The manufacturer and dealer of the rifle used in the Washington, D.C.-area sniper shootings (search) agreed Wednesday to pay $2.5 million in a settlement with victims and victims' families.

The settlement with Bushmaster marks the first time a gun manufacturer has agreed to pay damages to settle claims of negligent distribution of weapons, said Jon Lowy, a lawyer with the Brady Center to Prevent Gun Violence (search). He helped argue the case. He said the settlement with Bull's Eye Shooter Supply is the largest against a gun dealer.

"These settlements send a loud and clear message that the gun industry cannot turn a blind eye to how criminals get their guns," Lowy said.

Bushmaster Firearms (search) of Windham, Maine, agreed to pay $550,000 to eight plaintiffs. Bull's Eye Shooter Supply (search) of Tacoma, where the snipers' Bushmaster rifle came from, agreed to pay $2 million.

Kelly Corr, the attorney representing Bushmaster, said the company made "no admission of liability whatsoever."

He said Bushmaster and its insurance company, which will pay the $550,000, decided to settle rather than continuing to run up legal fees in court. Corr said the settlement will not change the way Bushmaster conducts business.

"Bushmaster believes it is a responsible manufacturer," he said.

As part of the settlement, though, Bushmaster agreed to educate its dealers on gun safety.

A lawyer representing Bull's Eye did not immediately return calls for comment Wednesday night.

A judge will determine how to divide the settlement among two people who were injured in the shootings and the families of six people who were killed.

John Allen Muhammad (search), 43, was convicted and sentenced to death for murder in one of the 10 fatal shootings in October 2002 in the Washington, D.C.-area. His co-conspirator, 19-year-old Lee Boyd Malvo (search), was tried separately, convicted of murder in a different death and sentenced to life in prison without parole.

They used a .223-caliber Bushmaster rifle, a civilian version of the military M-16.

The civil lawsuit alleged that at least 238 guns, including the snipers' rifle, disappeared from the gun shop in the three years before the shooting rampage. Despite audits by the Bureau of Alcohol, Tobacco and Firearms (search) showing that Bull's Eye had dozens of missing guns, Bushmaster continued to use the shop as a dealer and provided it with as many guns as the owners wanted, the lawsuit alleged.

"It appears that 17-year-old Malvo was able to stroll into this gun store and stroll out carrying a 3-foot-long, $1,000 Bushmaster assault rifle," Lowy said. "Bull's Eye should have taken reasonable care to prevent guns from being stolen. Bushmaster should have required Bull's Eye to implement simple, reasonable security measures."

Seattle attorney Paul Luvera represented the victims' families. He called the settlement "historic" and said it should change practices in the firearms industry.

"When a manufacturer makes a large settlement like this one, it is an example to other manufacturers," Luvera said.

The victims' lawsuit, filed in January 2003, also names Malvo and Muhammad as defendants. Those claims are technically still pending, though they are unlikely to be resolved.

A bill was proposed in Congress earlier this year that would have given the firearms industry immunity from lawsuits such as this one. Despite strong support from President Bush, it died in the Senate.