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The 22-year-old, who had been just a few hours away from hitting the market as a restricted free agent, led all NHL defensemen with 18 goals last season and finished eighth with 56 points. Green, now under contract through 2011-12, will have one more year as an RFA before becoming eligible for unrestricted free agency.

McPhee said Tuesday owner Ted Leonsis has given him the authority to spend up to the salary cap (set at $56.7 million this season) if necessary. He also said Brian Pothier (concussion) has placed on long-term injured reserve, so his $2.5 million salary will not count against the team’s cap this season if he can’t return to the lineup because of post-concussion complications.

That means the Caps could have a little more than $9.5 million left under the cap depending on who makes the team out of training camp with RFAs Brooks Laich, Shaone Morrisonn and Boyd Gordon - and possibly unrestricted free agent Sergei Fedorov - still to sign.

“We’ve said that when these kids come of age and it is time to renew them, we will,” McPhee said. “We’ll keep the team intact and spend what we need to spend to do it.”