Teams are able to select players who meet the following criteria:

Players who are at least 23 years old and have a minimum of three years of MLS experience whose options were not exercised by their clubs (available at option salary for the next season).
Players who are at least 25 years old with a minimum of four years of MLS experience who are out of contract and whose club does not offer them a contract at their previous salary (available at previous season's salary).
Players who are at least 30 years old with a minimum of eight years of MLS experience who are out of contract and whose club does not wish to re-sign them (available for at least 105 percent of their previous season's salary).
Players with expiring contracts or options that are not renewed by their clubs who do not meet the age and service requirements necessary to be included in the Re-Entry Draft are instead available in the Waiver Draft.

The draft order is determined by a reverse combination of the teams' playoff and regular season positions, similar to the MLS SuperDraft, with any expansion clubs picking last.

Each club may either select a player from the eligible player list or pass. Once a club chooses to pass, they may no longer participate in that stage of the Re-Entry Process. Each stage continues until all clubs have passed on the available players. Clubs may not select their own players in Stage 1.

If a club selects a player in Stage 1, it must exercise the option for, or extend a Bona Fide Offer to, the player. If the player rejects the offer, the drafting club will hold the right of first refusal for that player in MLS. Players with option years left on their contract are automatically to the drafting club’s roster. Any player selected in Stage 1 will remain on the drafting club’s 2012 budget at the option price or Bona Fide Offer price until April 1 of the following year. Clubs and players may not mutually renegotiate that price to a lower number until April 1 of that year.

For several days after Stage 1, clubs may sign their own players to new contracts or sign and trade a player to a new club (provided the old club, new club, and player agree to the new terms). A blackout period then begins before Stage 2 takes place one week following Stage 1.

In Stage 2, clubs may select from players that are under contract and those not under contract. If a player is not under contract, the drafting club will be required to make a genuine offer to the player within seven days. In the event that an agreement cannot be reached between the drafting club and an out-of-contract player, the drafting club will hold the right of first refusal for that player in MLS.

Clubs may select their own players in the Stage 2 draft only after all other clubs have declined to select those players.

If a player is not selected in either stage of the Re-Entry Process, that player will be available on a first come first serve basis to all clubs.

Wiki entry on this year's Entry Draft: LINK

This post was edited on 12/14/12 at 2:53 pm