<PAGE>

                                                                     EXHIBIT 4.1





                                MIND C.T.I. LTD.
                                      1998
                                    RESTATED
                               SHARE OPTION PLAN


<PAGE>

                                MIND C.T.I. LTD.
                                     1998
                               SHARE OPTION PLAN



1.  NAME

    This Plan, as amended from time to time, shall be known as the Mind 1998
Share Option Plan (the "Option Plan").

2.  PURPOSE OF THE OPTION PLAN

    The Option Plan is intended as an incentive to retain, in the employ of Mind
C.T.I. Ltd. (the "Company") and its subsidiaries, persons of training,
experience, and ability, to attract new employees, whose services are considered
valuable, to encourage the sense of proprietorship of such persons, and to
stimulate the active interest of such persons in the development and financial
success of the Company by providing them with opportunities to purchase shares
in the Company, pursuant to the Option Plan approved by the board of directors
of the company (the "Board"), which is designed to benefit from, and is made
pursuant to, the provisions of Section 102 of the Israeli Income Tax Ordinance
(New Version) 1961 and any regulations, rules, orders of procedures promulgated
thereunder ("Section 102") with respect to Options granted to employees of the
Company pursuant to the Option Plan (the "Options"). The Option Plan is also
intended to fulfill certain previous obligations of the Company to certain
employees.

3.  ADMINISTRATION OF THE OPTION PLAN

    The Board or a share option committee appointed and maintained by the Board
for such purpose (the "Committee") shall have the power to administer the Option
Plan. Notwithstanding the above, the Board shall automatically have a residual
authority if no Committee shall be constituted or if such Committee shall cease
to operate for any reason whatsoever.

    The Committee shall consist of such number of members (not less than two (2)
in number) as may be fixed by the Board. The Committee shall select one of its
members as its chairman (the "Chairman") and shall hold its meetings at such
times and places as the Chairman shall determine. The Committee shall keep
records of its meetings and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.

    Any member of such Committee shall not be eligible to receive Options under
the Option Plan while serving on the Committee, unless otherwise specified
herein.

    The Committee shall have full power and authority (i) to designate
participants; (ii) to determine the terms and provisions of respective Option
agreements (which need not be identical) including, but not limited to, the
number of shares in the Company to be covered by each Option, provisions
concerning the time or times when and the extent to which the Options may be
exercised and the nature and duration of restrictions as to transferability or
restrictions constituting substantial risk of forfeiture; (iii) to accelerate
the right of an Optionee to exercise, in whole or in part, any previously
granted Option; (iv) to interpret the


<PAGE>

provisions and supervise the administration of the Option Plan; and - (v) to
determine any other matter which is necessary or desirable for, or incidental to
administration of the Option Plan.

    All decisions and selections made by the Board or the Committee pursuant to
the provisions of the Option Plan shall be made by a majority of its members
except that no member of the Board or the Committee shall vote on, or be counted
for quorum purposes, with respect to any proposed action of the Board or the
Committee relating to any Option to be granted to that member. Any decision
reduced to writing and signed by a majority of the members who are authorized to
make such decision shall be fully effective as if it had been made by a majority
at a meeting duly held.

    The interpretation and construction by the Committee of any provision of the
Option Plan or of any Option thereunder shall be final and conclusive unless
otherwise determined by the Board.

    Subject to the Company decision, each member of the Board or the Committee
shall be indemnified and held harmless by the Company against any cost or
expense (including counsel fees) reasonably incurred by him, or any liability
(including any sum paid in settlement of a claim with the approval of the
Company) arising out of any act or omission to act in connection with the Option
Plan unless arising out of such member's own fraud or bad faith, to the extent
permitted by applicable law. Such indemnification shall be in addition to any
rights of indemnification the member may have as a director or otherwise under
the Company's Articles of Association, any agreement, any vote of shareholders
or disinterested directors, insurance policy or otherwise.

4.   DESIGNATION OF PARTICIPANTS

    The persons eligible for participation in the Option Plan as recipients of
Options shall include any employees of the Company or of any subsidiary of the
Company. The grant of an Option hereunder shall neither entitle the recipient
thereof to participate nor disqualify him from participating in, any other grant
of Options pursuant to this Option Plan or any other option or stock plan of the
Company or any of its affiliates. The Company reserves its right to issue an
additional option plan for non-Israeli employees, that the Company may employ in
the future.

    Anything in the Option Plan to the contrary notwithstanding, all grants of
Options to directors and office holders ("Nosei Misra" - as such term is defined
in the Companies Ordinance (New Version), 1983 - the "Companies Ordinance")
shall be authorized and implemented only in accordance with the provisions of
the Companies Ordinance, as in effect from time to time.

5.   TRUSTEE

    The Options which shall be granted to employees of the Company (and/or any
subsidiary thereof) and/or any Shares (as defined below) issued upon exercise of
such Options and/or other shares received subsequently following any realization
of rights, shall be issued to a Trustee nominated by the Committee, and approved
in accordance with the provisions of Section 102 - (the "Trustee") and held for
the benefit of the Optionees for a period of not less than two years (24 months)
from the date of grant, or such other period as shall be required in order to
comply with the provisions of Section 102 as amended from time to time,.

                                     Page 3
<PAGE>

    Anything to the contrary notwithstanding, the Trustee shall not release any
Options and/or any Shares issued upon exercise of Options, prior to the full
payment of the Optionee's tax liabilities arising from Options which were
granted to him and/or any Shares issued upon exercise of such Options.

    Upon receipt of the Option, the Optionee will sign an undertaking to exempt
the Trustee from any liability in respect of any action or decision duly taken
and bona fide executed in relation with the Option Plan, or any Option or Share
granted to him thereunder.

6.   SHARES RESERVED FOR THE OPTION PLAN

     Subject to adjustments as set forth in Section 8 below, a total of
     2,308,000 (two million, three hundred and eight thousand) Ordinary Shares,
     of NIS 0.01 par value (the "Shares") shall be subject to the Option Plan.
     The Shares subject to the Option Plan are hereby reserved for such purpose
     in the authorized share capital of the Company and may only be issued in
     accordance with the terms hereof. Any of such Shares which may remain
     unissued and which are not subject to outstanding Options at the
     termination of the Option Plan shall cease to be reserved for the purpose
     of the Option Plan, but until termination of the Option Plan the Company
     shall at all times reserve a sufficient number of Shares to meet the
     requirements of the Option Plan. Should any Option for any reason expire or
     be canceled prior to its exercise or relinquishment in full, the Shares
     therefore subject to such Option may again be subjected to an Option under
     the Option Plan.

7.   OPTION PRICE

     7.1. The purchase price of each Share subject to an Option or any portion
          thereof shall be determined by the Committee in its sole and absolute
          discretion in accordance with applicable law, subject to any
          guidelines as may be determined by the Board from time to time. As of
          the date of adoption of the Option Plan, the Board has instructed the
          Committee to determine the purchase price of each Share, at a price
          which is not less then the price per share, according to the most
          recent evaluation of the Company in any investment or other capital
          transaction.


     7.2. The Option price shall be payable upon the exercise of the Option in
          a form satisfactory to the Committee and conforming to Section 102,
          including without limitation, by cash or cheque. The Committee shall
          have the authority to postpone the date of payment on such terms as it
          may determine.

8.   ADJUSTMENTS

     Upon the occurrence of any of the following described events, Optionee's
     rights to purchase Shares under the Option Plan shall be adjusted as
     hereafter provided:

     8.1. If the outstanding shares of the Company shall at anytime be changed
          or exchanged by declaration of a stock dividend, stock split,
          combination or exchange of shares, recapitalization, or any other like
          event by or of the Company, and as often as the same shall occur, then
          the number, class and kind of Shares subject to this Option Plan or
          subject to any Options therefore

                                     Page 4
<PAGE>

          granted, and the Option prices, shall be appropriately and equitably
          adjusted so as to maintain the proportionate number of Shares without
          changing the aggregate Option price, provided, however, that no
          adjustment shall be made by reason of the distribution of subscription
          rights on outstanding stock or by reason of conversion of any
          Management Shares or preferred shares of the Company into Ordinary
          Shares (regardless of the ratio of such conversion). Upon occurrence
          of any of the foregoing, the class and aggregate number of Shares
          issuable pursuant to the Option Plan (as set forth in paragraph 6
          hereof), in respect of which Options have not yet been exercised,
          shall be appropriately adjusted, all as will be determined by the
          Board who's determination shall be final.

          Anything herein to the contrary notwithstanding, if prior to the
          completion of an initial public offering of the Company's securities
          ("IPO"), all or substantially all of the shares of the Company are to
          be sold, or upon a merger or reorganization or the like, the shares of
          the Company, or any class thereof, are to be exchanged for securities
          of another Company, then in such event, each Optionee shall be obliged
          to sell or exchange, as the case may be, the shares such Optionee
          purchased under the Option Plan, in accordance with the instructions
          then issued by the Board whose determination shall be final. Upon the
          occurrence of any such transactions, all unexersized Options shall be
          immediately and completely terminated.

9.   TERM AND EXERCISE OF OPTIONS

     9.1. Options shall be exercised by the Optionee by giving written notice
          to the Company, in such form and method as may be determined by the
          Company and the Trustee and conforming Section 102, which exercise
          shall be effective upon receipt of such notice by the Company at its
          principal office. The notice shall specify the number of Shares with
          respect to which the Option is being exercised.


     9.2. Each Option granted under this Option Plan shall be exercisable only
          following the vesting dates and for the number of Shares as shall be
          provided in Exhibit B to the Option agreement (the "Expiration Date").
          However no Option shall be exercisable after the Expiration Date, as
          defined for each Optionee in his Option agreement.


     9.3. Options granted under the Option Plan shall not be transferable by
          Optionees other than by will or laws of descent and distribution, and
          during an Optionee's lifetime shall be exercisable only by that
          Optionee.


     9.4. The Options may be exercised by the Optionee in whole at any time or
          in part from time to time, to the extent that the Options become
          vested, prior to the Expiration Date, and provided that, subject to
          the provisions of Section 9.6 below, the Optionee is an employee of
          the Company or any of its subsidiaries, at all times during the period
          beginning with the granting of the Option and ending upon the date of
          exercise of the relevant Options.

     9.5. Subject to the provisions of Section 9.6 below, in the event of
          termination of the Optionee's employment with the Company or any of
          its subsidiaries, all Options granted to him, which have not yet been
          exercised, will immediately

                                     Page 5
<PAGE>

          expire. A notice of termination of employment by either the Company or
          the Optionee shall be deemed to constitute termination of employment.

     9.6. Notwithstanding anything to the contrary hereinabove, an Option may
          be exercised after the date of termination of Optionee's employment
          with the Company or any subsidiary of the Company during an additional
          period of time beyond the date of such termination, but only with
          respect to the number of Options vested at the time of such
          termination, according to the vesting periods of the Options, set
          forth in Section 10 below, if: (i) termination is without Cause (as
          defined below), for a period of three (3) months from the termination
          of Employment, (ii) termination is the result of death or disability
          of the Optionee, in which event any Options still in force and
          unexpired may be exercised within a period of one year from the date
          of termination, but only with respect to the number of Options already
          vested at the time of such termination according to the vesting
          periods of the Options. The term "Cause" shall mean any action,
          omission or state of affairs related to the Optionee which the Board
          decides, in its sole discretion, is against the interests of the
          Company.

     9.7. The holders of Options shall not have any of the rights or privileges
          of shareholders of the Company in respect of any Shares purchasable
          upon the exercise of any part of an Option unless and until, following
          exercise but subject always to the provisions of Section 5 above,
          registration of the Optionee as holder of such Shares in the Company's
          register of members.


     9.8. Any form of Option agreement authorized by the Option Plan may
          contain such other provisions as the Committee may, from time to time,
          deem advisable.

10.  VESTING OF OPTIONS

     Notwithstanding anything to the contrary, any Option may be exercised only
     to the extent that such Option was vested. Each option granted hereunder
     shall be vested, in whole or in part, as determined by the Committee in its
     sole and absolute discretion, provided that the Optionee is an employee of
     the Company or any of its subsidiaries, at all times during the period
     beginning with the granting of the Option and ending upon the date of
     vesting of any portion of the Option.

11.  DIVIDENDS

     With respect to all Shares (in contrary to unexercised Options) issued upon
     the exercise of Options purchased by the Optionee and held by the Trustee,
     the Optionee shall be entitled to receive dividends in accordance with the
     quantity of such Shares, and subject to any applicable taxation on
     distribution of dividends. During the period in which Shares issued to the
     Trustee on behalf of an Optionee are held by the Trustee, the cash
     dividends paid with respect thereto shall be paid directly to the Optionee.

12.  ASSIGNABILITY AND SALE OF OPTIONS

     No Option, purchasable hereunder, whether fully paid or not, shall be
     assignable, transferable or given as collateral or any right with respect
     to them given to any third party whatsoever, and during the lifetime of the
     Optionee each and all of such

                                     Page 6
<PAGE>

     Optionee's rights to purchase Shares hereunder shall be exercisable only by
     the Optionee.

     As long as the Shares are held by the Trustee in favor of the Optionee,
     then all rights of the optionee possessed in the Shares are personal, can
     not be transferred, assigned, pledged or mortgaged, other than by will or
     laws of descent and distribution.

13.  TERM OF THE OPTION PLAN

     The Option Plan shall be effective as of the day it was adopted by the
     Board and shall terminate at the end of ____ months from such day of
     adoption.

14.  AMENDMENTS OR TERMINATION

     The Board may, at any time and from time to time, amend, alter or
     discontinue the Option Plan, except that no amendment or alteration shall
     be made which would impair the rights of the holder of any Option therefore
     granted, without his consent.

15.  GOVERNMENT REGULATIONS

     The Option Plan, and the granting and exercise of Options hereunder, and
     the obligation of the Company to sell and deliver Shares under such
     Options, shall be subject to all applicable laws, rules, and regulations,
     whether of the State of Israel or of the United States or any other State
     having jurisdiction over the Company and the Optionee, including the
     registration of the Shares under the United States Securities Act of 1933,
     and to such approvals by any governmental agencies or national securities
     exchanges as may be required.

16.  CONTINUANCE OF EMPLOYMENT

     Neither the Option Plan nor the Option agreement with the Optionee shall
     impose any obligation on the Company or a subsidiary thereof, to continue
     any Optionee in its employ, and nothing in the Option Plan or in any Option
     granted pursuant thereto shall confer upon any Optionee any right to
     continue in the employ of the Company or a subsidiary thereof or restrict
     the right of the Company or a subsidiary thereof to terminate such
     employment at any time.

17.  GOVERNING LAW AND JURISDICTION

     This Option Plan shall be governed by and construed and enforced in
     accordance with the laws of the State of Israel applicable to contracts
     made and to be performed therein, without giving effect to the principles
     of conflict of laws. The competent courts of Tel-Aviv, Israel shall have
     sole jurisdiction in any matters pertaining to this Option Plan.

18.  ARBITRATION

     Any dispute in relation with this Option Plan and the exercise of rights
     thereunder, shall be brought to arbitration of the legal counsel to the
     Company (the "Arbitrator"), who shall decide on such dispute in accordance
     with the provisions of

                                     Page 7
<PAGE>

     the Arbitration Law - 1968 and its supplement. The decision of the
     Arbitrator shall be final and shall bind the Company and the Optionee.

19.  TAX CONSEQUENCES

     Any tax consequences arising from the grant or exercise of any Option, from
     the payment for Shares covered thereby or from any other event or act (of
     the Company, the Trustee or the Optionee), hereunder, shall be borne solely
     by the Optionee. The Company and/or the Trustee shall withhold taxes
     according to the requirements under the applicable laws, rules, and
     regulations, including withholding taxes at source. Furthermore, the
     Optionee shall agree to indemnify the Company and the Trustee and hold them
     harmless against and from any and all liability for any such tax or
     interest or penalty thereon, including without limitation, liabilities
     relating to the necessity to withhold, or to have withheld, any such tax
     from any payment made to the Optionee.

     The Committee and/or the Trustee shall not be required to release any Share
     certificate to an Optionee until all required payments have been fully
     made.

20.  NON-EXCLUSIVITY OF THE OPTION  PLAN

     The adoption of the Option Plan by the Board shall not be construed as
     amending, modifying or rescinding any previously approved incentive
     arrangements or as creating any limitations on the power of the Board to
     adopt such other incentive arrangements as it may deem desirable,
     including, without limitation, the granting of stock Options otherwise then
     under the Option Plan, and such arrangements may be either applicable
     generally or only in specific cases. For the avoidance of doubt, prior
     grants of options to employees of the Company under their employment
     agreements, and not in the framework of any previous option plan, shall not
     be deemed an approved incentive arrangement for the purpose of this
     Section.

21.  MULTIPLE AGREEMENTS

The terms of each Option may differ from other Options granted under the Option
Plan at the same time, or at any other time. The Committee may also grant more
than one Option to a given Optionee during the term of the Option Plan, either
in addition to, or in substitution for, one or more Options previously granted
to that Optionee.

                                     Page 8