The official requested anonymity because the contract still must be approved by the NHL.
The 31-year-old Smith had mostly been a backup before leading the Coyotes to the Western Conference finals for the first time in 2011-12, his first as Phoenix's No. 1 goalie. Smith was about to become a free agent and had been waiting for clarity on the Coyotes' ownership situation before signing.
The City of Glendale is set to vote on a lease agreement with Renaissance Sports & Entertainment on Tuesday, the last major hurdle in the group's attempt to buy the franchise from the NHL.
Smith signed with Phoenix in 2011 after spending the previous six seasons with Dallas and Tampa Bay.
He was stellar in his first true shot at being a No. 1 goalie, winning 38 games with a 2.21 goals-against average, a .930 save percentage and a franchise-record-tying eight shutouts. The Coyotes won their first division title in 33 years as an NHL franchise and went to the conference finals for the first time that season.
Smith wasn't quite as good in the final year of his contract, going 15-12-5 with a 2.58 goals-against average and save percentage of .910 during the lockout-shortened 2012-13 season. The Coyotes finished four points out of the West's final playoff spot.
Smith likely would have been one of the top goalies in the free agency market, but said his preference was to stay in Phoenix as long as there was clarity in the team's ownership.
The NHL has agreed to sell the franchise to RSE, but the deal is contingent upon the group working out a lease agreement with Glendale for Jobing.com Arena. Tuesday's vote is still in doubt, leaving open the possibility that the franchise could be relocated — the NHL has indicated that would be the likely next option — but Smith decided to sign anyway.
Even as the four-year ownership saga laboured on, the Coyotes have shown signs of stability over the past few weeks, signing General Manager Don Maloney, assistant GM Brad Treliving, coach Dave Tippett and his assistants in recent weeks. Phoenix also signed captain Shane Doan before the 2012-13 season and locked up young defenceman Oliver Ekman-Larsson to a long-term deal in March.
Tippett signed with the Coyotes this week and goalies coach Sean Burke, Smith's mentor in Arizona, signed a couple of weeks before that.