According a source close to Jeff Zrebiec of The Baltimore Sun, the Orioles have reached an agreement on a one-year deal with Derrek Lee. The deal is pending a physical.

Jon Heyman of Sports Illustrated says that the deal is close to $8 million, but he cautions that the number is unconfirmed. Tim Brown of Yahoo Sports adds that the deal could reach $10 million with incentives.

Earlier this week, Phil Wood of MASN, reported that the Orioles and the Washington Nationals were in competition for Lee. Now that Lee is off the board, the Nationals may look at Adam LaRoche.

The one-year contract will allow Lee to build up his value and enter the free agent market in 2011 with the hopes of securing a longer-term deal.

Lee, 35, hit .260/.347/.428 with 19 home runs and 80 RBIs with the Chicago Cubs and the Atlanta Braves in 2010.