The CBA ( http://www.nflpa.org/Members/main.asp?subPage=CBA+Complete ) says that as long as you have a tag available you can use the transition tag. You can even use the transition tag during the uncapped year...
Section 3. Transition Player Designations:
(a) Each Club shall be permitted to designate one Unrestricted Free Agent as a Transition Player between February 1 and February 15 in the Final League Year, with the period ending at 4:00 p.m. New York time. In addition, in each League Year during the term of this Agreement, each Club shall be permitted to designate one Unrestricted Free Agent or Restricted Free Agent as a Transition Player in lieu of designating a Franchise Player, if such Franchise Player designation is available to such Club, in addition to the Transition Player designation permitted by the immediately preceding sentence, during the same designation period as the Franchise Player designation period.
Terms are: one year contract, salary equivalent to the average salary of the top 10 (Franchise is top 5) in his position (or 120% raise over previous salary, whichever is greater).