The stretch provision saves the Blazers approximately $5.6 million in luxury tax this year.
Nicholson, 27, signed a four-year, $26 million contract with the Washington Wizards in July 2016. Washington traded him to the Nets as part of a February deadline deal for Bojan Bogdanovic. Nicholson has averaged six points and three rebounds per game in his five NBA seasons.
Orlando selected Nicholson with the 19th overall pick in the 2012 NBA draft, and he spent his first four seasons with the Magic. He played his college ball at St. Bonaventure, where he led the Bonnies to an Atlantic 10 championship and the NCAA tournament in 2012.