Butler's deal will include a player option after the fourth year of the deal, sources told Yahoo.
Butler was a restricted free agent, and Chicago could've matched an offer sheet and retained him.
Butler's agents with Relativity Sports, Happy Walters and Steve McCaskill, negotiated the deal with Bulls general manager Gar Forman.
Butler, 25, had rejected the Bulls' offer of a four-year, $44 million contract extension in October with the belief that a breakout season would enhance his value on the restricted free-agent market this summer. He averaged a career-best 20 points, 5.8 rebounds and 3.3 assists, developed into a dependable 3-point threat and was named the NBA's Most Improved Player of the Year.
"It came down to me deciding that I want to bet on myself," Butler told Yahoo Sports in October. "It was about me believing that I put the work in this summer to become a better player with the hope that my improvement will give the Bulls a better chance to win a championship."
Several teams, including the Los Angeles Lakers, had expressed interest in signing Butler to an offer sheet before he came to a quick agreement with the Bulls.
The Bulls took Butler with the 30th and final pick of the 2011 NBA draft out of Marquette. He steadily improved in each of his four seasons under former Bulls coach Tom Thibodeau.
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