EXHIBIT 4.1
 
RESTATED CERTIFICATE OF INCORPORATION
 
OF
 
THE CATO CORPORATION
 
 
 
         The Cato Corporation, a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
 
         1. The name of the corporation is "The Cato Corporation," and the name
under which the corporation was originally incorporated is "Cato Stores, Inc."
The date of filing its original Certificate of Incorporation with the Secretary
of State was March 28, 1946.
 
         2. The text of the Restated Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read as herein set forth in
full:
 
         FIRST. The name of the Corporation is
 
                              THE CATO CORPORATION
 
         SECOND. Its registered office in the State of Delaware is located at
         1209 Orange Street, in the City of Wilmington, County of New Castle.
         The name and address of its resident agent is The Corporation Trust
         Company, 1209 Orange Street, Wilmington, Delaware, 19801.
 
         THIRD. The purpose of the corporation is to engage in any lawful act or
         activity for which corporations may be organized under the General
         Corporation Law of Delaware.
 
         FOURTH (A) The total number of shares of all classes of capital stock
         which the Corporation shall have the authority to issue is 65,100,000,
         consisting of:
 
                  (1) 50,000,000 shares of Class A Common Stock having a par
         value of $.03 1/3 per share,
 
                  (2) 15,000,000 shares of Class B Common Stock having a par
         value of $.03 1/3 per share, and
 
                  (3) 100,000 shares of Preferred Stock having a par value of
         $100.00 per share.
 
         The issued shares of the Corporation's capital stock as of the date of
         filing of this Amendment shall be reclassified as shares of Class A
         Common Stock, without any further action required by the holders
         thereof.
 
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<PAGE>   2
 
         (B) Except to the extent otherwise provided below, the holders of Class
         A Common Stock and the Class B Common Stock shall have the same powers,
         designations, preferences and participation rights and privileges. The
         holders of Class A Common Stock and Class B Common Stock shall have the
         following specific powers, designations, preferences, and relative
         participating rights and privileges:
 
                  (1) Each holder of Class A Common Stock shall be entitled to
                  one (1) vote per share of Class A Common Stock standing in his
                  name on the transfer books of the Corporation, and each holder
                  of Class B Common Stock shall be entitled to ten (10) votes
                  per share of Class B Common Stock standing in his name on the
                  transfer books of the Corporation, with respect to each matter
                  to be voted upon.
 
                  (2) The holders of Class A Common Stock and Class B Common
                  Stock shall have the right to vote, but not as separate
                  classes except to the extent required by law or as otherwise
                  provided in subsection (B) (3) below, upon all matters
                  submitted to the stockholders of the Corporation.
 
                  (3) In addition to any other vote required by law, the
                  Corporation may not alter or change, by rights, preferences,
                  privileges, restrictions, dividend rights, voting power or
                  other powers given to the holders of Class A Common Stock and
                  Class B Common stock pursuant to this Article Fourth other
                  than by the affirmative vote of not less than sixty-six and
                  two thirds (66 2/3) percent of all the votes entitled to be
                  voted by the holders of each class of stock to be adversely
                  affected thereby voting as a separate class, except that the
                  Corporation may increase the total number of authorized shares
                  of Class A Common Stock or Class B Common Stock that may be
                  issued by the corporation by the affirmative vote of a
                  majority of all the votes entitled to be voted by the holders
                  of Class A Common Stock and Class B Common Stock voting
                  together, without regard to class.
 
                  (4) Subject to the rights of any holders of Preferred Stock,
                  holders of Class A Common Stock and Class B Common Stock shall
                  be entitled to receive such dividends and other distributions
                  in cash, stock or property of the Corporation as may be
                  declared thereon by the Board of Directors from time to time
                  out of assets or funds of the Corporation legally available
                  therefor; provided, however, that:
 
                           (a) No cash dividend may be declared and paid on the
                  Class B Common Stock unless a dividend of an equal or greater
                  amount of cash per share has been declared and paid on the
                  Class A Common Stock.
 
                           (b) In the event of any dividend or other
                  distribution payable in stock of the Corporation, other than
                  Preferred Stock, including a distribution pursuant to any
                  stock split or division, which occurs after the initial
                  issuance of Class B Common Stock by the Corporation, only
                  shares of Class A Common Stock shall
 
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<PAGE>   3
 
                  be distributed with respect to Class A Common Stock, and the
                  Corporation's Board of Directors, in its discretion, shall
                  determine whether to distribute shares of Class A or Class B
                  Common Stock, in an amount per share equal to the amount per
                  share distributed with respect to the Class A Common Stock,
                  with respect to Class B Common Stock.
 
                           (c) In the case of any combination, reclassification
                  or recapitalization of the Class A Common Stock, the shares of
                  Class B Common stock shall also be combined, reclassified or
                  recapitalized so that the number of shares of Class B Common
                  stock outstanding immediately following such combination
                  reclassification or recapitalization shall bear the same
                  relationship to the number of shares of Class B Common Stock
                  outstanding immediately prior to such combination,
                  reclassification or recapitalization as the number of shares
                  of Class A Common Stock outstanding immediately following such
                  combination, reclassification or recapitalization bears to the
                  number of shares of Class A Common Stock outstanding
                  immediately prior to such combination, reclassification or
                  recapitalization.
 
                           (d) Shares of Class B Common stock outstanding at any
                  time shall not be reverse split or combined, whether by
                  reclassification, recapitalization or otherwise, so as to
                  decrease the number of shares thereof issued and outstanding
                  unless at the same time the shares of Class A Common Stock are
                  reverse split or combined so that the number of shares of
                  Class A Common Stock outstanding immediately following such
                  reclassification or recapitalization shall bear the same
                  relationship to the number of shares of Class A Common Stock
                  outstanding immediately prior to such reclassification or
                  recapitalization as the number of shares of Class B Common
                  Stock outstanding immediately following such reclassification
                  or recapitalization bears to the number of shares of Class B
                  Common Stock outstanding immediately prior to such
                  reclassification or recapitalization.
 
                  (5) Any outstanding shares of Class B Common Stock shall be
                  convertible on or after July 1, 1988 into fully paid and
                  nonassessable shares of Class A Common Stock at the option of
                  the holders thereof on a one share for one share basis. In
                  order for a stockholder to effect any such conversion; such
                  stockholder must furnish the Corporation with a written notice
                  of the request for conversion, which notice shall be addressed
                  to the principal office of the Corporation or to the
                  Corporation's designation transfer agent, shall state the
                  number of shares of Class B Common Stock to be converted into
                  shares of Class A Common Stock, shall state the name of the
                  person(s) in whose name(s) the shares of Class A Common Stock
                  are to be registered and shall be accompanied by a certificate
                  or certificates representing such shares, properly endorsed
                  and ready for transfer. A conversion shall be deemed to be
                  made (and the holder of such shares shall be deemed to be the
                  holder of record of an equal number of shares of Class A
                  Common Stock) on
 
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<PAGE>   4
 
                  the close of business of the date when the Corporation or
                  transfer agent has received the prescribed written notice and
                  required certificate or certificates, properly endorsed and
                  ready for transfer. The Corporation hereby reserves and shall
                  at all times reserve and keep available out of its authorized
                  and unissued shares of Class A Common Stock, for the purposes
                  of effecting conversion such number of duly authorized shares
                  of Class A Common Stock as shall from time to time be
                  sufficient to effect the conversion of all outstanding shares
                  of Class B Stock.
 
                  (6) In the event of a liquidation or dissolution of the
                  Corporation, or a winding up of its affairs, whether voluntary
                  or involuntary, or a merger or consolidation of the
                  Corporation, after payment or provision for payment of the
                  debts or liabilities of the Corporation and the amounts to
                  which holders of the Preferred Stock shall be entitled,
                  holders of Class A Common Stock shall be entitled to receive
                  out of the net assets of the Corporation, the amount of $1.00
                  per share, prior to any distribution to be made with respect
                  to Class B Common Stock. After such payment or provision for
                  such payment to the holders of Class A Common Stock, the
                  holders of Class A Common stock and the holders of Class B
                  Common Stock shall be entitled to share ratably (i.e., an
                  equal amount of assets for each share of either Class A Common
                  Stock or Class B Common Stock) in the remaining assets of the
                  Corporation.
 
         (C) (1) No person holding shares of Class B Common Stock of record
         (hereinafter called a "Class B Holder") may transfer, and the
         Corporation shall not register the transfer of, such shares of Class B
         Common Stock, as Class B Common Stock, whether by sale, assignment,
         gift, bequest, appointment or otherwise, except to a Permitted
         Transferee (as hereinafter defined). Shares of Class B Common Stock
         transferred to any party other than a Permitted Transferee (as
         hereinafter defined) shall be converted into shares of Class A Common
         Stock as provided by subsection (4) of this Section C. A Permitted
         Transferee shall mean, with respect to each person from time to time
         shown as the record holder of shares of Class B Common Stock:
 
                           (a) In the Case of a Class B Holder who is a natural
                  person;
 
                                    (i) any lineal descendant of such Class B
                                    Holder (the Class B Holder and such lineal
                                    descendants herein collectively referred to
                                    as "Class B Holder's Family Members");
 
                                    (ii) The trustee of a trust (including a
                                    voting trust) principally for the benefit of
                                    such Class B Holder and/or one or more of
                                    his or her Permitted Transferees described
                                    in each subclause of this clause (a) other
                                    than this subclause (ii), provided that such
                                    trust may also grant a general or special
                                    power of appointment to one or more of
 
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<PAGE>   5
 
                                    such Class B Holder's Family Members and may
                                    permit trust assets to be used to pay taxes,
                                    legacies and other obligations of the trust
                                    or of the estates of one or more of such
                                    Class B Holder's Family Members payable by
                                    reason of the death of any of such Family
                                    Members:
 
                                    (iii) A corporation if all of the
                                    outstanding capital stock of such
                                    corporation which is entitled to vote for
                                    the election of directors is owned by, or a
                                    partnership if all of the partners are, and
                                    all of the beneficial interests in the
                                    partnership are owned by, the Class B Holder
                                    or his or her permitted Transferees
                                    determined under this clause (a), provided
                                    that if by reason of any change in the
                                    ownership of such stock or partnership
                                    interests, such corporation or partnership
                                    would no longer qualify as a Permitted
                                    Transferee, all shares of Class B Common
                                    Stock then held by such corporation or
                                    partnership shall, upon the election of the
                                    Corporation given by written notice to such
                                    corporation or partnership, without further
                                    act be converted into a like number of
                                    shares of common Stock effective upon the
                                    date of the giving of such notice, and stock
                                    certificates formerly representing such
                                    shares of Class B Common stock shall
                                    thereupon and thereafter be deemed to
                                    represent the like number of shares of
                                    common Stock; and
 
                                    (iv) The estate of such Class B Holder.
 
                           (b) In the case of a Class B Holder holding shares of
                  Class B Common Stock as trustee pursuant to a trust (other
                  than a trust described in clause (c) below), Permitted
                  Transferee means (i) any person transferring Class B Common
                  Stock to such trust and (ii) any Permitted Transferee of any
                  such transferor determined pursuant to clause (a) above.
 
                           (c) In the case of a Class B Holder holding the
                  shares of Class B Common Stock in question as trustee pursuant
                  to a trust which was irrevocable on the record date for
                  determining the persons to whom the Class B Common Stock is
                  first issued by the Corporation, Permitted Transferee means
                  (i) any person to whom or for whose benefit principal may be
                  distributed either during or at the end of the term of such
                  trust whether by power of appointment or otherwise and (ii)
                  any Permitted Transferee of any such person determined
                  pursuant to clause (a) above.
 
                           (d) In the case of a Class B Holder which is a
                  partnership or corporation acquiring record and beneficial
                  ownership of the shares
 
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<PAGE>   6
 
                  of Class B Common Stock in question upon its initial issuance
                  by the Corporation, Permitted Transferee mean (i) any partner
                  of such partnership, or stockholder of such corporation, as of
                  the date of the initial issuance of the shares of Class B
                  Common Stock, and (ii) any Permitted Transferee of any such
                  person, partner, or stockholder referred to in subclause (i)
                  of this clause (d).
 
                           (e) In the case of a Class B Holder which is a
                  corporation or partnership (other than a corporation or
                  partnership described in clause (d) above) holding record and
                  beneficial ownership of the shares of Class B Common Stock in
                  question, Permitted Transferee means (i) any person
                  transferring such shares of Class B Common Stock to such
                  corporation or partnership and (ii) any Permitted Transferee
                  of any such transferor determined under clause (a) above.
 
                           (f) In the case of a Class B Holder which is the
                  estate of a deceased Class B Holder, or which is the estate of
                  a bankrupt or insolvent Class B Holder, which holds record and
                  beneficial ownership of the shares of Class B Common Stock in
                  question, Permitted Transferee means a permitted Transferee of
                  such deceased, bankrupt or insolvent Class B Holder as
                  determined pursuant to clause (a), (b), (c), (d) or (e) above,
                  as the case may be.
 
                           (g) Any employee benefit plan for the benefit of the
                  employees of the Corporation (a "Plan").
 
                           (h) In the case of a Class B Holder which is a Plan,
                  Permitted Transferee includes any beneficiary of such plan to
                  whom shares of stock of the Corporation may be distributed,
                  but only as such shares are distributable.
 
                  (2) Notwithstanding anything to the contrary set forth herein,
         any Class B Holder may pledge such Holder's shares of Class B Common
         Stock to a pledge pursuant to a bona fide pledge of such shares as
         collateral security for indebtedness due to the pledge, provided that
         such shares shall not be transferred to or registered in the name of
         the pledge and shall remain subject to the provisions of this Section
         C. In the event of foreclosure or other similar action by the pledge,
         such pledged shares of Class B Common stock may only be transferred to
         a Permitted Transferee of the pledge or converted into shares of Common
         Stock, as the pledge may elect.
 
                  (3) For purposes of this Section C:
 
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<PAGE>   7
 
                           (a) The relationship of any person that is derived by
                  or through legal adoption shall be considered a natural one.
 
                           (b) Each joint owner of shares of Class B Common
                  Stock shall be considered a "class B Holder" of such shares.
 
                           (c) A minor for whom shares of Class B Common Stock
                  are held pursuant to a Uniform Gifts to Minors Act or similar
                  law shall be considered a Class B Holder of such shares.
 
                           (d) Unless otherwise specified, the term "person"
                  means both natural persons and legal entities.
 
                           (e) Without derogating from the election conferred
                  upon the Corporation pursuant to subclause (iii) of clause (a)
                  above, each reference to a corporation shall include any
                  successor corporation resulting from merger or consolidation
                  and each reference to a partnership shall include any
                  successor partnership resulting from the death or withdrawal
                  of a partner.
 
                  (4) Any transfer of shares of Class B Common Stock not
         permitted hereunder shall result in the conversion of the transferee's
         shares of Class B Common Stock into shares of Class A Common Stock,
         effective as of the date on which certificates representing such shares
         are presented for transfer on the books of the Corporation. The
         Corporation may, in connection with preparing a list of stockholders
         entitled to vote at any meeting of stockholders, or as a condition to
         the transfer or the registration of shares of Class B Common Stock on
         the Corporation's books require the furnishing of such affidavits or
         other proof as it deems necessary to establish that any person is the
         beneficial owner of shares of Class B Common Stock or is a Permitted
         Transferee.
 
                  (5) Shares of Class B Common Stock shall be registered in the
         names of the beneficial owners thereof and not in "street" or "nominee"
         name. For this purpose, a "beneficial owner" of any shares of Class B
         Common Stock shall mean a person who, or an entity which possesses the
         power, either singly or jointly, to direct the voting or disposition of
         such shares. The corporation shall note on the certificates for shares
         of Class B Common stock that there are restrictions on the transfer and
         registration of transfer imposed by Article Fourth, Section C hereof.
 
         (D) The Board of Directors is expressly authorized, subject to the
         limitations prescribed by law, to provide for the issuance of the
         Preferred Stock in series, and to fix by resolution or resolutions
         providing for the issue of any series
 
                                       7
 
<PAGE>   8
 
         the number of shares included in such series and the designations,
         relative powers, preferences and rights, and the qualifications,
         limitations or restrictions thereof.
 
         FIFTH. No holder of shares of the capital stock of any class of the
         corporation shall have any pre-emptive or preferential right of
         subscription to any shares of any class of stock of the corporation,
         whether now or hereafter authorized, or to any bonds, debentures or
         other securities convertible into stock of any class, and all such
         additional shares of stock, bonds, debentures or other securities
         convertible into stock may be issued and disposed of by the Board of
         Directors to such person or persons and on such terms and for such
         consideration (so far as may be permitted by law) as the Board of
         Directors, in its absolute discretion, may deem advisable.
 
         SIXTH. The corporation is to have perpetual existence.
 
         SEVENTH. The private property of the stockholders shall not be subject
         to the payment of corporate debts to any extent whatever.
 
         EIGHTH. Whenever a compromise or arrangement is proposed between this
         corporation and its creditors or any class of them, and/or between this
         corporation and its stockholders or any class of them, any court of
         equitable jurisdiction within the State of Delaware may, on the
         application in a summary way of this corporation or of any creditor or
         stockholder thereof, or on the application of any receiver or receivers
         appointed for this corporation under the provisions of Section 291 of
         Title 8 of the Delaware Code or on the application of trustees in
         dissolution or of any receiver or receivers appointed for this
         corporation under the provisions of Section 279 of Title 8 of the
         Delaware Code, order a meeting of the creditors or class of creditors,
         and/or of the stockholders or class of stockholders of this
         corporation, as the case may be, to be summoned in such manner as the
         said court directs. If a majority in number representing three-fourths
         in value of the creditors or class of creditors, and/or of the
         stockholders or class of stockholders of this corporation, as the case
         may be, agree to any compromise or arrangement and to any
         reorganization of this corporation as consequence of such compromise or
         arrangement, the said compromise or arrangement and the said
         reorganization shall, if sanctioned by the court to which the said
         application has been made, be binding on all the creditors or class of
         creditors, and/or on all the stockholders or class of stockholders of
         this corporation, as the case may be, and also on this corporation.
 
         NINTH. Meetings of stockholders may be held without the State of
         Delaware, if the bylaws so provide. The books of the corporation may be
         kept (subject to any provision contained in the statutes) outside of
         the State of Delaware at such place or places as may be from time to
         time designated by the Board of Directors or in the bylaws of the
         corporation.
 
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<PAGE>   9
 
         TENTH. The provisions of this Certificate of Incorporation shall not be
         modified, revised, altered or amended, repealed or rescinded in whole
         or in part, without the affirmative vote of sixty-six and two-thirds
         (66 2/3) percent of the votes to which the holders of the outstanding
         stock are entitled.
 
         ELEVENTH. (A) A director of the Corporation shall not be personally
         liable to the Corporation or its stockholders for monetary damages for
         breach of fiduciary duty as a director, except for liability (i) for
         any breach of the director's duty of loyalty to the Corporation or its
         stockholders, (ii) for acts or omissions not in good faith or which
         involve intentional misconduct or a knowing violation of law, (iii)
         under Section 174 of the Delaware General Corporation Law, or (iv) for
         any transaction from which the director derived an improper personal
         benefit. If the Delaware General Corporation Law is amended after
         approval by the Corporation's stockholders of this Article to authorize
         corporate action further eliminating or limiting the personal liability
         of Directors, then the liability of a Director of the Corporation shall
         be eliminated or limited to the fullest extent permitted by the
         Delaware General Corporation Law, as so amended.
 
                  Any repeal or modification of the immediately preceding
         paragraph by the stockholders of the Corporation shall not adversely
         affect any right or protection of a Director of the Corporation
         existing at the time of such repeal or modification.
 
         (B) Each person who was or is made a party or is threatened to be made
         a party to or is otherwise involved in any action, suit or proceeding,
         whether civil, criminal, administrative or investigative (hereinafter a
         "proceeding"), by reason of the fact that he or she is or was a
         director, officer or employee of the Corporation or is or was serving
         at the request of the Corporation as a director, officer, employee or
         agent of another corporation or of a partnership, joint venture, trust
         or other enterprise, including service with respect to employee benefit
         plans (hereinafter an "indemnitee"), whether the basis of such
         proceeding is alleged action in an official capacity as a director,
         officer, employee or agent or in any other capacity while serving as a
         director, officer, employee or agent, shall be indemnified and held
         harmless by the Corporation to the fullest extent authorized by the
         Delaware General Corporation Law, as the same exists or may hereafter
         be amended but, in the case of any such amendment, only to the extent
         that such amendment permits the Corporation to provide broader
         indemnification rights than such law permitted the Corporation to
         provide prior to such amendment), against all expense, liability and
         loss (including attorneys' fees, judgments, fines, ERISA excise taxes
         or penalties and amounts paid in settlement) reasonably incurred or
         suffered by such indemnitee in connection therewith, and such
         indemnification shall continue as to an indemnitee who has ceased to be
         a director, officer, employee or agent and shall inure to the benefit
         of the indemnitee's heirs, executors and administrators; provided,
         however, that, except as provided in paragraph (C) hereof with respect
         to proceedings to enforce rights to indemnification, the
 
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<PAGE>   10
 
         Corporation shall indemnify any such indemnitee in connection with the
         proceeding (or part thereof) initiated by such indemnitee only if such
         proceeding (or part thereof) was authorized by the Board of Directors
         of the Corporation. The right to indemnification conferred in this
         Section shall be a contract right and shall include the right to be
         paid by the Corporation the expenses incurred in defending any such
         proceeding in advance of its final disposition (hereinafter an
         "advancement of expenses"); provided, however, that, if the Delaware
         General Corporation Law requires, an advancement of expenses incurred
         by an indemnitee in his or her capacity as a director or officer (and
         not in any other capacity in which service was or is rendered by such
         indemnitee, including without limitation, service to an employee
         benefit plan) shall be made only upon delivery to the Corporation of an
         undertaking, by or on behalf of such indemnitee, to repay all amounts
         so advanced if it shall ultimately be determined by final decision from
         which there is no further right to appeal that such indemnitee is not
         entitled to be indemnified for such expenses under this Section or
         otherwise (hereinafter an "undertaking").
 
         (C) If a claim under paragraph (B) of this Article is not paid in full
         by the Corporation within sixty days after a written claim has been
         received by the corporation, except in the case of a claim for an
         advancement of expenses, in which case the applicable period shall be
         twenty days, the indemnitee may at any time thereafter bring suit
         against the Corporation to recover the unpaid amount of the claim. If
         successful in whole or in part in any such suit or in a suit brought by
         the Corporation to recover an advancement of expenses pursuant to the
         terms of an undertaking, the indemnitee shall be entitled to be paid
         also the expense of prosecuting or defending such suit. In (i) any suit
         brought by the indemnitee to enforce a right to indemnification
         hereunder (but not in a suit brought by the indemnitee to enforce a
         right to an advancement of expenses) it shall be a defense that, and
         (ii) any suit by the Corporation to recover an advancement of expenses
         pursuant to the terms of an undertaking the Corporation shall be
         entitled to recover such expenses upon a final adjudication that, the
         indemnitee has not met the applicable standard of conduct set forth in
         the Delaware General Corporation Law. Neither the failure of the
         Corporation (including its Board of Directors, independent legal
         counsel, or its stockholders) to have made a determination prior to the
         commencement of such suit that indemnification of the indemnitee is
         proper in the circumstances because the indemnitee has met the
         applicable standard of conduct set forth in the Delaware General
         Corporation Law, nor an actual determination by the Corporation
         (including its Board of Directors, independent legal counsel, or its
         stockholders) that the indemnitee has not met such applicable standard
         of conduct, shall create a presumption that the indemnitee has not met
         such applicable standard of conduct or, in the case of such a suit
         brought by the indemnitee, be a defense to such suit. In any suit
         brought by the indemnitee to enforce a right hereunder, or by the
         Corporation to recover an advancement of expenses pursuant to the terms
         of an undertaking, the burden of proving that the
 
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<PAGE>   11
 
         indemnitee is not entitled to be indemnified or to such advancement of
         expenses under this Section or otherwise shall be on the Corporation.
 
         (D) The rights to indemnification and to the advancement of expenses
         conferred in this Section shall not be exclusive of any other right
         which any person may have or hereafter acquire under any statute, this
         Certificate of Incorporation, by-law, agreement, vote of stockholders
         or disinterested directors or otherwise.
 
         (E) The Corporation may maintain insurance, at its expense, to protect
         itself and any director, officer, employee or agent of the Corporation
         or another corporation, partnership, joint venture, trust or other
         enterprise against any expense, liability or loss, whether or not the
         Corporation would have the power to indemnify such person against such
         expense, liability or loss under the Delaware General Corporation Law.
 
         (F) The Corporation may, to the extent authorized from time to time by
         the Board of Directors, grant rights to indemnification and to the
         advancement of expenses, to any agent of the Corporation to the fullest
         extent of the provisions of this Article with respect to the
         indemnification and advancement of expenses of directors, officers and
         employees of the Corporation.
 
         TWELFTH. (A) The Board of Directors shall consist of not less than five
         (5) nor more than fifteen (15) members and shall be divided into three
         classes as nearly equal in number as possible. At the annual meeting of
         stockholders in 1987, the directors of one class shall be elected for a
         term of one year, the directors of the second class shall be elected
         for a term of two years, and the directors of the third class shall be
         elected for a term of three years. At each annual meeting of the
         stockholders after the 1988 annual meeting, the successors of the
         directors of the class whose terms expire in that year shall be elected
         to hold office for a term of three years, so that the term of office of
         one class of directors shall expire in each year.
 
         (B) Vacancies in the Board of Directors may be filled by a vote of
         three of the directors then in office, although less than a quorum.
         Directors so elected shall hold office until he next election of the
         class for which such Directors shall have been chosen and until their
         successors shall have been elected and qualified.
 
                  3. The aforesaid amendment was duly adopted in accordance with
         the applicable provisions of Section 242 and 245 of the General
         Corporation Law of the State of Delaware.
 
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<PAGE>   12
 
         IN WITNESS WHEREOF, the foregoing is executed by the Vice President of
the Corporation and attested by the Assistant Secretary of the Corporation, this
6th day of March, 1987.
 
 
                                THE CATO CORPORATION
 
 
                                By: /s/  Alan E. Wiley
                                   -----------------------------------
                                      Alan E. Wiley
                                      Senior Executive Vice President
                                      Secretary
                                      Chief Financial and Administrative Officer
 
 
           ORIGINAL CERTIFICATE OF INCORPORATION FILED MARCH 28, 1946
 
 
 
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