SARASOTA, Fla. -- With just hours to spare before going to arbitration, the Reds and third baseman Edwin Encarnacion agreed to a two-year, $7.6 million contract early Tuesday morning.

Encarnacion was seeking $3.7 million while the club offered $2.55 million when figures were exchanged last month. He will make $2 million this season and $4.75 million in 2010. There is also an $850,000 signing bonus and a $25,000 incentive bonus if he reaches 600 plate appearances.

In his first year of arbitration eligibility, the deal takes care of the final two years of potential arbitration cases.

"The aftermath is never nice," Reds manager Dusty Baker said of arbitration hearings, which are usually contentious. "I'm glad they came to an agreement. It's good for Edwin and good for us."

Encarnacion was not in camp on Tuesday because he was in Phoenix to attend his hearing. It was scheduled for 11:30 a.m. ET. General manager Walt Jocketty said the deal came together at around 2:30 p.m. ET. Assistant GM Bob Miller handled the talks for the club and was also out west for the hearing.

"It was inevitable it'd go right to the end," Jocketty said. "It seemed like there were a lot of guys in that class that were kind of negotiating until the end for whatever reason. Anyhow, we're glad to get it done."

Encarnacion is expected to be in camp on Wednesday to take his physical before the deal becomes finalized.

In 146 games last season, Encarnacion batted .251 with a career-high 26 home runs, 68 RBIs and a .340 on-base percentage. Although considered a strong run producer in previous years, he batted only .234 with runners in scoring position in 2008.

Encarnacion's biggest issue has been defense. Prone to throwing issues, he committed 23 errors last season -- two below his career high of 25 set in 2006.

Despite being just 26, Encarnacion is entering his fifth season with the Reds and has the third-longest tenure on the club.