The contract will start next season at $8.75 million and descend in value with the final season in 2023-24 non-guaranteed.
A former second-round pick, Osman is in the final season of a three-year, $8 million deal. He would've been a restricted free agent next summer.
He averaged 13 points, 4.1 rebounds and 2.6 assists last season as the team's starting small forward.
The New York Times first reported the agreement.