The Oklahoma City Thunder have traded James Harden to the Houston Rockets after they were unable to agree to a contract extension with the star guard, league sources told Yahoo! Sports.

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The Rockets sent Kevin Martin, Jeremy Lamb and future draft considerations to the Thunder for Harden, sources told Y! Sports. Along with Harden, the Thunder will send Cole Aldrich, Lazar Hayward and Daequan Cook to the Rockets.

Houston also sent two 2013 first-round picks (from Dallas and Toronto) to Oklahoma City, sources told Y! Sports, as well as a 2013 second-round pick (via Charlotte). The Thunder will receive the Toronto pick this year if it's slotted Nos. 4-14. That pick also is top-three protected in 2014, top-two protected in 2015 and top-one protected in 2016.

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Contract extension talks between the Thunder and Harden broke down, and Thunder general manger Sam Presti moved quickly to trade the guard. Harden rejected a four-year offer that would have paid him a base salary of $53 million to $54 million, league sources said. That offer would have pushed OKC's payroll to $95 million, and Thunder officials weren't willing to go any higher. The 2012-13 salary cap is set at just over $58 million, and the luxury tax kicks in at $70.3 million, while a four-year max deal is worth $60 million.

The Thunder are already paying franchise stars Kevin Durant and Russell Westbrook on maximum contracts. The trade breaks up OKC's young core, which carried the franchise into last season's NBA Finals. The Thunder agreed to a four-year contract extension worth about $50 million with forward Serge Ibaka after the season.

Houston hasn't been allowed to discuss a contract extension with Harden's agent Rob Pelinka yet, but will start immediately once the deal is officially completed. Houston can choose to give Harden a four or five-year maximum contract extension.

The Rockets are expected to make a max offer of four or five years before Wednesday's deadline for the class of 2009 extensions, sources said. Harden is expected to come to terms and never see restricted free agency in the summer of 2013.

Harden, 23, averaged 16.8 points, 4.1 rebounds and 3.7 assists last season and was named the league's Sixth Man of the Year.

Martin is happy to be headed to the Thunder.

"Oh my gosh!" he told Y! Sports' Marc Spears. "Feels like a dream. Sometimes words can't describe it."

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