EXHIBIT 10.1

                               AMENDMENT NO. 3 TO
                           LOAN AND SECURITY AGREEMENT


                                                              July 31, 1998


All American Semiconductor, Inc.
16115 Northwest 52nd Avenue
Miami, Florida  33014
Attention:  Chief Financial Officer

Ladies and Gentlemen:

                  Reference is made to the Loan and Security  Agreement dated as
of May 3,  1996  among  Harris  Trust  and  Savings  Bank,  as a  Lender  and as
Administrative  Agent for the Lenders,  American National Bank and Trust Company
of Chicago,  as a Lender and as  Collateral  Agent for the Lenders and the other
Lenders party thereto and All American  Semiconductor,  Inc., as amended to date
(the "Loan  Agreement").  Unless defined herein,  capitalized  terms used herein
shall have the meanings provided for such terms in the Loan Agreement.

                  Borrower has requested that  Requisite  Lenders agree to amend
the Loan  Agreement in order to modify  certain  financial  covenants  contained
therein.  Requisite  Lenders  have  agreed  to the  foregoing  on the  terms and
pursuant to the conditions provided herein.

                  Therefore, the parties hereto hereby agree as follows:

                  1.       AMENDMENTS TO LOAN  AGREEMENT.  The Loan Agreement is
hereby amended as follows:

                  (a)      SECTION 8.12.  Section 8.12 of the Loan  Agreement is
hereby  amended by  deleting  therefrom  the phrase  "Three  Million Two Hundred
Thousand  Dollars  ($3,200,000)  for any fiscal year" and inserting in its place
the following phrase:

                  "(i) Four Million Five Hundred Thousand  Dollars  ($4,500,000)
         for the 1998 fiscal year or (ii) Four  Million  Five  Hundred  Thousand
         Dollars ($4,500,000) for any fiscal year after the 1998 fiscal year."

                  (b)      SECTION 8.17. The table  contained in Section 8.17 of
the Loan Agreement is hereby amended and restated in its entirety, as follows:
<TABLE>
<CAPTION>

                                 "Period                                    Amount
                                 -------                                    ------
<S>               <C>                                              <C>

                  Each three month period commencing  on             The actual Tangible Net
                   March 31 and ending on the next succeeding         Worth of the Designated
                   June 29 (beginning with the period ending          Companies as of the prior
                   June 29, 1998)                                     September 30, plus
                                                                      $1,500,000

                  Each three month period commencing on              The actual Tangible Net
                   June 30 and ending on the next succeeding          Worth of the Designated
                   September 29 (beginning with the period            Companies as of the prior
                   ending September 29, 1998)                         December 31, plus $750,000
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                                                 
<S>               <C>                                              <C>
                  Each three month period commencing on              The actual Tangible Net
                   September 30 and ending on the next                Worth of the Designated 
                   succeeding December 30 (beginning with             Companies as of the prior
                   the period ending December 31, 1998)               March 31, plus $750,000

                  Each three month period commencing on              The actual Tangible Net 
                   December 31 and ending on the next                 Worth of the Designated
                   succeeding March 30 (beginning with the            Companies as of the prior
                   period ending March 30, 1999)                      June 30, plus $1,000,000"
</TABLE>

                  (c)      SCOPE.  This  Amendment  No. 3 to Loan  and  Security
Agreement  shall have the effect of amending  the Loan  Agreement  and the other
Financing  Agreements as appropriate to express the agreements contained herein.
In all other  respects,  the Loan Agreement and the other  Financing  Agreements
shall remain in full force and effect in accordance with their respective terms.

                  2.       CONDITIONS TO EFFECTIVENESS.  This Amendment No. 3 to
Loan and Security  Agreement shall be effective  immediately  upon the execution
hereof by Requisite  Lenders,  the  acceptance  hereof by each Borrower and each
Guarantor,  and the delivery  hereof to the  Administrative  Agent,  at 111 West
Monroe  Street,  Chicago,  Illinois  60603,  Attention:  Mr. William Kane, on or
before July 31, 1998.

                                      Very truly yours,

                                      HARRIS TRUST AND SAVINGS BANK,
                                        as Administrative Agent and a Lender
                                      Pro Rata Share:  25%


                                      By:_______________________________________
                                      Its:______________________________________


                                      AMERICAN NATIONAL BANK AND
                                        TRUST COMPANY OF CHICAGO,
                                      as Collateral Agent and a Lender
                                      Pro Rata Share:  25%



                                      By:_______________________________________
                                      Its:______________________________________


                                      SANWA BUSINESS CREDIT
                                        CORPORATION, as a Lender
                                      Pro Rata Share:  12.5%


                                      By:_______________________________________
                                      Its:______________________________________


                                      -2-
<PAGE>

                                      MERCANTILE BUSINESS CREDIT,
                                        INC., as a Lender
                                      Pro Rata Share:  12.5%


                                      By:_______________________________________
                                      Its:______________________________________


                                      THE BANK OF NEW YORK
                                        COMMERCIAL CORPORATION,
                                        as a Lender
                                      Pro Rata Share:  12.5%


                                      By:_______________________________________
                                      Its:______________________________________


                                      NATIONSBANK OF TEXAS, N.A.,
                                        as a Lender
                                      Pro Rata Share:  12.5%


                                      By:_______________________________________
                                      Its:______________________________________


Acknowledged and agreed to as of this 31st day of July, 1998.

ALL AMERICAN SEMICONDUCTOR, INC.


By:_______________________________________
Its:______________________________________

                                      -3-

<PAGE>


                   ACKNOWLEDGMENT AND ACCEPTANCE OF GUARANTORS

                  Each of the undersigned, in its capacity as a Guarantor of the
Liabilities of Borrowers to Agents and Lenders under the Loan Agreement,  hereby
acknowledges  receipt  of the  foregoing  Amendment  No. 3 to Loan and  Security
Agreement,  accepts and agrees to be bound by the terms  thereof,  ratifies  and
confirms all of its obligations under the Master Corporate  Guaranty executed by
it and agrees that such Master  Corporate  Guaranty shall continue in full force
and effect as to it, notwithstanding such amendment.


                                      Dated:  July 31, 1998

                                      Each of the Subsidiaries of All American
                                         Semiconductor, Inc.

                                      By:_______________________________________
                                      Its:______________________________________



                                      -4-