The deal includes a vesting option that could take it beyond $60 million for the 30-year-old, the source said. Another source close to the situation said the physical with the Phillies won't occur until early next week, the earliest the contract could be finalized or announced.

If finalized, the contract would be the largest total package ever signed by a relief pitcher. The previous high was the five-year, $47 million deal signed by B.J. Ryan with Toronto in December 2005.

The $12.5 million average annual value of the deal would be tied for the second-highest ever signed by a reliever.

Mariano Rivera's $15 million a year, in each of his last two contracts, ranks No. 1.

Papelbon's annual pay would be tied with former Phillies closer Brad Lidge, who signed a three-year, $37.5 million extension during the 2008 season, covering the 2009-11 seasons.

Papelbon takes 219 career saves, with a 2.33 ERA and 1.02 WHIP, with him to Philadelphia, despite pitching his entire career in the AL East.

The deal comes after the Red Sox said they would like to re-sign Papelbon, and the Toronto Blue Jays and Florida Marlins reportedly also had expressed strong interest.

"We knew he was going to be in demand and we knew that teams in position to win would have interest in him," Boston general manager Ben Cherington said.

Papelbon's agents, Sam and Seth Levinson, did not call the Red Sox and offer the opportunity to match or trump the Phillies, according to Cherington.

"We haven't had that conversation," he said. "I don't think he owes us a phone call, but based on the conversations I've had with Sam and Seth we weren't going to be able to bridge that gap at this point in the offseason."

It remains uncertain whether the Phillies will have to surrender their first-round draft pick next June to the Red Sox as compensation for Papelbon, because draft-pick compensation is one of the unresolved issues still on the table during the ongoing labor talks.

Under the current rules, because Papelbon is a Type A free agent, the Red Sox would receive the Phillies' No. 1 pick, the 31st overall pick, in the draft.

However, the players' union has been seeking to reduce the number of premier free agents who would require a team to surrender a draft choice. So until labor negotiations are completed, neither team can be certain of the new definition of players who would still require compensation.

Nevertheless, a source familiar with the labor talks predicted Friday that Papelbon is still likely to be among the elite free agents who would cost their team a No. 1 pick.

Papelbon, a four-time All-Star, will replace Ryan Madson, who also is a free agent.