MORGANTOWN, W.Va. -- Former West Virginia University football coach Rich Rodriguez and the University of Michigan have agreed to pay a $4 million buyout clause and settle a lawsuit that WVU filed after he broke his contract in December.

Rodriguez will pay $1.5 million in three annual payments beginning January 2010. The Wolverines athletic department, his new employer, will pay $2.5 million by the end of July and cover Rodriguez's legal fees, the University of Michigan said in a statement.

"To help Rich focus on the challenges ahead, we have worked with him to resolve the dispute between him and West Virginia University over the terms of his buyout," Michigan athletic director Bill Martin said. "Although he continues to disagree with the validity of the terms, Rich and the rest of us at Michigan felt that it would be best to get this distracting issue behind us."

The WVU Board of Governors held a special meeting Wednesday and approved the agreement, settling a case that attorneys Tom Flaherty and Jeff Wakefield were set to try this fall.

"It's a case that should have settled a long time ago and could have settled a long time ago. It's in the best interest of everyone to resolve it," Flaherty said.

WVU will be responsible for its own legal bills, which Wakefield said "will be very reasonable."

A call to Ohio attorney Marv Robon, who represents Rodriguez, and WVU athletic director Ed Pastilong were not immediately returned.

Rodriguez's agent, Mike Brown, declined comment.

Gov. Joe Manchin, meanwhile, issued a statement urging an end to the acrimony.

"I am happy that this seems to be coming to a conclusion and believe, as I'm sure many other West Virginians do, that with this agreement in place, it's now time to move on," he said.

Rodriguez quit the Mountaineers in December for the head-coaching job at Michigan, only a year after extending his contract with WVU. He had argued that WVU broke the contract first by failing to honor certain promises -- a charge WVU denied.

Adding pressure on Rodriguez was a lawsuit WVU filed in a Michigan court last week, asking a judge to order Martin and school president Mary Sue Coleman to testify in depositions. A hearing on that request had been set for Wednesday afternoon.

WVU also recently got an Ohio court to issue a subpoena for testimony and records from Mike Wilcox, Rodriguez's financial adviser.

The Rodriguez camp approached the university with a "significant and serious offer" within the past few days, and WVU responded with a counterproposal Tuesday, Flaherty said. That set off a series of meetings with a court-appointed mediator, Frank Fragale.

WVU president Mike Garrison said he was pleased the matter was resolved.

"It was a valid contract. We entered the contract in very good faith. We worked very hard to create an experience here for our former coach that was a very good one, but he made a decision and I respect his decision," Garrison said.

Garrison is stepping down as WVU's president Sept. 1 over an unrelated scandal involving a master's degree the university wrongly awarded to the governor's daughter last fall.

The $4 million liquidated damages clause was suggested by an attorney on the WVU board of governors in December 2006, after Rodriguez turned down an offer from Alabama.

It was double the amount of the previous contract, but a number attorney Steve Farmer said he believed would protect WVU from lost marketing, merchandising and other opportunities if Rodriguez left early.

Though Rodriguez initially balked, he ultimately signed a contract with that figure in August 2007. He then resigned Dec. 16, taking recruits and assistant coaches with him, and leaving the Mountaineers just before the Fiesta Bowl game against Oklahoma. Bill Stewart replaced Rodriguez after a 48-28 victory over the Sooners.

Stewart has a five-year contract worth $800,000 a year, plus incentives. The base salary totals $4 million, the same amount WVU aimed to recover with its lawsuit.

Rodriguez testified recently in a deposition that he signed his contract under pressure from board members and Gov. Joe Manchin. He argues that WVU failed to honor some of his demands and Garrison assured him the buyout clause would be reduced or eliminated if he were to resign -- a promise Garrison denies making.

Rodriguez also testified that while he considered the amount "excessive" and "unfair," he acquiesced when he was told a major WVU donor had insisted on it.

WVU booster Ken Kendrick, managing general partner of the Arizona Diamondbacks, had insisted on the $4 million.

"I don't think that anybody wins in litigation," he said. "The university needs to get on with its business and Rich Rodriguez needs to get on with his business at Michigan."

Rodriguez has agreed to a similar $4 million damages clause at Michigan.