Nope--that's the indemnification clause you're thinking of (Provision 6). Look at Provision 8 in their Game License Uploading Agreement:
8. Limitation of Liablity. KONGREGATE SHALL NOT BE LIABLE, WHETHER IN CONTRACT, IN TORT, OR IN ANY OTHER FORM OF ACTION, FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY, OR PUNITIVE DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ITS PERFORMANCE OR FAILURE TO PERFORM HEREUNDER. IN NO EVENT SHALL KONGREGATE'S LIABILITY TO DEVELOPER FOR DAMAGES EXCEED $5.00 USD.
Actually, now that I look at it again, this reads like both an exculpatory clause and a limitation of liability clause wrapped into one. First they say they won't be liable to you for breaching the agreement, and then they say that even if they are, they won't be obligated to pay you more than $5.
The California courts have upheld limitation of liability provisions in the past, but so far as I know, never a limitation this low, and never outside the context of construction contracts. My unlicensed, unprofessional opinion (which you should definitely
not rely upon) is that the courts could go either way with a provision like this.
When I was looking for a sponsor for Telepath RPG Chapter 2, I negotiated with Kongregate and attempted to get them to waive this provision. It went all the way up the chain to Emily Greer, who ultimately refused to waive it. This convinced me to go with a different company for sponsorship. My feeling is, regardless of whether it would ever be enforced in court, why would I ever want to deal with a company that knowingly buries a provision like this in its boilerplate game upload agreement?