Makoto Toyoda, a lawyer representing the two families, said the settlement will be signed at the U.S. Embassy in Tokyo on Jan. 31.

Toyoda declined to disclose the amount of compensation for each family. Kyodo News reported that it is expected to roughly match that of the other 33 families who signed $13 million compensation packages from the U.S. Navy in November.

Nine of the 35 high school students, teachers and crew aboard the boat, the Ehime Maru, died when the USS Greeneville surfaced beneath it, sinking the training vessel off the coast of Hawai'i on Feb. 9, 2001.

The agreement by the two families comes a month after a visit by the submarine's former skipper, Scott Waddle, to Japan. The families of the two victims ­ 17-year-old student Yusuke Terata and ship engineer Toshimichi Furuya ­ made Waddle's visit a condition for accepting the compensation settlement.

Under U.S. law, compensation must be completed within two years of an accident, giving the families until February to decide whether to accept the settlement offer, the Japanese lawyer said.

During his visit last month, Waddle placed flowers at a memorial for the dead at the Uwajima Fisheries High School in southern Japan and met four young survivors and their families.

In April, the Ehime government agreed to $11.47 million in compensation from the U.S. Navy for the costs of the vessel, equipment, cargo, crew salaries, mental health care for the survivors and a memorial. Part of the payment was used to build a $9.25 million replacement boat, which was launched in early December.