European forward Damjan Rudez has reached agreement on a three-year deal with the Indiana Pacers, league sources told Yahoo Sports.

The Pacers, who are pursuing shooting on the free-agent market, will pay Rudez, 27, out of a portion of their mid-level exception.

The Pacers are also talking to Cleveland free-agent guard C.J. Miles on a deal for a bigger financial portion of that exception, sources said.

Rudez, who is 6-foot-10, plays the coveted NBA stretch-four position.

Rudez's production for Zaragoza of the Spanish ACB has helped develop a growing level of value for him in the NBA. He shot 44 percent on three-pointers in the ACB season and 52 percent (28-for-54) in the 16-game Euro Cup.

A native of Croatia, Rudez went undrafted in the 2008 NBA draft, which makes him eligible to sign a free-agent deal.