UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------x In re : : THELEN LLP, : : Debtor.

: ------------------------------------------------------x

Chapter 7 Case No. 09-15631 (ALG)

AMENDED STIPULATION AND ORDER BETWEEN CHAPTER 7 TRUSTEE AND CITIBANK, N.A. REGARDING LIMITED USE OF CASH COLLATERAL BY TRUSTEE AND GRANTING ADEQUATE PROTECTION WHEREAS, on September 18, 2009 (the Petition Date), Thelen LLP, the above-captioned debtor (the Debtor), filed a voluntary petition for relief under chapter 7 of Title 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court); and WHEREAS, Yann Geron (the Trustee) has been appointed and qualified as chapter 7 trustee of the Debtors bankruptcy estate and as of the date hereof, he is serving in that capacity; and WHEREAS, Trustee has been authorized to retain certain professionals, including Fox Rothschild LLP as his general counsel (Order at Docket No. 11), and CBIZ Accounting, Tax & Advisory of NY, LLC (Order at Docket No. 10), and Trustee intends to request from the Bankruptcy Court authority to retain a number of additional professionals including, but not necessarily limited to, auctioneers, and special litigation and debt collection counsel with respect to the Debtors outstanding accounts receivable (collectively, the Trustee Professionals); and

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WHEREAS, pursuant to certain promissory notes, credit agreements and security agreements (collectively, the Loan Agreements) between the Debtor, or its predecessors-ininterest, and Citibank, N.A. (Citi), and certain financing statements filed by Citi with the California Department of State, Citi is the holder of valid, duly-perfected, unavoidable firstpriority liens in and against, among other things, all of the Debtors accounts-receivable, contract rights, cash, securities, furniture, artwork, fixtures, equipment, books, records1 and proceeds of the sale of any such assets (collectively, the Collateral); and WHEREAS, the Collateral secures indebtedness of the Debtor to Citi of approximately $6.9 million as of the date of this Stipulation; and WHEREAS, the Collateral includes any cash collateral, as that term is used in section 363(a) of the Bankruptcy Code (the Cash Collateral), of the Debtor; and WHEREAS, the value of the Collateral has not been determined pursuant to section 506 of the Bankruptcy Code; and WHEREAS, Citis liens do not currently extend to, among other things, certain assets of the Debtor and certain rights, claims and potential recoveries which the Trustee may obtain from third parties, including rights and potential recoveries pursuant to sections 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code (collectively, the Unencumbered Assets); and WHEREAS, the parties hereto wish to resolve any immediate issues regarding the preservation and liquidation of the Debtors assets which may constitute Citis Collateral, by and through this agreement which provides for (i) the Trustees use of Citis Cash Collateral upon the terms and conditions set forth herein, (ii) a carve-out from Citis Collateral with respect

Subject to any statutory posessory lien, as and when allowed by the Bankruptcy Court, that any warehouse may have on certain files in storage in their respective facilities.

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to certain costs of administration, and (iii) the granting to Citi of certain replacement liens and super-priority administration expense claims. IT IS THEREFORE, STIPULATED, CONSENTED AND AGREED by and among the Trustee and Citi as follows: 1. This Stipulation and Order shall have no force or effect unless and until it

is approved by the Bankruptcy Court. 2. The Trustee agrees and acknowledges that Citi holds a valid, enforceable

and allowed as a duly-perfected lien against the Collateral, including the Cash Collateral (the Citi Lien). Citis claim is fixed and allowed as a secured claim in the amount of $6,865,252.26 as of the Petition Date, and continues to accrue post-petition interest, charges, costs and expenses (including professional fees and expenses) as provided for under the Loan Agreements (collectively the Citi Debt). Notwithstanding the foregoing, the Trustee shall have 60 days to challenge the amount of the Citi Debt, which period shall commence upon the date on which Citi provides to the Trustee loan account statements reflecting the Citi Debt and all debits and credits thereto for the 12 month period preceding the Petition Date. If the Trustee does not timely challenge the Citi Debt by written notice to Citi care of its undersigned counsel, then the Citi Debt shall be deemed fixed and allowed as of the Petition Date as stated above. 3. Citi shall provide a carve-out from the Cash Collateral (the Carve-Out)

for payment of chapter 7 administrative costs including (i) allowed commissions, fees and expenses of the Trustee and Trustee Professionals, (ii) tax obligations of the Debtors estate, (iii) costs of maintaining insurance on the Collateral and estate assets, and (iv) any reasonable costs of administering the Debtors estate2 (collectively, Trustee Administrative Expenses), as follows: (a) payment in full to all Trustee Professionals retained by the Trustee with Citis prior
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Including any administrative-priority claims that may be allowed by the Court for records storage.

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consent, for the exclusive purpose of collecting the Debtors accounts receivable or liquidating Citis Collateral, in accordance with their respective retention terms and as approved by the Court; (b) all other commissions, fees and expenses of Trustee and Trustee Professionals, upon prior application to and award by the Bankruptcy Court, on notice to Citi, subject to Citis rights to object as to the amounts sought, and subject to a 10% hold-back unless waived by Citi; and (c) any individual disbursements incurred by the Trustee in the course of his administrative duties in this case, not exceeding $500 each, unless as otherwise agreed by Citi. Other than with prior Court approval, or as expressly provided in this Stipulation, the Trustee shall not disburse Cash Collateral without Citis prior consent, upon reasonable notice to Citi, until the Citi Debt is paid in full. Trustee Administrative Expenses shall be paid first from Unencumbered Assets, and the Carve-Out shall be utilized only secondarily to cover Trustee Administrative Expenses. 4. Except as may otherwise be provided in this Stipulation, the Cash

Collateral and additional cash proceeds acquired from the post-petition liquidation and/or disposition of the Collateral, shall be held by the Trustee in the dedicated estate accounts and distributed by the Trustee as follows: a. First, to the extent Unencumbered Assets and the proceeds thereof shall be unavailable or inadequate and to the extent of the Carve-Out, to payment of Trustee Administrative Expenses; Second, in payment in full of the Citi Debt; and Third, to be disbursed pursuant to the orders of priorities set forth in section 507(a) of the Bankruptcy Code. Notwithstanding anything to the contrary contained in section 552(a) of

b. c.

5.

the Bankruptcy Code, as adequate protection for, and to secure payment of, an amount equal to the aggregate of any diminution (including, without limitation, by depreciation, use, sale, loss or collection) in the value of the Cash Collateral, and as security for and an inducement to Citi to 4
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consent to the Trustees use of the Cash Collateral, the Trustee hereby grants to Citi, a security interests in and replacement lien upon the estates presently-owned and hereafter-acquired Cash Collateral, and such security interests and liens shall be valid, perfected, enforceable and effective as of the Petition Date without any further action by Citi or the Trustee, and senior to any other security interest or lien, subject only to (i) the valid and perfected liens and security interests, if any, of Citi on such property, assets and rights existing before the Petition Date; (ii) the payment of Trustee Administrative Expenses from the Carve-Out, including professionals retained for the purpose of litigating of collecting such Cash Collateral; and (iii) subject to any valid and existing liens as of the Petition Date, on any such assets and pursuant to Section 506(a) of the Bankruptcy Code. 6. In addition, as further inducement to Citi to permit the use of its Cash

Collateral, to the extent that any of the Trustee Administrative Expenses paid with Cash Collateral are directly attributable to Trustee activities, pursuit of assets and claims, and/or other estate administration activities that are not directly related to the maintenance and liquidation of Citis Collateral, Trustee hereby grants to Citi a security interest in and replacement lien against the Unencumbered Assets and proceeds thereof, and such security interests and liens shall be valid, perfected, enforceable and effective as of the Petition Date without any further action by Citi or the Trustee, and senior to any other security interest or lien, subject only to the Carve-Out. 7. As additional adequate protection for the Trustees use of Cash Collateral

and for any diminution in the value of the Cash Collateral, and as security for and an inducement to Citi to permit the use of the Cash Collateral, the Trustee shall pay an amount to Citi equal to any funds held in the Debtors estate bank account attributable to the liquidation of the Collateral in excess of one-hundred twenty-five (125%) percent of the estimated outstanding Trustee

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Administrative Expenses (the Administrative Reserve) at the end of each month on the last day of each month commencing on November 30, 2009 and continuing through to the Termination Date, as defined below (collectively, the Adequate Protection Payments), as provided for below. 8. All Adequate Protection Payments shall be drawn on the Trustees estate

bank account and sent to Citi by Wire Transfer to: Citibank, N.A. 485 Lexington Ave, 9th floor New York, New York 10017 ABA 021000089 For Credit to: ITA - CPB Special Loan Region Account #37428705, and shall be due within seven (7) business days of the end of each monthly period along with an accounting showing how the amount of the Adequate Protection Payment was calculated. The receipt of the Adequate Protection Payments shall be without prejudice to Citis rights to seek, by agreement with Trustee or order of the Bankruptcy Court, a payment from the Administrative Reserve, if Citi believes such reserve is higher than what is necessary in excess of the proceeds of Unencumbered Assets to provide for the payment of all Trustee Administrative Expenses. 9. To the extent the replacement liens granted hereby do not provide

adequate protection for the use of Cash Collateral, Citi shall have a super-priority administration expense claim under 507(b) of the Bankruptcy Code superior to all other claims except the Carve-Out, and shall otherwise enjoy all rights and claims thereunder. 10. Citi shall not be required to take any other action in order to validate and

perfect any security interests and liens granted pursuant to this Stipulation and Order. Nothing in this Stipulation and Order shall in any way restrict the scope of the pre-petition or post-petition liens or security interests, or the priorities, rights of set-off, remedies or claims of Citi and the 6
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automatic stay under section 362(a) is deemed modified to permit Citi to take any such actions and/or to file financing statements or a copy of this Stipulation and Order or any other evidence of the granting of the replacement liens hereunder. 11. In the event that this case is dismissed, neither the entry of this Stipulation

and Order nor the dismissal of the case shall affect the rights of Citi under its respective liens, and all the rights and remedies of Citi shall remain in full force and effect as if the case had not been filed. 12. Notwithstanding anything to the contrary contained herein, the Trustees

right to use and the use of Cash Collateral shall expire (other than the use of Cash Collateral to pay already approved and accrued Trustee Administrative Expenses) on the earliest to occur of (the first such occurrence being hereinafter referred to as the Termination Event): (i) the entry by the Bankruptcy Court or any other court reversing, amending, supplementing, staying, vacating or otherwise modifying the terms of this Stipulation and Order; (ii) the dismissal of this case; (iii) the entry by the Bankruptcy Court of an order granting material relief from the automatic stay imposed by section 362 of the Bankruptcy Code to any entities other than Citi with respect to acts against any of the Collateral or Cash Collateral or replacement liens granted hereunder; or (iv) any material breach by the Trustee of the terms of this Stipulation and Order. On the date of the Termination Event (the Termination Date) and thereafter, the Trustee shall immediately cease using any Cash Collateral (other than to pay approved Trustee Administrative Expenses that accrued prior to the Termination Date). 13. Nothing contained in this Stipulation and Order shall be deemed to be a

consent by Citi to any charge, lien, assessment or claim against the Collateral or Cash Collateral under section 506(c) of the Bankruptcy Code or otherwise and the Trustee agrees that, in

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consideration for Citi providing the Carve-Out, no costs or expenses chargeable or alleged to be chargeable against the Collateral or Cash Collateral under section 506(c) of the Bankruptcy Code shall be incurred in these proceedings. 14. This Stipulation and Order has been negotiated in good faith and at arms

length among the Trustee and Citi, and each of the parties hereto has had the opportunity to receive independent legal advice from the attorneys of its choice with respect to the advisability of entering into this Stipulation and Order. 15. If any or all of the provisions of this Stipulation and Order are hereafter

modified, vacated, or stayed by order of this or any other Court, such stay, modification, or vacation shall not affect in and of itself the validity and enforceability of any lien, priority, other benefit, or application of payment authorized hereby with respect to any indebtedness of the Debtor to Citi. 16. This Stipulation and Order cannot be amended or modified except by a

writing executed by all the parties hereto and approved by the Court. 17. hereto. 18. The terms and provisions of this Stipulation and Order shall be binding This Stipulation and Order may be executed in counterparts by the parties

upon the Trustee, any assignee or successor in interest to the Trustee or Debtors estate (including, without limitation, any successor trustee appointed in the case) and all creditors and parties in interest with respect to the Debtor, and upon Citi and its successors and assigns.

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Dated:

New York, New York December 16, 2009

Dated:

New York, New York December 21, 2009

BLANK ROME LLP

FOX ROTHSCHILD LLP

By: s/ Andrew B. Eckstein Andrew B. Eckstein Michael Z. Brownstein The Chrysler Building 405 Lexington Avenue New York, New York 10174-0208 Telephone: (212) 885-5000 Facsimile: (212) 885-5002 Attorneys for Citibank, N.A.

By:

s/ Yann Geron Yann Geron Fred Stevens 100 Park Avenue, 15th Floor New York, New York 10017 Telephone: (212) 878-7900 Facsimile: (212) 692-0940 Attorneys for Yann Geron, Trustee

Dated:

New York, New York December 16, 2009

Dated:

New York, New York December 21, 2009

CITIBANK, N.A.

YANN GERON, as Chapter 7 Trustee of the Estate of Thelen LLP

By: s/ Marina Yakolina Name: Marina Yakolina Title: S.V.P.

By:

s/ Yann Geron Yann Geron Chapter 7 Trustee

Dated: December 23, 2009 New York, New York /s/ Allan L. Gropper Hon. Allan L. Gropper _

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