Coach Byron Scott said Monday he had agreed to terms on a contract extension that could keep him with the New Orleans Hornets for three more seasons.

Scott guided the Hornets to a 20-win improvement in his second season with the team, even as it endured a temporary move from New Orleans to Oklahoma City caused by Hurricane Katrina.

“The deal is pretty much finalized and I’m happy about it and looking forward to getting the season under way,” Scott said.

He did not reveal the contract’s financial terms.

Scott led the Hornets to an 18-64 record in his first season then oversaw the largest improvement in the league last season. The Hornets were in the playoff race until the final week of the season, and Scott was voted fifth in the NBA’s coach of the year balloting.

In his tenure with New Jersey, his Nets team also had a sizable improvement — 26 wins — in his second season and made its first of back-to-back berths in the NBA Finals in 2002 and 2003.

Scott was replaced by Lawrence Frank after a 22-20 start in 2003-04 and signed on with the Hornets the following season. The new deal would guarantee the two remaining option years on Scott’s four-year contract and add an option for 2008-09, Scott said.

“I’m happy about it. I think it’s a good deal,” Scott said. “It’s mostly incentive-based, which I kind of like.”

Scott did not reveal the contract’s exact financial terms, but he said it included bonuses for wins, reaching the playoffs and other milestones.

“Whatever you can think of, we tried to put it in there and try to make it more incentive-based,” Scott said.

Scott’s business manager, Brian McInerney, was in Oklahoma last week to visit Scott and work on the extension. He said Scott’s priority was keeping his coaching staff together.

“We wanted to make sure that we were on the same page with (general manager) Jeff (Bower) and they could go forward as a unified coaching staff,” McInerney said.

Following the Hornets’ pre-draft workout on Monday, Bower said he could not confirm Scott’s new extension but said negotiations with Scott and his staff were ongoing.

“We’re real happy with where we’re at with all of our talks, and we’re hopeful we’ll have an announcement soon,” Bower said.

After the season, Hornets owner George Shinn said he had hoped to re-sign Scott for the long term.

“I’m confident because he loves his team and he sees a good one and he wants to stay,” Shinn said last month. “We’re going to do everything to make that happen.”

Shinn has also said he wants to re-sign Bower, who took over as general manager when Allan Bristow resigned in October.

Scott’s extension comes just before this years NBA draft, which is Wednesday.