According to Metsblog: Mets and K-Rod settle Contract 2010 DisputeIn a team press release, Jeff Wilpon said:
“We are pleased that Frankie Rodriguez has accepted responsibility for his actions and their consequences.  We have been assured that he is taking steps to address the issues that led to the incident, and that those efforts will continue.   We have also been assured that he will work hard both on and off the field to regain the trust of the organization, Mets fans and the community.”
So basically the Mets get to keep 3.1M and Krod.  Hopefully his legal troubles are solved quickly and he can come back and continue to be the best pitcher in the Mets pen.