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Sample Business Contracts

OEM Agreement - Packeteer Inc. and ADTRAN Inc.

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                                 PACKETEER, INC.
                                  OEM AGREEMENT

                            AGREEMENT NO. __62999__


        THIS OEM AGREEMENT (the "Agreement") is entered into as of this 29th day
of June, 1999 (the "Effective Date"), by and between PACKETEER, INC., a Delaware
corporation having its principal place of business at 10495 N. De Anza Blvd.,
Cupertino, CA 95014 (together with any Affiliates, "Packeteer"), and ADTRAN,
INC., a Delaware corporation having its principal place of business at 901
Explorer Boulevard, Huntsville, Alabama 35806 (together with any Affiliates,
"ADTRAN").

                                    RECITALS

        Packeteer is engaged in the design and manufacture of certain products,
incorporating both hardware and software elements, which products are utilized
in the allocation of bandwidth on wide area network access lines, and related
products.

        ADTRAN is engaged in the design and manufacture of certain products,
incorporating both hardware and software elements, which products are utilized
in networks.

        ADTRAN desires to port Packeteer's software to ADTRAN's platform, and to
incorporate additional ADTRAN software and hardware elements to create an
enhanced Smart DSU product and to distribute such product.

        Accordingly, the parties agree as follows:

1. DEFINITIONS

        1.1 "AFFILIATE" means an entity controlling, controlled by, or under
common control with a party, such control being exercised through ownership or
control, directly or indirectly, of 50% or more of the voting power of the
shares.

        1.2 "ADTRAN PRODUCT" means ADTRAN's product that incorporates the Ported
Software, and which provides all the functionality detailed in ATTACHMENT F
("Specifications for ADTRAN Product"), and no greater or lesser functionality
than that detailed therein. In addition to the Ported Software, the ADTRAN
Product includes the following components:

               1.2.1 "ADTRAN SOFTWARE" means the software portion of the ADTRAN
Product (other than the Ported Software) developed by ADTRAN. The ADTRAN
Software has been partially developed as of the Effective Date. The ADTRAN
Software will be integrated with Packeteer Software only through the Packeteer
API (See Section 1.5.3).

               1.2.2 "ADTRAN HARDWARE" means the hardware portion of the ADTRAN
Product.



                                       1.
<PAGE>   2

        1.3 PACKAGES. The Packeteer Software comprises a single OEM software
component that includes the following packaging options:

               1.3.1 "APPLICATION DISCOVERY SOFTWARE PACKAGE" means the
Packeteer Software for analyzing network traffic flow and usage and for
measuring information related to the network traffic flow, as described in the
PacketShaper/ADTRAN OEM Deliverables document referenced in ATTACHMENT A
("Packeteer Software").

               1.3.2 "RATE CONTROL SOFTWARE PACKAGE" means the Packeteer
Software as enabled for analyzing network traffic flow and usage and for
prioritizing packets and limiting/controlling partitions that specify minimum
and maximum levels for aggregate traffic classes, as described in the
PacketShaper/ADTRAN OEM Deliverables document referenced in ATTACHMENT A
("Packeteer Software")

        1.4 "PACKETEER DOCUMENTATION" means the training manuals and end user
manuals supplied to ADTRAN by Packeteer relating to the Packeteer Software.

        1.5 "PACKETEER SOFTWARE" means that software listed as "Packeteer
Software" in ATTACHMENT A ("Packeteer Software"), and any Updates thereto
provided under this Agreement. The Packeteer Software includes the following
components:

               1.5.1 "PACKETEER SOFTWARE SOURCE" means the human-readable source
code for the Packeteer Software. The Packeteer Software Source does not include
any third party software or materials that Packeteer is unable to sublicense in
source code form.

               1.5.2 "PACKETEER SOFTWARE INFORMATION" means supporting
information provided by Packeteer to enable a programmer reasonably skilled in
the art to make use of the Packeteer Software Source.

               1.5.3 "PACKETEER API" means an application programming interface
developed by Packeteer to permit third party software (such as the ADTRAN
Software) to call certain documented functions in the Packeteer Software. The
Packeteer API is described in detail in ATTACHMENT B ("PacketShaper: OEM
Software Porting Guide"), (the "PACKETSHAPER PORTING GUIDE document, REVISION
1.17, DATED 5/3/99.

        1.6 "PORTED SOFTWARE" means the software, in object code form only,
resulting from ADTRAN's porting and compilation of the Packeteer Software Source
and the Packeteer API to the ADTRAN platform.

        1.7 "SOURCE CODE SITES" means those geographic locations at which ADTRAN
may access, store and use the Packeteer Software Source and that are specified
in ATTACHMENT H ("Source Code Sites"). The Source Code Sites may be changed upon
mutual written agreement of the parties.

        1.8 "UPDATES" means those additions, modifications, error corrections,
bug fixes, enhancements, updates, upgrades, future versions and any derivative
works made by Packeteer (or by a third party on Packeteer's behalf) to the
Packeteer Software (or any component thereof) and made generally commercially
available by Packeteer. Updates is not meant to include other



                                       2.
<PAGE>   3
modules or plug-ins which have unique characteristics for specific markets and
that are designed to be used in connection with the feature set (and no more
than the feature set) of the Packeteer Software provided to ADTRAN in accordance
with ATTACHMENT A ("Packeteer Software").


2. LICENSE GRANTS

        2.1 LIMITED SOURCE CODE LICENSE. Subject to the terms and conditions of
this Agreement, Packeteer hereby grants to ADTRAN a non-exclusive,
non-transferable license to use the Packeteer Software Source at a Source Code
Site for the sole purpose of porting and compiling the Packeteer Software Source
and Packeteer API to ADTRAN's platform to create the Ported Software for
inclusion in the ADTRAN Product.

        2.2 DISTRIBUTION LICENSE. Subject to the terms and conditions of this
Agreement, Packeteer hereby grants to ADTRAN a non-exclusive, non-transferable,
royalty-bearing license to reproduce the Ported Software and sublicense and
distribute (through multiple tiers of distribution) the Ported Software solely
as integrated with the ADTRAN Product, by way of licenses to end user customers
("End User Licenses" and "End Users," respectively),and through hardware OEMs
(re-labeled Adtran Product). Notwithstanding the foregoing, ADTRAN will be
permitted to distribute Updates to existing End Users and OEMs on an unbundled
basis.

        2.3 EXCLUSIONS.

               2.3.1 THIRD PARTY TOOLS. No license is granted hereunder to any
third party development tools or other software required to replicate the
Packeteer Software development environment ("Third Party Tools"). A complete
list of the Third Party Tools is set forth in ATTACHMENT A ("Packeteer
Software).

               2.3.2 OTHER EXCLUDED COMPONENTS. The Packeteer Software may
contain certain third party software that Packeteer has no right to redistribute
in source code form ("Excluded Components"). A complete list of Excluded
Components is set forth in ATTACHMENT A ("Packeteer Software).

               2.3.3 NO ADDITIONAL RIGHTS. ADTRAN specifically acknowledges
that, other than as expressly set forth above, no rights to the Packeteer
Software are granted to ADTRAN hereunder and there are no implied licenses under
this Agreement. Without limiting the generality of the foregoing, ADTRAN
acknowledges that it has no right to modify the Packeteer Software Source or
Packeteer API except for the limiting porting activities licensed under
PARAGRAPH 2.1 ("Limited Source Code License"), and that any modification will be
deemed a material breach of the Agreement. In addition to any remedies available
to Packeteer for such breach, Packeteer will have no obligations to support the
modified Packeteer Software or the resulting ADTRAN Product, and ADTRAN shall
assign all right, title and interest in such unpermitted modifications to
Packeteer. Except as expressly set forth above, ADTRAN will have no right to
sublicense or transfer the rights granted herein to any third party.

        2.4 DOCUMENTATION. Subject to the terms and conditions hereof, Packeteer
grants to ADTRAN a royalty-free non-exclusive, non-transferable, sub-licensable
license to localize, reproduce, distribute, reformat, modify and sublicense the
Packeteer Documentation so as to apply to the ADTRAN Product. ADTRAN recognizes
that its ownership of any derivative works




                                       3.
<PAGE>   4
of the Packeteer Documentation is subject to Packeteer's underlying ownership of
the Packeteer Documentation. ADTRAN agrees that it will not modify or delete any
copyright notices or other proprietary notices included in the Packeteer
Documentation without written approval of Packeteer. Packeteer will have the
right to inspect the modified Packeteer Documentation to ensure that it meets
Packeteer's quality standards.

        2.5 TRADEMARK LICENSE. Subject to compliance with the terms of this
Agreement (including, but not limited to, PARAGRAPH 11 ("Trademarks")) and
ATTACHMENT D ("Packeteer Trademarks"), Packeteer hereby grants to ADTRAN a
non-exclusive, non-transferable, limited license to use the trademarks set forth
in ATTACHMENT D ("Packeteer Trademarks") in connection with the marketing and
distribution of the ADTRAN Products.

        2.6 END USER LICENSE. ADTRAN will take all steps necessary to protect
Packeteer's proprietary rights in the Packeteer Software and to ensure that each
ADTRAN Product will be accompanied by a localized copy of ADTRAN's standard
software license agreement applicable to such software which will include terms
and conditions no less protective of Packeteer's interests as those set forth in
ATTACHMENT C ("Packeteer End User License Agreement").

        2.7 OWNERSHIP OF PORTED SOFTWARE. Packeteer will own all right, title
and interest in all Ported Software created by ADTRAN. ADTRAN hereby assigns to
Packeteer the entire right, title and interest in the Ported Software. ADTRAN
will deliver all such Ported Software to Packeteer in source and object code
form as such Ported Software is created, or upon Packeteer's request, but in no
event less frequently than once per calendar quarter. ADTRAN agrees to render
reasonable cooperation to Packeteer in the procurement and maintenance of
Packeteer's rights in the Ported Software and to sign all papers which Packeteer
may deem necessary and desirable for vesting Packeteer with such rights
throughout the world, including litigation of applicable patents, copyrights and
other proceedings, and execution of an assignment of copyright.

3. DELIVERY

        3.1 INITIAL DELIVERY; ACCEPTANCE. Upon receipt of the Initial Delivery
Fee, Packeteer will deliver the Packeteer Software to ADTRAN, including the
Packeteer Software Source, the Packeteer Software Information, the Packeteer
API, and the Packeteer Documentation, all in electronic form, and where
suitable, also in paper form. The Packeteer Software will be deemed accepted
upon delivery.

        3.2 MAINTENANCE DELIVERIES. So long as ADTRAN is current on maintenance
fees and Packeteer is still offering maintenance releases for the Packeteer
Software, Packeteer will deliver applicable Updates to the Packeteer Software as
such Updates are made generally available to Packeteer's customers. Such
deliveries will be deemed accepted upon delivery.

        3.3 INCORPORATING UPDATES. ADTRAN will have the option to incorporate
such Updates into the ADTRAN Product, provided that if ADTRAN fails to
successfully incorporate such Updates within one (1) year such Update is made
generally available, (a) the trademark license set forth in PARAGRAPH 2.5
("Trademark License") will terminate and ADTRAN will cease to use the Trademarks
in connection with such ADTRAN Product, and (b) Packeteer will



                                       4.
<PAGE>   5

bear no obligation to continue to provide technical support (but will continue
to provide Updates during the Maintenance Period) for such out-of-date ADTRAN
Product.

4. SUPPORT AND MAINTENANCE

        4.1 DEMONSTRATION. Packeteer will provide a "walk-through" demonstration
(not to exceed one day) for the Packeteer Software, and periodically for each
Update it delivers.

        4.2 MODIFICATIONS TO PACKETEER SOFTWARE. In the course of developing the
ADTRAN Product, ADTRAN may from time to time request that Packeteer make changes
to the Packeteer Software in order to provide additional functionality. During
the period in which ADTRAN is paying Packeteer for maintenance and is in
compliance with its maintenance obligations (a "Maintenance Period"), Packeteer
agrees to consider such requested changes promptly, and if it finds, in its sole
discretion, such requested changes to be reasonable to the future development of
the Packeteer Software, to implement such changes promptly as an Update, all
without additional charge to ADTRAN.

        4.3 END USER SUPPORT. ADTRAN will be solely responsible for providing
all support and maintenance for End Users of the ADTRAN Product. ADTRAN will
provide its End Users with reasonable documentation, warranty service, and
e-mail or telephone support for the use of the ADTRAN Product consistent with
good industry practice and the terms of this Agreement.

        4.4 TECHNICAL SUPPORT. During the Maintenance Period, Packeteer will
provide ADTRAN (but not ADTRAN's End Users, distributors or resellers) with
development support (including access to technical, engineering and management
staff) in the form of telephone and e-mail responses to questions that ADTRAN
may have with respect to the current version of the Packeteer Software and any
previous versions released by Packeteer within the past twelve (12) months.
Packeteer will provide support solely for questions related to the unmodified
Packeteer Software. In the event that such technical support requests become
unduly burdensome, the parties shall confer to discuss whether the number of
hours per month which Packeteer spends providing support should be reduced, or
if the fee for such support should be increased. In this scenario support will
not be withheld during such discussions.

        4.5 COMPATIBILITY. Updates provided hereunder for functionality that has
previously been implemented by ADTRAN will be "backwards compatible" (so that
there will be no substantial loss of functionality) with the previously released
version and any versions released in the preceding twelve (12) months.

5. PAYMENTS

        5.1 INITIAL DELIVERY. On the Effective Date, ADTRAN will pay Packeteer a
fee (the "Initial Delivery Fee") in SCHEDULE 1.

        5.2 MAINTENANCE. For each calendar quarter for which ADTRAN desires to
receive Updates and technical support, it will pay Packeteer a maintenance fee
(the "Maintenance Fee") as set forth on SCHEDULE 1 ("Fees"). Any failure by
ADTRAN to pay a Maintenance Fee shall terminate those obligations by Packeteer
to provide Updates under PARAGRAPH 3.2 ("Maintenance Deliveries") and technical
support under PARAGRAPHS 4.2 ("Modifications to



                                       5.
<PAGE>   6

Packeteer Software") and 4.4 ("Technical Support") but shall not otherwise
terminate the licenses granted in PARAGRAPHS 2.1 ("Limited Source Code License")
and 2.2 ("Distribution License") or other obligations of the Parties to this
Agreement. Any failure by ADTRAN to pay a Maintenance Fee shall not relieve
ADTRAN from any of its obligations under this Agreement including, without
limitation, the payment of the Royalties under PARAGRAPH 5.3 ("Royalties"). Upon
a failure by ADTRAN to successfully incorporate any Update as contemplated in
PARAGRAPH 3.3 ("Incorporating Updates") within one (1) year after it is made
generally available by Packeteer, (a) ADTRAN will cease to use the Trademarks
(as described in PARAGRAPH 3.3 ("Incorporating Updates")), and (b) Packeteer
shall have the option not to accept any further Maintenance Fees from ADTRAN and
to terminate its obligations to provide Updates under PARAGRAPH 3.2
("Maintenance Deliveries") after the current Maintenance Period.

        5.3 ROYALTIES. The royalties and other fees payable will be as set forth
on


                                       6.
<PAGE>   7
SCHEDULE 1 ("Fees").

        5.4 TAXES. ADTRAN agrees to pay, and to indemnify and hold Packeteer
harmless from, any sales, use, excise, import or export, value added or similar
tax, not based on Packeteer's net income, as well as the collection or
withholding thereof, including penalties and interest, as well as any costs
associated with the collection or withholding thereof, and all government permit
or license fees and all customs, duty, tariff and similar fees levied upon the
delivery of, the ADTRAN Product or related products, as well as any costs
associated with the collection of any of the foregoing items in the event that
it is deemed not to be a sale for resale under applicable state law by the
relevant taxing authority. ADTRAN will be responsible for obtaining, at its
expense, all required import licenses, permits or other governmental orders. If
a resale certificate or other certificate, document or other evidence of
exemption or payment or withholding of taxes by ADTRAN is required in order to
exempt the distribution or licensing of the Packeteer Software, ADTRAN Product
or other related product from any such liability or to enable Packeteer to claim
any tax exemption, credit, or other benefit, ADTRAN will promptly furnish such
certificate or document to Packeteer.

        5.5 REPORTING. On a quarterly basis, ADTRAN will, within [*] following
the end of such quarter, provide Packeteer a report including the following: (a)
the number of units of the ADTRAN Product sold during that quarter; (b)
geographic information related to the units of ADTRAN Product sold during that
quarter, including, at least, by the country of the sale, by the State and
postal (zip) code of the sale; (c) the royalty payments due during that quarter.

        5.6 AUDIT. Each party will keep and maintain, for a period of three (3)
years, proper records and books of account relating to licenses of the ADTRAN
Product to customers and End Users. Upon reasonable notice to the other party, a
party may have a reputable independent auditor inspect, at the requesting
party's expense, such records to verify the other party's payments hereunder no
more than once every six (6) months; however, if the audit reveals a discrepancy
of more than 5%, then the recordkeeper will pay for the cost of the audit and
the auditing party will have the right to conduct another audit within the six
(6) month period.

        5.7 MANNER OF PAYMENT. All payments due hereunder are in U.S. Dollars.
ADTRAN shall include royalty payments with each report.

        5.8 OVERDUE PAYMENTS. Overdue payments will be subject to a finance
charge of the lesser of one and one-half percent (1 1/2%) per month or the
highest interest rate allowed by law, for each month or fraction thereof that
such amounts are [*] past due.

6. DEVELOPMENT AND TESTING

        6.1 ADTRAN DEVELOPMENT RESPONSIBILITIES. ADTRAN will be responsible for
creating the Ported Software, the ADTRAN Product, and incorporating Updates in
the ADTRAN Product in compliance with the terms of the Agreement. In addition,
ADTRAN will be responsible for creating and delivering to Packeteer a list of
errors found prior to Packeteer's certification or testing of the ADTRAN Product
pursuant to ATTACHMENT G ("Test Certification Procedures").


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                       7.
<PAGE>   8

        6.2 TESTING AND CERTIFICATION OF ADTRAN PRODUCTS. ADTRAN will test each
version of the ADTRAN Product. Once yearly, Packeteer will certify ADTRAN's
tests results or perform independent testing in accordance with the procedures
in ATTACHMENT G ("Test Certification Procedures"). If the ADTRAN Product passes
Packeteer's Test Certification Procedures, then ADTRAN shall be entitled to
market and distribute the ADTRAN Product under the Trademarks under the terms of
this Agreement. ADTRAN will provide Packeteer with reasonable access to the
ADTRAN Software and Ported Software, including, but not limited to, exposing
command line interfaces for the ADTRAN Software in order to permit Packeteer to
perform regression testing and to confirm that no unpermitted modifications have
been made to the Packeteer Software. Such regression testing will not be
designed to permit Packeteer to analyze the ADTRAN Software (its source or
object code) to determine the manner and methods utilized in supporting its
functionality without the prior written permission of ADTRAN.

        6.3 LOANED EQUIPMENT. ADTRAN will loan Packeteer all necessary equipment
for such certification testing. All equipment loaned by ADTRAN to Packeteer will
remain the property of ADTRAN, will be fully insured by Packeteer, and will be
returned to ADTRAN at its request after termination of Packeteer's testing
activities hereunder. ADTRAN will pay all shipping and other costs (including,
without limitation, custom fees and duties) resulting from delivery of such
loaned equipment to Packeteer. Any loaned equipment will be returned to ADTRAN
by Packeteer, shipping, insurance and any other applicable costs prepaid by
ADTRAN. While in the possession of Packeteer, the loaned equipment will be
maintained by ADTRAN in good working order.

7. MARKETING

        7.1 PROMOTIONAL EFFORTS. ADTRAN will use its reasonable efforts to
market and distribute the ADTRAN Product to End Users. ADTRAN may advertise the
ADTRAN Product in advertising media of ADTRAN's choice. ADTRAN will use the
Trademarks in accordance with the terms of this Agreement in conducting such
marketing efforts.

        7.2 PRESS RELEASE. The parties will create a mutually agreeable press
release to announce the execution of this Agreement. Neither party will disclose
any terms of the Agreement, except pursuant to a mutually agreeable press
release or as otherwise required by law.

8. WARRANTY

        8.1 PACKETEER WARRANTY. Packeteer warrants for a period of ninety (90)
days from delivery (the "Warranty Period") that the unmodified Packeteer
Software Source will compile in the development environment specified by
Packeteer to yield the corresponding object code version of such source code
(excluding any Excluded Components). Packeteer also warrants for the Warranty
Period that the unmodified Packeteer Software Source when used in accordance
with the Packeteer Documentation shall share substantially equivalent
functionality (excluding functionality corresponding to the excluded components)
with Packeteer's PacketShaper software delivered to ADTRAN for testing on or
about February 10, 1999. If ADTRAN reports to Packeteer a failure of the
Packeteer Software Source to conform to the foregoing warranties during the
Warranty Period, and provides such detail as Packeteer may require to permit



                                       8.
<PAGE>   9
Packeteer to reproduce such failure, Packeteer, at its expense, shall use
reasonable commercial efforts to modify or replace the Packeteer Software Source
to correct such failure. ADTRAN acknowledges that the Packeteer Software Source
delivered by Packeteer to ADTRAN will require adaptation by ADTRAN or Packeteer
for compatibility with ADTRAN platforms and configurations, which platforms and
configurations will generally be different from the development environment and
platform used by Packeteer. ADTRAN acknowledges that the Packeteer Software is
of such complexity that it may have inherent defects, and agrees that Packeteer
makes no other warranty, either express or implied, as to any matter whatsoever.
The foregoing states Packeteer's sole and exclusive warranty to ADTRAN
concerning the Packeteer Software Source and ADTRAN's sole and exclusive remedy
for breach of warranty.

        8.2 DISCLAIMER. EXCEPT AS SET FORTH IN PARAGRAPH 8.1 ("PACKETEER
WARRANTY"), THE PACKETEER SOFTWARE IS PROVIDED TO ADTRAN "AS-IS" AND WITHOUT ANY
WARRANTY OF ANY KIND, EXPRESS, IMPLIED, OR STATUTORY. PACKETEER EXPRESSLY
DISCLAIMS ANY IMPLIED WARRANTIES OF NON-INFRINGEMENT, FITNESS FOR A PARTICULAR
PURPOSE OR MERCHANTABILITY.

9. INDEMNITY

        9.1 BY PACKETEER. Packeteer agrees to defend and otherwise hold ADTRAN
harmless from any costs, damages and reasonable attorneys' fees resulting from
any claim that the uses permitted hereunder of the Packeteer Software infringe
any U.S. patents or U.S. copyrights, or misappropriate the trade secrets of any
third party, provided that ADTRAN gives Packeteer prompt written notice of any
such claim, tenders to Packeteer the defense or settlement of such a claim at
Packeteer's expense, and cooperates with Packeteer, at Packeteer's expense, in
defending or settling such claim. If Packeteer receives notice of an alleged
infringement or if ADTRAN's use of the Packeteer Software is prevented by
permanent injunction, Packeteer may, at its sole option and expense, procure for
ADTRAN the right to continued use of the Packeteer Software, modify the
Packeteer Software such that it is no longer infringing, or replace the
Packeteer Software with software of similar functional capability (in either of
the latter two options, the revised or replacement software must be backwards
compatible as that term is defined in PARAGRAPH 4.5 ("Compatibility")), or
terminate the license and return to ADTRAN the Initial Delivery Fee. PACKETEER'S
OBLIGATIONS UNDER THIS SECTION WILL BE ADTRAN'S SOLE AND EXCLUSIVE REMEDY FOR
ANY ALLEGED INFRINGEMENT OF MISAPPROPRIATION OF ANY PROPRIETARY RIGHT. PACKETEER
WILL HAVE NO LIABILITY TO ADTRAN IF ANY ALLEGED INFRINGEMENT OR CLAIM THEREOF IS
BASED UPON THE USE OF THE PACKETEER SOFTWARE IN CONNECTION OR IN COMBINATION
WITH EQUIPMENT, DEVICES, OR SOFTWARE NOT DELIVERED BY PACKETEER (IF SUCH
INFRINGEMENT OR CLAIM COULD HAVE BEEN AVOIDED BY THE USE OF THE UNMODIFIED
PACKETEER SOFTWARE WITH OTHER EQUIPMENT, DEVICES OR SOFTWARE), OR THE USE OF THE
PACKETEER SOFTWARE OTHER THAN AS PERMITTED UNDER THIS AGREEMENT OR IN A MANNER
FOR WHICH IT WAS NOT INTENDED, OR USE OF OTHER THAN THE MOST CURRENT RELEASE OF
THE PACKETEER SOFTWARE (IF SUCH CLAIM WOULD HAVE BEEN PREVENTED BY THE USE OF
SUCH RELEASE).



                                       9.
<PAGE>   10

               9.1.1 UPDATES. IF PACKETEER GIVES ADTRAN NOTICE THAT A SPECIFIC
UPDATE IS REQUIRED IN ORDER TO AVOID INFRINGING THE INTELLECTUAL PROPERTY RIGHTS
OF A THIRD PARTY, AND IF WITHIN SIXTY (60) DAYS ADTRAN FAILS TO USE SUCH UPDATE
AND TO DISTRIBUTE SUCH UPDATE TO ITS END USERS, THEN PACKETEER WILL HAVE NO
LIABILITY TO ADTRAN UNDER PARAGRAPH 9.1 FOR INFRINGING SUCH INTELLECTUAL
PROPERTY RIGHTS IF THERE WOULD HAVE BEEN NO INFRINGEMENT HAD ADTRAN ADOPTED SUCH
UPDATE.

        9.2 BY ADTRAN. ADTRAN agrees to defend and otherwise hold Packeteer
harmless from any costs, damages and reasonable attorneys' fees resulting from
any claim that the uses permitted hereunder of the ADTRAN Product infringe any
U.S. patents or U.S. copyrights, or misappropriate the trade secrets of any
third party, provided that Packeteer gives ADTRAN prompt written notice of any
such claim, tenders to ADTRAN the defense or settlement of such a claim at
ADTRAN's expense, and cooperates with ADTRAN, at ADTRAN's expense, in defending
or settling such claim. ADTRAN'S OBLIGATIONS UNDER THIS SECTION WILL BE
PACKETEER'S SOLE AND EXCLUSIVE REMEDY FOR ANY ALLEGED INFRINGEMENT OF ANY
PROPRIETARY RIGHT.

10. PROTECTION OF PROPRIETARY RIGHTS

        10.1 PACKETEER OWNERSHIP. Packeteer and its suppliers are the sole and
exclusive owners of all rights, title and interest, including all Trademarks,
copyrights, patents, trade names, trade secrets, and other intellectual property
rights to the Packeteer Software, and in any modifications made to the Packeteer
Software at ADTRAN's request or suggestion under PARAGRAPH 4.2 ("Modifications
to Packeteer Software"). Except for the rights expressly enumerated herein,
ADTRAN is not granted any rights to patents, copyrights, trade secrets, trade
names, trademarks (whether or not registered), or any other rights, franchises
or licenses with respect to the Packeteer Software. ADTRAN agrees to protect the
Packeteer Software in accordance with PARAGRAPH 10 ("Protection of Proprietary
Rights") and ATTACHMENT E ("Secure Procedures"). Failure to protect the
proprietary rights of Packeteer and its suppliers in the Packeteer Software, as
required by this Agreement, will be considered a material breach of this
Agreement.

        10.2 ADTRAN OWNERSHIP. Packeteer acknowledges ADTRAN's statement that
ADTRAN and its suppliers are the sole and exclusive owners of all rights, title
and interest, including all trademarks, copyrights, patents, trade names, trade
secrets, mask works, and other intellectual property rights to the ADTRAN
Product (excluding the Ported Software). Except for the rights expressly
enumerated herein (e.g., the right to perform certain regression testing),
Packeteer is not granted any rights to patents, copyrights, trade secrets, mask
works, trade names, trademarks (whether or not registered), or any other rights,
franchises or licenses with respect to the ADTRAN Product. Packeteer agrees to
protect the ADTRAN Product in accordance with PARAGRAPH 12 ("Confidentiality").

        10.3 COOPERATION. The parties agree to cooperate and execute documents
reasonably requested to confirm such ownership or to obtain protection under any
intellectual property law.



                                      10.
<PAGE>   11
        10.4 PROPRIETARY NOTICES. ADTRAN agrees that as a condition of its
rights hereunder, each copy of the Ported Software will contain the same
proprietary notices which appear on or in such Packeteer Software provided by
Packeteer to ADTRAN. More specifically, ADTRAN agrees that a valid Packeteer
copyright notice will appear on the media or will be displayed on any screen
visible to a user when the ADTRAN Product is first initialized in the following
format or such other format as Packeteer specifies by written notice to ADTRAN:
the name of the program, the word "Copyright" and the "(C)" symbol, the year
1996 (the date of first creation of the Packeteer Software), followed by a
hyphen and the year of the most recent version of the Ported Software, and the
name of the copyright owner and the words "All Rights Reserved." Presence of a
copyright notice does not constitute an acknowledgment of publication. ADTRAN
will ensure that the trademark notices are displayed in the ADTRAN Product as
set forth in PARAGRAPH 11 ("Trademarks").

        10.5 UNAUTHORIZED DISTRIBUTION OR COPYING. ADTRAN agrees that (except as
expressly permitted by this Agreement): (a) distributing, copying, duplicating
or otherwise reproducing all or any part of the Packeteer Software, (b)
distributing or using copies of all or any portion of the Packeteer Software
other than as embedded in a royalty-bearing ADTRAN Product, or (c) failing to
ensure that each End User receives a license agreement as required by PARAGRAPH
2.6 ("End User License") will constitute a material breach of this Agreement.

        10.6 GOVERNMENT AGREEMENTS. ADTRAN will take all reasonable steps in
making proposals to and agreements with governments that involve the ADTRAN
Product and related documentation to ensure that Packeteer's proprietary rights
receive the maximum protection available from such governments for commercial
computer software and related documentation developed at private expense.

        10.7 CERTIFICATION. At Packeteer's request, ADTRAN will provide
Packeteer with written certification by an officer of ADTRAN of ADTRAN's
compliance with its obligations under this PARAGRAPH 10 ("Protection of
Proprietary Rights") and ATTACHMENT E ("Secure Procedures").

        10.8 PACKETEER TRADE SECRETS. Packeteer represents that the Packeteer
Software and those techniques, algorithms, and processes contained in the
Packeteer Software which have been developed, acquired or licensed by Packeteer,
or any modification or extraction thereof, constitute trade secrets of Packeteer
and/or its suppliers, and ADTRAN agrees they will be used by ADTRAN only in
accordance with the terms of this Agreement. ADTRAN will take all measures
reasonably required to protect the proprietary rights of Packeteer and its
suppliers in the Packeteer Software Information.

        10.9 ACCESS. In consideration of the licenses and access to proprietary
information and technology of Packeteer granted under this Agreement, ADTRAN
hereby agrees: (a) not to use the Packeteer Software to develop, manufacture or
distribute GOODS OUTSIDE OF THOSE DEFINED IN ATTACHMENT F (SPECIFICATIONS FOR
ADTRAN PRODUCT); and (b) to obtain the Packeteer Software only from Packeteer.
Subject to the terms of restrictions on use of proprietary information
(including, but not limited to this PARAGRAPH 10 ("Protection of Proprietary
Rights"), ATTACHMENT D ("Packeteer Trademarks"), and ATTACHMENT E ("Secure
Procedures") provided under this Agreement, this Agreement does not preclude
ADTRAN from



                                      11.
<PAGE>   12

independently developing similar technologies or products, where ADTRAN can
demonstrate by competent proof that such independent development has been
created without reference to the Packeteer Software Source, Packeteer Software
Information, or Packeteer Documentation.

11. TRADEMARKS

        11.1 PROPER USE. Unless ADTRAN or Packeteer opt to terminate the
following requirement of trademark usage and the trademark license of PARAGRAPH
2.5 ("Trademark License") under the conditions set out below, ADTRAN will make
use of the Packeteer Trademarks in accordance with the guidelines and
requirements set forth in ATTACHMENT D ("Packeteer Trademarks") and the standard
guidelines and usage requirements as promulgated by Packeteer from time to time
regarding the Trademarks. If Packeteer promulgates any changes to the standard
guidelines and usage requirements, then ADTRAN: (a) shall have six (6) months to
continue operating under the old guidelines; (b) shall have six (6) months to
continue operating under the old guidelines for existing inventory. Either
Packeteer or ADTRAN shall have the right to terminate the trademark usage
requirement of this PARAGRAPH 11.1 ("Proper Use") if ADTRAN does not pay an
annual Maintenance Fee as set out in PARAGRAPH 5.2 ("Annual Maintenance") when
such Maintenance Fee is due. Furthermore, Packeteer shall, under the same
instance, additionally be able to prohibit ADTRAN from using any Packeteer
Trademark.

        11.2 RIGHT OF REVIEW. In order to assure the Packeteer Trademarks are
associated only with products and services of Packeteer's high quality
standards, Packeteer will have the right to inspect and review all such products
and services. In the event that any use of the Packeteer Trademark does not
comport with the quality standards set by Packeteer, Packeteer will advise
ADTRAN, and ADTRAN will improve the quality within thirty (30) days so as to
comport with Packeteer's standards or cease use of the Packeteer Trademarks
immediately.

        11.3 NO COMPETITIVE EXPLOITATION OF TRADEMARKS. With respect to any
Competitive Products which ADTRAN develops or markets, ADTRAN agrees that ADTRAN
will not exploit its access to the Packeteer Software, its relationship with
Packeteer, or the existence of the Ported Software to promote ATTACHMENT I
"Competitive Products". Furthermore, so long as ADTRAN is marketing the ADTRAN
Product under the Trademarks, ADTRAN agrees to use best efforts to distinguish
the ADTRAN Product from any ATTACHMENT I "Competitive Product" when displaying
or referring to the ADTRAN Product in advertisements, catalogs, brochures and at
trade shows by (a) identifying the ADTRAN Product prominently and exclusively
with the Trademarks in such proximity that the viewer is unlikely to associate
the ADTRAN Product with the Competitive Product, and (b) not associating the
Trademarks with any Competitive Product in advertising, press releases, and
other promotional and marketing materials.

12. CONFIDENTIALITY

        12.1 RESTRICTION ON USE. Except as expressly permitted by this
Agreement, each party ("Recipient"), its employees, and its contractors will not
use in any way for its own account or the account of any third party, nor
disclose to any third party, any Confidential Information revealed to it by the
other party ("Disclosing Party") without the Disclosing Party's prior written
consent; provided, however, that if any Confidential Information of the other
party is required to



                                      12.
<PAGE>   13
be disclosed pursuant to any statute, regulation, order, subpoena or document
discovery request, then the Recipient shall provide written notice thereof to
the Disclosing Party as soon as practicable in order to afford the Disclosing
Party an opportunity to seek a protective order (it being agreed that if the
Disclosing Party is unable to obtain or does not seek a protective order and the
Recipient is legally compelled to disclose such information, disclosure of such
information may be made without liability).

        12.2 DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, "Confidential Information" consists of (a) any information designated
by the Disclosing Party in writing as confidential, (b) the Packeteer Software
Source and the Packeteer Software Information, (c) the source code and technical
documentation for the ADTRAN Product, and (d) the terms and conditions of this
Agreement. Information in oral form will be considered Confidential Information
only to the extent it is (x) identified as confidential prior to disclosure and
(y) summarized in writing and transmitted to the Recipient, identified as
proprietary, within thirty (30) days after the oral disclosure.

        12.3 EXCLUSIONS FROM DEFINITION OF CONFIDENTIAL INFORMATION.
Confidential Information will not include, and this PARAGRAPH 12
("Confidentiality") will not apply to information that (a) was known to the
Recipient prior to its receipt from the Disclosing Party; (b) is or becomes
public knowledge without fault of Recipient; (c) is acquired by Recipient from a
third party with the right to disclose same and without binder of secrecy; (d)
is independently developed by a party without using the other party's
Confidential Information; or (e) has been approved for release by written
authorization of the Disclosing Party.

        12.4 STANDARD OF CARE. Each party will use the same standard of care
that it applies to its own Confidential Information, but in no event less than
reasonable care. Each party agrees to notify the other promptly in the event of
any breach of confidentiality or security under conditions in which it would
appear that any Confidential Information was prejudiced or exposed to loss, and
will, upon request of the other, take all reasonable steps necessary to recover
any compromised trade secrets disclosed to it or placed in its possession by
virtue of this Agreement. Without limiting the generality of the foregoing,
ADTRAN agrees to comply with the terms of ATTACHMENT E ("Secure Procedures")
regarding the handling of the Packeteer Software.

13. LIMITATION OF LIABILITY

EXCEPT IN THE CASE OF WILLFULNESS OR GROSS NEGLIGENCE, NEITHER PACKETEER NOR ANY
OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES, OR AGENTS WILL BE LIABLE TO
ADTRAN OR TO ANY THIRD PARTY FOR ANY LOSS OF USE, INTERRUPTION OF BUSINESS, OR
FOR ANY INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS OR REVENUES) OR SIMILAR DAMAGES, WHETHER BASED ON TORT (INCLUDING
WITHOUT LIMITATION, NEGLIGENCE OR STRICT LIABILITY), CONTRACT, OR OTHER LEGAL OR
EQUITABLE GROUNDS, EVEN IF PACKETEER HAS BEEN ADVISED OR HAD REASON TO KNOW OF
THE POSSIBILITY OF SUCH DAMAGES AND EVEN IN THE EVENT OF FAILURE OF EXCLUSIVE
REMEDIES. In no event will Packeteer's liability under this Agreement, including
claims for contribution or indemnity,



                                      13.
<PAGE>   14
exceed the greater of US $100,000 (One Hundred Thousand Dollars) and all fees
paid pursuant to this Agreement in the twelve (12) months preceding the claim
giving rise to such liability.

14. TERM AND TERMINATION

        14.1 TERM. The initial term of this Agreement will be five (5) years
from the Effective Date; provided however, in the event Packeteer assigns this
Agreement pursuant to PARAGRAPH 16.11 during such initial term, and Packeteer's
assignee fails to perform all or substantially all of its obligations pursuant
to such assignment and such failure remains uncured for a period of thirty (30)
days, ADTRAN may at its option renew this Agreement with Packeteer for a term of
three (3) years by giving written notice to Packeteer. Such option shall be
exercisable, if at all, only within ninety (90) days of such failure;
thereafter, this Agreement shall not be renewable except by written agreement of
the parties.

        14.2 TERMINATION FOR MATERIAL BREACH. Either party may terminate this
Agreement if the other party has breached any material term of this Agreement
and such breach remains uncured for forty five (45) days after written notice of
such breach (which notice will, in reasonable detail, specify the nature of such
breach).

        14.3 BANKRUPTCY. A party may terminate this Agreement upon written
notice to the other in the event the other (a) becomes insolvent or admits in
writing its inability to pay its debts as they mature, or makes an assignment
for the benefit of creditors; (b) files a petition under any foreign, state, or
United States bankruptcy act, receivership statute, or the like, as they now
exist, or as they may be amended; (c) any third party files against it such a
petition, or an application for a receiver of either party is made by anyone and
such petition or application is not resolved favorably within sixty (60) days;
or (d) discontinues its business.

        14.4 OBLIGATIONS ON CANCELLATION, TERMINATION OR EXPIRATION. Upon
cancellation, termination, or expiration of this Agreement:

               14.4.1 LICENSES TERMINATED. The licenses granted pursuant to
PARAGRAPH 2 ("License Grants") will terminate immediately; provided, however,
that ADTRAN will be permitted to sell (for a period of ninety (90) days from
termination) any finished inventory of ADTRAN Product then in stock.

               14.4.2 SAFEGUARDING OF PROPRIETARY RIGHTS. ADTRAN will continue
to be responsible for safeguarding the proprietary rights of Packeteer and
Packeteer's suppliers in accordance with this Agreement, including PARAGRAPHS 10
("Protection of Proprietary Rights"), 11 ("Trademarks"), and ATTACHMENT E
("Secure Procedures") after such cancellation, termination, or expiration.

               14.4.3 RETURN OR DESTRUCTION OF PACKETEER INFORMATION. Except for
the limited exemption set forth in PARAGRAPH 14.4.1 ("Licenses Terminated")
permitting ADTRAN to sell out existing inventory, ADTRAN will immediately
discontinue use and distribution of the Packeteer Software, and return or
destroy all copies of the Packeteer Software and any Packeteer deliverables in
its possession (including copies placed in any storage device under ADTRAN's
control); provided, however, that ADTRAN may keep a reasonable number of copies
for


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      14.
<PAGE>   15
supporting existing End Users. Upon Packeteer's request, ADTRAN will warrant in
writing to Packeteer compliance with this PARAGRAPH 14.4.3.

               14.4.4 PAYMENT. The payment date of all monies due Packeteer will
automatically be accelerated so that they will become due and payable on the
effective date of termination, even if longer terms had been provided
previously.

               14.4.5 CONTINUED USE BY END USERS. End Users will be permitted
the continued and uninterrupted use of the ADTRAN Products for the balance of
the term of their End User agreements, as specified in such agreements, provided
that and so long as the End Users are not in default of their End User
agreements.

               14.4.6 SURVIVAL. The following sections will survive the
termination of expiration of this Agreement: PARAGRAPHS 1 ("Definitions"), 8
("Warranty"), 9 ("Indemnity"), 10 ("Protection of Proprietary Rights"), 12
("Confidentiality"), 13 ("Limitation of Liability"), 14 ("Term and
Termination"), 15 ("No Patent License."), and 16 ("General").

15. NO PATENT LICENSE.

        15.1 PACKETEER PATENTS. As used herein, "Packeteer Patent Right" means
any right arising under any United States or foreign patent now owned by, or
later issued or assigned to Packeteer, applicable to the Packeteer Software.
Packeteer covenants that, to the extent that ADTRAN, ADTRAN's sublicensees as
authorized in this Agreement, ADTRAN's End Users, and ADTRAN's other direct and
indirect customers of Packeteer Software (collectively "Customers") exercise the
rights expressly granted in PARAGRAPH 2 ("License Grants") to ADTRAN, or which
ADTRAN is authorized to grant to Customers herein, Packeteer will not (a) assert
any Packeteer Patent Right against ADTRAN, (b) assert any Packeteer Patent Right
against Customers, or (c) require any additional fee or royalty from ADTRAN or
Customers based upon any Packeteer Patent Right. Except to the extent of such
covenant not to assert any Packeteer Patent Right, nothing contained herein will
be construed as conferring, by implication, estoppel, or otherwise, any license
or right with respect to any Packeteer Patent Right.

        15.2 ADTRAN PATENTS. As used herein, "ADTRAN Patent Right" means any
patent right arising under any United States or foreign patent issued or
assigned to ADTRAN and having a filing date after the inventor had access to the
Packeteer Software in which (a) an inventor is (a) an employee of ADTRAN who has
had access to the Packeteer Software or (b) an independent contractor who has
had access to the Packeteer Software and has assigned patent rights in the
claimed invention to ADTRAN and (b) the Packeteer Software contributed to the
claimed invention. ADTRAN Patent Right will not include any patent applications
filed three (3) years after termination or expiration of this Agreement. ADTRAN
covenants that it will not (a) assert any ADTRAN Patent Right against Packeteer
or against its sublicensees or customers for products of a similar nature to
that distributed by ADTRAN, or (b) require any fee or royalty from Packeteer or
such sublicensees or customers for the sale of such products based upon ADTRAN
Patent Rights. Except to the extent expressed above, nothing contained herein
will be construed as conferring, by implication, estoppel, or otherwise any
license or right with respect to any ADTRAN Patent Right.



                                      15.
<PAGE>   16

16. GENERAL

        16.1 GOVERNING LAW. This Agreement will be governed in all respects by
the laws of the United States of America and the State of California as such
laws are applied to agreements entered into and to be performed entirely within
California between California residents. The parties agree that the United
Nations Convention on Contracts for the International Sale of Goods is
specifically excluded from application to this Agreement.

        16.2 GOVERNING LANGUAGE. This governing language and any interpretation
or construction of this Agreement will be English.

        16.3 FORUM. All disputes arising under this Agreement may be brought in
the state and federal courts located in San Jose, California, or Huntsville,
Alabama as permitted by law. ADTRAN and Packeteer consent to the personal
jurisdiction of the above courts.

        16.4 NOTICES. All notices or reports permitted or required under this
Agreement will be in writing and will be delivered by personal delivery,
telegram, telex, telecopier, facsimile transmission, or by certified or
registered mail, return receipt requested, and will be deemed given upon
personal delivery, five (5) days after deposit in the mail, or upon
acknowledgment of receipt of electronic transmission. Notices will be sent to
the addresses set forth in the introductory paragraph of this Agreement and
shall be sent to the attention of the Chief Financial Officer, or to such other
address or person as may be designated in writing.

        16.5 INJUNCTIVE RELIEF. It is understood and agreed that,
notwithstanding any other provisions of this Agreement, breach of the provisions
of this Agreement relating to the protection of intellectual property rights
(including, but not limited to, PARAGRAPHS 2 ("License Grants"), 10 ("Protection
of Proprietary Rights"), 11 ("Trademarks"), 12 ("Confidentiality"), ATTACHMENT D
("Packeteer Trademarks"), and ATTACHMENT E ("Secure Procedures") may cause the
other party irreparable damage for which recovery of money damages would be
inadequate, and that a party will therefore be entitled to obtain timely
injunctive relief (whether by arbitral or judicial authority) to protect its
rights under this Agreement in addition to any and all remedies available at
law.

        16.6 NO AGENCY. Nothing contained herein will be construed as creating
any agency, partnership, or other form of joint enterprise between the parties.

        16.7 FORCE MAJEURE. Neither party will be liable hereunder by reason of
any failure or delay in the performance of its obligations hereunder (except for
the payment of money) on account of strikes, shortages, riots, insurrection,
fires, flood, storm, explosions, acts of God, war, governmental action, labor
conditions, earthquakes, material shortages or any other cause which is beyond
the reasonable control of such party.

        16.8 WAIVER. The failure of either party to require performance by the
other party of any provision hereof will not affect the full right to require
such performance at any time thereafter; nor will the waiver by either party of
a breach of any provision hereof be taken or held to be a waiver of the
provision itself.



                                      16.
<PAGE>   17

        16.9 SEVERABILITY. In the event that any provision of this Agreement
will be unenforceable or invalid under any applicable law or be so held by
applicable court decision, such unenforceability or invalidity will not render
this Agreement unenforceable or invalid as a whole, and, in such event, such
provision will be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.

        16.10 HEADINGS. The Paragraph headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, construe,
or describe the scope or extent of such Paragraph or in any way affect this
Agreement.

        16.11 ASSIGNMENT. Neither this Agreement nor any rights or obligations
of ADTRAN hereunder may be assigned or transferred by ADTRAN in whole or in
part, whether by operation of law or otherwise, without the prior written
approval of Packeteer which shall not unreasonably be withheld. For the purposes
of this Paragraph, a change in ownership or sale of substantially all of the
assets of ADTRAN or the business division of ADTRAN primarily involved in this
Agreement shall not be considered an assignment or transfer of ADTRAN's rights.
Packeteer may exercise full transfer and assignment rights in any manner at
Packeteer's discretion and specifically may sell, pledge, or otherwise transfer
it's right to receive royalties under this Agreement.

        16.12 EXPORT. ADTRAN acknowledges that the laws and regulations of the
United States restrict the export and re-export of commodities and technical
data of United States origin, including the Packeteer Software licensed
hereunder. ADTRAN agrees that it will not export or re-export the Packeteer
Software or ADTRAN Product in any form, without the appropriate United States
and foreign governmental licenses, if legally required. ADTRAN agrees that its
obligations pursuant to this Paragraph will survive and continue after any
termination or expiration of rights under this Agreement.

        16.13 FULL POWER. Each party warrants that it has full power to enter
into and perform this Agreement, and the person signing this Agreement on each
party's behalf has been duly authorized and empowered to enter into this
Agreement. Each party further acknowledges that it has read this Agreement,
understands it and agrees to be bound by it.

        16.14 ENTIRE AGREEMENT. This Agreement together with the Attachments and
appendices completely and exclusively states the agreement of the parties
regarding its subject matter. It supersedes, and its terms govern, all prior
proposals, agreements, or other communications between the parties, oral or
written, regarding such subject matter. This Agreement will not be modified
except by a subsequently dated written amendment signed on behalf of all parties
by their duly authorized representative and any provision of a purchase order
purporting to supplement or vary the provisions hereof will be void.

        16.15 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be considered an original, but all of
which together will constitute one and the same instrument.



                                      17.
<PAGE>   18

        IN WITNESS WHEREOF, the parties hereto have caused this OEM Agreement to
be executed by their duly authorized representatives as of the Effective Date.


PACKETEER, INC.                        ADTRAN, INC.

     /s/ CRAIG ELLIOTT                             /s/ DANNY WINDHAM
----------------------------           -----------------------------------------

By: Craig Elliott                      By:  Danny Windham
    ------------------------                ------------------------------------
Its: President and CEO                 Its:  Vice President, Marketing CPE
     -----------------------                 Products
                                             -----------------------------------


                                      18.
<PAGE>   19
                                  ATTACHMENT A

                               PACKETEER SOFTWARE


PACKETEER SOFTWARE



The Packeteer Software components that Adtran has the right to use and
distribute are defined with check marks in the following table, and by reference
to the PACKETSHAPER PORTING GUIDE v 1.17 which is fully incorporated into this
agreement in Attachment B.

[*]

* Requires a disk drive

[*]

THIRD PARTY TOOLS

[List of development tools required to replicate the development environment, as
well the vendor who offers such tools]

           TOOL                                           VENDOR
SNMP                                           EMANATE
DNS                                            UNIVERSITY OF CALIFORNIA

EXCLUDED COMPONENTS

[List all third party software which Packeteer is not permitted to sublicense in
source code form, as well as all third party software for which there might be
any ambiguity as to their inclusion (e.g. Any RTOS software, objects, etc.).]



* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      A-1.
<PAGE>   20
                                  ATTACHMENT B

                    PACKETSHAPER: OEM SOFTWARE PORTING GUIDE

THE DOCUMENT ENTITLED "PACKETSHAPER PORTING GUIDE," REVISION 1.17, DATED 5/3/99
IS FULLY INCORPORATED WITHIN THIS ATTACHMENT B AND IS DIRECTLY ATTACHED HERETO.



                                      B-1.
<PAGE>   21
                                  ATTACHMENT C

                      PACKETEER END USER LICENSE AGREEMENT

THE FOLLOWING IS A SAMPLE FORM OF THE PACKETEER END USER AGREEMENT AS OF THE
EFFECTIVE DATE:

  "THIS AGREEMENT IS PROOF OF YOUR RIGHT TO USE THE SOFTWARE CONTAINED IN THE
 PACKETEER PACKETSHAPER PRODUCT AND CONTAINS ADDITIONAL INFORMATION CONCERNING
           PACKETEER'S PRODUCT WARRANTY AND LIMITATIONS OF LIABILITY.
                           PLEASE READ IT CAREFULLY.


THIS AGREEMENT IS BETWEEN YOU (EITHER AN INDIVIDUAL OR AN ENTITY) AND PACKETEER,
INC. ("PACKETEER"). PACKETEER IS WILLING TO GRANT YOU THE FOLLOWING RIGHTS TO
USE THE SOFTWARE INCORPORATED IN OR SUPPLIED WITH THE PACKETEER PACKETSHAPER
PRODUCT AND ITS ACCOMPANYING DOCUMENTATION (COLLECTIVELY, THE "PACKETEER
SOFTWARE") ONLY IF YOU AGREE TO BE BOUND BY ALL OF THE TERMS OF THIS AGREEMENT.
BY INSTALLING THE PRODUCT (THE "EQUIPMENT") OR USING THE PACKETEER SOFTWARE, YOU
AGREE TO BE BOUND BY ALL THE TERMS OF THIS AGREEMENT. IF YOU DO NOT AGREE TO BE
BOUND BY ANY OF THE TERMS OF THIS AGREEMENT, PACKETEER IS UNWILLING TO GRANT YOU
ANY RIGHTS TO USE THE PACKETEER SOFTWARE AND YOU MUST NOT USE THE PACKETEER
SOFTWARE OR THE EQUIPMENT; INSTEAD YOU MUST PROMPTLY RETURN THE EQUIPMENT AND
PACKETEER SOFTWARE FOR A FULL REFUND TO PACKETEER OR TO THE AUTHORIZED PACKETEER
RESELLER THAT PROVIDED YOU WITH THE PRODUCT.


1. OWNERSHIP: The Packeteer Software is and shall remain a proprietary product
of Packeteer. Packeteer and Packeteer's suppliers shall retain ownership of all
patents, copyrights, trademarks, trade names, trade secrets and other
proprietary rights relating to or residing in the Packeteer Software and
Equipment. Except for the license grant provided in Paragraph 2, you shall have
no right, title or interest in or to the Packeteer Software. The Packeteer
Software is licensed, not sold, to you for use only under the terms of this
Agreement.


2. GRANT OF LICENSE: Packeteer grants you a non-transferable (except as set
forth in this Paragraph) non-exclusive, restricted right to use the Packeteer
Software as incorporated in or supplied with the Equipment and solely in
connection with the operation of the Equipment for your own internal business
purposes. You understand that Packeteer may update the Packeteer Software at any
time and in doing so incurs no obligation to furnish such updates to you
pursuant to this Agreement. You may transfer the license to use the Packeteer
Software only in connection with a sale or transfer of the Equipment and as
included with the Equipment and not on a standalone basis, provided the buyer or
transferee agrees to be bound by the terms and conditions of this Agreement.


3. RESTRICTIONS: Packeteer reserves all rights in the Packeteer Software not
expressly granted to you. Except as permitted in Paragraph 2, you may not use,
copy, modify, create derivative works of, distribute, sell, assign, pledge,
sublicense, lease, loan, rent, timeshare, deliver or otherwise transfer the
Packeteer Software, nor permit any other party to do any of the foregoing. You
may not remove from the Packeteer Software, or alter, any of the trademarks,
trade names, logos, patent or copyright notices or markings, or add any other
notices or markings to the Packeteer Software. To the extent permissible by
applicable law, you may not derive or attempt to derive the source code of the
Packeteer Software by any means, nor permit any other party to derive or attempt
to derive such source code. To the extent permissible by applicable law, you may
not reverse engineer, decompile, disassemble, or translate the Packeteer
Software or any part thereof.


4. LIMITED WARRANTY: Packeteer does not warrant that the functions contained in
the Packeteer Software and Equipment will meet your requirements or that the
operation of your Packeteer Software or Equipment will be uninterrupted or error
free. Packeteer warrants that for a period of ninety (90) days from your date of
receipt of the Equipment and Packeteer Software, (a) the Equipment will be free
of any defects in materials and workmanship and (b) the Packeteer Software will
perform substantially in accordance with the accompanying documentation. This
limited warranty is void if failure of the Equipment or Packeteer Software to
conform with the warranty has resulted from improper installation, testing,
misuse, neglect, accident, fire or other hazard, or any breach of this
Agreement.


5. LIMITED REMEDIES: In the event of a breach of the foregoing limited warranty,
you must return the Equipment and Packeteer Software to Packeteer or the
Packeteer authorized reseller that provided you with the Packeteer Software,
postage prepaid, before the expiration of the warranty period, with a copy of
the invoice for the unit. Packeteer's sole and exclusive obligation and your
sole and exclusive remedy shall be, at Packeteer's sole discretion, to either
(a) repair the Packeteer Software or Equipment; (b) provide a replacement
Equipment unit or a replacement copy of the Packeteer Software or (c) refund the
amount you paid for the unit and terminate this Agreement. Any replacement copy
of the Packeteer Software or replacement Equipment unit will be warranted for
the remainder of the original warranty period or thirty (30) days, whichever is
longer.


6. NO OTHER WARRANTIES: OTHER THAN THE FOREGOING LIMITED WARRANTY, PACKETEER
HEREBY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, FITNESS
FOR A PARTICULAR PURPOSE AND MERCHANTABILITY. SOME JURISDICTIONS DO NOT ALLOW
THE DISCLAIMER OF IMPLIED WARRANTIES, SO THE ABOVE DISCLAIMER MAY NOT APPLY TO
YOU, IN WHICH CASE THE DURATION OF ANY SUCH IMPLIED WARRANTIES IS LIMITED TO
SIXTY (60) DAYS FROM THE DATE THE EQUIPMENT AND PACKETEER SOFTWARE ARE RECEIVED
BY YOU. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS. YOU MAY HAVE OTHER LEGAL
RIGHTS WHICH VARY FROM JURISDICTION TO JURISDICTION.


7. LIMITATION OF LIABILITY: PACKETEER'S AGGREGATE LIABILITY IN CONNECTION WITH
THIS AGREEMENT, THE PACKETEER SOFTWARE AND THE EQUIPMENT, REGARDLESS OF THE FORM
OF THE ACTION GIVING RISE TO SUCH LIABILITY (WHETHER IN CONTRACT, TORT OR
OTHERWISE), SHALL NOT EXCEED THE AMOUNT PAID BY YOU TO



                                      C-1.
<PAGE>   22

PACKETEER. PACKETEER SHALL NOT BE LIABLE TO YOU FOR ANY INDIRECT, EXEMPLARY,
SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY KIND (INCLUDING WITHOUT
LIMITATION LOSS OF DATA, EQUIPMENT DOWNTIME OR LOST PROFITS), EVEN IF PACKETEER
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SOME JURISDICTIONS DO NOT
ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL
DAMAGES SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY TO YOU. THE LIMITED
WARRANTY, LIMITED REMEDIES AND LIMITED LIABILITY PROVISIONS CONTAINED IN THIS
AGREEMENT ARE FUNDAMENTAL PARTS OF THE BASIS OF PACKETEER'S BARGAIN HEREUNDER,
AND PACKETEER WOULD NOT BE ABLE TO PROVIDE THE PACKETSHAPER TO YOU ABSENT SUCH
LIMITATIONS.


9. GOVERNMENT END USERS: The Packeteer Software is comprised of "commercial
computer software" and "commercial computer software documentation" as such
terms are used in 48 C.F.R. 12.212 (SEPT 1995) and is provided to the Government
(a) for acquisition by or on behalf of civilian agencies, consistent with the
policy set forth in 48 C.F.R. 12.212; or (b) for acquisition by or on behalf of
units of the Department of Defense, consistent with the policies set forth in 48
C.F.R. 227-7202-1 (JUN 1995) and 227.7202-3 (JUN 1995).


10. EXPORT CONTROL: Since the Packeteer Software is subject to the export
control laws of the United States, you may not export or re-export the Packeteer
Software without the appropriate United States and foreign government licenses.
You shall otherwise comply with all applicable export control laws and shall
defend, indemnify and hold Packeteer and all Packeteer suppliers harmless from
any claims arising out of your violation of such export control laws.


11. GENERAL: The United Nations Convention on Contracts for the International
Sale of Goods is specifically disclaimed. If any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable for any reason,
the remaining provisions hereof shall be unaffected and remain in full force and
effect. This Agreement is the final, complete and exclusive agreement between
the parties relating to the subject matter hereof, and supersedes all prior or
contemporaneous understandings and agreements relating to such subject matter,
whether oral or written. Should you have any questions regarding this Agreement,
or if you desire to contact Packeteer for any reason, please write to:
Packeteer, Inc., 10495 N. De Anza Blvd., Cupertino, California 95014, U.S.A."



                                      C-2.
<PAGE>   23
                                  ATTACHMENT D

                              PACKETEER TRADEMARKS

Packeteer may adopt certain trademarks, trade names, marks, and logos
("Trademarks") from time to time in its sole discretion. The following Packeteer
Trademarks are licensed to ADTRAN pursuant to this Agreement:


                          [PACKETWISE TECHNOLOGY LOGO]


The above trademark is designated to be included on the back panel of the Adtran
Box Level Product (Attachment F). Pending platform(s) design of the System Level
Products (Attachment F), use of this trademark will be determined prior to
shipping.

The Trademarks may be modified at any time by Packeteer.

                           USE OF PACKETEER TRADEMARKS

1. OWNERSHIP OF TRADEMARKS. ADTRAN acknowledges the ownership of the Packeteer
Trademarks in Packeteer. ADTRAN agrees that it will do nothing inconsistent with
such ownership and that all use of the Trademarks by ADTRAN will inure to the
benefit of and be on behalf of Packeteer. ADTRAN acknowledges that Trademarks
are valid under applicable law and that ADTRAN's utilization of the Trademarks
will not create any right, title or interest in or to such Trademarks. ADTRAN
acknowledges Packeteer's exclusive right to use of the Trademarks and agrees not
to do anything contesting or impairing the trademark rights of the Packeteer.
Any use of the Trademarks must identify Packeteer as the owner of such
Trademarks.

2. QUALITY STANDARDS. Packeteer hereby appoints ADTRAN as its representative for
the limited purpose of controlling the quality of the ADTRAN Products and any
other products or services it supplies in connection with the use of the
Trademarks. ADTRAN agrees that (a) the nature and quality of the ADTRAN Products
and any other products or services it supplies in connection with use of the
Trademarks will conform to the standards set by Packeteer, and (b) it will
cooperate with Packeteer in facilitating Packeteer's monitoring and control of
the nature and quality of such products and services. Such assistance will
include supplying Packeteer, upon its request, with specimens of its use of the
Trademarks, including supplying samples of reprinted documentation,
translations, product packaging and promotional materials that use the
Trademarks in conjunction with ADTRAN's marketing of ADTRAN Products. Upon
reasonable notice to ADTRAN and at Packeteer's sole expense, Packeteer may
conduct an inspection of such specimens at facilities of its choosing to
determine conformance with the standards.



                                      D-1.
<PAGE>   24

ADTRAN will, at Packeteer's request and expense, assist Packeteer in conducting
such inspection and testing including, but not limited to, providing Packeteer
with applicable hardware. If, at any time, Packeteer determines that ADTRAN has
not met the Packeteer quality standards, Packeteer will so advise ADTRAN and,
upon ADTRAN's receipt of such notice by any means, ADTRAN will have thirty (30)
days to improve the quality to the standard previously approved by Packeteer, or
to cease the use of all Trademarks. ADTRAN will comply with all applicable laws
and regulations pertaining to the use of the Trademarks and to the distribution
and advertising of the ADTRAN Products; however, Packeteer shall obtain all
appropriate government approvals pertaining to the use of the Trademarks.

3. INFRINGEMENT PROCEEDINGS. ADTRAN agrees to notify Packeteer of any
unauthorized use of the Trademarks by others promptly as it comes to ADTRAN's
attention. Packeteer will have the sole right and discretion to bring
infringement or unfair competition proceedings involving the Trademarks.

4. ADTRAN'S USE OF TRADEMARKS. Except as set forth otherwise in the Agreement,
ADTRAN agrees that it will (a) prominently and permanently include the Packeteer
Trademarks on all copies of the Packeteer Software and on any ADTRAN Products
distributed to End Users (b) use the Packeteer Trademarks, including the
PacketWise logo, in any advertising or printed materials concerning the ADTRAN
Products, (c) use all applicable Trademarks on all copies, advertisements,
brochures, manuals, packaging and other appropriate uses made in the promotion,
sale or use of the ADTRAN Products, and (d) ensure that the logo set forth above
will appear prominently on the logon screen, splash screen, or other first
display created by the Packeteer Software when End Users initialize the
Packeteer Software.

5. TRADEMARK REGISTRATIONS. ADTRAN, at Packeteer's request and expense, will (a)
promptly provide Packeteer with any specimens, (b) execute all applications for
trademark registrations, assignments or other applicable documents, and (c)
perform any other act reasonably necessary for Packeteer to secure or maintain
any and all trademark rights in any country in which ADTRAN is marketing the
ADTRAN Products in association with a Trademark. ADTRAN's responsibilities will
include complying with the formalities of local law, including, but not limited
to, executing any application for registration as a registered user, executing
additional license agreements suitable for recording with the appropriate
authorities or providing proof of use of the trademarks in any other applicable
documents.

6. NO UNITARY OR COMPOSITE TRADEMARKS. ADTRAN agrees not to use any other
trademark or service mark in close proximity to any of the Packeteer Trademarks
or combine the marks so as to effectively create a unitary composite mark
without the prior written approval of Packeteer.



                                      D-2.
<PAGE>   25
                                  ATTACHMENT E

                                SECURE PROCEDURES


        1. AUTHORIZED EMPLOYEES AND CONTRACTORS. ADTRAN agrees that it will only
disclose all or any portion of the Packeteer Software to authorized employees
("Authorized Employees") and authorized contractors ("Authorized Contractors")
(subject to ADTRAN's having obtained authorization for use of such contractors
in accordance with PARAGRAPH 2 of this ATTACHMENT E, below) who (a) require
access thereto for a purpose authorized by this Agreement, (b) have signed an
employee or contractor agreement in which such employee or contractor agrees to
protect third party confidential information and (c) in the case of disclosure
of Packeteer Software Source or Packeteer Software Information ("Source
Information"), have received a notice of confidentiality prior to access to such
Source Information, and again upon any termination of such access, that
contains, at a minimum provisions substantially in accordance with the
following:

        "Recipient has previously signed an agreement with ADTRAN pursuant to
        which Recipient has agreed to maintain the confidentiality of
        confidential information of ADTRAN and its suppliers (the "Confidential
        Information") and to use the Confidential Information solely for
        ADTRAN's benefit. The purpose of this notice is to apprise Recipient
        that Recipient will be receiving certain proprietary information of
        Packeteer, including internal source code, interface specifications and
        related documentation for the Packeteer product and related Packeteer
        information, all of which is of a confidential nature and which contains
        valuable trade secrets, know-how, and proprietary information of
        Packeteer (the "Packeteer Information") and which constitutes
        Confidential Information under Recipient's agreement with ADTRAN.

        This is to inform Recipient that the Packeteer Information cannot be
        used for any purpose except for the specific purposes which ADTRAN or
        Packeteer authorize in writing and that Recipient is not authorized to
        disclose the Packeteer Information to any person at any time except to
        employees of Packeteer and to those Authorized Employees and Authorized
        Contractors which ADTRAN informs Recipient are authorized to receive
        such Packeteer Information.

        All materials including, without limitation, programs, recorded
        information, documents, drawings, models, apparatus, sketches, designs,
        and lists furnished to Recipient by ADTRAN or Packeteer which are
        designated in writing to be the property of Packeteer remain the
        property of Packeteer and must be returned to Packeteer promptly at its
        request, together with any copies or modifications thereof."

ADTRAN guarantees the compliance of all such Authorized Employees and Authorized
Contractors with their obligations under such confidentiality agreements.

        2. APPROVAL OF CONTRACTORS. Notwithstanding the provisions in this
ATTACHMENT E permitting Authorized Contractors to have access to Source
Information,



                                      E-1.
<PAGE>   26
ADTRAN may not permit a contractor to come into contact with Source
Information, or engage in the development of the Enhanced Software hereunder
unless ADTRAN has first obtained a non-disclosure agreement which protects
against the unauthorized use of Source Information, and assures that the
contractor is not engaged in Competitive Product development.

        3. PACKETEER SUPPORT INFORMATION.

               3.1 ADTRAN will ensure that all Source Information received from
Packeteer, and copies made thereof, will be properly marked or otherwise
appropriately identified as Packeteer Information before being made available to
Authorized Employees and Authorized Contractors hereunder. Packeteer will
properly mark all material and Source Information as Packeteer Information.

               3.2 ADTRAN will ensure that the same degree of care is used to
prevent the unauthorized use, dissemination, or publication of the Source
Information as ADTRAN uses to protect its own confidential information of a like
nature, but in no event will the safeguards for protecting such Packeteer
Support Information be less than a reasonably prudent business would exercise
under similar circumstances. ADTRAN will take prompt and appropriate action to
prevent unauthorized use or disclosure of Source Information.

               3.3 ADTRAN will instruct Authorized Employees and Authorized
Contractors not to copy Source Information on their own, and not to disclose
Source Information to anyone not authorized to receive it.

               3.4 Source Information will be handled, used, and stored solely
at the Development Site. The Source Information will not be stored on any
computer or network which is accessible from outside of the Development Site or
by people other than Authorized Employees or Authorized Contractors.

               3.5 ADTRAN will provide Packeteer with a list of all Authorized
Employees and Authorized Contractors who have access to the Source Information
and who have had access in the preceding five (5) years.

        4. TRADE SECRETS. The Packeteer Software, including the techniques,
algorithms, and processes contained in the Packeteer Software which have been
developed, acquired, or licensed by Packeteer, or any modification or extraction
thereof, constitute trade secrets of Packeteer and/or its suppliers, and will be
used by ADTRAN only in accordance with the terms of this Agreement. ADTRAN will
take all measures reasonably required to protect the proprietary rights of
Packeteer and its suppliers in the Packeteer Software and will promptly notify
Packeteer of any lost or missing items and take all reasonable steps to recover
such items. ADTRAN agrees that it will not attempt to reverse engineer any
portion of the Packeteer Software which is provided to ADTRAN solely in object
code form.

        5. NO COMMINGLING OF TECHNOLOGY. If ADTRAN engages in development of
products (other than the Ported Software) that are comparable to the Packeteer
Software ("Comparable Products") during the term of this Agreement, it will
ensure that there is no sharing with such Comparable Products development any of
the following: (a) design documents or schematics supplied by Packeteer; (b)
Source Information or other information based upon or



                                      E-2.
<PAGE>   27
derived from the Source Information; or (c) any facilities (including, but not
limited to, computer systems and network storage devices), or (f) personnel with
access to any of (a)-(c) above. ADTRAN will ensure that all Authorized Employees
and Authorized Contractors who have had previous access to the Packeteer
Software will be precluded for a period of twenty-four (24) months after their
latest access to such Packeteer Software from being employed in any Comparable
Product development (either internally or externally) by or for ADTRAN or any
Competitive Product (as defined in PARAGRAPH 10.9 ("Access") of this AGREEMENT)
or Comparable Product development for any third parties. "Employment in any
Competitive (or Comparable) Product development" will be defined as having
direct access to, or producing any specifications, documentation, or source code
for, components of a Competitive (or Comparable) Product.

        6. CERTIFICATION. At Packeteer's request ADTRAN will provide Packeteer
with written certification by an officer of ADTRAN of ADTRAN's compliance with
its obligations under PARAGRAPHS 1 and 5 of this ATTACHMENT E.

        7. PROPRIETARY RIGHTS AUDIT. During the term of the Agreement and for a
period of twenty-four (24) months thereafter, an independent auditor selected by
Packeteer will have access to such portion of ADTRAN's records and premises to
allow Packeteer to determine whether ADTRAN is substantially in compliance with
this ATTACHMENT E and PARAGRAPH 10 ("Protection of Proprietary Rights") of the
Agreement. In no event will audits be made hereunder more frequently than twice
per year. Such access will be (a) during ADTRAN's regular business hours, (b)
arranged so that, to the extent possible, ADTRAN's regular business activities
are minimally disrupted and (c) under the terms of an appropriate
confidentiality agreement executed by the individual(s) conducting such audit.
If Packeteer determines, after conducting such audit, that ADTRAN is not
substantially in compliance with its obligations to protect Packeteer's
proprietary rights, ADTRAN will pay the costs of such audit. Otherwise,
Packeteer will pay the costs of such audit. Such payment will not preclude
Packeteer from exercising any right which it may have under the Agreement.
ADTRAN will immediately correct any deficiencies discovered in the course of the
audit.


                                      E-3.
<PAGE>   28
                                  ATTACHMENT F

                        SPECIFICATIONS FOR ADTRAN PRODUCT


[*]


[*]

[*]

[*]
                                      F-1.
<PAGE>   29
                                  ATTACHMENT G

                          TEST CERTIFICATION PROCEDURES



INTRODUCTION.


This document describes proposed requirements for the software verification
testing that Packeteer, Inc. will perform

The areas are

    -     Support materials
    -     Software requirements
    -     Hardware requirements
    -     Testing Methods
    -     Reporting results

SUPPORT MATERIALS


Adtran must provide documentation on the following areas:

-       A set of manuals and a complete description of the feature set of the
        Device Under Test (DUT)

-       A description of current revision level, how this version differs from
        any previous version, and estimated ship date of the next version.

-       A complete set of test plans, test scripts, test tools and test results
        from Adtran's own internal testing effort. This must include a list of
        known bugs.



SOFTWARE REQUIREMENTS


-       DUT must have implement the complete Packeteer Command Line Interface
        (CLI) for each Packeteer module implemented in the DUT.

-       This CLI must be accessible through Telnet through any port (Inband or
        Outband) of the DUT.

-       This CLI need not be accessible for normal customers, but in this event,
        Packeteer must be given some means of putting the DUT into this
        Packeteer test mode.



                                      G-1.

<PAGE>   30

HARDWARE REQUIREMENTS


-       Adtran will provide at least two (2) end-to-end test rigs for the DUT.

-       These test rigs must be capable of placing the DUT into an IP/Ethernet
        based test harness. Thus, for example, if the DUT were a frame-relay
        access device, each test rig would consist of at least two Ethernet
        frads (one of which would be the DUT), connected back to back across the
        frame-relay link by either a frame-relay router or a null-cable.

-       If the DUT features require cross-traffic to test, then the rig must be
        capable of passing such traffic. This may require a central router with
        3 or more interfaces.

-       The test rig must also have Sun Sparc 20's (or equivalent) running
        Solaris 2.6, with Ethernet interfaces, to function as test traffic
        generators.


TESTING METHODS

Packeteer testing will consist of two parts

-       Automated testing. In this phase, a series of automated tests will be
        performed where the DUT is placed into various traffic modes, loaded
        with traffic, and the results compared with expected.

-       Limited manual testing. In this phase, various features which are
        awkward to test in an automated fashion are executed manually.


REPORTING RESULTS

Packeteer will provide a complete test report upon completing the tests.

This report will include all automated and manual tests run, the expected
results, the actual results, and whether the result constitutes a test pass or
fail.


                                      G-2.
<PAGE>   31
                                  ATTACHMENT H

                                SOURCE CODE SITES


ADTRAN facility.

        ADDRESS
               901 Explorer Boulevard,
               Huntsville, Alabama 35806



                                   SCHEDULE-1.

<PAGE>   32
                                  ATTACHMENT I

                              COMPETITIVE PRODUCTS


         PRODUCT WITH TRAFFIC SHAPING FUNCTIONALITY FROM THESE VENDORS:


                                     ALLOT

                                  AMPLIFY.NET

                                   CHECKPOINT

                                  NET REALITY

                            STRUTURED INTERNETWORKS

                                     XEDIA




                                      G-2.

<PAGE>   33
                                   SCHEDULE 1

                                      FEES


ADTRAN shall make the following payments to Packeteer:

[*]   Initial Delivery Fee payable on the Effective Date.

Prepaid royalties shall be paid upon the following schedule:

[*]

For a total of * * * of prepaid royalties. The prepaid royalties shall be fully
creditable against royalties according to the following schedule:

From the Effective Date to December 31, 2000 at a rate of 100% against a unit's
royalty due;

Beginning January 1, 2001 at a rate of 50% against a unit's royalty due. Cash
will make up the remainder of the royalty due.

ROYALTY SCHEDULE:

Cumulative Royalties are an aggregate of all products defined in Attachment F:

               -  For box level products


Computed as a percentage of list price(s) of the base unit plus any add-on
amount designated for PacketWise.

[*]

For system level products:

Computed as a percentage of list price(s) of the component unit as described in
Attachment F plus any add-on amount designated for PacketWise.

[*]


MAINTENANCE FEE:

[*]


* Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.


                                      G-3.