EXTENSION AND MODIFICATION AGREEMENT ASSOCIATES,

 

                                                                  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 i