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New York City agreed on Tuesday to pay more than $7 million to settle a federal lawsuit filed by the family and two friends of Sean Bell, a 23-year-old black man fatally shot by the police in 2006, on what would have been his wedding day.

The decision came after two days of intense negotiations in Federal District Court in Brooklyn. The children whom Mr. Bell had with his fiancée, Nicole Paultre Bell, will receive $3.25 million, and two friends of Mr. Bell’s who were injured in the episode will also receive payments, with Joseph Guzman getting $3 million, and Trent Benefield $900,000.

The lawsuit, filed in 2007, accused the police of wrongful death, negligence, assault and civil rights violations. But it had repeatedly stalled as the state and federal governments and city police officials investigated the shooting.

The case, whose settlement ranks among the biggest in recent years involving the city’s police, set off a raw debate over the use of deadly force and prompted the city to change some of its policing procedures.

On Nov. 25, 2006, five police officers — three of whom were black and two white — fired 50 shots into the Nissan Altima that Mr. Bell was driving outside a strip club in Queens. The car struck a detective in the leg and hit a police van just before the officers began firing.

None of the three men in the car had guns, although the officers apparently believed at least one did.

Three of the officers were acquitted of manslaughter and reckless endangerment charges in State Supreme Court in Queens in 2008. The other two officers who opened fire did not face criminal charges.

Federal prosecutors declined in February to file civil rights charges against the officers, citing insufficient evidence.

Nicole Paultre Bell said the settlement was fair but not a victory. “No amount of money can provide closure, no amount of money can make up for the pain,” she said. “We’ll just try to learn how to live with it and move on.”

The money will go to her two children with Mr. Bell, Jada, 7, and Jordyn, 4; she will not receive a share because she was not married to Mr. Bell (she took his name legally after his death). Ms. Bell promised to keep pushing for the passage of police reforms intended to prevent a similar episode.

Standing beside her, Mr. Guzman, 34, said he was sure that something similar would happen again. “I don’t think a black or Hispanic man’s life means much in this city,” he said.

Mr. Benefield, 26, was not present, but he is expected to join Ms. Bell and Mr. Guzman at a news conference Wednesday at the Brooklyn offices of one of their lawyers, Sanford A. Rubenstein. The Rev. Al Sharpton will also attend.

Michael A. Cardozo, the city’s corporation counsel, said: “The Sean Bell shooting highlighted the complexities our dedicated officers must face each day. The city regrets the loss of life in this tragic case, and we share our deepest condolences with the Bell family. The city is also settling claims with Mr. Guzman and Mr. Benefield. We hope that all parties can find some measure of closure by this settlement.”

But Michael J. Palladino, the president of the Detectives Endowment Association, criticized the settlement as “laughable.”

“I think there is something seriously wrong with the entire picture,” Mr. Palladino said, “because if you take a look at the situation in its entirety, it’s that the police were there performing their lawful duty; Bell was intoxicated and he tried to run the police down.”

“If you take a look at the whole situation,” he added, “the settlement is absurd, for that amount of money, when Bell was responsible for the entire incident. If Bell pulls the car over, then he is still alive and the taxpayers still have their $7 million.”

The five officers who fired the shots and were named in the lawsuit will not have to contribute to the settlement.

The five officers who opened fire — Detectives Gescard F. Isnora, Michael Oliver, Marc Cooper and Paul Headley and Officer Michael Carey — are all on modified assignment, or desk duty, with no gun and no shield, Mr. Browne said.

The settlement was among the largest in recent years involving the police. In 2004, the family of Amadou Diallo agreed to a $3 million settlement after Mr. Diallo, an unarmed immigrant from West Africa, died in a hail of 41 police bullets in the Bronx. In 2001, Abner Louima, a Haitian immigrant who was tortured with a broken broomstick in a Brooklyn police station in 1997, was awarded a total of $8.75 million in a settlement with the city and the police union.

Last month, the city agreed to pay $9.9 million, the largest personal settlement in its history, to a man, Barry Gibbs, who served almost two decades in prison but was released after evidence surfaced that he had been framed for murder by a corrupt detective.