When another team wants to sign a restricted free agent, it signs the player to an offer sheet, the principal terms of which the original team is given seven days to match. The offer sheet must be for at least two seasons (not including option years). If the player's prior team also submitted a maximum qualifying offer, then the offer sheet must be for at least three seasons (not including option years). If the player's original team exercises its right of first refusal by matching the principal terms of the offer sheet, the player is then under contract to his original team. If the player's original team does not exercise its right of first refusal within seven days, the offer sheet becomes an official contract with the new team.
To summarize, a restricted free agent essentially has four options:
He can accept his prior team's qualifying offer, play for one season, and become a free agent again the following summer.
He can accept his prior team's maximum qualifying offer (if applicable, and if one has been submitted) and play under a long-term contract at the maximum salary.
He can sign an offer sheet with another team, which his prior team is given the opportunity to match.
He can negotiate a new contract with his prior team that is independent of the qualifying offer or maximum qualifying offer.
. . .
A signed offer sheet can be rescinded within the seven day waiting period if all three parties (the player and the two teams) agree.
