Lee Daniels and Damon Dash Settle $5 Million Lawsuit, Damon's 'Happy' with the Amount

7:35 AM PT -- Whatever amount of money Damon got in the settlement, he's satisfied with it. He tells TMZ ... "I'm good. Just happy 2 people from the culture could work things out."

Lee Daniels is a man of his word -- he told us he would make things right with Damon Dash -- and now he has ... reaching a settlement in their lawsuit over a $2 million movie investment.

According to docs, obtained by TMZ, both sides agreed to drop the matter and each will pay their own attorney's fees. As we first reported ... Dame was livid about the cash he'd given Lee to make a couple of movies. In fact, he got in Lee's face during a Diana Ross concert earlier this year ... demanding the dough.

Damon's next step was filing the suit for $5 million -- due to interest and lost profits.

Lee made it clear to us ... he'd settle the debt, and thanked Dame for supporting his projects when no one else in Hollywood would.

The docs don't reveal any financial details ... but based on Lee's own words, it's a good bet he forked a hefty chunk of change to Dame.