Exhibit 10.3

                      EXTENSION AND MODIFICATION AGREEMENT


     This Extension and Modification Agreement  ("Agreement") is hereby made and
effective this 19th day of December 2003, by and between SEQUATCHIE  ASSOCIATES,
INC., a private  corporation,  having a principal  place of business  located at
Dunlap, TN,  (hereinafter  referred to as "Lessor") and C&D TECHNOLOGIES,  INC.,
formerly  known as C&D Charter  Power  Systems,  Inc.,  a Delaware  corporation,
having a principal  place of business  located at 1400 Union Meeting Road,  Blue
Bell, Pennsylvania, 19422 (hereinafter referred to as "Lessee").

     WITNESSETH,  Lessor  and Lessee are  parties to a certain  Lease  Agreement
dated February 15, 1994, covering the premises known as 18 Industrial Park Road,
Dunlap,  Tennessee 37327, Fourth Civil District of Sequatchie County,  Tennessee
(the "Lease"). The parties now desire to extend the Lease until JANUARY 15, 2009
and effect further modifications to the Lease as provided herein.

The parties hereby agree as follows:


          1. Rent: The Lease shall be amended to insert the following provisions
          after the first full paragraph of the Lease appearing on page 1 of the
          Lease ( i.e., paragraph beginning "IN CONSIDERATION WHEREOF, ..."):

          "Thereafter,  Lessee  agrees to pay  Lessee the  following  amounts as
          advance  rent  during  the  following  periods  in equal,  consecutive
          monthly installments:

     a) during the period  commencing  on SEPTEMBER 1, 2003 and ending on AUGUST
31,  2004,  the sum of TWELVE  THOUSAND  TWO  HUNDRED  SEVENTY  THREE AND 66/100
DOLLARS  ($12,273.66) per month (or ONE HUNDRED FORTY SEVEN THOUSAND TWO HUNDRED
EIGHTY FOUR AND NO/100 DOLLARS ($147,284.00) per annum);

     b) during the period  commencing  on SEPTEMBER 1, 2004 and ending on AUGUST
31, 2005 the sum of TWELVE THOUSAND EIGHT HUNDRED SEVENTY TWO AND 33/100 DOLLARS
($12,872.33)  (or ONE HUNDRED  FIFTY FOUR  THOUSAND FOUR HUNDRED SIXTY EIGHT AND
NO/100 DOLLARS ($154,468.00) per annum);

     c) during the period  commencing  on SEPTEMBER 1, 2005 and ending on AUGUST
31, 2006 the sum of THIRTEEN THOUSAND FIVE HUNDRED THIRTY ONE AND NO/100 DOLLARS
($13,531.00)  (or ONE HUNDRED SIXTY TWO THOUSAND  THREE HUNDRED  SEVENTY TWO AND
NO/100 DOLLARS ($162,372.00) per annum);

     d) during the period  commencing  on SEPTEMBER 1, 2006 and ending on AUGUST
31, 2007 the sum of FOURTEEN THOUSAND ONE HUNDRED EIGHTY NINE AND 58/100 DOLLARS
($14,189.58)  (or ONE HUNDRED  SEVENTY  THOUSAND  TWO HUNDRED  SEVENTY  FIVE AND
NO/100 DOLLARS ($170,275.00) per annum); and

     e) during the period  commencing on SEPTEMBER 1, 2007 and ending on JANUARY
15, 2009 the sum of FOURTEEN  THOUSAND  NINE  HUNDRED  EIGHT AND NO/100  DOLLARS
($14,908.00) (or ONE HUNDRED SEVENTY EIGHT THOUSAND EIGHT HUNDRED NINETY SIX AND
NO/100 DOLLARS ($178,896.00) per annum)."
<PAGE>

          2. Options to Renew:  Stipulation 2 of the Lease  (appearing on page 2
          of the  Lease)  shall be  deleted  and in lieu  thereof  inserted  the
          following:

     "Provided that if, at the time of exercise of each option, Lessee is not in
material  default under any of the  provisions of this Lease,  Lessee shall have
the option to extend the term  hereof  for two (2)  further  periods of FIVE (5)
YEARS each, the 1st Option commencing  JANUARY 16, 2009 and expiring JANUARY 15,
2014, and the 2nd Option  commencing  JANUARY 16, 2014 and expiring  JANUARY 15,
2019 (collectively referred to hereafter as "the Options"),  which Options shall
be exercisable in the manner and at the time specified  below.  The total annual
rental  payable  during each  extended  period shall be as follows:  for the 1st
Option the total  annual  rental  shall be the Fair  Market  Rent as  determined
below,  but not less than ONE HUNDRED  EIGHTY SEVEN THOUSAND EIGHT HUNDRED FORTY
AND 80/100  DOLLARS  ($187,840.80).  For the 2nd Option the total annual  rental
shall be the Fair Market Rent as determined below, but not less than 105% of the
total annual rental during the 1st Option.

     Fair  Market  Rent  Determination:  On or before  the  commencement  of the
TWELFTH  (12th)  MONTH  prior to the  expiration  of the  original  term (or 1st
Option,  as the case may be)  Lessor  shall  submit  to Lessee  in  writing,  by
registered or certified mail, return receipt  requested,  a statement of what it
believes to be the current  rate of rent for the demised  premises  based on the
then current economic conditions and the local commercial real estate market for
properties  comparable to the demised premises (the "Fair Market Rent").  In the
event  Lessee  does not object to  Lessor's  estimate of the Fair Market Rent in
writing, within FIFTEEN (15) DAYS after receipt of Lessor's statement,  the Fair
Market Rent specified in Lessor's statement shall become the total annual rental
payable during the applicable Option period. In the event Lessee notifies Lessor
that it objects to  Lessor's  determination  of the Fair Market Rent within FIVE
(5) DAYS of receipt of Lessor's  proposed Fair Market  Value,  then Lessee shall
have TEN (10) DAYS to  determine  its own estimate of Fair Market Rent to Lessor
and to notify Lessor of such estimate.  Upon receipt of Lessee's  calculation of
Fair Market Rent,  Lessor,  in turn,  shall have FIVE (5) DAYS to notify  Lessee
whether it accepts or objects the  Lessee's  determination  of Fair Market Rent.
Provided, however, in the event Lessor does not object to Lessee's determination
of the Fair Market Rent in writing,  within  FIFTEEN (15) DAYS after  receipt of
Lessee's  statement,  the Fair Market Rent determined by Lessee shall become the
total annual rental payable during the applicable  Option period.  Should Lessor
notify Lessee that it objects to Lessee's determination,  the parties shall have
FIVE (5) DAYS to negotiate the total annual rental which will be payable  during
the applicable Option period.  Should the parties fail to reach agreement within
such 5 day period,  Lessor's  right to exercise the  applicable  Option shall be
deemed waived.

     Lessee  shall  exercise  the 1st and 2nd Options by giving  Lessor  written
notice of its intention to do so by registered or certified mail, return receipt
requested, no later than SIX (6) MONTHS prior to the expiration date of the then
current lease term.

     Anything  contained in this Lease to the contrary  notwithstanding,  in the
event Lessee shall not exercise the 1st Option herein granted,  this Lease shall
terminate without further notice from either party on the expiration date of the
original term and Lessee shall have no right to exercise the 2nd Option.

     Anything  contained in this Lease to the contrary  notwithstanding,  in the
event Lessee shall not exercise the 2nd Option herein granted,  this Lease shall
terminate without further notice from either party on the expiration date of the
1st Option.

Each of said  Options  may be  exercised  to extend the term hereof one (1) time
only.  Except as  expressly  provided  in this  Lease,  upon the  exercise of an
Option,  all of the terms and  provisions  of this Lease shall apply  during the
term of such Option."
<PAGE>

Lessee  shall have the sole and absolute  right to terminate  this Lease for any
reason at any time after AUGUST 31, 2006,  provided Lessee shall give Lessor not
less than SIX (6) MONTHS prior  notice.  In the event of such  termination,  the
term of the Lease shall be deemed to have expired,  as if it had been originally
fixed to expire on the effective date of such  termination.  In connection  with
the foregoing  right to  terminate,  in the event Lessee  terminates  this Lease
during  the  during the period  commencing  on  SEPTEMBER  1, 2006 and ending on
AUGUST 31, 2007,  Lessee shall pay Lessor a one-time  payment in an amount equal
to two (2.0) times the amount of the then current monthly rent, as a termination
fee which shall be an addition to all other  amounts due under the Lease through
the termination date. In the event Lessee terminates this Lease after AUGUST 31,
2007,  in  addition  to all  other  amounts  due under  the  Lease  through  the
termination  date, Lessee shall pay Lessor a one-time payment in an amount equal
to one (1) month's rent (at the then  applicable  rental rate), as a termination
fee which  shall be an addition  to all other  amounts  due to Lessor  under the
Lease through the termination date .

          3. Option to Purchase: Stipulation 3 of the Lease shall be deleted and
          replaced with the following:

     "During the period  commencing  on  SEPTEMBER 1, 2003 and ending on JANUARY
15,  2009 (or until the latest  date that this Lease may be extended as provided
herein,  the "Purchase  Option Term"),  Lessee shall have the option to purchase
the  demised  premises  from  Lessor,  at the Fair  Market  Value of the demised
premises (the "Purchase Option").

     In order to exercise the  Purchase  Option,  Lessee shall notify  Lessor no
later than NINETY (90) DAYS prior to  expiration  of the  Purchase  Option Term.
Thereafter,  the parties shall, in good faith,  prepare and execute an Agreement
of Sale requiring a FIVE PERCENT (5%) deposit upon execution, with settlement on
or before the  NINETIETH  (90th) DAY  following  the date of Lessee's  notice of
exercise of Purchase  Option,  and on such other terms and conditions  which are
customary  to an Agreement  Of Sale for  commercial  real estate in the State of
Tennessee. The exercise of the Purchase Option shall be contingent upon Lessee's
material  compliance  with the terms,  covenants and conditions of this Lease at
the time of  exercising  this option.  If, at any time prior to the option being
exercised  by Lessee the Lease shall be  terminated  for any reason  whatsoever,
then this option to purchase  shall  immediately  become null and void and of no
further force and effect.  In the event Lessee  exercises the option to purchase
herein  granted,  this Lease shall  remain in full force and  effect,  including
Lessee's  obligation  to pay all rent  hereunder,  until such time as settlement
shall take place. At the time title is transferred  under the Agreement of Sale,
the Lease shall merge with the Deed and be extinguished.

     Fair Market  Value  Determination:  On or before the  FIFTEENTH  (15th) DAY
after Lessee gives  notice it has  exercised  its option to purchase the demised
premises,  Lessor shall submit to Lessee in writing,  by registered or certified
mail, return receipt requested,  a statement of what it considers to be the Fair
Market Value of the purchase price for the demised premises. In the event Lessee
does not object to same in writing,  by  registered  or certified  mail,  return
receipt requested, within FIFTEEN (15) DAYS after receipt of Lessor's statement,
the amount  specified in Lessor's  statement shall become the purchase price. In
the event  Lessee  notifies  Lessor  that it  objects to the Fair  Market  Value
established  by Lessor in writing in the manner and within the period  specified
above,  then Lessee  shall have TEN (10) DAYS to  determine  its own estimate of
Fair Market  Value to Lessor and to notify  Lessor in writing of such  estimate.
Upon receipt of Lessee's  calculation  of Fair Market  Value,  Lessor,  in turn,
shall have FIVE (5) DAYS to notify  Lessee  whether  it  accepts or objects  the
Lessee's  determination of Fair Market Value.  Provided,  however,  in the event
Lessor does not object to  Lessee's  determination  of the Fair Market  Value in
writing,  by registered or certified  mail,  return  receipt  requested,  within
FIFTEEN  (15) DAYS after  receipt of Lessor's  statement,  the Fair Market Value
determined  by Lessee  shall  become  the sale price  payable by Lessee.  Should

<PAGE>

Lessor  notify  Lessee  that it objects to Lessee's  determination,  the parties
shall have FIVE (5) DAYS to negotiate  the sale price for the demised  premises.
Should the parties fail to reach  agreement  within such 5 day period,  Lessee's
purchase option shall be deemed to have expired."

          4.  Insurance  :  Stipulation  7 of the  Lease  shall be  deleted  and
          replaced with the following:


"Lessor shall,  at all times during the term of this Lease,  maintain at its own
cost and expense (with coverage to commence on the Commencement  Date): (1) Fire
Insurance in an amount  adequate to cover the cost of replacement of the demised
premises in the event of fire.  Lessor shall also procure "Fire Legal Liability"
in an amount not less than  $100,000  and (2) Public  Liability  Insurance on an
occurrence basis with minimum limits of liability in an amount of $1,000,000 for
personal  injury or death to any person and $1,000,000 for such bodily injury or
death of more than one person and $1,000,000 with respect to damage to property.
The  insurance  coverages  specified in this  paragraph  shall be evidenced by a
certificate(s) of insurance, which, in addition the policy limits of each of the
required  insurance  polices,  indicates  the  following:  (i) name Lessee as an
additional  insured;  (ii) that the insurance is primary to any other  insurance
carried  by  Lessee  for the  covered  risks;  and  (iii)  include  endorsements
providing  notice that such  insurance  may not be cancelled or amended  without
THIRTY  (30) DAYS  notice by mail to Lessee (the  "Certificate  of  Insurance").
Lessor shall provide Lessee with the Certificate of Insurance not later than TEN
(10) DAYS following its execution of this Agreement."

          5. Casualty:  Stipulation 8 of the Lease shall be deleted and replaced
          with the following:

"Lessor  agrees  that if the demised  premises  or any part  thereof is rendered
untenantable  by reason of fire or except for the negligent acts or omissions of
Lessee or any other cause, Lessor will promptly notify Lessee within THIRTY (30)
DAYS of such  loss of the time  schedule  for  repair of the  demised  premises;
provided,  however, that if the repairs or restoration have not been started and
diligently  pursued  within SIXTY (60) DAYS after being  rendered  untenantable,
Lessee may, at its option,  terminate  the Lease without  further  obligation to
Lessor,  except for such rent as may then be due and payable  hereunder.  Lessor
further  agrees that the  demised  premises  or any part  thereof  are  rendered
untenantable for any period of time during the term hereof, the rent during such
period  shall  abate  to the  same  extent  and in the  same  proportion  as the
untenantable  portion  of the  demised  premises  bears  to the  whole  of  said
premises. Notwithstanding anything to the contrary contained in this stipulation
# 8, Lessee shall have no right to terminate the Lease in the event  substantial
repair and restoration is completed  within ONE HUNDRED AND EIGHTY (180) DAYS of
the date of the casualty. With respect to a casualty which Lessor indicates will
require more than NINETY (90) DAYS to repair and  restore,  Lessee may either a)
terminate the Lease or b) require Lessor to substantially repair and restore the
facility within SIX (6) MONTHS."

          6. Roof and Structural Repairs/Restoration: Stipulation 9 of the Lease
          shall be amended to include the following  language at the end of that
          Stipulation:

"In the event of any structural or exterior damage to the demised  premises,  if
Lessor has not completed repairs to the roof and/or  structural  portions of the
demised  premises within THIRTY (30) DAYS of receiving  notice of such condition
from Lessee,  Lessee shall have the right to complete such repairs and either a)
deduct  the cost  thereof  from the  annual  rent due  hereunder  or b)  receive
reimbursement of such costs from Lessor."

          7.  Improvements:  Stipulation  10 of the Lease  shall be  amended  to
          include the following language at the end of that Stipulation:
<PAGE>

"Lessee shall not, under any  circumstances,  be obligated to remove,  repair or
replace  any  improvement,  equipment  or  systems  which it may  install at the
premises during the term of this Lease.

Subject to Lessee's  work,  health and safety  policies and rules,  Lessor shall
have the right,  on not less than TWENTY FOUR (24) HOURS prior  written  notice,
except in case of emergency,  to enter into the demised  premises in the company
of Lessee or its representative to make an inspection."

          8. Change in Ordinance:  Stipulation  11 of the Lease shall be amended
          to include the following language at the end of that Stipulation:

"Lessor shall be solely  responsible for all costs and expenses  associated with
any  modifications,  improvements or additions to the demised premises which may
be  required  as a  result  of  the  adoption  of  new  laws,  statutes,  codes,
ordinances, rules or regulations applicable to the premises and any revisions or
amendments in existing laws, statutes,  codes, ordinances,  rules or regulations
except for any such modifications,  improvements or additions which are required
solely due to Lessee's specific operations conducted at the demised premises."

          9.  Default:  Stipulation  13 shall be deleted and  replaced  with the
          following:

"Lessor may enforce any of its rights or remedies with regard to this Lease only
after  notifying  Lessee that a default has  occurred,  and such  default is not
cured by  Lessee:  (1) within  FIFTEEN  (15) DAYS  following  the date that such
notice was received for any failure to pay any sum due under this Lease; and (2)
within THIRTY (30) DAYS following the date that such notice was received for any
failure  to  perform  any  other  type of  duty or  fulfill  any  other  type of
obligation imposed on Lessee under this Lease."

          10. Real Estate  Taxes:  Stipulation  14 of the Lease shall be deleted
          and replaced with the following:

"The Lessee will pay One Hundred  Percent  (100%) of all  governmental  charges,
impositions,  assessments  and taxes  assessed  on or imposed  upon the land and
building which constitute the assessment of the demised  premises,  in excess of
those  assessed for the calendar year 2003.  The amount due hereunder on account
of such  taxes  shall be  apportioned  for that  part of the  first and last tax
fiscal years covered by the term hereof. Lessor shall promptly forward to Lessee
all  bills  received  by Lessor  for  taxes  which  Lessee  is  required  by the
provisions  of this Lease to pay, and which shall be assessed or levied  against
Lessor.  Lessee shall promptly,  within TEN (10) DAYS after receipt of said bill
from Lessor,  pay the amount  specified in said bill to Lessor.  Lessee  agrees,
however,  that any  failure  on the part of Lessor  to  submit  to Lessee  bills
received  by Lessor  for taxes  shall  not be  deemed a  waiver,  abrogation  or
limitation  of  Lessee's  obligation  to pay all taxes  imposed  on the  demised
premises as above provided."


          11. Notices: Stipulation 15 of the Lease shall be deleted and replaced
          with the following:

Any  notification  required or  permitted  hereby shall be deemed  given,  if in
writing,  upon  transmission  or  receipt  by:  (a)  confirmed  telecopy  or (b)
enclosure thereof in an adequately  post-paid  envelope,  sent first class mail,
respectively.  In either  case,  such  notice  shall be  addressed  to the party
indicated below to whom notices are to be directed,  at the facsimile  number or
mailing  address  (as  applicable)  indicated  below or at such other  facsimile
number or  mailing  address  which that party  subsequently  notifies  the party
giving notice that notices are to be sent.

<PAGE>



         If to Lessee, notices shall be directed to:

                  C&D Technologies, Inc.
                  18 Industrial Park Road
                  Dunlap, TN  37327
                  Attention: Plant Manager
                  (Fax): (423) 949-3480

                  With a copy to:

                  C&D Technologies, Inc.
                  1400 Union Meeting Road, P. O. Box 3053
                  Blue Bell, PA  19422-0858
                  Attention: Chief Financial Officer
                  (Fax): (215) 619-7816

         If to Lessor, notices shall be directed to:

                  Sequatchie Associates, Inc.
                  222 Ridge Road
                  Dunlap, Tennessee 37327
                  Attention: ______________
                  (Fax):  _________________


          12.  Term:  Stipulation  20 of the Lease shall be deleted and replaced
          with the following:

"The parties agree that the term of this Lease shall  commence on the date first
appearing  above and,  unless extended in accordance with the provisions of this
Lease, shall end on JANUARY 15, 2009."

          13.  Premises  Description:  Lessor  agrees  to  provide  to Lessee an
          updated legal  description or certified survey of the demised premises
          not later than TEN (10) DAYS following execution of this Agreement.

          14. Quiet  Enjoyment/Non-Disturbance:  Lessor agrees that Lessee, upon
          paying  the rents  herein  reserved  and  observing  and  keeping  the
          covenants, agreements and stipulations of this Lease on its part to be
          observed and kept, shall lawfully,  peaceably and quietly hold, occupy
          and enjoy the demised  premises  during the term of this Lease and any
          extension  or  renewal  thereof,   without   hindrance,   eviction  or
          molestation  by Lessor or any  person or persons  claiming  by a title
          superior  to that of Lessor,  subject to the terms and  conditions  of
          this Lease.

          Lessee agrees that this Lease shall be subject and  subordinate to any
     mortgage  now or  hereafter  given  with  respect to the  demised  premises
     provided  however,  Lessor  agrees to secure from any current or subsequent
     mortgagee,  a written  agreement  recognizing  Lessee's  tenancy and rights
     under  this Lease and that such  mortgagee  will not  disturb or  otherwise
     interfere  with  Lessee's  possession  of the  demised  premises as long as
     Lessee is not in default hereunder. Upon obtaining such agreement from such
     mortgagees, Lessor shall promptly deliver same to Lessee.
<PAGE>


          15.  Lessor's Work:  Promptly  following  execution of this Agreement,
          Lessor,  at its sole cost and  expense,  agrees  to  engage  competent
          professionals,  contractors  and/or craftsmen to perform the following
          work at the demised  premises and to complete such work not later than
          NINETY (90) DAYS following execution of this Agreement:

               a) Re-stone and re-grade the gravel  parking lot area.

               b) Replace the sidewalk and re-route  downspout  outflow in front
               of  building.

               c) Seal all existing  asphalt  areas.

               d) Replace  existing chain link fence gate at main front entrance
               with roll back gate to match the three other chain link gates.

               e) Replace existing dock ramp.

          16. Ownership and Sale:  Lessor represents and warrants that it is the
          sole legal and equitable owner of the demised premises.  Lessor agrees
          that it will  provide  written  notice  to  Lessee  of any sale of the
          demised  premises at the time an  agreement  of sale is  executed  and
          require Buyer, and its lender,  if any, to acknowledge the priority of
          this Lease and assume all of Lessor's obligations hereunder.

          17. Sale, Sublet or Assign:  Anything to the contrary  notwithstanding
          in the Lease,  Lessee may sublet the  demised  premises  to any entity
          related to or affiliated with Lessee,  without Lessor's  approval.  In
          addition,  Lessor may assign the Lease to or  affiliated  with Lessee,
          without Lessor's approval. Lessor's consent to any other subletting or
          assignment  of  this  Lease  shall  not be  unreasonably  conditioned,
          withheld or delayed. In the event of any assignment occurring pursuant
          to the foregoing or otherwise,  assignor Lessee shall be released from
          all  liability,  except  only for  liability  and  responsibility  for
          hazardous  materials brought onto the demised premises by Lessee,  its
          agents, employees and/or contractors during the term of this Lease.

          18. Existing Lease Terms:  Except as expressly specified above, all of
          the other terms, covenants and conditions of the Lease shall remain in
          full force and effect.

          19. Counterparts: This Agreement may be executed in counterparts, each
          of which shall  constitute  an original  and,  taken  together,  shall
          constitute one and the same instrument.

          IN WITNESS WHEREOF, each of the parties has caused its duly authorized
     representative  to  execute  this  Lease  on the day and year  first  above
     written.


   SEQUATCHIE ASSOCIATES, INC.                        C&D TECHNOLOGIES, INC.


By: /s/ Flavius A. Barker                       By: /s/ Stephen E. Markert, Jr.
    _____________________________                  __________________________

Name:   Flavius A. Barker                       Name:   Stephen E. Markert, Jr.
    _____________________________                  __________________________

Title: Pres                                    Title:  VP - CFO
    _____________________________                  __________________________