options may
     be exercised shall be ten (10) years from the date of issuance."

     3. Paragraph "6 (b)(ii) is hereby deleted in its entirety.
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     4. Paragraph  "6(c)" of the  Employment  Agreement is hereby deleted in its
entirety and in its place and stead shall be the following:

          "6(c). The severance  benefits under this section shall consist of the
     continued  payment  to  Employee,  for  the  balance  of the  term  of this
     Agreement,  of the annual  salary  provided in Section 4(a) hereof plus the
     immediate vesting of options held by Employee."

     5.  Paragraph  "10" of the  Employment  Agreement is hereby  deleted in its
entirety and in its place and stead shall be the following:

          "10.  Notice.  Any  notice  to be given  to the  Company  or  Employee
     hereunder  shall be deemed given if  delivered  personally,  telefaxed,  or
     mailed by certified or registered mail, postage prepaid, to the other party
     hereto at the following addresses:

          To the Company:     Vasomedical, Inc.
                              180 Linden Avenue
                              Westbury, New York 11590

          To Employee:        John C. K. Hui
                              7 Braemer Road
                              East Setauket, New York 11733


     6. Paragraph "14" shall be added to the Employment Agreement to be and read
as follows:

          "14.  Change  of  Control.  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; then

          Employee is entitled to the following settlement benefits:

     (i) a 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  thirty (30) days of an event  described  in
          Section 14(a) or (b) hereof; or
<PAGE>
               (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 one-hundred
          mile radius 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.

          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 without the approval of the Board of Directors; 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."

     7. 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/Anthony Viscusi
     ----------------------------------
     Anthony Viscusi, President and CEO


     /s/ John C. K. Hui
     ----------------------------------
     John C. K. Hui
     Employee