If he signs it now, it'll be 3.5 yrs at his new wage to expire in July 2009.
If it's a 3 yr deal, it'll take effect at the end of the season and the shortfall in the wages for 6 month will be made up with a one-off ex-gratia payment.
Davies and his agent have to sit down and work out which suits him best: a fixed sum or a wage rise including potential bonuses.