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10-2-2b states that the team last in possession, Team B, must give their option of accept/decline first. You said they declined the illegal formation penalty. 10-2-2b then states that the team not last in possession, Team A, may decline or accept the penalty of Team B. In this case, they declined.
You no longer have a double foul. There is no live ball accepted foul, so the period is ended.
Casebook play 10-2-2 SITUATION C is the binding casebook play.
I'm 99.9% positive that up to about three or four years ago this play was ruled differently. I remember seeing a casebook play that in this situation, once Team B declined the foul on Team A that there were no further options. Team A could not decline the Team B foul. That has since been changed.
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