SIEBEL SYSTEMS INC, S-3/A, 2000-01-31

SIEBEL SYSTEMS INC
S-3/A, 2000-01-31
PREPACKAGED SOFTWARE

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As Filed with the Securities and Exchange Commission on January 31, 2000

Registration No. 333-91777
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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SIEBEL SYSTEMS, INC.
(Exact Name of Registrant As Specified in Its Charter)

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Delaware 94-3187233
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)

1855 South Grant Street
San Mateo, California 94402
(650) 295-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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THOMAS M. SIEBEL
Chairman and Chief Executive Officer
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, California 94402
(650) 295-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies To:
ERIC C. JENSEN, ESQ.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
(650) 843-5000

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Approximate Date of Proposed Sale To The Public: From time to time after the
effective date of this registration statement.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. These +
+securities may not be sold until the registration statement filed with the +
+Securities and Exchange Commission is effective. The prospectus is not an +
+offer to sell these securities, and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JANUARY 31, 2000

P R O S P E C T U S

[SIEBEL LOGO]

$300,000,000
of 5 1/2% Convertible Subordinated Notes due September 15, 2006 and
6,433,260 Shares of Common Stock Issuable upon Conversion of the Notes

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This prospectus relates to 5 1/2% Convertible Subordinated Notes due
September 15, 2006 of Siebel Systems, Inc., a Delaware corporation, held by
certain security holders who may offer for sale the notes and the shares of our
common stock into which the notes are convertible at any time at market prices
prevailing at the time of sale or at privately negotiated prices. The selling
security holders may sell the notes or the common stock directly to purchasers
or through underwriters, broker-dealers or agents, who may receive compensation
in the form of discounts, concessions or commissions.

The holders of the notes may convert the notes into shares of our common
stock at any time at a conversion rate of 21.4442 shares per $1,000 principal
amount of notes. After September 15, 2002, we may redeem the notes, in whole or
in part, at the redemption prices set forth in the section entitled
"Description of the Notes--Optional Redemption."

In the event of a Change of Control, as defined in the section entitled
"Description of the Notes--Change in Control," each holder of the notes may
require us to repurchase the notes at 100% of the principal amount of the notes
plus accrued interest. At our option, we may repurchase the notes for cash or
common stock.

The notes are general, unsecured obligations that are subordinated in right
of payment to all of our existing and future senior indebtedness. See
"Description of the Notes--Subordination."

Our common stock currently trades on the Nasdaq National Market under the
symbol "SEBL." The last reported sale price on January 28, 2000 was $92 3/4 per
share.

Our 5 1/2% Convertible Subordinated Notes are currently eligible for trading
on the PORTAL Market of the Nasdaq Stock Market.

Investing in our common stock or our convertible subordinated notes involves
a high degree of risk. Please carefully consider the "Risk Factors" beginning
on page 2 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.

The date of this prospectus is , 2000
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SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus. Prospective investors
should consider carefully the information in this prospectus under the heading
"Risk Factors." Unless indicated otherwise, all share data is adjusted to
reflect two-for-one stock splits (each in the form of a 100% dividend) that
occurred on each of December 19, 1996, March 20, 1998 and November 12, 1999.

The Company

We are the market leader in web-based front office information systems for
organizations focused on increasing sales, marketing and customer service
effectiveness in field sales, telesales, telemarketing, retail, customer
service, call centers, field service, resellers, business partners and
Internet-based eCommerce, marketing and customer service. We design, develop,
market and support Siebel Front Office Applications, a leading web-based
application software product family designed to meet the sales, marketing and
customer service information system requirements of even the largest multi-
national organizations.

Our front office applications deliver the first entirely web-based family of
sales, marketing and customer service applications. The Siebel Front Office
allows organizations to manage, synchronize and coordinate all customer
interactions via the web, call center, field and business partner network. Our
front office applications fully support ActiveX, Java and HTML and can be
delivered over the Internet or via an organization's intranet, supporting
multiple desktop platforms.

Our products are also available in industry-specific versions designed for
the pharmaceutical, consumer goods, telecommunications, insurance and finance
vertical markets.

Our customers are comprised of global market leaders, known for delivering
the highest levels of quality in their products and services and for their
commitment to maintain the highest levels of customer satisfaction. Spanning
diverse industries and locations, our customers represent global organizations
of all sizes.

Deploying front office solutions is no longer viewed as a means of gaining a
competitive advantage, but rather is fundamental to an organization's ability
to survive. Employing front office applications technology to better manage
their customer relationships today, our customers continue to be the leaders in
their markets.

Our principal executive offices are located at 1855 South Grant Street, San
Mateo, CA 94402. Our telephone number is (650) 295-5000 and our e-mail address
is [email protected]. We also maintain an Internet home page at siebel.com.

Recent Events

At a special stockholders' meeting on October 20, 1999, our stockholders
approved an amendment to our certificate of incorporation to increase our
authorized number of shares of common stock from 300,000,000 to 800,000,000
shares.

On November 12, 1999 we effected a two for one stock split by way of a stock
dividend of one share of common stock for each share of common stock held by
each stockholder. All share data is adjusted to reflect the stock split.

On December 1, 1999, we acquired OnTarget, Inc., a provider of consulting
services and training programs for sales and marketing organizations. OnTarget
will operate as a wholly owned subsidiary. Please refer to our Form 8-K filed
on December 15, 1999 for more information about the OnTarget acquisition. All
financial data is adjusted to reflect the consolidated operations of OnTarget
and Siebel.

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RISK FACTORS

In addition to the other information contained in this prospectus, investors
should carefully consider the following risk factors in evaluating an
investment in the notes or the common stock issuable upon conversion of the
notes. This prospectus includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical fact are "forward-looking
statements" for purposes of these provisions, including any projections of
earnings, revenues or other financial items, any statements of the plans and
objectives of management for future operations, any statements concerning
proposed new products or services, any statements regarding future economic
conditions or performance and any statement of assumptions underlying any of
the foregoing. In some cases, forward-looking statements can be identified by
the use of terminology such as "may," "will," "expects," "plans,"
"anticipates," "estimates," "potential," or "continue" or the negative thereof
or other comparable terminology. Although we believe that the expectations
reflected in the forward-looking statements contained herein are reasonable,
there can be no assurance that such expectations or any of the forward-looking
statements will prove to be correct and actual results could differ materially
from these projected or assumed in the forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking
statements, are subject to inherent risks and uncertainties, including but not
limited to the risk factors set forth below and for the reasons described
elsewhere in this prospectus. All forward-looking statements and reasons why
results may differ included in this prospectus are made as of the date hereof
and we assume no obligation to update any such forward-looking statement or
reason why actual results might differ.

Risks Related to Our Business

We have a limited operating history upon which to evaluate our business.

You should evaluate our prospects in light of the risks, expenses and
uncertainties that companies in their early stage of development frequently
encounter. We began operations in July 1993. We first shipped our Siebel Sales
Enterprise product in April 1995 and our Siebel Service Enterprise product in
December 1996. Subsequent versions of these products were first shipped in 1996
and 1997. Accordingly, we have a limited operating history upon which you may
evaluate our business and prospects.

Our net revenue and operating results may fluctuate.

We may experience a shortfall in revenue or earnings or otherwise fail to
meet public market expectations, which could materially adversely affect our
business and the market price of our common stock. Our net revenue and
operating results may fluctuate significantly because of a number of factors,
many of which are outside of our control. These factors include:

. Level of product and price competition;

. Length of our sales cycle and customer purchasing patterns;

. The size and timing of individual license transactions;

. Delay or deferral of customer implementations of our products;

. Success in expanding our customer support organization, direct sales
force and indirect distribution channels;

. Timing of new product introductions and product enhancements;

. Appropriate mix of products and services sold;

. Levels of international sales;

. Activities of and acquisitions by competitors;

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. Activities of and acquisitions by competitors;

. Timing of new hires and the allocation of our resources;

. Changes in the economy and foreign currency exchange rates; and

. Our ability to develop and market new products and control costs.

One or more of the foregoing factors may cause our operating expenses to be
disproportionately high during any given period or may cause our net revenue
and operating results to fluctuate significantly. Based upon the preceding
factors, we may experience a shortfall in revenue or earnings or otherwise fail
to meet public market expectations, which could materially adversely affect our
business, financial condition and the market price of our common stock.

Our quarterly operating results may fluctuate.

Our net revenue and operating results may vary drastically from quarter to
quarter. The main factors that may affect these fluctuations are:

. The discretionary nature of our customer's purchase and budget cycles;

. The size and complexity of our license transactions;

. The potential delays in recognizing revenue from license transactions;

. The timing of new product releases;

. Seasonal variations in operating results; and

. Variations in the fiscal or quarterly cycles of our customers.

Each customer's decision to implement our products and services is
discretionary, involves a significant commitment of resources and is subject to
their budget cycles. In addition, the timing of license revenue is difficult to
predict because of the length of our sales cycle, which has ranged to date from
two to eighteen months. We base our operating expenses on anticipated revenue
trends. Because a high percentage of these expenses are relatively fixed, a
delay in recognizing revenue from license transactions could cause significant
variations in operating results from quarter to quarter and could result in
operating losses. If these expenses precede, or are not subsequently followed
by, increased revenues, our operating results could be materially and adversely
affected. Although we have not experienced significant seasonal variations in
operating results, such variations could develop in the future.

As a result of these and other factors, revenues for any quarter are subject
to significant variation and we believe that period-to-period comparisons of
our results of operations are not necessarily useful. You should not rely on
these comparisons as indications of future performance. It is likely that our
future quarterly operating results from time to time will not meet the
expectations of market analysts or investors, which would likely have an
adverse effect on the price of our common stock.

We need to successfully integrate acquisitions and manage growth.

Our business strategy includes pursuing opportunities to grow our business,
both internally and through selective acquisitions, investments, joint ventures
and strategic alliances. Our ability to implement this strategy depends, in
part, on our success in making such acquisitions, investments, joint ventures
and strategic alliances on satisfactory terms and successfully integrating them
into our operations. Implementation of our growth strategy may impose
significant strains on our management, operating systems and financial
resources. Failure to manage this growth, or unexpected difficulties
encountered during expansion, could have an adverse effect on our business,
operating results and financial condition.

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We rely on strategic relationships with systems integrators.

Failure to maintain existing strategic relationships with systems
integrators, or to establish new relationships in the future, could have a
material adverse effect on our business. We have established strategic
relationships with a number of organizations that we believe are important to
our sales, marketing and support activities, and the implementation of our
products. We believe that our relationships with these organizations provide
marketing and sales opportunities for our direct sales force and expand the
distribution of our products. These relationships allow us to keep pace with
the technological and marketing developments of major software vendors and
provide us with technical assistance for our product development efforts.

In particular, we have established a non-exclusive strategic relationship
with Andersen Consulting, one of our largest stockholders. We have also entered
into significant relationships with other third-party systems integrators such
as PricewaterhouseCoopers and Deloitte Consulting. A significant portion of our
revenues have historically been derived from customers for whom Andersen
Consulting, or another systems integrator with which we have a significant
relationship, have been engaged to provide system integration services. Any
deterioration of our relationship with these significant third-party systems
integrators could have a material adverse effect on our business, financial
condition and results of operations. We also have relationships with IBM
Corporation, Compaq Computer Corporation, Microsoft Corporation and Sun
Microsystems, among others. Failure to maintain existing relationships, or to
establish new relationships in the future, could have a material adverse effect
on our business, results of operations and financial condition.

Our current and potential customers may also rely on third-party system
integrators to develop, deploy and/or manage Siebel Front Office Applications.
If we do not adequately train a sufficient number of system integrators, or if
these integrators do not have, or do not devote, the resources necessary to
implement our products, our business, operating results and financial condition
could be materially and adversely affected.

The Internet presents unique risks.

We may not be able to effectively compete in the Internet-related products
and services market. Siebel Front Office Applications communicate through
public and private networks over the Internet. The success of our products may
depend, in part, on our ability to continue developing products that are
compatible with the Internet. We cannot predict with any assurance whether the
Internet will be a viable commercial marketplace or whether the demand for
Internet-related products and services will increase or decrease in the future.
The increased commercial use of the Internet could require substantial
modification and customization of our products and the introduction of new
products.

Critical issues concerning the commercial use of the Internet, including
security, demand, reliability, cost, ease of use, accessibility, quality of
service and potential tax or other government regulation, remain unresolved and
may affect the use of the Internet as a medium to support the functionality of
our products and distribution of our software. If these critical issues are not
favorably resolved, our business, operating results and financial condition
could be materially and adversely affected.

We operate in a competitive and rapidly changing market.

If the client-server and web-based applications markets fail to grow or grow
more slowly than we currently anticipate, our business, operating results and
financial condition could be materially and adversely affected. The market for
client-server and web-based application software is relatively new, highly
competitive and rapidly changing. We market our products only to customers who
have migrated or are in the process of migrating their enterprise computing
systems to client-server and web-based computing environments. Our future
financial performance will partly depend on the continued growth of
organizations successfully adopting client-server and web-based computing
environments.

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Our customers may not successfully implement our products.

If existing customers have difficulty further deploying Siebel Front Office
Applications or for any other reason are not satisfied with Siebel Front Office
Applications, our business, operating results and financial condition could be
materially and adversely affected. Many of our customers purchase and implement
our products in phases. Our customers frequently deploy our products to large
numbers of sales, marketing and customer service personnel. These end-users may
not accept our products. Our products are also being deployed on a variety of
computer hardware platforms and used with a number of third-party software
applications and programming tools. This use may present significant technical
challenges, particularly as large numbers of personnel attempt to use our
product concurrently.

A limited number of products provides a substantial part of our license
revenues.

In 1998 and the first nine months of 1999, a substantial majority of our
license revenues were attributable to sales of Siebel Sales Enterprise, Siebel
Service Enterprise, Siebel Call Center and related products. We expect that
such products and related consulting, maintenance and training services will
continue to account for a majority of our future revenues. As a result, factors
adversely affecting the pricing of or demand for such products, such as
competition or technological change, could have a material adverse effect on
our business, operating results and financial condition.

The length of time required to engage a client and to implement our products
may be lengthy and unpredictable.

The timing of the sales and implementation of our products and services is
lengthy and not predictable with any degree of accuracy. You should not rely on
prior sales and implementation cycles as any indication of future cycles.

The license of our software products is often an enterprise-wide decision by
prospective customers and generally requires us to provide a significant level
of education to prospective customers regarding the use and benefits of our
products. In addition, the implementation of our products involves a
significant commitment of resources by prospective customers and is commonly
associated with substantial reengineering efforts that may be performed by the
customer or third-party system integrators. The cost to the customer of our
product is typically only a portion of the related hardware, software,
development, training and integration costs of implementing a large-scale front
office software system. For these and other reasons, the period between initial
contact and the implementation of our products is often lengthy and is subject
to a number of factors that may cause significant delays, over many of which we
have little or no control. These factors include (i) the size and complexity of
the overall project and (ii) delays in our customers' implementation of web-
based computing environments. A delay in the sale or implementation of even a
limited number of license transactions could have a material adverse effect on
our business and operations and cause our operating results to vary
significantly from quarter to quarter.

Our success will require us to continue to expand our direct sales force and
technical support staff.

Failure to expand our direct sales force or technical and customer support
staff or to expand our distribution channels could materially and adversely
affect our business, operating results and financial condition. We have
expanded the distribution of our products in recent years. This expansion has
placed new and increased demands on our direct sales force and technical and
sales support staff. Our ability to achieve revenue growth in the future will
depend, in part, on our success in recruiting and training sufficient direct
sales, technical and customer support personnel. Although we invest significant
resources to expand our direct sales force and our technical and customer
support staff, there is only a limited number of qualified personnel in these
areas. Therefore, we may not be able to expand our direct sales force and
technical support staff as necessary to support our growing operations. In
addition, such expansion may not result in increased revenues.

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Our expanding distribution may create additional risks.

Failure to minimize channel conflicts could materially and adversely affect
our business, operating results and financial condition. We have recently
entered into a number of relationships with resellers in order to obtain broad
market coverage. We have generally avoided exclusive relationships with
resellers of our products. Discount policies and reseller licensing programs
are intended to support each distribution channel with a minimum level of
channel conflicts.

Our revenue is concentrated in a relatively small number of customers.

Our success depends on maintaining relationships with our existing
customers. A relatively small number of customers have accounted for a
significant percentage of our revenues. For 1998 and the nine months ended
September 30, 1999, license revenues from our ten largest customers accounted
for 22% and 15% of total revenues, respectively. We expect that licenses of our
products to a limited number of customers will continue to account for a
significant percentage of revenue for the foreseeable future. The loss of a
small number of customers or any reduction or delay in orders by any such
customer, or failure to successfully market our products to new customers,
could have a material adverse effect on our business, financial condition and
results of operations.

Our continued success will require us to keep pace with technological
developments, evolving industry standards and changing customer needs.

The software market in which we compete is characterized by (i) rapid
technological change, (ii) frequent introductions of new products, (iii)
changing customer needs and (iv) evolving industry standards. To keep pace with
technological developments, evolving industry standards and changing customer
needs, we must support existing products and develop new products. We may not
be successful in developing, marketing and releasing new products or new
versions of the Siebel Front Office Applications that respond to technological
developments, evolving industry standards or changing customer requirements. We
may also experience difficulties that could delay or prevent the successful
development, introduction and sale of these enhancements. In addition, these
enhancements may not adequately meet the requirements of the marketplace and
may not achieve any significant degree of market acceptance. If release dates
of any future products or enhancements to the Siebel Front Office Applications
are delayed, or if these products or enhancements fail to achieve market
acceptance when released, our business, operating results and financial
condition could be materially and adversely affected. In addition, new products
or enhancements by our competitors may cause customers to defer or forego
purchases of our products, which could have a material adverse effect on our
business, financial condition and results of operations.

To be successful, we must effectively compete in the front office systems
market.

Our products target the front office systems market. This market is highly
competitive, rapidly changing and significantly affected by new product
introductions. We face competition primarily from our customers' internal
information technology departments and systems integrators, as well as from
other application software providers that offer a variety of products and
services to address this market. Many of our customers and potential customers
have attempted to develop front office systems in-house, either alone or with
the help of systems integrators. We may not be able to compete successfully
against such internal development efforts.

We rely on a number of systems consulting and systems integration firms for
a substantial portion of implementation and other customer support services, as
well as for recommendations of our products during the evaluation stage of the
purchase process. Although we seek to maintain close relationships with these
service providers, many of them have similar and often more established,
relationships with our competitors. If we are unable to develop and retain
effective, long-term relationships with these third parties, our competitive
position could be materially and adversely affected. Further, many of these
third parties have significantly greater resources than we do and may market
software products that compete with us.

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A large number of personal, departmental, enterprise-wide and other products
exist in the front office software market. Companies (Products) such as
Symantec (ACT!), Borealis Corporation (Arsenal), Saratoga Systems (Avenue),
Aurum (BaanFrontOffice) (acquired by Baan Company N.V.), Corepoint (Corepoint
Field Sales, Corepoint Telesales), Clarify Inc. (ClearSales, ClearSupport),
ONYX (Customer Center), Epiphany (e.4 System), Silknet (eBusiness System), IMA
(EDGE), Rubric (EMA), Applix (Enterprise), Dendrite International, Inc. (Force
One), Marketrieve Company (Marketrieve PLUS), Firstwave Technologies, Inc.
(Netgain), Broadvision, Inc. (One-To-One Application System), Oracle
Corporation (Oracle Field Sales Online, Oracle Service and Oracle Call, Front
Office Application), Relavis (OverQuota), Pivotal Software, Inc.
(Relationship), SAP AG (Sales Force Automation Solution), SalesLogix
(SalesLogix), Portera (ServicePort), MEI (UniverSell), Exchange Applications
(ValEX) and The Vantive Corporation (Vantive Enterprise) (acquired by
PeopleSoft Inc.) are among the many firms in this market segment.

Some of these competitors have longer operating histories, significantly
greater financial, technical, marketing and other resources, significantly
greater name recognition and a larger installed base of customers than we do.
In addition, many competitors have well-established relationships with our
current and potential customers. As a result, these competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the development, promotion and
sale of their products than we can.

There are many factors that may increase competition in the front office
systems market, including (i) entry of new competitors, (ii) alliances among
existing competitors (iii) consolidation in the software industry and (iv)
technological changes or changes in the use of the Internet. Increased
competition may result in price reductions, reduced gross margins or loss of
market share, any of which could materially and adversely affect our business,
operating results and financial condition. If we cannot compete successfully
against current and future competitors or overcome competitive pressures, our
business, operating results and financial condition may be adversely affected.

If we do not maintain our relationships with third-party vendors, interruptions
in the supply of our products may result.

We may not be able to replace the functionality provided by the third-party
software currently offered with our products if that software becomes obsolete
or incompatible with future versions of our products or is not adequately
maintained or updated. Portions of our products incorporate software that was
developed and is maintained by third-party software developers. Although we
believe there are other sources for these products, any significant
interruption in the supply of these products could adversely impact our sales
unless and until we can secure another source. We depend in part on these third
parties' abilities to enhance their current products, to develop new products
on a timely and cost-effective basis and to respond to emerging industry
standards and other technological changes. The absence of or any significant
delay in the replacement of functionality provided by third-party software in
our products could materially and adversely affect our sales.

Software errors or defects in our products could reduce revenues.

Software products frequently contain errors or failures, especially when
first introduced or when new versions are released. Although we conduct
extensive product testing during product development, we have, in the past,
been forced to delay the commercial release of products until the correction of
software problems. We could lose revenues as a result of software errors or
defects. Our products are intended for use in sales applications that may be
critical to a customer's business. As a result, we expect that our customers
and potential customers will have a greater sensitivity to product defects than
the market for software products generally. Testing errors may also be found in
new products or releases after commencement of commercial shipments, resulting
in loss of revenue or delay in market acceptance, damage to our reputation, or
increased service and warranty costs, any of which could have a material
adverse effect upon our business, operating results and financial condition.

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If we do not successfully manage our growth, our business may be negatively
impacted.

If we fail to manage our growth effectively, our business, financial
condition and results of operations could be materially and adversely affected.
Our business has grown rapidly in recent years. This growth has placed a
significant strain on our management systems and resources. To manage future
growth, we must continue to (i) improve our financial and management controls,
reporting systems and procedures on a timely basis and (ii) expand, train and
manage our employee work force.

The loss of key personnel could negatively affect our performance.

Our performance depends on the continued service of our key technical, sales
and senior management personnel, particularly Thomas M. Siebel, our Chairman
and Chief Executive Officer. None of our key employees has entered into an
employment agreement with us. The loss of the services of one or more of our
executive officers could have a material adverse effect on our business,
operating results and financial condition.

The protection of our proprietary information is limited.

We rely primarily on a combination of patent, copyright, trade secret and
trademark laws, confidentiality procedures and contractual provisions to
protect our proprietary rights. We also believe that the technological and
creative skills of our personnel, new product developments, frequent product
enhancements, name recognition and reliable product maintenance are essential
to establishing and maintaining a technology leadership position. We seek to
protect our software, documentation and other written materials under patent,
trade secret and copyright laws, which afford only limited protection. Any
patents issued to us may be invalidated, circumvented or challenged. Any of our
pending or future patent applications, whether or not being currently
challenged, may not be issued with the scope of the claims we seek, if at all.
Furthermore, others may develop technologies that are similar or superior to
our technology or design around our patents. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary.
Policing unauthorized use of our products is difficult. In addition, the laws
of some foreign countries do not protect our proprietary rights as fully as do
the laws of the United States. Our means of protecting our proprietary rights
in the United States or abroad may not be adequate. We have entered into
agreements with substantially all of our customers that require us to place
Siebel Front Office Applications source code into escrow. Such agreements
generally provide that such parties will have a limited, non-exclusive right to
use such code if (i) there is a bankruptcy proceeding by or against us, (ii) we
cease to do business, or (iii) we fail to meet our support obligations.

Although we do not believe that we are infringing any proprietary rights of
others, third parties may claim that we have infringed their intellectual
property rights. Furthermore, former employers of our former, current or future
employees may assert claims that such employees have improperly disclosed to us
the confidential or proprietary information of such former employers. Any such
claims, with or without merit, could (i) be time consuming to defend, (ii)
result in costly litigation, (iii) divert management's attention and resources,
(iv) cause product shipment delays and (v) require us to pay money damages or
enter into royalty or licensing agreements. A successful claim of product
infringement against us and our failure or inability to license or create a
workaround for such infringed or similar technology may materially and
adversely affect our business, operating results and financial condition.

We license certain software from third parties. These third-party software
licenses may not continue to be available to us on acceptable terms. The loss
of, or inability to maintain, any of these software licenses could result in
shipment delays or reductions. This could materially and adversely affect our
business, operating results and financial condition.

8
<PAGE>

Year 2000 problems may cause an interruption in our business.

Many existing computer programs and systems use only two-digit fields to
identify the year, e.g. 85=1985 and they are unable to process date and time
information between the twentieth and twenty-first centuries. Accordingly,
computer programs and software may need to be modified prior to the year 2000
in order to remain functional. Although we have spent a large amount of time
and resources to address potential Y2K problems and are not aware of any Y2K
problems with respect to our programs and systems caused by the recent
commencement of the year 2000, there is no assurance that we will be successful
in our efforts to identify and address all Y2K issues that may arise in the
future. Failure to complete the necessary modifications in the event such
issues arise could cause a disruption or failure of our programs and systems.

International operations involve unique risks.

Our revenues are primarily derived from large multi-national companies. To
service the needs of these companies, we must provide worldwide product support
services. We have expanded and intend to continue expanding, our international
operations and enter additional international markets. This will require
significant management attention and financial resources that could adversely
affect our operating margins and earnings. We may not be able to maintain or
increase international market demand for Siebel Front Office Applications. If
we do not, our international sales will be limited and our business, operating
results and financial condition could be materially and adversely affected.

Our international operations are subject to a variety of risks, including
(i) foreign currency fluctuations, (ii) economic or political instability,
(iii) shipping delays and (iv) various trade restrictions. Any of these risks
could have a significant impact on our ability to deliver products on a
competitive and timely basis. Significant increases in the level of customs
duties, export quotas or other trade restrictions could also have an adverse
effect on our business, financial condition and results of operations. In
situations where direct sales are denominated in foreign currency, any
fluctuation in foreign currency or the exchange rate may adversely affect our
business, financial condition and results of operations. We manage our foreign
currency exchange rate risk by entering into contracts to sell foreign currency
at the time a foreign currency receivable is generated. When the foreign
currency receivable is collected, the contract is liquidated, thereby
converting the foreign currency to US dollars and mitigating the exchange rate
risk. In certain instances, we have not hedged foreign currency receivables
when the forward contracts in the relevant currency were not readily available
or were not cost effective.

Certain stockholders may be able to exercise control over matters requiring
stockholder approval.

Our current officers, directors and entities affiliated with us together
beneficially owned a significant portion of the outstanding shares of common
stock as of September 30, 1999. While these stockholders do not hold a majority
of our outstanding common stock, they will be able to exercise significant
influence over matters requiring stockholder approval, including the election
of directors and the approval of mergers, consolidations and sales of our
assets. This may prevent or discourage tender offers for our common stock.

Our stock price may continue to be volatile.

Our stock price has fluctuated substantially since our initial public
offering in June 1996. The trading price of our common stock and, as a result,
the market price of the notes, is subject to significant fluctuations in
response to variations in quarterly operating results, the gain or loss of
significant orders, changes in earning estimates by analysts, announcements of
technological innovations or new products by us or our competitors, general
conditions in the software and computer industries and other events or factors.
In addition, the stock market in general has experienced extreme price and
volume fluctuations that have affected the market price for many companies in
industries similar or related to ours and that have been unrelated to the
operating performance of these companies. These market fluctuations have
adversely affected and may continue to adversely affect the market price of our
common stock.

9
<PAGE>

Certain provisions in our charter documents may prevent certain corporate
actions.

Our Board of Directors is authorized to issue up to 2,000,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further
approval by our stockholders. The preferred stock could be issued with voting,
liquidation, dividend and other rights superior to those of the common stock.
The rights of the holders of common stock will be subject to and may be
adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could make it more difficult for a third party to acquire a
majority of our outstanding voting stock. We have a classified Board of
Directors. This and certain other provisions of our certificate of
incorporation and certain provisions of our Bylaws and of Delaware law, could
delay or make more difficult a merger, tender offer or proxy contest.

Risks Related to the Notes

Substantial leverage and debt service obligations may adversely affect our cash
flow.

We have substantial amounts of outstanding indebtedness, primarily the
notes. As a result of this indebtedness, our principal and interest payment
obligations are substantial. We may be unable to generate cash sufficient to
pay the principal of, interest on and other amounts due in respect of our
indebtedness when due. We also expect to add additional equipment loans and
lease lines to finance capital expenditures and may obtain additional long-term
debt, working capital lines of credit and lease lines. There can be no
assurance that any financing arrangements will be available.

Our substantial leverage could have significant negative consequences,
including:

. increasing our vulnerability to general adverse economic and industry
conditions;

. limiting our ability to obtain additional financing;

. requiring the dedication of a substantial portion of our expected cash
flow from operations to service our indebtedness, thereby reducing the
amount of our expected cash flow available for other purposes, including
capital expenditures;

. limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete; and

. placing us at a competitive disadvantage compared to less leveraged
competitors and competitors that have better access to capital resources.

The notes are subordinated to all other senior debt.

The notes are unsecured and subordinated in right of payment to all of our
existing and future senior indebtedness, as defined in the indenture governing
the notes. As a result, in the event of bankruptcy, liquidation or
reorganization or upon acceleration of the notes due to an event of default, as
described in "Description of the Notes," and in specific other events, our
assets will be available to pay obligations on the notes only after all senior
indebtedness has been paid in full in cash or other payment satisfactory to the
holders of senior indebtedness. There may not be sufficient assets remaining to
pay amounts due on any or all of the notes then outstanding. The notes are also
effectively subordinated to the liabilities, including trade payables, of our
subsidiaries. The indenture governing the notes does not prohibit or limit the
incurrence of senior indebtedness or the incurrence of other indebtedness and
other liabilities by us or our subsidiaries. The incurrence of additional
indebtedness and other liabilities by us or our subsidiaries could adversely
affect our ability to pay obligations on the notes. As of September 30, 1999,
we had approximately $50.3 million of indebtedness outstanding that would have
constituted senior indebtedness. As of September 30, 1999, our subsidiaries had
no material indebtedness or other liabilities. We anticipate that from time to
time we will incur additional indebtedness, including senior indebtedness. See
"Description of the Notes-Subordination."

10
<PAGE>

The notes contain limitations on redemption upon a change in control.

Upon a change in control, as defined in "Description of the Notes," each
holder of notes has rights, at the holder's option, to require us to redeem all
or a portion of the holder's notes. Although the indenture allows us, subject
to satisfaction of conditions, to pay the redemption price in shares of common
stock, if a change in control were to occur, we may not have sufficient funds
to pay the redemption price for all the notes tendered by holders. Any future
credit agreements or other agreements relating to other indebtedness, including
other senior indebtedness, to which we become a party may contain restrictions
or prohibitions on the payment of the redemption price while such indebtedness
is outstanding. In the event a change in control occurs at a time when we are
prohibited from purchasing or redeeming the notes, we could seek the consent of
lenders to the purchase of the notes or could attempt to refinance the
borrowings that contain this prohibition. If we do not obtain a consent or
repay these borrowings, we would remain prohibited from purchasing or redeeming
the notes. Our failure to redeem tendered notes would constitute an event of
default pursuant to the indenture under which the notes were issued, which
might constitute a default under the terms of other indebtedness that we may
enter into from time to time. In these circumstances, the subordination
provisions in the indenture would likely restrict payments to the holders of
the notes. The term "change in control" is limited to specified transactions
and may not include other events that might adversely affect our financial
condition. In addition, the requirement that we offer to repurchase the notes
upon a change in control does not necessarily afford holders of the notes
protection in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving us. See "Description of the Notes-
Repurchase at Option of Holders Upon a Change in Control."

There is no public market for the notes and there are restrictions on resale of
the notes.

Prior to this offering, the notes have traded in the Private Offerings,
Resale and Trading through Automated Linkages (PORTAL) Market of the National
Association of Securities Dealers, Inc. Although Goldman, Sachs & Co., Banc of
America Securities LLC and Thomas Weisel Partners LLC have advised us that they
currently intend to make a market in the notes, they are not obligated to do so
and may discontinue their market making activities at any time without notice.
Consequently, we cannot ensure that any market for the notes will develop, or
if one does develop, that it will be maintained. If an active market for the
notes fails to develop or be sustained, the trading price of the notes could be
materially and adversely affected. We do not intend to apply for listing of the
notes on any securities exchange or any automated quotation system.

11
<PAGE>

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, the SEC, a
registration statement on Form S-3 to register the securities offered by this
prospectus. However, this prospectus does not contain all of the information
contained in the registration statement and the exhibits and schedules to the
registration statement. We strongly encourage you to carefully read the
registration statement and the exhibits and schedules to the registration
statement. We also file annual, quarterly and special reports, proxy statements
and other information with the SEC.

You may inspect and copy such material at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as at the SEC's regional offices at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New
York, New York 10048. You may also obtain copies of such material from the SEC
at prescribed rates by writing to the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549.

Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the
SEC's web site at www.sec.gov.

If at any time during the two-year period following September 15, 1999, we
are not subject to the information requirements of Section 13 or 15(d) of the
Exchange Act, we will furnish to note holders, to holders of common stock
issued upon conversion thereof and to prospective purchasers thereof the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act in order to permit compliance with Rule 144A in connection with
resales of such notes and common stock issued upon conversion thereof.

INCORPORATION BY REFERENCE

The SEC allows us to "incorporate by reference" the information contained in
documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:

1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998, filed on March 31, 1999, including all material incorporated by
reference therein;

2. Our Definitive Revised Proxy Statement on Schedule 14A, filed on
April 5, 1999;

3. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1999, filed on May 14, 1999, including all material incorporated by
reference therein;

4. Our Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1999, filed on August 13, 1999, including all material incorporated by
reference therein;

5. Our Definitive Proxy Statement on Schedule 14A, filed on September
17, 1999;

6. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1999, filed on November 15, 1999, including all material
incorporated by reference therein;

7. Our Current Report on Form 8-K, filed on December 15, 1999, including
all material incorporated by reference therein.

12
<PAGE>

8. Our Current Report on Form 8-K, filed on January 7, 2000, including
all material incorporated by reference therein.

9. All other reports filed by us pursuant to Section 13(a) or 15(d) of
the Exchange Act since December 31, 1998, including all material
incorporated by reference therein; and

10. The description of the common stock contained in our Registration
Statement on Form 8-A.

You may request a copy of these filings, at no cost to you, by writing or
telephoning us at: Siebel Systems, Inc., Attention: Investor Relations, 1855
South Grant Street, San Mateo, California 94402, Telephone (650) 295-5000.

Our common stock is quoted on the Nasdaq National Market under the symbol
"SEBL." The last reported sales price of the common stock on the Nasdaq
National Market ("Nasdaq") on January 28, 2000 was $92 3/4 per share. You may
inspect reports and other information concerning us at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.

You should rely only on the information incorporated by reference or
provided in this prospectus. We have authorized no one to provide you with
different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.

13
<PAGE>

USE OF PROCEEDS

We will not receive any proceeds from the sale of the notes or the shares of
common stock offered hereby. See "Selling Security Holders."

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of earnings to fixed charges for
each of the last five years and for the nine months ended September 30, 1998
and 1999:

<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
---- ----- ----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (1)(2) ............... -- 11.69 34.02 11.52 31.34 26.39 39.38
</TABLE>
- --------
(1) For the purposes of computing the ratio of earnings to fixed charges,
earnings consist of income (loss) before provision for income taxes plus
fixed charges. Fixed charges consist of interest charges, amortization of
debt expense and discount or premium related to indebtedness, whether
expensed or capitalized, and that portion of rental expense we believe to
be representative of interest.

(2) Net loss before tax of $221,000 was inadequate to cover fixed charges of
$169,000 in 1994.

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BUSINESS

Overview

Our front office applications deliver the first entirely web-based family of
sales, marketing and customer service applications. The Siebel Front Office
allows organizations to manage, synchronize and coordinate all customer
interactions via the web, call center, field and business partner network.
Siebel front office applications fully support ActiveX, Java and HTML and can
be delivered over the Internet or via an organization's intranet, supporting
multiple desktop platforms.

Designed to run within a browser with no previously installed client-side
software, Siebel front office applications allow organizations to dramatically
reduce the cost of ownership for our applications and extend their reach
throughout the organization's network of third-party resellers and service
providers, business partners and customers (the organization's "extraprise").

Organizations configure our applications once and deploy them to mobile
laptop or handheld computers for field sales and service, in call centers, or
via the Internet to resellers and customers.

Our products are also available in industry-specific versions designed for
the pharmaceutical, consumer goods, telecommunications, insurance and finance
vertical markets.

Our customers are comprised of global market leaders, known for delivering
the highest levels of quality in their products and services and for their
commitment to maintaining the highest levels of customer satisfaction. Spanning
diverse industries and locations, our customers represent global organizations
of all sizes.

Through our global strategic alliances with industry-leading organizations,
we continue to enhance our Siebel Front Office product suite, ensuring that we
fully support our customers' technology requirements and industry best
practices today and in the future.

Products

Siebel 99.5, released in June 1999, brings the first entirely web-based
family of front office applications to market. Our web-based architecture and
diverse product offerings, are designed to provide support for sales, marketing
and customer service organizations and extends that support and seamlessly
unites, the organization's extraprise. This extended support not only enhances
communication between the organization and its customers but does so without
dependence on any particular method of communication.

Siebel Sales Enterprise

Siebel Sales Enterprise is designed to allow teams of sales and marketing
professionals to manage sales information throughout the entire sales cycle.
This core application includes the Opportunity Management, Account Management,
Contact Management, Activity Tracking, Message Broadcasting, Siebel Search,
Quotas and Incentives modules.

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Siebel Sales Enterprise options, as of July 31, 1999, include Siebel Quotes,
Siebel Revenue Forecasting, Siebel Product Forecasting, Siebel Proposal
Generator, Siebel Presentations, Siebel Campaigns, Siebel Sales Assistant,
Siebel Target Account Selling, Siebel Customer Service Integration, Siebel
Product Configuration and Siebel Product Configuration Integration Object.

Siebel Service Enterprise

Siebel Service Enterprise enables teams of customer service, sales and
marketing professionals to ensure complete customer satisfaction by using
closed-loop, service request management capabilities. The base application
includes the Service Request Management, Account Management, Asset Tracking,
Contact Management, Activity Tracking, Message Broadcasting, Solution
Management and Siebel Search modules.

Siebel Service Enterprise options, as of July 31, 1999, include Siebel
Service Assistant, Siebel Quality Management and Siebel Mail Agent.

Siebel Field Service

Siebel Field Service extends upon Siebel's customer service solution and
provides field engineers with service functionality for entitlement/contracts
management, integration with other customer facing departments, dispatch and
scheduling, parts management and repair center operations. Siebel Field Service
provides a complete solution for the mobile technician as well as the connected
service agent.

Siebel Field Service options, as of July 31, 1999, include Siebel Service
Inventory, Siebel Shipping/Receiving, Siebel Logistics Manager, Siebel Repair,
Siebel Service Assistant, Siebel Quality Management and Siebel Mail Agent.

Siebel Call Center

Siebel Call Center provides blended Sales and Service functionality that
enables call center agents to provide both sales and customer service
assistance to customers. It accesses the power of Siebel Sales and Service
Enterprise to integrate all available customer information. This allows each
service request to result in additional sales opportunities and provides
integrated sales and service histories for each opportunity. This base
application includes the Opportunity Management, Service Request Management,
Account Management, Asset Tracking, Contact Management, Activity Tracking,
Message Broadcasting, Solution Management and Siebel Search modules.

Siebel Call Center options, as of July 31, 1999, include all of the options
available for both Siebel Sales Enterprise and Siebel Service Enterprise.

Siebel Marketing Enterprise

The Siebel Marketing Enterprise is designed to allow marketing
professionals, sales and service managers and business analysts to monitor
overall company performance and the effectiveness of company programs and
activities. Siebel Marketing Enterprise is designed to extract information from
Siebel Sales Enterprise, Siebel Service Enterprise and Siebel Call Center into
a customer data mart, designed for fast data analysis. Siebel Marketing
Enterprise is designed to include a broad range of pre-built analyses about
customers, sales pipeline, customer service, competitors, campaigns and
products, allowing managers and analysts to drill down into key operational
details. Siebel Marketing Enterprise also includes powerful database marketing
capabilities that allow marketing professionals to immediately develop multi-
level campaigns that are tailored to target specific market segments.

General product options are typically available on any of the Siebel
Enterprise Base applications and as of July 31, 1999, include Siebel Thin
Client, Siebel Encyclopedia, Siebel Office, Siebel Calendar, Siebel Reports,

16
<PAGE>

Siebel Expense Reporting, Siebel Executive Information System, Siebel Incentive
Compensation, Siebel Order Entry, Siebel Contracts, Siebel SmartScript, Siebel
CTI, Siebel CTI Connect, Siebel Remote, Siebel Anywhere, Siebel Workflow
Manager, Siebel Assignment Manager, Siebel Data Quality, Siebel Professional
Services, Siebel Training and Siebel Advanced Search.

Siebel eBusiness

Siebel eBusiness allows organizations to interact directly with customers
and partners over the Internet. Using Siebel eBusiness, organizations can
immediately deploy scalable, secure and web-based applications for acquiring,
growing and retaining customers. Siebel eBusiness Applications include Siebel
eSales, Siebel eMarketing and Siebel eService.

Siebel eSales. Siebel eSales is a web-based application to support
unassisted business-to-business and business-to-consumer selling over the Web.
Siebel eSales includes a visual product catalog, web-based quote generation,
self-service solution configuration and on-line ordering. Siebel eSales
options, as of July 31, 1999, include Siebel eShopping Basket, Siebel eCatalog,
Siebel eConfigurator and Siebel eOrders.

Siebel eMarketing. Siebel eMarketing enables enterprises to create, execute
and assess web-based marketing campaigns. With Siebel eMarketing, enterprises
segment their customers and prospects; target them with a personalized,
automatically generated web- or email-based promotions; and create graphical
reports to assess the effectiveness and return-on-investment of the campaign.

Siebel eService. Through web- and email-based service automation, Siebel
eService allows organizations to manage the entire service process and to
provide world-class customer service and support via the Internet.

Siebel InterActive. Allows organizations to provide customized web-based
personalized briefings to partners and resellers over the web. Briefings
include key customer information including opportunities, accounts and contacts
and on-line content such as news and company profiles.

Industry Applications

Our products are available in industry-specific versions, all with similar
functionality, but each specifically designed for a particular industry.
Examples of our vertical products include:

. Siebel Pharma;

. Siebel Consumer Goods;

. Siebel Communications;

. Siebel Insurance;

. Siebel Finance; and

. Siebel Utilities.

Product Development Expense

During 1996, 1997, 1998 and the nine-month period ended September 30, 1999,
we had product development expenses of $14.8 million, $26.7 million, $44.0
million and $58.3 million, respectively.

Professional Services

We provide implementation consulting and other technical services to license
customers through our worldwide professional services organization. We provide
these services in connection with similar services provided by certain global
alliance partners to provide the customer with the full array of services
necessary to install, integrate, customize and deploy Siebel Front Office
Applications.

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<PAGE>

Customer Support and Training

We offer a comprehensive, multi-tiered, integrated family of global support
programs designed to ensure successful implementation and customer
satisfaction. These programs include maintenance, technical support,
professional services and customer communications, as well as extensive
educational offerings.

Marketing and Sales

In the United States, we market and sell our products and services primarily
through our direct sales and services organization. We have sales and service
professionals in 33 offices throughout the United States. Outside the United
States, we sell our products primarily through our direct sales and services
organization in the countries where we have an office. We have sales and
service professionals in 22 offices outside of the United States. We also
market and sell our products through distributors, primarily in Japan, Latin
America, South Africa and Asia.

Our ability to achieve significant revenue growth in the future will depend
in large part on our success in recruiting and training sufficient direct
sales, technical and customer support personnel and establishing and
maintaining relationships with our strategic partners. We believe the
complexity of our products and the large-scale deployment anticipated by our
customers will require a number of highly trained customer support personnel.

Our marketing and sales strategy includes the following key elements:

Target Large Multi-National Customers in a Broad Range of Industries

Our products are intended to be deployed on a global basis and provide
shared, up-to-date information for field sales, telemarketing, telesales,
marketing, customer service and third party reseller sales organizations. We
have a considerable number of large, multinational companies in our customer
base and intend to leverage our experience and continue to target sales and
marketing activities through our direct sales force to expand worldwide market
acceptance of Siebel Front Office Applications.

Maintain and Extend Advanced Technology Position

The Siebel Front Office Applications utilize advanced information
technology. We employ the use of configurable business objects (BusObjects)
that allow organizations to configure the Siebel application to fit their
unique needs while ensuring a clear and consistent upgrade path for future
releases. Our's web-centric, multi-tiered architecture is designed to enable
large-scale web, mobile and call center deployments with a single object
metadata repository. We have developed patented synchronization capabilities
that allow large numbers of mobile users to intermittently connect and
synchronize their local database with a server database. We have made extensive
use of object oriented component technology with extensible application program
interfaces (APIs) to enable seamless integration to other applications. We
intend to continue to commit substantial resources to maintain and extend our
advanced technology position.

Global Strategic Alliances

Long-term strategic business partnerships with leading technology providers
continue to serve as a core component of our strategy to maintain our
technology and market leadership, consistently deliver superior customer
satisfaction and enable corporate growth.

We have partnered with best-of-class business and systems integrators,
hardware, software, support and training partners to ensure the successful
deployment of Siebel Front Office Applications. These strategic global
partnerships with industry leaders help ensure that we deliver comprehensive
solutions that completely meet our global customers' sales, marketing and
customer service information systems needs.

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Promote Successful Customer Implementations

Our success is dependent upon our customers' successful implementation of
Siebel Front Office Applications. As a result, we actively support the
customer's deployment efforts by providing Internet and telephone technical
support, providing comprehensive instructor-led training and assigning an
account management team that consists of a sales representative, a technical
account manager and an executive sponsor. To objectively measure customer
satisfaction, we employ an independent third-party organization to perform
periodic customer satisfaction audits.

Expand Global Sales Capabilities

We intend to expand our global sales capabilities by increasing the size of
our direct sales organization in major markets and continuing to leverage
distributors in other selected markets. In particular, we plan to expand our
direct sales and marketing activities in Asia, Australia, Europe, South America
and North America. We have operations in Australia, Brazil, Canada, Colombia,
France, Germany, Italy, Japan, Mexico, the Netherlands, Norway, Sweden,
Switzerland, the United Kingdom and the United States and have introduced
localized versions of Siebel Front Office Applications for major European and
Asian markets. We are currently developing other localized versions, which will
be released as market conditions warrant.

During each of 1996, 1997, 1998 and the nine-month period ended September
30, 1999, no individual customer accounted for more than 10% of revenues.
Export license sales for 1996, 1997, 1998 and the nine-month period ended
September 30, 1999 were $7.7 million, $41.8 million, $88.2 million and $100.9
million, respectively. This represented 10%, 27%, 30% and 31% of total license
revenues, respectively.

Competition

The market for our products is intensely competitive, subject to rapid
change and significantly affected by new product introductions and other market
activities of industry participants. Our products are targeted at the emerging
market for sales, marketing and customer information systems. We face
competition from customers' internal development efforts, custom system
integration products, as well as other application software providers that
offer a variety of products and services designed to address this market. We
believe that the market for global front office information systems has
historically not been well served by the application software industry. We
believe that most customer deployments have been the result of large internal
development projects, custom solutions from systems integrators or the
application of personal and departmental productivity tools to the global
enterprise.

Internal Development

Many of our customers and potential customers have in the past attempted to
develop sales, marketing and customer service information systems in-house,
either alone or with the help of systems integrators. Internal information
technology departments have staffed projects to build their own systems
utilizing a variety of tools. In some cases, such internal development projects
have been successful in satisfying the needs of an organization. However, since
software development, support and maintenance are not core competencies of
these organizations in some cases such projects are unsuccessful. The
competitive factors in this area require that we produce a product that
conforms to the customer's information technology standards, scales to meet the
needs of large enterprises, operates globally and costs less than the result of
an internal development effort. There can be no assurance that we will be able
to compete effectively against such internal development efforts.

Custom System Integration Projects

A second source of competition results from system integrators engaged to
build a custom development application. The introduction of a system integrator
typically increases the likelihood of success for the

19
<PAGE>

customer. However, this approach can be expensive as compared to the purchase
of third party products and typically results in a product that has not been
designed to be supported, maintained and enhanced by a focused software
development company. Maintenance and support for the custom code can become
burdensome in future years, with enhancements and modifications being cost-
prohibitive. The competitive factors in this area require that we demonstrate
to the customer the cost savings and advantages of a configurable, upgradeable
and commercially-supported product developed by a dedicated professional
software organization.

We rely on system consulting and system integration firms for implementation
and other customer support services, as well as recommendations of our products
during the evaluation stage of the purchase process. Although we seek to
maintain close relationships with these service providers, many of these third
parties have similar and often more established, relationships with our
competitors. There can be no assurance that these third parties, many of which
have significantly greater resources than us, will not market software products
in competition with us in the future or will not otherwise reduce or
discontinue their relationships with or support of us and our products.

Other Competitors

A large number of personal, departmental and other products exist in the
front office applications market. Companies (Products) such as Silknet
(eBusiness System), Rubric (EMA), Exchange Applications, Portera (ServicePort),
Relavis (OverQuota), Symantec (ACT!), Saratoga Systems (Avenue), Epiphany (e.4
System), Clarify Inc. (ClearSales, ClearSupport), ONYX (Customer Center), IMA
(EDGE), Applix (Enterprise), Dendrite International, Inc. (Force One),
Marketrieve Company (Marketrieve PLUS), Firstwave Technologies, Inc. (Netgain),
Broadvision, Inc. (One-To-One Application System), Oracle Corporation (Oracle
Field Sales Online, Oracle Service and Oracle Call, Front Office Application),
Pivotal Software, Inc. (Relationship), SAP AG (Sales Force Automation
Solution), SalesLogix (SalesLogix), Aurum (BaanFrontOffice) (acquired by Baan
Company N.V.), MEI (UniverSell) and The Vantive Corporation (Vantive
Enterprise) (acquired by PeopleSoft Inc.) are among the many firms in this
market segment. Some of these competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
significantly greater name recognition and a larger installed base of customers
than us. In addition, many competitors have well-established relationships with
current and potential customers of ours. As a result, these competitors may be
able to respond more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the development,
promotion and sale of their products, than we can. We believe that we compete
favorably in this marketplace based on the following competitive advantages:
breadth and depth of functionality, a modern and enduring web-based product
architecture, ability to manage all customer interactions support across
multiple channels, configurable business objects, support for the global
enterprise, scalability allowing support for large user communities and
strategic alignments with industry leaders. In general, we have priced our
products at or above those of its competitors, which pricing we believe is
justified by the scope of functionality delivered and the performance
characteristics afforded by our products.

It is also possible that new competitors or alliances among competitors may
emerge and rapidly acquire significant market share. We also expect that
competition will increase as a result of consolidation in the software
industry. Increased competition may result in price reductions, reduced gross
margins and loss of market share, any of which could materially and adversely
affect our business, operating results and financial condition. There can be no
assurance that we will be able to compete successfully against current and
future competitors or that competitive pressures faced by us will not
materially and adversely affect our business, operating results and financial
condition.

Employees

As of September 30, 1999, we had a total of 2,516 employees, of which 1,974
were based in the United States, 3 in Argentina, 11 in Australia, 1 in Austria,
14 in Brazil, 3 in Colombia, 52 in Canada, 1 in Denmark, 51 in France, 74 in
Germany, 8 in Ireland, 10 in Italy, 30 in Japan, 11 in Malaysia, 7 in Mexico,
23 in the Netherlands, 2 in Norway, 1 in Portugal, 1 in Scotland, 14 in Spain,
4 in Sweden, 8 in Switzerland and 213 in

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<PAGE>

the United Kingdom. Of the total, 901 were engaged in sales and marketing, 418
were in product development, 1,022 were in customer support and professional
services and 175 were in finance, administration and operations. Our future
performance depends in significant part upon the continued service of its key
technical, sales and senior management personnel, particularly Thomas M.
Siebel, our Chairman and Chief Executive Officer, none of whom is bound by an
employment agreement. The loss of the services of one or more of our key
employees could have a material adverse effect on our business, operating
results and financial condition. Our future success also depends on our
continuing ability to attract, train and retain highly qualified technical,
sales and managerial personnel. Competition for such personnel is intense and
there can be no assurance that we will be able to retain our key technical,
sales and managerial personnel in the future. None of our employees are
represented by a labor union. We have not experienced any work stoppages and
consider our relations with our employees to be good.

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<PAGE>

DESCRIPTION OF THE NOTES

The notes were issued under a document called the "Indenture." The Indenture
is a contract between us and Chase Manhattan Bank and Trust Company, National
Association, who will act as trustee (the "Trustee"). The Indenture and the
notes are governed by New York law. Because this section is a summary, it does
not describe every aspect of the notes. This summary is subject to and
qualified in its entirety by reference to all the provisions of the Indenture,
including definitions of certain terms used in the Indenture. For example, in
this section we use capitalized words to signify defined terms that have been
given special meaning in the Indenture. We describe the meaning for only the
more important terms. We also include references in parentheses to certain
Sections of the Indenture. Wherever we refer to particular Sections or defined
terms, those Sections or defined terms are incorporated by reference here. In
this section, references to "Siebel" or "we" or "us" refer solely to Siebel
Systems, Inc. and not its subsidiaries.

General

The notes are general, unsecured obligations of Siebel. The notes are
subordinated, which means that they will rank behind certain of our other
indebtedness as described below. The notes are limited to $300,000,000
aggregate principal amount. Payment of the full principal amount of the notes
will be due on September 15, 2006.

The notes bear interest at the annual rate shown on the front cover of this
prospectus from September 21, 1999. We will pay interest twice a year, on each
March 15 and September 15, beginning March 15, 2000, until the principal is
paid or made available for payment. Interest will be paid to the person in
whose name the note is registered at the close of business on the preceding
March 1 or September 1, as the case may be. Interest payable per $1,000
principal amount of notes for the period from September 21, 1999 to March 15,
2000, will be $26.58.

You may convert the notes into shares of our common stock initially at the
conversion rate stated on the front cover of this prospectus at any time before
the close of business on September 15, 2006, unless the notes have been
previously redeemed or repurchased. The conversion rate may be adjusted as
described below.

We may redeem the notes at our option at any time on or after September 15,
2002, in whole or in part, at the redemption prices set forth below under "--
Optional Redemption," plus accrued and unpaid interest to the redemption date.
If there is a change in control of us, you may have the right to require us to
repurchase your notes as described below under "--Repurchase at Option of
Holders Upon a Change in Control."

Form, Denomination, Transfer, Exchange and Book-Entry Procedures

The notes were issued:

. in fully registered form;

. without interest coupons; and

. in denominations of $1,000 and greater multiples.

The notes are evidenced by two global notes that have been deposited with
the Trustee as custodian for DTC and registered in the name of Cede & Co.
("Cede"), as nominee of DTC. The global note and any notes issued in exchange
for the global note will be subject to restrictions on transfer and will bear a
restrictive legend. Except as set forth below, record ownership of the global
note may be transferred, in whole or in part, only to another nominee of DTC or
to a successor of DTC or its nominee.

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<PAGE>

The global note will not be registered in the name of any person, or
exchanged for notes that are registered in the name of any person, other than
DTC or its nominee unless either of the following occurs:

. DTC notifies us that it is unwilling, unable or no longer qualified to
continue acting as the depositary for the global note; or

. an Event of Default with respect to the notes represented by the global
note has occurred and is continuing.

In those circumstances, DTC will determine in whose names any securities
issued in exchange for the global note will be registered.

DTC or its nominee will be considered the sole owner and holder of the
global note for all purposes and as a result:

. you cannot receive notes registered in your name if they are represented
by the global note;

. you cannot receive certificated (physical) notes in exchange for your
beneficial interest in the global notes;

. you will not be considered to be the owner or holder of the global note
or any note it represents for any purpose; and

. all payments on the global note will be made to DTC or its nominee.

The laws of some jurisdictions require that certain kinds of purchasers (for
example, certain insurance companies) can only own securities in definitive
(certificated) form. These laws may limit your ability to transfer your
beneficial interests in the global note to these types of purchasers.

Only institutions (such as a securities broker or dealer) that have accounts
with DTC or its nominee (called "participants") and persons that may hold
beneficial interests through participants can own a beneficial interest in the
global note. The only place where the ownership of beneficial interests in the
global note will appear and the only way the transfer of those interests can be
made will be on the records kept by DTC (for their participants' interests) and
the records kept by those participants (for interests of persons held by
participants on their behalf).

Secondary trading in bonds and notes of corporate issuers is generally
settled in clearing-house (that is, next-day) funds. In contrast, beneficial
interests in a global note usually trade in DTC's same-day funds settlement
system and settle in immediately available funds. We make no representations as
to the effect that settlement in immediately available funds will have on
trading activity in those beneficial interests.

We will make cash payments of interest on and principal of and the
redemption or repurchase price of, the global note, as well as any payment of
Liquidated Damages, to Cede, the nominee for DTC, as the registered owner of
the global note. We will make these payments by wire transfer of immediately
available funds on each payment date.

We have been informed that, with respect to any cash payment of interest on,
principal of, or the redemption or repurchase price of, the global note, as
well as any payment of Liquidated Damages, DTC's practice is to credit
participants' accounts on the payment date with payments in amounts
proportionate to their respective beneficial interests in the notes represented
by the global note as shown on DTC's records, unless DTC has reason to believe
that it will not receive payment on that payment date. Payments by participants
to owners of beneficial interests in notes represented by the global note held
through participants will be the responsibility of those participants, as is
now the case with securities held for the accounts of customers registered in
"street name."

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<PAGE>

We will send any redemption notices to Cede. We understand that if less than
all the notes are being redeemed, DTC's practice is to determine by lot the
amount of the holdings of each participant to be redeemed.

We also understand that neither DTC nor Cede will consent or vote with
respect to the notes. We have been advised that under its usual procedures, DTC
will mail an "omnibus proxy" to us as soon as possible after the record date.
The omnibus proxy assigns Cede's consenting or voting rights to those
participants to whose accounts the notes are credited on the record date
identified in a listing attached to the omnibus proxy.

Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge the
interest to persons or entities that do not participate in the DTC book-entry
system, or otherwise take actions in respect of that interest, may be affected
by the lack of a physical certificate evidencing its interest.

DTC has advised us that it will take any action permitted to be taken by a
holder of notes (including the presentation of notes for exchange) only at the
direction of one or more participants to whose account with DTC interests in
the global note are credited and only in respect of such portion of the
principal amount of the notes represented by the global note as to which such
participant has, or participants have, given such direction.

DTC has also advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Certain of such participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.

The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to
beneficial interests in the global note. We and the Trustee have no
responsibility or liability for any aspect of DTC's or any participants'
records relating to beneficial interests in the global note, including for
payments made on the global note and we and the Trustee are not responsible for
maintaining, supervising or reviewing any of those records.

Conversion Rights

You may, at your option, convert any portion of the principal amount of a
note that is an integral multiple of $1,000 into shares of our common stock at
any time prior to the close of business on the maturity date, unless the note
has been previously redeemed or repurchased, at a conversion rate equal to
21.4442 shares per $1,000 principal amount of notes. This conversion rate is
equivalent to a conversion price of approximately $46.64 per share. The
conversion rate is subject to adjustment as described below. Your right to
convert a note called for redemption or delivered for repurchase will terminate
at the close of business on the business day immediately preceding the
redemption date or repurchase date for that note, unless we default in making
the payment due upon redemption or repurchase.

The holder of a note can convert the note by delivering the note at the
Corporate Trust Office of the Trustee, accompanied by a duly signed and
completed notice of conversion, a copy of which may be obtained from the
Trustee. In the case of a global note, DTC will effect the conversion upon
notice from the holder of a beneficial interest in the global note in
accordance with DTC's rules and procedures. The conversion date will be the
date on which the note and the duly signed and completed notice of conversion
are so delivered. As promptly as practicable on or after the conversion date,
we will issue and deliver to the Trustee a certificate or certificates for the
number of full shares of common stock issuable upon conversion, together with
payment in

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<PAGE>

lieu of any fraction of a share. The certificates will be sent by the Trustee
to the Conversion Agent for delivery to the holder of the note being converted.
The shares of common stock issuable upon conversion of the notes will be fully
paid and nonassessable and will also rank equally with other shares of our
common stock outstanding from time to time.

If you surrender a note for conversion on a date that is not an Interest
Payment Date, you will not be entitled to receive any interest for the period
from the preceding Interest Payment Date to the date of conversion, except as
described below. If you are a holder of a note on a Regular Record Date,
including a note that is subsequently surrendered for conversion after the
Regular Record Date, you will receive the interest payable on such note on the
next Interest Payment Date. Thus to correct for this resulting overpayment of
interest, any note surrendered for conversion during the period from the close
of business on a Regular Record Date to the opening of business on the next
Interest Payment Date will be required to be accompanied by payment of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of notes being surrendered for conversion. However, you will
not be required to make that payment if you are converting a note, or a portion
of a note, that we have called for redemption, or that you are entitled to
require us to repurchase from you, if your conversion right would terminate
because of the redemption or repurchase between the Regular Record Date and the
close of business on the next Interest Payment Date.

No other payment or adjustment for interest, or for any dividends on our
common stock, will be made upon conversion. If you receive common stock upon
conversion of a note, you will not be entitled to receive any dividends payable
to holders of common stock as of any record date before the close of business
on the conversion date. We will not issue fractional shares upon conversion of
notes. Instead, we will pay an amount in cash based on the market price of the
common stock at the close of business on the conversion date.

If you deliver a note for conversion, you will not be required to pay any
taxes or duties in respect of the issue or delivery of common stock on
conversion. However, we are not required to pay any tax or duty that may be
payable in respect of any transfer involved in the issue or delivery of the
common stock in a name other than that of the holder of the note. We will not
issue or deliver certificates representing shares of common stock unless the
person requesting the issuance or delivery has paid to us the amount of any
such tax or duty or has established to our satisfaction that no such tax or
duty is payable.

The conversion rate is subject to adjustment if:

(1) there is a dividend or other distribution payable in common stock on
shares of our capital stock;

(2) we issue to all holders of common stock rights, options or warrants
entitling them to subscribe for or purchase common stock at less than
the then current market price, calculated as described in the
Indenture, of our common stock; however, if those rights, options or
warrants are only exercisable upon the occurrence of certain triggering
events, then the conversion rate will not be adjusted until the
triggering events occur;

(3) we subdivide, reclassify or combine our common stock;

(4) we distribute to all holders of our common stock evidences of our
indebtedness, shares of capital stock, cash or assets, including
securities, but excluding:

. those dividends, rights, options, warrants and distributions referred
to in paragraphs (1) and (2) above;

. dividends and distributions paid exclusively in cash; and

. distributions upon mergers or consolidations;

(5) we make a distribution consisting exclusively of cash, (excluding any
cash portion of distributions referred to in paragraph (4) above, or
cash distributed upon a merger or consolidation applicable as discussed
below) to all holders of our common stock if: the aggregate amount of
the distribution

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<PAGE>

combined together with (A) other such all-cash distributions made within
the preceding 12 months in respect of which no adjustment has been made
and (B) any cash and the fair market value of other consideration
payable in respect of any tender offer by us or any of our subsidiaries
for our common stock concluded within the preceding 12 months in respect
of which no adjustment has been made, exceeds 10% of our market
capitalization, being the product of the Current Market Price per share
of our common stock on the record date for such distribution and the
number of shares of common stock then outstanding; or

(6) the successful completion of a tender offer made by us or any of our
subsidiaries for our common stock that involves aggregate consideration
that, together with (A) any cash and other consideration payable in a
tender offer by us or any of our subsidiaries for our common stock
expiring within the 12 months preceding the expiration of such tender
offer in respect of which no adjustment has been made and (B) the
aggregate amount of any such all-cash distributions referred to in
paragraph (5) above to all holders of common stock within the 12 months
preceding the expiration of such tender offer in respect of which no
adjustments have been made, exceeds 10% of our market capitalization on
the expiration of such tender offer.

We reserve the right to make such increases in the conversion rate in
addition to those required by the provisions described above as we may
consider to be advisable so that any event treated for United States federal
income tax purposes as a dividend of stock or stock rights will not be taxable
to the recipients. No adjustment of the conversion rate will be required to be
made until the cumulative adjustments amount to 1.0% or more of the conversion
rate. We will compute any adjustments to the conversion rate and give notice
to the holders of any such adjustments.

If we merge or consolidate with another person or sell or transfer all or
substantially all of our assets, each note then outstanding will, without the
consent of the holder of any note, become convertible only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
common stock into which the note was convertible immediately prior to the
merger, consolidation or sale. This calculation will be made based on the
assumption that the holder of common stock failed to exercise any rights of
election that the holder may have to select a particular type of
consideration. The adjustment will not be made for a merger that does not
result in any reclassification, conversion, exchange or cancellation of our
common stock.

We may, from time to time, increase the conversion rate by any amount for
any period of at least 20 days if our Board of Directors has determined that
such increase would be in our best interests. If our Board of Directors makes
such a determination, it will be conclusive. We will give holders of notes at
least 15 days' notice of such an increase in the conversion rate. No such
increase will be taken into account for purposes of determining whether the
closing price of the common stock exceeds the conversion price by 105% in
connection with an event which otherwise would be a "Change in Control," as
defined below.

If at any time we make a distribution of property to our stockholders that
would be taxable to such stockholders as a dividend for United States federal
income tax purposes, e.g., distributions of evidences of indebtedness or
assets of Siebel, but generally not stock dividends on common stock or rights
to subscribe for common stock and, pursuant to the anti-dilution provisions of
the Indenture, the number of shares into which notes are convertible is
increased, that increase may be deemed for United States federal income tax
purposes to be the payment of a taxable dividend to holders of notes. See
"Material United States Federal Income Tax Consequences--U.S. Holders."

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<PAGE>

Subordination

The notes are subordinated and, as a result, the payment of the principal,
any premium and interest on the notes, including amounts payable on any
redemption or repurchase, will be subordinated to the prior payment in full of
all of our Senior Debt. "Senior Debt" means the principal of and premium, if
any and interest, including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim
for post-petition interest is allowable as a claim in any such proceeding, on
and all fees and other amounts payable in connection with, the following,
whether absolute or contingent, secured or unsecured, due or to become due,
outstanding on the date of the Indenture or thereafter created, incurred or
assumed:

. all our indebtedness evidenced by a credit or loan agreement, note, bond,
debenture or other similar instrument;

. all our obligations for money borrowed;

. all our obligations as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting
principles;

. all our obligations under interest rate and currency swaps, caps, floors,
collars, hedge agreements, forward contracts or similar agreements or
arrangements;

. all our obligations with respect to letters of credit, bankers'
acceptances and similar facilities, including related reimbursement
obligations;

. all our obligations issued or assumed as the deferred purchase price of
property or services, but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business;

. all our obligations of the type referred to above of another person and
all dividends of another person, the payment of which, in either case, we
have assumed or guaranteed, or for which we are responsible or liable,
directly or indirectly, jointly or severally, as obligor, guarantor or
otherwise, or which is secured by a lien on our property; and

. renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange for
any indebtedness or obligation described in the bullets above.

Senior Debt will not include any indebtedness or obligation if the terms of
the indebtedness or obligation, or the terms of the instrument under which the
indebtedness or obligation is issued, expressly provide that the indebtedness
or obligation is not superior in right of payment to the notes. In addition,
Senior Debt will not include any particular indebtedness or obligation that we
may owe to any of our direct or indirect subsidiaries.

We will not make any payment on account of principal, premium or interest on
the note, or redemption or repurchase of the notes, if either of the following
occurs:

. we default in our obligations to pay principal, premium, interest or
other amounts on our Senior Debt, including a default under any
redemption or repurchase obligation and the default continues beyond any
grace period that we may have to make those payments; or

. an "event of default" occurs and is continuing on any Designated Senior
Debt, as defined below and (1) the event of default permits the holders
of the Designated Senior Debt to accelerate its maturity and (2) the
Trustee has received a notice (a "Payment Blockage Notice") of the
default from a holder of the Designated Senior Debt.

If payments of the notes have been blocked by a payment default on Senior
Debt, payments on the notes may resume when the payment default has been cured
or waived. If payments on the notes have been blocked by a nonpayment default,
payments on the notes may resume on the earlier of (1) the date the nonpayment
default is cured or waived or (2) 179 days after the Payment Blockage Notice is
received.

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<PAGE>

No nonpayment default that existed on the day a Payment Blockage Notice was
delivered to the Trustee can be used as the basis for any subsequent Payment
Blockage Notice. In addition, once a holder of Designated Senior Debt has
blocked payment on the notes by giving a Payment Blockage Notice, no new period
of payment blockage can be commenced until both of the following are satisfied:

. 365 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice; and

. all scheduled payments of principal, any premium and interest on the
notes that have come due have been paid in full in cash.

"Designated Senior Debt" means our obligations under any particular Senior
Debt in which the instrument creating or evidencing the debt, or the assumption
or guarantee of the debt, or related agreements or documents to which we are a
party, expressly provides that the indebtedness will be "Designated Senior
Debt" for purposes of the Indenture. That instrument, agreement or other
document may place limitations and conditions on the right of that Senior Debt
to exercise the rights of Designated Senior Debt.

In addition, upon any acceleration of the principal due on the notes as a
result of an Event of Default or payment or distribution of our assets to
creditors upon any dissolution, winding up, liquidation or reorganization,
whether voluntary or involuntary, marshaling of assets, assignment for the
benefit of creditors, or in bankruptcy, insolvency, receivership or other
similar proceedings, all principal, premium, interest and other amounts due on
all Senior Debt must be paid in full before you will be entitled to receive any
payment. Because of this subordination, in the event of insolvency, our
creditors who are holders of Senior Debt may recover more, ratably, than you
would and this subordination may reduce or eliminate payments to you. As of
September 30, 1999, we had approximately $50.3 million of Senior Debt
outstanding.

In addition, the notes will be "structurally subordinated" to all
indebtedness and other liabilities, including trade payables and lease
obligations, of our subsidiaries. This occurs because any right we have to
receive any assets of our subsidiaries upon their liquidation or reorganization
and the consequent right of the holders of the notes to participate in those
assets, will be effectively subordinated to the claims of that subsidiary's
creditors, including trade creditors, except to the extent that we are
recognized as a creditor of the subsidiary, in which case our claims would
still be subordinate to any security interest in the assets of the subsidiary
and any indebtedness of the subsidiary senior to that held by us.

The Indenture does not limit our ability or the ability of any of our
subsidiaries to incur indebtedness, including Senior Debt.

Optional Redemption

On and after September 15, 2002, we may redeem the notes, in whole or in
part, at our option, at the redemption prices specified below. The redemption
price, expressed as a percentage of principal amount, is as follows for the 12-
month periods beginning on September 15 of the following years:

<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002..................................................... 103.14%
2003..................................................... 102.36%
2004..................................................... 101.57%
2005..................................................... 100.79%
</TABLE>

and 100% of the principal amount on and after September 15, 2006. In each case
we will also pay accrued interest to the redemption date. The Indenture
requires us to give notice of redemption not more than 60 and not less than 30
days before the redemption date.

No "sinking fund" is provided for the notes, which means that the Indenture
does not require us to redeem or retire the notes periodically.

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<PAGE>

Repurchase at Option of Holders upon a Change in Control

If a Change in Control, as defined below, occurs, you will have the right,
at your option, to require us to repurchase all of your notes not called for
redemption, or any portion of the principal amount of your notes that is equal
to $5,000 or any greater integral multiple of $1,000. The price we are required
to pay is 100% of the principal amount of the notes to be repurchased, together
with interest accrued to the repurchase date.

At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in our common stock, valued at 95% of the average of the
closing sales prices of the common stock for the five trading days immediately
preceding and including the third day prior to the repurchase date. We may only
pay the repurchase price in common stock if we satisfy conditions provided in
the Indenture.

Within 30 days after the occurrence of a Change in Control, we are obligated
to give you notice of the Change in Control and of the repurchase right arising
as a result of the Change in Control. We must also deliver a copy of this
notice to the Trustee. To exercise the repurchase right, you must deliver, on
or before the 30th day after the date of our notice, irrevocable written notice
to the Trustee of your exercise of your repurchase right, together with the
notes with respect to which that right is being exercised. We are required to
make the repurchase on the date that is 45 days after the date of our notice.

A Change in Control will be deemed to have occurred at the time after the
notes are originally issued that any of the following occurs:

(1) any person, including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Exchange Act, acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of our
capital stock entitling that person to exercise 50% or more of the
total voting power of all shares of our capital stock entitled to vote
generally in elections of directors; however, any acquisition by us,
any of our subsidiaries or any of our employee benefit plans will not
trigger this provision;

(2) we consolidate with or merge with or into any other person or another
person merges into us, except if the transaction satisfies any of the
following:

. the holders of 50% or more of the total voting power of all shares of
our capital stock entitled to vote generally in elections of
directors immediately prior to the transaction have, directly or
indirectly, 50% or more of the total voting power of all shares of
capital stock of the continuing or surviving corporation entitled to
vote generally in elections of directors of the continuing or
surviving corporation immediately after the transaction;

. the transaction is a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of our capital stock; or

. the transaction is a merger effected only to change our jurisdiction
of incorporation and it results in a reclassification, conversion or
exchange of outstanding shares of our common stock only into shares
of common stock of us or another corporation; or

(3) we convey, transfer, sell, lease or otherwise dispose of all or
substantially all of our assets to another person.

However, a Change in Control will not be deemed to have occurred if the
closing sales price per share of our common stock for any five trading days
within the period of 10 consecutive trading days ending immediately after the
later of the Change in Control or the public announcement of the Change in
Control, in the case of a Change in Control relating to an acquisition of
capital stock, or the period of 10 consecutive trading days ending immediately
before the Change in Control, in the case of Change in Control relating to a
merger, consolidation or asset sale, equals or exceeds 105% of the conversion
price of the notes in effect on each of those trading days.

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For purposes of these provisions:

. the conversion price is equal to $1,000 divided by the conversion rate;

. whether a person is a "beneficial owner" will be determined in accordance
with Rule 13d-3 under the Exchange Act; and

. ""Person'' includes any syndicate or group that would be deemed to be a
"person" under Section 13(d)(3) of the Exchange Act.

Rule 13e-4 under the Exchange Act requires the dissemination of prescribed
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to you. We will
comply with this rule to the extent it applies at that time.

We may, to the extent permitted by applicable law, at any time purchase
notes in the open market or by tender at any price or by private agreement. Any
note that we so purchase may, to the extent permitted by applicable law, be
reissued or resold or may, at our option, be surrendered to the Trustee for
cancellation. Any notes surrendered may not be reissued or resold and will be
canceled promptly.

The definition of Change in Control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of "all or substantially all"
of our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, your ability to require
us to repurchase your notes as a result of conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be uncertain.

The foregoing provisions would not necessarily provide you with protection
if we are involved in a highly leveraged or other transaction that may
adversely affect you.

Our ability to repurchase notes upon the occurrence of a Change in Control
is subject to important limitations. Some of the events constituting a Change
in Control could cause an event of default under, or be prohibited or limited
by, the terms of future Senior Debt. As a result, unless we were to obtain a
waiver, a repurchase of the notes could be prohibited under the subordination
provisions of the Indenture until that Senior Debt was paid in full. Further,
we cannot assure you that we would have the financial resources, or would be
able to arrange financing, to pay the repurchase price for all the notes that
might be delivered by holders of notes seeking to exercise the repurchase
right. If we were to fail to repurchase the notes when required following a
Change in Control, an Event of Default under the Indenture would occur, whether
or not such repurchase is permitted by the subordination provisions of the
Indenture. Any such default may, in turn, cause a default under our Senior
Debt. See "--Subordination."

Mergers and Sales of Assets

We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us, unless each of the following requirements
is met:

. the person formed by the consolidation or into or with which we merge or
the person to which our properties and assets are conveyed, transferred,
sold or leased, is a corporation, limited liability company, partnership
or trust organized and existing under the laws of the United States, any
State or the District of Columbia and, if other than us, shall expressly
assume the due and punctual payment of the principal of, any premium and
interest on the notes and the performance of our other covenants under
the Indenture; and

. immediately after giving effect to that transaction, no Event of Default
and no event that, after notice or lapse of time or both, would become an
Event of Default, shall have occurred and be continuing.

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Events of Default

The following will be Events of Default under the Indenture:

. we fail to pay principal of or any premium on any note when due, whether
or not the payment is prohibited by the subordination provisions of the
Indenture;

. we fail to pay any interest on any note when due and that default
continues for 30 days, whether or not the payment is prohibited by the
subordination provisions of the Indenture;

. we fail to give the notice that we are required to give in the event of a
Change in Control, whether or not the notice is prohibited by the
subordination provisions of the Indenture;

. we fail to perform any other covenant in the Indenture and that failure
continues for 60 days after written notice to us by the Trustee or the
holders of at least 25% in aggregate principal amount of outstanding
notes;

. failure to pay when due the principal of, or acceleration of, any
indebtedness for money borrowed by us or any of our subsidiaries in
excess of $25 million if the indebtedness is not discharged, or the
acceleration is not annulled, within 30 days after written notice to us
by the Trustee or the holders of at least 25% in aggregate principal
amount of the outstanding notes; and

. events of bankruptcy, insolvency or reorganization specified in the
Indenture.

Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such
holders shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, the holders of a majority in
aggregate principal amount of the outstanding notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee.

If an Event of Default, other than an Event of Default arising from events
of bankruptcy, insolvency or reorganization, occurs and is continuing, either
the Trustee or the holders of at least 25% in principal amount of the
outstanding notes may accelerate the maturity of all notes. After acceleration,
but before a judgment or decree based on acceleration, the holders of a
majority in aggregate principal amount of outstanding notes may, under
circumstances set forth in the Indenture, rescind the acceleration if all
Events of Default, other than the nonpayment of principal of the notes which
have become due solely because of the acceleration, have been cured or waived
as provided in the Indenture. If an Event of Default arising from events of
bankruptcy, insolvency or reorganization occurs and is continuing, then the
principal of and accrued interest on, all of the notes will automatically
become immediately due and payable without any declaration or other act on the
part of the holders of the notes or the Trustee.

Before you may take any action to institute any proceeding relating to the
Indenture, or to appoint a receiver or a trustee, or for any other remedy, each
of the following must occur:

. you must have given the Trustee written notice of a continuing Event
of Default;

. the holders of at least 25% of the aggregate principal amount of all
outstanding notes must make a written request of the Trustee to take
action because of the default and must have offered reasonable
indemnification to the Trustee against the cost, liabilities and
expenses of taking such action; and

. the Trustee must not have taken action for 60 days after receipt of
such notice and offer of indemnification.

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These limitations do not apply to a suit for the enforcement of payment of
the principal of, or any premium or interest on, a note, or the repurchase
price payable for a note, on or after the due dates for such payments, or of
the right to convert the note in accordance with the Indenture.

We will furnish to the Trustee annually a statement as to our performance of
our obligations under the Indenture and as to any default in performance.

Modification and Waiver

The consent of the holders of a majority in principal amount of the
outstanding notes affected is required to make a modification or amendment to
the Indenture. However, a modification or amendment requires the consent of the
holder of each outstanding note affected if it would:

. change the stated maturity of the principal or interest of a note;

. reduce the principal amount, any premium or interest on any note;

. reduce the amount payable upon a redemption or mandatory repurchase;

. modify the provisions with respect to the repurchase rights of holders of
notes in a manner adverse to the holders;

. change the place or currency of payment on a note;

. impair the right to institute suit for the enforcement of any payment on
any note;

. modify the subordination provisions in a manner that is adverse to the
holders of the notes;

. adversely affect the right to convert the notes;

. modify our obligation to deliver information required under Rule 144A to
permit resales of the notes and common stock issued upon conversion of
the notes if we cease to be subject to the reporting requirements under
the Exchange Act;

. reduce the percentage of holders whose consent is needed to modify or
amend the Indenture;

. reduce the percentage of holders whose consent is needed to waive
compliance with certain provisions of the Indenture or to waive certain
defaults; or

. modify the provisions dealing with modification and waiver of the
Indenture.

The holders of a majority in principal amount of the outstanding notes must
consent to waive compliance by us with certain restrictive provisions of the
Indenture. The holders of a majority in principal amount of the outstanding
notes may waive any past default, except a default in the payment of principal,
any premium, interest or the repurchase price.

Notes will not be considered outstanding if money for their payment or
redemption has been deposited or set aside in trust for the holders.

We will generally be entitled to set any day as a record date for the
purpose of determining the holders of outstanding notes that are entitled to
take any action under the Indenture. In limited circumstances, the Trustee will
be entitled to set a record date for action by holders. If a record date is set
for any action to be taken by holders, such action may be taken only by persons
who are holders of outstanding notes on the record date and must be taken
within 180 days following the record date or such other period as we may
specify (or as the Trustee may specify, if it set the record date). This period
may be shortened or lengthened (but not beyond 180 days) from time to time.

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Registration Rights

We entered into a registration rights agreement with the initial purchasers
of the notes (the "Registration Rights Agreement"). In the Registration Rights
Agreement we agreed, for the benefit of the holders of the notes and the shares
of common stock issuable upon conversion of the notes (together, the
"Registrable Securities") that we will, at our expense:

. file with the Commission, within 90 after the date the notes were
originally issued, a shelf registration statement covering resales of the
Registrable Securities;

. use our reasonable efforts to cause the shelf registration statement to
be declared effective under the Securities Act within 180 days after the
date the notes were originally issued, subject to our right to postpone
having the shelf registration statement declared effective for an
additional 90 days in limited circumstances; and

. use our reasonable efforts to keep effective the shelf registration
statement until two years after the date it is declared effective or, if
earlier, until there are no outstanding Registrable Securities (the
"Effectiveness Period").

We are permitted to suspend the use of the prospectus that is part of the
shelf registration statement in connection with sales of Registrable Securities
during prescribed periods of time for reasons relating to pending corporate
developments, public filings with the Commission and other events. The periods
during which we can suspend the use of the prospectus may not, however, exceed
a total of 45 days in any 90 day period or a total of 90 days in any 365-day
period. We will provide to each holder of Registrable Securities copies of the
prospectus that is a part of the shelf registration statement, notify each
holder when the shelf registration statement has become effective and take
certain other actions required to permit public resales of the Registrable
Securities.

We may, upon written notice to all the holders of notes, postpone having the
shelf registration statement declared effective for a reasonable period not to
exceed 90 days if we possess material non-public information the disclosure of
which would have a material adverse effect on us and our subsidiaries taken as
a whole. Notwithstanding any such postponement, additional interest
("Liquidated Damages") will accrue on the notes if either of the following
events ("Registration Defaults") occurs:

. on or prior to 90 days following the date the notes were originally
issued, a shelf registration statement has not been filed with the
Commission; or

. on or prior to 180 days following the date the notes were originally
issued, the shelf registration statement is not declared effective.

In that case, Liquidated Damages will accrue on the notes from and including
the day following the Registration Default to but excluding the day on which
the Registration Default has been cured. Liquidated Damages will be paid semi-
annually in arrears, with the first semi-annual payment due on the first
Interest Payment Date following the date on which the Liquidated Damages begin
to accrue.

The rates at which Liquidated Damages will accrue will be as follows:

. 0.25% of the principal amount per annum to and including the 90th day
after the Registration Default; and

. 0.5% of the principal amount per annum from and after the 91st day after
the Registration Default.

In addition, the interest rate on the notes will be increased if:

. the shelf registration statement ceases to be effective, or we otherwise
prevent or restrict holders of Registrable Securities from making sales
under the shelf registration statement, for more than 45 days, whether or
not consecutive, during any 90-day period; or

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<PAGE>

. the shelf registration statement ceases to be effective, or we otherwise
prevent or restrict holders of Registrable Securities from making sales
under the shelf registration statement, for more than 90 days, whether or
not consecutive, during any 12-month period.

In either event, the interest rate on the notes will increase by an
additional 0.50% per annum from the 46th day of the 90-day period or the 91st
day of the 12-month period. The increased rate will continue until the earlier
of the following:

. the time the shelf registration statement again becomes effective or the
holders of Registrable Securities are again able to make sales under the
shelf registration statement, depending on which event triggered the
increase in interest rate; or

. the time the Effectiveness Period expires.

A holder who elects to sell any Registrable Securities pursuant to the shelf
registration statement will be required to be named as a selling security
holder in the related prospectus, may be required to deliver a prospectus to
purchasers, may be subject to certain civil liability provisions under the
Securities Act in connection with those sales and will be bound by the
provisions of the Registration Rights Agreement that apply to a holder making
such an election, including certain indemnification provisions.

We have mailed the Notice and Questionnaire to the holders of Registrable
Securities not less than 30 calendar days prior to the time we intend in good
faith to have the shelf registration statement declared effective (the
"Effective Time").

No holder of Registrable Securities will be entitled to be named as a
selling security holder in the shelf registration statement as of the Effective
Time and no holder of Registrable Securities will be entitled to use the
prospectus forming a part of the shelf registration statement for offers and
resales of Registrable Securities at any time, unless such holder has returned
a completed and signed Notice and Questionnaire to us by the deadline for
response set forth in the Notice and Questionnaire. Holders of Registrable
Securities will, however, have at least 28 calendar days from the date on which
the Notices and Questionnaire was first mailed to them to return a completed
and signed Notice and Questionnaire to us.

Beneficial owners of Registrable Securities who have not returned a Notice
and Questionnaire by the questionnaire deadline described above may receive
another Notice and Questionnaire from us upon request. Following its receipt of
a completed and signed Notice and Questionnaire, we will include the
Registrable Securities covered thereby in the shelf registration statement,
subject to restrictions on the timing and number of supplements to the shelf
registration statement provided in the Registration Rights Agreement.

We agreed in the Registration Rights Agreement to use our reasonable efforts
to cause the shares of common stock issuable upon conversion of the notes to be
quoted on the Nasdaq National Market. However, if the common stock is not then
quoted on the Nasdaq National Market, we will use our reasonable efforts to
cause the shares of common stock issuable upon conversion of the common stock
to be quoted or listed on whichever market or exchange the common stock is then
quoted or listed, upon effectiveness of the shelf registration statement.

This summary of certain provisions of the Registration Rights Agreement is
not complete and is subject to and qualified in its entirety by reference to,
all the provisions of the Registration Rights Agreement, a copy of which will
be made available to beneficial owners of the notes upon request to us.

Notices

We will give notice to holders of the notes by mail to the addresses of the
holders as they appear in the Security Register. Notices will be deemed to have
been given on the date of mailing.

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Replacement of Notes

We will replace, at the expense of the holders, notes that become mutilated,
destroyed, stolen or lost upon delivery to the Trustee of the mutilated notes
or evidence of the loss, theft or destruction thereof satisfactory to us and
the Trustee. In the case of a lost, stolen or destroyed note, indemnity
satisfactory to the Trustee and us may be required at the expense of the holder
of the note before a replacement note will be issued.

The Trustee

The Trustee for the holders of notes issued under the Indenture will be
Chase Manhattan Bank and Trust Company, National Association. If an Event of
Default shall occur and shall not be cured, the Trustee will be required to use
the degree of care of a prudent person in the conduct of his own affairs in the
exercise of its powers. Subject to these provisions, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request of any holders of notes, unless they shall have offered to the
Trustee reasonable security or indemnity.

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DESCRIPTION OF CAPITAL STOCK

We are authorized to issue up to 802,000,000 shares, $0.001 par value,
divided into two classes designated "common stock" and "preferred stock." Of
such shares authorized, 800,000,000 shares are designated as common stock and
2,000,000 are designated preferred stock.

Common Stock

As of January 24, 2000, there were 194,876,256 shares of common stock
outstanding that were held of record by approximately 733 record holders.

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. The holders of
common stock are not entitled to cumulative voting rights with respect to the
election of directors and as a consequence, minority stockholders will not be
able to elect directors on the basis of their votes alone. Subject to
preferences that may be applicable to any then outstanding shares of preferred
stock, holders of common stock are entitled to receive ratably such dividends
as may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of us,
holders of the common stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
then outstanding preferred stock. Holders of common stock have no preemptive
rights and no right their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock.

Preferred Stock

Pursuant to our Certificate of Incorporation, the Board of Directors has the
authority, without further action by the stockholders, to issue up to 2,000,000
shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the
designation of such series, without any further vote or action by stockholders.
The issuance of preferred stock could adversely affect the voting power of
holders of common stock and the likelihood that such holders will receive
dividend payments and payments upon liquidation and could have the effect of
delaying, deferring or preventing a change in control of us. We have no present
plan to issue any shares of preferred stock.

Registration Rights

The holders of 27,301,210 (as of January 24, 2000 ) shares of common stock
are entitled to certain rights with respect to the registration of such shares
under the Securities Act pursuant to the Restated Investor Rights Agreement
among such holders and Siebel, dated December 1, 1995, as amended. Under the
terms of the agreement, if we propose to register any of our securities under
the Securities Act, either for our own account or for the account of other
security holders exercising registration rights, such holders are entitled to
notice of such registration and are entitled, subject to certain limitations,
to include shares therein. The holders may also require us to file a
registration statement under the Securities Act with respect to their shares
and we are required to use our best efforts to effect two such registrations.
Furthermore, the holders may require us to register their shares on Form S-3.
Generally, we are required to bear all registration and selling expenses
incurred in connection with any such registrations. These rights are subject to
certain conditions and limitations, among them the right of the underwriters of
an offering to limit the number of shares included in such registration. Such
registration rights terminate on September 19, 2003. The rights of the holders
under the agreement may be waived with the written consent of the holders of at
least a majority of the shares registrable thereunder. Such rights have been
waived in connection with this offering.

Anti-Takeover Effects of Provisions of Our Charter and Bylaws

Our certificate of incorporation provides for the Board of Directors to be
divided into three classes, with staggered three-year terms. As a result, only
one class of directors will be elected at each annual meeting of

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stockholders, with the other classes continuing for the remainder of their
respective three-year terms. Stockholders have no cumulative voting rights and
the stockholders representing a majority of the shares of common stock
outstanding are able to elect all of the directors.

Our certificate of incorporation also requires that (a) any action required
or permitted to be taken by stockholders must be effected at a duly called
annual or special meeting of the stockholders and may not be effected by a
consent in writing and (b) the stockholders may amend our bylaws or adopt new
bylaws, only by the affirmative vote of 2/3 of the outstanding voting
securities. In addition, special meetings of the stockholders may be called
only by the Board of Directors, the Chairman of the Board or the Chief
Executive Officer. These provisions may have the effect of delaying, deferring
or preventing a change in control of us.

The classification of the Board of Directors and lack of cumulative voting
will make it more difficult for our existing stockholders to replace the Board
of Directors as well as for another party to obtain control of us by replacing
the Board of Directors. Since the Board of Directors has the power to retain
and discharge officers of Siebel, these provisions could also make it more
difficult for existing stockholders or another party to effect a change in
management.

These and other provisions may have the effect of deterring hostile
takeovers or delaying changes in control or management of us. These provisions
are intended to enhance the likelihood of continued stability in the
composition of the Board of Directors and in the policies of the Board of
Directors and to discourage certain types of transactions that may involve an
actual or threatened change in control. These provisions are designed to reduce
our vulnerability to an unsolicited acquisition proposal. The provisions also
are intended to discourage certain tactics that may be used in proxy rights.
However, such provisions could have the effect of discouraging others from
making tender offers for our shares and, as a consequence, they also may
inhibit fluctuations in the market price of our shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect
of preventing changes in our management.

Section 203 of the Delaware General Corporation Law

We are subject to Section 203 or the Delaware General Corporation Law
("Section 203"), which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the time that such
stockholder became an interested stockholder, unless: (i) prior to such time,
the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested holder, (ii) upon consummation of the transaction that resulted in
the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned (a) by persons who are
directors and also officers and (b) by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer; or
(iii) at or subsequent to such time, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders and not by written consent, by the affirmative vote of at least 66
2/3% of the outstanding voting stock which is not owned by the interested
stockholder.

In general, Section 203 defines "business combination" to include: (i) any
merger or consolidation involving the corporation and the interested
stockholder, (ii) any sale, transfer, pledge or other disposition of 10% or
more of the assets of the corporation involving the interested stockholder,
(iii) subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation to the
interested stockholder, (iv) any transaction involving the corporation that has
the effect of increasing the proportionate share of the stock or any class or
series of the corporation beneficially owned by the interested stockholder or
(v) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits by or through the
corporation. In general, Section 203 defines "interested stockholder" as an
entity or person beneficially owning 15% or more of the outstanding voting
stock of the corporation and any entity or person affiliated with or
controlling or controlled by such entity or person. See "Risk Factors--Certain
provisions in our charter documents may prevent certain corporate actions."

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a general discussion of the material U.S. federal income
tax consequences to holders of the notes or underlying common stock. This
discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed U.S. Treasury Regulations ("Regulations"),
Internal Revenue Service ("IRS") rulings and pronouncements and judicial
decisions now in effect, all of which are subject to change (possibly with
retroactive effect) or different interpretation.

This discussion is for general information only and does not address all
aspects of U.S. federal income taxation that may be relevant to holders of the
notes or common stock. This discussion does not describe the tax consequences
arising under the laws of any foreign, state or local jurisdiction, nor does it
describe all of the tax consequences that may be relevant to particular holders
in light of their personal circumstances (such as holders subject to the U.S.
federal alternative minimum tax), or to certain types of holders (such as
certain financial institutions, insurance companies, tax-exempt entities,
dealers in securities or foreign currencies, persons who hold the notes or
common stock in connection with a "straddle," "hedging," "conversion" or other
risk reduction transaction for U.S. federal income tax purposes, or persons
that have a "functional currency" other than the U.S. dollar) who may be
subject to special rules. This discussion assumes that each holder holds the
notes and common stock received upon conversion thereof as capital assets
within the meaning of Section 1221 of the Code. We have not sought any ruling
from the IRS with respect to statements made and the conclusions reached in
this discussion and there can be no assurance that the IRS will agree with such
statements and conclusions.

For purposes of this discussion, the term "U.S. holder" means a holder who
or that (i) is a citizen or resident of the United States, (ii) is a
corporation, partnership or other entity (other than a trust) created or
organized in or under the laws of the United States or a political subdivision
thereof, (iii) is an estate the income of which is subject to U.S. federal
income taxation regardless of its source, (iv) is a trust if (A) a U.S. court
is able to exercise primary supervision over the administration of the trust
and (B) one more U.S. persons, within the meaning of Section 7701(a)(30) of the
Code ("U.S. Persons"), have authority to control all substantial decisions of
the trust, or (v) is otherwise subject to U.S. federal income taxation on a net
income basis in respect of the notes or common stock. As used herein, a "Non-
U.S. holder" means a holder who or that is not a U.S. holder.

Prospective purchasers are urged to consult their own tax advisors regarding
the U.S. federal, state, local and foreign tax consequences of their
participation in this offering, and their ownership and disposition of the
notes (including conversion of the notes) or the common stock, including the
effect that their particular circumstances may have on such tax consequences.

U.S. Holders

Interest on Notes. Interest paid on a note will be taxable to a U.S. holder
as ordinary interest income, at the time that such interest is accrued or
actually or constructively received, in accordance with such U.S. holder's
method of accounting for U.S. federal income tax purposes.

Conversion of Notes. A U.S. holder of a note generally will not recognize
income, gain or loss on the conversion of the note into common stock, including
an optional conversion by us in the case of a repurchase upon a Change in
Control, except upon receipt of cash in lieu of a fractional share of common
stock or attributable to accrued but unpaid interest that would be taxable as
interest income. Such U.S. holder's aggregate tax basis in the common stock
received upon conversion of the note will be equal to the U.S. holders adjusted
tax basis in the note at the time of conversion (less any portion of that basis
allocable to cash received in lieu of a fractional share). The holding period
of the common stock received upon conversion of a note generally will include
the period during which the U.S. holder held such note prior to the conversion.

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Cash received in lieu of a fractional share of common stock should be
treated as a payment in exchange for such fractional share. Gain or loss
recognized on the receipt of cash paid in lieu of such fractional share
generally will be capital gain or loss equal to the difference between the
amount of cash received and the amount of adjusted tax basis allocable to the
fractional share.

Adjustment of Conversion Price. The conversion price of the notes is subject
to adjustment in certain circumstances. See "Description of the Notes--
Conversion Rights." Under Section 305(c) of the Code and the Treasury
Regulations issued thereunder, adjustments that have the effect of increasing
or decreasing the proportionate interest of U.S. holders of the notes in assets
or earnings of Siebel (for example, an adjustment following a distribution of
property by us to our stockholders) may in some circumstances give rise to
deemed distributions to U.S. holders; similarly, a failure to adjust the
conversion price of the notes to reflect a stock dividend or other event
increasing the proportionate interest of stockholders of outstanding common
stock can in some circumstances give rise to deemed distributions to such
stockholders. Such deemed distributions will be taxable as a dividend, return
of capital or capital gain in accordance with the earnings and profits rules
discussed under "--Distributions on Common Stock" below whether or not the U.S.
holders ever convert such notes. Generally, a U.S. holder's tax basis in a note
will be increased to the extent any such constructive distribution is treated
as a dividend.

To the extent, if any, that a U.S. holder receives a distribution on common
stock that would otherwise constitute a dividend for U.S. federal income tax
purposes but that exceeds current and accumulated earnings and profits of
Siebel, such distribution will be treated first as a nontaxable return of
capital reducing the U.S. holder's tax basis in the common stock. Any such
distributions in excess of the U.S. holder's tax basis in the common stock will
be treated as capital gain.

Sale, Exchange or Redemption of Notes or Common Stock. In general, subject
to the discussion under "Market Discount" below, a U.S. holder of a note will
recognize capital gain or loss upon the sale, redemption, retirement or other
disposition of the note measured by the difference between the amount of cash
and the fair market value of any property received (except to the extent
attributable to the payment of accrued interest income, which is taxable as
ordinary income) and such U.S. holders adjusted tax basis in the note. A U.S.
holder's adjusted tax basis in the note generally will equal the cost of the
note to such holder, increased by the amount of any market discount previously
taken into income by the holder or decreased by any premium amortized by the
holder with respect to the note. (For the basis and holding period of shares of
common stock received upon conversion of the note, see "--Conversion of Notes,"
above.) In general, subject to the discussion under "Market Discount" below, a
U.S. holder of common stock received upon conversion of a note will recognize
capital gain or loss upon the sale, exchange, redemption or other disposition
of the common stock under rules similar to the computation of gain or loss on
the disposition of the notes. However, special rules may apply to a redemption
of common stock which may result in the proceeds of the redemption being
treated as a dividend. In general, the maximum tax rate for noncorporate
taxpayers on long-term capital gain is 20% with respect to capital assets
(including the notes and common stock), but only if they have been held for
more than one year at the time of disposition. Capital gain on assets having a
holding period of one year or less at the time of disposition of the assets is
taxed as "short-term gain" at a maximum rate of 39.6% in the hands of
noncorporate taxpayers. For individual taxpayers, the deductibility of capital
losses is subject to limitations. For corporate taxpayers, capital gains or
ordinary income are subject to a maximum regular tax rate of 35%.

Market Discount. The resale of notes may be affected by the impact on a
purchaser of the "market discount" provisions of the Code. For this purpose,
the market discount on a note generally will be equal to the amount, if any, by
which the stated redemption price at maturity of the note immediately after its
acquisition

39
<PAGE>

(other than at original issue) exceeds the U.S. holder's adjusted tax basis in
the note. Subject to a de minimis exception, these provisions generally require
a U.S. holder who acquires a note at a market discount to treat as ordinary
income any gain recognized on the disposition of such note to the extent of the
"accrued market discount" on such note at the time of disposition, unless the
U.S. holder elects to include accrued market discount in income currently. This
election to include market discount in income currently, once made, applies to
all market discount obligations acquired on or after the first taxable year to
which the election applies and may not be revoked without the consent of the
IRS. In general, market discount will be treated as accruing on a straight-line
basis over the remaining term of the note at the time of acquisition, or, at
the election of the U.S. holder, under a constant yield method. A U.S. holder
who acquires a note at a market discount and who does not elect to include
accrued market discount in income currently may be required to defer the
deduction of a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the note until the note is disposed of in a
taxable transaction. If a U.S. holder acquires a note with market discount and
receives common stock upon conversion of the note, the amount of accrued market
discount not previously included in income with respect to the converted note
through the date of conversion will be treated as ordinary income upon the
disposition of the common stock.

Amortizable Premium. A U.S. holder who purchases a note at a premium over
its stated principal amount, plus accrued interest, generally may elect to
amortize such premium ("Section 171 premium") from the purchase date to the
note's maturity date under a constant-yield method that reflects semiannual
compounding based on the note's payment period. Amortizable premium, however,
will not include any premium attributable to a note's conversion feature. The
premium attributable to the conversion feature is the excess, if any, of the
note's purchase price over what the note's fair market value would be if there
were no conversion feature. Amortized Section 171 premium is treated as an
offset to interest income on a note and not as a separate deduction. The
election to amortize premium on a constant yield method, once made, applies to
all debt obligations held or subsequently acquired by the electing U.S. holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.

Non-U.S. Holders

Payments of Interest. Generally, payments of interest on the notes to, or on
behalf of, a Non-U.S. holder will not be subject to U.S. federal withholding
tax if: (i) such interest is not effectively connected with the conduct of a
trade or business within the U.S. by such Non-U.S. holder; (ii) such Non-U.S.
holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Siebel within the meaning of
Code Section 871(h)(3); (iii) such Non-U.S. holder is not (a) a controlled
foreign corporation for U.S. federal income tax purposes that is related to
Siebel through stock ownership or (b) a bank that received the note on an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of its trade or business as described in Section 881(c)(3)(A)
of the Code; and (iv) the Non-U.S. holder provides a statement signed under
penalties of perjury that includes its name and address and certifies that it
is not a U.S. Person in compliance with applicable requirements of the
Regulations or an exemption is otherwise established. If certain requirements
are satisfied, the certification described above may be provided by a
securities clearing organization, a bank, or other financial institution that
holds customer's securities in the ordinary course of its trade or business.
For this purpose the Non-U.S. holder of notes would be deemed to own
constructively the common stock into which it could be converted. If these
requirements cannot be satisfied, a Non-U.S. holder will be subject to U.S.
federal withholding tax at a rate of 30% (or lower treaty rate, if applicable)
on interest payments on the notes unless (x) the interest is effectively
connected with the conduct of a United States trade or business, in which case
the interest will be subject to U.S. federal income tax on net income that
applies to U.S. persons generally, or (y) an applicable income tax treaty
provides for a lower rate of, or exemption from, withholding tax.

Conversion of Notes. A Non-U.S. holder generally will not be subject to U.S.
federal withholding tax on the conversion of a note into common stock. To the
extent a Non-U.S. holder receives cash in lieu of a fractional share of common
stock on the conversion, such cash may give rise to gain that would be subject
to

40
<PAGE>

the rules described below with respect to the sale or exchange of a note or
common stock. See "--Sales of Exchange of Notes or Common Stock" below.

Adjustment of Conversion Price. The conversion price of the notes is subject
to adjustment in certain circumstances. See "Description of the Notes--
Conversion Rights." Any such adjustment could, in certain circumstances, give
rise to a deemed distribution to Non-U.S. holders of the notes. See "--U.S.
Holders-Adjustment of Conversion Price" above. In such case, the deemed
distribution would be subject to the rules below regarding withholding of U.S.
federal tax on dividends in respect of common stock. See "--Distributions on
Common Stock" below.

Distributions on Common Stock. Distributions on common stock will constitute
a dividend for U.S. federal income tax purposes to the extent of current or
accumulated earnings and profits of Siebel as determined under U.S. federal
income tax principles. Dividends paid on common stock held by a Non-U.S. holder
will be subject to U.S. federal withholding tax at a rate of 30% (or lower
treaty rate, if applicable), unless the dividend is effectively connected with
the conduct of a trade or business within the United States by the Non-U.S.
holder and, if required by a tax treaty, is attributable to a permanent
establishment maintained in the United States, in which case the dividend will
be subject to U.S. federal income tax on net income that applies to U.S.
persons generally (and, with respect to corporate holders under certain
circumstances, the branch profits tax). A Non-U.S. holder may be required to
satisfy certain certification requirements in order to claim a reduction of or
exemption from withholding under the foregoing rules.

Sales of Exchange of Notes or Common Stock. In general, a Non-U.S. holder
generally will not be subject to U.S. federal withholding tax on gain
recognized upon the sale or other disposition (including a redemption) of a
note or common stock received upon conversion thereof unless the gain is
effectively connected with the conduct of a trade or business within the U.S.
by the Non-holder and, if required by a tax treaty, is attributable to a
permanent establishment maintained in the United States or unless, the Non-U.S.
holder (i) is a nonresident alien individual who is present in the United
States for 183 or more days in the taxable year in which the gain is realized
and certain other conditions are satisfied, or (ii) is subject to tax pursuant
to the provisions of U.S. tax law applicable to certain U.S. expatriates.
However, if we were to become a "United States real property holding
corporation" (a "USRPHC"), a Non-U.S. holder may be subject to federal income
tax withholding with respect to gain realized on the disposition of notes or
shares of common stock. In that case, any withholding tax withheld pursuant to
the rules applicable to dispositions of a "United States real property
interest" will be creditable against such Non-U.S. holder's U.S. federal income
tax liability and may entitle such Non-U.S. holder to a refund upon furnishing
required information to the IRS. We do not believe that we are a USRPHC or will
become a USRPHC in the future.

U.S. Estate Tax. Notes owned or treated as owned by an individual who is not
a citizen or resident (as specially defined for U.S. federal estate tax
purposes) of the United States at the time of death ("Nonresident Decedent")
will not be includible in the Nonresident Decedent's gross estate for U.S.
federal estate tax purposes as a result of the Nonresident Decedent's death,
provided that, at the time of death, the Nonresident Decedent does not own,
actually or constructively, 10% or more of the total combined voting power of
all classes of stock of Siebel and payments with respect to such notes would
not have been effectively connected with the conduct of a trade or business in
the United States by the Nonresident Decedent. Common stock owned or treated as
owned by a Nonresident Decedent will be includible in the Nonresident
Decedent's gross estate for U.S. federal estate tax purposes as a result of the
Nonresident Decedent's death. Subject to applicable treaty limitations, if any,
a Nonresident Decedent's estate may be subject to U.S. federal estate tax on
property includible in the estate for U.S. federal estate tax purposes.

IRS Reporting and Backup Withholding

Certain noncorporate U.S. holders may be subject to IRS reporting and backup
withholding at a rate of 31% on payments of interest on the notes, dividends on
common stock and proceeds from the sale or other disposition of the notes or
common stock. Backup withholding will only be imposed where the noncorporate

41
<PAGE>

U.S. holder (i) fails to furnish its taxpayer identification number ("TIN"),
which would ordinarily be his or her social security number, on a properly
completed Form W-9; (ii) furnishes an incorrect TIN, (iii) is notified by the
IRS that he or she has failed to properly report payments of interests or
dividends, or (iv) under certain circumstances, fails to certify, under
penalties of perjury, that he or she has furnished a correct TIN and has not
been notified by the IRS that he or she is subject to backup withholding. A
failure to provide us with a correct TIN may also subject a U.S. holder to
penalties imposed by the IRS.

We must report annually to the IRS and to each Non-U.S. holder any interest
and dividends paid with respect to a note or common stock, respectively and
that is subject to U.S. federal withholding tax or that is exempt from such tax
under applicable treaty or the Code. We also report to the IRS and to each non-
U.S. Person such income paid which is exempt from federal withholding tax
because it is effectively connected with such Non-U.S. Person's U.S. trade or
business. However, a Non-U.S. holder will not be subject to IRS reporting or
backup withholding if the payer has received appropriate certification
statements from or on behalf of the Non-U.S. holder and provided that the payer
does not have actual knowledge that the Non-U.S. holder is a U.S. Person. The
payment of the proceeds from the disposition of the notes or common stock to or
through the U.S. office of any U.S. or foreign broker will be subject to IRS
reporting and possibly backup withholding unless the owner certifies as to its
non-U.S. status under penalties of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. Person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a note
or common stock to or through a non-U.S. office of a non-U.S. broker that is
not a U.S. related person will not be subject to IRS reporting or backup
withholding. For this purpose, a "U.S. related person" is (i) a "controlled
foreign corporation" for U.S. federal income tax purposes or (ii) a non-U.S.
Person 50% or more of whose gross income from all sources for the three-year
period ending with the close of its taxable year preceding the payment (or for
such part of the period that the broker has been in existence) is derived from
the activities that are effectively connected with the conduct of a U.S. trade
or business.

In the case of the payment of proceeds from the disposition of notes or
common stock to or through a non-U.S. office of a broker that is a U.S. related
person, the Regulations require IRS reporting on the payment unless the broker
has documentary evidence in its files that the owner is a Non-U.S. holder and
the broker has no knowledge to the contrary. Backup withholding will not apply
to payments made through foreign offices of a broker that is a U.S. Person or a
U.S. related person (absent actual knowledge that the payee is a U.S. Person).

Any amounts withheld under the backup withholding rates from a payment to
holder will be allowed as a credit against such holders U.S. federal income tax
liability, if any, or will otherwise be refundable, provided that the requisite
procedures are followed. holders of the notes or common stock should consult
their own tax advisors regarding their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption, if applicable.

Prospective Final Regulations

The IRS has issued new withholding regulations effective generally for
payments made after December 31, 2000. The Proposed Regulations provide that
information reporting but not backup withholding, may apply to a payment made
outside the United States of the proceeds of a sale of a note through an office
outside the United States of a broker that is a foreign partnership if one or
more of its partners are "U.S. persons," as defined in U.S. Treasury
regulations, who in the aggregate hold more than 50% of the income or capital
interest in the partnership or such foreign partnership is engaged in a United
States trade or business unless the broker has documentary evidence in its
records that the holder is a non-U.S. person and does not have actual knowledge
that the holder is a U.S. person, or the holder otherwise establishes an
exemption. Non-U.S. holders should consult their own tax advisors with respect
to the future impact of these new withholding regulations.

42
<PAGE>

SELLING SECURITY HOLDERS

The notes were originally issued by us and sold by the initial purchasers in
a transaction exempt from the registration requirements of the Securities Act
to persons reasonably believed by the initial purchasers to be qualified
institutional buyers. Selling holders, including their transferees, pledgees or
donees or their successors, may from time to time offer and sell pursuant to
this prospectus any or all of the notes and common stock into which the notes
are convertible.

The following table sets forth information with respect to the selling
holders and the principal amounts of notes beneficially owned by each selling
holder that may be offered under this prospectus. The information is based on
information provided by or on behalf of the selling holders. The selling
holders may offer all, some or none of the notes or common stock into which the
notes are convertible. Because the selling holders may offer all or some
portion of the notes or the common stock, no estimate can be given as to the
amount of the notes or the common stock that will be held by the selling
holders upon termination of any sales. In addition, the selling holders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their notes since the date on which they provided the information
regarding their notes in transactions exempt from the registration requirements
of the Securities Act. No selling security holder named in the table below
beneficially owns one percent or more of our common stock assuming conversion
of a selling security holder's notes.

43
<PAGE>

<TABLE>
<CAPTION>
Common Common
Principal Stock Stock
Amount of Issuable Owned
Notes upon after
Beneficially Conversion Common Completion
Owned and of the Stock of the
Name Offered Notes Offered Offering
---- ------------ ---------- ------- ----------
<S> <C> <C> <C> <C>
CALAMOS Growth and Income Fund--
CALAMOS Investment Trust.......... 430,000 9,221 9,221 --
CALAMOS Market Neutral Fund--
CALAMOS Investment Trust.......... 70,000 1,501 1,501 --
C&H Sugar Company, Inc. ........... 225,000 4,824 4,824 --
Champion International Corporation
Master Retirement Trust........... 1,425,000 30,557 30,557 --
CIBC World Markets International
Equity Arbitrage.................. 4,500,000 96,498 96,498 --
City of Knoxville Pension System... 540,000 11,579 11,579 --
City University of New York........ 56,000 1,200 1,200 --
Consulting Group Capital Markets
Funds............................. 140,000 3,002 3,002 --
Coua Bond Debenture Fund........... 400,000 8,577 8,577 --
David Lipscomb University General
Endowment......................... 105,000 2,251 2,251 --
Delaware Group Equity Fund V--
Retirement Income Fund Series..... 85,000 1,822 1,822 --
Delaware Group Premium Fund, Inc.--
Convertible Securities Series..... 300,000 6,433 6,433 --
Delaware PERS...................... 1,150,000 24,660 24,660 --
Delphi Foundation, Inc. ........... 12,000 257 257 --
Delta Airlines Master Trust........ 3,375,000 72,374 72,374 --
Deutsche Bank Securities, Inc...... 35,898,000 769,803 769,803 --
Dorinco Reinsurance Company........ 625,000 13,402 13,402 --
Dow Chemical Company Employees'
Retirement Plan, The.............. 3,245,000 69,586 69,586 --
Ellsworth Convertible Growth and
Income Fund, Inc. ................ 1,000,000 21,444 21,444 --
Elf Aquitaine...................... 100,000 2,144 2,144 --
Engineers Joint Pension Fund....... 317,000 6,797 6,797 --
Equitable Life Assurance Separate
Account--Balanced................. 120,000 2,573 2,573 --
Equitable Life Assurance Separate
Account--Convertibles............. 1,985,000 42,566 42,566 --
Family Service Life Insurance
Company........................... 300,000 6,433 6,433 --
Fidelity Financial Trust: Fidelity
Convertible & Securities Fund..... 2,390,000 51,251 51,251 --
Fist--Franklin Convertible
Securities Fund................... 1,500,000 32,166 32,166 --
Fondren Foundation, The............ 135,000 2,894 2,894 --
Forest Alternative Strategies Fund
II L.P. A5I....................... 450,000 9,649 9,649 --
Forest Alternative Strategies Fund
II L.P. A5M....................... 180,000 3,859 3,859 --
Forest Fulcrum Fund L.P. .......... 5,900,000 126,520 126,520 --
Forest Global Convertible Fund
Series A-5........................ 8,255,000 177,021 177,021 --
Forest Performance Fund L.P. ...... 500,000 10,722 10,722 --
Forrestal Funding Master Trust..... 5,000,000 107,221 107,221 --
Forum Capital Markets LLC.......... 800,000 17,155 17,155 --
Franklin & Marshall College........ 184,000 3,945 3,945 --
Frist Foundation, The.............. 310,000 6,647 6,647 --
Gabelli Global Convertible
Securities Fund, The.............. 150,000 3,216 3,216 --
General Motors Employees Global
Group Pension Trust............... 2,262,000 48,506 48,506 5,100
General Motors Foundation Inc...... 123,000 2,637 2,637 --
Global Bermuda Limited
Partnership....................... 1,650,000 35,382 35,382 29,000
Grable Foundation.................. 86,000 1,844 1,844 --
</TABLE>

44
<PAGE>

<TABLE>
<CAPTION>
Common Common
Principal Stock Stock
Amount of Issuable Owned
Notes upon after
Beneficially Conversion Common Completion
Owned and of the Stock of the
Name Offered Notes Offered Offering
---- ------------ ---------- ------- ----------
<S> <C> <C> <C> <C>
Greek Catholic Union................ 15,000 321 321 --
Greek Catholic Union (Calamos
Account #2)........................ 20,000 428 428 --
Gryphon Domestic III, LLC........... 2,400,000 51,466 51,466 --
Guardian Life Insurance Company of
America, The....................... 4,500,000 96,498 96,498 --
Guardian Pension Trust, The......... 200,000 4,288 4,288 --
Hawaiian Airlines Employees Pension
Plan-IAM........................... 125,000 2,680 2,680 --
Hawaiian Airlines Pension Plan for
Salaried Employees................. 30,000 643 643 --
Hawaiian Airlines Pilots Retirement
Plan............................... 185,000 3,967 3,967 --
Highbridge Capital Corporation...... 19,880,000 426,310 426,310 --
Hudson River Trust Balanced
Account............................ 1,810,000 38,814 38,814 --
Hudson River Trust Growth & Income
Account............................ 3,630,000 77,842 77,842 --
Hudson River Trust Growth
Investors.......................... 1,510,000 32,380 32,380 --
IBM Retirement Plan................. 3,380,000 72,481 72,481 --
ICI American Holdings Trust......... 505,000 10,829 10,829 --
Investcorp--SAM Fund Limited........ 4,450,000 95,426 95,426 --
Island Holdings, Inc. .............. 15,000 321 321 --
Kapiolani Medical Center............ 275,000 5,897 5,897 --
Kentfield Trading, Ltd. ............ 10,180,000 218,301 218,301 --
Kettering Medical Center Funded
Depreciation Account............... 135,000 2,894 2,894 --
Key Asset Management, Inc. as Agent
for the Victory Convertible
Securities Fund.................... 500,000 10,722 10,722 --
Knoxville Utilities Board Retirement
System............................. 280,000 6,004 6,004 --
Lakeshore International, Ltd. ...... 3,350,000 71,838 71,838 59,000
Lipper Convertibles, L.P. .......... 10,000,000 214,442 214,442 --
Lipper Convertibles Series II, L.P.
................................... 550,000 11,794 11,794 --
Lipper Offshore Convertibles, L.P.
................................... 2,250,000 48,249 48,249 --
LLT Ltd. ........................... 440,000 9,435 9,435 --
Lord Abbett & Co. Oxford Fund....... 400,000 8,577 8,577 --
Lord Abbett Bond Debenture Fund..... 1,500,000 32,166 32,166 --
McMahan Securities Company, L.P. ... 1,000,000 21,444 21,444 --
Maryland State Retirement System.... 1,239,000 26,569 26,569 --
Memphis Light, Gas & Water
Retirement Fund.................... 1,530,000 32,809 32,809 --
Merrill Lynch Convertible Fund, Inc.
................................... 200,000 4,288 4,288 --
Merrill Lynch ECS Convertible
Securities Portfolio............... 50,000 1,072 1,072 --
Merrill Lynch Insurance Group....... 207,000 4,438 4,438 --
Merrill Lynch Pierce, Fenner, Smith
Inc. .............................. 10,000 214 214 --
Morgan Stanley Dean Witter.......... 5,500,000 117,943 117,943 --
Morgan Stanley Dean Witter
Convertible Securities Trust....... 2,000,000 42,888 42,888 --
Motion Picture Industry Health
Plan--Active Member Fund........... 265,000 5,682 5,682 --
Motion Picture Industry Health
Plan--Retiree Member Fund.......... 130,000 2,789 2,789 --
Motors Insurance Corporation........ 603,000 12,930 12,930 --
Nalco Chemical Company.............. 225,000 4,824 4,824 --
New Orleans Firefighters............ 92,000 1,972 1,972 --
New York Life Insurance and Annuity
Corporation........................ 1,600,000 34,310 34,310 --
New York Life Insurance Company..... 14,400,000 308,796 308,796 --
Nicholas-Applegate Convertible
Fund............................... 447,000 9,585 9,585 --
1976 Distribution Trust FBO A. R.
Lauder/Zinterhoffer................ 12,000 257 257 --
</TABLE>

45
<PAGE>

<TABLE>
<CAPTION>
Common Common
Principal Stock Stock
Amount of Issuable Owned
Notes upon after
Beneficially Conversion Common Completion
Owned and of the Stock of the
Name Offered Notes Offered Offering
---- ------------ ---------- ------- ----------
<S> <C> <C> <C> <C>
1976 Distribution Trust FBO Jane A.
Lauder............................. 12,000 257 257 --
Northern Income Equity Fund......... 3,000,000 64,332 64,332 --
Occidental Petroleum................ 152,000 3,259 3,259 --
Ohio Bureau of Workers
Compensation....................... 100,000 2,144 2,144 --
Onex Industrial Partners............ 3,700,000 79,343 79,343 --
Oppenheimer Convertible Securities
Fund (Colorado).................... 3,000,000 64,332 64,332 --
Oppenheimer Convertible Securities
Fund (New York).................... 3,000,000 64,332 64,332 --
Pacific Life Insurance Company...... 1,000,000 21,444 21,444 --
Pebble Capital, Inc. ............... 1,100,000 23,588 23,588 --
Penn Treaty Network America
Insurance Company.................. 168,000 3,602 3,602 --
Physicians Life..................... 208,000 4,460 4,460 --
Pilgrim Convertible Fund............ 2,522,000 54,082 54,082 --
Port Authority of Allegheny County
Retirement and Disability Allowance
Plan for the Employees Represented
by Local 85 of the Amalgamated
Transit Union...................... 1,760,000 37,741 37,741 --
Q Investments, L.P.................. 788,000 16,898 16,898 --
Queen's Health Plan................. 50,000 1,072 1,072 --
R/2/ Investments, LDC............... 1,462,000 31,351 31,351 --
Rhapsody Fund, L.P. ................ 650,000 13,938 13,938 --
Robertson Stephens.................. 12,000,000 257,330 257,330 --
Salomon Brothers Asset Management,
Inc. .............................. 6,690,000 143,461 143,461 222,300
San Diego City Retirement........... 748,000 16,040 16,040 --
San Diego County Convertible........ 2,306,000 49,450 49,450 --
SG Cowen Securities................. 3,600,000 77,199 77,199 --
Shell Pension Trust................. 121,000 2,594 2,594 --
South Dakota Retirement System...... 1,250,000 26,805 26,805 86,000
Southern Farm Bureau Life Insurance
Company............................ 600,000 12,866 12,866 --
Southern Farm Bureau Life Insurance-
FRIC............................... 725,000 15,547 15,547 --
SPT................................. 1,400,000 30,021 30,021 --
Starvest Combined Portfolio......... 1,200,000 25,733 25,733 --
State of Oregon Equity.............. 5,600,000 120,087 120,087 --
State of Oregon/SAIF Corporation.... 6,500,000 139,387 139,387 --
State Street Bank Custodian for 6E
Pension Trust...................... 1,302,000 27,920 27,920 --
TCW Group, Inc., The................ 16,365,000 350,934 350,934 --
Transatlantic Reinsurance Co........ 1,500,000 32,166 32,166 --
UBKAM Arbitrage Fund Ltd. .......... 1,000,000 21,444 21,444 --
U.S. Olympic Foundation............. 150,000 3,216 3,216 --
Unifi, Inc. Profit Sharing Plan and
Trust.............................. 215,000 4,610 4,610 --
United Food and Commercial Workers
Local 1262 and Employers Pension
Fund............................... 900,000 19,299 19,299 --
Value Line Convertible Fund, Inc. .. 500,000 10,722 10,722 --
Van Kampen Convertible Securities
Fund .............................. 800,000 17,155 17,155 --
Van Kampen Harbor Fund ............. 4,200,000 90,065 90,065 --
Van Waters & Rogers, Inc. Retirement
Plan............................... 480,000 10,293 10,293 --
Wake Forest University.............. 771,000 16,533 16,533 --
Warburg Dillon Read LLC............. 11,355,000 243,498 243,498 --
White River Securities.............. 1,500,000 32,166 32,166 --
Zeneca Holdings Trust............... 505,000 10,829 10,829 --
</TABLE>
- --------
(1) Amounts indicated may be in excess of the total amount registered due to
sales or transfers exempt from the registration requirements of the
Securities Act since the date upon which selling holders provided to us the
information regarding their notes.

46
<PAGE>

None of the selling holders nor any of their affiliates, officers, directors
or principal equity holders has held any position or office or has had any
material relationship with us within the past three years except that Banc of
America Securities was an initial purchaser in connection with the offer and
sale of the notes in September 1999. The selling holders purchased all of the
notes in private transactions on or after September 15, 1999. All of the notes
were "restricted securities" under the Securities Act prior to this
registration.

Information concerning the selling holders may change from time to time and
any changed information will be set forth in supplements to this prospectus if
and when necessary. In addition, the conversion rate and therefore, the number
of shares of common stock issuable upon conversion of the notes, is subject to
adjustment under certain circumstances. Accordingly, the aggregate principal
amount of notes and the number of shares of common stock into which the notes
are convertible may increase or decrease.

47
<PAGE>

PLAN OF DISTRIBUTION

The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and the common stock
into which the notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the
form of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.

The notes and the common stock into which the notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at prices related to the prevailing market prices, at
varying prices determined at the time of sale, or at negotiated prices. These
sales may be effected in transactions, which may involve crosses or block
transactions:

. on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which the notes or the
common stock may be listed or quoted at the time of sale;

. in the over-the-counter market;

. in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

. through the writing of options, whether the options are listed on an
options exchange or otherwise; or

. through the settlement of short sales.

In connection with the sale of the notes and the common stock into which the
notes are convertible or otherwise, the selling holders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the notes or the common stock into which the
notes are convertible in the course of hedging the positions they assume. The
selling holders may also sell the notes or the common stock into which the
notes are convertible short and deliver these securities to close out their
short positions, or loan or pledge the notes or the common stock into which the
notes are convertible to broker-dealers that in turn may sell these securities.

The aggregate proceeds to the selling holders from the sale of the notes or
common stock into which the notes are convertible offered by them will be the
purchase price of the notes or common stock less discounts and commissions, if
any. Each of the selling holders reserves the right to accept and, together
with their agents from time to time, to reject, in whole or in part, any
proposed purchase of notes or common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.

Our outstanding common stock is listed for trading on the Nasdaq National
Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes.

In order to comply with the securities laws of some states, if applicable,
the notes and common stock into which the notes are convertible may be sold in
these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the notes and common stock into which the notes are
convertible may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.

The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under
the Securities Act. Selling holders who are "underwriters" within the meaning
of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. The selling holders have
acknowledged that they understand their obligations to comply with the
provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M.

48
<PAGE>

In addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule
144 or Rule 144A rather than pursuant to this prospectus. A selling holder may
not sell any notes or common stock described in this prospectus and may not
transfer, devise or gift these securities by other means not described in this
prospectus.

To the extent required, the specific notes or common stock to be sold, the
names of the selling holders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a post-
effective amendment to the registration statement of which this prospectus is a
part.

We entered into a registration rights agreement for the benefit of holders
of the notes to register their notes and common stock under applicable federal
and state securities laws under specific circumstances and at specific times.
The registration rights agreement provides for cross-indemnification of the
selling holders and us and their and our respective directors, officers and
controlling persons against specific liabilities in connection with the offer
and sale of the notes and the common stock, including liabilities under the
Securities Act. We will pay substantially all of the expenses incurred by the
selling holders incident to the offering and sale of the notes and the common
stock.

49
<PAGE>

LEGAL MATTERS

The validity of the notes and the common stock offered hereby is being
passed upon for us by Cooley Godward LLP, Palo Alto, California. James C.
Gaither, a partner of Cooley Godward LLP, is one of our directors. As of the
date of this prospectus, certain members and associates of Cooley Godward LLP
beneficially own an aggregate of 155,486 shares of our common stock.

EXPERTS

The consolidated financial statements and schedule and the supplemental
consolidated financial statements and supplemental schedule of Siebel Systems,
Inc. and subsidiaries as of December 31, 1997 and 1998, and for each of the
years in the three-year period ended December 31, 1998, have been incorporated
by reference herein and in the registration of which this prospectus is a part,
in reliance upon the reports of KPMG LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.

50
<PAGE>

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

We have authorized no one to give any information or to make any representa-
tions that are not contained in this prospectus. You should rely only on the
information provided in this prospectus or incorporated by reference therein.
You must not rely on any unauthorized information.

This prospectus does not offer to sell or buy any notes or shares in any ju-
risdiction where it is unlawful. You should not assume that the information in
this prospectus is accurate as of any date other than the date on the front of
the document.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................... 1
Risk Factors............................................................... 2
Where You Can Find More Information........................................ 12
Incorporation by Reference................................................. 12
Use of Proceeds............................................................ 14
Ratio of Earnings to Fixed Charges......................................... 14
Business................................................................... 15
Description of the Notes................................................... 22
Description of Capital Stock............................................... 36
Material United States Federal Income Tax Consequences..................... 38
Selling Security Holders................................................... 43
Plan of Distribution....................................................... 48
Legal Matters.............................................................. 50
Experts.................................................................... 50
</TABLE>

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

[SIEBEL LOGO]

$300,000,000

5 1/2% Convertible Subordinated Notes

Due September 15, 2006

and

6,433,260 Shares of Common Stock

Issuable Upon Conversion of the Notes

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the
sale of the securities being registered. All the amounts shown are estimates
except for the registration fee and the filing fee.

<TABLE>
<S> <C>
Registration fee................................................... $ 83,400
Legal fees and expenses............................................ 30,000
Accounting fees and expenses....................................... 10,000
Nasdaq National Market filing fee.................................. 17,500
Miscellaneous...................................................... 4,100
--------
Total............................................................ $145,000
========
</TABLE>

Item 15. Indemnification of Officers and Directors.

Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify our directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").

The Registrant's Certificate of Incorporation, as amended, provides for the
elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to the Registrant and its stockholders. These provisions
do not eliminate the directors' duty of care and, in appropriate circumstances,
equitable remedies such an injunctive or other forms of non- monetary relief
will remain available under Delaware law. In addition, each director will
continue to be subject to liability for breach of the director's duty of
loyalty to the Registrant, for acts or omissions not in good faith or involving
intentional misconduct, for knowing violations of law, for any transaction from
which the director derived an improper personal benefit and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision does not affect a director's responsibilities
under any other laws, such as the federal securities laws or state or federal
environmental laws.

The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of the Registrant or any of its affiliated enterprises, provided such
person acted in good faith and in a manner such person reasonably believed to
be in or not opposed to the best interests of the Registrant and, with respect
to any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The indemnification agreements also set forth certain
procedures that will apply in the event of a claim for indemnification
thereunder.

II-1
<PAGE>

Item 16. Exhibits

(a) Exhibits.

<TABLE>
<CAPTION>
Exhibit
Number Description of the Document
------- ---------------------------
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant.(3)
3.2 Bylaws of the Registrant.(1)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Stock Certificate.(1)
4.3 Restated Investor Rights Agreement, dated December 1, 1995, between
the Registrant and certain investors, as amended April 30, 1996 and
June 14, 1996.(1)
4.4 Form of Registration Rights Agreement, dated October 1, 1997 between
the Registrant and certain stockholders.(5)
4.5 Form of Registration Rights Agreement, dated November 1, 1997
between the Registrant and certain stockholders.(6)
4.6 Indenture between the Registrant, as Issuer, and Chase Manhattan
Bank and Trust Company, National Association, as Trustee, dated
September 15, 1999.(7)
4.7 Purchase Agreement among the Registrant, Goldman Sachs & Co., Banc
of America Securities LLC and Thomas Weisel Partners LLC dated
September 15, 1999.(7)
4.8 Registration Rights Agreement among the Registrant, Goldman Sachs &
Co., Banc of America Securities LLC and Thomas Weisel Partners LLC
dated September 15, 1999.(7)
5.1 Opinion of Cooley Godward LLP.(7)
10.1 Registrant's 1996 Equity Incentive Plan, as amended.(3)
10.2 Registrant's Employee Stock Purchase Plan, as amended.(3)
10.3 Form of Indemnity Agreement entered into between the Registrant and
its officers and directors.(1)
10.4 Registrant's Deferred Compensation Plan dated January 10, 1997.(4)
10.5 Master Alliance Agreement, dated March 17, 1995, between the
Registrant and Andersen
Consulting LLP.(1)(2)
10.6 Assignment Agreement, dated September 20, 1995, by and between the
Registrant and
Thomas M. Siebel.(1)
10.7 Lease Agreement, dated June 4, 1996, by and between the Registrant
and Crossroad Associates and Clocktower Associates.(1)
10.8 InterActive WorkPlace, Inc. 1996 Stock Option Plan.(5)
12.1 Statement regarding Computation of Ratios.(8)
23.1 Consent of KPMG LLP.(8)
23.2 Consent of Cooley Godward LLP. (included in Exhibit 5.1).(7)
24.1 Power of Attorney (included in the signature page).(7)
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee.(7)
</TABLE>
- --------
(1) Incorporated by reference to our Registration Statement on Form S-1 (No.
333-03751), as amended.
(2) Confidential treatment has been granted with respect to portions of this
exhibit.
(3) Incorporated by reference to our Registration Statement on Form S-8 (No.
333-07983), as amended.
(4) Incorporated by reference to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1997.
(5) Incorporated by reference to our Registration Statement on Form S-3 (No.
333-36967), as amended.
(6) Incorporated by reference to our Quarterly Report on Form 10-Q for the
quarter ended December 30, 1997.

(7) Incorporated by reference to our Registration Statement on Form S-3 (No.
333-91777).

(8) Filed herewith.

II-2
<PAGE>

Item 17. Undertakings

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of The
Securities Act of 1933.

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Mateo, County of San Mateo, State of
California on January 31, 2000.

/s/ Howard H. Graham
By: _________________________________

Howard H. Graham

Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas M. Siebel and Howard H. Graham and each
of them, as his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments (including post-
effective amendments, exhibits thereto and other documents in connection
therewith) to this registration statement and any subsequent registration
statement filed by the registrant pursuant to Securities and Exchange
Commission Rule 462, which relates to this registration statement and to file
the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys- in-fact
and agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
* Chairman and Chief January 31, 2000
______________________________________ Executive Officer
Thomas M. Siebel (Principal Executive
Officer)

/s/ Howard H. Graham Senior Vice President January 31, 2000
______________________________________ Finance and
Howard H. Graham Administration and Chief
Financial Officer
(Principal Financial and
Accounting Officer)

* Director January 31, 2000
______________________________________
Eric E. Schmidt

* Director January 31, 2000
______________________________________
James C. Gaither

* Director January 31, 2000
______________________________________
George T. Shaheen

Director
______________________________________
Charles R. Schwab

Director
______________________________________
A. Michael Spence

</TABLE>

/s/ Howard H. Graham

*By: _____________________

Howard H. Graham

Attorney-in-Fact

II-4
<PAGE>

EXHIBITS INDEX

<TABLE>
<CAPTION>
Exhibit
Number Description of the Document
------- ---------------------------
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant.(3)
3.2 Bylaws of the Registrant.(1)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Stock Certificate.(1)
4.3 Restated Investor Rights Agreement, dated December 1, 1995, between
the Registrant and certain investors, as amended April 30, 1996 and
June 14, 1996.(1)
4.4 Form of Registration Rights Agreement, dated October 1, 1997 between
the Registrant and certain stockholders.(5)
4.5 Form of Registration Rights Agreement, dated November 1, 1997 between
the Registrant and certain stockholders.(6)
4.6 Indenture between the Registrant, as Issuer, and Chase Manhattan Bank
and Trust Company, National Association, as Trustee, dated September
15, 1999. (7)
4.7 Purchase Agreement among the Registrant, Goldman Sachs & Co., Banc of
America Securities LLC and Thomas Weisel Partners LLC dated September
15, 1999. (7)
4.8 Registration Rights Agreement among the Registrant, Goldman Sachs &
Co., Banc of America Securities LLC and Thomas Weisel Partners LLC
dated September 15, 1999. (7)
5.1 Opinion of Cooley Godward LLP.(7)
10.1 Registrant's 1996 Equity Incentive Plan, as amended.(3)
10.2 Registrant's Employee Stock Purchase Plan, as amended.(3)
10.3 Form of Indemnity Agreement entered into between the Registrant and
its officers and directors.(1)
10.4 Registrant's Deferred Compensation Plan dated January 10, 1997.(4)
10.5 Master Alliance Agreement, dated March 17, 1995, between the
Registrant and Andersen Consulting LLP.(1)(2)
10.6 Assignment Agreement, dated September 20, 1995, by and between the
Registrant and Thomas M. Siebel.(1)
10.7 Lease Agreement, dated June 4, 1996, by and between the Registrant and
Crossroad Associates and Clocktower Associates.(1)
10.8 InterActive WorkPlace, Inc. 1996 Stock Option Plan.(5)
12.1 Statement regarding Computation of Ratios.(8)
23.1 Consent of KPMG LLP.(8)
23.2 Consent of Cooley Godward LLP. (included in Exhibit 5.1).(7)
24.1 Power of Attorney (included in the signature page).(7)
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee. (7)
</TABLE>
- --------
(1) Incorporated by reference to our Registration Statement on Form S-1 (No.
333-03751), as amended.
(2) Confidential treatment has been granted with respect to portions of this
exhibit.
(3) Incorporated by reference to our Registration Statement on Form S-8 (No.
333-07983), as amended.
(4) Incorporated by reference to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1997.
(5) Incorporated by reference to our Registration Statement on Form S-3 (No.
333-36967), as amended.
(6) Incorporated by reference to our Quarterly Report on Form 10-Q for the
quarter ended December 30, 1997.

(7) Incorporated by reference to our Registration Statement on Form S-3 (No.
333-91777).

(8) Filed herewith.

<PAGE>

EXHIBIT 12.1

STATEMENT REGARDING COMPUTATION OF RATIOS

<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
------------------------------------------------------------- --------------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(in thousands, except ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges:

Assumed interest $169 $233 $613 $1,294 $2,381 $1,657 $2,230
element included in --------- ---------- ---------- ------------ ------------ ------------ ------------
rent expense

Total fixed changes $169 $270 $645 $1,322 $2,448 $1,687 $3,242

Earnings (loss):

Net income (loss) $(221) $2,887 $21,296 $13,903 $74,277 $42,831 $124,426

Fixed charges per 169 270 645 1,322 2,448 1,687 3,242
above --------- ---------- ---------- ------------ ------------ ------------ ------------

Total earnings (loss) $(52) $3,157 $21,941 $15,225 $76,725 $44,518 $127,668

Ratio of earnings to -- 11.69 34.02 11.52 31.34 26.39 39.38
fixed charges --------- ---------- ---------- ------------ ------------ ------------ ------------

Deficiency of earnings $(221) $ -- $ -- $ -- $ -- $ -- $ --
available to cover fixed --------- ---------- ---------- ------------ ------------ ------------ ------------
charges
</TABLE>

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors

Siebel Systems, Inc.:

We consent to incorporation herein by reference of our reports dated January
26, 1999, relating to the consolidated balance sheets of Siebel Systems, Inc.
and subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of operations and comprehensive income (loss), stockholders' equity
and cash flows for each of the years in the three-year period ended December
31, 1998 and the related schedule, which reports appear in the December 31,
1998, annual report on Form 10-K of Siebel Systems, Inc. We also consent to
incorporation herein by reference of our reports dated December 1, 1999,
relating to the supplemental consolidated balance sheets of Siebel Systems,
Inc. and subsidiaries as of December 31, 1997 and 1998, and the related
supplemental consolidated statements of operations and comprehensive income,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1998, and the related supplemental schedule, which
reports appear in the current report on Form 8-K dated January 7, 2000 of
Siebel Systems, Inc.

We consent to the reference to our firm under the heading "Experts" in the
registration statement.

/s/ KPMG LLP

Mountain View, California

January 28, 2000