Boozer was a second-round pick of the Cavs in 2002. He signed a standard second-round contract for two years with a team option for the third.
He had two strong years and obviously would have had his option picked up. However, the Cavs wanted to lock him in long-term. So (allegedly; this is one of those things we’ll never know for sure) they agreed with Boozer that they would decline his option, allow him to become a restricted free agent, and sign him to a long-term deal. Under the salary rules then in effect, the most they could offer Boozer was $41 million over six years. Boozer had a strong incentive to go along - his option for 2004-05 was for $750K, so he stood to make a lot more money that season.
So the Cavs declined Boozer’s option …. and Boozer promptly signed with Utah for $68 million.
Why didn’t the Cavs offer him $68 million? Because they couldn’t. A loophole in the salary rules at the time meant other teams with cap room could offer a former second-round pick more money than the current team. This loophole would eventually be closed (Google “Gilbert Arenas provision” if you care), but it was the rule at the time, and it hosed the Cavs.
Did Boozer and the Cavs have a (likely illegal) handshake agreement in place? Who knows for sure. I doubt the Cavs would have ever declined a team-friendly option otherwise. They tried to do something that stood to benefit both Boozer and the team, and they got burned.