Have you seen this exploit in your theme or plugin files?

As I was working on a redesign of a site for a client, I noticed a code in one of his theme files that completely blew me off. I have tried to search for what it could mean or what it is supposed to be doing but I can’t seem to get a handle on it.

I have concluded that it is a hack, but wanted to get your opinion just before I delete it completely.

Here is the code
[ Malware deleted, please do not post that here. ]