<PAGE>   1
                                                                    EXHIBIT 4.23


                              EMPLOYMENT AGREEMENT


      THIS EMPLOYMENT AGREEMENT (the "AGREEMENT"), dated as of the 20th day of
August, 1997 the ("EFFECTIVE DATE"), by and between ILOG, Inc., a California
corporation (the "COMPANY") and the undersigned employee ("EMPLOYEE") of
Company.

                                    AGREEMENT

      NOW, THEREFORE, IT IS HEREBY AGREED by and among the parties hereto as
follows:


      1.          EMPLOYMENT BY COMPANY; DUTIES.

            (a)   Employment. Subject to the terms and conditions set forth
herein, the Company hereby agrees to employ Employee in the position of
Executive Vice President, CPLEX Business, having all the duties and
responsibilities customarily associated with such positions, subject to
modification from time to time by the Company, and Employee hereby accepts such
employment by the Company. Employee's duty's shall initially include the
management of the CPLEX Technology Center, and Employee shall report to the
Chief Executive Officer of the Company's parent entity. With respect to any
modifications of Employee's position and/or duties during the term of Employee's
employment hereunder, the Company shall give due consideration to Employee's
skills and experience in determining the appropriate position and duties of
Employee and shall not, without Employee's consent, modify Employee's position
or duties in a manner inconsistent with Employee's status as a senior executive
officer of the Company; provided, however, that the foregoing shall in no way
limit the ability of the Company to terminate Employee's employment at any time
for any reason or for no reason. Such employment shall commence on the Effective
Date and shall continue until terminated as provided in Paragraph 3 hereof.
Employee shall not, without the prior written consent of Company, directly or
indirectly, alone or as part of any group, association or organization, be
actively engaged in or concerned with any other duties or pursuits which
interfere with the performance of Employee's duties to Company or which may be
contrary to the best interests of the Company.

            (b)   Company Policies. The employment relationship between the
parties shall also be governed by the general employment policies and practices
of the Company now in effect or which may become effective in the future,
including those relating to the protection of confidential information and trade
secrets, except that when the terms of this Agreement differ from or are in
conflict with the Company's general employment policies or practices, this
Agreement shall control.


<PAGE>   2
      2.          COMPENSATION AND BENEFITS.

            (a)   Base Salary; Bonuses; Compensation for Part-Time Employment.
As compensation for the services to be rendered by Employee during his Full-Time
Employment hereunder, including all services rendered to entities affiliated
with the Company, the Company agrees to pay Employee in accordance with the
Company's regular payroll practices, direct salary compensation at the rate of
$150,000 per year (as adjusted from time to time pursuant to the terms hereof,
the "BASE SALARY"), commencing on the Effective Date. In addition, Employee
shall be eligible to receive a performance bonus in the target amount of
$50,000, with the actual bonus to be determined based on the achievement of
performance criteria to be determined by mutual agreement of the Company and
Employee (as adjusted from time to time pursuant to the terms hereof, the
"BONUS"). For purposes of this Agreement, "FULL-TIME EMPLOYMENT" shall mean all
periods of time during which Employee is devoting all of Employee's working
time, attention and energies to performing Employee's duties to the Company. In
the event Employee desires to reduce the level of Employee's time, attention or
energies devoted to the Company to below Full-Time Employment levels, Employee
shall give the Company sixty day's written notice of such request and the
Company shall not unreasonably deny such request. Such notice shall quantify
Employee's desired level of time, attention and energies to be devoted to the
Company and the effective date of such reduction (any such periods of time
during which such reduction are in effect, "PART-TIME EMPLOYMENT"). Employee
may, subject to the consent of the Company which consent shall not be
unreasonably withheld, request to resume Full-Time Employment or further adjust
the level of Employee's Part-Time Employment upon sixty day's notice. During
any period of Part-Time Employment, Employee's Base Salary and Bonus shall be
proportionately adjusted by the Company in good faith. Such good-faith
adjustments by the Company shall be conclusive and binding on Employee.

            (b)   Employee Benefits. Employee shall be eligible to participate
in the employee benefit plans and arrangements which are available or which
become available, in the discretion of the Company's Board of Directors, to
other employees of the Company, subject in each case to the generally applicable
terms and conditions of the plan or arrangement in question and to the
determination of any committee administering such plan or arrangement. The
Company's presently available benefits are listed on Exhibit A hereto.
Employee's benefits shall not be reduced during periods of Part-Time Employment,
except that benefits that are based on levels of salary and bonus compensation,
such as moneys paid during periods of paid vacation, shall be proportionately
adjusted by the Company in good faith.

            (c)   Annual Compensation Review. Employee and the Company shall
review Employee's Base Salary and Bonus structure annually and may make mutually
agreeable adjustments at such times.

      3.          TERM AND TERMINATION.

            (a)   Term; Effect of Termination. Unless terminated by either party
as provided below, this Agreement shall remain in full force and effect until
the date three years after the Effective Date (such three year period, the
"DEFAULT TERM") and may be extended for one annual term upon the mutual
agreement of Employee and the Company (any such extension period, the "EXTENDED
TERM"). Provisions of this Agreement that expressly relate to periods of time
following the term of this Agreement or of Employee's employment shall survive
any termination or expiration


<PAGE>   3
of this Agreement or of Employee's employment with the Company.

            (b)   Limitation of Liability upon Termination. If Employee's
employment terminates (or is terminated) for any reason (or for no reason),
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided in this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies at the time of termination. Subject to the terms and conditions hereof,
Employee acknowledges that Employee's employment hereunder shall be on an
at-will basis and that Company may terminate Employee's employment hereunder at
any time with or without Cause.

            (c)   Termination for Cause; Definition of "Cause". Employee's
employment with the Company may be terminated for Cause at any time by the
Company, upon reasonable notice to Employee of the circumstances leading to such
termination for Cause. For the purpose of this Agreement, "CAUSE" shall mean (i)
the substantial and continuing failure to render services to the Company or its
affiliated entities in accordance with Employee's assigned duties (other than as
a result of Employee's Disability, as defined below, or other medically
determinable serious physical impairment), as determined by the Board of
Directors of the Company's parent entity, if such failure remains uncured for a
period of 30 days following delivery of notice to Employee of such failure; (ii)
the conviction of a felony; (iii) gross negligence, dishonesty, breach of
fiduciary duty or material breach of the terms of any confidentiality,
noncompetition or other agreement in favor of the Company or its affiliated
entities; (iv) the commission of an act of fraud or embezzlement which results
in loss, damage or injury to the Company or its affiliated entities, whether
directly or indirectly; or (v) the commission of an act which constitutes unfair
competition with the Company or its affiliated entities or which induces any
customer of the Company or its affiliated entities to break a contract with the
Company or its affiliated entities.

            (d)   Continuation of Option Vesting upon Certain Events. In
connection with the commencement of Employee's employment with the Company,
Employee has been or will be granted an option to purchase up to 200,000 shares
of ILOG S.A. under its 1996 Stock Option Plan pursuant to an option agreement in
substantially the form attached hereto as Exhibit B (the "OPTION"). Upon
termination of Employee's employment for any reason, Employee shall have the
right to exercise, within 90 days of such termination, the portion of Employee's
Option that is then-exercisable pursuant to the terms and conditions of such
option agreement and such option plan; provided, however, that, notwithstanding
any term of such option agreement or such option plan to the contrary, if at any
time prior to such time as the Option becomes fully vested and exercisable,
either (X) the Company terminates Employee's employment with the Company without
Employee's consent other than for Cause or (Y) Employee dies or becomes Disabled
(as defined below) then, in each case, Employee's Option shall (i) continue to
vest until fully vested and (ii) continue to be exercisable to the extent
vested, in each case, as if Employee had remained alive, not Disabled and
employed by the Company throughout the term of the Option.

            (e)   Continuation of Salary, Bonus and Benefits upon Termination
without Cause. If the Company terminates Employee's employment with the Company
during the Default Term without Employee's consent other than for Cause, then,
during the remaining Default Term, the Company shall continue to pay Employee
the annual Base Salary and target Bonus in effect immediately prior to such
termination and shall continue to provide Employee with benefits


<PAGE>   4
substantially equivalent to those being provided immediately prior to such
termination.

            (f)   Definitions of Disability and Disabled. For purposes of this
Agreement, the terms "Disabled" and "Disability" shall refer to a state of
Employee's "permanent and total disability" as such term is defined in Section
22(e)(3) of the Internal Revenue Code of 1986, as amended.

      4.          PROPRIETARY INFORMATION; NONINTERFERENCE. As a condition to 
            the effectiveness of this Agreement, Employee shall execute the
            Proprietary Information and Invention Assignment Agreement attached
            hereto as Exhibit C.

      5.          MISCELLANEOUS.

            (a)   Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon the third day after deposit with the United States Post Office, by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the Company or Employee at the addresses set forth on the signature
page of this Agreement, or at such other address as such party may designate by
ten (10) days advance written notice to the other party.

            (b)   Severability. Nothing in this Agreement shall be construed so
as to require the commission of any act contrary to law and wherever there is
any conflict between any provision of this Agreement and any law, statute,
ordinance, order or regulation, the latter shall prevail, but in such event any
provision of this Agreement shall be curtailed and limited only to the extent
necessary to bring it within applicable legal requirements. If any provision of
this Agreement should be held invalid or unenforceable, the remaining provisions
shall be unaffected by such a holding.

            (c)   Tax Matters. Employee has consulted Employee's own independent
tax and legal advisors with respect to the transactions contemplated by this
Agreement and is not relying in any respect on the Company or any officer,
employee, or other agent or representative of the Company to provide any advice
with respect to the federal, state, local or foreign tax consequences of the
transactions contemplated hereby. Employee alone will bear Employee's tax
consequences, if any, associated with the transactions contemplated hereby and
will not seek any reimbursement in connection with any such tax consequences
from the Company.

            (d)   Complete Agreement. This Agreement and the exhibits attached
hereto contain the entire agreement and understanding between the parties
relating to the subject matter hereof, and supersedes any prior understandings,
agreements, or representations by or between the parties, written or oral,
relating to the subject matter hereof.

            (e)   Successors and Assigns. This Agreement and the rights and
obligations of the parties hereto shall bind and inure to the benefit of any
successor or successors of the Company by way of reorganization, merger or
consolidation and any assignee of all or substantially all of its business and
assets, but except as to any such successor or assignee of the Company, neither
this Agreement nor any rights or benefits hereunder may be assigned by the
Company or Employee.

            (f)   Amendments. Notwithstanding anything to the contrary contained
in this


<PAGE>   5
Agreement, the parties to this Agreement may make any modification or amendment
to this Agreement only by a mutual agreement in writing.

            (g)   Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as such laws
are applied to contracts entered into and to be performed entirely within the
State of California.

         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the day and year first above written.

                                       ILOG, INC.

                                       By:     /s/ Roger Friedberger
                                           -------------------------------------


                                       EMPLOYEE


                                              /s/ Todd Lowe
                                       -----------------------------------------
                                       (Signature)


                                       Todd Lowe
                                       -----------------------------------------
                                       (Print Name)


                                       -----------------------------------------

                                       -----------------------------------------
                                       (Print Address)


                                       -----------------------------------------
                                       (Print Telephone Number)



<PAGE>   6
                                    Exhibit A


While Employee remains employed with the Company, Employee shall be eligible for
all benefits offered to Company employees generally, currently including Aetna
Medical HMO/PPO coverage, dental and vision insurance plans, Accidental Death &
Disability Insurance, Section 125 pre-tax medical and dependent care expense
reimbursement plan, and 401(k) plan. In addition, Employee shall be entitled to
paid vacation during each year of employment of the greater of (i) four weeks or
(ii) the then-current annual paid vacation allowed by the Company's standard
benefit policy (currently three weeks).


<PAGE>   7
                                    Exhibit B

ILOG S.A.

1996 STOCK OPTION GRANT AGREEMENT

PART I

NOTICE OF STOCK OPTION GRANT


Mr. Todd Lowe

            You have been granted an Option to subscribe Shares of the Company,
subject to the terms and conditions of the 1996 Stock Option Plan, as amended
(the "Plan"), and this Option Agreement. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Option
Agreement.

<TABLE>
<S>                                                     <C>   
            Grant Number:                               SO96/97/

            Date of Grant:                              August 20, 1997

            Vesting Commencement Date:                  August 20, 1997

            Vesting period:                             Four years

            Share Per Value:                            FF 4.00

            Exercise Price per Share:                   FF 36.84

            Total Number of Shares Granted:             200,000

            Total Exercise Price:                       FF 7,368,000

            Type of Option:                             Incentive Stock Option

            Term/Expiration Date:                       Ten Years
</TABLE>


<PAGE>   8
VESTING SCHEDULE:

            This Option may be exercised, in whole or in part, in accordance
with the following schedule:

            25% of the Shares subject to the Option shall vest twelve months
after the Vesting Commencement Date, and 1/48 of the Shares subject to the
Option shall vest each month thereafter.

            Except as may be provided in that certain Employment Agreement by
and between Optionee and ILOG, Inc. dated as of August 20, 1997 (the "Employment
Agreement"), vesting shall continue only during Optionee's Continuous Status as
a Beneficiary.

TERMINATION PERIOD:

            Except as provided in the Employment Agreement, this Option may be
exercised for ninety (90) days after termination of the Optionee's employment or
term of office with the Company or an Affiliated Company as the case may be.
Upon the Death or Disability of the Optionee, this Option may be exercised for
such longer period as provided in the Plan or the Employment Agreement. Save as
provided in the Plan, in no event shall this Option be exercised later than the
Term/Expiration Date as provided above.

            By his signature and the signature of the Company's representative
below, the Optionee and the Company agree that this Option is granted under and,
except to the extent inconsistent with the Employment Agreement, governed by the
terms and conditions of the Plan and this Option Agreement. The Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had the
opportunity to obtain advice of counsel prior to executing this Option Agreement
and fully understands all provisions of the Plan and Option Agreement. The
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement which are not governed by the Employment Agreement. The
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.

            The Company and the Optionee recognize that the Plan has been
prepared both in the French and the English language. The French version is the
version that binds the parties, notwithstanding this, the English version
represents an acceptable translation and, consequently, no official translation
will be required for the interpretation of this agreement.

OPTIONEE:                              ILOG S.A.

______________________________         By:_____________________________

Signature

Print Name                             Name: Roger Friedberger
                                             --------------------------

                                       Title: Chief Financial Officer
------------------------------                -------------------------

Residence Address

------------------------------


<PAGE>   9
                                   ILOG S. A.
                        1996 STOCK OPTION GRANT AGREEMENT
                                     PART II
                              TERMS AND CONDITIONS

     1.     Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee"), an option (the "Option") to subscribe the number of
Shares, as set forth in the Notice of Grant, at the exercise price per Share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the 1996 Stock Option Plan, as amended, which is incorporated
herein by reference. In the event of a conflict between the terms and conditions
of the Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.

      If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code. However, if this Option is intended to be an Incentive Stock Option,
to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall
be treated as a Non-statutory Stock Option.

      2.    Exercise of Option.

      (a)   Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, disability or other termination of Optionee's employment or
term of office, the exercisability of the Option is governed by the applicable
provisions of the Plan and this Option Agreement.

      (b)   Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached hereto (the "Exercise Notice"), comprising
a share subscription form (bulletin de souscription) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised (the "Exercised Shares"), and such other
representations and agreements as may be required by the Company pursuant to the
provisions of the Plan. The Exercise Notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Company or its
designated representative or by facsimile message to be immediately confirmed by
certified mail to the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price.

      No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law as set
out under Section 14(a) of the Plan.


<PAGE>   10
      Upon the issuance of the Shares, the Optionee shall be entitled to receive
such Shares in the form of American Depositary Shares by completing and signing
the appropriate box of the Exercise Notice attached hereto.

      3.    Method of Payment. Payment of the aggregate Exercise Price shall be
            by any of the following, or a combination thereof, at the election
            of the Optionee:

            (1)   wire transfer;

            (2)   check;

            (3)   delivery of a properly executed notice together with such
            other documentation as the Administrator and the broker, if
            applicable, shall require to effect exercise of the Option and
            delivery to the Company of the sale or loan proceeds required to pay
            the exercise price; or

            (4)   any combination of the foregoing methods of payment.

      4.    Non-Transferability of Option. This Option may not be transferred in
            any manner otherwise than by will or by the laws of descent or
            distribution and may be exercised during the lifetime of the
            Optionee only by the Optionee. The terms of the Plan and this Option
            Agreement shall be binding upon the executors, administrators,
            heirs, successors and assigns of the Optionee.

      5.    Terms of Option. Subject as provided in the Plan, this Option may be
            exercised only within the term set out in the Notice of Grant, and
            may be exercised during such term only in accordance with the Plan
            and the terms of this Option Agreement.

      6.    Entire Agreement; Governing Law. The Plan is incorporated herein by
            reference. The Plan, this Option Agreement and the Employment
            Agreement constitute the entire agreement of the parties with
            respect to the subject matter hereof and supersede in their entirety
            all prior undertakings and agreements of the Company and Optionee
            with respect to the subject matter hereof, and may not be modified
            adversely to the Optionee's interest except by means of a writing
            signed by the Company and Optionee. In the event of any conflict
            between the provisions of this Option Agreement and the provisions
            of the Employment Agreement, the Employment Agreement shall, to the
            extent of such conflict, control. This Option Agreement is governed
            by the laws of the Republic of France.

Any claim or dispute arising under the Plan or this Agreement shall be subject
to the exclusive jurisdiction of the Tribunal de Grande Instance of Creteil.


<PAGE>   11
                                CONSENT OF SPOUSE

  (TO BE SIGNED BY RESIDENT OF CALIFORNIA AND OTHER COMMUNITY PROPERTY STATES)



      The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to subscribe Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.



                                       -----------------------------------------
                                       Spouse of Optionee


<PAGE>   12
                                    EXHIBIT A

                                    ILOG S.A.
           SOCIETE ANONYME HAVING A SHARE CAPITAL OF 24,798,780 FRANCS
                              REGISTERED OFFICE: []

                             1996 STOCK OPTION PLAN

                                 EXERCISE NOTICE

                            (SHARE SUBSCRIPTION FORM)




ILOG S.A.
[]

Date:

Attention:




      1.    Exercise of Option. Effective as of today, , 199_, the undersigned
            hereby elects to subscribe       (_________ ) shares (the "Shares") 
            of the Common Stock of ILOG S.A. (the "Company") under and pursuant
            to the Company's 1996 Stock Option Plan (the "Plan") adopted by the
            Board of Directors on May 30, 1996, as amended and the Stock Option
            Agreement dated , 199_, (the "Option Agreement"). The subscription
            price for the Shares shall be FF , as required by the Option
            Agreement.

      2.    Delivery of Payment. Purchaser herewith delivers to the Company the
            full subscription price for the Shares.

      3.    Representation of Optionee. The Optionee acknowledges that Optionee
            has received, read and understood the Plan and the Option Agreement
            and agrees to abide by and be bound by their terms and conditions.

      4.    Rights as Shareholder. Until the issuance (as evidenced by the
            appropriate entry on the books of the Company) of the Shares, the
            Optionee shall have, as an Optionee, no right to vote or receive
            dividends or any other rights as a shareholder shall exist with
            respect to the Optioned Stock, except those the Optionee may have as
            a shareholder of the Company. No adjustment will be made for rights
            in respect of which the record date is prior to the issuance date
            for the Shares, except as provided in Section 11 of


<PAGE>   13
            the Plan.

      5.    Tax Consultation. The Optionee understands that Optionee may suffer
            adverse tax consequences as a result of Optionee's subscription or
            disposition of the Shares. Optionee represents that Optionee has
            consulted with any tax consultants Optionee deems advisable in
            connection with the subscription or disposition of the Shares. The
            Optionee is not relying on the Company for any tax advice.

      6.    Entire Agreement; Governing Law. The Plan and Option Agreement are
            incorporated herein by reference. Reference is made to that certain
            Employment Agreement by and between Optionee and ILOG, Inc. dated as
            of August __, 1997 (the "Employment Agreement"). This Exercise
            Notice, the Plan the Option Agreement and the Employment Agreement
            constitute the entire agreement of the parties with respect to the
            subject matter hereof and supersede in their entirety all prior
            undertakings and agreements of the Company and Optionee with respect
            to the subject matter hereof, and may not be modified adversely to
            the Optionee's interest except by means of a writing signed by the
            Company and Purchaser. In the event of any conflict between the
            provisions of this Exercise Notice and the provisions of the
            Employment Agreement, the Employment Agreement shall, to the extent
            of such conflict, control. This Exercise Notice is governed by the
            laws of the Republic of France.

This Exercise Notice is delivered in two originals, one of which shall be
returned to the Optionee.

Submitted by:                          Accepted by:
OPTIONEE(*)                            ILOG S.A.


----------------------------------
Signature                              by:


                                       Its: CEO
----------------------------------
Print Name

ADDRESS:                                ADDRESS:


----------------------------------      ILOG S.A.



----------

(*)   The signature of the Optionee must be preceded by the following manuscript
mention "accepted for formal and irrevocable subscription of Shares."


<PAGE>   14
                                    Exhibit C


                                   ILOG, INC.
                          CONFIDENTIAL INFORMATION AND

                         INVENTION ASSIGNMENT AGREEMENT

      As a condition of my employment with ILOG, INC., its subsidiaries,
affiliates, successors or assigns (together the "COMPANY"), and in consideration
of my employment with the Company and my receipt of the compensation now and
hereafter paid to me by Company, I agree to the following:

      1.    CONFIDENTIAL INFORMATION.

            (a)   COMPANY INFORMATION. I agree at all times during the term of
my employment and thereafter, to hold in strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, firm or
corporation without written authorization of the Company, any Confidential
Information of the Company. I understand that "CONFIDENTIAL INFORMATION" means
any Company proprietary information, technical data, trade secrets or know-how,
including, but not limited to, research, product plans, products, services,
customer lists and customers (including, but not limited to, customers of the
Company on whom I called or with whom I became acquainted during the term of my
employment), markets, software, developments, inventions, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing, finances or other business information disclosed to me by the Company
either directly or indirectly in writing, orally or by drawings or observation
of parts or equipment. I further understand that Confidential Information does
not include any of the foregoing items which has become publicly known and made
generally available through no wrongful act of mine or of others who were under
confidentiality obligations as to the item or items involved.

            (b)   FORMER EMPLOYER INFORMATION. I agree that I will not, during
my employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity.

            (c)   THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.

      2.    INVENTIONS.

            (a)   INVENTIONS RETAINED AND LICENSED. I have attached hereto, as
Exhibit A, a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were


<PAGE>   15
made by me prior to my employment with CPLEX or the Company (collectively
referred to as "PRIOR INVENTIONS"), which belong to me, which relate to the
Company's proposed business, products or research and development, and which are
not assigned to the Company hereunder; or, if no such list is attached, I
represent that there are no such Prior Inventions. If in the course of my
employment with the Company, I incorporate into a Company product, process or
machine a Prior Invention owned by me or in which I have an interest, the
Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license to make, have made, modify, use and
sell such Prior Invention as part of or in connection with such product, process
or machine.

            (b)   ASSIGNMENT OF INVENTIONS. I agree that I will promptly make
full written disclosure to the Company, will hold in trust for the sole right
and benefit of the Company, and hereby assign to the Company, or its designee,
all my right, title, and interest in and to any and all inventions, original
works of authorship, developments, concepts, improvements or trade secrets,
whether or not patentable or registrable under copyright or similar laws, which
I may solely or jointly conceive or develop or reduce to practice, or cause to
be conceived or developed or reduced to practice, during the period of time I am
in the employ of the Company (collectively referred to as "INVENTIONS"), except
as provided in Section 2(e) below. I further acknowledge that, except as
provided in Section 2(e) below, all original works of authorship which are made
by me (solely or jointly with others) within the scope of and during the period
of my employment with the Company and which are protectible by copyright are
"works made for hire," as that term is defined in the United States Copyright
Act.

            (c)   MAINTENANCE OF RECORDS. I agree to keep and maintain adequate
and current written records of all Inventions made by me (solely or jointly with
others) during the term of my employment with the Company. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.

            (d)   PATENT AND COPYRIGHT REGISTRATIONS. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns, and nominees the
sole and exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, to act for and in my behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by me.


<PAGE>   16
            (e)   EXCEPTION TO ASSIGNMENTS. I understand that the provisions of
this Agreement requiring assignment of Inventions to the Company do not apply to
any invention which qualifies fully under the provisions of California Labor
Code Section 2870 (attached hereto as Exhibit A).

      3.    CONFLICTING EMPLOYMENT. I agree that, during the term of my
employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of my employment, nor will I engage in any other activities that conflict
with my obligations to the Company provided, however, that the Company
recognizes and agrees to my continued academic association and activities with
respect to Rice University.

      4.    RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving
the employ of the Company, I will deliver to the Company (and will not keep in
my possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications, drawings
blueprints, sketches, materials, equipment, other documents or property, or
reproductions of any aforementioned items developed by me pursuant to my
employment with the Company or otherwise belonging to the Company, its
successors or assigns. In the event of the termination of my employment, I agree
to sign and deliver the "Termination Certification" attached hereto as Exhibit
B.

      5.   NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ
of the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.

      6.   REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.

      7.   ARBITRATION AND EQUITABLE RELIEF.

            (a)   ARBITRATION. Except as provided in Section 8(b) below, I agree
that any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in Santa Clara County, California, in
accordance with the rules then in effect of the American Arbitration
Association. The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction. The
Company and I shall each pay one-half of the costs and expenses of such
arbitration, and each of us shall separately pay our counsel fees and expenses.

            (b)   EQUITABLE REMEDIES. I agree that it would be impossible or
inadequate to measure and calculate the Company's damages from any breach of the
covenants set forth in Sections 1, 2, and 4 herein. Accordingly, I agree that if
I breach any of such Sections, the Company will have available, in addition to
any other right or remedy available, the right to obtain an injunction from a
court of competent jurisdiction restraining such breach or threatened breach and
to specific performance of any


<PAGE>   17
such provision of this Agreement.

      8.    GENERAL PROVISIONS.

            (a)   GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by the laws of the State of California. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any lawsuit filed there against me by the Company
arising from or relating to this Agreement.

            (b)   ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.

            (c)   SEVERABILITY. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions will continue in
full force and effect.

            (d)   SUCCESSORS AND ASSIGNS. This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be for
the benefit of the Company, its successors, and its assigns.

Date:  August__, 1997


                      -----------------------------------
                                Signature
                                Employee


------------------------
Witness


<PAGE>   18
                                    EXHIBIT A


                       CALIFORNIA LABOR CODE SECTION 2870
                   EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS


      "(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:

            (1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.

            (2) Result from any work performed by the employee for the employer.

      (b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable."


<PAGE>   19
                                    EXHIBIT B


                                   ILOG, INC.
                            TERMINATION CERTIFICATION


      This is to certify that I do not have in my possession, nor have I failed
to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to ILOG, Inc., its subsidiaries, affiliates, successors or
assigns (together, the "COMPANY").

      I further certify that I have complied with all the terms of the Company's
Confidential Information and Invention Assignment Agreement signed by me,
including the reporting of any inventions and original works of authorship (as
defined therein), conceived or made by me (solely or jointly with others)
covered by that agreement.

      I further agree that, in compliance with the Confidential Information and
Invention Assignment Agreement, I will preserve as confidential all trade
secrets, confidential knowledge, data or other proprietary information relating
to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to any business of the Company or any of its
employees, clients, consultants or licensees.

      I further agree that for twelve (12) months from this date, I will not
hire any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.


Date: ___________



                                     -------------------------------------------
                                     (Employee's Signature)




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                                     (Type/Print Employee's Name)