Oracle Database Discussions

When I download Oracle, the only license agreement that I am presented with for review is the OTN license. Are there any other license agreements that I must adhere to?
I was recently told by an Oracle rep that the OTN license is only good for developing commercial applications. And that development of an application that is not shrink-wrapped for commercial consumption (He used People Soft as an example of this) is not covered under OTN and one must buy the appropriate license(s). However the OTN license does not support what he says and if the OTN license is the only agreement that Oracle requires I adhere to IF I USE THE PRODUCT OUTSIDE OF PRODUCTION, then what is this guy talking about?

We develop applications for use by feds. These apps are developed onsite then moved offsite. Most use oracle as its primary data source. When the application is production ready, we either:

A: Move a production copy of the database to the client-site where Oracle exists

Or

B: Purchase Oracle if we are establishing the total application environment (IE, at a hosting facility or data center)

We do continue developing the application internally. Now, I don't know if this is addressed by the language in the OTN agreement which speaks of a "single prototype..." but, if it does, I'd be happy to hear anyone (especially from Oracle) that can authoritatively speak. I'm desperate to understand if we are indeed misunderstanding the OTN license and how it relates to our product development.