THIRD AMENDMENT TO CREDIT AGREEMENT AND AMENDMENT TO PLEDGE AND SECURITY AGREEMENT

Exhibit 4.1

THIRD AMENDMENT TO CREDIT AGREEMENT AND AMENDMENT TO PLEDGE AND SECURITY AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT AGREEMENT AND AMENDMENT TO PLEDGE AND SECURITY AGREEMENT, dated as of March 18, 2009 (this “Amendment”), is among TECUMSEH PRODUCTS COMPANY (the “Borrower”), the other Loan Parties party hereto, the lenders party hereto (the “Lenders”), and JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such capacity, together with its successors and assigns, the “Administrative Agent”).

RECITAL

     The Borrower, the other Loan Parties, the Lenders and the Administrative Agent are parties to a Credit Agreement dated as of March 20, 2008 (as amended from time to time, the “Credit Agreement”) and are parties to a Pledge and Security Agreement dated as of March 20, 2008 (as amended from time to time, the “Security Agreement”). The Borrower and the Loan Guarantors desire to amend the Credit Agreement and the Security Agreement as set forth herein and the Lenders are willing to do so in accordance with the terms hereof.

TERMS

     In consideration of the premises and of the mutual agreements herein contained, the parties agree as follows:

ARTICLE 1.

CREDIT AGREEMENT AMENDMENTS

     The Credit Agreement is amended as follows:

     1.1 The following new definition is added to Section 1.1:

          “ Aggregate Net Mark-to-Market Exposure ” means, as of any date of determination, the aggregate amount of the excess (if any) of all unrealized losses over all unrealized profits pursuant to all Swap Agreements and related transactions of each Loan Party or its Subsidiaries owing to one or more Lenders or their respective Affiliates. “Unrealized losses” means the fair market value of the cost to the Loan Parties of replacing all Swap Agreements and related transactions as of the date of determination (assuming all Swap Agreements and related transactions were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to the Loan Parties of replacing all Swap Agreements and related transactions as of the date of determination (assuming all Swap Agreements and related transactions were to be terminated as of that date).

     1.2 The following definitions in Section 1.1 are restated as follows:

          “ Applicable Rate ” means, for any day, with respect to any ABR Loan or Eurodollar Loan, the applicable per annum rate set forth below:

For purposes of the foregoing, the Applicable Rate shall be determined by reference to the Average Availability for the most recent fiscal quarter end. Adjustments, if any, to the Applicable Rate shall be made on a quarterly basis and shall be effective five Business Days after the date the applicable Compliance Certificate is scheduled to be delivered. If the Borrower fails to deliver the Borrowing Base Certificate to the Administrative Agent at the time required or any other Event of Default has occurred and is continuing, then the Applicable Rate shall be the highest Applicable Rate set forth in the foregoing table until five days after such Borrowing Base Certificate is so delivered or other Event of Default is waived.

          “ Borrowing Base ” means, at any time, the sum of:

               (a) 85% of Eligible Accounts at such time, plus

               (b) the lesser of (i) 70% of Eligible Inventory, valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time and (ii) 85% multiplied by the Net Orderly Liquidation Value percentage identified in the most recent inventory appraisal ordered by the Administrative Agent multiplied by Eligible Inventory, valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time, plus

               (c) 100% of the Cash Collateral, plus

               (d) the PP&E Component, minus

               (e) Reserves.

     The Agent may, in its Permitted Discretion, reduce the advance rates set forth above or reduce one or more of the other elements used in computing the Borrowing Base.

          “ PP&E Component ” means, at the time of any determination, an amount equal to the least of (i) 50% of the fair market value of any Loan Party’s Eligible Real Property as determined by an appraisal satisfactory to the Administrative Agent, plus 80% of the Net Orderly Liquidation Value of any Loan Party’s Eligible Equipment as determined by an appraisal satisfactory to the Administrative Agent prior to the Effective Date, less reserves established by the Agent in its Permitted Discretion, (ii) 25% of the amount of the Aggregate Commitment or (iii) $3,500,000 or, if all or any substantial portion of the Borrower’s operations in Paris, Tennessee cease to operate or are sold or otherwise transferred, $1,750,000; provided that each of the amounts described in the foregoing clauses (i), (ii) and (iii) shall each reduce by $250,000 as of each March 31, June 30, September 30 and December 31, commencing September 30, 2009 until such amounts reach zero.

     1.3 Section 2.10(b) is restated as follows:

     (b) At all times that full cash dominion is in effect pursuant to Section 7.3 of the Security Agreement, on each Business Day, the Administrative Agent shall apply all funds credited to the Collection Account the previous Business Day (whether or not immediately available) first to prepay any Protective Advances and Overadvances that may be outstanding, pro rata, and second to prepay the Revolving Loans (including Swing Line Loans) and to cash collateralize outstanding LC Exposure and to cash collateralize outstanding Swap Obligations of any Loan Party or its Subsidiaries owing to one or more Lenders or their respective Affiliates (based on the Aggregate Net Mark-to-Market Exposure thereof).

     1.4 The following new Section 2.11(d) is added:

     (d) On such occasion that the sum of the Aggregate Credit Exposure plus the Aggregate Net Mark-to-Market Exposure (after giving effect to any prepayments and cash collateral required under Section 2.11(b)) exceeds the Borrowing Base, the Borro